The midland journal. (Rising Sun, Md.) 1885-1947, 1933-05-05
by William Bruckart


constitute the thing of fixed units of
value. Consequently, when Mr.. Roose-
velt's action caused an increase in
commodity prices, this group argued
the dollar was and had been too
''dear" and ought to be made cheaper.
Similarly, they asserted there had been
a shortage of currency throughout the
depression and that there could never
be sufficient currency If the gold basis
were continued. This was SO, they
claimed, because there was not enough
gold in the world to permit retention
Of gold backing for each dollar Of
currency.
The strength of those favoring a
greater amount Of currency was in
creasing numerically
Free Coinage through the last
of SiIUer several years Con-
sequently, there
were more of them in congress. This
is attested by vote which the senate
took on an amendment to permit free
and unlimited coinage of silver. The
amendment was defeated, it is true,
but the vote showed 33 senators in ia
vor of 1t compared with AZ nays. That
is the largest vote polled on the ques-
ton in more than 80 years.
In the meantime. the President was
getting ready for conferences with
the heads of eleven foreign govern
ments on economic and financial ques-
lions. Most of those nations were
using exactly the same basis Of cur
rency as ours became after support
for the dollar was withdrawn. He en-
tered those conferences then on even
terms, insofar as currency was con-
cerned.
But the departure from the gold
standard caused need for new legis-
lation. Hence, the President analysed
what was needed and asked congress
to give him the authority to employ
whatever was needed. He appeased the
demands of the inflationists by telling
them to put into the legislation au-
thority for him to use any or all Of
their several schemes in his discretion.
There is nothing mandatory about
them. He can use the powers or not
as he chooses, or as the pressure Of
public opinion makes given course
of action seem advisable.
Under the terms of the legislation,
negotiations are permitted between
the Treasury and the Federal Reserve
board and the Federal Reserve banks
4 whereby the Reserve banks would buy
$3,000,000000 worth Of government
bonds from private owners The holders
would be given cash by the reserve
institutions in place of their securi-
ties. Thus, banks holding government
bonds would be given cash instead Of
interest-bearing bonds, and the theory
is that since the cash would not bring
them return, they would seek to
make loans that would provide inter-
est. If it works that way, 1t means
that the banks would seek to encour-
age use of money in business enter
prises. A condition known as an "easy
money market would obtain.
1t is to be remembered, however,
that the Federal Reserve Banks are
quasi-priyat
As Greenbdcks banks. It is posi-
Were Issued BILE for them to re-
fuse to buy the
government bonds in the manner sug-
gested, so the law provides that the
Treasury may buy $3.O0O,OO0O00 in
government bonds and pay for them
in "United States notes" just as were
issued in the days of the greenbacks
after the Civil war. This would pour
just $3,000,000.000 of new money into
circulation. 1t will have either gold or
silver back of it, but it remains to be
determined which and in what amount.
so It is an inflationary provision.
In the case of purchase by the Fed
eral Reserve banks of the bonds in
question, the law provides that the
Federal Reserve banks will hold them
for a stated period, but If the new
money was issued by the Treasury to
pay the bonds, a sinking fund Is set
up to retire the notes. 1t is provided
that at least per cent Of the out
standing United States notes would he
retired each year through an appro-
priation of funds by congress for that
purpose.
Another provision of the law allows
the President to change the value of
the gold dollar. Under the previous
law, it was required that gold dollar
should contain 25.8 grains of fine gold,
or pure gold as we know it. The new
law. however gives the President pow
err to reduce Tat gold content by as
much MS so per cent.
The third major section of the law
allows the President to accept silver
from foreign governments in payment
of their war debts to the United
States. lie is limited in this respect.
however, and may not accept more
than $1O0.O00000 in any one year, or
about one-thlrd of the annual pay
ments in interest and principal. He
cannot receive II If the price is above
20 cents an ounce. Present quotations