Evening star., 1935-02-25
KEMMERER FEARS
INITIATION MOVES
Balancing of Budget and
Return to Gold Urged in
Town Hall.

Balancing of the budget and re-
turn to q statutory" gold standard
to relieve the depression were advised
by DR.. Edwin F. Kemmerer, Prince
ton professor of international finance,
speaking at the Town Hall of Wash
ington at the Shoreham Hotel last
night before approximately 1000
Washingtonians.
;, DR.. Kemmerer warned his audience
that I'VE are drifting in an ever-in-
creasing imitation current and there
are rapids below" He said the United
States would have been further ad-
vanced out of the financial and eco
nomic depression if the Government
had held on to the gold standard.
Infiationary spending was roundly
scored by the speaker. On almost
every point where he touched on
criticism of administration monetary
policies he was questioned at length
by the panel. made up of Senator
Tom Connally, Democrat, of Texas;
Earl Bryan Schwulst, director of the
Commodity Credit Corp; John Dick
inson, Assistant Secretary of Com
merce; Representative John B. Hol-
lister, Republican, Ohio, and Repre-
sentative Robert Ewing Thomson
Democrat, of Texas.
Slow Turnover Blamed.
Depressions are not caused by lack
Of money, but by the slow turnover
of currency, DR.. Kemmerer said. He
ures collected since 1919 of the aver
age velocity of money turnover ir
banks throughout the country. These
charts showed the turnover for 1925
was AZ times a year, "a in 1925 and
23 in 19345.
The speakers advice to monetary
chiefs was to slash Government ex-
penditures, balance the budget
finance spending out of taxation anc
the creation of a taxing system that
will make every citizen feel the weight
of the governmental spending. He
advocated an income tax similar te
Great Britain's, reaching down to in
comes Of $3.50, and an excise ia,
of selective nature, rather than 6
general sales tax. He also asks fol
the sterilization Of the dollar, con.
vertible into gold bars at the present
rate of 15.5 grains of gold to the dol
lar, instead of what he termed the
''de facto gold standard dollar" which
~ rro1l hy,,yipo r0uar
Confidence Prime Necessity.
sThe prime necessity for recovery
is confidence" DR.. Kemmerer as
serted. 80 long as the people lack
confidence in the financial policies
of the country, just so long will they
hold currency out OF circulation
People get the idea that If there
were more money in circulation all
their ills would heal themselves. Thi!
is q false idea. there is superabun-
dance of money in this country now
All that is needed is confidence tc
start money to moving out of oul
banks and from the pockets o1
hoarders.
"Inf1ationists have sought to raise
sprices, with results disappointing te
them, despite their open-market pur-
chase of Government securities, theil
spending for public works. reduction
of the dollars gold content repudia-
ton of gold contracts, purchases OF
gold and silver and lending of Gov
ernment money"
DR.. Kemmerer said there is 81 pei
rN1I in, ha TTYaifnd Sfofns
than there was in 1929, based on the
old dollar. Based on the new dollar
there is los per cent more, he said
He said that in order to whip the de-
preston confidence must be restored
and that this can come only with q
convertible gold dollar and bal
anced budget.
Only One Agrees.
Representative Hollister was the
only member of the panel to appear
ito evince any agreement with the
speaker. He observed, during ques-
tioning, that inf1ationary measures
had hurt wage-earners and the mid
die classes most.
Senator Connally fired several
questions, demanding yes or nc
answers, at the speaker before DR.
Kemmerer called halt with the
observation that such brief handling
Of the question might cause me to
mislead the audience" Connally
argued that we were on the gold
standard when the depression came
and that this fact had not prevented
the catastrophe.