The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1933-11-14

When men look to unofficial
sources for light they find little to
help them in forming clear opin-
ion of what ought actually to be
done. Thus Edward H. Collins of
the Herald Tribune, in the course
of very able discussion of the dam
gers of the present policy, concludes
by saying that whether return to
67-cent dollar is the best move
from a sound -money standpoint, or
whether a return to gold should be
at an early or a distant date-these
things, it seems to the present
writer, are secondary, so far as the
United States is concerned"
Mr.. Collins is, no doubt, right in
thinking that the gold content or
the dollar now can not be deter
mined exactly. But firm public
opinion is hardly likely to cryStalize
around the confession that the
Sound-money advocates do not know
where or when they wish to stabi-
lie the dollar.
At the other pole we have the
declaration of Senator Thomas of
Oklahoma, that there are many
reasons for believing that our price
of gold must go to double the statu-
tory flgure-that it must not stop
short of $41.34 an ounce" But what
are those many reasonS?" Senator
Thomas does not disclose them.
And so with the official policy
enshrouded in mystery, the unoffi-
cial sound-money view vague and
inconclusive, and the unofficial
hereto view dogmatic but unex-
planned, the ordinary man is likely
to say this is big operation and I
guess I still am taking chloroform.
NNE does not, however, like to
.Ogive up completely the effort to
understand. And so we turn for
light to the writings of Professors
G. F. Warren and F. A. Pearson.
They are reputed to have provided
the theoretical basis of the present
policy.
From very elaborate statistical
studies covering a long period of
time they have, as I understand it,
reached this conclusion. I quote
their own language:
For seVenty-five years before the
World war, world monetary stocks
had to increase at the same rate as
did the world physical volume of
production in order to maintain
stable commodity prices in England
If gold stocks increased more rapidly
than did other things, prices rose
if they increased less rapidly, prices
fell"
So much for England What of
the United States? Professors War
rem and Pearson find that while
in general this theory has held
for the United States, it has not
held nearly so we'll. From 1884
to 1880 wholesale prices were lower
than the gold supply would Sug-
gest"; since 1880 prices in the
United States were more cratic
than those of England, primarily
because of financial difficulties.
You look closer at the figures Sus-
tanning the basic generalization and
you discover that "the ratio of gold
to production and wholesale prices
in England" is based on "f1ve-year
moving averages" which eliminate
short time variations"
Now what is one to make of this?
Taking the theory at its own face
value, all that Professor Warren
really claims for it is that over a
long period of time, on the average.
there is a reasonably close cor
respondence between the supply of
gold and the volume of production.
He specifically disclaims an exact
correspondence for the United States
or a short term immediate cor
respondence anywhere. That being
the case there should be no illusion
even among those who adopt the
Warren theory that with it they car
Immediately raise the price level
where they wish it to be, or that
they can closely or firmly control