The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1933-06-30

OF the silver coun-
tries, is tremen-
dous. -
This competi- ,.
ton not only is Aippiiaiin
strangling their trade, but the ex-
ample of relief through rising prices
in America and elsewhere is produc-
ing enormous impulses among their
people to hope and to fear that they,
too, will have an initiation.
The repercussions from Holland
and Switzerland are felt in Bel
gium, in Germany, in Italy, and,
finally, in France.
= =
TN these countries, whatever may
l. be the rational view of none
tary imitation, there are great
masses of people who have devel-
oped an entirely understandable
phobia against another depreciation
of their currencies.
Yet their currencies are threat
ened, in some measure by the pres
sure of external forces, in even
greater measure by the phobia
among the people. Their experience
some years ago was so terrible that
there is latent panic at the pos
sibility Of their being forced off the
gold standard again.
Hence the insistent demand from
the gold countries with France the
leader, for assurances, for declara-
tons, for measures to stop the de-
probation of the dollar.
Hence their opposition to almost
any proposal which seeks to raise
world prices by means which are
not compatible with the most per-
feet and the most soothing ortho-
doxy Of the gold standard.
The phobia Of imitation among
the continental peoples, the latent
panic expressing itself in boarding
and in flight, the political and So
cial necessity of defending the gold
standard. These are the considera-
tons which compel the French and
their financial allies not only to OPP
pose projects which aim to raise
world prices, but to demand agree
ments which their people will in
terpret as opposing any inflationary
tendency.
TN this conflict most of the coun-
l. tries which produce raw materials
and most of the countries outside
OF Europe which have large inter
nal or external debts are aligned
against the defenders of the gold
standard. The British position is
somewhere in the middle, because
Britain itself is divided on the issue.
The Bank of England and the city,
that is to say the financial and
creditor interests, lean strongly to
the gold standard group.
The industrial interests, both
capital and labor, lean strongly to
the policy of expansion and price
raising.
The question is whether this con-
tlct is to be settled by statesman
ship or by speculation. In the alb
sence of a positive joint policy by
Britain and America, as for example
tho policy proposed by Mr.. Keynes,
1t seems very likely that the settle
ment OF the issue will be left to
speculation.
Whether speculation, which is
tending to induce panic on the
continent, will pull some of or all
the gold countries off the gold
standard I do not venture to predict.
But that the speculation is
enormously powerful no one can
doubt.
THE question for us is whether
Il with the dollar deprecated
nearly Is per cent from gold, as it
was Wednesday, we are not some
where near the point where we must
take stock and ask ourselves wheth-
er the dollar has not deprecated
enough.
At this point of depreciation
very large increase of domestic
prices is not only possible, but still
necessary, to justify so low a value
Tor the dollar. A devaluation at
somewhere around 25 to 80 per cent
can not now be far away from the
objective set when the administra-
ton left the gold standard.
1t is difficult to see why devalua-
ton somewhere around the present
point should check, except perhaps
momentarily in ultra speculative
circles, the real and the steady adj
vance Of American prices based up
on the enhancement of purchasing
power and the revival of business.
We are in the region of guesses,
for no man knows enough to fore
see the future with certainty. In
these matters our guesses are likely
to be determined by our prejudices.
My own prejudice would lead to
an attempt to control events by
definite devaluation in British and
in America, accompanied by a pro-
visional sterilization.
There are others who will prefer
to trust events rather than human
Judgment They will elect to let
matters drift and allow speculation
to settle the issue.