Evening star., 1933-08-03
DOLLAR INITIATION
IS NOT SEEN NOW
May Result, However, After
Recovery Act Is Fully
Under Way. -
BY MARK SULLIVAN.

BY MARK SULLIVAN.
Rumor this week about the admins
tration's intention as to the currency
says there will be no imitation and no
devaluation Of the dollar. Deduction
from the rumor stops, In many cases,
at this point. 1t is important. however,
to take into account the concluding
clause of the story, which says, in effect,
until after the industrial recovery act
Is fully under way"
Thus stated there Is some foundation
for the notion. The administration,
nevertheless, is careful about committing
itself. Inquiry by reporters in official
| statement that the rumor is a hot
weather story" that there has been no
change Of policy.
Facts in Middle Ground
As often, the facts beneath the rllmor
lie in the middle ground The inference
| made by some that there will never
be actual imitation and that the stand
ard dollar will at some future time
again contain the same 1922 grains OF
gold Is much too extreme. The in
ference the dollar will some time be
stabilized at something like 16 grains
of gold is safer.
The administration has never stated
in so many words that the gold content
of the dollar will be changed. Presi-
dent Roosevelt's public announcements
in this field have been in terms OF the
dollars purchasing value" This is
not identical with gold content.
What the administration wants. the
intention that has been repeatedly and
publicly proclaimed. is in effect that
the dollar shall have a purchasing
value approximately equal to that OF
about 1926 This is the same as saying
that prices of goods on the average
shall rise to about the level Of 1926.
Mr.. Roosevelt has not himself publicly
mentioned the 1925 level, but others
of the administration have The 1926
level is much above the present.
While attainment Of roughly the
1926 level is the main economic OBJ
jective of the administrator, the in
tention is not to reach that level at
once Indeed, there was alarm some
three weeks ago when prices seemed
rising too rapidly. What Is desired for
the present is that prices should re-
main about where they are, until after
the industrial recovery act is thoroughly
under way The central objective of
the industrial recovery act has to do
Will wages dIo Io1 Will PiiIco VI
goods.
The program is that through higher
wages and through greater employ
ment, large quantities of money, ''pur-
chasing power" shall be put in the
pockets of labor. This purchasing
power, the anticipation is. will imme-
diately go into the retail shops and
buy goods. This buying. so the ex-
pectation goes, will cause prices of
goods to rise. 1t is at that point, some
months from now, that the hope Is to
reach the 1926 level of prices. When
reached. the purpose is to stabilize
prices there
1t is just possible that the desired
1926 level might come about without
action on the gold content of the dol
lar and without imitation of currency.
If, through the industrial recovery act
and through all the Governments con-
crols of production of crops and other
commodities, prices Of goods should
reach and keep the 1925 level. that
would be full attainment of the admin
iStration's purpose. With the piirchas-
ing power of the dollar the same as in
1926, there would be no necessity for
changing the gold content of the dollar
nor for direct imitation of the currency.
Several "Ifs" Seen.
In all this are several ifs" The
fixed fact is that prices of goods must
sometime reach the 1926 level. If they
reach it through natural forces, every
body will be content. But that level
must sometime be reached The ad-
mlnistration has in effect announced it.
The inf1ationistS in Congress demand
1t. If that level should fail to arrive
by natural forces, and if the President
should then seem reluctant to use the
powers OF imitation Congress has con-
ferred on him, Congress would probably
decree mandatory imitation
In that set of conditions, with prices
remaining materially below the 1926
level, caucus of Mr. Roosevelts party
would indorse mandatory imitation.
Quite certainly, majority of Congress
would vote it. Whether two-thirds of
Congress would vote it over a Presi-
dental veto is less certain. It is hardly
conceivable that. given the failure OF
prices to rise to the 1926 level, the
President would so resist initiation as
to precipitate a veto situation.
Understanding of this whole complex
situation may be helped by visualizing
the President as, so to speak. in a per-
fectly legitimate sense, sitting on
broad safety valve. At one time as one
condition tends to erupt, he must throw
his weight on that point. From occa-
sion to occasion he must shift his
weight. Just now, the attempt is to
keep prices of goods down and let wages
go up.