The midland journal. (Rising Sun, Md.) 1885-1947, 1934-02-02
by William Bruckaf

. fest for some time. Conditions have
to adjust themselves. But the spon-
sors of the new arrangement for
money have not been able to explain
to me why the artificial boosting of
prices may not lead to ultimate evils.
l mean by that to inquire why, if the
prices are started upward, we may
not expect to see them reach level
that Is disproportionately high, level
that will have the same effect upon
you and me, In our daily buying, that
drained our resources during the
World war.
The legislation affecting monetary
matters which the President asked
congress to enact in
Treasury cluded authority for
that the Federal Re-
serve banks have stored up. 1t amount
ed to approximately S3,700,000,000.
All of this gold now becomes the prop
erty of the treasury. That agency Of
the government, therefore, possesses
all of the gold for monetary purposes
that there is available in this country.
When the treasury has taken it over,
1t will pay the Federal Reserve banks
in gold certificates, yellow backs of
the type that used to be in circulation.
But the irony of the thing is that the
reserve banks cannot leash" those
certificates. It must simply hold them,
awaiting the pleasure of the treasury
because they are to be redeemed at
the pleasure of the treasury.
OF course, the reserve banks will
be allowed to use them as they used to
use gold. Federal reserve notes can
be issued with the uncashable gold
certificates as the collateral, instead
of gold. The reserve banks, therefore,
simply had to obey the decree of the
federal government and turn In their
good gold as every one else, individ-
uals or corporations.
The federal government is going to
use two billions Of the gold taken from
the reserve banks to establish "sta-
bilization fund.-" simultaneously, the
secretary of the treasury has been
given authority to buy or sell interna-
tional exchange. That is, he can buy
British pounds or French francs or
German marks, or he can sell dollar
exchange or buy dollar exchange.
Money from the sterilization fund will
be used.
The purpose of this Is to bring about
balance between the amount any ma
tion pays the United States and the
amount paid by the United States to
that particular foreign country. BY
that method, no gold would have to be
transferred, or only small amounts
would change hands. Thus, it is
claimed, the new value of the dollar
will be maintained at what amounts
to an even trading worth insofar as
foreign nations are concerned. OF
course, 1t Is not actually the nations
that are concerned, but the business
of those nations that makes interna-
tional trade, causes the sale of wheat
or cotton or corn or hogs and the pur-
chase of coffee, of sugar, of novelties
or the hundred and one other items.
No one seems to know how much it
will cost to maintain the dollar on a
stable basis as measured in interna-
tional trade. When the President pro-
vided for a two-billion-dollar stabiliza-
ton fund, he apparently was guided
by the size of the British fund which
was created for exactly the same pur-
pose, namely, protection of the British
pound from being made a currency
that nobody wanted.
Another phase of the monetary pro-
gram upon which Mr. Roosevelt has
launched seems to
Credit warrant discussion.
Control The new legislation
has the effect, am
told by authorities, of giving the treas
ury the greatest power 1t has ever
held in the matter of credit control.
It has taken over this power from the
Federal Reserve system, which was
created under the Democratic admin
istration of Woodrow Wilson, to pro-
vide flexible currency for business.
It's purpose was to make certain that
as business expanded and its need for
more currency developed, the Federal
Reserve banks could supply it. Wheth-
err that purpose has been destroyed,
authorities inform me it is too early
u