Evening star., 1933-06-18


This condition. duplicated as to every
occurrence in the world. makes it very
l.Ificult Tor a business mar. in one
country to carry on transactions with
a business man in another country.
During the thirty days or sixty days or
more required to complete the tranSac-
tion and receive payment. the currency
involved may go ~ or down through
a range of 20 r cent or more A
business man IN America. beginning a
transaction with business man in
Great Britain land the same is true as
to every other county, is subject to four
different sets of uncertainties about
currency. In terms of gold the dollar
and the pound may both rise, though in
different degrees; or the dollar and the
pound may both fall. though in differ
ent degrees, in terms of each other the
dollar may fall and tho pound rise, and
vice versa.
The condition makes international
trade almost impossible. And so the
London Conference is meeting for a
purpose which may be stated thus:
To take steps about conditions which
will cause those conditions to express
themselves in stable values of the dol
lar and the pound in relation to each
other. tAnd all other currencies as well.)
To take these steps or in the event of
failure of the conference to accept a
condition in which the United States
Will not attempt TO do much interna-
tional business.
The values of the dollar and the
pound in relation to each other, that
is. their values in international trade,
are. IN the absence of artificial inter-
terence, natural expression of the
currents of trade all over the world.
Before currencieS can stabilize in their
relation to each other, before there can
be 'stabilization of currencies." the
currents of trade between two countries
must arrive at their natural balance.
Either that, or the delegates and ex-
perts at the conference must be able to
estimate with fair accuracy what the
future currents will be. The American
and British experts at the conference
tnink they can make such an estimate
now, and 1t Is possible they can.
Natural Course Desirable.
/ may have overemphasized the dif-
flcultieS of the conference. 1t Is true
that currencies can only arrive at their
natural and continuing relation to each
other as an accompaniment to currents
OF trade arriving at their natural rela-
tlon. And 1t is true that currents of
trade are q pretty formidable matter
for the conference to deal with. New
ertheless, the conference can do much
toward letting those currents take their
natural way. Moreover even without
attempt at fixed relation of curren-
cies, the conference can arrange for
cooperative policies by the central
Banks OF the world. Even without doing
mucn about trade, the conference can
n H-t, ,yaIr a%
OF fluctuations would be modified.
Sterilization of currencies in inter-
national trade, specifically stabilization
OF the dollar in international trade, i'm
plies stablization of the dollar at home.
Obviously, the dollar cannot be given a
fixed value in relation to the pound SO
long as the value of the dollar within
the United States is subject to violent
f1Ictuation. Consequently, probable.
but not now generally foreseen possi-
billty, OF the London conference is that,
simultaneously with the conference, the
Roosevelt administration may carry the
collar to the level it aims at (Which Is
about the level of 1920 and may sta
bil1ze it there. Only with the dollar
reasonably stabilized at home can it be
stabilized in international trade.
Inat at a certain point (expected
be stabilized at home-that this is
part OF the program of the Roosevelt
administration is we'll understood.
The Managed Dollar"
In this connection. there Is much talk
OF managed dollar" Some think
this IS practicable. do not believe that
managed currency" can be perma-
nently stable. The managing must be
always done, in the nature of things.
oy a political agency, by whatever ad-
Democratic or Republican,
happens to be in power. I cannot con-
ceive any political agency, Democratic
or Republican, ever keeping a managed
dollar stable in value. On the eve of
each campaign there would be a de-
mand for higher prices of goods and
higher wages, or a temptation to bring
about higher prices of goods and higher
wages.
The alternative to a managed dollar
IS dollar having a fixed relation to
5old-that is, containing fixed num-
Der OF grains of gold. That is what
turn OF the dollar to the gold basis.
but with lower gold value. Certainly
hat is fair to expect. provided the Lon
ION conference deals successfully with
'tabilization of currencies.
The present gold dollar contains
3.22 grains of pure gold I say pres
mt gold dollar. Actually there is no
gold dollar at present. 1t will be bet
.er to use the phrase "old gold dollar"
The new gold dollar, if it is arrived at
md fixed this Summer or Fall. is likely
% contain less. How much less. what
number of grains the new gold dollar
would contain, is subject about which
here is fascinated guessing. At pres
mt the value of the paper dollar, ex-
pressed in relation to gold, to gold
rancs for example. is about 80 cents.
Many persons informed in this field
h1nk that this is a fair permanent
'alue for the dollar If So the new
old dollar would contain about 80 per
ent OF the old amount Eighty per
ent OF 1922 grains would be 1858
rains.
Held As Surmise.
The reader, however, is not expected
o take this as more than one sur
Mise. Such a surmise must be based
N combination of elements. and
ach of the elements is highly dis
'osed to fluctuate from day to day.
1858 grains is too high an
stimate. We know that President
has authority from Congress
o fix the weight of the gold dollar at
ny point between the present weight,
3.22 grains, and half that, or 11.6l
rains. He is not authorized to go
Glow half. We know further that this
uthority was given the President. at
is request. largely in anticipation of
ne present international conference.
We know the principal aim of the con-
arence is stabilization of currencies.
We know that stabilization of curren-
les for purposes of international trade
an only be accomplished if accom-
anied by domestic stabilization. In
MS set of conditions there is strong
eason for stabilization of the dollar
home to be attempted during the
ummer and Fall, while the conference
in session.
Conditions within the United States
ould suggest for the new dollar a
eight about go per cent of that of the
ID dollar. The objective aimed at by