The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
JOHN I..
215 WEST SEVENTH STREET
LOS
ANGELES
November 18,
Leon Fraser, Esq.,
President
First National Bank of New York
2 Wall Street
New York City, New York
% dear Sir:
It was with keen interest that I read the statement attributed to you advocating utilization of The Bank
for International Settlements as the channel to facilitate
stabilization of world currencies* It so happens I mention
The Bank for International Settlements in my booklet "Have
You Any Money51 •
This rather sketchy treatise was written under my
pen name, "Leslie Ward"* For a time I published Sard's Forecast" covering business trends and related subjects* The
pseudonym, "Leslie Ward" originated as a result of linking
together my middle name, Leslie, and the middle name of a
young friend of mine in New York who handled the business
end of our joint enterprise*
It is unfortunate, indeed, that crippling events
of the last two decades have caused too many of our worthwhile citizens to surrender to cowardice or to pander to
mob mentality* We hardly need more new institutions I
Rather we should strive to re-establish to dignity and honor
the many already in existence* Your viewpoint on this subject Yras refreshing, indeed*
JLR c
Enclosure
FOREWORD
There was a time when the general prosperity of any
country could be fairly determined from the condition and
activity of its principal stock exchange. Share prices in
years past reflected varying degrees of confidence. But
times have changed for the moment! Governments now
endeavor to legislate people into thinking as they would
have them think. We come now to the point of "Have You
Any Money?" It was hopefully written to banish any
future fears emanating from annoying dictators and super-economists. It is they who keep right on promoting
these frequent emergencies and pseudo-crises. We can
always forgive the awkward shortages and recurring surpluses, the planning and the regimentation. Here nature
has a hand! We are always amused by our glorious politicians. Their exciting careers can be just one vote after another provided they avoid any unholy reference to debt
money. Should yo'u decide to pursue this discourse further
you will probably discover life is very realfthough for the
most part Ait is just another fairy tale. But I trust you will
conclude with me that the lucid moments are enjoyed best
if you have some understanding of our money and credit
system.
LESLIE WARD.
October 1st, 194 L
In the long history of the human race, different types of minds
have risen to power and affluence. A particular era was propitious
to the growth of their beliefs or suppositions. But nothing really
changes, except perhaps space and time. In our father's day the
wrapping was brown paper. Today, it is cellophane. As a result,
we should see things easier. But do we? If the answer is in the
affirmative, this is then a futile effort. We have made a pair of
gloves for an armless person! Some among us know the Old
World will always have these evil days when nations are in a
mad race to see who can make the most noise. Finally, the noise
subsides. Once more, all join hands willingly and hopefully to
theorize on how equilibrium and a lasting peace can be attained.
And so it goes!
The time was when warfare was a recourse to people settling
individual disputes. To eliminate these constant disputes and
killings, the legal fraternity instituted its code of ethics. It laid
down a broad and complex series of edicts. These edicts were
intended to unionize mankind. They prescribed dispassionate considerations for rules of fairplay. As a result, knowledge and culture spread. Mysticism and dogma gave way to reason and logic.
Unbeknown to most of us, the world was slipping comfortably
into the realm of socialism. War now was to become the function
of responsible government.
Now all wars are basically of the same origin. Every new one
we are told is the hope of civilization. This is a misstatement of
fact. This subterfuge originates with militarists and those who
endeavor to fatten on the cultivated fears of isolated people.
Nowadays these militarists find themselves socialized along with
the scavengers and schemers seeking only selfish advantage.
In this Old World conflict few are allowed to profit! The
greatest burden falls on the rich everywhere. This time the
noncombatants pay dearly for protection. However, this great
war should not be too burdensome for the New World. Our
social structure is still comparatively even. By Old World standards, we have avoided culture in the sense of social strata. We
have instead, developed our educational facilities to a point where
people have learned to do things for themselves. We are learning
to think independently. As a resuit, this titanic struggle for power
and Old World domination will create boundless opportunities
when a peaceful solution is reached. Peace should permit all people this time to sack, completely, the old shackles. For us all, a
great and thrilling future lies ahead.
While the Old World is engaged in war, we in the New World
are compellingly aware of the sordid struggle of starving masses.
Men and women in high places cry out against the futility of
life. For the most part, these sincere people have already been
pushed or crowded into life's weary treadmill. It is the treadmill
wherein the anthropological differences are obliterated. The philosophers of yesterday are paired together. But their daily utteraces and cries are heard or read-by curious millions. Is civilization
over? Are we going steadily downward to a lower standard of
living? Must we in America come to know the poverty and hopelessness which typifies the Orient or sub-standard Europe? No,
indeed! Just as warfare is now a responsible function of government, so should the social and financial structure of government
be given dispassionate consideration when the next peace is
written. The next time we hope justice will prevail! There should
be a central depository for world gold. Irresponsible custodians
of money should quietly be eliminated. The complicated financial
machinery on which foreign exchange once functioned could be
streamlined and simplified. A Bank for International Settlements
is already in existence. Its next operation should be for the function of all responsible governments. Warfare this time must remove the shackles to a long and prosperous world-peace.
We in the Americas are the progeny of the working classes of
Europe and Asia. By nature we are adventurers. We shall never
fall back trembling to known ground. The American-people will
undoubtedly go forward to see what lies beyond. In our land fearsome taboos are being dispelled. Logic slowly replaces age-old
customs. It is the spirit of our people to be curious. We are not
allergic to change. We abandon the ikon. We embface the iconoclast! Nevertheless, some among us are rightly confused and perplexed by the swiftly moving panorama of world events. To them
this message is addressed.
Money Is Community Debt.
We hear now a great deal about the function of money. Money
is simply community debt Its future validity is what makes it
acceptable. It is a pledge by society that the members will render
service to the holder of the money when and wherever a service
is demanded. This pledge is given unequivocably because of a
service someone has previously rendered. The pledge is indisputable! Nor is society interested as to why the pledge circulates
from person to person. It is only when circulation is tedious that
financial engineers come forward with their panaceas and cures.
Having issued money, a government in need of funds offers
its interest bearing bonds and notes to induce a return of the
money to its treasury. The money so returned is issued again to
persons who render service. The process is repeated over and
over again. Such bonds and notes are fiat money. Fiat money is
legal tender by law! Its intrinsic value is seldom equal to its
nominal value. It may be a great deal more! It may be a great
deal less! Systems of fiat money always break down. This results
in whole or partial repudiation. When a breakdown occurs the
means by which a monetary system is bolstered and revitalized
is by coin clipping or increased taxation. Here in America we do
both!
You may wonder how this system of fiat money functions in
relation to its recipients. First, think of fiat money or government
debt in relation to the value of those things for which both are
exchangeable. Money has nofixedor stable value. When people
work overtime destroying each other as they do today, the purchasing power of money falls in proportion to the devastation of
war. We in America are not yet in actual war. In our land money
still buys a great deal. On the other hand, most commodities bring
little. The very opposite condition exists in Europe and Asia. By
comparison, their money purchases very little. Commodities
bring a great deal. You cannot stabilize the purchasing power
of money unless you can successfully stabilize and regiment all
life, itself. To have even a fair trial, such stabilization and regimentation would have to extend to every niche and corner of
the globe. It isn't possible. Dictators will find this out for themselves. Free men and women will always rise to thwart them.
So money values are simply reciprocals of commodity values.
When labor-saving; devices short cut productive methods and
the effort to live is thereby lightened, money values should
normally decrease. They never do! People continue to multiply.
This keeps competition alive and stimulated. It makes increased
earnings difficult. So you see, the value of money in war or
peace is affected by numerous elements. Therefore, fiat money or
Federal debt money has no value of its own. Its imputed exchange value always depends upon public confidence in the
issuing power. In our land, this issuing power is lodged with
the privately owned Federal Reserve System. The balance of
power rests now with the Democratic Party and its leader,
President Roosevelt. Nevertheless, the American dollar plus
Federal bonds and notes are always a proof of credit guaranteed by 130,000,000 American people.
As population expands a natural demand results for more
fiat money. This is necessary to record the credit or debit balances of those who continually serve society. Because America
is now large enough to be a compelling force in the society
of nations and because the Old World is at war, our money and
securities are desired by the people of all nations. They believe
them a sound token. They believe America safe from the ravages
of war. They have faith in our ability to keep our money and
commercial system functioning.
Our elaborate financial economy is founded upon our enormous gold reserves plus the industry and fundamental honesty
of the people. It is a complicated system. To it, we add arm after
arm. Federal functions now reach out directly or indirectly into
the field of railroad transportation, public utilities, foreign lending, private banking, public works, and defense. Therefore, public debt must expand. Now, when you issue public debt you
assume the people are willing to be taxed. Strangely enough, we
once encouraged immigration in the belief our per capita debt
could be kept within reasonable limitations by increasing our
productive population. Instead, we learned more population
meant more governmental expense. It meant a greater demand
for money. It called for more jobs. The creative ability of private
enterprise was crowded to capacity finding employment for
these eager, hopeful souls. It is this question of expanding public
debt which has brought the unfortunate schism between political and private enterprise. Business leaders are being constantly
reminded of Sir Ernest John Pickstone Benn's wise observation,
"Politics is a short-sighted business, while business is a longminded affair
Whenever a man goes out to spend his own
money he can be trusted to get something like value for it;
when the State spends money, value leaves the market." At
some future time our generation cannot shirk its responsibilities
in relation to this debt financing. With peace, millions of aliens
and their new offspring will wish to return home. Billions in
savings will be called up. It is now we come to debased money.
A more descriptive designation would be coin clipping.
Warfare and Debts.
Throughout the world, new debts are now accumulating
faster than new wealth. This is because warfare never produces
new wealth. It merely endeavors to clear the air! Values created
by war efforts are exploded on land or sunk at sea. Therefore,
war bonds which people of belligerent nations are compelled
to buy represent absolutely nothing! There is really no moral
nor patriotic reason why they should be assumed and paid by
the labor of future generations. Because governments are aware
of this bitter though controversial fact, private circulation of
gold must be discouraged everywhere. Free circulation it is believed might drastically impede war and defense efforts. Therefore, gold redemption may be deferred until a guaranteed world
peace is assured. The debt money which governments now issue
in lieu of gold money is the credit for services rendered. This
debt money is payable in a future return of Service.
It is of course, unfortunate, society must always mortgage the
future. People are impatient. They must have things now!
Interest bearing contracts are avidly signed without thought of
the unpredictable future. As a result, days of reckoning and
severe adjustment always arrive. It is then hysterical panic is
halted through debased money. Governments deflate money
values—bank credits, Federal bonds or notes, corporate debt,
life insurance and annuities—by making the power of gold
effective. A dollar's worth of gol'd is surrendered for every dollar
of government debt or paper currency. The weight of this newly
minted gold dollar measures the amount of debasing. Debasing
gold money is popularly referred to as defrauding creditors, i.e.,
the owners of money and money values. In advanced capitalistic
society it is nearly always a pleasant deception. Few catch on
until it is top late.
Meanwhile, the weight of gold which owners of money values
will be given when peace returns, must be the result of complex
appraisals of various and related factors. The more important
considerations will involve interest-bearing debt, commodities
(including gold), productive facilities and labor. Obviously,
gold redemption and settlement on an international basis can
only function realistically in time of peace. In time of war, price
movements are continually upward, debt expansion is rapid,
while labor and material shortages are general. As a result, any
monetary system tied to a fixed weight of gold must fail miserably. People would hoard gold coins knowing full well their
relative value in terms of future purchasing power would in
some distant year be very.great. Those in our land who cry now
for gold redemption are for the most part the same selfish,
shortsighted people who use the high ideals of fraternalism,
unionization, religion, or racial distinctions, to achieve their
lust for power and advantage. Success and money sometimes
blind too many to the fact they are surrounded by others of high
mentality who, too, will act fearlessly when roused. The present
conflict of ideological differences proves this pofnt. This
struggle merely attempts, among other things, to remove the
iniquities of a financial obligarchy which had proven both
inhuman and heartless.
Futility of World War I.
After World War I, the old money system was continued. As
a result, countless men who labored long and hard to provide
homes and security for themselves and their families were gradually trampled or pushed into lives of hopeless drudgery. This
evil must not be permitted again. Of course, you will say there
are always among us those who drag their weary way through
life unhappy and unwilling to lift up their head toward the improvement and betterment of their fellowman. This is true.
Unfortunately, there are those, too, who are shiftless, selfish,
weak, or anti-social—too many wholly destructive in their views.
We know them as those who would destroy what remains of
our own free enterprise system. But the vast majority, the educated people of normal habits, recognize the necessity for strong
and noble leadership and the essential change which accompanies such leadership. To strive for perfection is to insist on
balanced relations between all nations—weak and strong. Those
who say now our civilization is dying are forgetful of the eager
fearlessness and impulsiveness of irrepressible youth. It is they
who will erect a better civilization on what remains of the one
we are now discarding.
In the new world order, countless millions of educated men
and women, many of whom are not now in the public eye, will
vigorously challenge the "old order"—that small minority who
would stay inevitable change and progress. We all must realize
this living world is forever moving forward into its unpredictable future. A part of this future must be an improved money
system which can stamp out the obvious past inequalities. The
small but powerful group who still sit in the lofty temples of
finance are being compelled by the exigencies of warfare to
make voluntary—even involuntary—concessions. They should
not be just temporary concessions, as indeed they were during
World War I. Concessions this time must become permanent,
else there is grave danger of dictatorship sweeping many more
into its maelstrom of despairing drudgery wherein a mere handful of ruthless leaders gain mastery over a resentful uncultured
mob, cringing hopelessly under the fear of hunger and want.
Now the price of gold is anchored for one purpose. It guarantees the stability of invested wealth! Yet the element of
time will always prove this premise false! It is argued a fixed
gold price protects the surplus wealth of those who are in a
position to command the services of others. Let us consider this
point in relation to an international monetary system.
When credits, whether in the form of bonds or bank deposits, bring in let us say forty dollars per day and going wages
are ten dollars per day, the creditor commands the services of
four wage earners. If wages are reduced to five dollars per day
the creditor commands the services of eight wage earners. Therefore, the relative wealth of the creditor has been increased! On
the other hand, should the daily wage standards be raised to
twenty dollars per day, then the creditor has command over
only two wage earners. Relative wealth has been drastically
decreased! The ups and downs of labor and commodity prices
must always determine the relative purchasing power of invested wealth! It is these recurring cycles which make the
poor relatively poorer and some of the rich relatively richer .
But the temporary benefits which accrue to the investing class
under these conditions are illusory Only for a time do they
enjoy their advantage. Let us examine this point further.
When the wage earner is unable to contribute toward taxes,
the burden must be shifted more and more on the wealthy.
Incomes are taxed more heavily. Eventually, this must cause
the whole credit structure to break down. Securities depreciate,
some becoming worthless. Real estate values fall. Rent collections are difficult. Mortgages default. Corporate and quasipublic debt cannot always be redeemed. The increasing tax burden, plus the curtailed purchasing power of the masses, plus the
reduced purchasing power of the investing class, ultimately
usher in severe dislocations.
Gradually, members of the investing class through loss of
income and savings find it essential to seek real employment.
Now the ranks of the unemployed are being swelled. New and
eager workers are offering their services. Only those of great
and independent wealth are surviving the stress. With the decadence of the great middle class the super-wealthy become
more powerful. Sometimes under such trying conditions the
masses openly revolt. There is a gigantic social upheaval. Our
own country underwent just such an upheaval in 1933. It was
peaceful but severe. Russia's revolution, like Spain's, took the
more violent form. In recent years, India has threatened several
times. But the Mohammedans were always cowed into submission by the clever Mahatma Ghandi. As a result, brilliant
British diplomats retain economic domination over India to this
day. Even now, we witness the energetic Nipponese attempting
to duplicate in China the economic benefits which have accrued
to the British through their domination of India. Germany's
impressive war machine is being directed toward a similar stake.
The vast material resources of Russia are a rich plum.
Folly of Unregulated Capital Movements.
Why must these revolutions and counter-revolutions occur
with such regularity? I daresay, the principal cause is the unregulated movements of international funk money. For example,
sudden withdrawals of vast sums of gold from our own country
during and after 1929 were largely responsible for the great
unrest which followed in India. These gold withdrawals were
forced on India by far-sighted international financiers. This
influx of gold to India caused their own money unit to become
virtually worthless in terms of current purchasing power. The
vast Indian population became restless. In the end there was
deliberate revolt against soaring prices. Here is grim proof of
the working of Gresham's law. Real gold coin was thoroughly
debasing the accepted circulating medium of India which had
been silver and paper. Other members of the society of nations
will attract international venture capital so long as overbearing
and oppressive leadership can keep wages and business taxes
at low levels. Mexico, rich in natural resources, has always
been exploited by selfish interests without regard for the welfare and consideration of the Mexican people.
When international capital is hurriedly shifted from country
to country, a fixed conversion price for gold is considered desirable. It gives invested wealth a definite guarantee to its
permanence. Any sudden change in the price level of gold,
it was always argued, would subject owners of international
credits to enormous losses. Critics who opposed tinkering with
the price level of gold rightfully declared an advance beyond
$20.67 an ounce would work great hardship on the debtor
class. This is true only when private bankers are allowed to
effect settlement of contracts. It is not true when governments
retain their sovereign right to exact settlement.
Monetary Revolution.
So it was in 1933 the United States of America broke international banking precedent. The Federal government settled
contracts between its own citizens—both debtor and creditor.
For the first time in over a century here was a drastic step in the
dreaded direction of equalization of opportunity. Under the
Old World caste system here was monetary blasphemy of the
worst kind. By Presidential edict all gold held by citizens of
the United States of America was declared forfeited. Ir was
declared the property of the Federal government. Private own
10
ership of gold coin was outlawed. Actually, no one was harmed
by this governmental action. The mechanics were simple.
Assume I owed you five thousand dollars payable in gold
at the old statutory level. I appeared at my bank and handed
over five thousand dollars in currency. I requested the agent
to pay you five thousand dollars in gold at §20.67 an ounce or
roughly two hundred and forty-two ounces. With the new price
for gold set at $35 an ounce, we know the two hundred and
forty-two ounces owed you is now worth eight thousand four
hundred and seventy dollars. Nevertheless, my debt is only
five thousand dollars! My banking agent pays you five thousand
dollars and retains three thousand four hundred and seventy
dollars for credit to the Federal Treasury. I have lost absolutely
nothing in this transaction. You have gained absolutely nothing.
Yet our contract is fulfilled. To be sure, a few shrewd, far-sighted
speculators, who hoarded gold or owned gold credits were
grieviously annoyed by this revolutionary practice. They hoped
this profit would revert wholly to them. This was the old system
on which the international banking fraternity had fed for years.
To be sure, foreign speculators owning gold bullion did profit.
But are they not now paying dearly for their ill-gotten gains?
During the years 1900 to 1940, we know the world's stock
of gold available for monetary use has more than doubled.
With this gold added to reserves, various central banking systems
have proceeded to issue debt money to the amount of several
times the going value of newly acquired gold. The money so
obtained is spent in governmental activities. To effect service
and ultimate redemption for this debt-money nations are compelled to exact taxes and collect them!
Interest at the rate of three per cent per annum approximates
one hundred per cent in thirty-three years. Hence when three
hundred dollars in three per cent bonds are issued it is contemplated to pay out six hundred dollars in principal and interest at
the redemption date thirty-three years later or approximately
six times the specie coverage. This kind of arithmetic has been
common practice. It should have been exploded by events which
11
followed World War I. We know default after default occurred
then. The hurried expansion of indebtedness reached such heights
during and after World War I that the ordinary increase in
productive population and real wealth could not support the
increasing tax burden. Finally, gold redemption at the old statutory level was abandoned.
When the tax burden becomes intolerable unrest and revolt
are sure to follow. The cost of World War I exceeded all expectations. The cost of this present debacle must exceed all
calculations. War debts are never paid honestly! When warfare
ends, the debts remain. These debts are not stated in hours of
labor nor in quantities of commodities. They are stated in terms
of debt money; dollars, sterling, reichsmarks, lira, yen, etc. This
being the case, the debts must be redeemed in money or repudiated. Because the stupendous indebtedness resulting from
warfare cannot be honestly paid, monetary legerdemain, through
a manipulation of the price level of gold is the accepted practice.
Price Level of Gold.
Now there is considerable obscurity as to just what the price
level of gold implies. If all debts could be automatically retired
throughout the world and commercial life could be started
anew, a mad scramble would follow. There would be rapid and
accelerated bidding for labor. This would constitute prosperity.
Since debts cannot be so easily cancelled we aim to decrease
the load of debt by decreasing the ratio between the numerical
value of the debts and the numerical value of the available
means of payment. Aflexibleinternational gold purchase policy
will attain this objective.
The pattern for solving the chaos resulting from World
War I was wrong! The Allies demanded from the vanquished
certain tribute. Politicians and statesmen gave way to the dominating mastery of clever, self-seeking minorities. The same old
band of brigands were permitted to retain their monetary powers
as though nothing had happened. It was just such a condition
that left the society of nations in the deplorable state we find
12
it today. Those of high mental attainments who wanted to
eradicate poverty and ignorance, curb greed and avarice, develop education and culture and give to European society a
standard of living comparable to ours were deterred by selfish
zealots, wholly destructive in their views. These foreign manipulators simply wanted the wealth of the future for themselves.
As a result we now witness another war wherein these selfish
people pay for their follies instead of making unwholesome
profits.
We surely know now America has no real friends in the
Old World. Our Republic has been depicted throughout Europe,
Asia and South America as a nation of Shylocks. We demanded
the pound of flesh from the same people periodically and these
same people periodically were finding ways to evade payment.
Because our leadership failed abroad it naturally follows it failed
at home. We should know now the whole international exchange system is inter-related and sympathetic. You cannot
successfully repeal the fundamental laws of supply and demand,
cause and effect and action and reaction and remain long aloof
from your folly.
Monetary Chicanery Exposed.
After 1929 the evils of World War I were revealed. By that
time the British, French and ourselves had acquired too much
fictitious wealth. We suddenly found ourselves hog-fat. Our
brains, muscles and vital organs were flabby and bloated with
an unhealthy accumulation of easy money. Too many wholly
incapable persons found themselves in positions of leadership
for which they lacked both merit and ability. Others floated into
positions of affluence through sheer luck. We are witnessing
now the healthy change which should be for the betterment
of mankind. We are having a needed economic awakening.
Among other things, we are learning it was sinful to have
kept the price of gold anchored so long at the same old level.
Here was the root of all the evil.
13
The crushing international financial system which has always
been an inhuman and heartless legal juggernaut has finally been
exposed. It was exposed by the follies it practiced on unsuspecting people after World War I. As a result, a great Worid Bank,
wholly removed from selfish and scheming hands, will open
up vistas and unending opportunities which no mere League of
Nations could ever command. Those who fight this conflict to
its final and ultimate conclusion should never again allow themselves to be subjected to gallery seats in a post-war world. The
people must strive to keep the competitive system alive so they
can provide capable and honest leadership from their own ranks.
They must not be left to drift without regard to future consequences. Past sins are too alive to be wholly ignored. Always
remember America's immense unused gold hoard can be a
powerful bludgeon. Wisely directed and utilized it can effect
a righteous international exchange system and a prosperous
world economy.
I daresay, Union Now, like the famed League of Nations, is
just another fantastic scheme calculated to evade the real issue.
Like the sociological inventions of fanciful adherents to Communism, Union Now will never correct the real basic evil. It
is the international money system which has been at fault. A
few financiers have been permitted to manipulate the international gold standard until there develops this hopeless fatalism
which finally leads to warfare. Only through central banking
systems, tied through rigid international agreement and collaboration to a world bank, can the gold money standard be made
to function for the humane benefit of all. If, after this war, a
few nations are again permitted to gamble on margin and issue
several times as much debt money as there is gold, then this
bloody contest, like others, will have been fought in vain.
To improve the world money system so the vast potential
energies of mankind can be directed away from war into peaceful pursuits should be right now the happy goal of farsighted
political and financial leaders. For too long, life has been just
14
a miserable existence for most of the humans who make up
the society of nations. At this point, it is really sad to relate, but
nevertheless true, the international monetary system which can
provide unrestrained material progress and simultaneously check
the opposing forces of dishonesty and ambitious aggrandizement of power has not yet been devised. A high gold price;
semi-free gold market; and finally, gold redemption; have been
recent steps out of the morass resulting when profligate government crumples.
Future of Gold Assured.
In view of our enormous gold reserves it is not unnatural for
us to be concerned about the future of gold should the Axis
powers—Germany, Japan and Italy—gain a stalemate peace in
Europe and Asia. The power of gold will never falter! All
Europe, including Russia, is in a measure still capitalistic. Gold
is the basis of Soviet Russia's monetary system. Russia mines
her fabulous gold reserves to exchange for the material benefits
which accrue to other nations where people are freely allowed
and encouraged, through a private enterprise system, to glory
in the creation of new and astounding works. New goals and
achievements must continue to be the hope of mankind. Some
member of the society of nations will always set a high example
in striving to stamp out poverty and ignorance. Curious, eager
people will always be with us. And gold will remain as the
standard for measuring new and old values no matter how
involved or intricate becomes the international banking system.
Gold will be the base in Germany when her people are allowed
to win gold by exchanging hours of labor with those nations
possessing gold. The Communists, themselves, will never win
gold. The Soviet system is non-competitive. It is, therefore, noncreative! Everyone knows the revolution rooted out private
ownership of property. Under the Soviet system extended ownership and title is vested wholly in the State.
15
Despite prevailing contrary opinion, a satisfactory substitute
for gold has never been discovered. Its use, in a monetary sense,
is older than organized society. Gold as a money token was not
selected by any gathering of sages. Nor was gold introduced
into the world by sinister promoters. The power of dictators
had nothing to do with its wide acceptance. Gold is a unique
substance. It is peculiarly adaptable to preserve honesty in the
exchange of labor between people of all lands. The gold standard
was developed by the Occidental people. The future of gold
as a money token is definite and certain. The cost of war should
permit monetary and fiscal authorities to justify America's high
dollar price for gold no matter how this war ends. Of course,
it will be necessary to perform again some monetary gymnastics
to make gold effective in world commerce. Resourceful political
and banking leadership can find a way whenever a reasonable
and valid peace agenda can be commenced. That day will surely
come! It will arrive when Europe's and Asia's war lords run
short of the ammunition which can never surmount plague and
famine.
Need for Flexible Gold Standard.
Meanwhile, this war, like others preceding it, causes labor,
fabricators of raw materials, entrepreneurs and merchants to
strive for high prices. When commodities, including gold, bring
rising prices, then labor demands its relative share. Since warfare
exaggerates the price level of labor and commodities the price
level of gold should float free in peacetime to permit easy cancellation of government and inter-government debt. This is
axiomatic! For example, Lord Macaulay in his "History of
England" recounts how the British debt during the vigorous
war and commercial battle with Louis XIV rose from £50,000,000 to more than £800,000,000. He writes, "... at every
stage in the growth of that debt it was seriously asserted by wise
men that bankruptcy and ruin were at hand... still the debt
went on growing; and still bankruptcy and ruin were as remote
as ever..."
16
What did England do? The British then wisely allowed gold
to seek its natural price level until gold became less valuable
in relation to other commodities, including labor. Gold found
its natural price level through the workings of fundamental
economic law. This natural price level was for many years
$20.67 in the American dollar equivalent. Thus, in 1516 Great
Britain established an official gold price throughout the world.
They then set out to solidify their unique position. A plan for
controlled and coordinated development of the world banking
and commercial structure was undertaken. Raw commodities
were conveyed from all parts of the world to British ports in
British ships. The British Isles became the one great supply
house for manufactured goods. London was the world banking
center. As masters of the sea and the monetary structure, British
authorities accepted their tremendous responsibilities seriously.
So long as statesmanship and high financial ideals prevailed,
the society of nations under British tutelage made remarkable
progress.
Britain*s Dilemma Arrives!
Finally, as it always does, statesmanship became tinged with
political ambition. Financial ideals gradually decayed, then
rotted with greed. Benevolent political leadership gave way to
a desire for mastery. Certain nations were challenging British
commercial and banking supremacy. Finally, the selfishness
which generally follows the accumulation of great wealth and
the responsibility of leadership asserted itself. Warfare was the
inevitable result.
Just preceding World War I and after, too, Britishers relied
more and more upon political and financial intrigue. Progress
in the technique of manufacturing and scientific research was
neglected. The best British minds were engaged in world politics and highfinance.England clung tenaciously to old standards.
It was the horse instead of the tractor. It was always more merchant ships instead of airships! Yet Jules Verne, late in the
nineteenth century, in his fascinating yarn, "Clipper of the
Clouds," foretold the coming of the airship. Did he not then
17
admonish his fellowmen by telling them the nation which
controlled the air might rule the earth? But good old England,
with the ruling element resisting the standardization of the
machine-age and firmly defensive of individual rights, trusted
to luck.
It was the same old fixed anchorage for gold until cumulative
evils forced England to abandon the gold standard in 1931. It
came too late! Even so, the British still tried doggedly to maintain their world banking prestige and commercial dominance.
It was the same aristocracy of noble chaps, exquisitely mannered and impeccably tailored, ruling by right of birth and blood
over the obedient masses. Critics were compelled to admit the
great British people had always made the best of things, according to circumstances. They had succeeded magnificently in
the past so why misgivings now? Wasn't the English way preferable to a Five-Year Plan or a bloody social revolution? Why
turn everything inside out and upside down on the mere pretext
that by doing so bloody civil war and revolution could be
averted? As in former years, the essential honesty and perseverence of the British people would overcome difficulties. This
was the accepted attitude, as England muddled along with a
character and tradition which will always prove miraculous.
Despite Great Britain's intense political efforts, the rising
influence of America, Germany and Japan in the society of
nations was too formidable a challenge. So it was in 1932, the
British gave up their last vestige of dominance in world affairs.
Adoption by America of the controversial Hawley-Smoot tariff
finally compelled the Empire to sack free trade for protected
markets. Other countries were quick to follow. National selfsufficiency became the goal of all nations!
When violent trade dislocations appear, first come tariffs,
then embargoes, and finally, warfare. World War I and World
War II are of the same origin. The British are meeting this
second challenge courageously. Whether the Empire will survive
to re-establish its pre-eminent position is sheer guesswork. Who
knows an answer which may take years deciding?
18
Reconstruction Through a World Bank.
When this war is finally recorded, history will probably tell
how the so-called Axis powers bit off more than they could
chew. In any event, there are those who now tell us our New
World can never survive with the Old World divided into
different spheres of influence, under different types of financial
and commercial domination. Soviet Russia is still holding on,
despite the years of peaceful though earnest effort to discredit
and destroy their communal system. Who can deny with supporting facts this final reshuffling of the Old World's economic
and financial blocs may not bring benefits and gains not now
visible through the dark clouds of war, confusion and propaganda? Or can anyone assuredly deny the Old World, left alone,
cannot find the answers which will bring all peoples close together again in a final collaboration of common interests? Any
adventure of blood always clears the air of much cant and dogma.
To be sure, World War I was a striking exception. With America's direct interference, that quarrel settled nothing!
Did not our forefathers make many mistakes? They fought
numerous wars. They labored under many delusions. Somehow,
the people of the Old World have always muddled through.
After each healthy fight or lawsuit, civilized people somehow
retain the wisdom to whip new problems until new mistakes
create others.
The fact remains, America is honored today as the great
shelter for a free and articulate people. In addition, we are the
world storehouse for idle gold. Down through the ages, when
greed, vanity and ignorance have led mankind into mires of
reckless indiscretions and finally war, a gleam of gold from
the dark recesses of the earth has lighted the way back to peace,
prosperity and sanity. It will be so again! But the right of those
with money or Federal credits to be protected by a permanently
fixed price for gold should be the broken twig against the
bludgeon. Indeed, gold should never again be the permanently
stable reference to other commodities which it was from 1816
19
to 1931. Who cares if the price of gold is arbitrarily adjusted
next time by a consortium of qualified international representatives, with term appointments, working within the framework
of the Bank for International Settlements? Should any single
nation be allowed again this exclusive right and authority? To
facilitate the gathering of vital statistical information, could
not clearing offices of the Bank for International Settlements
be established in all representative countries, small and large,
on all continents? Then, when peace assuredly comes our vast
unused gold hoard could really be a dependable vehicle to
accelerate an impoverished, tired and disillusioned people back
to gainful, productive pursuits.
The Old World is not pursuing an unchartered course. Warfare nearly always brings a redistribution of opportunity. The
people of Asia and Europe are now simply aligned on two sides!
They determine who shall wrjte the rules to guide their next
generation in the ways of peace and opportunity. But America
must this time take the leadership in writing and establishing
the international monetary rules. We have the gold! There is
already in existence an International Bank for Settlements. We
can conceive a workable plan for its benevolent operation. It is
in the interests of the American people to exercise their new
power and strength wisely. By doing so we can protect our own
economy and institutions while simultaneously developing an
international monetary and exchange system which could hold
in check selfish and scheming aggrandizement.
Published by WARD'S FORECAST
NEW YORK OFFICE
PACIFIC COAST OFFICE
545 - Fifth Ave.
New York City
215 - West 7th St.
Los Angeles, Cal.
PRICE $1.00
20
This document is protected by copyright and has been removed.
Author(s): J. H. Clifford Johnston
Article Title: Mr. Leon Fraser's Currency Plan
Journal Title: The Financial News
Volume Number:
Date: November 20, 1943
Page Numbers:
Issue Number:
This document is protected by copyright and has been removed.
Author(s):
Article Title: The Money Market
Journal Title: The Statist
Volume Number: CXL
Date: November 20, 1943
Page Numbers: 818-819
Issue Number: 3430
This document is protected by copyright and has been removed.
Author(s):
Article Title: Stock Exchange
Journal Title: The Statist
Volume Number: CXL
Date: November 20, 1943
Page Numbers: 819-820
Issue Number: 3430
This document is protected by copyright and has been removed.
Author(s): Norman Crump
Article Title: City Notes: Sterling and the Dollar
Journal Title: The Sunday Times
Volume Number:
Date: November 21, 1943
Page Numbers:
Issue Number:
JOSEPH
NATHAN
&
CO. LIMITED.
N E W
STOCK,LONDON.
FOREIGN TELEGRAMS
STANDARDEXCELSIOR.
MERCHANTS-
fg>
jrgAD^N1AL;L ! T R E E T '
I O | O T I I C L E1 I fij FLJHB.C,
TELEPHONE N9»
WESTERN ONION.
BE NT LEY'S*
LONDON, E.C.
3.
LIBBERS.
AVENUE 3 9 4 1 .
(3 Lines)
Temporary
322,
Mr.
The
The
Kew
Leon Fraser,
President,
First National Bank of New York,
York,
Address —
EWELL
ROAD,
SURBITON,
Telegrams—SENORITA,
TeiePhone-ELMBRiDGE
surrey.
SURBITON.
4947 and 6466.
22nd November, 1943.
Dear Sir,
I am prompted by the report in "The Time^f of
the 17th November to write you just a short letter
because I recognise that you will receive shoals of
correspondence in view of the very practical suggestions
you have made in connection with international currency
etc.
Personally I have always felt that unless the
United States makes some use of its gold stocks for worlds
and its own benefit then we stiaL 1 never reacH financial
or economic composure.
I wrote an article a year or tv;o ago on this
subject for a trade paper called "Export".
I am enclosing
a copy and also an amplification of same that I made to
the chairman of the Research Committee of the Institute of
Export.
"Export" is their official paper.
%
suggestions for the use of gold are more expansive than
yours but I just thought you might find in these very
sketchy writings some germs of Ideas that might suggest
to you'a widening of your proposed scheme.
I sincerely hope that your scheme will be given
serious consideration and as a director of this Company
with Anglo-Colonial experience of fourty-six years, I am
P.T.O.
thoroughly of the opinion that you are on the right trade*
With all best wishes and compliments,
Yuurs very trulyf
This document is protected by copyright and has been removed.
Author(s): Sydney Jacobs
Title: Stability of Currency
Date: August 1941
Page Numbers:
Memorandum for Mr* A. E. Upton, Chairman of the Research
Committee of the Institute of
Export.
When I tendered my article in August "Export"
on "Stability of Currency" I did so with a desire"to promote
discussion.
Very little earnest discussion ensued/ and
instead some attention, has, in the interim, been focused
on other "plans" - mainly I feel because there has been
the oft repeated general statement that "the Gold Standard
broke down". I firmly state that this is not a fact.
The system failed in universal application because those
nations who so wished for their own ends ceased to play to the
rules and left England to make thee?ror, with all best intentions,
of returning to what was an unilateral Gold Standard - which of
course could not prevail, just as 1 feel that no one country
could adopt free trade if all other nations are protectionist.
I want to emphasise this point for a misconception
of the facts is leaving many to seek new and experimental
methods forworld's finance.
I have reread my article and in light of no definite
criticism must assume that there are many members of the
Institute who agree that my suggestion has some merit as I feel
is the case and I know is so from my own touch with many
competent thinkers inside and outside the Institute*
So too,
I have had nothing placed before me in the several "plans"
that I view as applicable to world's finance.
This question
must be approached from that angle*
Unilateral financial
arrangements will not meet the demands required for stabilization
of international dealings can if applied universally will, I
opine, lead eventually to certain friction between nations•
This postulates I do not agree with many of the conclusions
reached on this subject of finance generally in the interim report,
My proposal does not suggest that the ownership of such
gold stocks as exist should be relinquished. I propose a
"Trusteeship", holding such stocks for the contributing nations•
This gold in the aggregate of the first established stock need
not pass out of the"hands of the trustees.. It is there to be
refunded if the world's Gold Standard consortium breaks down.
Under my scheme freshly mined stocks will be acquired by the
trustees as against what is sold for manufacturing purposes•
2.
So a plea for a retrial of the Gold Standard
throughout the world is to my mind a practical proposition
that v/ill be the more readily applicable and acceptable than
these new "plans" and it does appear to me that, if America
earnestly desired, as the largest holder of Gold, to
contribute towards economic compdLsure she should not, in her own
interests, resist the idea of making use of these stocks in
world's interests as well, by the establishment of this trust
even if it was designed for a stated period only - then for
reviewal - to set up a solid basis by which international trade
can be pursued, with a sense of stability as soon as peace
happily arrives*
My scheme presupposes two fundamentals if this trust
is launched•
(1)
The Trust is the only buyer and seller of gold.
(2)
Exchanges should be agreed by the members of the
Trust which should include all trading nations
and such exchanges should be fixed and reviewed
only by consent of the Trustees appointed to work tl
the scheme.
Gold would not be circulated.
That is unnecessary
and would lead to hoarding which should be prevented.
The
system would be one of bookkeeping - where balances of each
member would vary each year from the original allocation in the
books - and the annual balance sheet would show the position of
each country.
flfy idea is that for say the first ten years of peace,
in order to bridge the period to reasonably normal times, there
should be, as suggested in my article, a marginal reserve
created that could be used to help those nations that are slower
than others to find their economic feet once more. The stronger
nations must be prepared to help others to reach that sta^e.
I feel that some such stability of currency and
exchanges is fundamental to world's recovery and, if Gold can
be used and not remain idle, to provide that stability it will
clear the way, in a calmer atmosphere, to allow time to be given to
the economic questions wiiicn are, I contend, the second and not
the first line of attack, except for the carrying out of seeing
tnat the oppessed nations are tendered free supplies of the
3.
fundamental needs of human folk*
I consider the establishment of external stability
is vital. Internal matters are domestic and do not come within
the ambit of consideration at present. They will be more 1 easily
handled and if necessay adjusted later for this is a world s
matter and I repeat should always be approached from the one
angle only. If ther: is not a reasonably composed world
then the constituent nations can never be singly happy.
No reference is, in my view, needed to the calls for
use of Gold by the Gold producing countries. Again that is a minor
consideration except that the established export industries in
Gold must, if kept in being, help towards the more comfortable flow
of international trade.
There is a tendency to feel that those who favour the
Gold Standard
are tninking in terms of possession of Gold or
fl
worshiping The Golden Calf".
That is one of the many parrot
phrases so loosely used in these days,
I repeat that there is
no need for circulation of Gold under this cheme to either
nations or individuals.
My conviction in this matter flows solely in the feeling
of what will more readily appeal and be understandable to the
whole world, and my desire to see the adoption of a system that is
the most easily manageable from the aspect of the least chance
of continuous friction.
I should like to tnink that our Institute could set afoot
a real practical discussion on this subject and perhaps that could
best be undertaken in the first instance by a research committee
discussion, hoping always that, if we can agree on an official
statement of view, we could then try to find reliable
correspondents in America that could probe the matter there.
(Sgd). SYDNEY JACOBS.
11.9.42
November 22, 1943
Dear Mr. Guinness:
Thanks for your letter
of November 18. I am taking home
your enclosure to read*
It will be a pleasure
to see you one of these days. I
am out of town a great deal In
connection with the Red Cross
but if you will give me a ring
we trill try to get together»
Faithfully yours,
Arthur R. Guinness, Esq.
ITetropolltan Club
Fifth Avenue at 60th Street
New York 23, N.Y,
CHEMICAL BANK & TRUST COMPANY
16 5
BROADWAY
NEWYORK 15
November 18, 1943«
PLEASE ADDBESS REPLY TO:
ARTHUR R. GUINNESS,
METROPOLITAN CLUB,
FIFTH AVENUE at 60th STREET,
NEW YORK 23, N. Y^
Mr. Leon Fraser, President,
First National Bank,
2 Wall Street,
New York 5 H. Y.
Dear Mr. Fraser,
I was very much interested in your
>
pjLfewu 6LU uio auCJ-U.—Tribune Forum the other evening and
**\ A
would like to have a full text as the one given in the
\v V
We have been doing a good deal of
work at the British National Committee of the International
Chamber of Commerce on these problems and for your confidential information I enclose a copy of our chapter on currency,etc.
I should greatly value a talk with you on the subject.
Our report is not an agreed document in
England. We are over here talking over the subject with our
opposite numbers, the American National Committee of the
International Chamber of Commerce and Mr* Winthrop Aldrich is
taking part.
May I call on you some time to have a
talk?
Very sincerely yours,
R.
This document is protected by copyright and has been removed.
Author(s): British National Committee of the International Chamber of Commerce
Title: Chapter V: Currency Standards, Foreign Exchange and International Credit
Date: [1943]
Page Numbers:
November 22, 1943
Dear ttr. Ward:
I am obliged to you for
your Interesting letter of November
18, and the enclosure, ??hlch I
have carefully read but return
as you may require it again*
We
seem to be moving in the same
direction.
Faithfully yours,
Thomas E. Ward, Ssq*
30 Church Street
Hew York, N.Y.
THOMAS E.WARD
THIRTY CHURCH STREET
NEW YORK
November 18, 1943*
Dear Mr, Fraser:I am deeply interested in the splendid suggestion which you made
that international money of tomorrow be a dollar-sterling
standard* Your thoughts on international currency control
recallf a remark made by the late Sir Henri Deterding
who was the head of a company with which I was associated
many years ago. He said, "Anything which is complicated is
wrong; anything which
is simple, however, will never be accepted
by the economists.n
Shortly before the war broke out I called at the office of the
Bank of International Settlements for I was interested in
discussing possibilities of returning to a gold standard for both
the dollar and the pound* My interest in this connection was
evidenced in a plan which I had submitted to the British Treasury
in connection with the settlement of the war debts which plan,
incidentally, was being considered for immediate favorable action
which action was interrupted by the outbreak of World War II*
I shall take the liberty of enclosing copy of a letter which I
wrote to the New York Times a few weeks agof which will evidence
to you the fact that I am disagreement with you*
There is absolutely no need for elaborate new machinery and, as
you say, we should dispel the illusion that any international
instrument can work a miracle in the creation of stable currencies.
With best wishes*
lours sincerely,
TEW/EAM..
ENCL,, •
Mr, Leon Fraser, President,
First National Bank of New York,
2 Wall Street,
New York
MICHAEL A- PARISANO
10 EAST 3rd STREET
NEW CASTLE, DEL.
November 23,1943
Mr. Leon Fraser
President.
First National Bank
Wall Street
New York, N.Y.
Dear Sir:
I take the liberty of sending you an illustrated article
pertaining to World Stability, titled STABILITY FOR PEACE AND
PROSPERITY, dealing with the subject of stability, as the foundation of all national prosperity and progress, and trust that
when you examine it, you may find something of value and interest to you and your Organization, especially at this present
time when Stabilization of Finance, Industry and Commerce is
most essential and desired by the entire world.
You have the power to do much to accomplish this result,
which will benefit all nations, and doubtless this subject has
received long and careful consideration at your hands.
My congratulations to you for the great speech made at
the Herald Tribune Forum, and at the same time wishing you a
successful adaptation of the idea, for most essential stability
in world affairs.
V
Yours very truly,
Michael A. Parisano
P.S,
WORLD STABILITY FOR PEACE PROGRESS AND PROSPERITY.
STABILITY FOR PEACE AND PROSPERITY
STABILITY IN FINANCE, INDUSTRY AND COMMERCE IS THE MASTER
KEY WHICH SHALL UNLOCK THE DOOR LEADING TO WORLD PROSPERITY
AND UNIVERSAL PEACE
By
MICHAEL A. PARISANO
THE LAW OF NATURE
UNIVERSAL STABILITY
STABILITY FOR PEACE AND PROSPERITY
STABILITY IN FINANCE, INDUSTRY AND COMMERCE IS THE MASTER KEY
WHICH SHALL UNLOCK THE DOOR LEADING TO WORLD PROSPERITY AND
UNIVERSAL PEACE.
Universal Stability and the Triunity of Prosperity.
The triangle of Finance, Industry and Commerce is the
supporting pivot of the scale that has to stabilize production
and consumption throughout the world in order to establish
prosperity and peace. Therefore, the above three principles
are the powers that can stabilize the scale of future conditions
and nothing else can take their places. They are the pyramids
of power and we cannot do without either of them.
They consti-
tute a continuous chain which interlinks one with the other. As
a consequence, the nations are compelled to unite capital and
labor, so that the pull in one direction may serve to accomplish
stabilization in world affairs.
The illustration v/hich accompanies this article, symbolizes graphically the writerfs conception of World Stability
for Prosperity and Peace. The ideology behind this idea of
World Stability points to a development of those inherently
humane influences which should make practical the age-old benediction of "Peace on earth and good will toward all men." The
approach to this ideology, by way of Finance, Industry and
Commerce, simple as it may appear, is nevertheless, in the
writerfs opinion the very fundamental means toward establishing
influences essential for the happiness and betterment of human
society the world over.
Rational economics visualizes a balance of industry
through Finance, a balance of Commerce through Industry and
balance of Finance through altruist^
- a government
having the legal power to balance thejmonetary value of the
metals of exchange, such as gold, silver or platinum.
One of our most distressing problems is the instability
of market prices of all commodities.
The erratic, unreasonable
and almost insane fluctuation of prices is probably one of the
most painful symptoms of our present period of depression.
To
bring peace to the industries of the world we must first have
prices stabilized and firmly controlled.
In the establishment of business stability the world
over, nations will lose their incentive for friction and discord.
Stability in commerce is by far the most certain way of bringing
(2)
about a better "understanding among the peoples of the earth and
permanent international good-will.
To realize this, almost all the nations of the earth
should unite and create a plan in which an absolute standard
of fixed monetary value prevails. The universal adoption of a
fixed standard of value of any; of the precious metals which
may be used as a medium of exchange, both domestically and
internationally, will directly serve to stabilize the entire
financial and economic structure of the world - a structure
which at this moment is rocking perilously on the brink of
imminent destruction*
Regardless of all the_theories to the contrary, under the
present existing state of economics-, the monetary system cannot
be dispensed with. It has thus far proved itself to be the best
means of exchange for labor and the products of labor. The three
handmaids of labor, Finance, Industry and Commerce, constitute
the triunity upon which every phase of business directly depends,^and .^therefore ^with^ which this.article ^ mainly deals.
Instability of capital spells instability of business.
These two are interactive and interdependent.
cajgrtal i n e ^ ^
Retrenchment of
business, with the
resultant state of depression, more or less widespread.
Obvi-
ously, any law which has for its basic effect the stabilization
je,^Industry and Commerce, must.take in under its term?
of uniformity and equality, "the•__integrali divisions of Finance,
Industry and Commerce, namely Production and Consumption, Demand
and Distribution.
False economy must eventually lead to chaos.
(3)
THE SUN, MOON AND EARTH IN STATE OP STABILITY.
An Analogy
The sun, the moon and the earth maintain a state of
stability toward each other through the great stabilizing
forces of nature, be they of the phenomena of gravitation or
electro-magnetism, or whatever it may be that future science
may discover.
Without the beneficent properties of the sun in transmitting light and warmth to this earth,- a state of cold would
exist which would be so intense as to make life on this planet,
as we know it, impossible.
The moon with its powerful gravita-
tional pull on this earth serves to stabilize the earth's revolutions; regulates the tides and in general gives to our whole
planetary system that perennial uniformity with which we are so
familiar.
The sun transmits a tremendous amount of heat, while the
moon, so far as we know, appears to be utterly cold, the temperature probably below that which our present instruments are
capable of computing.
The earth, on the other hand, is the
beneficent recipient of the properties which emanate from both
these celestial bodies. Here, before our very eyes, we have a
(4)
great cosmic example of stability from which it behooves us to
take a lesson; to utilize the intelligence the Almighty God has
given us, and to so endeavor to balance our minds that loyalty
and respect for one another may be the order of the day and that
true justice to all mankind shall prevail to the end of time.
Our present state of society is in a condition closely
resembling a tremendous electric force which is about to make
contact between its negative and positive poles, which, creating
an explosion, may set loose a conflagration whose termination
may be beyond prophesy•
an
And as in electricity, a neutralizer -
3»ngul&tor is essential for the purpose of safeguarding dan-
gerous and unforeseen contacts, so in society we are compelled to
utilize an insulating force as it were, which, in this thesis,
is incorporated under the term World Stability. There may be
other unknown and amazingly intricate forces which operate to
influence people's minds in one direction or another. There
do appear to be waves of concerted action from time to time
which sweep like a tide over nations carrying them on to higher
peaks of progression or backwards, as woefully too frequently
happens, to the lower levels of retrogression. But in the end
the climb is always upward,
Man is essentially an instrument motivated from outside
forces. Neither his mind, nor his heart nor his motor processes
can properly function when he is surrounded by deleterious influences.
In a stabilized society, in a well-balanced scale of
the highest human values, there must be no animosity, no bickering, no inflammatory controversies, no hatreds and no jealousies.
(5)
UNIVERSAL STABILIZATION IN THE PREVENTION OP DEPRESSION
Depression is a pathological state of society. Prosperity and Peace are th6 indicators of its health and well-being.
To convert society into a state of health, nations, the component
parts of society, must be cooperative.
The nations1 currency
systems, the very "basis of their economic structure, must "be
stabilized.
There can be no progress until this has been accom-
plished. The accompanying illustrations will serve to clarify the
idea and the theory of stability in its relationship to man!s
environmental forces.
It should prove particularly interesting
to all those whose ideals lead them to work and hope for the
final establishment of universal peace.
All about us we see the forces of nature in a state of
stability.
Time, space, gravity are eternally constant. What-
ever variations there may be are so slight that we are not
aware of them.
Every phenomenon of life conforms to system,
regularity and stability.
laws,
lajL^qnly^runs counter to naturals
Man's nature is in constant. cpnfltQji.with the ..laws of
stability about him.
But, Teoo^niziig£^thX^Mo%> •
the diffim^Vh^fta t h i s , contrariness is..constantly bringing
(6)
him, his greatest efforts to correct the defects should be persistently and patiently employed, and eternal vigilance is the
price of his prosperity and his peace.
Thus, universal peace and prosperity is not an idle
dream.
It can be accomplished by organizing a widespread move-
ment for World Stabilization for Prosperity and Peace,
Through
this movement the peoples of all nations may be educated to a
better and more rational understanding among themselves. The
representatives of the nations may then be given a place to
meet and unite for the purpose of deciding ways and means for
an all-embracing world stability which shall lead to prosperity
and an enduring Peace.
Michael A. Parisano
(7)
MICHAEL A. PARISANO
10 EAST 3rd ST.
NEW CASTLE* DEL
MICHAEL A. PARISANO
10 EAST 3rd ST..
NEW CASTLE, D E U
This document is protected by copyright and has been removed.
Author(s):
Article Title: Banker Fraser's Proposal
Journal Title: Time Magazine
Volume Number:
Date: November 29, 1943
Page Numbers: 84-86
Issue Number:
W. RANDOLPH BURGESS
55
WALL STREET
NEW
YORK
November 29, 1943•
pear Leon:
5Cou may have noticed the crack at our report
in the London Economist. I thought of answering it as
indicated herewith.
What do you think?
Sincerely yours,
X- Q. tt
Mr* Leon Fraser,
President, First National Bank,
2 Wall Street, New lork, B. Y.
Copy has been sent to
Mr» Fraser
Mr* Rentschler
Or* Stonier
He* Caiman
Mr. Roberts
November 29, 1943«
Dear Mr* Tyeraan*
miile a consistent, and usually admiring, reader of the ECONOMIST,
I have just seen your issue of September 13 with its comment entitled,
"Through American Blinkers,* on the report of the Economic Policy Commission
of the American Bankers Association*
From your date line, as well as the
article, it seems clear that you had to rely on an inadequate cabled dispatch
and did not have before you a complete copy of our report,
X enclose one
herewith. From it ydu will see that we do not say most of the things which
so horrify your writer*
A difference in point of view such as your article suggests v«ould be
disturbing at a time when so much depends on understanding between our two
countries on these vital natters. This report to the American Bankers Association was not an offhand or one-man product but represented an effort of saany
months to ascertain &nd set down the informed opinion of bankers and others in
many parts of our country. It has been well received here*
lour review uses one phrase well calculated to make American readers
see red* lour writer says, " - the task, not so much of welding the official
British and American views, bit of bringing American opinion into line with any
compromise between the two, will be difficult." Th&t approach does not go down
well in our democracy* Is not the real task one of finding out American and
British opinion in this matter, and then bringing official views into line? I
have a notion that British and American public opinion are not too far apart*
This is perhaps illustrated by the recent Moscow meeting, the results of which
met instant and almost unanimous approval here* The United Bations Relief and
- 2 -
Rehabilitation proposals are also being well received* Both of these plans
are characterized by simple directness and common sense. This may be suggestive for the currency plans*
Without yielding to the tenpt&tion to discuss a number of points
on which your article seems to me misleading, I must mention ay concern at
one point of view* The article quotes, or r&ther misquotes, as proving the
antedeluvian nature of the report, from the following paragraph* The misquotation consists of lifting the middle sentence of the paragraph from its context and omitting from that sentence the qualifying adverb, * assuredly*"
"The r&te question csnnot be settled &lone» It goes
along with all the other problems of peace and i?ar and trade
barriers reviewed here* Bo country can assuredly maintain
a stable currency unless its Internal economy is in order its budget under control* its price level reasonably stable,
end Its external payments and receipts veil balanced* A
stable currency is a logical result of a sound economy &nd
cannot exist long in its absence**
Is it possible that the iiCcffiOIttST or economic thought in England
believes that a stable currency can be maintained without this sort of foundation? The attitude of the two nations on this question is basic to any understanding •
One might venture to say that the American people have h&d a look at.
monetary instability and don't like it* (The f/hite plan reflects tills.) They
hope to attain stability without serious domestic sacrifice; indeed their
desire for stability arises largely from domestic reasons* The British people
have looked at instability and don't like It either*
But they have also looked
at the possible domestic sacrifices necessary for currency stability* The
natural question is how such Great Britain is willing to pay to maintain the
position of the pound, especially if the international economic atmosphere is
cloudy* Does the Keynes plan reflect some desire for a gradual currency depreciation? the success of any international stabilisation mechanism depends cm
-3-
the answer to these questions* It is for these basic reasons that the attitude
of the ECONOMIST is especially interesting*
Sincerely yours,
Tim Randolph Burgess
Hr* Donald Tyerman,
Acting Editor, THE ECONOMIST,
Brettenham House,
15 Lancaster Place,
London, W« 0«, 2, England*
This document is protected by copyright and has been removed.
Author(s):
Article Title: Through American Blinkers
Journal Title: The Economist
Volume Number:
Date: September 18, 1943
Page Numbers: 404-405
Issue Number:
November 29, 1943
Henry Steffens, Sr*t Esq.
Librarian
Essex County Hospital
Cedar C-rove, New Jersey
Denr V.v. Steffens:
This i s a tardy
acknowledgment of your l e t t e r
of Kovembor 23.
Becnuse I
aqi Just leaving to^m, I cannot
deal at length v/ith the very
Interesting contents*
Faithfully yours f
L(
«nnTvT rp V
Z3
rya sev
Ffysh
JJ ea V S ( vi
v(c( M &
> fZ Great
/3Yt~+&t'n
co
us?
Jf (ft
f
-foY
tffcs
be. r<.
I lavs
ave
-fo y
P yc ce
I
Iz
co
v*
fS
ts
^ee
f
VepovfxcL,
as
of tf 0 x/* *+ be * <1
fr
,
5 fates
Tveaswy
$ I 9, So 3^ Z r J~f o o o ,
kas
h e<? f\ e y ^ M a / ^
less
tkaux
J a ^ L>I
cuA ^ 3of a o o/ ooof
f<rcA p?v <ei^i
*7 ^ e
Ooovfci's
ooo ,
/?c>f>v f<* -f r o
si y v <z f e d, fo t tt\
o c\
(buy
(A
ff
\A/
Sw/?
(Li-f(a t <o u\
lAoie,
fvotAA
ID c cu\
oj
I( a b ( (t'-f (k S
Si-
2 %
k a s Jbccc^y
<JGIC{J
GUV
<zu y YQ M C y,
USeoL
I l>\? " yaf
up
r'c*
O
c o UA lo t*>\ <?GL *' k a s
cc y ^ > a v
a^c
• /o
LL.
7
ve<y(u<:<?aL
uu
Li LA G( C V
e
lus
FecfzTsoif
Q o o db
IAJ o vlo(
he
p V^\J
^ ^
v v <
^O ^ y C e f e ^ / ^
IAJ o v k
very
Sy s
CG61 i
W QL It
c? t*
IAJ hx \e c\
e t>\ + & I%f
/
z.tAJe o(j
o
hy
P f & p eV
l^uy a c^ d ^ e L^\P t^ A,
efc.
UofcL
S(i^ac
&a(<z{ Se H (^ ws\
U\A. (A t* Q c*edb
(pa
p^ v)
CCJ y ye i^ a< 5 9
1 & (s
UJ ay
J
u cj
l~i\ ^ ^
IA/
Vestove
t
* (I
f
f
A
f
o^
IT\?
e
Vv 0 v /oL
^ o
at ?
co
No,
lA/ovlcb
up
ay
The
cAollay
ou
W A o (^_
our
/Z Sj
/ouiscLhcfStiAj
IAJ CA O ^
^^^t
%
a(
°/
/^f-f
r
S^
yeckvS
o( ( of
f'fi
M e-e o< s
e
V <? p
/° ° Ou
A^v.
Co lA
A ^ c^ ^
IA C f
ac/^t
pvo-fefsovs
^ ?
°/o,
~fU af
p
~f
Iz
y o/o{
ou U c,f
nvi^es
I,
<^ / u e.
of
o\ /~fa{ CGVCA*((
ti^i<zytAC\
/7^>
Kec/uc/fo^
l
puvpast
aJ
A^e L*S\ e f<* fs
co^y/f>^
fCyicy-esiS
1r & <du cLi ( u<> ( o\ cj v y 1 v t ? S
to u ((W f IA<J
^S<z ^
IA, ( 11
jf, / e M^
/3vtfc<t^s
G<LAG{S
S &/ t's /** <=/o v
^ ^5
BvfhcM^
-f (t\ a M c f & f
o CAJ u\
!~t\e &o\ly
SuypfuS
O^^i/
[Ar o Y Id S
&ve
& € fteu
u-e.
e c o u\o IA^ f 3 % fh?
l~t\i*+
f
^
^
^^1
-
a
MA
os
(77
So
e\j e ci 1 \J <* f y
f
fa
f
O CA
ex. to o u*fey
%
/3 a ts\ l(x? vS i^y\
£& OL^ # en G u\ ofi 18 J L
c
eS < Jh A c\ S a t's o
Oil* o(
O\J &V (s\J? & ds
/rei/<
lkaf
(5
f
Oy
/?[rcc^
f r v e. .
c< e p o s ft? o{
o s t fs
(A/-eve
y
H
as
Uold*vS
Izr <LCK
hut
if- &j profit-,
Ccc^cL^
\f <ce (ft h
exf
t'tyiS ~f^o\cAs
tkk
o4
f
<^ So vf-
IS
Stiff
is
c< f
af
o V tj
fM a /
a
/he
Cut
fi^
Ik*
CL
o{ol(uVfS
&(<?{
f
p to ( uy ^
a I
Ixo'f
S
L<\oi
t i^-f?
/ • ou
C
erf
v o\ ex
/
a £
o
a fo(
ilf
GO
L\c*\se
lob
ss
li\(V<h(c5.
y
CM < (f
Vou
/
(^
<^f f s
$
u
is\ cA ex </ ( o ^7 ,
*?
c*i*ivol
(o te L\
hy
S u c c f y r -f<j I
t is\
ibr?
o u y
s&i^t*
CCC/M/
vy ^
UA<I~UOCAS
JO <- fu^
S I/
£ O (6 IA ( a I
cAo IA^\ ( is\ i o W
O t\
Iw?
fa
O
OCA
(kce loans
U(C{
lot
^
e*if,Wrc/
p o^
(z
/o
p Yo / / A *
S Uoulcj
h^
ai
t&e~
ca(t
y
lit?
as
y& oc*-? LAJ
f
f{^
fc
(V
Ik?
{/ au Us- Ih^f
oi a f
J
h<
MA O LA eVfc^v y
CAJtlf l^cf
bcrve y o u
c(
\foUV
C
C6Lsv<>eV
^
fi\
by
k u s* f U e s- r
jtZ?
H^Vc^fcU
O
c<jt f^y h a ^ l< s
Tv'f lou m-tL.
ftZk
s
<zffoyfS
fZ
13<JVtL<\<j
H ooyjesvs
e
(e
' V-e Ccs l^ si y u cA
& d m < ii fs 1Y&+ t o
a
J&/
<* f
C{ -/
fife
f* y
i~ I UA ^
C*J a $
^S"o lAs\a<u<y
S^uv^yrsec^
<^ <* 61 S ' 6f <^*>cy{ ( /\
^ J ^ M My. ^fou^,^
a
n
y
GKJ
VJV; U
±,' a
y
• •
I ^ j.
OEDAE GEOVE, U, J.
^<^V
TWENTY EAST SEVENTY-SIXTH STREET
NEW YORK,N.Y.
RHINELANDER -4-I69O
November 30, 1943.
Leon Fraser, Esq.,
President, The First National Bank
of ths City of New York,
2 Wall Street,
New York. N*Y*
Dear Mr. Fraser,
Thank you very much for your letter of November 22nd and
for the full text of your address which was sent me under cover of
the New York Herald Tribune; (as you had seen from my first letter,
I am a reader of the New York Times and not of the Tribune; this is
why I had not seen the publication in the Sunday number of the
Tribune)* I am very glad to have your address in this form and will
keep it in my files as an important document on monetary questions*
May I express a wish; on page U of the address you say:
"The rigidity of the old gold standard would be avoided by continued
active management of the monetary mechanism with the goal of high
production"* It would be extremely useful if you could find a
moment to develop the idea expressed in this sentence; as you know
there are many plans setting as their aim high production or, according to the usual slogan, "full employment"; some of these plans
seem very dangerous, to the point of jeopardizing the financial
stability of the United States* Swould be very helpful, therefore,
if a plan could be found which would not entail this danger*
With renewed thanks, believe me,
Yours sincerely,
Robert Wolff.
November 22 f 1943
Robert Wolff, Esq.
20 Kant 76th Street
New York, N^Y.
Dear Mr. Wolff;
Thanks so much for
sending me your volume. I had
heard about it before but I did
not hatfe a copy. I am taking
it home to study.
My remarks were verysketchy, but in accordance with
your suggestion I will see that
the full text gets to you. It
was published in yestex*dayfs
Sunday Supplement of the Tribune.
Faithfully yours,
TWENTY EAST SEVENTY-SIXTH STREET
NEW YORK,N.Y.
RHINELANDER 4-169O
November 19, 1943.
Leon Fraser, Esq.,
President, The First National Bank
of the City of New York,
2 Wall Street,
New York. N.Y.
Dear Mr. Fraser,
You may remember that I had the pleasure of meeting you
at your office in New York in October of 1937; I was introduced to
you by a letter from Professor Charles Kist.
If I take the liberty of writing you now, it is because
I have read with great interest in the New York Times of November
17th a summary of your criticism of the British and American plans
for post-war currencies. Your exceptional experience in such matters
lends great weight to your observations and I think that your
proposals offer a much simpler and much more constructive method of
dealing with these problems.
I hope that your address will be published in full; if
this is the case, I should appreciate your lettimg me know in which
periodical it will appear; if not, would it be too much to ask for
a copy of the text of your address? Should you have only a few
copies, I would not fail to return it to you so that it may be of
use to other persons.
On the other hand, may I present you with a copy of my
book, published by Brentano's a few months ago, entitled "Economie
et Finances de la France.- Passe et Avenir". Its origin is the following:
In 194.0 I was inclined to believe that the only hope for
France ever to recover lay in a "mea culpan in all respects. Notes
which I had been taking on the subject developed into a book, written directly in English - bad English - entitled "The Economic
Causes of the French Collapse11. The book took on form only by and
by and rather slowly owing to pressure of other work. It was completed in the Spring of 1942, At that time I tried to find an
American publisher, but since the book is of no interest to the
general public, I have so far not been successful in this endeavor.
So I began a French ^translation". In the Autumn of 1942 the French
text was selected by Brentano*5 for their new collection of French
- 2
Leon Fraser, Esq.
-
November 19, 1943.
Editions, but since I had only dealt with the period 1919-1939, they
asked me to write an additional chapter embodying suggestions for the
future; hence the change in the title of the book*
The book does not contain anything that you do not know
already; however it may help you to call to mind some moments of the
past through which you have lived.
Yours very truly,
Robert Wolff.
This document is protected by copyright and has been removed.
Author(s):
Article Title: Leon Fraser's Views on Money and Banking
Journal Title: [Am. M. M.]
Volume Number: L
Date: November 30, 1943
Page Numbers:
Issue Number:
Hxy Leon Frasgfr
\rJ
For your infonuatibn.
FROM
ASSISTANT TO CHAIRMAN
UNITED STATES STEEL CORPORATION
NEW
This document is protected by copyright and has been removed.
Author(s):
Article Title: London Bankers Back Fraser Plan for Stabilization
Journal Title: Journal of Commerce
Volume Number:
Date: December 6, 1943
Page Numbers:
Issue Number:
Deoember 99 1943
Mr. Roland W. Mann
14 Hudson Street
Bangor, Maine
Dear Mr. Pfinnt
Your letter of
December 4 cane in Just as
Mr. Fraaer was leaving for
Washington.
You may be assured
that this will be brought to his
attention 1 mediately upon his
return.
Yours very truly,
Secretary to Mr. Leon Praser
ROLAND W. MANN
BANGOR
MAINE
14 Hudson Street.
December 4, 1943.
Leon Fraser, Esq.,
First National Bank of New ¥ork,
New York City.
Dear Sir:
The recent report, appearing in "Time11 magazine of
November 29th, containing the substance of your address before
the'Herald Tribune1 Forum, was of such deep Interest to me that,
although quite unknown to you, 1 am, nevertheless, taking this
liberty of addressing you in connection with a possible framework
o£ the proposed World Bank.
In recent months 1 have been exploring various methods
for the safeguarding of a portion of our gold supply, and at the
same time seeking to avoid any necessity for the United States
entering into any direct commitments or guarantees of whatever
obligations may be incurred in furtherance of the purposes for
which said bank is to be established, but rather to discover
some indirect method of meeting that end, as embodied in the following general outline of the suggested Plan, provided, of course,
that the four United Nations can be induced to assent to its
provisions.
One - That the United Nations jointly and severally organize a corporation with an authorized capital of ten billion
dollars, consisting of one hundred thousand units, each to have
a par of $100,000, their value to be based upon that of the to
be determined dollar pound.
Two - Each of the four NatLons to authorize an issue of
its own respective ten to twenty-year collateral trust Gold
Bonds, to an amount in each case equivalent in par value, fes
adjusted to that of the dollar pound.
Three- Each nation to segregate from its holdings of owned
gold coin and bullion an amount thereof equivalent to the extent
to which each nation shall contribute, on a definitely established
and permanent basis, to the acquisition of its respective contribution to the shares of the said World Bank.
ROLAND W* MANN
BANGOR
MAINE
L. F*
2.
December 4, 1943.
Four - Each of the four United Nations to deposit
of gold as collateral to the aforesaid bond issues, to
inviolate for that purpose only*
Both the said bonds
accompanying gold to secure them to be held en bloc in
be mutually agreed upon financial world centre*
such amount
be held
and the
some to
Five - Simultaneously with the deposit of the respective
collateral trust issues by the four United Nations, the corporation shall authorize and issue ten billion dollars of its Circulating Currency for use from time to time among the devastated
nations, as the requirements of each may be determined by the
Board of Managers of the World Bank Corporation.
Without referring to various other points of weakness,
all of which are of defintely serious menace to our economic
future, the present plan outlined by Dr. Harry White, whose
recent concessions to Sir*John Keynes1 insistence that the
amount of income and volume of world trade enjoyed by each nation
shall constitute important factors in the determination of the
extent to which each nation shall participate in the ownership of
the proposed World Bank, cannot fail to result in a highly unstable
and. constantly fluctuating situation, in response to the changing
conditions of international trade.
This provision appears, to those who are realistic in
their approach to such matters and who may possess some intimation
of the underlying purposes, however cleverly disguised, of the
Keynes plan, as a clear indication of the expectation that Eggland
may ultimately assume Germany's former position as the middleman
of continental Europe.
Furthermore, through her control of certain areas in the Pacific, and her influence in Turkey, upon whose
raw products we depend for a not inconsiderable portion of our
import trade, she could also have recourse to cartels with other
nations not necessarily under her control, by subsidies to her
shipping and other Industrial concerns, and by other devices of
interference with the free flow of world trade, with the result
that our present position of dominance in world affairs and as
ROLAND W. MANN
DANGOR
MAINE
L. F. 3.
December 4, 1945•
holders of the largest supply of gold could gradually revert to
England, and our holdings of gold be seriously depleted, since
these undertakings would necessitate replenishment of her gold
supply.
To this end, the Keynes Plan is clearly directed, end
provides the groundwork either for the perpetuation of the balance
of power theory, or that of colonial expansion and control, either
of which would operate directly against our future economic wellbeing.
As far as Dr. White's contribution to the aforesaid
proposal is concerned, itVone thing for an expert to formulate
a financial plan, but quite another for him to visualize its
economic effects and to disregard their economic implications.
It is my conviction that unconsciously Dr. White has been unduly
influenced by Sir John Keynes in the letter's effort ultimately
to return England to its former unquestioned position of a dominant world power.
As to the plan to set up a stabilization fund of
eight billion dollars of our gold, with no ultimate benefit to
ourselves, our gold reserve of that amount would be laid open
to artificial regulation by other nations with no protection
whatever, in view of our one-third minority interest in the
World Bank.
This amount would serve as an invitation to the
less favored nationsato avoid the stabilizing of their respective currencies, and they would continue to depend upon the
largess of the United Nations; whereas in the absence of any
such fund a distinct inducement would exist to adjust their
currency values to that of the dollar pound, and thus with our
gifts and advances of commodities they would gradually return
to a dignified and self-supporting status.
That part of the
White-Keynes proposal is consistent with the similar line of
endeavor as the preceding one; is unconscionable in its conception, as well as unsound from an international banking
standpoint, and should be entirely eliminated as a concomitant
to the proposed World Bank.
Some months since, in order to protect a substantial
portion of our gold supply, I had formulated a Plan embodying
certain amendments to the Federal Reserve Act, the substance
of which I herewith enclose, vthich I had submitted to Mr. Secretary Morgenthau, and which I understand is now being considered
by Senator George and other members of his committee. It now
occurs to me that certain aspects of it might conceivably be
ROLAND W- MANN
BANGOR
MAINE
L. F #
4«
,
December 4, 1943
ooordinatedAor be supplemental to,t.he foregoing Plan. In it
emphasis is laid upon the necessity of placing our own financial
house in order before we can embark upon the unpredictable
adventure in international affairs*
The bonds in each case
would be similar in form, except in the latter* the circulation
function would be eliminated, and the aggregate of the requirements
of bothwould c&ll for some fifteen billion dollars, the balance
of some seven billion and a half of gold to remain inviolate in
the Treasury for our own exclusive use during the period of
economic maladjustment here and abroad, but subject to the direction of the Congress*
With my apologies for having imposed the foregoing
upon you, and anticipating your reaction to the suggestions
submitted,
X am, dear Sir,
Very truly yours,
RVVM/F
Enclosure
Roland W, Main
A Flan for Amending
Certain Provisions of the
Existing Federal Reserve Act.
The objectives of the following Plan are first to
establish an amplified and more uniform system of currency and
banking by affording a profit inducement to all the commercial
banks in the country to become members of the Federal Reserve
System, as amended, since today, after some 25 years of operation,
only some 6600 out of 14,722 commercial banks in the United States
have become members of that System,
Second, to eliminate the present existing method of
issuing currency based upon the aggregate securities and notes
of industrial corporations and Individual borrowers, of widely
and constantly varying replacement or liquidation value, which
is quite unfamiliar to and unrecognized in the financial centers
of the world, held in the Investment portfolios of the above
banks, ihlnority in number.
Third, to keep a major part of our gold reserve at home,
safeguarded by raids against it, after the war, on the part of alien
or friendly interests, and from depletion of its volume or value by
any hitherto undisclosed or future executive mandate*
Fourth, to afford an additional basis for annual revenae
to accrue Foth to the U« S* Treasury and to the member banks,
supplementing in the former case the former tax levies, without
imposing a penalty upon either, but on the contrary, to insure a
substantial annual profit to them both.
As long as the present uncoordinated currency situation
is permitted to exist, we are likely to be faced with a grave menace
to the integrity of our national currency, by falling to maintain a
solvent and dependable system here at home, in the unpredictable
future confronting us during the period immediately following the
war, nor shall we be able, either with dignity or effectiveness, to
dbo our part with the other United Nations in the rehabilitation of
the devastated areas abro&d; an adventure upon which we cannot with
safety embark until we have first put our own financial house In
order.
To accomplish these ends, the following is submitted:
One
Require that all of the 14,722 commercial banks of the
United States shall become members of the Federal
Reserve System, as amended, or of any other succeeding it*
Two
Require the Secretary of the Treasury to segregate from
the accumulation of gold coin and bullion (twenty-two
billion plus) now held in the Treasury vaults to no
constructive end, not less than five nor more than
ten billion dollars thereof at its present ordained
dollar value•
- 2 Three
Require the said Treasurer specifically to set aside such
gold to be held inviolate and to deposit such portion
thereof as may be necessary for the purpose of depositing
it as collateral security for a proposed new issue of
U* S. Government Ten to Twenty*Year One^er Cent
"Circulation11 Gold Bonds.
Pour
Require the Treasury and all commercial banks to exchange
with each other, par for par, such portion of $10,896,889,000
U # S« Treasury Three-Year Savings Notes. Series "C", as the
latter may-hold in their Investment portfolios, for the
bonds of the new One Per Cent issue.
Five
Require all member banks, upon their completion of the
above exchange, to deliver their so-received new One Per
Cent bonds to the Comptroller of the C\r rency. who shall
issue and return to each such bank new U. S. "Circulation11
bank notes at par for their so deposited bonds.
Six
Provide that, simultaneously with the delivery of the new
National Bank notes the Federal Reserve Bank shall cancel
and retire from circulation an equal amount of its outstanding Issues, in order to avoid any further Inflationary
tendencies, and also that in consideration for the Treasury
having extended to the banks the profitable function of
issuing their own bank notes, that each bank shall divide
all such profits as may accrue to it with the Treasury,
as set forth in the following calculation, and thus reestablish and again put into effect the long sponsored
Republican theories of a sound system of banking and
currency, In contradistinction to the more recent Democratic practice of employing the assets of banks, minority
in number, as a basis for our national currency issues.
It will be noted from the above that each of the provisions
of the Plan coordinates with and is dependent upon the proper functioning of the others; hence, if any one is eliminated, the whole structure
would be without force and effect. Further, in no other way can any
relief be afforded to the Treasury except by increasing the volume of
its indebtedness, or by a form of sequestration of the principal of
corporations, estates and individuals, which latter alternative may
be resorted to when the Capacity of the public for absorbing future
issues of Treasury bonds or notes reaches its saturation point. In
any case, the banks of the country must be depended upon to provide
additional sums to meet the Treasury1 s deficit financing.
- 5 -
- Calculation showing annual results, from Bank circulation
based upon
Each $100,000 unit of 10-to-20-Year U.S.Govft
One Per Cent "Circulation11 Gold Bonds,
upon their exchange for the $10,894,889,000
U # S. Treasury 3-year Savings Hotes, Series "C1
at present held in investment portfolios of
14,722 commercial banks in the United States•
J2L.
Honey at
Be venue yearly from
$100,000 1% bonds
$1000
From $100,000 notes
loaned at 6%
6000
From $90,000 notes
Loaned at
$1000
$1000
$1000
4500
From $80,000 notes
Loaned at 4$
3200
From $70,000 notes
Loaned at Z%
2100
From $60,000 notes
Loaned at 2%
Gross Annual Revenue
Less cost of printing
bills and express, etc*
Net Yearly Profit
to be divided between
Treasury and banks.
$1000
1200
$7000
$5500
$4200
$3100
$2200
300
250
200
150
100
6700
5250
4000
2950
2100
Deeenber 11, 1943
J, K. Clifford Johnston, Seq.
Kingston House
Princes date
London, S.W« 7
land
Dear Mr. Johnston:
Thanks so much for
sending me your articles that
I have examined with nreat
interest.
I think the practical
application requires overcoming
certain difficulties that now
prevail.
ith much appreciation
for your thought,
Faithfully yours,
ICing s t o n Eous e,
Princes
london S.W.7.
TE
LEPHONES
V D i A N ' S YARD
WE S ^ M I N ST-i-R.<=; w
KENslngton 6855
l
17th November 1943
Dear Mr. -^eon Praser,
I am sending you the enclosed literature
as'a basis for a practical experiment, suggested
fry your proposal for a dollar-sterling standard.
Leaving Governments and central banks alone
for the moment, if the First .national Bank and, say,
the Chase national Bank, with Lloyds Bank and the
National Provincial Bank in London would act as
clearing bankers for an international branch of the
Bankers' Clearing House, at fixed exchanges
stabilized on gold, a start could be made at once in
reconstruction without any more delay or political
meandering.
Subsequently, your suggestion of a call on
gold would be the salvation of the economic world and
the United States, whose gold holding is unproductive
at present, could be both safeguarded and recompensed
by charging a commission of 1% on the turnover. In
this event the old British war debt need not be cancelled but could be worked out in the course of time.
If your side would take the initiative there
would be no difficulty here with our clearing banks.
lours sincerely^.
v.
This document is protected by copyright and has been removed.
Author(s): J. H. Clifford Johnston
Article Title: A Banking Chimera
Journal Title:
Volume Number:
Date: November 1943
Page Numbers: 270-272
Issue Number:
This document is protected by copyright and has been removed.
Author(s): J. H. Clifford Johnston
Title: Unitive Clearing and Gold Sovereigns
Date: [1943]
Page Numbers:
This document is protected by copyright and has been removed.
Author(s): J. H. Clifford Johnston
Title: The Master Key - A British Sovereign: A Recall to the Honest Pound Sterling
Date: 1943
Page Numbers:
December 11, 1943
Dr. Robert Slsler
^he Dower House
Maugersbury
Stow-on-the-Wold
England
Dear Dr. E i s l e r :
Much obliged for your
letter of November 21. I have been
familiar in a general way with the
studies of the Drs. Gulllaune.
I am afraid I do not have
any wsy of getting the interesting
articles you enclosed published at
t is end.
With thanks for your note,
Faithfully yours,
Dr.Robert Eisler
The'Dower House,Maugersbury
Stow-on-the-Wold
Nov.21st 1943
'ir.Leon Fraser,
President,First National Bank of New York
New York City
N.Y.,U.S.A.
Six1
*The undersigned,author of THIS MONEY MAZE and STABiiE MONEY
published in London 1931 and 1932 who first advocated in a number
of books,articles and lectures in three world languages a DollarSterling Standard has read with great interest the report in THE
TIMES of London Nov.17th of your speech of the loth at the New
York Heraid-Tribune Forum.
Being in whole-hearted agreement with your proposal and completely opposed to the fantastic ideas of a continuous expansion
of world currencies by governments budgeting for ever bigger and
better deficits to prevent incipient regressions I venture to send
you an English article of mine setting forth the one legislative
proviso we need to make a currency linked to gold workable tnroughout both unpreventabie inflation and inevitable deflation periods.
The article is based on solid research published in two volumes
- so far only in French - by Drs.Guillaume, mathematical analysis
upon which my friend and myself have spent not less than 8000 £ .
Unless the simple laws outlined in the article are put on the
statute-book,recurrent crises are inevitable.If%fi is accepted,
they will become a thing of the past like the plagues which used
to ravage the Western world for centuries .
If you are interested,I shall be delighted to see my article
reproduced wherever you can get it published in America.
I am,Sir,
very faithfully yours
This document is protected by copyright and has been removed.
Author(s): Robert Eisler
Article Title: Guillaume Theory of Credit Crises
Journal Title: Oxford Mail
Volume Number:
Date: November August 21, 1943
Page Numbers:
Issue Number:
This document is protected by copyright and has been removed.
Author(s): Robert Eisler
Article Title: The Economics of Permanent Peace: A Scientific Solution of the
Reparations and Security Problem
Journal Title: Oxford Mail
Volume Number:
Date: November August 16, 1943
Page Numbers:
Issue Number:
This document is protected by copyright and has been removed.
Author(s): Robert Eisler
Article Title: Abolish Customs Barriers
Journal Title: Oxford Mail
Volume Number:
Date: November August 19, 1943
Page Numbers:
Issue Number:
December 14, 1943
Robert W. Griffith, Esq.
c/o National Credit Offloe, Inc.
Two Park Arenue
New Yoifc, N.Y.
Dear Mr. Griffith:
Thank you for your note
of Deo ember 10, and for the encloaure
whloh I have examined.
l i e the
propoaal la ingenloua, I do not find
in i t anything of eapeoial Intere8t
ao far as I an ooneemed, and I
greatly doubt that i t *ould be
useful to impose on Dr. Hoeniger'a
time in this connection - the more
ao ai I an abaent froa the City a
great deal in the present circumstances.
With thanks,
Faithfully youra,
National Credit Offitioe
INCORPORATED
Two Park Avemie
Established 1900
NewYork
CA lodonia IMI 101
December 10, 1943
ilr. Leon Fraser
The First National Bank
Of The City of New York
2 Wall Street
New York 5, N. Y.
Dear Mr. Fraser:
At the suggestion of Mr, Arthur D. V/hiteside,
I would like to call to your attention the enclosed
resume of a plan for financing one particular phase of
post-war trade with Europe, namely medium term"reconstruction credit for equipment.
This is the work of Dr. Heinrich Hoeniger who
resides at 317 North Fulton Avenue, Ivlt. Vernon, N. Y.
Dr. Hoeniger is at present Associate Professor of
Economics at Hunter College, New York City.
Prior to coming to this country in 1938, he
had a distinguished career in the law as well as in the
field of economics in Germany. He was at one time Dean
of Law at Freiburg University and has published numerous
works on accounts receivable, financing, labor problems,
etc*.
If you are interested, I am sure Dr. Hoeniger
would be glad to discuss with you the development of his
plan and also other ideas on this subject.
Very truly yours,
Robert W. Griffit to.
abb
COLLATERAL SECURITY FOR SELF-LIQUIDATING
RECONSTRUCTION CREDIT ON EQUIPMENT
Private financing of medium term equipment credit for reconstruction purposes encounters difficulties due to the lack of an
appropriate method of securing and liquidating such type of credit*
There are, however, generally recognized and practiced methods of
financing short-term rav; material credits. There is, furthermore,
an obvious interdependence between the interests of the material and
the equipment seller; for, the material seller will get no payment
unless his customer has the equipment to process the material properly
and to sell the product, and vice versa. The following suggestion for
securing equipment credit rests on this mutuality of interests.
Raw material credit can be and frequently is secured
through three main types of collaterals in the following sequence:
(1) Conditional Sale
(2) Chattel mortgage on the manufactured goods
(3) After sale of these goods, assignment of the receivables.
Chattel mortgages and assignments of receivables,although
sometimes hampered through bankruptcy laws, are widely used in
European countries. The commodities under chattel mortgage are of
higher value than the raw material, previously under conditional sale.
This increase in value, commonly known as value added through manufacture, is partly due to the use of equipment furnished on credit.
The equipment creditor is, therefore, entitled to demand that a portion of the value added through manufacture should be set aside for
securing the equipment credit.
In other v/ords, the secui'ity available after the processing of the material through chattel mortgage and subsequently through
the receivables, assigned in advance, should be split and allocated
in adequate proportion to the raw material and the equipment credit.
This works out in the following way: A cotton exporter and
a machine manufacturer, having sold their goods to tfF" in France, obtain advances upon their shipments through their regular bank connections, e.g. bank "Atf and bank tfBtr in New York, respectively. These
two American banks get in touch with the same bank in France which
either takes over the American credits or administers them as an agent
of the American banks by supervising the ensuing chattel mortgages and
subsequently collecting the assigned receivables.
-
1
-
-
2
-
From the receipts on these receivables the raw material
credit is to be paid off completely, v/hile only a small percentage
of each of them is to be credited to the equipment account. These
latter small percentages of the individual receivables are to be
figured out so that their total per annum would approximate 20$ of
the equipment credit* Thus, the equipment credit liquidates itself
in five years.
The suggested plan employs established financing methods
in a particular way. It can, therefore, be carried out in the main
through private initiative. Only some government implementation of
this financing device through appropriate provisions in the reconstruction trade agreements with the countries concerned would be
needed: firstly, suspension of statutory regulations which hamper
the proposed financing method; and secondly, the strict provision
that all reconstruction credits granted to an individual enterprise must be serviced by the same bank of the country concerned.
Mandatory recording of the reconstruction credits in question would
sufficiently safeguard observation of this latter provision.
Conclusion:
The formula advanced here is simply this: A small percentage of the value added through manufacture to the available
securities is to be apportioned as security to the equipment credit.
This formula can be utilized for securing medium term
equipment credit of any kind and wherever necessary, as e.g. in
South America.
Research is needed in order to work out the particulars
with reference to the specific legal and economic conditions in the
various countries and also the varying needs of the different industries.
Heinrich Hoeniger
317 North Fulton Avenue
Lit. Vernon, N# Y«
Deoenber 16, 1943
i^dmond !• Lincoln, Saq«
Room 9136
De Pont Building
filmington 98, Delaware
Dear
r. Lincoln:
I appreciate your thought
of me In enclosing the confidential
but highly lnatructlTe data '?lth
your note of yesterday.
I have
examined the material with much
Interest and approbation.
It waa nice to catoh a
glimpse of you the other evening.
with b«st Holiday greetings,
Faithfully youra.
Confidential
ROOM 9136.DU PONT BUILDING
December 15 > 1943
WILMINGTON, DELAWARE
98
Mr. Leon Fraser, President,
First National Bank of New York,
2 Wall Street,
New York City*
Dear Mr. Fraser:
In view of current "muddy" thinking on
some of our post-war financial problems, you
may be interested in the attached.
With best regards,
Sincerely yours,
Enclosure
This document contains internal or confidential information and has
been removed.
Author(s):
Title: Some Current "Savings" Illusions -- With Particular Reference to Post-War
"Purchasing Power"
Date: December 6, 1943
Page Numbers: 1-7
Qjbo^
• ci
< '
December 20, 1943
Vice Admiral R. Fanard
Chief of the French TIaval Mission
in the United States
French Naval Mission
Munitions Building
"Tashinprton 25, D.C.
My dear &<&iiral Fenard:
Frequent absences from the City have delayed answering
your kind l e t t e r .
An extensive literature on the subject of international
monetary stabilization has appeared in recent months. Much of the
discussion centers around the 'Shite (American) and Keynes (British)
plans,
I &n sure you will have no difficulty in obtaining copies
of these plans in Washington. The White
"Proposal for a United and
Associated nations' Stabilization "BYmd11 may be obtained from the
United States Treasury, and the Keynes proposal for "An International Clearing Union* may be obtained from the British Tnforaatlon Services, 1335 Hew York Avenue, W.w. t Washington, D.C.
Numerous discussions of these plans have been published
by various organizations and Individuals. I am enclosing a reprint
of an a r t i c l e fcy Dr. John H. Tilliaias of Harvard University frora
the July issue of PORETCW AFFAIRS, which I think will be of interest
to you. A second a r t i c l e by Dr. -filllam* appears in the January 1944
iSTue of the saae publication, I also understand that the National
Bureau of "ioonoralc Research (1819 Broadway, New York, H,Y.) will
publish shortly a pamphlet on * British
and Aaerlcan Plans for
International Currency Stabilization, 1 1 by Mr. J. H, Riddle.
In addition t o the British and American plans for international currency stabilization, there i s also a Canadian plan which
include* modifications of the other two. This WAS published under
the t i t l e of "Tentative Draft Proposals of Canadian Experts for
International Exchange Union*, and released in t h i s country by the
Canadian Martin© Information Board, 1206-15th Street, I«W*« Washington,
D.C.
Plan11,
There was also reference in the papers l a s t Hay to a "French
The news account stated that t h i s plan was written prior to the
Deo. 20,1943
Vice Admiral R. Fenard
Washington, D.C.
release of the British and American plans by a *^roup of administrative
officials*.
The only names specifically mentioned ^vere thoae of
Andre I s t e l , referred to as "former financial adviser to the Reynaud
Ministry and one of the negotiators of the Franco-British financial
agreement of 1939% and Kerve Alphand, referred to as "former French
financial attache In ifashington and former hend of trade agreements
at the French Ministry of Corameroe*, who represented France at the
International Pood Conference. So far as I know, this plan was not
formally published, but had a limited distribution in mimeographed
form.
I trust that the references given abow will provide at
lea^t some of the materials you may wigh for your consideration
of the subject.
Faithfully yours,
encl.
August 6, 1943
Sixth re-draft
Proposed re-draft of "Seotion 4 - Monetary Stability"
of Eoonomio Policy Commission on
"Place of the United States in the Post-War Economy"
4, Monetary Stability
Ranking olose to the hazard of war as an obstacle to human material progress is the changing value of money.
"When there is question about
the value of money, trade is disorganized, dormant, or feverish, as in Germany and Central Europe after the last ,war and in France during the monetary
troubles of the '20s and ! 30s.
Especially is the advance planning on which
full employment so largely depends blocked by, doubt of the value of money.
The depression of the middle f30s certainly owed some of its severity to
fears about money — about its gold value and about the goodness of bank
deposits. Money and enterprise grew timid and went into hiding together.
The period of "Pax Britannioa" was also a period of stable money
when the pound, and for most of the time the dollar, were firmly anchored
to and freely exchangeable for a given amount of gold*
It was one of the
sources of the great material progress of that period.
In the welter of uncertainties which will surround us after the
war it is essential, as has been said before, to reduce the areas of doubt,
to fix the points of the compass.
Only so can the people who want to plan,
who want to trade, who want to provide work, go ahead with assurance. Currency value is one of the factors basio to decisions in business and government transactions.
- 2 -
The necessity for currency stability is again being widely recognized, but it will be hard to achieve. Many countries will be impoverished
and in disorder, with seriously disturbed balances of foreign payments*
are far along the road of internal inflation already*
will be disrupted.
Many
Old trade ohannels
Many countries will lack adequate reserves of gold and
foreign exchange. For practically all, the problem of finding rates of
exchange that truly reflect the internal purchasing power of different currencies will be a perplexing one. Wrong rates would invite serious difficulties as proved true after World War I.
The rate question cannot be settled alone*
It goes along with
all the other problems of peace and war and trade barriers reviewed here*
No country oan assuredly maintain a stable currency unless its internal
economy is in order — its budget under control, its price level reasonably
stable, and its external payments and receipts well balanced.
A stable
currency is a logical result of a sound economy and oannot exist long in
its absence.
The basic requirements for stabilization are twofold in character.
The first concerns the general politioal and economic background.
The second as the more technical question of international monetary arrangements.
It is in the second area that recent proposals have been made
for the establishment of an international institution.
In April of this
year both the American and British Treasuries made public tentative plans
for currency stabilization known as the White and Keynes plans.*
Both
* On June 9 the Canadian Finance Minister, Mr. James L. Ilsley, likewise
made, public tentative proposals of Canadian experts for a post-war currency
stabilization plan which incorporated many of the features of the White and
Keynes plans.
- 3 -
Governments have wisely refrained from rigid and premature adherence to
any particular formula and have invited full consideration and debate.
Both plans contemplate the setting up of an international agenoy
—
the White plan, an actual fund of gold, foreign exchange and securities;
the Keynes plan, a "clearing union" without capital assets to begin with.
Management of the credit agenoy would be vested by both plans in a governing
board v/ith broad powers.
Under both plans member countries would be encour-
aged and aided in fixing the value of their currencies, and once values are
fixed
they could not alter the value of their exchange rates without the
approval of the governing board, except small changes under oertain circumstances*
Under both plans countries running behind in their balance of payments could borrow other currencies at nominal raires.
Countries borrowing
from the agency in excess of specified limitations would be required, under
both plans, to carry out measures reoommanded by the.board for bringing
their exchanges into balance.
Such measures, it is stated specifically by
the Keynes plan, might include a devaluation of currency, control over capital movements, or even such domestic measures as the board deems appropriate.
The White plan would charge the exchange fund with the purchase and
liquidation of the large volume of international balances frozen by the war,
essentially a long-term operation.
The Keynes plan apparently would per-
mit, large credit extensions for indefinite periods at nominal rates.
Both plans would provide for the compilation and exchange of information as to foreign balances and the flow of funds and trade.
The Keynes plan is the more ambitious of the tv;o proposals, and
the provisions for basing lending quotas on the sum total of imports and
- 4 -
exports of member countries would set up enormous credit facilities that
would be highly inflationary in a world which will be trying to counteract
the inflationary influences created by war.
This plan would be particularly
inflationary in the United States by both oausing an expansion of Federal
Reserve credit to the extent other countries borrowed dollars, and by creating large demands for our people at a time when goods are scarce, and the
country is trying to meet the wants of its own people.
The White plan
would apparently involve less danger in this respect in that the sums
available would be much smaller and based on member contributions to a
oentral fund, and provisions for lending appear more safeguarded.
Conversations between representatives of different governments
have been going on,
While these plans are in the discussion stage it would
be premature to draw final conclusions about them, nor is there space to
discuss them fully in this report.
There are, however, certain principles
which have been clarified by the discussion up to this point.
The first is that some international institution is desirable to
help nations in stabilizing their currencies, as a meeting place for the
discussion of monetary questions, to collect information which is a necessary
basis for sound principles, and to make some arrangements for stabilization
credits in oases where they are justified.*.
The experience with the Bank
for International Settlements showed to those who studied its operations the
value of such an institution.
On a more modest scale the Tripartite Agree-
ment was another encouraging example of the possibility and value of consultation.
Whether the needs of the situation would be met best by modifi-
cations in the structure of the Bank for International Settlements or the
establishment of a new institution is a question which should be fully examined.
- 5 -
The second essential point is that an institution of this sort is
no cure all and is no substitute for the hard, patient labor of reestablishment of economic soundness in the participating countries, of the balancing
of budgets, and readjustments to post-war conditions.
Especially important
is the economic condition of the key countries, the United States and England.
To extend credit before sound economic programs are established may be to
pour money down a rat hole.
In their first form neither of these plans
gives adequate recognition to this truths
There clearly must be sharper
distinction between operations in the period when economic adjustments are
in prooess and the later period of more nearly normal conditions *
The kind
ofi credits neeled in the immediate post-war reconstruction period are not
primarily short-term banking credits appropriate for such an institution,
but should be longer term funding. fjp\
A third point relates to the general scale and scope of the operations of such an institution.
President Dodds of Princeton has recently sugg
gested that any international organisation "must not attempt to frame a supergovernment so new and unfamiliar that men will not be prepared to participate
in it."
The Keynes plan clearly violates this principle; the White plan
also is open to that objection in its,first form both with respect to the
amount of money the United States would be asked to put in and the extent
to which we and other countries would surrender freedom of action in monetary
policy.
The principle of limitation of power is especially applicable to an
ipstitutiQn whose board might represent one or two creditor countries and
twenty or twenty-five debtor countries.
The success of such an institution will depend not on the vastness
of its legal powers, but on the support given it by key countries.
It was
- 6 -
not just lack of power that crippled the League of Nations, but lack of support.
The British Commonwealth of Nations has no constitution and no legal powers. "^
It is tied together by enlightened loyalty.
(K
3
Implications of" compulsion and -*^>
broad controls,.regardless of how carefully veiled they may be, are not suitable unifying factors in international monetary matters.
Free collaboration
based on mutual advantages and built up by persuasion and friendly relation-
<£
ships offers the most promising approach to the problem.
Fourth.
Credits granted by such an agency should be extended ^
in accordance with sound standards, based on the merits of the individual
case, ajid conditioned on adequate commitments by the debtor.
be temporary in nature and made at a fair rate of interest.
They should
A system of
quotas or shares in a credit pool which gives debtor countries the impression that they have a right to credits up to some amount is unsound in
principle, and Raises hopes that cannot be realized.
Such a system would
encourage the impression that credits received may not have to be liquidated,
and would invite abuses of the credit facilities.
Any formula which at-
tempts to determine in advance the credit needs and credit worthiness of
each country is impracticable.
It mv^be hoped that further ndblic discussion of the Keynes and
White plans may lead to substantial jrfodif ications of the proposals to conform with thes^,principles.
In concluding this section it seems wise to emphasize again the
principle that no institution no matter how well designed can work miracles
in this or any other field.
That is an illustion all too often cherished.
*
Basically stable money is possible only with stable national economies and
in particular the United States must lead the way.
The first requisite
^
- 7 ~
for any genuine progress toward stabilization is a stable doller free of all!
exchange restrictions, a dollar in which the world has full confidence. Regardless of the standards adopted, or the organization set up, some strong
currency must in fact be the main stabilizing influence.
So far as can now
be foreseen that strong foundation currency must be the dollar.
The second step should be to establish definite rates between the
dollar and the pound sterling - the two currencies in whioh the major part
of world trade has been conducted for the past century, ps Many currencies
C^VJ/
would already be stable in relation to the dollar or the pound, and otjier
—
countries could gradually make the necessary adjustments* v%^ Where financial
aid is needed it should be granted only after due consideration of the merits
in each individual oase.
Each country must of necessity work out its mone-
tary salvation largely by its own efforts.
It cannot shift responsibility*
In this process the presence of an institution, as a mechanism to encourage
consultation may be useful, but its funotion as a lender of money can only
properly begin when a sound economic program has been put into effect.
It should again be emphasized, however, that the United States
cannot successfully promote international monetary stability without making
determined efforts to put its own affairs in order by balancing its budget
and checking inflationary influences.
If we continue in time of peace to
have fiscal policies whioh result in vmbroken series of annual deficits, all
efforts to maintain international monetary stability will inevitably fail.
Confidence in the dollar will also be enhanced by a clear out policy that
the dollar will be redeemable in gold, in foreign trade, with no deviation
from the present value.
This document is protected by copyright and has been removed.
Author(s):
Article Title: Dollar-Sterling Standard
Journal Title:
Volume Number:
Date: November 17, 1943
Page Numbers:
Issue Number:
This document is protected by copyright and has been removed.
Author(s): Lewis Haney
Article Title: Haney: Discusses New Deal's World Bank
Journal Title:
Volume Number:
Date: [1943]
Page Numbers:
Issue Number:
@FedFRASER