Evening star. [volume] (Washington, D.C.) 1854-1972, 1936-11-08
MONEY STABILITY GOAL
OF DEVALUATION MOVES
United States, With Huge Stock Of Gold,
Holds Whip Hand Over Erection
of New Standard.

recovery with the "over.production"
notions of three short years ago!
Then almost everybody imagined the
trouble was too many goods, not too
little money to buy them with. It was
then very easy for traditional bankers
to laugh at "the Warren plan" for
devaluation and for continuous re-
valuations Of the gold dollar, which is
what the new American French
English agreement regarding the price
of gold seems, in part, to mean. Still
earlier the same bankers had rejected
substantially the same plan when pre-
scented by me at the st. Louis meeting
of the American Bankers Association
in 1919. But the main point Is not q
variable gold price; the main point is
an invariable purchasing power. And
it would be possible for long period
to maintain invariable both the
purchasing power of money and the
price of gold, although not forever.
The increasing band Of economists
and bankers In Europe who see clearly
the new opportunity to reform none
tary traditions still hold their breath
in the suspense Of hope, just as the
diminishing band of their tradition
bound opponents hold their breath In
the suspense of fear.
Traditionalists Retreat.
There seems now little question as to
which side will eventually win. The
reformers have been progressing and
the traditionalists retreating for at
least two decades. The recent de-
valuations and engagements of "Ster-
lingaria," together with the American
English French agreement. are simply
the last links in a long historical chain
of progress described in my Stable
Money, a History of the Movement"
1t was the World War. which with its
great mutations. followed by great de-
fiations, caused monetary reform
greatly to quicken its pace.
In this rapid progress the chief
landmarks reached and passed be-
tween the war and the French devalu-
alton have been:
Cd The Genoa International Con-
ference in 1922, which passed resolu-
lions favoring the sterilization IN
purchasing power Of monetary units
by means of central bank policy. This,
which in 1922 was merely pious hope,
seems to be what is now, at last,
actually happening in, or for, some
Is nations. a..
2. The adoption (unoficially) In
1922 of policy Cthen kept as far as
possible "out of the limelight') OF
monetary control by the five largest
Federal Reserve banks, through OPEN
market operations devised by and per-
formed under supervision OF the late
Benjamin Strong. governor OF the
Federal Reserve Bank of New York.
(This policy nearly ceased after his
death in 1928; otherwise the depres-
sion-in my opinion at least-would
not have developed into anything
big)
g. The official Lord Macmillan re-
port of 1881 favoring the Sterilization
of the pound sterling in purchasing
power.
1882 Conference at Ottawa.
4. The British Imperial Economic
Conference of 1882 at Ottawa, even
more emphatically favorine stable
money.
5. The explicit adoption by Sweden
in 1881 of a stable money policy, with
a specific index number to record the
power of the krona (this
has been kept stable ever since large
ly through market operations in
which Governor Rooth Of the Riks-
bank had been trained by Benjamin
Strong).
g. The adoption, somewhat less ex-
plicitly, of similar monetary policy
by Norway, Finland and Denmark,
and, least explicitly but most i'm
portant of all, by England.
Z. The monetary announcements
and acts of President Roosevelt.
These included: Devaluation; multi
flying the gold clause" in contract;
the passage of the "Eccles"
banking act of 1885 and reconstitut-
ing the Federal Reserve Board ac-
cordly, so as to resume the open
market" policy of Gov. Strong; utiliz-
ing the very unfortunately additions
10 our national debt to create cor
land very Fortunately adj
iitivns to our national circulating
Medium ccheckbook money" or de-
mand deposits). internationally the
monetary policies of Roosevelt In
GUIDED his "bombshell" radio message
70 the World Economic Conference in
London in 1888 favoring the internal
,r purchasing-powe stability of the
dollar as against the external or for
stability then de-
by France. It was this con-
dict of ideas between internal and
sterilization which broke up
he conference. It has also required
waiting till this Fall for France to
'ecede from its attitude Of demand
ing gold standard with unchanged
gold content before the hope for any
important world reform could be re-
covered. Reginald McKenna, Eng
and's leading banker. said of the
conference that the Presidents "nego-
,iations, which are often described as
having wrecked the conference, pro-
'ided the one hope of solid accom-
In my opinion, that hope
Is greatly strengthened by Mr.. Roose-
velt's reelection.
London Conference in 1898.
8. The British Imperial Conference
II 1888 In London, which, as McKenna
points out, practically committed the
empire to the measure recommended
BY the Genoa and Ottawa conferences
and by the Macmillan report.
9. Accordingly, the members of the
British Empire and later Scandina-
vtan and many other countries at
tached or ''pegged" their monetary
units to the British pound sterling
and maintained parity by govern
mental exchange control through
sterilization funds" This .steriing-
aria" group Of countries, together with
France and the United States added,
now includes almost al the civilized