Page Eighteen 



THE I. A. A. RECORD 



February, 1933 



owes the money in terms of gold to pay 

 perhaps $140 in currency to settle the 

 obligation, whereas he expected to pay 

 only $100. It happens that farmers are 

 very little affected by this situation 

 because more than 90 per cent of their 

 contracts do not have in them the 

 'gold clause.' Other nations have not 

 written 'gold clause' contracts because 

 they have been common sense ehough to 

 realize that if the emergency were great 

 enough to push a nation off the gold 

 standard, it would also be great enough 

 to cause an abrogation of the con- 

 tracts. As a matter of fact, this is 

 exactly what would happen in the 

 United States. It is my guess that in 

 case we go off the gold standard, the 

 'gold clause' will either be proved im- 

 constitutional or a law will be passed 

 taxing away completely any profits re- 

 sulting from the 'gold clftuse.' Con- 

 gress has the right to abrogate con- 

 tracts and I feel confident it would do 

 so in a case of this sort. Moreover it 

 is likely that public sentiment would 

 make it unhealthy for anyone to at- 

 tempt to collect 'gold clause' profits. 



Need International Conference 



^ "The other argument customarily 

 presented against devaluing the dollar 

 is that the matter cannot toe taken up 

 in Congress without creating a panic. 

 Under the constitution. Congress is 

 given the specific duty of 'coining 

 money and regulating the value there- 

 of.' It is claimed that Congress is a 

 debating society and carmot act 

 promptly in case of emergency. Some 

 people say that it would be all right 

 for the United States to devalue the 

 dollar If it could be done overnight in 

 the same way as England did it. 



"Devaluing the dollar would at once 

 give us the whip hand in holding an 

 international monetary conference. At 

 the present time, foreign nations com- 

 peting with us for the markets of the 

 world are exceedingly anxious to keep 

 us on the present gold standard. A 

 great variety of proposals might be con- 

 sidered at an international monetary 

 conference. A definite effort might be 

 made to set up an international bank 

 in some neutral country, like Switzer- 

 land, to which the Federal Reserve 

 System of the United States and the 

 central banks of the other nations 

 would contribute one -fourth of their 

 gold reserves. This international bank 

 might issue an international currency 

 and take care of the bookkeeping debits 

 and credits in international trade. 

 Eventually it may be possible for the 

 international currency to represent con- 

 stant purchasing power in terms of the 

 basic commodities which move in world 

 trade. Inventions of this sort are 

 scientific and can eventually be made 

 to work when international fears and 

 hatreds are to some extent over- 



come. . 



England More Sensible 



"It is unfortunate that the wild-eyed 

 inflationists of the thirties, seventies 

 and nineties of the last century should 

 have so scared our bankers and finan- 

 cial leaders that it is impossible for 

 them to think sensibly in the present 

 emergency. England has understood 

 from past history how to handle her 

 monetary matters more sensibly than 

 we. Her problem has been enormously 

 more difficult than ours but she has 

 handled it much more skillfully. Many 

 people in England feel that the Fed- 



eral Reserve System of the United 

 States has not only handled the mon- 

 etary problem in such a way as to dam- 

 age the United States, but the rest of 

 the world as well. 



"There are a few people who believe 

 that the United States is such a domi- 

 nant figure in world affairs that the 

 all important thing is for her to get 

 business activities started again and 

 that it doesn't make a lot of differ- 

 ence which monetary method is used. 

 These people claim that inasmuch as 

 the United States consumes a very 

 high percentage of the world's rubber, 

 silk, coffee, etc., and inasmuch as she 

 holds 40 per cent of the world's mone- 

 tary gold and also inasmuch as the 

 hopes and fears of other nations go up 

 and down with what is going on in the 

 United States, — it is simply a matter of 

 the United States striking out boldly. 

 If our prices go up and our activities 

 start, business will revive over the en- 

 tire world. It is confidence which 

 makes for high velocity of credit and 

 money. It is confidence which will bring 

 the money out of hiding, most of which 

 Is said to be hoarded in bills of $1,000 

 or more. Some of the people who hold 

 to this theory claim that confidence is 

 more likely to re-establish itself if 

 there are no inflationary measures 

 whatever. I might agree with them if it 

 were not for the fact that there is a 

 world wide fear of gold shortage. Fur- 

 thermore, the currents of trade be- 

 tween the United States and the rest 

 of the world are being cruelly inter- 

 fered with by the fact that we have not 

 reduced the quantity of gold behind the 

 dollar to the same extent as the rest 

 of the nations of the world. If the 

 United States is to restore herself to her 

 normal parity with outside nations, she 

 should reduce the weight of gold be- 

 hind the dollar by at least 25 per cent. 



We Forced 'Em 



"It must be recognized, of course, that 

 the foreign nations have been forced 

 into currency depreciation partly as a 

 result of our high tariff and our atti- 

 tude on the inter-govermnental debts. 

 Some of the leading foreign nations 

 finding that we could not learn to be- 

 have as a mature creditor nation 

 should, decided that we were vulnerable 

 through currency and gold manipula- 

 tions. It is reported that certain large 

 bankers have on occasion shifted 100 

 million dollars in gold back and forth 

 between the United States and France. 

 When gold Is shipped out of a country 

 suddenly, prices tend to fall on the 

 stock exchange, whereas when it comes 

 into a country, prices tend to rise. It 

 Is, therefore, possible by handling large 

 gold shipments and by buying and sell- 

 ing stocks, to conduct a huge 'shell 

 game.' 



"We must adopt new rules for the 

 banking system of the world. These 

 rules must make it possible to maintain 

 a stable price level from year to year. 

 If the rest of the tiations of the world 

 are not yet ready for such rules, the 

 United States should adopt them by 



herself. Holding, as she does, 40 per 

 cent of the gold of Uie world and 

 dominating the world trade in many 

 fundamental commodities, she can 

 eventually force the other nations to 

 adopt her rules if they are funda- 

 mentally sound and Just. 



"The first step is for the United 

 States to inflate to the same extent 

 as England. The next step is for the 

 United States, England, France and 

 Germany to hold a monetary con- 

 ference and agree on uniform rules of 

 procedure. At such a conference should 

 be discussed the money problem, tariffs, 

 inter - governmental debts, tonnage 

 quotas, currency quotas and all of the 

 other things which are now so upset- 

 ting the world." 



Harriman Suggests Way 

 Out of Economic Storm 



The well being of agriculture is 

 the key to national prosperity H. I. 

 Harriman, president of the U, S. 

 Chamber of Commerce, said in his 

 address before the annual I. A. A. 

 banquet the night of Jan. 26. The 

 balance between agriculture and 

 other groups must be restored. 

 There is no gain for anyone when 

 prices are below cost, wages are low 

 and buying power is gone. 



Harriman recommended stabiliza- 

 tion of the dollar with the index 

 of commodity prices, the unshack- 

 ling of business, opening up of trade 

 and commerce through the removal 

 of tariff barriers, and reduced gov- 

 ernment expenditures along with 

 higher farm prices as the way to 

 restore national prosperity. 



As a long range solution to the 

 farm problem he advocated taking 

 marginal lands out of production 

 and encouraging the use of agricul- 

 tural products for other purposes 

 than food. He suggested that farm- 

 ers make a study of the possibilities 

 in using ethyl alcohol as an adul- 

 terant of motor fuels. 



Something must be done imme- 

 diately, he said, to restore farm 

 prices. "Too much peanuts" was his 

 comment on the domestic allotment 

 bill which passed the House. 



In introducing Mr. Harriman, 

 President Smith called attention to 

 the fact that for the first time the 

 president of the American Farm 

 Bureau Federation and the presi- 

 dent of the U. S. Chamber of Com- 

 merce were speaking from the same 

 platform. This is indicative of bet- 

 ter co-operation between business 

 and agriculture for the welfare of 

 the nation, he said. 



A number of I. A. A. staff members 

 and convention visitors InclndinK Larry 

 Williams, Ray Miller, George Thiem, 

 Vernon Vaniman, Lee Quasey, Frank 

 Gongler, G. C. Johnstone and . Mrs. 

 Burl Hombeek talked over Ed Bill's 

 Station WMBD, Peoria duringr the 

 three day session. The address of H. 

 L Harriman on Thursday night also 

 went out over this station. 



