The Washington times., 1934-11-30

would suppose.
The reasons, I think, are as
follows:
(a) Many bonds were extreme
ly depressed because of doubt as
to default. Their prices we're very
low because, regardless of the
purchasing power of the dollar, IT
was feared that they would pay
no dollars at all. so when bust
ness recovered a little and the
companies did not fail, the price
of their bonds recovered. They
have not, however, recovered as
much as they would have done
had the dollar remained sound
and unchanged.
(b) There has been much buy
ing of bonds for the sake of mere
"liquidity." That is, the bonds
are bought not for investment, but
to hold temporarily, with the idea
that they can be sold more readily
than stocks whenever their holders
become convinced that severe in
flation is at hand.
Co Many financial institutions
by law can't buy anything else
but bonds.
Cd Many people don't know
what initiation is, and others don't
believe that we are going to have
further initiation. Many think
that our paper dollars are as
good as ever, and the Admins
tration keeps soft pedaling" in.
flation whenever it has to borrow
funds.
(e) The Treasury and the
banks have artificially supported"
the bond market, particularly for
governments
(D The reputation of the gold
clause in bonds may possibly be
overthrown by the courts. For
eign tribunals have ruled against
such reputation, and cases are
now pending before our Supreme
Court. (Of course. if gold bonds
are to pay gold, initiation would
not hurt themD
~ Should the 40 per cent
cut in the gold dollar not have
hurt bonds?
It would have hurt high grade
bonds seriously, if we had re-
turned to the gold standard. The
fact is that the devaluation OF
the gold dollar has been some
what of a joke, because we don't
have any gold dollars, nor can
we get any. Our paper dollars
have no direct relation to gold.
So why should we expect our
tinkering with the mythical gold
dollar to have any definite ef-
feet?
AS a matter of fact, even COM
modify prices have not risen any
where near as much as the cut
in the gold dollar.
~ Can bOOms and depreS.
Bions be averted without some
sort of reforms and planning?
The only way to avert depres-
eions is to stop booms. Once we
are at the peak of a boom, moth.
ing can stop us from falling into
q depression. Reforms which
would prevent the over-extenslon
Of credit and initiation would help
to prevent further booms, and
therefore depressions. But such
reforms and planning as we have
adopted during this depression
have made it worse.
az / read that at our pres
ent rate of spending it would
take 20 years to reach Eng
lands per capita debt, yet Eng
land is said to be better off.
Neither statement is true. Eng
lands per capita debt is much
larger than ours, but we are
catching up more rapidly than
stated. England is not better off
than we are. She is merely fol
lowing Sounder policies in balanc-
ing her budget, in banking. and
in monetary matters (no silver
buying, for example). These en-
able her to bear her large debt.
Anyhow, is England herself as
well off as she would be if her
debt were smaller? Do We want
England's debt and taxes?
~ Does defIation not spread
misery in France despite the
gold standard and a balanced
budget?
No. It is not deflation that
spreads misery. It is the neceS
sity for deflation which causes
misery, and that necessity arises
out of initiation, which causes the
deflation. You might as well
say that it is SOLDERING up after
a spree that causes the head
ache. Initiation is debt. Della
ton is paying off.
France refuses to "reflate" be
cause of the misery her people
experienced as a result of the
imitation they went through after
the war. She wants to gel
sound and we'll again. She wants
l. L.