Evening star., 1933-05-07
An Initiation Primer
answers in Simple Language to Frequent Questions
asked About What the Term Has Come to
Mean in the Light of Past Experience.

9. Why cannot imitation be kept
within bounds?
A. Generally speaking, 1t might be
kept within bounds, but experience
shows II cannot. because, for one thing,
the effects Of moderate, controlled In
flation are never startling enough to
suit the enthusiasts; they clamor for
more. The theory that If . little is
good more is better, has . surprising
number of adherents. 1t Is roughly cal
culated that it took two years to dou-
BILE the German currency the first time.
two months to double 1t again, two
weeks to double 1t a third time, and
two days to double 1t the fourth time
The experience of every nation with
imitation has been the same. France,
from 1859 on, the United States with
the Continental currency" ultimate
ly redeemed at 1 cent on the dollar;
the shin plasters Of the wildcat bank
ing" era, Confederate currency, Civil
War greenbacks, German marks, French
and Belgian francs. Italian Ira, Eng
lish pounds, all followed more or lees
the same course.
Benefits to Foreign Trade.
@. What dement's to foreign trade are
promised by inflationists?
A. It Is said that the competitive ad-
vantage of countries operating with the
deprecated currency will be destroyed
If we depreciate ours. This seems to
be equivalent to saying that If man
in q ditch spatters US with mud we
must get down in the ditch to pro-
tect ourselves. Imitation may mean
worldwide competition in currency de-
probation to protect and expand eX-
port trade which would be countered
everywhere by higher import barriers,
trade wars and international i'll will.
The theory Is that II we cheaper our
money 1t will be easier for foreigners
to buy from us and less easy for them
to sell to us. But selling goods for
cheap money Is the same thing as re-
ducing prices, at least until the pre-
sumptive stimulus Of foreign buying op-
crates to raise them. OF course no man
and no nation can become prosperous
by selling at Q loss. The supposed
competitive advantage" Of a debased
currency Is temporary and illusory; in
the long run the advantage is a dis
advantage. Dumping can be stopped
quicker and easier by q tariff or an
embargo.
O. What will be the effect of infla-
ton on the debts owed the United
States by foreign countries?
H. ~ WAA dAlOQllI w al oQtOA4otAC
reduction Of them, because they can
be paid of in cheaper money. Ma
tions which have issued dollar bonds"
for sale In the United States will bene-
fit particularly.
O. About what Is the total OF the
foreign and domestic debts which would
be Affected
A. The total Of the most pressing
debts OF farmers and small-home own
ers. which initiation Is supposed to re-
lieve, IS estimated at about s20000,-
600, 900. The total Of other debts in
the United States, mostly represented
by bond issues and business debts. runs
between 100000, ,000, 900 and $120 00O,-
600 900. The foreign debbts owed by
the United States total about l.000.-
900 900. A reduction Of say so per
cent in the value Of the dollar would
thus amount to present OF $5.500.-
600, COO by Americans to foreigners
Holders Of corporate common stocks
and equities-largely the wealthy class
would profit by that amount to SINH
lar enormous gifts taken out Of insur-
ance policies, savings bank deposits. ed
ucatlonal endowments and so on. 1t
would make the rich richer. the poor
poorer The farmer and small home
owner would benefit by $4,000 900. =
900. The other small property owners
Of the country would lose $50 900 000,-
900. not counting the toll Of the specu-
lator, who would take out another enor-
nous sum in the process.
The Presidents Judgment.
9. Who is to have the say as to in
flation?
A. The entire administration Of the
program involving some $l50,000, ,000,-
900 in debts, 500, 1000 600 900 in life
insurance, and uncounted billions in
actual and potential business affected
will depend upon the judgment of one
man. the President
@. What is the gold standard?
A. A country Is on the gold standard
when gold Is the measure OF value for
its currency system. Gold Is given q
1ixed price, which Is also the par value
Of the currency in domestic circulation.
Gold standard currencies are also con-
vertible into gold on demand, or are
adequately supported by gold reserves
Under all ordinary circumstances gold
movement Of gold in and out Of the
country In settlement Of international
balances. Similarly. country Is on
the silver standard when the same con-
ditions obtain with regard to that metal
@. Why Is the gold standard prefer
able to any other?
A. Gold has been the preferred money
Of the world for thousands of years.
the most generally known. the most
universally accepted; in normal times
1t Is the most stable In value and
hence the best yardstick Of the value
Of everything. It combines high value
with small bulk, it is durable. coins
easily, and does not tarnish or corrode
@ What is meant by free silver?
Bimetallism?
A. Free silver Is q shortening Of the
phrase, free coinage Of silver" by
which Is meant permission to any one
who has silver enough to make a dol
lar to get 1t coined into q dollar at the
mint on demand Bitmetallism means
the free coinage Of both gold and sill
to each other. We now have free COIN
age Of gold only
q. Would bimetallism work?
A. Only II gold and silver were being
produced in exact step with each other.
50 the market ratio between them was
always the same as the mint ratio, a
practical impossibility. The cheaper
metal would always tend to drive the
dearer out of circulation. With an
ounce of gold at $2067 and an ounce
Of silver at 80 cents, the market ratio
-, Iouehly, oV W i. IL plmctAlASm AT
| l6 to l were established, we would be
| on single silver standard Immediately
and gold would vanish so far as none
tery use was concerned, its price going
to about $50 an ounce
@. What relation has free silver to
the present imitation program?
A. One Of the sections Of the Thomas
bill permits the President. in his dis
cretion. to allow the free coinage of
silver.
@. Is this the old Bryan plan Of
| Is to /?
A. 1t is substantially identical, except
that the President could fix the ratio,
instead Of having 1t fixed by law.
HELEN VASCO RETURNS