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Show Editorial Submitted by Another Writer (Our editorial last week, "The Flucuatina Dollar," brought out the following signed reply - - - ) I just read your editorial headed "The Flucutating Dollar," and from it I judge that you accept the idea that rather wide fluctuations in the value of the dollar dol-lar are unavoidable, and also that as a result booms and depresions are also unavoidable. I don't agree with either conclusion. I maintain that the value of the dollar can be held within narrow limits the Constitution gives Congress the authority to coin money and regulate the value thereof and that by maintaining a dollar of reasonably stable purchasing power, or, in other words, by maintaining maintain-ing a reasonably stable average price level, the extremes ex-tremes of booms and depressions can be smoothed out. I think the old idea of tying our money to the value val-ue of a certain amount of gold is outworn and unworkable. un-workable. For one thing, we never were actually on a gold standard, but only on a "contingent fund" standard, with only a fraction of our money backed by gold. Our so-called gold standard was further diluted by the fact that banks were and are permitted permit-ted to create check-book money, simply by writing figures on little pieces of paper, to the point where not over five per cent of our "gold standard" money was actually backed by gold. We were actually on a paper money standard, and our monetary system had serious defects, the most serious being its tendency ten-dency to go off into alternate spirals of inflation and deflation, booms and depressions. The average price level is dependent on the interplay inter-play of four factors the supply and demand for goods balanced against the supply and demand for money. I advocate a managed currency because be-cause I believe that only by adjusting the amount of money in circulation to the production of goods and services can our economic system be kept workable. work-able. The system has become so complex that a reasonably stable average price level is imperative to prevent its collapse. With debts, taxes, utility rates and other prices fixed by law, remaining constant, con-stant, a fluctuating dollar simply cannot be tolerated. tolerat-ed. I believe that only under a system of managed currency, managed so as to maintain a nearly stable sta-ble average price level,- can our economic system survive. To me the evidence of this is overwhelming. overwhelm-ing. Our banking system was based on the system' of , the Bank of England, which was founded in 1694 by Wm. Paterson, who was said to be a pirate. I can believe he was one, for he surely knew how to work things for his own benefit. When the first goldsmith issued receipts for more gold that had been deposited deposit-ed with him, the foundation for the system of booms and depressions was laid. We have put up with it ever since, because it took too much mental effort to analyze the thing and end it. The acceptance of the idea that booms and depressions de-pressions are inevitable shows up just one of the economic fallacies which plague our lives today. A few others are: 1. That machinery destroys opportunities for employment. em-ployment. 2. That America must depend on the export market, mar-ket, with a "favorable" balance of trade, to keep our factories running. 3. That cheap raw materials would lower our standard of living. 4. That it is essential to maintain government control con-trol over all lines of endeavor. (I can agree with this one, however, as the only alternative to a managed currency). 5. That we owe a great national debt. This last is one of the greatest absurdities of all. We don't owe anything to anybody. We are fighting the war and supplying all of our current needs from current production. pro-duction. The national debt is only a bookkeeping trick which could be resolved in a few minutes. It's all done with mirrors. Don't get me wrong. This nation na-tion really doesn't owe anything to anybody, and in fact other nations owe a great deal to us which we probably won't get back. 6. That we are headed for, (a) a great inflation, or, (b) a terrible deflation. We don't need to accept either. We might have one or the other, but if we do it will be the result of stupidity, and it is not inevitable. inevita-ble. Concluding, I will just say that for all my dislike of new deal methods, I think that in upsetting some of our outworn economic ideas the new deal has done us a great favor. Some readers, recalling my literary efforts on behalf be-half of the Republican' party last fall, may decide I've gone nuts. As to that, I am the one person in the world not qualified to say whether I have or not. R. S. Morrison ! |