Evening star., 1933-11-05
Who Lost on the Deal?

w IAO HOSb VA thS OSuA
If the Treasury as reported, plans
to print ten million dollars in silver
certificates, backed by the silver that
Great Britain sent to this country last
June as token payment" on her war
debt, and, in accordance with the
Thomas amendment to the farm bill,
plans to pay Government obligations
with those dollars, the gentle art Of
making two dollars grow where only
one grew before will have received
forceful demonstration. To understand
this modernized alchemy, let us trace
the imaginary history Of an ounce Of
gold that a gold miner dug from the
earth back in 1918.
This miner was patriotic citizen.
Immediately he dug or panned his gold
he took it to the mint and received in
exchange s2o.67-that being The legal
fixed price of gold-in paper money.
The paper money was in the nature
Of receipt for his gold, and the miner
knew, or thought he knew, that he
could turn in the receipt any time he
wanted to and get back his gold. But.
being patriotic. he bought a Liberty
Loan bond, Liberty Loan bonds were
not issued in s20.67 denominations, but
in this case we must forget such de-
tails in pursuing the narrative of the
ounce of gold) The bond bore on its
face the Governments promise that it
would be redeemed VI gold coin Of
the same standard e. weight and fine
ness as that for s,lich it was ex-
changed.
The United Stat.o Government took
the s20,67 it had borrowed from the
miner and loaned it to Great Britain,
to help keep the world safe for democ
racy. Now. the curtain having fallen
to indicate a lapse of time, we find
Great Britain in 1888 still in difficulties
over settling the war debt. But kind
American Congress, anxious to do
something for silver has in the mean
time passed a law permitting the debtor
nations, of which Great Britain is one,
to make partial payment of debt in
silver. and this silver has been given,
by the same munifcent Congress, an
arbitrary value of fifty cents an ounce.
But. despite this noble effort to give
silver a value of fifty cents an ounce,
Great Britain knew at the time she
made this June token payment" that
she could buy all the silver she wanted
for thirty-five and one-half cents an
ounce. that being the price of silver
despite the American Congress. So
Great Britain took the s2067 she bor-
roWed from Uncle Sam and with it
bought ffty-eight ounces of silver at the
price of thirty-hve and one-half cents
an ounce. But to repay the S20.67
she borrowed she does not need fifty
eight ounces. She needs only forty
ounces of silver. which have been given
the arbitrary value of fifty cents an
ounce So she sends Uncle Sam forty
ounces Of silver in payment Of debt
Of S2O67, and pockets a neat profit Of
$3.50 on the deal
Uncle Sam meanwhile. received his
forty ounces of silver and minted it into
coin But there are only 37l.25 grains
Of silver in a silver dollar, while there
ere 48O grains Of silver in an ounce.
nf Si1ver in
the forty ounces received from Eng
land, Uncle Sam can mint fifty-one sill
yer dollars. And, according to law, the
Treasury can print ffty-one dollar
bills, exchangeable on demand for the
ffty-one silver dollars.
That is enough not only to pay the
gold miner his S2067 when his bond
is redeemed, but to take care of interest
and make another payment to another
bond holder.
AS for the miner. he cannot force
the Government to live up to its prom
ise to redeem his bond in gold coin.
His Government has repudiated that
promise So he must content himself
with receiving the S2O67 in silver GER
tificates And he cannot swap, as be-
fore, these certificates for actual gold.
If he could, however, he would not re-
ceive s2067 in gold. He would receive
only 1892, as the price Of gold has
been increased to s3267 an ounce and
the gold value of the dollar deprecated
by thirty-six per cent.
That of course is one way to settle
Indebtedness. 1t was generous to Great
Britain" 1t enables Uncle Sam to issue
two silver dollars for paying the dollar
debt he borrowed from the gold miner
And as for the gold miner, he can
philosophize over the thought that if
he had left that ounce of gold in the
ground, instead of digging it up and
nuying a Liberty bond with it, he
could sell it today for $32.67.
Many big business man is wishing
that Henry Ford. now taken so Sc
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