Evening star., 1933-10-07

toward the "silver crowd" II interna-
tional bimetallism should be established
under this provision, it would present
many practical difficulties, but would
not be an impossibility.
Effort Doomed to Fail.
Any attempt to establish bimetallism
doomed to failure The country would
Immediately be drained of its gold and
would become a dumping ground for
silver from the rest of the world. In
other words, the United States would
find itself. before the episode was ended,
not on a bimetallic but on silver
standard.
Quite aside from other practical con-
siderations, there is. of course. no pos
sible reason why the United States
should abandon gold for silver. The
only excuse that has ever been put for
ward-the excuse of gold shortage
has been thoroughly discredited in the
exhaustive study of the gold delegation
of the League of Nations. which shows
conclusively that there is more than
ample gold for the worlds monetary
requirements.
AS to proposals for reducing the gold
content of the dollar it is unfortunate
ly necessary to take realistic view Of
the situation and to recognize the fact
that at the moment the paper dollar
stands at a discount of between 80 and
40 per cent in terms of the standard
gold dollar of 1922 grains. In other
words, it is currently evaluated at be-
tween IA and 16 grains of gold The
reason for this, as we have seen before,
is the fact that since the imposition
of the gold embargo the United States
has been OH an inconvertible paper
money basis. The paper dollars dis
count represents fears throughout the
world as to what the country may do
IN the way of imitation of devaluation.
Devaluation in Effect.
Unless business is stimulated greatly
by legitimate -inf1ationary) meth
DDS, SO that prices can be maintained
at present or higher levels while the
dollar in turn is strengthening its posi-
tion in relation to gold, return to the
old gold parity might be difficult without
a considerable shock to prices. mis-
take was made, when the embargo was
placed on gold and vast inflationary
powers placed in the Presidents hands.
The country has already ':devalued de
facto," with nothing like the price re-
covery that devaluationists promised"
Moreover, the consequences Of formal
devaluation-at current or at lower
levels - are extremely problematical.
Some devaluationists want 70-cent
dollar, others a 60-cent dollar, and still
others a 50-cent dollar. But suppose
the 7O-cent dollar, or the 60-cent dol
lar, does not bring back the price level
of 1926-what then? Must the process
start all over?
This is the great weakness of devalu-
alton. Once the step is taken, it is
difficult to prevent its being taken a Sec
ond time, or a third time. For the
dollar has then ceased to have any
anchorage. It is political foot ball.
and as such forfeits the confidence Of
every one.
At the moment the important thing
is to get the dollar formally tied up
with gold and kept there. Even if this
involves a moderate devaluation, such
devaluaticn, unfortunate as it is as a
precedent, is far preferable to the pro-
longed uncertainty growing out of the
fluctuations of an unanchored currency
(The fourteenth articles of this
series will appear in The Star
tomorrow.)