INFLATION PLAN.

Auckland Star, Volume LXIV, Issue 114, 17 May 1933, Page 3

INFLATION PLAN.

ROOSEVELT'S STEP. SUPPORT BY ECONOMIST. ,< SI TUATION TOO DESPERATE." (F rom Our Own Correspondent.) SAX IfEANCISCO, April 25. ' « is to enable him to enter into an .element with oUun ' uati ° n3 Suatiou of currencies that President JLwdt has introduced an inflation Tul.ioh authorises him to reduce the I" 1 i "tint of the dollar not more than poKlconte tol inflftt]on ]egislatioll) 5 l?lf t.the Secretary of State, Mr. rti Hull, is designed to ra.se Co " ■ ~ 'rice levels, and not for use as A "Sn m the. currency negotiations. a \ f the proposals discussed with the OnC ~f bv Mr. Ranisay Mac Donald r r: 1 iin Washington was the W T of the depreciated currency rctU ?- to the Hold standard with ""f A fflSbucik That is, the British *ft»t "av 3.30 dollars, instead of val " C ;[Si v- the iim-1031 value. America 4 2,STback to gold with the dollar 3S It, say, 90 cents. "Out-dated School ,, Denounced. There was some (.[.position to the , • Linn in Congress, and a statement ,C ftsu?d ointly by Senator Reed and SSSSpufWn Lca i cr ft. tl,c House and two other Republicans. J2SS on the country to "wake up Sd reject what he termed the Admlnie?r ion's "insane." proposal, Senator Reed SS «.e voters to telegraph their representatives in Congress to flffht it. Hβ charged President Roosevelt with violating campaign promises to stand for "sound currency." The Sneaker of the House, Mr. Rainey. availed these anti-inflationists most porously. "Many of the bankers they ia°ve been following," he said, soon Kgo to the penitentiary. They f represent the Mcllons, Harnmans and Mitchels and their leadership. These men represent Told, out-dated school. They don r " e n aliso \ vc are trying to remedy the mistakes these gentlemen, and men who think as they do, have made in the last twelve years."

Comparison With Germany. Professor Irving Fisher, of Yale, noted economist, asserted that the attack of the four Republican Congressmen on the Administration's inflation programme was "in lino with time-worn traditions. Defending the inflation programme, he stated- "It (inflation) certainly should be used until it works enough, and then stopped. It can bo stopped, for we shall be stronger, not weaker." Professor Fisher added: "The protest acainst the President's reflation programme is in line with the time-worn traditions of bankers—though few bankers to-day are as loyal to them as these four Congressmen. But we are now confronted with a condition, not a theory.' This condition is the opposite of Germany's when German inflation began. "Few realise the gravity of our present situation. Our very national existence is at stake, even more than it was in the World War. Halfway, traditional and timid measures will no longer do. If the price level is not speedily raised, bo that business, industry and agriculture can be run again at enough of a profit to make sure that they are run at all, and reabsorb the unemployed, and if that level is not raised enough to enable debtors to pay their debts, and creditors to get their pay, this country will soon he over the precipice with bloodshed and revolution.

Fear of Paper Money. "There is, if my analysis of this depression is right, absolutely no escape from our present imminent danger except through reflation. Nor can we stop to cavil about methods. The situation is too desperate and imperative. The test method is whatever is the quickest. "The open market operations, -which alone the objectors grudgingly admit might well he used, cannot be entrusted wholly to the Federal Reserve System. They had their opportunity a year ago. and made insufficient use of it. The paper money which the objectors fear is no more 'fiat' than what we have, nor as much. Our dollar silver certificates are redeemable in only 25 cents' worth of silver. Almost every other nation has devaluated its gold coins. No one should care ivhat the dollar weighs if what it buys is properly safeguarded. It now is not 100 cents, but 180 cents, in terms of 1926 dollars. Debtors cannot pay 180 cents, on the dollar, nor interest."