The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1933-11-17
MONEY ROUTE is
DRAWN FOR u. S.
BY PROFESSOR
George Warren Outlines
Plan for Sterilization
of Currency.
Continued From Page 2D

cheapened dollars at all. We shall
see.
Professor Warren, however, be-
Ieves strongly that this is the one
big step necessary. He wrote in
August:
1T would be a great calamity
to be deluded into thinking that
the rise in prices which has come
from a decline in the gold value
of the dollar is due to currency,
credit or government control Of
agriculture and industry, all Of
which came later.
None Of these can succeed eX-
cept as the gold content Of the
dollar is reduced, and if the gold
content Of the dollar is reduced
by the right amount, none Of these
is necessary"
Professor Warren's Compensated
dollar" is simple in principle. He
wants to keep the principle that
a paper dollar should be redeem
able in gold. But he argues that it
is silly to allow the price Of i'm
portant things like bread and
shoes to be influenced by the price
of useless metal like gold, which
itself fuctuates according to its
own supply and demand.
LIE would, therefore, take an
Il L average Of the prices of the
things by which men live. When
that average rises, say 10 per cent,
then he would make the dollar
redeemable for 10 per cent more
gold than before. If prices fell
10 per cent, then he would take 10
per cent of the gold out of the
dollar. Thus the dollar always
would have a sympathetic rela-
tionship to the prices Of other
things
Perhaps, though no one can be
sure, this is what President Roose-
welt meant when he said thus we
continue to move toward a man
aged currency"
Such management Of currency
IS not as new as many people as
sumo. England, off gold, had such
a currency from 1914 to 1925, and
again since September, 1881. Yet
she has contrived to keep her
home prices steadier than we have
here.
Sweden, forced off gold with
Britain, is the most conspicuous
example of successful currency
and price management.
The Swedish system is no
patented process-it simply con-
sistS of the wise use of powers
such as our own federal reserve
system might have if it were ex-
tended to practically all banks.
and were used to control credit
and banking functions with the
definite object of keeping the
price level steady.
For instance, no one knows how
much grief We might have been
saved if our federal reserve sys-
tenn had been able in 1929 to cut
of the flow of speculative funds
which blew up the stock market
bubble until it burst.
True, it didn't work then. But
the point is, the principle was es-
tablished even here twenty years
ago. Establishment of the federal
reserve system was simply to give
control over bank credit money
(the moSt-uSed kind through
setting rediscount rates and open
market buying and selling of
government securities.
That this has amounted to an
influence rather than complete
control doesn't matter. The point
is that twenty years ago we agreed
to the principle. Now we are about
to carry it to the end.
NEXT-Eyes focus today on
the new gold policy. But that
is only one of the levers the Presi-
dent can pull in his determination
to raise prices 'in one way or an
other" How some of these other
levers work.