Evening star., 1933-10-18
Not Very E-.lightening.

1t 5 possible to accept the Treasury!
refunding operations, in connection
with the Fourth Liberty loan bonds, a!
the best answer to inf1ationist propa.
ganda and as partial assurance. at least
that the Government still relies or
sound-money methods in meeting it.
debt obligations and in raising new cash
But that it is not the complete an
swer finds illustration in an important
copyrighted article carried by the re.
liable Associated Press and appearing
in The Star and other newspapers last
Sunday This article presented the
views of some high authority" in the
administration, otherwise unnamed. re.
lating to the money question. The ar
ticle was presumably accurate and cor
rectly reflected the high authority's'
philosophy. But if the views expressed
were those Of all high authorities ir
the administration, they are not very
assuring, nor very helpful in throwing
light on somewhat hazy state OF af-
fairs.
1t is said, for instance, that 'it is
still the purpose (of the administra-
tion) to redeem Government securities
in dollars of the same value as those
borrowed" but that lit would be ab-
surd to attempt in present circum-
stances to stabilize the dollar against
foreign exchange" and that "the Amer
lean Government does not yet
consider prices high enough to warrant
stabilization of the dollar"
Taken together. those statements rep
resent something of a poser. The
American Government in 1918 borrowed
some s6,268,O $50, through the fourth
Liberty loan, to meet war expenses.
On each of these bonds 1t promised
redemption in United States gold coin
of the present standard Of value" that
standard of value being gold at the
fixed price of $20.67 an ounce. Now
the same Government is offering to
swap these bonds for others which do
not carry the gold clause" and, in
addition, has given notice of redeeming
some of the Liberty bonds next April
In dollars. But if they were redeemed
in dollars today, the paper dollars paid
In redemption-tor they are not now
redeemable, as promised. in gold coin
would be worth only sixty-nine or
,fy fe i,,cf of %Ia
cents gold they we're worth when
borrowed If the Government still has
"the purpose to redeem its securities
in dollars of the same value as those
borrowed" the implied meaning might
be that by April IS next it will be pos
sible to redeem the fourth Liberty
loan bonds in 10o-cent gold dollars
the same sort of dollars that were bor-
rowed. But here the high authority
injects the confusing element of prices
''The American Government does not
yet consider prices high enough to war
rant stabilization of the dollar"
Does this mean, then, that before
the dollar is stabilized" in foreign ex-
change by announcing its redemption
value in terms of gold, prices must
rise still higher in terms OF the paper
dollars which measure them now, or,
vice versa, that paper dollars must de-
preciate still more in terms of COM
modify prices? And, if that is so, how
can the Government, at the same time,
hold to "the purpose to redeem its Sc
curities In dollars of the same value
as those borreSed?"
There is more than one high au-
thority' in the administration. But
until the highest authority" the
President, indicates a contrary policy.
Americans will incline to the hope and
belief that sound money" doctrines
will prevail, even though they run
counter to the sometimes abstruse the
cries of other authorities.