Evening star., 1936-01-06

mentS, banks, corporations and indi-
viduals. Nation after nation that Is of
the gold standard today has more
gold than it had when it was on the
gold standard. The total stock OF
monetary gold in the leading coun-
tries of the world in terms Of old gold
dollars is today "a per cent greater
than 1t was when the economic crisis
struck us in October, 1929.
Value Of Gold Increased.
This worldwide scramble for. gold
has put up the value of gold in terms
OF commodities, which in turn has
greatly stimulated gold production,
making the worlds output OF the
yellow metal for the five years ending
1885 by far the largest of any quin-
quennium in history. and causing
India to shift her position from being
a country that absorbed into jewelry,
ornaments and boards on an average
about one-sixth of the worlds total
gold production annually Q926-l930)
to being q country that poured into
the worlds markets annually Q93l-
1885, the equivalent of one fourth of
the worlds gold production.
When once we work our way out of
this depression and when the present
scramble for gold for boarding pur-
poses in Europe and America is dis
continued and gold again flows back
into active monetary uses, and when
the large additions to the worlds
stock of monetary gold that have been
created through the increased produc-
ton Of gold during the last few years
and through these outpouringS from
India exercise their full influence On
the worlds supply of monetary gold
We may reasonably expect that the
value of gold, namely, its purchasing
power in terms of commodities, will
again depreciate at least to as low q
level as it had during the eight to
nine years of comparatively stable
gold values ending with the crisis of
1929.
Devaluation to Boost Prices.
If the value of gold thus works its
way back to what it was, say, in 1926
commodity prices in gold standard
countries that have not devalued their
currency since 1925 will likewise work
back to the level of that year. Com
modify prices Of countries that have
devalued their gold currency since
that time will tend to increase above
the 1925 level by an amount propor-
tionate to the devaluation For exam
pie, II the gold content of the none
tary unit in country were cut in
half, commodity prices in that coun-
try should be double what they we're
in 1926, and if the gold content we're
cut TO one-third, commodity prices
should be tripled.
In the United States we cut down
the gold content of the dollar bys Al
per cent. namely, from a "i00-cent
dollar" to "59-cent dollar" which
should give us commodity price level
SO per cent higher than that of 1926.
II we increase our present wholesale
commodity price level to a figure IS
per cent above what it was in 1925, and
If We likewise increase our present cost
OF living to figure 50 per cent above
that Of 1925, we would haveNa whole.
sale price level and a cost of living
more than 100 per cent higher than
they are today. This Is what may rea-
sonably be expected to happen during
the years Immediately ahead when I'VE
have finally taken up all the gold
slack" that has already been created.
Assumptions Conservative.
These estimates. have been made
upon the conservative assumptions
that the gold standard will be retained
in those countries that have it today,
and that the countries that have given
up the gold standard since the crisis Of
1929 will return to it. They are made
on the assumption that we will not
further debase our gold monetary unit
in the United States below the level
OF the present "59-cent dollar" And
that, Of course, means that within q
reasonable time we will balance our
budget and thereby avoid any runaway
imitation.
If. however, our Government should
continue 70 run heavy deficits of the
kind that it has been running in recent
years, and should continue to meet
these deficits by increasing infiation-
ary borrowing from the banks, If it
should continue its present nonstrous
silver-purchase policy and should re-
tain on its statute books the Thomas
amendment. which authorizes meas
ures to be taken by administrative
decree, that, II taken, would smash
the gold standard overnight. then
our present "59-cent gold standard
dollar" or any other dollar that we
might establish would be broken
down. Under such contingencies the
cost OF living would probably rise to
level several times as high as it Is
today.
(Copyright, 1896, by the North American
Newspaper Alliance, Ine.b