The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-01-16
A Sound Money Policy
An EDITORIAL

tionary effect Of large government expendi-
lures would be controlled by keeping finances
on a budgetary borrowing and gold bullion
base. Under the extreme initiation program
the government would resort to printing press
money which would tend to become valueless
and lead to bankruptcy Of the government and
people.
But the Roosevelt policy admits that the
inflationists are right in asserting that the old
gold dollar is dishonest and unavoidable, be-
cause it makes the debtor pay two for one and
because it permits wide fluctuations in prices.
Therefore the President proposes to devaluate
from 40 to so per cent to cancel the approx
innate difference in the purchasing power Of
the old and the new dollar.
This is Objectionable to the deflationists
There is an extreme deflationist group which
demands a return to the old dollar, even
though that is worth, in fact, not 100 cents,
but 200 cents in purchasing power This group,
however, has dwindled into insignificance dur
ing the last six months. Even most conserva-
tive bankers now recognize that an attempted
return to the old dollar under present condi-
lions would amount almost to national and in
Conservative opinion for the most part has
come around to the point where it is willing to
take fixed devaluation. Though conservative
opinion would prefer a devaluaton to 70 or 80,
it doubtless will become reconcIed to a lower
figure because it has won its major demand
that the dollar be a gold dollar.
The chief conservative criticism will be that
the President has failed to stabilize at fixed
figure and has left a 10 per cent range within
which to manage the gold content of the
currency in terms Of commodity prices.
without entering at this point into an
argument over the merits and dement's Of the
much restricted managed currency plan -
limited experiment which has not yet proved
or disproved it's worth-we believe the con-
servatives should see that it would be unwise
to fix the value of the dollar rigidly at this
time even from their own point of view.
The domestic price level today is too arti-
fetal and too unstable to permit any one to
say definitely what fair and workable dollar
level would be. If it were fixed permanently
today at 60, it probably would have to be
changed a few points within a month or
year. Actual conditions do not permit any
more than an approximate sterilization at the
moment.
This is true not only because of domestic
but also of foreign conditions. There can be
no permanent sterilization until the dollar is
stabilized in terms of foreign exchanges. That,
in turn, can not occur until the President is
able to persuade other governments to enter
into some reasonable agreement. Meanwhile
the President proposes through use of
$4,000 100000 fund for dealing in gold and
foreign exchanges to keep the dollar at
world level which will protect our money and
our trade during the interim and which will
prevent sterilization at an unfair level when
permanent international agreement is reached.
Therefore, in our judgment, there is no
longer excuse for the monetary fears which
have checked business. On the basis of the
Roosevelt program the radicals can stop
worrying about the old dishonest gold dollar,
and the conservatives can stop worrying about
greenbacks. And the country can turn to the
real job of economic reform and recovery.