AMERICAN DOLLAR

New Zealand Herald, Volume LXX, Issue 21577, 23 August 1933, Page 9

AMERICAN DOLLAR

MR. ROOSEVELT'S PROBLEM ECONOMISTS AT VARIANCE WASHINGTON, Aug. 15 The next problem President Roosevelt will have to solve is whether to adopt a fixed gold standard or a commodity or "rubber" dollar. While a puzzled nation waits, a struggle is being waged within the Roosevelt councils. One group of economists in Mr. Roosevelt's own Treasury Department is urging the President to declare for a fixed gold standard, and another group of the "Brain Trust" is pressing him toward the adoption of a commodity or "rubber" dollar. The President is fairly open-minded on tho whole question. He realises that the nation's commerce abroad is at stake, and his sole purpose in the meantime is to permit the American people to enjoy a, stable existence and the purchase of'the necessities and comforts of life. Varying the Value of the Dollar Professor Irving Fisher, of Yale, leads the exponents of the "rubber" currency. He would have the President exert the powers granted to him under the Inflation Bill to alter the value of the dollar every month if necessary. Professor Fisher proposes that the dollar shall be given changing valuations in strict accordance with the changes noted in the prices of commodities. He has devised a commodity index weighted according to the economic importance of the commodities included in his calculations, tho purpose being to achieve an average price, representing all commodities. The professor argued to the President this week that the value of the American dollar should be bounced up or down, so that it should always be level with the commodity index, and thus have a permanent degree of purchasing power. This method of varying the value of tho dollar would be to change the gold content of -the dollar by executive decrco. Influence on Foreign Trade At present the purchasing power of tho dollar is about 75 cents, compared with its value before the United States abandoned the gold standard. Tho President, under the authority given him by Congress, could formally declare the gold content of the dollar to be at any point down to 50 per cent of its former gold value. Thus, according to Professor Fisher's rule, if prices required a dollar worth 75 cents, 70 cents, or even 50 cents, tho President would establish that value by executive order, then change it from time to time as prices fluctuated. The Treasury advisers of the President, who are opposing the commodity index of the dollar, have advanced the objection that fluctuations would make impossible any stabilised trade with foreign countries.

Before shipments 'jould be completed in foreign commerce, the dollar would have jumped up or down in relationship to foreign moneys. Objections to Professor's Scheme

If the point is made by the Fisher dollarites that an international commodity dollar may be adopted, the experts opposed to tinkering with money values retort that conditions in all nations are never changing along the same courses, nor ever in the same degrees, so that tlio index of one nation might bo up and that of another down. Another objection to the professor's dollar is that speculators could obtain easy access to figures which would inform them whether the commodity index was going up or down during the month, and they could demoralise foreign exchange by buying or selling dollars in money markets against future fluctuations to be ordered by the President.