The Christchurch Star THURSDAY, NOVEMBER 23, 1933. “TOPSIDE MONEY THINKER.”

Star (Christchurch), Volume LXIV, Issue 927, 23 November 1933, Page 10

The Christchurch Star

THURSDAY, NOVEMBER 23, 1933. “TOPSIDE MONEY THINKER.”

PUBLISHED BY New Zealand Newspapers Ltd.

it /T\HE TOPSIDE money thinker, a real one,” is the description given by a writer in the “ Saturday Evening Post ” to Dr Sprague, whose resignation as special adviser to the United States Treasury has been accompanied by a condemnation of the Roosevelt gold policy and the depreciation of the dollar. Dr Sprague was a lecturer on banking and finance at Harvard before the New York Federal Reserve Bank engaged him as financial adviser. Then in 1930 came a call from the Bank of England, “ and this short, stocky, whitehaired, spectacled, quiet man went to Tlireadneedle Street and in effect was financial adviser for Great Britain, for the Bank of England is the fiscal agent of that country.” He was recalled by President Roosevelt and has become one of the big men of the brain trust, and his word hitherto has been final. He has maintained that unless the main political problems now encumbering the world are solved and the technicians are enabled to get at the monetary and other economic questions Capitalism is played out. “ .The system cannot survive many years,” he said recently, “ unless we get together and tackle the problems that are assaulting it everywhere.” THE WEAK SPOT. TT IS NOT DIFFICULT to see the attitude of this expert on the subject of sound money, especially when he remarks that Government bonds have become an unsatisfactory investment. Looking to the fact that as much as 2,000,000,000 dollars must be borrowed during the remainder of the fiscal year, that many issues of Government securities have dropped below par, and that the Administration will be faced with the alternatives of giving up the present policy or meeting Government expenditures with additional paper money, Dr Sprague touches on the weak spot of the whole, financial situation. Mr Roosevelt, on May 7, said: “ The Administration has the definite objective of raising commodity prices to such an extent that those who have borrowed money will on the average be able to repay that money with the same kind of dollar which they borrowed. We do not seek to let them get such a cheap dollar that they will be .able to pay back a great deal less than they borrowed.” WHERE BORROWING LEADS. THIS IS A VERY significant statement, and is incidentally worth pondering in relation to depreciation in New Zealand. The Administration in America has not been able to live up to it because the Government itself is now the colossal borrower. In fact, as the President was speaking,, people were putting their money into Government bonds which were payable in “ gold dollars of the present standard of value.” Within a few weeks this -contract between the Government and its bondholders .was repudiated so that there should not be two kinds of bonds in existence, old gold dollar bonds and new dollar bonds. Congress declared that the gold clause in respect to all existing gold bonds was contrary to public interest, because it obstructed the power of the Government to regulate the value of money, and on this ground it was made invalid and illegal as to every kind of obligation, public or private. Actually no holder of bonds normally requires gold in redemption, but he does want gold standard money, and Dr Sprague has parted company with the Administration on the contention that the true value of a bond should be written on its face, and that a rise in prices that is attributable to the circulation of paper money will be purchased too dearly by that “ distrust of the currency which is already manifest in the growing flight from the dollar.”