The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-02-08

| people VINO are being denateQ. Iht
cabinet crises in France are The
counterpart Of the impotence of the
Labor government in the summer o.
1881 and of the Hoover administra.
ton in 1928. With business di.
minishing and income contracting
there is political disintegration.
This is accomplished by the col
lapse of unsound financial Struc-
lures and the disclosure of Scanda-
louS conditions. England escaped
this experience owing to the fact
that she was forced off gold quickly
before the deflationary pressure hao
undermined her internal position
too seriously. But we did not escape
it. We had our banking scandals
as France is having her Stavisky
scandal.
Those scandals produce fierce re-
also by manifestations of social re-
volt on the part of those who can
endure no more dehation. In Eng
land there was a mutiny in the fleet
and the threat of a general strike
IN the United States there were
l. all sorts of agrarian uprisingS in
the form of resistance to foreclos-
ures and farmer strikes. In France
there are demonstrations in the
streets of Paris.
In all three countries these con-
ditions have generated a cry for q
government strong enough to bal
ance the budget and defend the
gold standard. But in reality u was
for the British and ourselves, and
is, believe, now in France, a cry
for government strong enough to
go off the gold standard without
precipitating a panic. in the last
phase of the gold effect the real
question in all three countries has
been whether weak government
would be driven off gold or whether
a strong government would be in
power when gold was abandoned.
The British got a strong govern
ment just before we abandoned
gold. The question is whether
France can organize a strong gov
eminent in time to achieve an or
derby abandonment of the present
gold parity. Once a government
exists which is strong enough to
leave gold that government is
strengthened immeasurably by the
instantaneous relief which aban-
donment of the gold parity brings
with it.
TINE French problem resembles
l. ours of last winter in that the
orthodox banking mind which infiu-
ences the opinion of the markets
is in the grip of two great delu-
sions. One is that the possession
of a large stock of gold means that
the gold parity should be main
tanned, at no matter what cost tc
the nation, because technically ii
can be preserved as long as the
| gold is not exhausted.
The other is that to abandon the
gold parity and revalue the cur
rency is the same as an imitation.
| The French, even more than we
are being tortured because they
are confused on the one hand by
the size of their gold stocks and on
/ the other by their failure to dis
tinguish between revaluation and
| Initiation. Yet our experience
showed, and theirs is showing, that
a lot Of gold, if it is incorrectly
valued in relation to goods, is no
protection whatever against the
calamity of a ruthless and vicious
defation.
You can not revive business with
gold that is too dear in terms Of
goods. You can not balance a
budget with a pile of gold that buys
too much.
Not only our experience, but that
of the British and of thirty odd ma
lions, shows conclusively that re-
valution of a currency does not
produce imitation. There has as
yet been no imitation in any coun-
try off gold except when it has
been deliberately undertaken. The
United States, which desires to in
fate somewhat, is having lot Of
trouble producing imitation. On
the other hand a country which
clings to a high gold parity too
long is in real danger Of uncon-
trollable imitation. For its budget
tends to become uncomfortable due
to constantly falling revenues, its
banks are undermined by boarding
and the flight Of capital.
T.
IN some quarters there is dis
l. position to fear the effects Of a
French revaluation. 1t is a mis-
taken fear. Our interest is the
same as the real interest of the
French nation. 1t is that the
French deflation should end and
that France should be restored to
her position in the world economy.
It is that France should recover her
national unity as the British did,
as we have.
1t is that France should take her
part in the world revival, thing
she can not hope to do while her