Coulee City dispatch. [volume] (Coulee City, Wash.) 19??-19??, 1937-04-29
SEEN and HEARD~
around the la@N
NATIONAL CAPITALIZE /
BY Carter Field w2
FAMOUS WASHINGTON CORRESPONDENT IN -

Washington. - The taxpayers of
the United States are substituting the
gold miners of the world. The Treas
ury is paying somewhere between
So and SIS an ounce more for gold
than the rest of the world thinks it
is worth. Washington is practically
the only buyer of gold in the world
at the moment, leaving out the
gold actually used in certain in
dustries. The answer is simple. We
are getting all the gold mined in the
world because we are willing to pay
more for it than any one else thinks
it is worth.
The British empire is the chief
beneficiary, as it produces about
SIS per cent of the worlds total.
Soviet Russia has risen to second
place, about % per cent. There is
nothing picayunish about this sub
sidy. The United States Treasury is
buying right now at the rate of al
most 81, 400, 000,O year.
To make it worse, the govern
ment is highly embarrassed by this
flood of gold. 1t is so explosive
from the infationary standpoint that
the Treasury has been "sterilizing"
it. To do that the government must
sell short term obligations, on which
it must pay interest, to get the dol
lars to buy the gold it wants to
"sterilize." These short term obliga-
tons in themselves tend toward in
fation, but they also tend to boost
interest rates, and in turn to de-
press government bond prices.
Both these lead in a vicious circle
towards higher interest rates for
other money the government must
borrow. AS the government is now
running on basis which indicates
$4,000, 000,0 900 deficit this year, this
situation also is far from picayunish.
Depression of bond prices is
dangerous signal to all banks, so
the problem is what to do about it.
Would Mean Big Loss
One suggestion, which has raised
cain in the worlds money marts
during the last month, is for the
United States to reduce the price
of gold to $32 or even $50 an ounce.
Secretary of the Treasury Henry
Morgenthau Jr., opposes this be-
cause of the loss the Treasury would
then take amounting to more than
one and two-thirds billion dollars.
It is not likely to be accepted.
Another proposal is for the gov
eminent simply to stop buying gold
Objection is made that this would
throw the rest of the world into
state of financial jitters. It would
certainly stop a lot Of foreign buy
ing of commodities from this coun-
try. 1t is the dollars obtained by
selling gold to the Treasury that
finances these experts in consider
able part.
That solution would seem to fit in,
however, with President Roosevelt's
views about prices, which in many
instances have scared because of
foreign buying. In fact, it is a solu-
ton which is being urged very
strongly, especially as it would in
volve no paper loss to the Treasury.
But it might, say its critics, prove
far too drastic a curb on the boom
which had been pushing prices up
too rapidly. This remedy might be
worse than the disease. Much worse.
It might even be better to continue
paying a subsidy of from $150,0O0,-
900 to 5000, 100000 year to the gold
miners than to risk it.
There is some talk also of free
gold market once more-letting it
really find it's own level. Critics of
that say they are not sure what
would happen if the only big buyer
of the world suddenly stepped out
of the picture. Some even suggest
no other government would care to
buy gold that it might drop to it's
commercial value, with Uncle Sam
holding the bag just as he did on
silver.
The chief difference between gold
and silver in this subsidy business,
aside from the volume, is that the
Treasury is paying its subsidy only
to silver miners inside the United
States. 1t is paying most of its gold
subsidy to foreigners.
Big disappointment
Perhaps the biggest disappoint-
ment opponents of President Roose
welt on the Supreme court enlarge
ment plan have had was the special
congressional election in Texas,
where Lyndon B. Johnson, the can
didate one hundred per cent for the
President, was decisively victori-
GUS
1t was so disappointing because
it was the action of the Texas
legislature, coming so swiftly after
the first announcement of the court
program, which so heartened the
senators and members of the house
who were against "tampering" with
the court.
In fact, during the few days that
interviewed between the first an
nouncement and the heavy majority
cast in both branches of the Texas
legislature disappearing the Presi-
dents plan, there was no hope in
Washington on the part of critics
that they could beat it.
But then folks began recalling the