Evening star., 1934-01-18
The Political Mill
By. G.. Gould Lincoln.

President Roosevelt effectually laid
his cards on the table In his gold mes
sage to the Congress last Monday. For
months there has been Q clamor for
some indication from the White House
as TO the currency and monetary policy
Of the administration. Now the pro-
gram has been revealed, and pretty
clearly revealed. There are some who
seek to read into the Presidents pro-
posals things that do not appear on the
surface. Mr.. Roosevelt himself, how
ever, appears to have Q very definite
idea what the whole thing Is about.
That the Roosevelt program on
seems a foregone conclusion. If there
are opposing ideas among members Of
Congress-and there are-they are d.
vided. with radicals urging far greater
imitation and "free oliver" and conserva-
ttves demanding an immediate return to
the gold standard as 1t was practiced
before Mr.. Roosevelt took ONCE. In
some quarters the constitutionality of
the proposal to take over all the none
tary gold in the country and then to
devalue the dollar by lessening its gold
content has been CHALLENGED. Senator
Carter Glass Of Virginia, former Secre-
tary Of the Treasury under President
Wilson, Is one of those who Is most
severe in his criticism Of the Presidents
plan. and Representative Luce Of
Massachusetts,. Republican member Of
the House Banking and Currency Com
mittee. Is another. Attorney General
Cummings has handed the Senate
Banking and Currency Committee, how
ever, an opinion completely upholding
the constitute Of the program.
This was expected in view OF the fact
| that the President undoubtedly had con-
suited his chief legal adviser before
sending his message to Congress.
Just how the country will react Ia
the order that hereafter gold is not to
be considered money or to be used
as money remains to be seen. Gold
money in the past has been consid-
cred the best. But the Government is
| going to take over all the gold In
the country that is not used CONNER
| ctally in jewelry, ETC. and hold It as
bullion, and it will be used only to
settle international exchange at times
and when necessary to do 50. It will
continue, however, to be the basis of
monetary issues. It is the contention
OF Senator Glass that the GENERALIZATION
OF all this gold in the Federal Treasury
really means the setting up Of great
central bank, with the Secretary of
the Treasury as its head He further
insists that the issuance CT paper money
by the Federal Reserve banks against
certificates issued them by the Treas
ury@supposedly based on gold-is tan
tamount to the issuance Of money by
the banks with no real basis at all.
L - n
If the American people are convinced
that the new dollars are good dollars,
that is all that Is necessary to keep the
wheels going. Few people in this coun-
try have had any gold coins in recent
years. The withdrawal of gold from
circulation, therefore, is not likely to
create any unusual condition. 1t will
no longer be possible to give gold coins
as Christmas presents But that was q
condition that existed last Christmas
But. generally speaking. the huge busi-
ness Of buying and selling in this coun-
try has for years been carried on
through the use Of paper money and
credits and the use Of silver nickel and
copper coins.
The country so far has refused to
believe that dollar Is not dollar
despite the various moves Of the ad-
ministration in the past few months
with regard to money. Perhaps the
| very confidence Of the people in the
dollar has hampered to some extent the
efforts of the administration to force
prices of commodities higher. The
q, country will accept the new dollars with
confidence, too. it is hoped. Nothing
of confidence In the new dollars. That
| indeed would create chaos
| With all these changes regarding
money being put into effect under the
new DEAL" it seems exceedingly timely
that another reform be made-the abo-
lition of the system by which very large
part of the wealth of the country invest
ed in Government securities. Fedora
and State and municipal, escapes taxa
ton. Tax-free securities, whereby somt
forty billions of dollars are free OF taxa
ton, in part or wholly, seem to hav.
no proper place in this country. The!
have been under attack for years b!
various Presidents of the United State.
and Secretaries of the Treasury, includ
ing the late President Coolidge, former
President Hoover and former Secre
taries Mellon and Mills. The Hous'
Ways and Means Committee, through
subcommittee headed by Represent
ative Sam B. Hill, has gone into th'
matter extensively, although 1t ha'
withheld recommendation pending Wort
from the administration, PARTICULAR!
with reference to the refinancing Of tn
Government securities and the Govern
ment Indebtedness. The subcommittee
however. has reported that the best wa!
Of dealing with this matter OF tax
| s~ nd
ment to the Constitution.
Senator Lonergan Of Connecticut
Democrat, strong advocate Of the
elimination Of tax-eXempt securities
has made an exhaustive report on the
situation both here and abroad as il
relates to tax-exempt securities. In thl'
report Senator Lonergan said:
THE logic and wisdom of levying q
tax on exempt securities has continued
with such force down to the present
time that the present session Of Con-
eress Is faced with the necessity OF
taking some definite affirmative action
There is no escape from this conclu-
sion. The question now is simply one
of which course we shall adopt.
I'm approaching the procedural diff.
culties I have done so with a full
realization and understanding of the
present economic situation, as well as
! numerous decisions Of the United
States Supreme Court and our Federal
courts relating to the constitutionality
of imposing tax on income from
certain types Of exempt securities
These facts, which will hereafter be
discussed in some detail, have led me
to the conclusion that Congress will
adopt the following course: Cd Enact
legislation to amend the revenue laws
SO that future issues of Federal securi-
ties can be taxed; or ca propose q
constitutional amendment granting
power to the Federal Government and
to the States to tax future issues Of al
States or subdivisions thereof"
The first step, Mr.. Lonergan said
would be easier, but not so beneficial
since it would apply only to future
issues of securities. He has introduced
two measures, one q bill to levy q tai
~, fY,trIra issl1eS of COVernment ge-