Evening star., 1933-06-21
Stabilization and Imitation.

Stabilization and Imitation.
Events in London regarding cur
.ency stabilization agreements dem
onstrate that you cannot have your
cake and eat it too. You cannot
have the comforting solidity Of an inter-
nationally-stabilized currency and at
the same time enjoy the temporarily
intoxicating thrill of an experiment IN
managed currency imitation at home.
One proposal aimed at immediate
sterilization of the dollar with the
pound has been turned down. Senator
Key Pittman's proposed stabilization
resolution, received with a show OF
favor, is inflationary in principle and
would not become effective Immediately,
but at some time in the indefinite
future which will be reached "as
quickly as practicable"
How quickly it would be practicable
depends, apparently. upon point OF
view. Undersecretary Of the Treasury
Acheson has explained, in commenting
on the first sterilization proposal, that
something might be done Tentatively,
but
We do not wish to say that any
currency should be pegged at the pres
ent levels or at any certain Level. we
have not arrived at a place Wnere we
can nick out a particular point Where
sterilization should take place.
One confusing element here Is that
there has been so much talk recently,
on the part of members of that infia-
zionist school who have their eyes glued
on the wholesale price index, OF doing
that very thing which Mr.. Acheson so
sensibly says has not been done-that
is, picking out particular point wnere
sterilization should take place" The
suggestion has been made that some
point should be selected as the desirable
price level-say the year 1925 In the
wholesale price index-and that the
urice level will then be pumped up to
that point and, by some mysterious feat
Of legerdemain, made to stay there.
What disturbs the sound money"
men is that the pumping up mdght be
done with q currency which Is no
longer anchored to gold. For the real
1y solid pumping would more effectively
be done In relation to control Of COM
modify production with currency taat
is stabilized and backed by gold In
other words, a rise in prices measured
in terms of q stabilized currency OF q
known value In gold is substantial
rise, solidly backed. A rise in prices IN
terms Of fuctuating, uncertain cur
rency, may in the end disastrously re-
veal its artificiality.
The idea that the wholesale price
level of the year 1925 should be the OBJ
iective for currency stabilization Is
has ed, of course, on the Department Of
Iahor's selection of that year as the
starula lard for a new statistical series OF
Who'll asale price indexes. The Depart
n,ent of Labor symbolizes the relative
purcha Nng power of the wholesale dol
lar of tA,a* year as being 100 cents.
But this symbol is purely relative.
Confusion arises when this statistical
symbol of "a lative value is chosen as an
absolute deA 'deratum. And the de-
fusion beconA,s dangerous when 1t IS
planned to ata ain this desideratum by
manipulating the currency, although
previous rises and falls of the figure
expressing relative value Of the dollar
take place as der uonstrated in the past,
without tinkering with the currency.
The process Of rising prices has
already begun. So.We Of it appears to
be a substantial ind cation of improved
business conditions, as there has as yet
been no direct and cp1fessed currency
imitation. The price tAe Is to be aided
by great price-lifting campaign. The
President has extraordinary powers to
increase the price Of commodities by
regulating production Of certain over
produced, or underconsum'sd. commodi-
ties, and, perhaps eventually, by in
creasing foreign trade.
1t Is to be hoped that the reasonable
and desirable appreciation in the price
Of commodities and the depreciation in
the corresponding value of tahe gold
dollar may be effected, as in tk past,
without debasing the currency to a
given point, where stabilization Is con-
sidered in somebody's opinion to be di-
sirable.
There may be sound reasons why the
President and his advisers do not wash
to enter into a stabiliZation agreemellt
at this time. They are jealously watch
ing the rise in prices and do not want
anything done to place it in jeopardy,
even temporarily. They may be bar
gaining for something that has not been
revealed. But it is sincerely to be hoped
that whatever their reasons, they are
not based on theory of debasing the
domestic currency until fictitious price
level is arbitrarily established at some
prearranged point. 1t would appear
that one of the essential elements in
sound recovery, especially as concerns
international trade. would be the as
surance Of a stable dollar.