Evening star., 1933-11-03
MYSTERY LACKING
IN GOLD PURCHASE
Hopes of Raising Commodity
Prices Here Held
True Purpose.
BY MARK SULLIVAN.


The Inauguration by the Government
CT a policy of buying gold abroad, IN
addition to already buying it within
the United States, does not contain
ANYTHING which, of itself. need create
the atmosphere of mystery and sus-
pensA that exists all over the country
Buying gold abroad, or, more accurately
standing ready to buy gold abroad, is
natural incident, considering what mas
gone before, and considering the broao
purpose the President has in mind.
The specific purpose of buying gold
abroad. as given out officially. Is tC
raise the prices of commodities within
the United States. There is no reason
whatever to doubt that this is the true
purpose and the whole purpose. In
qualification it might be added that in
the event of possible future conditions
not now in contemplation. this policy
Of buying gold abroad might be used
for additional purposes.
Plan Not Understood.
The relation between buying gold
abroad and raising prices at home is
not understood by the public generally
and this accounts for the atmosphere
of dramatic suspense. 1t is desirable,
it should be understood, because the
atmosphere of mystery and suspense Is
detrimental to business.
The simplest underlying fact in this
situation, understandable by all. is that
goods going up in price is the same
thing as dollars going down in price
To put it the other way around, as dol
lars go down in price, goods on the
average go up in price automatically in
the same ratio. Therefore the Presi-
dents purpose of raising the price OF
goods is the same as lowering the price
of dollars 1t is indispensable to under
stand that the price Of dollars and the
price of goods are opposite ends of a
see-saw, goods going up as dollars GO
down.
It is to lower the price of dollars that
the policy of buying gold abroad has
been begun. Paying out dollars fol-
gold abroad, and paying for the gold
on an ascending scale. has the effect
of reducing the value of the dollar as
quoted in international trade. The
present quotation is 66 cents.
The administration desires to keep
the quotation at least this low. and
perhaps ultimately to make it lower
For this purpose paying out dollars for
gold abroad, with the gold being taken
at rising prices, is practicable method
1t Is true that this keeping the quoted
value of the dollar low in international
transactions has no direct relation to
the prices of goods within the United
States. 1t has, however, a strong in
direct psychological relation. The quo
tation of the dollar in international
trade is made public daily. The quota
ton abroad has a sympathetic effect
on the value at home.
If, as the administration intends, the
quotation of the dollar in international
trade should go down, the price of
goods in the United States will tend to
rise.
1t is true, as asserted by many critics,
that increasing the price of gold as the
administration is doing, will not stand
ing alone, increase the price of goods
IN TINS statement the words standing
alone" should be emphasized. The most
competent American authority on gold,
asked today whether raising the price
of gold would alone raise the price of
goods, responded ''Unequivocally no."
Does Not Stand Alone.
But raising the price of gold does not
stand alone. 1t is one detail in a
broad program of activities bv the ad-
mtnistration, all designed to raise the
prices of goods. These activities in
clude limiting the acreage of farm
crops, assuring farmers higher prices
for wheat and other crops. loaning
money to farmers on cotton at 10 cents
a pound, creation of purchasing power
by raising wages, laying out great sums
OF money in public works. fixing the
prices Of one commodity, oil. and many
other methods Whether all these ac-
Whether it is wise for a government to
dedicate itself whole -heartedly TO rails.
ing prices is not here in question All
program of bringing about a raise in
prices OF goods, purchase of gold abroad
IS natural detail which need not give
rise to mystery or suspense. Indeed, it
Is an indispensable detail, for dollars
cannot be kept low at home unless
they are also kept low abroad And. to
go back to the thesis underlying the
PRESIDENTS program, keeping dollars
low IS the same as keeping goods hign.
fair summary would say that de-
pendable Government statistics show
that in spite of some setbacks as 1o
some goods and in some sections. the
residents program of causing the
price OF goods to go higher Is having
gradual success. The same Govern
ment figures show that in spite of a
recession in steel activity, business ac-
tlvlty as a whole is increasing in vol
ume.