Evening star., 1933-05-27
Member Of the Associated Press.
Rerudiation-Temporary or Per-
rnanent.

Repudiation-Temporary or Per-
manent.
Inasmuch as such an authority as
Senator Carter Glass Of Virginia re-
yards the administration resolution Tor
abandonment OF the gold standard as
an unconstitutional reputation OF obh-
cations. while such an authority as
representative Stessall Of Alabama
looks on it as a sort of boon that will
bring a revival Of prosperity and happi-
ness to the American people" there is
q naive species of optimism in the ex-
planatory statement from the Secretary
of the Treasury, who says that the
resolution Is designed to clarity" the
result Of recent legislation on the status
of the gold clause in public and private
obligations.
If the purpose of the resolution was
clarificaticn of condition which
properly can be regarded, and will so
be regarded by millions here and
abroad, as an act of repudiating a SOL
enn premise to do a certain thing
entered into by the United States Gov
ernment and accepted in good faith by
its cwn and other citizens CT the world
then the resolution will fail OF that
purpose.
The resolution is backed by the ad-
nainistration and will probably pass
But. far from clarifying anything, it
will precipitate an issue between re-
pudiation and non-repudiation that
will live and wax strong for many
years to come.
There are some who have regarded
the temporary abandonment OF the gold
standard, through embargoes on ship
ments Of gold abroad and redemption
in gold of domestic currency or bonds,
Is an emergency action dictated by a
series of circumstances, and as such
unavoidable. The hope OF sound
money men has been that as soon as
the emergency was passed these en-
bargoes would be lifted, possibly in
union with restoration throughout the
world Of the gold standard at new
ratio between gold and the currency
which 1t supports.
During the course OF this emergency
Il became obvious that the United
states Government would not redeem
the pledge which 1t wrote into its obli-
gations-amounting now to some $22,-
ooo, ,ooo, ,ooo-agreeing that principal and
interest will be payable in United
States gold coin of the present standard
Of value" And If the United
States Government refused during the
emergency to redeem its own pledge,
1t was obvious that all debtors who
had borrowed money-including the
debtor nations abroad-and had en-
tered into contracts containing a SIM
liar gold clause, would follow suit.
The real purpose of the resolution in
troduced yesterday by Mr.. Steagall and
Senator Fletcher is clarifying only in
respect to the fact that it seeks to
legalize, and adds discomforting de-
gree of statutory permanence to, this
reputation of the gold clause agree
ment 1t deprives the President of his
present power to view the suspension
of specie payments as merely tenn
porary expedient compelled by imme-
Aate necessity, and to resume specie
payments in his discretion. 1t converts
q supposed postponement of specie pay
ments into permanent reputation. 1t
tnvalidates contracts specifying payment
in gold coin by saying that debts can
be paid in any other sort of currency.
It makes all currency legal tender for
the payment of debts contracted on the
gold standard, or in terms of the gold
dollar which was defined by the gold
standard act of 1900 as consisting of
as $40 grains of nine-tenths fine" and
which said that this dollar shall be
the standard unit of value"
The resolution uses the words that the
existing emergency has disclosed that
provisions of obligations which pur-
port to give the obligee right to re-
quire repayment in gold or a particular
kind of coin obstruct the power
of the Congress to regulate the value OF
the money" But the value OF our
money is established in gold. This res
olution does not repeal the gold stand
ard act, which defines the value of the
dollar, nor does it change the value OF
that dollar as defined. 1t merely says, in
effect, that debts can be paid in any
kind of money And there is evasion
In the use of the word 'purport." The
gold clause was written into Govern
ment obligations because it strength
ened the demand for those obligations
secured them in the name of the United
States Government, gave the purchase!
the definite guarantee that, If he bougl,'
them and paid for them in gold. tn:
United States Government would re-
deem them in gold. There was moth
ing accidental about the inclusion O
the gold clause. The borrower bene'
fited by it. The borrowers credit wa
strengthened by it. And the fear o
many now is that the borrowers credi
will pe weakened at home and through
out the world. Just as it WAS strength
sned throughout the world by inclusion
Of the gold clause.
In the end, the righteousness as vel
as the legality of this act may come u
depend upon a showing of whether /
was necessary. in the light of tn
emergency There is more gold in tn
possession of this country today thai
ct any time in its history. Forty pc
cent Of the worlds supply of gold
In the United States.