Detroit evening times. (Detroit, Mich) 1921-1958, 1942-06-26

EccIes Tells
House Group
Henderson, Controls
Value Of Money
BY PAUL MtLLON

. IAlNtI Nt AIldlI man isNNi'N'
Tie announced officially and
pcrSistcntly that our gold re-
serves have nothing whatever to
DO with the value of our cur
rcnCy. that VIC are completely
off tho gold standard.
II there was StupCiactlon in
! Congress there must have been
connlption fits around the treas
ury at such a plain official
/ suggestion that the gold land
silycr?D buying policy was a
/ flop. that the value of the dol
lar is really only what the gov
eminent says il IS
DEP. FREDERICK SMITH.
II an Ohio Republican led
Mr.. EcclcS up 10 the subject.
-SHgEpStiHg that the eeHhtft-iS
getting near fiat money. that
the war might cost $500 O00,-
100000, that even if the cost
only gets up 10 $500. 000.0 100000
appropriations lTeady have
reached S20S, 0OO.00O.OO0) the
question of the gold reserve be-
comes important.
mo" said Mr.. Eccles. There
was "A feeling that by increasing
the price of gold. YOU recall,
that the increase would he inn
mediately reflected In increas-
ing the price of goods. Well, of
course. that, we all know, didn't
work. 30 l say the question of
the gold reserve doesn't have
any relationship to the stability
of value of the currency"
MIR. SMITH Either bank
currency or circulating cur
rency ."
MIR. ECCLES-"No, / don't
think So"
MR.. SMITH: what, then, Is
A'A the fundamental principle
of the Federal Reserve Banking
Act?"
Mr.. ECCrES- wei, II isn't
that"
Mr.. Smith was obviously fab
bergaSted He pleaded:
II don't believe YOU want to
go on record rs saying that. l
don't believe you want TO do
that"
Mr.. ECCLES: THAT Is right,
yes I do" Then, later on:
81 do deny that the amount
of the gold reserve, or the gold
requirements have anything to
do with the price level, which
means they have nothing To do
with the value of currency"
MIR. SMITH: Aren't you. In
A'A effect. saying there Is no
relation whatever of gold i'm
this country To our currency"
MR.. ECCLES: "That Is right"
MR.. SMITH: There is no
relation whatever"
MR.. ECCLES: THAT is right"
MIR. SMITH; "YOu then take
the attitude we are completely
off the gold standard >"
MIR. ECCLES: Eyes. COM
pletely."
MIR. SMITH: 81 am rather
astonished. Ii makes no diff
ference then whether we have
an ounce of gold or whether we
have 100000 900 ounces?"
MIR. ECCLES; at has made
no difference to Russia for 30
years, no difference TO Germany
for n long while. Most of the
countries of Europe had to give
up the idea of the gold reserve.
Their currencies have gone into
managed Currencies The
Russians have mined gold as
commodity to sell to the de-
mocracies and get foods that
they wanted TO get and they
haven't looked upon gold as
necessary item 10 support their
currency"
IN OTHER words. gold is good
for teeth and for selling 10
Mr.. Morgenthau at the arbi-
trarily inflated figure Of S35 an
ounce, not much otherwise.
Mr.. Morgenthau is sitting on
the worlds largest amaSsed pile
of II. and there is nothing he can
do with IT, except TO increase the
problem by buying some more
from Britain or Russia. which
means giving away public money
for gold
Thus has tho cut from old
tieS now been officially conceded
for the first time by the head
/ OF tho banking system Mr.. Ec-
clcS has merely recognized the
obvious effects of administration
| policy which any reader of this
column will recall having read
from time TO time for years
back.
THE important point is that
Il II IS now official. No one can
be accused Of being against the
administration for saying the
policy was a failure.
The value Of currency. il APP
pears, is not IN the hands of Mr..
EccleS or Mr. Morgcnthau, hut
in the hands of Leon Henderson.
When you read the prices Of
food IN your grocery YOU will
find out the real value Of the
dollar these days.
What this portends for post
war policies. domestic and inter-
national cannot be forctold yet.
hut ihnN nnn I'll rnni Cd IN tho