Evening star., 1937-07-11
CURRENCY STERILIZATION
NOW is HELD PREMATURE
Silver and Gold Buying Policies of
U. S. Are Termed 1llogical-Re-
examination Is Called for.
BY HERBERT M BRATTER.

By HERBERT M. BRATTER.
THE francs latest crisis-the sec
ond in nine months-is a re-
mlnder that monetary stability
a without economic and political
stability is impossible Sterilization
and stability are two different things.
Under changing conditions, different
attitudes are necessary. In determin-
Ing our monetary policy we should be
guided by our own best interests. We
should learn to know when those in
terests coincide with the interests of
foreign countries and when they do
not. We should reconcile our internal
And external policies. Externally, our
monetary policy today is our gold pol
Icy. This was policy arrived at un-
scientifically. In part it was a means
OF bringing to an end period of delib-
crate devaluation, in part gesture of
difference to tradition during an era
when tradition generally was in the
discard. 1t does not jibe with our
present efforts to control imitation.
Recently the Brookings Institution
published very able and interesting
study by Charles o. Hardy, "Is There
Enough Gold?" Only yesterday"
there was worldwide interest in that
highly interesting question Yet today
public wonder here and abroad has
completely changed In the latest
London Times, for example, the head
line asks: rs there a surfeit?"
Whether there is too much gold or
too little depends on ones viewpoint.
There's never too much for the fellow
who wants to sell it. Ask Gen. SHUTS.
ASK Mr. Stain. At the other end is
the ultimate buyer. Mr. Morgenthau
hasn't enough fingers to count his bill
lions. And between both extremes is
q fellow like Hitler, who, having per-
force sold all his country's gold, is now
dead broke and cannot afford to buy
any.
Gold Handy in Crises.
rs there enough gold, Mr.. Hitler?"
-. In his silence we seem to detect
his meaning: Yes and no. Yes, be-
cause 1t has been demonstrated that
internally a nation doesn't need the
luxury of gold. No because the only
real use OF gold that survives is a coin
OF governments and sterilization funds
IN international settlements AS such
1t is extremely handy in times of crisis
and indeed quite valuable. As an in
ternational currency gold will long
continue to have value. But what
value?
Last September. after a ive-vear
struggle to maintain the franc, the
french government was finally obliged
10 devalue its currency. The other
gold bloc countries followed suit. A
trlparute statement issued by Wash
ngton, London and Paris, ana sub
scrlbed to by other European capitals
put on record the respective govern
ments' intention to do everything
within reason to avoid further con-
fusion IN international exchange
rates.
The world genuinely welcomed these
pronouncements. Like a sea-tossed
traveller yearning for the end of a
rough and stormy sea voyage. it
looked with anticipation to the ap-
parent prospect of assured calm. The
trlpartite agreement loomed as
sheltering breakwater. Today. to be
sure, the agreement is still in effect,
although in Frances case its stabil-
1ty feature lives only in state of
suspended animation. The good in
tentlons Of the several governments
concerned are still bona fde. Yet
the franc, which was worth 6.62 cents
year ago and 1855 after last years
deValuation, is now worth only 3.86
oentS.
81 Governments Since 1917.
For, in the world about us, cur
rency Is no better than what's behind
1t. France has had so many flnan-
eial and political crises that one NAV
almost describe it as in a state OF
perpetual unsettlement. Since No.
vember 16, 1917, 81 government have
fallen in Paris Time and again the
franc has had to be saved" Now it
Is being lowered further. Is this one
to be the last franc crisis?
Behind the franc crisis has been
the drain of capital, largely in the
form of gold taken from Frances
great hoard. For years Frenchmen
have been selling their country short"
Scores OF billions of francs of French
capital have found Judgement abroad.
until. last year, less than the 5O.OOO.-
100000 francs regarded by the army
staff as q minimum war chest re-
manned.
Just why has this money been sent
away by its owners? War scares have
played direct part. Stock market
opportunities here have been contrib
ntory factors since 1895. But the
main reason has been the deteriorat-
Ing financial outlook at home and the
growth OF left-wing in domestic poll
tics.
This budget has been in constant
unbalance. Huge expenditures for
rearmament purposes have been oc-
casioned by the minatory policies of
aggressive nations. The tax burden
has been increased. Business over
head has been swollen. Succeeding
governments have asked for more and
more power, while the working classes,
ever more restive, have demanded a
better standard of living. Higher
wages and shorter hours have meant
higher costs and higher prices.
Franc Outlook Uncertain.
These circumstances, so unsettling
20 the economic picture at home, give
no signs OF early disappearance. Hence
the early and spontaneous repatriation
OF any substantial part of the French
capital now in hiding abroad seems
unlikely. The outlook for the franc,
= therefore, still continues uncertain,
despite the latest depreciation.
What does all this mean TO us and
our currency policy, to the stability
OF currencies and return to the in
ternaticnal gold standard? The one
sure thing it means is continued un-
certainty. Clearly, the tripartite pro-
nouncements are still little more than
praiseworthy expressions of hope, and
! ie CT 80