Evening star., 1934-08-29
Ultimate Utilization Seen,
However, in Comment on
Morgenthau Talk.
NEW DEAL COST HELD
AT ONLY HALF BILLION
Increase in Public Obligations Is
Held Mostly Offset by New
Assets.
BY J. RUSSELL YOUNG,
staff Correspondent OF The Star.


HYDE PARK, N. Y, August 90
President Roosevelt today gave reas-
surance that his administration has
no present intention of using the
Treasurys gold profits to reduce the
public debt.
For the benefit of those who read
into Secretary Morgenthau'S radio ad-
dress last night the fear Of a sudden
and violent imitation of the currency,
Mr. Roosevelt declared that use of this
gold profit to reduce the public debt
was not to be contemplated for long
time yet to come.
The President so expressed himself
at his conference with newspaper cor
respondents. He emphasized that i'm
portance should be attached to the
word ultimately" used in Mr.. Nor
genthau's address.
Termed Like Nest-Egg'
The President said the money re-
ferred to by Mr.. Morgenthau is in the
Treasury and probably will be used
some time. He described it as being
something like "nest-egg," and Smil-
ingly said that ultimately one uses all
or part of ones nest-egg.
To observers here who have closely
followed every step in the develop
ment of the administrations financial
policies it appeared the Secretary's
speech last night was intended chiefly
to bolster up the Treasury's position
as it prepares to float its tremendous
billion and three-quarters issue OF
securities next month.
With 1,200000,000 in Liberty
Bonds to be refunded in october in
addition to some 100000 900 in short
term paper the Treasury is facing a
crucial test, and it was believed here
the Secretary's radio address was
prompted in large measure by de-
sire to call attention to the fact that
while the public debt has increased
heavily under the new deal, the bur-
den has fallen comparatively lightly
upon the TesssIlry due to the huge
So 800, 900, 900 profit realized by the
Government as a result of its devalu-
alton of the dollar.
None here doubted that the use OF
this profit in the manner suggested
by Secretary Morgenthau last night
would result in an intensely real in
fation of the currency. To retire
corresponding amount of Government
obligations, this profit" would have
to be turned into currency, so that
where $5,000,000, 900 in money is in
circulation today there would be ST.
800,0O0,000 in circulation thereafter.
Prices Would Soar.
The economic effect of this cur
rency cheapening would undoubtedly
be to force prices up radically.
Through the mere operation of the
law of supply and demand which ap-
plies, according to economists, to
money as well as to commodities, the
value of the dollar in domestic trade
would fall sharply and would reach,
presumably, here at home, the So
cent level at which it is being
held abroad However, nothing alters
the fact that the $2,800,000,000 is
available in the Treasury for use at
any time and that it is an asset just
as real in its present form as it would
be were it actually to be coined into
money or issued in the form of paper
currency.
President Roosevelt indicated very
plainly today he is not contemplating
making a statement reassuring busi-
ness. There have been rumors to
this effect for some time. When asked
about it today the President roared
with laughter and then asked, Has
that old rumor started again?"
NEW DEAL COST HELD LOW.