The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1933-12-13

They found that the d1tncultleS OF
the export trades and of trades
which had to compete with foreign
imports were largely due" to the
fact that sterling costs did not
prove adjustable" What did they
mean by sterling costs? Chiefly
two things, wages and taxes.
If Britain was to compete in the
outer world, one of three things had
to happen. Either world gold prices
had to rise substantially, or the
pound sterling had to be debased in
relation to gold currencieS, or wages
and taxes had to be adjusted" that
is to say, reduced. In the next
three months world gold prices did
not rise.
Therefore Britain had to choose
between deflation of wages and
taxes on the one hand and cur
rency depreciation on the other.
The British decided first to try
defation. They began with the
budget and made what Professor
Sprague properly describes as great
efforts" They reduced the dole,
government wages and salaries to
the social services.
To debate that much Mr. Nc
Donald's labor government had to
be wrecked, and the bulk of the
labor party went into opposition.
But when great effort had been
made, it was still obviously not
enough. Every one knew, labor as
we'll as employers, that the next step
had to be a reduction of wages in
industry.
To that step labor, which is very
well organized in Britain, interposed
a veto. The temper of the working
classes was revealed on Sept. IS
when there was a mutiny in the
fleet over the proposed cuts in pay.
That ended all hope of restoring
equilibrium by defation. Six days
later Britain went off the gold
standard and the pound sterling de-
preciated.
Now, it is perfectly true that
Britain was forced off the gold
standard. But what forced her off?
1t was not, as as usually said, her
foreign creditors. 1t was the Brit
ish working class, which would not
submit to reduction in wages.
When Britain'S creditors and when
the exchange spectators we're con-
WINGED that Britain could not de-
fate any further, they knew the
pound must eventually fall. So they
fled from the pound and made it
fall.
NTOW what happened to us? We
~ stayed on the gold standard
and we Debated. While British
wages in terms of sterling remained
steady, we reduced factory pay rolls,
through wage cuts and short time,
by nearly 40 per cent. We cut farm
prices by nearly the same amount.
We Debated and Debated and de-
.fated till at the end our banking
system collapsed.
Those we're great efforts" to stay
on the gold standard, and no one, I
believe, has the right to say that
the American people did not pay
terrible price before they gave up
the struggle. They fought eighteen
months longer than the British, and
they endured inordinate suffering
and took great risks. Does any one
doubt that if the British had been
able and willing to cut their wages
as ours we're cut, and to subject
masses of their people to the pro-
cesses Of bankruptcy and liquidation
that our farmers and small business
men had to undergo, they, too, could
have stayed on the gold standard
another year or so? Be that as it
may, they did not debate as we
debated, and the event showed that
they we're wise.
With the record what 1t is, I, for
one, do not think that any Amer
lean need make any apologies or
acknowledge for a moment that our
moral position is in any way inferior
to that of the British.
What misleads many commenta-
tors, including, I think, Professor
Sprague, is that the British gold
stock was exhausted in September,
1881, whereas ours was very large
in April, 1888. The inference is that
if you have a lot of gold you ought
to be able to stay on the gold stand
ard.
That is wholly misleading. Great
Britain has ten times as much gold
as Germany, but Great Britain is
off the standard, and Germany is
nominally on it. Great Britain has
fifty times as much gold as Hun
gary, but the pengo is still at gold
parity. Argentina has five times as
much gold as Poland, but Argen-
tina has a deprecated currency and
Poland has not.
T EFT us not be dazled by the gilt
IL ter of gold. The problem Of
adhering to the gold standard is
wholly different problem; it is
whether internal costs are suff-
GENTLY in adjustment with the gold
price levels so that business can
yield a profit.
That this is the essential prob
lem is shown by what is happening
in Italy and France. Both countries
are on the gold standard and would
like to stay there. To do so they
must debate. Signor MusSolini has