Evening star., 1933-10-25
Special Dispatch to The Star.

0peClhl bispebSu w Ahc obnA'
SYRACUSE, N. Y. October IS (N.A
President Roosevelt's gold
policy seems to be puzzling the country''
economists, It is more or less of an old
story to the bankers and business men Of
this city and agricultural leaders of New
York state, the first ones to sponsor the
plan They recognize it as part of the
program long advocated by DR.. George
F. Warren and DR.. Frank A. Pearson Of
Cornell University. There Is the plan
in simple language as understood by
men who have made a study Of 1t from
previous utterances by DR.. Warren.
The aim Of the Warren plan. as 1t is
called. is to restore the price level OF
1926 and then to base the country's cur
rency on geld at new level, plus the
new feature Of the commodity dollar,
by which the currency would vary In
value according to changes In the COM
modify price level.
The 1926 price level is advocated be-
cause it is the level at which the bulk OF
present debts were incurred. II the
price level and the debt level are not In
balance, debts cannot be paid, for the
effort to pay them consumes too much
money, draining 1t from business enter
prise.
"Reflation" Is Preferable.
DR.. Warren and DR.. Pearson hold
that debts cannot be lowered to the
level to which prices have descended IN
the last four years. To do SO. in thet1
opinion, would be more than the coun-
try could stand. They do not contend
that the opposite plan, that OF "ref1a-
ton" to the 1926 level. is all good. but
that it is much preferable to continued
liquidation which was driving farmers
home owners, businesses and industries
into bankruptcy.
The policy does not affect all prices
alike. Wholesale prices during period
Of imitation rise more than retail
prices, because factors which enter into
retail prices, such as transportation
labor, rents storage and power, have
not dropped as much as other prices
Thus. while the farmer or miner real.
ICES more from the sale Of his goods
the consumer does not meet all of this
additional cost to the farmer.
According to the Warren-Pearsor
formula. the price of an article is no
Influenced only by the supply and de-
mand for that article, but by the supply
and demand for gold. Thus, the price
of gold is most vital and important
| factor in the price of goods.
The policy announced by President
Roosevelt means the administration vii
attempt to control the price of gold II
| this country through the Reconstruction
Finance Corporation, which is author
lied to buy it. Undoubtedly. this fac
will influence the price of gold through
, out the world.
Gold Now $50 an Ounce.
II the Government pays a higher
price for the gold it buys, the price o.
| commodities will go up proportionately
| according to the Warren-Pearson cal
| culations.
The price of gold now is approximate.
ly $50 an ounce. If the 1926 price leve
| is to be attained, gold must bring s4t
| an ounce. The Government would no
| be able to raise the price that much
Immediately; it is probable it will rais'
! the price very gradually. making it!
price decisions according to the level O
| business activity in the country.
| Thus, if there are definite signs o.
recession, an increased price Nor golt
, would stimulate activity; If there ART