Evening star., 1933-11-27
REVEALS ACHESON
GOLD PLAN ATTACK
Treasury Memorandum Dis
closes Legal Opinion Which
Led to Resignation.

Dean G.. Acheson's resignation as
Undersccretary of the Treasury was
the result of his attack upon legal
opinions of the Reconstruction Finance
Corporation and the Department OF
Justice upholding the Presidents gold
buying policy.
This was revealed here yesterday in
A Treasury memorandum which m
Guided the legal opinion Of the former
official. in which he attacked every
cround cited by the r. F. c. snd the
Attorney Generals Office.
Achcson's resignation came about
without thc usual public exchange o.
correspondence. and the memorandum
brings TO light the background OF the
situation that has resulted in the
storm;cst phase to date of the Roose-
welt administration.
While it was known that Achason
q hard money man" as Acting Sec
rotary of the Treasury fought with
Budget Director Lewis w. Douglas and
others b. diSsuade the President from
adopting his Gold-buying policy, his
lcgaiStic objections to Mr.. Roosevelt
were not given out either at the
White HOUSE or the Treasury when
Acheecn's resignation and the appoint
rlent OF Henry Morgenthau, jr, were
announced.
Heard by Roosevelt.
The Treasury memorandum made
available yesterday is the official de-
partmental draft upon which Mr..
AcheSon based the opinion ha first
handed to the President in writing
and later rectated i'll the presence of
others attending a presidential con-
ference to promu.gate the gold-buying
program. The arguments are the
Cnes laid before Mr. Roosevelt
The subsequent substitution of Mr..
M9TCcnthau as Uniclsecretary and
hence as Acting Secretary. in view of
William H. Woodins indefinite leave OF
absence as Secretary of the Treasury.
has br"n justified bv &C riStration
officia's on the glourd that the Presi-
dent waS entitled to have sn official in
the post who was in sympathy with his
program. especially since it developed
upon the Acting Secretary of the Treas
ury, theoretically at least. to sit with
the President from tine to tine to fix
the price to b paid by the R. F. c. for
newly mined god
Cummings and Feed Uphold Policy.
Officials contended further that,
whether CT not Mr. Achcson had been
talking around as reported. even an
honest difference of opinion on this
vital subject made q change in the
Treasury essential to unity in the 'gh
command IN the face of reported dis
sension
In proceeding to the operation of his
plan, the President was fortified how
ever, by an opinion of Attorney General
Homer S. Cummings and by another
written for the Reconstruction Finance
Corporation by its general counsel
Stanley Reed These opinions pei
suaded Mr. Roosevelt that the Recon-
struction Finance Corporation law
could be construed to permit the sale"
of R. F. c. Obligations for the newly
mined gold which the administration
proceeded to buy at prices above the
world market.
The Points at Issue.
The Treasury had contended, its
memorandum shows. that there was no
justification in the law for such sales"
except under construction which
would open wide the door for any and
every kind Of manipulation fer ulterior
purposes where statute provides rev.
enue-obtaining machinery en- a dis
count basis"
In line with the Presidents plan to
depreciate the dollar through increasing
the price OF gold, it was necessary to
find a way BY which the Government
could pay for newly mined gold more
than the statutory mint price of s20,67
a fine ounce. The problem was solved
by a device of exchanging R. F. c.
debentures for the god, with the miners
cashirg the debentureS at Federal Re-
serve member banks.
The Treasury memorandum had OBJ
jected that such procedure would be in
violation CT either method provided for
the issue of r. F. G. obligataions 1t
pointed out that such Obligations might
be issued in payment Of loans author
izcd by the R. F. c. act or that they
guised from "sold'O at such price or
prices as the corporation might deter
mine from time TO time with the ap.
prevail CT the Secretary of the Treasury.
r. F. c. Counsers Contentious.
Where the general counsel of the
r. +. G. cited various precedents to
support his contention that the law
could be construed as permitting rules
as contemplated, the Treasury con-
tended that it seems difficult under
any stretch of the imagination to see
how one could possibly construe the
present exchange of r. F. c. obligations
for gold" as within the purview of the
revenue raising powers Of the R. F. c..
unless the gold was to be acquired for
less than the world market price and
held for a profit The object of such
an operation would be to make profit
for the Government. The Presidents
object was TO force up the price of gold
and with it the commodity price level.
The only basis on which R. F. C.
obligations might be exchanged for
gold in the Treasury view presented,
was on condition that the gold be con-
sidered money and not a commodity,
since gold as money, had the definite
statutory value of S20.67 an ounce.
OfhciflS pointed out that the admins
tration, on the basis of its bid price in
the last five days, was paying sl309 in
excess of the statutory price.
Mr.. Reed. the general counsel of the
r. F. c.. took the position in his memo
randum that the word sale" did not
import an exchange for
only but had a variety of defini-
tions established in law. He contended
that the R. F. c. act merely provided
that price or prices must be deter
mined, but that it did not provide that
the exchange of the r. F. c. obligations
must be for money at that price He
also went into the congressional de-
bate over the act for quotations to show
that tactily this was the legislative
intent.