The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-01-03

7 OMIT Germany, because the for.
L eign trade of Germany is carried
on in deprecated reichsmarks. We
shall not be far wrong in saying
that four fifths of the worlds trade
is done in currencieS which are de-
preciated by about So per cent OF
more. Now, why should it be con-
sidered dangerous to put the dollar
on level with the money in which
four ffthS of the worlds trade is
done?
Take the relationship between the
dollar and the pound. For a cen
fury pound has been worth S4.86
In March it was worth about $40
In December it was worth about
$5.15. Which was the more ABB
normaI?" A pound worth 80 per
cent less than it has been for a
hundred years, or a dollar with {
per cent more than it has been
worth for a hundred years?
I do not mean to minimize the in
convenience and disturbance Of viO-
lent fluctuations But if there is
any normal" relationship between
the pound and the dollar it is much
more likely to be the one which pre-
vailed for a century than the one
which prevailed for eighteen
months in the midst of a world de-
preston. So I think that it is at
least arguable that the present re-
lationship is more nearly normal
than that which existed last WIN
ter. I am confirmed in that belief
by the fact that under the present
relationship both Britain and Amer
lea are doing more business. 1t will
take a lot of proving to show that
world trade, which has actually in
creased, has really been hurt by the
reaignment Of the dollar.
None of this is intended as a
claim that the monetary problem is
solved and settled. 1t is a claim
that we have made real progress
And if we are looking for trouble
for truly abnormal monetary con-
ditions, the place to look, 1 suspect
is not in the United States, but in
the gold standard countries Of con-
tinental Europe and in the silver
and paper countries of Asia.
IN relation to the trade of the
L world, the franc and the Ira are
probably too valuable, the japanese
and Chinese moneys are probably
too cheap. The over-valued gold
currencieS of France and Italy are
likely to prevent those two coun-
tries from participating in, and con-
tributing their full share to, the re-
vival of world trade. The excessive
depreciation of the ASiatic curren-
cieS is probably destructive of GER
tain kinds of prices. In any event
the dollar today is in reasonable
relationship with the major curen-
cies of the world, a little cheaper
than the British pound a little dear
er than the Australian and Scandi-
navian money, on an equality with
the Canadian.
Why such relationship of ap-
proXimate equality with our chief
customers and competitors should
be regarded as fantastic is rather
hard to understand, I can under
stand why a currency which is radi-
cally out of alignment with other
currencies should be suspected. But
why the world should damn the
dollar which is now approximately
realigned with its currencies, why
it should be held to be dangerous
to be nearer the old parity Of ex-
change, is something that the
alarmists ought to explain.
1t is interesting to note that the
realignment of the dollar has CO.
incided with a revival of world
trade and that this revival is in its
turn producing tangible evidences in
Washington Of a renewed interest in
the lowering of tariffs.
a YEAR ago. following the lead
IA of most economists, I believed
that world recovery would have to
be initiated by reducing tariffs. But
what we got was higher tariffs
everywhere. I now see, or think I
see, what was wrong with that
theory. 1t put the cart before the
horse. In order to reduce tariffs