Evening star., 1933-12-12
U. S. Gold Standard Step Unparalleled
Dr. Sue Says Dollar Depreciation Policy Bears No Resemblance
Previous Moves:

adopt extreme monetary policies. 1t
was apparently the view of the ad-
ministration that a trade recovery
would be hastened by cooperation with
other countries, directed toward the
early establishment of international
monetary stability. A
London MoM Recalled.
As a contributing influence the ad-
ministration was then disposed to con-
slider favorably some means of steady
ing the exchanges during the period
of the World Economic Conference and
for that purpose a special mission, in
dependent of the conference, was sent
by the President to London to negotiate
with France and Great Britain on that
matter, and on that matter alone.
For reasons that are still obscure,
during the month Of June there was a
decided change in the monetary poll
cies of the administration. The ar
rangements which had been worked
out for steadying the exchanges during
the period Of the co---erence were re-
jected, accompanied by the announce
ment of an intention to establish a
new monetary system based on COM
modify dollar. The psychological effect
of this unexpected change in policy
was reflected In further weakening
of the dollar, increasing the deprecia-
ton to something like 20 per cent.
Throughout the Summer and early
Autumn this degree of depreciation
seems to have been considered rea-
sonably satisfacto from the point OF
view OF the administration. 1t was,
however. a depreciation which did not
rest upon a firm foundation. There
was always present an underlying
tendency for the dollar to reverse its
course and appreciate.
Further Step Dictated.
By October the administration ap-
parently decided that a depreciation OF
20 per cent was not sufficient to ac-
complish what 1t expected from de-
probation, but further depreciation
could not be accomplished without more
positive action than had hitherto been
taken. This more positive action was
taken when it was announced that gold
would be purchased both at home and
abroad by the Reconstruction Finance
Corporation at prices determined from
day to day in Washington.
In its initial stages 1t has not been
necessary to purchase large amounts
of gold in order to weaken the dollar
The determination of the Government
to depreciate the dollar, as expressed in
this novel procedure, has served to In
duce sufficient speculation against the
dollar and flight from the dollar to ac-
complish the desired result. In the ab-
sence of bear speculation and flight
from the dollar very large purchases OF
gold in foreign markets would have
been required.
That it will be possible to depreciate
the dollar still further need not be
questioned. The difficulties confront
ing the Government will present them
selves when the administration decides
to go no further on the downward
course. The various influences tending
to depreciate the dollar will then tend
to bring about its appreciation.
To hold the dollar at any particular
point of depreciation will prove wholly
impracticable unless prices shall have
risen in the meantime to level rough
ly approximating the depreciation which
it is desired to make permanent.
In the next article shall consider
the price-raising possibilities of the de-
preciating dollar.
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