Evening star., 1937-04-25

by the debtor countries at bargain
prices, for many of the issues were
depressed because in default. But the
purchases also included a net inflow
Of $9l7, 100000, that is, net acquisi-
tions by foreigners of American Sc
curities, thanks a whole lot to our
generous gold policy.
Not only do these heavy purchases
tend to stimulate stock market prices,
which further increases the market
value of foreign investments here;
their liquidation would tend to depress
the stock market, as the S. E. C.
well knows. Besides, nonresident
aliens with no place Of business here
are not subject to capital gain tax
and SO have an advantage over Ameri-
can citizens trading on American mar
kets. And We can't tax them, because
its too hard to collect and because
Mr.. Hull wants us to be good neigh
bors.
Unprecedented Spectacle.
Mr.. Van Winkle may still be won-
dering what relation exists between
the various problems indicated above
Why is gold no longer wanted here?
Why does it come here at all? Why
should our public debt be increasing
at the rate Of IL billions per annum
merely to buy a metal we quite ap-
parently don't need and say we don't
want? Here is the unprecedented
spectacle OF q nation paying interest
to keep gold away from its monetary
system Even Jules Verne never
thought Of that.
1t all goes back to the depression.
Great Britain, having in 1925 sta
bilized the pound at level too high
for the welfare of her important ex-
port trade, in 1881 abandoned the
gold standard. The pound was per-
mitted to find its own level, and 1t
deprecated about 40 per cent SINH
larly, other countries suspended the
gold standard, with the result that in
the beginning Of 1888 the United
States and few European gold-bloc
countries alone adhered to the gold
standard.
Due to the severity of the depres-
sion, strong pressure for imitation de-
veloped in the United States. 1t was
argued that-private expenditures and
private employment being greatly
depressed-the Government should
initiate and thus stimulate business
until natural revival should take up
the slack This was perfectly justifi-
able line OF reasoning.
But, it should be noted, there is
more than one way of making possible
Government expenditures. Borrowing
by the Government is the most obvious
way. This method was used and is
still being employed. A second method
was revaluation of gold. which would
yield q "thin-air" profit to the Gov
ernment. Still another course pro-
posed was "the restoration Of silver to
its just and rightful place alongside
gold";; i. e., the purchase OF domestic
and foreign silver at higher prices.
Saw Means to Boost Exports.
Especially, the proponents of these
polssse4es saw in them a means of stim-
ulating exports by cheapening the
value Of the dollar in international
exchanges This would tend to equslize
for our exporters the advantage which
their British and associated exporters
had presumably gained when their re-
spective currencies were deprecated.
It would also be powerful stimulant
Of industrial and agricultural revival
in this country, it was argued.
In theory all this was true. Actual
ly, we lived, and we still live, In q
world Of trade barriers and exchange
controls, and exports Of goods were
not free to respond to anything like
the degree expected. But exports OF