The Washington times., 1934-10-10

IMAM ever.
Doumergue, the French leader,
has just won a victory involving
support for his deflationary pol
icy. France has plenty of gold
and has been coming more. The
dominant thrifty class of savers
remain unshaken in their COM
mon sense.
They see the great truth that
as earners and consumers their
interest lies in maintaining the
purchasing power of their money
not in reducing it.
In such matters, logic and
experience rule in France, HOl-
land, Switzerland, and Italy.
The majority of the leaders
see that you can no more add
to the prOductiveness or wealth
of q country by changing the
size of the tickets called money,
than you can make more
wheat by reducing the size of
buShel baskets.
They know that their ex-
ports can be stimulated" just
as well by charging fewer
francs for buShel Of wheat
rs charging cheaper (devalued)
francs. Either way is just
cutting foreign prices.
I may add that they see our
monetary experiments as a fall
ure. for they are not fed hand
picked Washington news" items,
but get the cold facts.
2. Our New Deal legislation
authorizes a further 10 per cent
reduction in the size of the
theoretical gold dollar "a dollar
which does not exist. Some
people still want further legisla-
ton to require a greater reduc-
ton.
My guess is that the 10 per
cent reduction to "50-cent dol
lar" is not improbable, but that
will be the limit.
No one can point to any bene-
fits which are attributable to our
devaluation policy. Farm prices
have risen on account of drought
and crop destruction policies. But
wholesale price averages have not
risen in any such proportion as
the 40 per cent devaluation OF the
dollar, and have recently declined
Even so, consumers are kicking
against high living costs.
Sooner or later. our people are
going to see the foolishness OF
doing things to the size of a myth
ical gold dollar which they can't
have! It has no relation to their
paper dollars.
But the bonuses, doles, pubic
works" expenditures, etc., Whicn
the New Dealers are scattering
around, mean such a public dept
that the Government will prob
ably want to manufacture more
paper dollars. This is the chief
force working for further devalu-
alton and initiation.
81 agree with most ecOno.
mists in considering the uItl-
mate general return to a gold
standard as certain.
Where did the recOrd-break-
ing gold production of 1888 go?
It went into boards eagerly
accumulated all over the
world.
who has boarded it? In
dividuaIs, banks, and govern
ments. without hesitation,
they have sought to build up
reserves of gold. You will
note that silver men want to
get rid of their silver at high
priceS.) -,
Why are international traders
arranging schemes to insure pay.
mentS in gold, by buying and
selling gold futures" in the open
London market?
AS soon as we are ready to
TOSSCaDlLSu d OcAoAo AVA
confidence, we will want cur
rency in which we can have con-
fidence, This, however. can come
about only when government
budgets are balanced. Then cur
rencies will be stabilized. and the
gold standard will be found neces-
Sary.
A. conclude that the gold
stocks of sound and honestly
managed companies are as good
as the gold which is in their
mines. The ore reserves cannot
be absolutely known but, WITHIN
that limit, the proven earners
are fairly priced at around 10
times earnings per share. ana
they give an excellent yield In
dividends. :,
The possibility of further deval'
uation of the dollar, whether On;
rectly or W injecting overvalueo
silver, offers the chance OF higher
gold prices.
But beware speculation in the
eats and dogs Of gold mine shares