Evening star., 1933-05-07
BY HARTLEY WITHERS.

D1 nAhILEx WlVhkhS,
Former Editor London Economist. Former
Financial Editor London Times.
ONDON-To us in the Old World
only one explanation seems pos
sible for the action of the Amer
~ ican authorities in refusing to
pay British holders of American
securities In gold when this form Of pay
ment is stipulated by the debt contract
This explanation is that President
Roosevelt and his advisers are deter
mined to produce such a state of eco
nomic chaos that the forthcoming world
conference in London will be obliged in
sheer desperation to do something forci-
bly, and quickly to obtain more improve
ment
1t was pretty severe shock to all
friends Of the United States on this
side Of the Atlantic when that country,
holding more than $4,000, ,0O0, 900 in
gold, went of the gold standard and
put an embargo on export gold.
Many Of US, however, believed that
this would make no difference in the
fulhllment Of debt contracts in SO far
as they provided for the payment of
interest on them in gold coin of the
United States or some equivalent.
Didn't Expect to Suffer.
1t was not, Of course. that We ex-
pected or wanted to receive payment
actually In gold. but it was expected
that In these ca1eS interest payments
would be offered in paper dollars to
an amount which would be equivalent
to gold coin.
In other words. the depreciation in
hnr f1l1
abandonment of the gold standard was
not assumed to imply that the holders
OF securities protected by gold clause
against this very depreciation would
nevertheless have to suffer.
Among the many expressions of sur
prise and indignation heard in London
since Americas determination to ignore
the gold clause in debt contracts has
been made known the most effective
have been those quoted from American
sources.
Lately there have come to London
large numbers of copies Of a statement
made before the Finance Committee of
the United States Senate by Winthrop
w. Aldrich, head of the Chase National
Bank. New York. This statement dis
cussed causes of the depression ard
possible remedies, and has been gen.
orally recognized in Europe as one of
the most acute and most lucid examina-
tions of the worlds distress and possible
ways out.
Bound by Every Promise.
In the statement Mr.. Aldrich said a
good deal about the possible conse-
quences should the American Govern
ment deliberately debase the dollar by
reducing its gold content He said:
The shock to confidence at home and
abroad OF deliberate breach Of faith
by the United States Government with
respect to the gold standard would be
something We could not get over in
years. Our Government has given its
solemn promise on every Liberty bond
to pay in gold. The same promise is
printed virtually on all our privately
issued bonds, State and municipal
bonds, and a multitude of mortgages.
We are bound by every promise"
for embarrassed countries like England
in going of the gold standard when
they could not help it. But no excuse
could be made for America if she did
1t deliberately.
Perhaps an Englishman may be al
lowed to remind American readers that
before England went of gold she had
borrowed 130 000, 900 pounds abroad to
try to save herself from this humilia-
ton: also, that her action was forced
upon her not by internal financial diff
culties, but by the demands Of her for
eign creditors; further, and as was
stated by Charles Rist. French econ
OuiSt, the pound sterling fell like a