The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1933-11-29

n n
THE practical problem is this
l. Acting under the Thomas
amendment, where shall the Presi-
dent by proclamation fix the
weight of the gold dollar in grains
nine-tenthS fine" and thus estab-
liSh "a gold dollar, the weight OF
which is so fixed" as the standard
unit of valued" This is what the
President has authority to do.
This is what it must be assumed
that he is aiming to do. In adj
vancing the price of gold he either
is trying to discover the proper
weight of the gold dollar" with a
view to fixing it by proclamation, or
he is violating the law. There is
no reason to think he is violating
the law.
The question then is - Where
shall he fix the weight of the dollar?
Let us see what light his most i'm
pressive critics throw upon this
question. There is the statement of
the thirty-eight Columbia profess
sors. Among them are some of the
most distinguished economists in the
world
They recommend IAN expeditions
return to the only standard which,
by long experience and tradition,
enjoys general conference.-the gold
but they add at once that
this does not necessarily mean a
return to the gold dollar Of the for
mer weight and f1neness."
In other words, they refrain from
committing themselves as to What
the weight of the gold dollar ought
to be. They go on to propose that
the weight of the gold dollar be de-
termined by entering into negotia-
ton with Great Britain and the
sterling bloc in order to arrive at
an agreement for a general return
to gold.
In my opinion this does not meet
the practical issue. If we are TO
negotiate with the sterling bloc we
ought to have an opinion as to the
value of the dollar, for the English
will have an opinion as to the value
of their pound, the Canadians about
their dollar, the Australians about
their pound, the Scandinavians
about the kroneS, and so forth and
so on.
The Columbia professors are avoid
ing the question which the PreSi-
dent has to settle when they tell
him that the weight of the dollar
need mot necessarily" be what it
was. He somehow has to make up
his mind what it necessarily ought
to be, and while it seems to me that
his present advisers eXaggerate
their ability to estimate accurately
the new value Of the dollar, it
would seem as if the thirty EIGHT
Columbia professors greatly under
estimated the Importance of making
some kind Of estimate.
That the problem is not negligible
should be evident when we recall
that the last time the nations re-
turned to gold, the British over
valued the pound and the French
underValued the franc, and that
these two errors turned out to have
very serious consequences.
T EFT us look next at Mr.. James P.
IL Warburg's reply to Senator
Borah's challenge. Mr.. Warburg
agrees with the thirty eight Colum-
bia professors in desiring a joint
sterilization operation by Britain
and the United States, but he differs
from them in that he does not rec
ommend an expeditions return to
gold. Mr.. Warburg wishes to steady
the exchanges and then over "a pc
Rod Of trial and error which may
take months or years. work out q
revaluatiOn and a drastically re-
formed international gold standard.
Mr. Warburg has no opinion as to
what should be the weight of the
dollar, and, although he does not
offer an opinion as to what should
be its exchange value with other
currencieS he wishes to steady the
exchange at once. Then he wishes
to experiment by international
agreement. and one must assume, I
think, that he regards the stability
Of the foreign exchanges as very
much more important that the in
ternal value of the currency
I doubt whether the sterling bloc
will share his apparent view that
the weight of the currency really
does not matter Or perhaps it
would be truer to say that the ma
tons Of the sterling bloc will agree
with him in so far as they have al
ready arrived at a valuation of
their currencieS which suit them.
They have been experimenting with
reValuation nearly two years longer
than We have, and so they are prob
ably nearer a definite conclusion.
What is it that emerges from this
debate that bears upon the imme-
date situation? It is, I think, that
the Presidents critics have not yet
faced the problem he is facing,
which is to do what the sterling
bloc has done, determine the value
Of the currency in relation to gold.
The United Kingdom has fixed it at
about so per cent of the old value,
and would presumably like to sta
Billie there. Australia has fixed it
at about so per cent.
The Scandinavian countries in
between the two. Does it matter
where We fix it? The President 5
critics do not seem TO think it mat
tiers. and perhaps it does not mat
ter within narrow limits. But with
in wider limits it evidently does
matter TO all the other nations how
their currency is valued if one is
to judge by their actions. and pre-
sumably it does to matter to us.
Therefore it appears that there
will be meeting Of minds and the
possibility of a constructive solu-
ton when the Presidents critics de-
eide not merely that they wish to
stabilize, but where.
Copyright. 1880