Evening star., 1932-12-28


First we started with gentleman VINO
had Z theory that the price OF pig iron
was an index as to what the future had
In store for us, then the chart reader
and the graph expert became increas-
tngly numerous and the different little
peaks and valleys gave the forecast OF
the future. and then with the specu-
lative volume, starting frst IN real
estate in Florida and then extending to
agricultural lands, and finally to the
stock market In New York. We were IN
the end taught by noted economists that
instalment buying and the mortgaging
OF our future was a perfectly healthy
thing to do for anything which might,
st that time, meet our fancy. At the
peak Of 1t all, we were told that 1t was
impossible to figure the value of any
thing because OF imponderables. Just
what was meant by imponderables
have never known, but it was something
which could not be calculated and had
great value Then came the crash.
and the last three years We all very
Of severe liquidation, we are told there
Is no hope for the future because OF
technocracy, another child Of the eco
nomic brain.
Dollar Must BE Stabilized.
"Prior to the World War, gold was
the workable basis for the credit then
outstanding but the worlds debts were
80 much less than they are today that we
cannot use that yardstick now for proper
measurement. Assuming that the fig-
ures are correct and that the debt OF
the world today is $3.50, 900 900 900. and
the debt of this country-and by that
mean debts OF all characters $780,
%LAk &t.A ga
cages alone in this country are SO, 500,-
O00, 900, upon which there Is an interest
charge OF $60O,000,000 per annum. 1t
takes no mental activity to realize that
the gold in this country. and in the
world, notwithstanding the increase in
the production Of gold which has been
taking place in the past three years. Is
insufficient to support this structure.
II the debts Of the world, without in
terest from now on, were to be paid at
the rate Of 81 900 per minute. 1t would
require 1,411 years to liquidate, and II
: the economist who prior to 1929 used
the term that the so-called gold dollar
was a dishonest dollar because its, pur-
chasing power was only slightly above
so cents in the United States, although
1t was supposed to be worth 100 cents,
/. should apply the same rule today we
OF the dollar is equivalent to 160 cents
! instead Of 100 cents.
!. Therefore, because OF this increase
/ in the value OF the dollar, 1t Is now
!. impc r. for the debtor to pay to the
: creditor his obligations because If in
!. 1927 he contracted to pay the sum Of
$4,000. today, In either labor. farm
products or whatever it may be he uses
as medium of payment. his debt has
= fpc %1 nl ha a
not contract to pay that sum Of money
but only the original amount. 1t Is
impossible for him to see why he should
pay this increased amount. and it Is
not correct to assume that the creditor
should expect it, but the cancelfng Of
contracts or the scaling down of debts
4. IS dangerous method to pursue be-
cause who is to be the judge as to what
the reduction should be or why, or
when. contract should be Cancelled.
1t. therefore. seems to me that the dol
lar should be stabilized. not to have an
abnormal purchasing power in times OF
depression or a lessening purchasing
power in times of prosperity, but should
that the whole world IS asking this
question. whether 1t applies to our
money or to the money Of any other
nation, because the same condition
exists the world over.
Z Sees Silver as Remedy.
/ II feel that soon the demand will
! be made to correct this condition. and
that the only way to do it will be by
adding silver to the money basis.
There is an impression that there are
huge stores of silver which would come
out if the price advanced For 438
years the production of silver to gold
has been less than IA to l. At the
present time it is about to l. The
United States coinage ratio Is 10 To /.
II all the silver in the world available
for money were to be coined at the
United States ratio there would be
sfewer dollars in silver than dollars in
gold. England made gold the unit OF
Western World continued the use Of the
two metals until Germany went on
gold basis after the war Of 1870, when
she collected 81 900, 100000 from France
In gold, and ct that time the amount
collected by Germany was almost one
third Of the monetary gold in the world.
The United States followed the eX-
ample of England and Germany in
.l873 and the Latin Union three years
later.
For ell the time of which there is
lily IcSOIQ up 10 liz tlIIl6 Lll6 OnlLeI
States made 22.23 grains OF gold the
unit Of value, the commercial price OF
silver in London never reached price
ratio OF l6 to /. except in the years
1912 and 1918, when 1t was 1911 and
1925, respectively, and that was before
even England had declar for the sim
gle unit of value. As illustrating that
AL changes in the pric. are the result
Of legislation and have no relation to
production, 1t may be cited that in 1850
the United States produced 62 times
as much gold as silver by weight, but
the price Of silver remained unchanged.
Just before We changed to a gold basis
In 1878. the production ratio for the
world was 81 silver to / Of gold. In
1872 1t was IL and l3 to l. and still We
hear many people say the United States
went to a gold basis because of the
Hood of silver 1t is not the amount of
metal which is produced that is i'm
portant as much as the re 10 production
Is between the two metals.
Would Turn World Depression.
! To-day we are measuring ell the
values Of the Western World with ap-
proximately $ll.600,0 100000 Of gold,
with the result that the price Of gold,
rs measured by labor and commodities,
has increased and Is appreciating and
has reached the purchasing power
which. AS stated. is out Of proportion
70 the contract originally entered into
ty the borrower If We added silver
TO the basis of our currency the pur-
chasing power of more than half the
world. would be Immediately increased.
And that is the purchasing power Of
the Orient, China and the South Amer
acan countries all Of which have al
ways teen good customers of ours, and
our doblar would be reduced in value
TO a. asis which would permit those