The Washington times., 1936-01-11
AND REGULATE
THE VALUE
THEREOF
BY LEWIS HANEY
Professor Of Economics, New York
University

"FOr the past year or more
Father COughlin has been broad
casting that Congress has the
Constitutional right to coin and
regulate the value Of money,
but that international bankers
now do it. He says this pre-
vents recovery. Is this true?"
The Constitution gives Congress
power to coin money and regulate
the value thereof. That much is
true. The rest of the Fathers
idea is entirely wrong.
The trainers of the Constitution
had coins in mind. They refer
only to coined money.
And the fact is that nobody
not even an international
banker'-can or does make or is
sue any coins. (Counterfeitlng
coins is illegalJ Only the gov
ernment minis make coins.
Another fact is that money" is
only one of several kinds of cur
rency, Bank credit as used in the
forms of checks, for example, is
currency, but it is not money.
Money" has two main charac-
Neristics: /. 1t criculates freely
from hand to hand, without queS-
ton as to the credit of the is
suer. 2. 1t is used to measure the
value of things, and we quote
prices in money.
Bnt everybody knows that
checks drawn on bank deposits
do not circulate. They go right
back to the bank and are can
celled. More than that, checks do
not measure value. In fact, they
get their value from the money
,(dollars) which they call for. A
check is no better than the value
of the dollars it enables one to
get. It is just promise to pay
money.
The Constitution gives Congress
no power to regulate the value of
bank deposits or of bank checks,
but only the real money that
checks call for. In fact, the Con-
Stitution refers only to coins.
Most important Of all, is the
misleading play on words that
Father COughlin makes when he
refers to regulating the value Of
money
What the Constitution means
Is that Congress has the power
to decide how much metal shall
be put in our coins. This is very
different from saying that 1t has
power to fix the value of gold or
silver, or to control prices.
Congress can say how many
grains of gold or silver or nickel
or bronze are to go into our coins.
To this limited extent. it can de-
eide what value our money (coins)
shall have. It acted within its
powers when it devalued the gold
dollar.
But that is very different from
trying to regulate the value or
purchasing power of all currency.
=. Such power is not indicated in
the Constitution. It is not
power that anybody on earth can
have or give.
Governments have tried over
and over again to regulate the
value of cotton, wheat, and other
things. They have always failed
and always will. Just so, it Is
impossible for Congress to regu-
hate the value of gold or silver or
any other money material.
Congress can put smaller
Ruantity of gold in the dollar, but
t can't say how much that gold
worth or will buy. A 13-grain
old dollar will fluctuate in value
alst the same as a 23-grain gold
ollar. Demand and supply will
determine.
When Congress fixes a buying
rice on gold. it does not deter
nine the value Of gold. All it
Ioes is to say how many dollars
ur Treasury will give for an ounce
II gold. That has little effect on
he world market for gold.
The value of money is what it
will buy, and is the same thing
as the prices of everything you
purchase with it. To regulate the
value of money, therefore, would
be the same as fixing the prices
Of all commodities. That is an
aInpossibility.
Father COughIin talks about
the right to issue" money. No
body denies the right of the
government in this respect. 1t
Is the only iSSuer of money in
this country. What he seems to
mean is that the government
should also be the only money
lender. He wants the politicians
to run our banking business.
defy Father Coughlin to prove
that the government has ever
been or could ever be a better
banker or lender than private
bankers and lenders. Our gov
eminent, Federal and State, has
had plenty of sad experiences in
the banking business.
Finally. he says that 80 per cent
Of our money is privately owned
and controlled What does he
l.