Evening star., 1933-02-14

IHE T. V ENINd
phenomenon Of the gold situation has
Increased disturbances and wrought
| havoc That Is the effect Of waves OF
fear and apprehension. We have q
parallel In nations to an unreasoning
panic run on q bank. The fears and
apprehensions directed in turn to the
stability Of first one nation and then
| another have caused the withdrawal
Of foreign balances from q particular
nation, followed by flights of capital,
through purchases Of exchange by its
| own citizens seeking refuge and Sc
curity for their property These move
mentS are followed by large flows of
gold to meet exchange demands, thus
undermining the domestic currency and
credit system Of the victim nation and
leading to an unnatural piling up Of
gold in some nation temporarily con-
sidered safe. These movements, them
selves in large degree unwarranted,
| have forced some nations of the gold
standard that could otherwise have
maintained their position. We. our
selves, a year ago suffered from the
effects OF such a movement. Thus a
mass of the gold dashing hither and
yon from one nation to another. seek
ing maximum safety, has acted like a
cannon loose on the deck of the world
in a storm.
In the meantime the currencies Of
the world are fluctuating spasmodically.
Countries of Of the gold standard are
in reality suffering from their managed
paper 'currencies by reason Of the fact
that men are unable to make contracts
for the future with security, and that
insecurity itself again dries up enter
prise, business, employment consump-
tion Of goods and further causes re-
ductions Of prices. Other nations to
hold their own are attempting to COM
pete in destruction.
Broadly. the solution lies in the re-
establishment Of confidence. That con-
f1dence cannot be re-established by the
abandonment Of gold as a standard in
the world. So far as the human race
has yet developed and established its
methods and systems Of stable ex-
change. that solution can only be found
now and found quickly through the re-
establishment Of gold standards among
important nations. The huge gold re-
serves OF the world can be made to
function in relation to currencies,
standards OF value. and exchange And
I say with emphasis that am not pro-
posing this as a favor to the United
States. It Is the need of the whole
world. The United States is so sit
uated that 1t can protect itself better
than almost any country on earth.
Courageous Action Needed.
Nor Is 1t necessary from an interna-
tional point Of view that those nations
who have been forced of the gold
standard shall be again restored to for
mer gold values. It will sufflce II it
only is fixed. From this source are the
principal hopes for restoring world con-
fidence and reversing the growing bar
rierS to the movement of goods, and
making possible the security in trade,
which will again revive a demand for
such goods To do this 1t is necessary
to have strong and courageous action
on the part Of the leading commercial
nations. If some sort Of international
financial action Is necessary to enable
central banks to cooperate for the pur-
pose Of stabilizing currencies, nations
should have no hesitation in joining in
such an operation under proper safe
guards. If some part of the debt pay
ments to us could be set aside for tenn
porary use for this purpose, we should
not hesitate to do so. At the same
time the world should endeavor to find
place for silver, at least in enlarged
subsidiary coinage.
II the major nations will enter the
road leading to the early re-establish-
ment Of the gold standard, then and
then only can the abnormal barrier to
trade, the quotas, preferences discrim-
inatory agreements, and tariffs which
exceed the differences in costs of pro-
duction between nations be removed,
uniform trade privileges among all ma
tions be re-esta blished and the threat
of economic war averted. A reasonable
period Of comparative stability in the
worlds currences would repay the cost
Of such effort q hundred times over in
the increase Of consumption, the In
crease Of employment, the lessening Of
the difficulties of debtors throughout
the land, with the avoidance of mil
lions of tragedies. The world would
quickly see a renewed movement of
goods and would have an immediate
rise in prices everywhere, thereby
bringing immediate relief to the whole
economic system.
I do not underestimate the difficulties
nor the vast fiscal and financial prob
lens which lie behind the restoration
Of stability and economic peace. Bold
action alone can succeed. The alterna-
tive to such constructive action Is
condition too grave to be contemplated
in passive acceptance.
Road to Real Stability.
The American people will soon be at