Evening star., 1933-12-18

The institution presented q charteG
analysis Of the movements of the prices
| OF various basic commodities since
abandonment of the gold standard
showing the price of gold increasing
more than so per cent, while some
commodities scared far upward, others
moved higher but to lesser degree
Still others were hardly changed, and
two chemicals and anthracite coal
went downward. Its comment was:
Ihe diversity in the movements o1
l6 important individual commodities
and groups Of commodities in the
United States since the dollar began to
depreciate is graphically indicated by
tne accompanying chart. II will be
noted that the prices of coal and chem
lcals have declined since April, and
that the prices of iron and steel, auto
mobiles and agricultural implements
have risen but little. The prices OF
other commodities have shown a wide
range OF fiuctuation, some of them re-
manning persistently below the price of
gold. some maintaining a position above
II; ana some swinging up and down
Wltnout any apparent relation to it.
The largest fluctuations have occurred
IN the prices of such highly sensitive
ana speculative international commodi-
ties as rubber, wheat, cotton and hides y
The survey mentioned other devices
for stimulating prices, such as the
Arglcultural Adjustment Administration
and the N. r. A. and efforts to expand
credit through the Federal Reserve
Board and the r. &c.
Holds Theory Unsupported,
Even II one were to argue that these
policies, singly or conformity, have had
no effect whatever in raising prices in
the United States, and that the rise
which has occurred is the sole result OF
the depreciation Of the dollar, it still
remains true that the extent of the
rise In the general level Of prices shows
little correspondence with the rise In
the price of gold
The great disparity between the two
movements furnishes conclusive evil
dence that the theory of automatic ad.
JustmentS between changes In the price
OF gold and changes in the commodity
price level is without scientific valid
lty As practical matter, the most
that can be said for the theory is that
the depreciation of the currency NAV
unoer conditions at present existing in
the United States. help to bring the
prices OF some agricultural commodities
entering into export trade which have
been heavily depressed. into a more
satisfactory adjustment with other
prices"
Discussing monetary uncertainty
the study said:
1T is recognized that A f,,ll ernn1ov.
ment of labor and thorough bushes.
recovery cannot be expected until the
construction Of capital goods Is re-
sumed. The resumption Of capital en-
terprise depends in large measure upon
the resumption Of normal issues OF
long-term securities. In the presence
OF an uncertain monetary policy the
notation OF such securities is unoues-
tionably deferred. While this problen,
Is complicated by other factors, none
tary instability is clearly an important
contributing cause.
Finally, experience shows that
monetary uncertainty sooner or later
leads to deterioration of Government
credit. So long as the uncertaintv
prevails. potential investors hesitate tc
purchase fixed income securities of al
kinds. including those issued by the
Government. Outstanding Government;
issues decline in value, with resulting
repercussions upon the banking struc-
ture and the investment markets.
U. s. Credit Important.
TN the United States at the present
time the maintenance of Government
credit is of especial Importance because
of It's relation to other phases Of the
general recovery plan. Public loans
must be hoated II the necessary funds
are to be available for carrying out
the program Of public works, as well
as the numerous relief, housing and
agricultural projects now under way
Difficulty in borrowing might force the
Government either to curtail these
projects or to embark upon the issuance
OF greenback currency as an alternative
means Of meeting its financial obliga-
tions and requirements"
The Institute of Economics Of Brook
Carnegie Corporation of New York. In
establishing the institute, the corpora
ton said:
The Carnegie Corporation, in COM
mitting to the trustees the administra-
ton of the endowment, over which the
corporation will have no control what
soeVtf, mas III Wluu single purpose
namely that the institute shall be con-
Quoted with the sole object Of ascer-
tanning the facts about current economic
problems and of interpreting these facts
for the people Of the United States in
the most simple and understandable
form. The institute shall be admins
tered by its trustees without regard to
the special interests of any group in the
body polite, whether political social or
economic"
Frederic A Delano, uncle of Presi-
dent Roosevelt. is chairman of the in
stitution. Those on the board Of
trustees include Whiteford R. Cole,
Norman H. Davis, Clarence Phelps
Dodge, Jerome D. Greene. David F.
Houston, Morton D. Hull, Vernon Kel-
logg, John c. Merriam, Harold G..
Moulton, John Barton Payne, Lessing
Rosenthal, Leo S. Rowe. Bolton Smith
and Harry Brookings Wallace.