AGE TOUR THE WORKHAN SATURDAY FEBRUARY 18, 1:28 The Workman Printery Stationery Store CENTRAL AVENUE TO No. 16 Street East Opposite The Wesleyan Church Next door Nash Motor Garage INSIST ON ST. CHARLES Says The Dollar Rules Creased and can en targeted basis 40. 94029293 expandinsa rapidly after a provided for further creslump had created greater World Price Level dit inflation.
supplies of money, the FederIMPORTANT NOTICE Dates New Policy from 1920.
al Reserve banks let gold imMr. McKenna Declares It It was in 1920, Mr. Mckenports again swell the nation banking cash and even stimuHas Supplanted Gold as a na said, that the Reserve bank Standard of Value authorities saw that if gold lated the process by moving securities. In 1925, when gold.
were allowed to function to its fullest extent it would lead to THS RESERVE POLICY started again to flow into the United States, the whole a perpetuation of the evils of amount was sold by the ReserAmerica Gold Stocks Are So inflation. He continued. AND They determined thereGreat That She Can Aflord ve banks, which would not alTo Lose Large quantities fore to deprive the incoming low the nation bank cash to gold of its credit creating capcontract.
acity until the demand of As gold was withdrawn, Mr. McKenna said, the bank LONDON, Jan. 24. The trade should call for a larger credit basis.
cash was maintained and creprice levels of the world are Then ensued the experiments dit actually increased in regoverned by the value of the HAS REMOVED FROM sponse to the needs of busiin the scientific control of gold dollar, rather than by the ness.
value of good, Reginald Me by a process heretofore unAs a result of the successKenna, former Chancellor of known. As another 200, 000, 000 gold flowed into the ful application of this central the Exchequer, told London banking policy, Mr. McKenna financial circles to day in his United States in 1920 1922 the declared, the almost unintercapacity as Chairman of the Reserve banks absorbed the rupted prosperity in America Midland Bank, Ltd. address. gold and held it in place of discounted bills.
has been attended by a large ing the shareholders at the annual meeting. The immediate effect of degree of stability in price level.
The value of the dollar, he the incoming gold was to insaid, was governed by the po whole increase was used by crease the bank cash, but the Effect on the Gold licy of the Federal Reserve Standard.
the members banks to pay off banks in explaining or con.
After paying tribute to the tracting credit, instead of hy maturing gold bills held by success of the American monethe amount of gold held by the central banks, so that on tary authorities in formulating Where we will be pleased to welcome our numerous the United States Treasury as the balance column, bank cash and executing their policy, Mr.
backing for its currency.
was not increased, he asPatrons and the Public generally.
McKenna said: serted.
He declared that he expect It is now necessary to obed this condition of the dol.
Later, said Mr. McKenna, in serve the bearing of the Amerlar standard, rather than a 1922 1924, when business was KUNSTSKYNJU42542 ican monetary policy on the gold standard, determining operation of the gold stanthe world level of prices!
dard. To day, as before the would continue, inasmuch as war, the price of gold in AmerAmerica was the chief creaica is fixed, and we are apt to ditor nation and hence the assume that the value of gold magnet of the world precious e continues to govern the value metal. The United States, he of the dollar. Such an assumpsaid, was rich enough either tion is no longer correct. While to lose or to gain great sums an ounce of gold can always of gold without affecting the be exchanged for a definite supremacy of the dollar stannumber of dollars, the value dard as dictated by her ćenof the ounce will depend upon tral banking policy.
what these dollars will buy, and this in turn obviously deCalls Change Remarkable.
pends upon the American The former Chancellor price level.
said. If the price movemeht was Nearly three years have The Brand that has stood in gold, the purchasing power clapsed since the pound sterlor the value of the dollar ing was esta lished on a gold the test of years.
would still depend, as it did asís, and the most important formerly, upon the value of currencies are now stabilized gold. But we know this is not on a reversion to gold. This so. The American price level general reversion to gold gives is controlled by the policy of the appearance of a return to the Reserve banks in expandpre war conditions in matters ing or contracting credit.
of credit and currency, but if The mechanism whereby we look further into the questhe dollar governs the extertion we shall find there has nal value of gold is obvious. If been a remarkable change.
the price level outside of The development of the America should rise because central bank policy of the BRAND of an increase in the supply United States has shown that, of gold, America would abwhile gold may be retained as sorb the surplus gold. If the the medium of making interexternal price level should fall national payments, it UNSWEETENED because of a shortage of gold, deprived of its function as the America would supply the deultimate standard of value. ficiency. The movement of Mr. McKenna summarized gold would continue till the the American experience in price levels inside and outside experimenting with scientific of America were brought to a gold control partially as folstate of equilibrium.
lows. Although gold is still the In consequence of the enornominal basis of most currenmous accumulation of gold, cies, the real determination of coupled with movements into movements in the general level and out of the country, which of world prices is thus the purif left uncontrolled would chasing power of the dollar. In prove disastrous to the stabil a very real sense, the world ity of the American price is on a dollar standard.
level, the attention of the RePERFECTLY SAFE NO BACTERIAS Lose or Gain Gold, serve banks was forcibly diThis condition is likely to rected to their controlling continue. Mr. McKenna said.
powers. Beginning with only because America gold a partial use, they have learnstocks are so great that she ed to utilize these powers to Bring your lables of ST. CHARLES to our can afford to lose large quan.
the full.
tities without any risk of the He said the Reserve banks Premium Department.
We shall be gold bullion falling below the had let inflation run its full legal minimum, and, secondly, course from the beginning of her central banking system is the World War until 1920, so constituted that she is able first during the period until to you free.
to absorb large quantities of 1919 when 200, 000, 000 in gold to deprive it of its creditgold entered the United States, creating powers.
and second, in the latter part In a word, America is rich of 1919, when America lost enough now to lose gold or 80, 000, 000 in gold to South gain it. She holds half the America and the Far East, but monetary gold in the world.
the Reserve banks continued Moreover, her creditor posi. freely to discount bills and to tion makes her a permanent buy earning assets to such an magnet for gold. Her debtors extent that the supply of bank must pay, and if they can find eash was considerably in(Continued on page 5)
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