Evening star. [volume] (Washington, D.C.) 1854-1972, 1933-11-19
BY BEN McKELWAY.

| chief essentials OF modern lie. 1t
] hard to live without it.
The President has told the people We
are to have a new kind of money. Tit
mysterious daily purchases of gold by &
| Nation that has outlawed the private
possession of gold, and at prices higher
than the market price, is a part of the
plan for a new sort of money. This
plan, the President has said, has beer
adopted as "a policy and not as ar
eXpedient."
The policy, having to do with the
Nations money, directly affects the we'll
being of everybody In the country. Yet
judging from the confusing and some
times contradictory explanations offered
by those who have standing as authori-
ties 1t means one thing to some people
and other things to others. And, sc
| far, the authorities in official positions
have not considered it necessary to fur
nish clear and complete enlightenment
BY general agreement. however, 1t
seems fairly well understood that the
President is working toward managed
currency" Every Nation, more or less
which is not on the gold or metallic
standard, manages its currency. But in
this country we are managing our cur
rency with a definite and, in the opin-
ion of many, with a remarkable and
hitherto unattained goal in sight. That
goal, as the President has described it
twice, is this;
when we have restored the price
level we shall seek to establish and
maintain a dollar which will not change
its purchasing and debt-paying power
during the succeeding generation"
The Commodity Dollar
The only kind of dollar that ever
claimed to be able to do anything of the
sort is the dollar which has been given
name Of comparatively recent COIN
age-the commodity dollar"
Some people will say that the COM
modify dollafsis rubber dollar" one
that stretches one day and contracts
the next and leaves everybody in doubt
as to its size.
Some people will say that the chief
advantage of the commodity dollar is
that it will not stretch or contract
from one day to the next; that it is
being proposed now to supplant a
rubber dollar" that caused general
pain and misery by its periodic con-
traction and expansion.
Those who thus differ over the defini-
ton of the commodity dollar are infiu-
enced by conflicting points Of view and
are disciples of opposing schools OF
economic thought. There is little
chance ever to bring them together
But as no Nation has ever perfected
the commodity dollar with the attri-
butes which its aoherents claim for 1t
today, and as nobody has ever had the
opportunity to study it in its wild and
natural state. the briefest way to define
it is to call it a theory.
1t is theory as yet undemonstrated
positively. One way to obtain con-
ception of this undemonstrated theory
AS elementary as may be the concep-
Hon-is to regard the theory against a
background of experience.
The Standard Of Measurement.
Aside from its other uses, the Ameri-
can dollar as we knew it up to the time
this country went of the gold standard
last April served rs fixed standard of
measurement. The dollar had an I'M
changing, statutory value in gold.
Prices of the things this dollar would
buy went up or down, but the standard
by which the prices were measured re-
manned the same. When prices have
been high, commodities have been in
demand, moving quickly and easily from
P4O00NNA w NOAAohA4ACAy QAlQ AOAldlo Will
which to buy them were relatively plen-
tiful People wanted the commodities
more than they wanted their dollars,
and from this fact there came into use
the expression cheap dollars"
When prices have been low, as in the
long years of this depression, the de-
mand for commodities has fallen off,
the producer has found 1t difficult to
make the consumer take them, and the
consumer as rule wanted to keep his
dollars more than he wanted the COM
modities for which dollars could be
exchanged This led to a condition
where great many consumers needed
commodities and also needed dollars,
but could obtain neither. Such con-
dition and others like it gave use to
the expression dear dollars"
According to the Sound money" peo-
pie, with whom the economists of the
orthodox school are identified, such ex-
dollars are misleading. The dollar,
measured by a fixed, standard value of
gold, has been neither dear" nor
cheap" But the commodities which
the dollar will buy have sometimes been
dear and sometimes cheap. because of
the many elements influencing their
production and their consumption, the
demand for them and their supply.
Raising the Level of Prices.
1t is the Presidents purpose now to
raise the price level, or the average price
OF all commodities. There are different
price levels. There is the wholesale
price level, the retail price level, the
price level of products sold by the farm
er and the price level of products bought
by the farmer. Anybody can assemble
a list Of commodity prices, compute the
and call the result price level,
its statistical use depending upon what
one wishes to show. The price level
which receives most attention these
days is the. wholesale price level, made
up of the average wholesale price of
784 commodities selected by the Bureau
of Labor Statistics of the Department Of
Labor. The average price Is computed
once a week, and when it is shown that
the average price has gained point or
two there is general rejoicing, and when
it is shown that the price level has
fallen bit there is usually an explana-
ton of some sort indicating that things
will probably be letter next week.
Why the Year 1926 Is Important.
Because of the general emphasis
everywhere on the fact that the price
level must be raised, there has devel-
oped sort Of price-level worship. upon
which learned men discourse at great
length each day in the financial pages
of the newspapers. One of the peculi-
arities Of this form Of worship has been
the dedication Of the year 1926 as the
period in which the price level attained
admirable characteristics,
and that year seems to be the year
chosen by common agreement as the
goal now to be achieved by raising
prices.
The reason for choosing the year 1926
as the desirable level of prices is inter-
esting The statisticians must have
a convenient way Of expressing an
average price. For statisticians are not
trying to convey an accurate idea
of actual prices. but of how the aver
age prices this year compare with
those of last. And to do this they
mist salanE come uaar DC O starting