Evening star., 1933-04-21
ECONOMISTS BACK
| R00SEYELT'S PLAN
Large Group Advocated Con-
NoI.of Purchasing Power
- :, Of Dollar.
~ r. Assoclsted Press.

~ ~ S.sSSv~A1sSeAt
NEW YORK, April 2l-The vigorous
program launched by President Roose
velt to control the purchasing power Of
tbs dollar strikes at the roots Of what
one prominent group of economists has
regarded as the vital weakness of the
present economic system.
These economists have long urged
control of the value of currency to
smcoths out fluctuations in the price
level Various means have been sug
gested.; Prominent in the group are
Prof. Irving Fisher OF Yale. John May
nard Keynes Of England and Prof.
Gustav Cassel Of Sweden.
Position Of Opponents.
Opponents of the plan say human in
genuity is inadequate to the gigantic
task Of managing q currency. and that
no better system has been devised than
the international gold standard. They
attribute the breakdown of the inter
national gold standard to the abnor-
Mally huge. shifting of funds resulting
from the World War. together with the
tnnumerable restrictions upon the move
ment of goods.
Several schemes Of controlled cur
fency envisage a flexible gold content
per unit of currency, permitting in
creases to check advances in prices,
and decreases to stop declines. but Oppo-
nents of such plans assert that success
ful operation would be thWarted by seri-
ous complications,
The administrations plan, as under
stood by Wall street economists, con-
templates control of the dollar through
the Federal Reserve System during the
suspension Of the gold standard. Under
the Thomas amendment to the farm
bill, the administration would be au-
thorized to expand credit to the extent
Government bonds, or through expan-
sion of currency by like amount,
Modified Plan Likely.
But It Is understood that O general
teturn to the gold standard. perhaps
modfhsd to overcome possible short
comings, will be proposed in the dis
cussi6ns between President Roosevelt.
Prime Minister Macdonald and former
Premier Herriot, and perhaps perfected
at the World Economic Conference.
International bankers incline to the
belief that it would be difficult for
France to continue for any length of
time as the sole major power on the
COLA standard.
The controlled currency school. OF
economists generally describes the cur
rent economic dilemma as monetary
and credit crisis, rather than result
chiefly of overproduction, undercon-
sumption. excessive speculation, or any
of the other explanations.
FQuctuating price levels, they main
baip, have reached such proportions as
TO jeopardize the economic fabric,
since large part Of the payments re-
main fixed Debts and taxes, which
were not regarded as burdensome in
1898 or 1929, they estimate, now threat
en-, on the basis Of reduced price levels,
10 take over half the national income.
DR.. Warren M. Persons, consulting
economist to q number Of large corpo-
rations in q brief prepared at the re-
quest of the Senate Finance Commit
tee. states: 10
"In setting up the legal rules for
economics activities we have carefully
safeguarded individual freedom, private
property, contract, corporations and
Corporate securities, Ia order to secure
efficient production and distribution by
Yewarding individual efficiency. After
having carefully done this, we have in
stituted q money, credit and debt sys-
TEN which has substituted fortuitous
gains and losses for reward for eficient
production.
Cites Illustration
LET us take . simple illustration.
Two brothers, one 60 years old, one
90 years old, owned in 1929 adjoining
farms in Iowa Of 800 acres each. The
first, being ready to retire, sold his
farm to his brother, took a mortgage
on the entire 900 acres at SO per
cent Of the total, value, and retired,
holding the mortgage. In 1888 the
younger brother finds that his equity
Is zero and the Older brother owns
both farms
"It was through no foresight Of
either brother that the first became
the creditor and the second debtor; the
first brother now owns both farms be-
cause he happened to cease producing
and retired the second brother now
has lost all because he continued in the
production Of goods. The collapse in
thu price level since 1929 has changed
the business contract made by the
two brothers into a gambling contract"
It is not the quest for profits which
has brought about the economic collapse
cataclysm, he says, but rather the
profit motive operating in a defective
monetary and credit system"