The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-01-16


tive step at that toward an ultimate
is not yet in sight. 1t may be use
full. however, to attempt to state the
nature Of the problem which calls
for solution.
The practical difficulties of re-
storing the international gold stand
ard and the dangers Of restoring it
in its old form, are perhaps not
fully appreciated among those who
look upon themselves as the guard
ians of sound money.
Yet we have just witnessed the
breakdown of the standard less
than three years after it had been
re-estabHshed, and it is difficult to
see how responsible statesmen and
financiers can advocate a second
restoration until and unless they are
reasonably certain that the causes
of the recent breakdown have been
cured.
1t is probably more difficult to
restore the international gold
standard today than it was in 1925
For since that time the bulk of the
worlds monetary gold has been ac-
cumulated and sterilized in three
countries. There are about $4,000
tons of gold in the world, and about
$4,000 of them sare held in the
United States, France and Great
Britain.
Obviously, these three great gold
holding countries have got somehow
to redistribute their gold if there
is to be an international gold stand
ard. How is this to be done? How
are Japan and Germany and Cen
trail Europe and South America and
Australia and India to get enough
of this gold to set up true gold
currency with gold reserves?
Obviously no one in France, Eng
land and America is going to pre-
sent the Japanese and the Germans
and the Argentinians and all the
rest of them with fair share of the
worlds small stock of gold. Nowhere
does devotion to the gold standard
go to the length of contemplating
free gifts of gold to countries which
lack it.
DUT if the gold is not given
IB away, then those who lack gold
must borrow it or must buy it. But
who in London, Paris or New York
wants to lend gold to countries that
lack it? The reason they have lost
their gold is that they already owe
more than they can pay The only
other way they could get gold is to
buy it by exporting more goods than
they import. They could do this by
depreciating their currencies. But
this would mean that Britain,
France and the United States would
have to stand by and let their for
eign trade be undercut by The debtor
countries and their home markets
flooded by cheap imports.
Political human nature will not
stand for that. Therefore, the gold
which now is cornered in these coun-
tries can not be rediStributed as a
gift; it can not be borrowed or
bought by the debtor countries ex-
cept by threatening the trade of the
creditor countries.
Some observers, notably L. L. B.
Angas, in his extraordinarily in
tersting pamphlet on "the coming
collapse in gold" have concluded
that the practical difficulties of re-
distributing the gold and of keeping
it distributed, are insuperable.
They prophesy the abandonment
of gold and advocate the continual
ton permanently Of what now exists
in three quarters of the commercial
world, that is, manager paper cur
rencies. This is a conclusion which
most men will be extremely reluc-
tant to accept.
The President has made it clear
in his message that he does not ac-
cept it. For while it is indisputable
that all modern currencies are, and
necessarily must be, managed, it
seems extremely dangerous, in view
Of the limitations of human wisdom
and disinterestedness, not to have
some metallic measure which re-
stricts somewhat the discretion of
those who manage money.
But anyone who is conservative
enough to desire metallic control
of money must be bold enough to
recognize that gold as it now is