Evening star., 1932-12-19
Continued Prom First Page.)

dangerous consequence. however. is WIS.,
ible enough in the increased difncul-
ties which are arising between many
debtors and creditors. The values be-
hind a multitude Of securities are les
sened. the income Of debtors is insuf-
flcient to meet their obligations. credit
ors are unable to undertake new com
mitments for fear OF the safety Of pres
ent ertakings.
1t is not enough to say that the fall
in prices is due to decreased conSump-
ton. and thus the sole remedy Is the
adjustment by reduced production.
That is in part true. but decreased con-
sumption is brought about by certain
economic forces which, II overcome,
would result In q great measure Of
recovery of consumption and thus re-
covery from the depression. Any COM
petent study of the causes OF continued
abnormal levels of prices would At once
establish the fact that the general
price movement Is worldwide In char
acter. ana international influences,
therefore, have q part in them. Fur
ther exploration in this field brings US
at once to tie fact that price levels
have been seriously affected by
abandonment Of the gold standard by
many countries and the consequent In
stability and depreciation Of foreign
currencies These fluctuations In them
selves, through the uncertainties they
create. Stifie trade, cause invasiOns Of
unnatural marketing territory, result
in arbitrary trade restrictions ana
ultimate diminished consumption Of
goods, followed by further fall In
prices.
World War Blamed.
The origins of currency instability
and depreciation reach back again 10
economic weaknesses rooted In the
World War which have eliminated In
many countries in anxieties In regard to
their financial institutions. the Night
Of capital. denudation of gold reserves
with its consequent jeopardy to cur
rencieS These events have been fol-
lowed by restrictions on the movement
of gold and exchange in frantic at
tempts to protect their currencies and
credit structures. Restrictions have not
alone been put upon the movement Of
gold and exchange. but they have been
imposed upon imports of goods In
endeavor to prevent the spending Of
undue sums abroad by their nationals rs
a further precaution to prevent the out
flow Of gold reserves and thus under
mining OF currency. These steps have
again reduced consumption and di-
minished prices and are but parts of the
vicious cycles which must be broken at
some points If We are to assure economic
recovery.
We have abundant proof of the effect
of these forces within our own borders
The depreciation of foreign currencies
lowers the cost Of production abroad
compared to our costs of production.
thus undermining the effect of our
protective tariffs. Prices of agricultural
and other commodities in the United
States are being seriously affected anC
thousands of our workers are TODAY
being thrown out of employment through
the invasion OF such goods
l concur in the conclusions Of many
thoughtful persons that one Of the first
and most fundamental points Of attack
Is to re-establish stability of currencies
and foreign exchange. and thereby re-
lease an infinite number OF barriers
against the movement OF commodities
the general effect Of which would be
to raise the price of commoditie,
throughout the world. 1t must be
realized, however. that many countries
have been forced to permit their cur
rencies to depreciate; it has not been 9
matter Of choice
l am we'll aware that many factors
which bear upon the problem are purely
domestic in many countries. but the
time has come when concerted action
between nations should be taken In an
endeavor to meet these primary ques-
tions. While the gold standard has
worked badly since the war due to the
hugo annnnn,ic diclnnofinnc 4f h.
yet it is still the only practicable basis
OF international settlements and none
tary stability so far as the more ad-
vanced industrial nations are concerned
The larger use of silver as supple
mentary currency would aid to sta
bility In many quarters OF the world
In any event it is a certainty that trade
and prices must be disorganized unui
some method Of monetary and ex-
change stability Is attained 1t seems
impossible to secure such result by the
individual and separate action OF diff
ferent countries each striving for sepa-
rate defense
Join Economic Farley.
1t is for the purpose of discussing
these and other matters most vital to
us and the rest of the world that we
have joined in the World Economic
Conference where the means and meas
ures for the turning of the tide of
business and price levels through
remedy to some of these destructive
forces can be fully and effectively con-
sidered and if possible undertaken ST.
multaneously between nations.
The reduction of world armament
also has bearing upon these questions.
The stupendous increase in military
expenditures since before the war is a
large factor in worldwide unbalanced
budget. with that consequent
contribution to Unstable credit and cur
rencies and to the loss of world con-
fldence in political stability. While
these questions are not part of the
work proposed for the Economic Con-
ference. cognizance of its progress and
possibilities must be ever in the minds
OF those dealing with the other ques-
tionS
The problem Of the war debts to the
United States has entered into this
world situation. 1t is my belief that
their Importance, relative to the other
world economic forces in action, is ex-
aggerated. Nevertheless in times OF
deep depressionS some nations are un-
able TO pay and in some cases payments
do weigh heavily upon foreign exchange
and currency stability. In dealing with
an economically sick world many factors
become distorted in their relative i'm
portance and the emotions of peoples
must be taken into account.
AS Congress is aware the principal
debtor nations recently requested that
the December payments on these debts
should be postponed and that we should
an exchange Of views upon
possible revision in the light of altered
world condition.
We have declined to postpone this
payment as we considered that such
action ta) would amount to practical
breakdown of the integrity of these
agreements. (b) would impose an
abandonment of the national policies
CT dealing with these obligations
separately with each nation. tc) would
create situation where debts would
have been regarded as being q counter
part of German reparations and in
IDENTITIES and thus not only destroy
their individual character and obliga-
ton. but become an effective transfer