Evening star., 1934-01-16
The Money Program.

President Roosevelt's gold message to
Congress has effectually cleared the
air and given the country full notice
of his monetary plans and policy. NO
longer can the cry of uncertainty be
raised and the plea made that business
Is impotent because it does not know
what is ~lanned by the administration
with regard to the currency. The
Presidents policy Will have its strong
defenders and its bitter detractors
The proof of the pudding will be in the
eating. as always
Under the plan now put forward by
the President and for which he has
asked the approval of Congress. the
Government takes over all American
owned monetary gold. For this go4a
the Government turns over to It's
owners-in this case the Federal Re-
serve banks, for the Government mas
already taken possession of all prl-
vately owned gold and gold certitl-
cates-certificates, paper money, OF an
equal value in terms of dollars while
the present gold content of the dollar
continues Having taken over the
ownership of the gold and made this
exchange, the Government will then
proceed to revalue the dollar-cut Its
gold content-between the lower and
upper limits of fifty and sixty per cent
of it's present statutory value. At the
same time the Government will set up
a stabilization fund of s2,00o,OOO,ooo
out of the profits accruing to the
Government through the gold trans
action. These profits are estimated to
run in the neighborhood of $4,000
100000, depending upon the exact per-
centage of cut in the gold content OF
the dollar. This stabilization fund will
be used by the President to maintain
a stable" dollar, to maintain foreign
exchange at a rate that is fair to the
United States and to protect Govern
ment securities against any raids that
may be undertaken against them; in
other words, to protect the credit OF
the United States.
Still another Step-and one which
the administration apparently hopes
will be possible-is an agreement be-
tween the United States, Great Britain
and possibly other nations looking to
monetary and foreign exchange stabili-
zation. That is matter for the future
Until such an agreement can be made
she United States will go it alone in
much the same fashion that England
has done during the last two years, and
with much the same kind of weapons
in its hands TO maintain stable dollar
and to deal advantageously with foreign
exchange.
The President, in his message which
so clearly outlined the steps which he
proposed to take, has dispelled in large
part fear of immediate printing press
money imitation. At the same time he
has shelved for the present the ques-
ton of free silver" for while he spoke
sympathetically of the greater use of
silver as a basis for money and as
money, he said he would withhold his
recommendations regarding silver until
the silver agreement of the London
Economic Conference had had an op-
portunity to develop its value and until
he knew more about what his present
plans for the dollar would bring forth.
The revalued dollar will still be made
UP of one hundred cents, of ten dimes
and twenty nickels, even though its
value be reduced to sixty per cent of the
old dollar. The difference will be in
the purchasing power of the dollar, not
in its so Or appearance. The whole
purpoo Of the Presidents monetary
proepam is to reduce the buying power
Of the dollar and by the same process
to increase commodity prices, and then
to stabilize the dollar, with an end to
wide and violent fluctuations, During
the depression the dollar has greatly
appreciated in value, with prices of
commodities falling like plummet.
The Presidents plan is to get a more
normal" dollar.
The old-fashioned sound money"
men will view this action as the natural
development of a monetary plan which
began not merely with a temporary
suspension of specie payments but with
permanent reputation of a specific
promise to pay the principal and in
terest of certain bonds in gold dollars
of an agreed weight and value, a
breach of contract which, they contend,
would be dishonest if committed by an
individual.
Bitter opposition will come from
those who hold that the Government
is taking" stealing" some say-some-
thing from the people who now own
gold. There is now approximately
$500 100000 in the Federal Reserve
banks. The case may be carried to
the Supreme Court on the theory that
it is violation of the fifth amendment
to the Constitution which declares:
Nor shall private property be taken
for public use, without just compensa-
tion," and in the same paragraph pro-
vides that no one shall be deprived of
property without due process of. law.
The President contends, however, that
the Government has sole auth0flty