Chicago Tribune from Chicago, Illinois • 3

CHICAGO DAILY TRIBUNE: FRIDAY. APRIL 21. 1933. Jfejlnf? 3 Steuben High School Band Victor in Contest GOLD STANDARD; WHAT IT IS AND Understand Inflation? 25 Maybe This Will Help You 1 HOW IT OPEBATI Only Few Countries Cling to Old Basis. I OPEN SATURDAY NIGHT 'TIL 9 O'CLOCK Inflation is on every tongue.

As an aid to an understanding of its rudiments the following primer is presented: Q. What is money? A. Money is either a token such as the copper penny, a coin such as the silver or gold dollar, or a certificate such as paper dollar bill used as a medium of exchange. Q. Why Is money needed as a medium of exchange? A.

Money is naeded as a medium of exchange because of the difficulty of barter and exchange of goods. I. E. It would be difficult for a farmer with 20 cows for sale and a desire for a suit of clothes to find a man with the clothes for sale who would accept the cows In payment. Q.

How has the government inspired confidence in its money? A. By maintaining actual gold in the treasury ample to redeem its gold notes. Q. What is the meaning of the gold standard A. The contract of the government to redeem its notes in gold at the money holder's request.

Q. Why do we say the United States has gone off the gold standard A. Because the government has announced it will not permit gold to be shipped out of tho country to redeem its own money and will not buy and sell gold at the price our laws have fixed- Q. How did going off the gold stand ard produce what we call inflation A. It produced inflation because when this country refused to redeem its money In gold it lessened the buying power of that money.

Money is not so desirable as it was. Q. What did that inflate? A. It inflated the value of basic commodities such as cotton, wheat, rubber, coffee, in comparison with money. If under the gold -standard one dollar would buy two bushels of wheat, and when the gold standard was abandoned one dollar will buy only one bushel and a half of what, the value of wheat has been inflated.

Q. Whom does inflation help? A. It helps any one who has commodities or labor for sale. Q. How Is that expected to overcome the depression? A.

Because of the lessened value of money, more of it will be put in circulation to purchase commodities, and the pace at which money circulates will be increased. Q. Why is it said inflation helps the debtor and hurts the creditor? A. Because the debtor pays his debt in money that is of lessened value it will not buy so much in commodities. Q.

What other ways of inflation are suggested? A. (1) It is proposed that the actual value of pure gold in the gold dollar be reduced. The gold dollar now has 23.22 grains. (2) It is proposed that silver be joined with gold in bimettalic standard. (3) It is proposed to print billions of paper or flat money, thus reducing the metallic backing of money.

BY WILLIAM SHINNICK. Only a few of the world's countries are still on the gold standard. Those Of Importance still clinging to the sold ship are France, Holland, Belgium, Switzerland, and Italy. All the others employ what is known as a managed currency. For a layman to evaluate what Is happening: and may happen with the United States definitely off the gold standard it is first necessary that he understand what the gold standard Is.

or was. That information was furnished yesterday by one of the best informed of Chicago bankers. Relation to Physical Gold. "A country on the gold standard," he said, has money that is definitely related to physical gold. First, the currency unit with us the dollar is a certain weight of gold of a certain fineness.

The act of congress under which our monetary system has operated since March 14. 1900. specifies that a dollar is 25. grains of gold nine-tenths fine. Second, the money must be exchangeable for gold.

The currency act ordered the secretary of the treasury to maintain all forms of paper or BSBBIBBBB iBSSSSSSSSnHBSSnmTV The Von Steuben Junior High school band yesterday after it had been declared victor for the third time in annual junior high school competition. Its director is Clifford P. Lillys. tribune Photo. f- 25.

grain figure, ard 1S78 a silver Victor Over Tin ee The Von Steuben band won the city championship for large bauds in the junior high schools in the final contest held yesterday a'ternoon at Harper Junior High school. The other contestants. In their respective order, were Parker, Amundsen, and Hirsch. FORMER HOLDERS OF FOREST BOARD BONDS AID QUIZ Assistant State's Attorney O. P.

Lightfoot yesterday telegraphed to a group of ten banks, from which forest preserve district bonds recently were redeemed, to learn the name of the former holders. This was the state's attorney's first move in its investigation of charges that the bonds were allowed to go into default in 1931 as part of a plot by speculators to depress the market value. County Commissioner Grace Fleming informed the county board on Tuesday that the speculators purchased the bonds in the market while their price was 53, and then enjoyed large profits when they were redeemed at par. Among the banks to which telegrams were sent were the First National bank and the United State's National bank of Portland, the Springfield, Marine bank, two banking institutions In Minneapolis, another in Montana, and two New York City banks. The Portland and Springfield banks replied yesterday that the bonds had been purchased by their officials for investment purposes.

rOI.ICK PROMOTION. Milwaukee. April 20. Special. 1 Police Chief Jacob Laubenhcimer presented to the police and lire commission tonleht a recommendation that Detective Serrant Eujrene be promoted to lieutenant of detective to fill the vaeney caused by the elevation ot Frank Prohaska to the captaincy of the bureau.

The commission de SEIZE ALLEGED COUNTERFEITER WHO FLED U. S. John Molnar, an alleged counterfeiter, who made a spectacular escape from his Chicago bondsman la3t December, has been arrested in ltaab, Hungary, according to cable dispatches last night. Molnar is wanted by the government in connection with a plot to pass $30,000 in counterfeit money. Molnar, an Austrian piano tuner, was arrested here Dec.

3 after federal agents had seized $44,000 in counterfeit bills, some counterfeiting plates, and $4,000 in good money. He was ordered held to the grand jury in bond of $12,500. On Dec. 28 he was released in the custody of his bondsmen, Louis Harnett, 2434 Burling street, presumably to locate a cache where he had concealed other counterfeit money. The next day while Barnett was driving to the supposed cache Molnar drew a revolver, robbed Barnett and lied.

His bond was forfeited on Jan. 25. House Committee Voted for Communist Inquiry Springfield, 111., April 20. Special. On motion of Representative R.

V. Llbonatl Chicago the house today authorized the naming of a committee of five member to investigate the activities of communists in Illinois. CHARGE 89 PCT. LOSS BY COUNTY IN TAX SUITS Charges that there has been a loss to the county of 89 per cent of all the delinquent personal property tax bills which have been taken into the courts by the state's attorney's staff were made yesterday by members of a county board subcommittee. A summary of 89 court rulings on these tax cases given during the period between Feb.

20 and April 11 discloses that only $35,115 has been collected from delinquent bills totaling more than $313,318. The summary was prepared by Commissioners George Miller, Amelia Sears, and Grace Fleming, who are investigating the court records. The charges were made public at the first hearing of the investigation in the presence of County Tax Attorney Hayden N. Bell and Assistant State's Attorney Manuel Cowen, who is in active charge of the delinquent tax collection. Both attorneys asserted that a complete transcript of each of the 89 court hearings would explain why small judgments were given or why the court entered a ruling dis missing the bill completi ly.

LOS ANGELES PASTOR FOUND HANGED IN CABIN Elsinore, April 20. The body of the Rev. John S. Stoner, 39 year old pastor of Florence Avenue United Presbyterian church of Los Angeles was found hanging in a cabin here this afternoon. Coroner Ben White pronounced it suicide.

Discovery of the body ended a police search requested by the clergyman's wife In Los Angeles. He left a note in the cabin. It said: If we confess our sins. He is faithful and righteous to forgive us our sins; and to cleanse us from all unrighteousness." sumptions were only true In a limited degree. Likewise it was believed a devaluated pound would enable the kingdom to export heavily.

What actually happened was that exports in 1932 were about the same as in 1931. This was not so bad, however, when it is considered that exports from the United States feli off heavily while we clung to gold. And while debtors were not favored by the figures, they were not wrecked, as many were in the United States, by a continuing drop in price levels. While wholesale commodity prices, over a period of eighteen months, remained stable in the tight little isles, they fell between 25 and 30 per cent in the United States. Britain Better Off.

On the face of things, it appears that Britain has been better off with a managed currency than It would have been with a gold standard. But Germany started to inflate in 1922 and couldn't quit until the price level was raised 700,000, 000,000 per cent. France inflated from 600 to 800 per cent and then revalued Its franc, on a gold basis, at one-fifth the original value. The banker attitude Is that a little inflation would be fine but can it be controlled? Kidnap Packing Co.Cashicr and Rob Him of $5,000 Frank Lestina, cashier for the Fulton Packing company, 820 Fulton street, was kidnaped and robbed of $5,000 yesterday by three bandits. Lestina, who lives at 6523 West 33d street.

Berwyn. had left a street car at Fulton and Halsted streets when the bandits forced him Into their car. He was thrown out at Curtis street and Austin avenue a short while later. I 1 ferred action r- BBSS 1 1 i metal money on a parity with tho gall dollar. In other words, any citizen who wanted gold was able to get it by trading paper money for it.

Certain difficulties arose during the war years, but it can be said that the United States, from 1300 until last month, maintained its gold standard and was able to furnish gold at all limes to citizens when they demanded it for domestic use. Halt Export of Gold. The third point was that citizens of the United States, desiring to pay riff obligations to foreigners, should be able to get gold when they needed it nd ship it from the country. This was possible until the order of Wednesday. The dollar is still officially 25.8 grains of gold, of which nine tenths is pure gold and one-tenth copper alloy.

But is Is no longer possible to get gold from the treasury for domestic purposes and none may be shipped abroad. Consequently we are off the gold standard." Relationships of currencies of countries on the gold standard were always based on the amount of gold in the units of these currencies. The gold in the pound sterling which by the way was never coined was the same amount that would be represented by J4.S3. There were some fluctuations while both England and the United States were gold standard countries, but they were small. Rise and Fall of Pound.

If trading on the money exchanges Jn New York and London made the pound's value at $4.80. then gold was shipped across the ocean to satisfy American debts to Britishers. If the pound fell to $4.83. gold was shipped from England to satisfy British debts to Americans. About 1 per cent was the total fluctuation possible.

The known value of the pound and the dollar in actual gold held everything firm. But In September, 1931. when Britain placed an embargo on the shipment of gold abroad, the relationship of the pound to the dollar changed markedly. The pound in America was worth just what Americans were willing to give for it. It has fallen below $3.30 at times.

Now that the United states will allow no more gold to be sent abroad, the dollar will be worth, in other countries. Just what those countries will pay for it. It will no longer, externally, be worth 25.8 grains of 90 per cent gold. Other Standards Used. This country has operated before, however, without a gold standard.

The first American dollar was defined by the congress of the confederation in 178 as 375.64 grains of silver. In 1792 a dollar was defined by congrefes as 24.75 grains of pure gold or 371.25 j-rains of silver. The two metals went along together as standards for many years. Numerous hanks also Issued currency without metal backing and there was a great confusion. Even the government, at the time of the civil war, panted vast quantities of greenbacks without actual metal va lue.

In 1873 the dollar was fixed at the dollar coinage was authorized. From that time until 1900 the country could have been described as on a limping gold standard. The status of the greenbacks was improved by the resumption of payments hi specie, or gold, in 1S7S, but the status of silver was uncertain and Bryan fought two campaigns to have this metal coined just as gold was, in the ratio of 16 to 1. Pay Bonds in Silver. a) resolution passed by the senate in 189S proposing to pay the Spanish war bonds in sjlver instead of gold again called attention to the need for currency reform and the 1900 act was passed.

Not until that year was the country on a gold standard that was both firm and official. Countries which have gone off the gold standard in the last two years include Denmark, Finland, Greece, Norway, Sweden, Portugal, Great Britain, Japan, British India, Siam. Chile, Ecuador, Peru, and Mexico. Previously Argentina, Paraguay, Brazil, Australia, and New Zealand had leaped off. In Europe Germany, Austria, and the Balkan countries are practically off.

Still carrying the gold banner, In adidtion to those named earlier, are Poland. Lithuania, Cuba, the Dutch Indies, and four small Uatin-Ameri-can states. The question arises as to why countries went off the gold standard. Great Britain went because the gold in the Bank of England vaults was being drained out, particularly by French withdrawals. The British colonies followed the mother country, and certain of the Scandinavians did so because of the dominance of the pound in their financial affairs.

South America, Follows. In some South American countries, which exported raw materials such as coffee, wheat, cattle, and minerals, the commodities fell so much in price that gold was drained from them in payment of debts contracted abroad. Thus there was Insufficient gold backing for the amount of currency needed to keep the countries' domestic business moving. So intimately is money connected with human affairs that several South American governments fell, by revolution before the gold standard was abandoned. Another question which arises is: what has happened in the countries which have adopted managed currency instead of gold.

Oreat Britain furnishes the best example. After Sept. 21, 1931, when the gold hanner was deserted, prices rose, within the country, 13 per cent in a month. Thereafter they dropped. Last July wholesale prices were 3 per cent under the September, 1931, figures.

Now they are almost exactly what they were on the day of abandonment. It was believed when Great Britain took the step that debtors would be benefited by finding it easier to pay debts. It was also assumed that the government would find It easier to collect taxes and pay off its bonds. But the money of Great Britain, inter-rally, was not cheapened, and the as- BRUCEWOOD DRESSES in a phenomenal record breaking sale at $Q95 SPECIAL THE HUB'S MliiwcnfAfiv it and that's only half the story. They're all fresh, sparkling, new styles not a one more than three weeks old.

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