Evening star., 1933-10-03

An Increasing number OF people
in the United States are apprehen-
stue OF currency imitation and tear-
Jul OF its results
Eight distinguished men, repre-
senting both major political parties,
haze approved and sponsored a series
OF articles presenting their pie,Upoint
ON the money problems OF the day
as their contribution to,Ddrd promot-
ing a clear understanding OF the
monetary system in the present con-
trODerSy.
The series 1Diu appear in this news-
paper in IS consecutive daily chap
ters. The ninth is presented todau.
Copyright. 1888. by North American News
paper Alliance. Incl
Article No. 9.
CONTROLLED IMITATION"
In the article Immediately preceding
We examined the arguments that in
fiation, by depreciating the dollar
abroad, would help American foreign
trade, and the argument that a return
to the 1926 price level was necessary to
tighten the debt burden. Today we
come to the third major argument Of
the inflationistS, that imitation is neces-
sary Ito reverse the spiral of def1a-
tion."
At one end of that line of inf1ation-
lists, as we have pointed out, is that
large but vocal group which puts its
faith in salvation by means of more
money; at the other end stands q
smaller group which understands that
We already have enough money, but
which believes the monetary system
needs hypodermic if it is to be re-
wiz
intelllgents1a of the imitation school.
Their philosophy may be summed up
thus:
Prices have always stabilized them
selves ultimately. but this has been be-
cause of some unexpected outside in
tervention. Thus the 1914 depression
was ended by a war boom, and the 1921
depression was terminated by the de-
velopment of the automobile industry
Otherwise there IS no telling where de-
1ation on these occasions would have
been arrested.
Depression Feeds on Self.
"Depressions feed upon themselves,
once started, and the continuity of the
downward spiral must be broken by
arbitrary interference. The one GER
tain way is to create distrust in the
flee from money into goods, and will
thereby start prices rising. When the
movement has gained headway. the
currency can once more be stabilized
and the momentum will carry prices
and business along of themselves
This is the theory underlying the
gold embargo Of April 10 and the
Thomas imitation bill introduced in
Congress the following day. BY an
embargo on gold the administration
served notice that its currency was no
longer redeemable in gold
The Thomas bill bestowed upon the
President power % to reduce the gold
content of the dollar by as much as so
per cent; CD to compel the Federal
Reserve to embark on an open market
program Of unprecedented magnitude;
80 to issue $4,000, 100000 in green
backs" (irredeemable notes., and 60 to
establish the country on a gold-silver
basis, instead of a gold basis.
Though the President has invoked
none of these powers to date, the mere
threat that he might do so, coupled
with the gold embargo and his an
nounced determination to raise COM
modify prices at all hazards, has al
ready impaired confidence in the dollar.
The currency since the gold embargo
has fallen to discount of as much as
81 per cent in terms of gold and cur
rencies on the gold standard
Misunderstanding Evident.
The theory of managed money" ad-
vocates that deflation, left to the
tender mercies of anti-inflationists,
would carry prices to zero, is a COM