The Washington times., 1935-01-15

"CAO UPy oAlN
about II per cent over year ago,
but that is partly due to higher
prices and wage payments.
The chief drawbacks to further
expansion are labor difficulties
National Biscuit strike, and
threats in motors and steeD, and
legislative uncertainties centering
in money and credit.
Wholesale commodity prices,
however, declined last week,
largely as a result of the specu-
lative reaction touched off by
doubts as to the Supreme Courts
action on gold clauses"
It is interesting to note that the
business activity data are mostly
a week old, while the price figures
are right up to date. Thus the
latter reflect gold doubts, while
the activity figures precede the
scare.
Maybe some hesitation will ap-
pear in the business returns re-
ported next week, but probably
not much, if any.
The whole Supreme Court
gOld-clause affair is just a case
of "jitters." If the court
should decide that the dollar
is still as good as gold, real
business would be helped, and
the way to recovery would be
opened.
But there is little chance Of
such a decision, and if it came
1t would merely hasten infla-
tiOn, as l explained yesterday.
UnqueStionably, if we could
know that our money would be
as good as gold, we would have
q real basis for confidence in
the future that is now lacking.
People who have money would
at once become willing to lend
and to invest. That would sup
ply business with funds. At the
same time, business men could
undertake plans for expansion
and make contracts with con-
fidence.
But unfortunately there IS
practically no chance of such a
development.
In the first place, the burden
Of debt is unrelieved. Our Gov
eminent has deliberately decided
against liquidation through de-
flation. and this means that it
has decided to maintain the old
and inflated debt structure.
This it has done by increasing
the public debt, thus enabling
private debtors to stall off their
creditors. It has taken over many
large private debts through the
lRFC and other agencies.
AS long as this policy is main
tanned, the burden of debt will
be maintained. But as long as
the burden of debt is maintained,
monetary Stabilization will be i'm
possible, and initiation will con-
tlnue and grow.
Whatever talk you may hear
about "stabilization," you may dis
count 100 per cent. The budget
is not balanced, nor is there any
prospect of it. That means grow
ing debt. And growing debt means
growing initiation and monetary
instability.
So an adverse" decision on
the gold clause could not pos
Sibly restore the nation to the
gold standard.
1t might possibly put us on q
sort Of double Standard-gold
for some bOndhOlders, and paper
for the rest of us. But this
would not help much.
What we still do not seem to
realize is that at present we
have no standard for our money.
If the theoretical gold dollar
were really our standard money,
prices would certainly be much
higher. We have cut the gold
content 40 per cent, and fixed
q price" OF $35 an ounce for
gold. But prices" of other com
modities have not risen anything
like in proportion, nor has the
value of gold in comparison with
other commodities fallen proper
tionally.
If, therefore. we really want to
make the deValuation of the gold
dollar effective in higher prices,
the Surest way to do it would be
to return to the gold standard on
the devalued$ basis-the 59-cent
gold dollar.
The ony alternative seems to
be the fear type of currency IN
flation.