Evening star., 1935-03-11
j. S. TO PARE DEBT
WITH GOLD PROFIT
Thomas and Treasury Differ
on Whether Currency
Will Be Increased.
Ry the Associated Press.

BY the Associated Press.
The Governments decision to use
part of its $2.8l2,000000 devaluation
profit" to reduce the public debt led
to conflicting interpretations today.
The Treasury held that the total
amount of outstanding currency should
not be changed" as result Of the
plan to retire some Government bonds
with S642 900 900 of the profit arising
from trimming the dollars gold value
last year.
On the other hand. Senator Thomas,
Democrat. of Oklahoma, leader OF
the currency expansion bloc in Con-
gress. foresaw q $40 100000 increase in
Thomas Praises Plan.
Declaring that for the first time. the
public debt will be cut by the issuance
of Government obligations which bear
no interest, Thomas praised the move
by saying:
1T is along the lines of what We
have been clamoring for"
He also praised the plan as a step
toward one single type of currency
and the concentration in the hands OF
the Government of the power to issue
money.
Under the Treasury plan. the ma
tional banks will lose the power TO
issue currency against certain Govern
ment bonds. right which they have
had since they were created after the
Civil War.
Gold Stock TO Be Set Aside.
The bonds to be retired are the 2
per cent "consols" of 1880 and the 2
per cent Panama Canal loan bonds
of 1866 and 1888. which ma
tional banks have been permitted tc
use as backing for currency.
They will be paid off in the main
by the issuance of certificates against
gold held in the Treasury. The gold
covered by the certificates will be set
aside from the Governments other
stocks. Certificate-holders will not be
able to obtain the yellow metal itself,
of course. since it is unlawful for an
individual or corporation to possess
monetary gold.
Only portion of the profit result
ing to the Government from devalu-
ing the dollar is involved The total
profit has been figured at S2,8l2 ,000,-
600. OF that sum, $4,000 900 900 was
put into fund to be used to stabilize
the exchange value of the dollar.
Some of the $4,000 100000 in the
stabiliZation fund eventually may be
applied on the public debt. However,
money in the fund will be available
in the near future only for certain
stated purposes, unless President
Roosevelt should exercise his author
1ty to terminate stabilization opera
tions ahead of schedule. Congress set
January 80. 1886, for the expiration
OF these activities. but gave Mr..
Roosevelt the right to end them
earlier or continue them a year
longer.
Secretary Morgenthau at present
has power under tine gold reserve act
OF 1884, to use portions of the stabili-
cation fund for investment in direct
obligations of the United States.
In announcing its plan the Treas
ury said retirement of the bonds
mentioned, and the expiration next
July % of authorization for the is
suance of national bank notes against
other bonds, would accomplish "a
simpliflcation of the currency system
through the elimination Of national
bank notes" More than $500, 900, 900
OF the bonds being called were report
ed to be on deposit with the Treas
urer of the United States as security
for this type of currency.