Evening star., 1933-04-21
Member of the Associated Press.
The Imitation Bill.

The Imitation Bill.
The administrations imitation plan,
proposed as An amendment to the farm
bill now before the Senate, may be
viewed as the less of two evils. II
steps are to be taken to debase the
Nations currency, it Is preferable that
such steps be made conditional on
other things; that the control Of these
steps be rested with the Executive, act
ing with measured consideration; that
the extent of proposed imitation be de-
cided upon after study Of conditions al
legged to warrant currency debasement.
The temper of Congress at this time
Is such that unless control Of imitation
is rested with the Executive any or all
Of the wildcat schemes ever proposed
for destroying the integrity Of the dol
lar and embarking the Nation on q Wild
inf1ationary gambling spree might
become effective. The vote in the Sen
ate on Bryan's sixteen-to-one silver
dream was indication of what Is in
store unless the business Of currency
manipulation is put in the hands OF q
President who has avowed his belief IN
sound money.
The administration imitation bill it.
self. Judged on its merits alone and
without regard to the circumstances
that led to its hasty preparation, Is
probably the most complete delega-
ton of power to an Executive considered
by any Congress-even In these days,
when so much of the power Of Govern
ment is being placed In the hands OF
the Executive.
It proposes series of trial-and-error
experiments in currency manipulation,
basing the experiment as whole on
the assumption that what is the matter
with the country today is really short
age of currency and that by driving
prices up with cheapened dollars some
thing helpful may come Of 1t.
AS the first of these experiments. the
Federal Reserve Board Is authorised to
make arrangements with the member
banks whereby these institutions Will
engage in "open market operations" by
buying Government bonds and obisa-
tions to the extent Of 10000, 900.
The bill recognizes that this may not
work. 1t is one thing to pump money
into the banks, but another thing to
make that money 60 to work IN the
right channels. The pumping process
has been undertaken before and with
out marked success.
If the open market operations are
not successful the President Is en-
powered to direct the issuance OF
Treasury notes, or currency, up to $3,-
ooo. 900 900, using the currency to meet
maturing Federal obligations or for
purchasing and retiring Government
bonds. The authority for this step Is
taken from the old "greenback" law OF
1862. The difference between this
money and fiat money is probably the
difference between two points Of view.
While the issuance Of such currency
would be accompanied by the estao-
lishment of sinking fund for retiring
the new money at the rate Of four
per cent a year and wiping 1t out at
the end OF twenty-five years, and
limit is placed on the total amount
of money to be so issued, the scheme
is a dangerous gesture toward start
ing the printing presses for run that
may continue until the traditional
course of imitation ends In disaster. 1t
is to be remembered that the act OF
February 25, 1862, authorized the issue
of only $50, 100000 in the beginning,
but was followed by similar authorize
tions in June of the same year and IN
March of 1853, these greenbacks rap
idly depreciating as more of them were
turned out Once they are started, 1t Is
hard to stop the presses.
The President Is permitted, in addi-
ton, to reduce the gold content OF the
dollar up to the limit of nifty per cent
II such action is deemed necessary to
protect the foreign commerce Of the
United States against the adverse ef-
feet of deprecated foreign currencies."
And, finally, the President IS author
lied to accept up to $l00,000,000 OF
war debt payments in silver, valued at
the maximum limit of nifty cents an
ounce. This latter permission would
drive up the price Of silver, to the profit
of silver producers; reduce the war
debt payments, and the United States
would pay obligations-contrac In
terms of gold-in this cheapened
money.
It Is true that the President might
not be forced to the resorts set forth
in the bill; that he might not do the
things that he is permitted to do. But
this bill, accompanying as it does the
sudden desertion of the gold standard,
casts the dark cloud Of uncertainty
over the whole world. There can be
little confidence when nobody knows
what his dollar is going to be worth
ten days or thirty days hence.
The President knows these things.
His gift for strong and wise leadership
must be relied upon as never before.
William Henry Holmes.