The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1933-10-24


and are wide differences of opinion
But even here there has been more
agreement than would have ap'
peared from the ardent statements
of fnflationists" and anti-infla-
tionists." For it has been clear
that a sudden return to the fixed
gold standard and to a fixed rate
of exchange was impractlcable.
AYOBODY knows enough or coulc
~ know enough to name the new
gold content or the new parity. They
have to be discovered by trial anc
error, or, if you like, by adjustment
and experience. 1t followed that the
next necessary step was to set ur
machinery, similar to the British
equalization fund, by which the golc
and the exchange value OF the dol
lar could be manipulated and dl'
rected with a view of finding the
most satisfactory point. On thl:
there have been no serious Differ
ences of opinion.
Now the device which the Presi-
dent has adopted is, if I understand
it. essentially an equalization fund
The government, through the Re-
construction Finance Corporation, is
to buy and sell gold in the worlc
market, as in substance the British
have been doing, as the French die
under Poincare when they were
working their way toward the sta
bilization of the franc.
Where the Presidents plan ap-
pears to differ most from the pro-
cedure of Britain and France is in
its bold disclosure of the purpose
he has in view. The British ano
the French also had purposes; they
did not announce them from the
housetops. But M. Poincare delib-
erately chose a level Tor the franc
which drastically relieved the bur-
den of the French internal debt
he could, had he chosen, have val
ued the franc higher than he did
He did not choose to do so.
The British, too, have had a pur-
pose. They have aimed to reduce
the external value of sterling anc
then to steady it. Being industrial
exporters they have not wanted tt
raise their internal prices, but tt
reduce the cost of their exports II
foreign markets. So we need no
assume too excitedly that the
United States is embarked on
policy the like of which was never
known on land or sea.
NEVERTHELESS, it must be adj
~ mitted that, though the device
and the purposes are not nearly sc
strange as they look, the manner Of
the President in adopting them anc
announcing them may have impor-
Jant consequences. The British anc
the French did what they did, quiet
~, step by step, and in constant con-
sultation with the financial markets
Mr.. Roosevelt has acted abruptly
and, it would seem, without taking
| the trouble to educate the markets
so that they may know how to CO.
operate with him. This may have
the political virtue of demonstrating
his dissertation from Wall street.
1t has the practical disadvantage
that it will make the necessary sup
port Of Wall street more difficult tt
obtain, and Furthermore that it may
produce speculative movements
based on ignorance, fear or hysteria
which only would confuse the work
ing out of the policy.
Nevertheless the most importan
thing to fix in mind immediatel!
is that, whatever may be our theo
retical opinions about money, somt
such system for controlling the dol
lar is, judging by foreign expert
ence, a necessary step. But of course
there is more to the Presidents plar
than that. He has committed him
self to the theory that he can man
age the dollar to bring about thu
price level he desires. AS to that
We shall see what we shall see.
1t can be said, too, I think, tina
for our particular malady, which i
the disparity of the prices of raw
materials, compared with finished
goods, manipulation of the price 0
gold may be quite effective.
There is no good reason for let
ting fear distort a sober effort t.
make the experiment successful. Blu
it must be obvious that the Who'll
fate of the experiment depend
upon the wisdom of those who ad
minister it.
Copyright 1881
| nj Cali INC NECCEI