The times-news. [volume] (Hendersonville, N.C.) 1927-current, 1935-04-23
NEWSPAPERS OPINION
PIECES OF MONEY

NOR unless il be the instance of Germany a1teE
the war, Great Britain suspended gold payments
in 1921 only when the Bank of England could see
the bottou of the gold bin She had to do 1t. Even
tbep sba did not contiscate her citizens gold nor
| forbid them to possess it.. She bought 1t from
them with paper money, only provided they were
wiling to sell it, and anybody willing to pay
premium in paper money for gold was free to 40
so and to keep it.
The American government not only suspended
gold payments; it abandoned the gold standard
with more than One-third of the visible monetary
gold of the whole world in the possession OF TINS
country. There, neither scarcity OF gold
nor scarcity of money, There was panic anu
there private boarding of gold But largely
because the congress began to talk OF managed
currency, of commodity dollars, OF rubber dollafS
in place of gold-standard money Even If the gov
eminent had been obliged during arpanic 10 stop
paying gold, that would not have been to aoanoon
the gold standard. There was no necessity 10 de-
value the dollar, to debase the currency TO fepn-
date anything.
What obsessed the government was the idea OF
getting rid of the gold standard in order to be
free to manipulate the value of money for purposes
of a great political and social experiment. The
theory held out to the popular Imagination was
that as the government cheapened money by de-
valuation, two blessings were bound to follow
one. the blessing that debtors would be eased OF
their debts second, the blessing that prices would
rise in a manner to produce kind of economic
ecstasy, and so prosperity would be restored. Has
it worked?
1t is true that great many debtors have been
eased of their debts, but mainly this has been &C
complished by transfer of their mortgages at
lower rates of interest from the hands of private
creditors to those of the government as the great
paternal creditor.
1t is true that prices have risen, but this has not
produced the psychic effect that was imagined. ina
reason why has failed to do so is perfectly clear
Rising prices produce economic good feeling only
when there may be at least the deluson that values
are rising. When everybody knows that the rise IN
prices is itself the deluson, that prices are rising
in terms of paper money only because the value Of
paper money is failing, then that state of economic
good feeling is not experienced.
Meanwhile there are positive effects that were
not imagined.
In the world of private enterprise the borrowing
and lending of capital tends to Why is that?
You need to think of only reason. 1t is unlaw-
full in any note or bond or obligation to write
promise that the value of what is paid back shall
equal the value of what was borrowed. Who,
therefore, will be anxious to lend?
The saving of capital to be borrowed and loaned
tends to cease. Why? Because capital must be
saved in terms of paper money and nobody knows
what that paper money will be worth tomorrow.
If you put dollars in the bank you will get back
the same number of dollars, of course; you cannot
know what those dollars will be worth when you
take them back.
! When it is unlawful for people among themselves
to agree to return what they borrow from one an
{ other in money of any particular kind, they are
upon notice that what they lend may and very
probably will be returned to them in diminished
! value. Who, therefore, will be the lender?
! When people look at the paper money in their
pockets and that they cannot believe what is
engraved upon it. and when they understand that
! they may read any morning in the newspaper that
the government has devalued the dollar again, even
without notice, who will save paper dollars?
| There comes a saying in Wall Street, seriously
and literally meant, "Do not save what you cannot
afford to lose" Then appears, you would ex
pect, a reckless feeling toward money Since no
! body can say what it will be worth tomorrow, why
+! not spend it now? Evidence of this feeling is
| wherever you look for it Observe how people
not the rich only, but all kinds of people-are
spending their money in time of depression, at
the race tracks, in unusual recreations, in betting
and sports, in the play places all in spirit of to-
morrow be damned. That is of the moral eff
fects of breaking down faith in the integrity of
money The spirit is logical.
There begins to be statistical evidence Taking
all the kinds and sources of saving into one &C.
count, it appears that for the first time in our
history our saving is below zero. We are consum-
ing each day more than we add. What does that
mean?
If you should family on farm eating its
seed corn, butchering its brood sow, burning its
front porch in the parlor stove, you would know
what 1t meant and it would make you shudder. 1t
4 IS not so easy to the wearing out of machines
and the alarming rise of obsolescence throughout
industry 1t is hard to realize that we may be de-
vourlng our toools If we are it is disastrous. If
we are not, we are coming to it. Even the govern
ment now begins to see that Yet seeing it OBJ
hquely not as consequence of what it has done
to the integrity of money and the inviolability OF
contract, 1t turns its mind to another problem,