Evening star., 1933-02-14

the United States has held stanchly
to the gold standard. In the presen
setting Of deprecated currencies ane
in the light Of differences In costs o.
production our tariffs are below thoss
Of most countries: we have he'd fret
from quotas. preferences, discrimina'
tions among nations We have thereby
maintained one Gibraltar of stability
In the world and contributed to checl
the movement to chaos.
We are ourselves now confronted
with an unnatural movement of good,
from the lowered costs and standards
of countries of deprecated currencies
which daily increase our unemployment
and our difficulties. We are confronted
with discriminatory actions and barrier,
sitting our agricultural and other mar
kets. We will be ourselves forced to
defensive action to protect ourselves
unless this mad race Is stopped. We
must not be the major victim of It all
In all this competition Of degenera-
ton, these beginnings Of economic wal
between scores OF nations, we see q
gradual shrinkage In demand fer in
ternational commodities throughout the
world, and continuing fall Of prices In
terms Of gold. From falling prices and
unemployment we have at once the
inability CT debtors to meet obligations
to their creditors, the. dispossession OF
people from their farms and homes and
businesses.
Stable Currency Stressed.
If the world is to secure economic
peace II 1t Is to turn In the tide of
degeneration, II 1t is to restore the func-
tioning Of the production and distribu-
ton systems of the world, it must
Start somewhere to break these vicious
fiscal and financial circles. I am con-
vinced that the first point Of attack is
to secure assured greater stability IN
the currencies OF the important COM
mercial nations without such stabil-
ity the continued results of uncertainty,
rency fluctuations, exchange controls,
and artificial import restrictions can
not be overcome but will continue to
increase. With effective stability Of
currencies these dangers can be at once
relaxed. I am not unaware that cur
rency instability Is beth cause and an
effect in the vicious cycle-but we must
start somewhere.
This brings me to q phase which has
gradually developed during the past
months, and that Is the reactions and
relation Of gold itself upon this situa-
ton. For, independent Of ether causes
Of degeneration, am convinced that
the circumstances which surround this
commodity are contributing to drive
nations to these interferences with free
commerce and to other destructive ar
tificialities.
Outside minor use in the arts there
are two dominant uses Of gold. First,
the important commercial nations have
builded their domestic currency and
credit systems upon foundation Of
convertibility into gold. Second, gold
Is the most acceptable Of all commodi-
ties IN international payments. Even
gold standard must still depend upon
gold for this purpose. 1t is true that
nations must In the long run balance
their international trade by goods, serv-
ices, or investments, but in the inter-
mediate ebb and flow balances must
still be settled by the use Of gold.
In all the welter Of discussion over
these problems we find some who are
maintaining that the world has out
grown the use Of gold as basis Of
currency and exchange. We can all
agree that gold as commodity Of
universal exchange has not worked per-
fectly In the face of this great economic
eruption. But we have to remember
that it Is a commodity, the value Of
which Is enshrined in human instincts
for over 10000 years. The time may
come when the world can safely
abandon its use altogether for these
purposes but it has not yet reached
that point. 1t may be that by
theoretically managed currencies some
form Of stability may be found score
or two years hence, but we have no
time to wait. They are subject to great
human infallibilities. Sooner or later
political pressure of special groups and
interests viii direct their use. But in
any event 1t would take many years
demonstration to convince men that
a nongold currency would certainly q
year hence be worth what he paid for
it today.
Not Dealing With Shortage.
It is noticeable that most the nations
of the gold standard are even today
seeking to increase their gold reserves
In the view Of many economists these
measures and the restrictions which
have been placed on the movement of
Soio oT cACidlsc ny Two score OF
nations have created the same practi-
cal effect as II there were a scarcity
Of gold In the world. That while there
has, in the last few years, been a very
large increase in the quantity of visible
gold in the possession of institutions
and governments, the effect Of all these
regulatory actions by governments at
tempting to protect their gold reserves
from runs and flights of capital and
their attempts to increase their supply
has been to divide the gold of the
world into two score Of pockets and in
many of them to freeze it from full
freedom Of action. In other words, this
view holds that we are today not deal
ing with shortage Of the commodity,
we are dealing with its being partly
immobilized in its functioning.
To add to the confusion, another