The Washington times., 1935-03-20

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AAS<$%&"* have q STAN
Lewis Haney dard for our
a dollar is convertible into
a fixed quantity of something
which has market value of its
own. Then there is no question
about what a dollar is, and trade
is much less restricted. Without
a standard, we always find con-
fusion, wide fluctuations, and
manipulation as to currency. This
is true today.
First, note that nothing can be
effective as a standard Of econ
omic value except it be some ma
terial substance. Material things
can be homogeneous and gener-
ally recognized. They may be
transported and stored. They can
have definite objective value
attached to them in markets.
Next, note that some single
material is necessary and best.
There is no way to hold together
the value of fixed quantities of
two different materials. The value
of some one material has to be
the standard for measuring the
value of all other things. Any.
how, we want the best standard,
and it is hardly likely that any
two materials are equally good
equally stable and convenient.
So the question becomes this:
What single material is the
best monetary standard? After
much experiment, the world
has settled upon gold.
Briefly, the reasons for gold
are that Cd it is universally de-
sired; 90 it is most convenient,
especially because it has a value
which is high, but not too high;
CD its value is very stable, chief
ly because the annual additions
to the total world supply are but
small percentage.
If there is any better material.
what is it? I, for one, would wei
come its adoption.
Superficial thinkers often say:
'"The gold standard has broken
down. Under it, we have had a
great depression and many
troubles. Therefore, it is bad"
But think a minute. We might as
well say that democracy and
ethics have broken down. Would
that mean that democracy and
ethics are bad? In this mad, war
world what standards
haven't broken down?
The fact is that there never has
been, and never can be, an
effective monetary standard when
a nation continues to spend more
than its income, and piles up an
excessive debt. That is one of the
curses of war. Nations at war
generally issue more notes than
they can pay, and so have to
abandon all monetary standards.
We practically abandoned the
gold standard when we entered
the war, and decided not to pay
cash to carry it on! Ever since
that time, we have had too much
credit paper, prices have been
inflated, and payments in gold
have been in doubt.
The superficial critic says:
"There Is not enough gold to
redeem currency" That is
bunk. ~ There is more gold
than ever before, and the supply
is increasing steadily. ~ IF
too many notes have been
issued, they must be retired and
reduced 30 a volume which gold
can support.
It is folly to say that we have
to have anything like a dollar
in gold for every dollar of cur
rency. That is no more true
than that a bank has to have q
dollar of reserves for every dollar
of deposits. If only we keep our
credit currency on sound, self.
("elastic") basis, a
dollar in gold can safely support
eight or ten times as many dol.
lars in currency.
Ignorant persons say that
England has abandoned gold"
The truth is that England was
reluctantly forced off gold be.
cause of excessive debt. Her ex-
perience since has been so un.
satisfactory, on account Of wildly
fluctuating exchange rates, that
we may predict without qualifi-
cation that she will return to the
gold standard as soon as possible.
Meanwhile, she uses the French
gold franc as basis for (attemptS
to stabilize her debaSed pound0
We will never get back "on
gold" again until there is peace
in the world, and until the lead.
ing nations have worked out debt
settlements and balanced budgets.
This statement tells the story. It
means that one Of the first signs
of returning economic sanity and
prosperity will be return to the
gold standard.