Must Prepare to Face Question Whether We Wish to Return to Gold, Warns Currie--Roosevelt's Statement Momentous
"We must be prepared to face the question whether we wish to return to gold at any ratio," declared Dr. Lauchlin Currie, instructor of Economics, recently in an interview when askd his opinion of the prospects of the London Economic Conference and of the United States going back to the gold standard. Dr. Currie believes that the President's statement that "the United States seeks the kind of dollar which a generation house will have the same purchasing and debt-paying power as the dollar value we hope to attain in the near future" is perhaps the most momentous in American monetary history, and is one which he heartily approves. Continuing, he stated. "It is important to realize that while, given international cooperation, it is possible to achieve this ideal under the gold standard, it will be a vastly more difficult task than under a dollar standard." Consequently, he considers that we should be ready, to question whether we should go back to gold at any rate.
At the Conference, Dr. Currie believes that it was regrettable that so much international ill-will has resulted, but it would have been even more so if agreement had been attained by a definite commitment on our part to link the dollar to a fixed ration to gold. Going on to explain, Dr. Currie said.
"The significance of the gold standard or indeed of any device to secure stable foreign exchange rates is that if forces the countries participating in the arrangement to keep in step industrially. Should one country of the group attempt to pursue an independent monetary expansion policy its imports would tend to increase relatively to its experts and an outflow of gold would result. If the country had a great amount of gold and if it were prepared and able to prevent the outflow from exercising a contractive effect on the volume of means of payment it is possible that the other countries in the group will pursue the same policy either through inclination or necessity." Dr. Currie explained that in the disturbed state of international confidence during the past two years, however, it is probable that an independent monetary expansion policy initiated have would have resulted in a fight from the dol- lar of such proportions as to have endangered the success of the policy. Hence so long as we remained on the gold standard the need for international monetary cooperation was real and pressing. With our departure from gold the whole picture was changed and indeed the raison d'etre of the conference was in large part gone. It would, of course, be to our benefit if our expansion policy were adopted by the gold standard countries. Concluding, he said, "It is, however, possible to achieve a high degree of prosperity independently. Moreover it is probable that the other non-gold standard countries will follow our lead. In these circumstances the President was, as Mr. Keynes has remarked, 'magnificently right' in refusing to link the dollar to gold, since such a step would have hampered his domestic policy"