Battle Lines

When portly Oliver Mitchell Wentworth Sprague resigned as the Treasury's hard money adviser, he warned his onetime pupil Franklin Roosevelt that "there is no defense from a drift into unrestrained inflation other than an aroused and organized public opinion." Last week that opinion was mightily taking shape.

Fearful lest a declining dollar damage the bond market on which the Government counts heavily to finance the New Deal, vacationing Secretary of the Treasury Woodin piped: "I must seriously criticize Dr. Sprague for the assertion he practically makes that the U. S. Treasury is placed in a position where it must borrow several billion dollars from the people on bad securities. In any way to suggest that U. S. Government bonds are or can be or will be in any sense bad securities is not only a reflection on the wealth and integrity of this country and its people, but impeaches Dr. Sprague's own common sense and competency."*

But Mr. Woodin's rebuttal did not prevent three of the Government's 14 active long-term issues from touching new lows for the year. Eight sold below par. By this time the anti-inflationist battle lines had been drawn. The alignment was vociferous, widespread but disorganized. The hard moneymen were no more articulate about what they were struggling for than the President's reticent financial advisers. What they were fighting against, however, was plain:

Forty-four economists from Leland Stanford to Pennsylvania, from Harvard to the University of Miami, banded under Princeton's famed Money-Doctor Edwin Walter Kemmerer to demand "an early return to the gold standard."

Taking their name from the element attacked in the President's Savannah speech, the '"Tories"' organized in Manhattan "to raise the drooping head of the American eagle on the dollar bill, to foster a 'back-to-the-college' movement for our statesmen."

The Crusaders, young men's temperance organization, used $1,000 bills in stage money to invite the public to an anti-inflation rally. Held on the same night as a meeting for Father Coughlin (see below), the meeting was barely able to fill one half of Carnegie Hall.

In Boston, New York, Chicago, businessmen's groups and chambers of commerce memorialized the President in behalf of hard money.

The oldest house in the U. S. specializing in Government securities, C. F. Childs & Co., acidly bulletined: "Utopia is derived from Greek words meaning nowhere. Toward that mythical place we are making detours."

To Washington went the Federal Reserve's Advisory Council, composed of bankers elected from each of the twelve Federal Reserve Districts, for one of its regular four-times-a-year meetings. The advisers, who have no directorial power, retreated to the Mayflower Hotel for consultation. Cozily established all by themselves, the Council proceeded to whip out recommendations to the Reserve Board and its member banks. The recommendation that made headlines: "History shows that the further currency inflation goes, the more difficult it becomes to control and ... it invariably results in untold losses to great masses of the people and the ruin of national credit."

But the most telling shot fired from the anti-inflationist ranks last week was touched off from Manhattan's lofty Empire State Building. Alfred Emanuel Smith, who had broken his first bread in the White House with his onetime crony Franklin Roosevelt only the week before, released to the Press excerpts from an open letter to the New York State Chamber of Commerce in the December New Outlook. "I do not believe,'' blazed the Happy Warrior, "that the Democratic Party is fated to be always the party of greenbackers, paper money printers, free silverites, currency managers, rubber dollar manufacturers arid crackpots. I am too old now to be regular just for the sake of regularity. . . . We are told that there is a new theory of government abroad. It is the theory that the executives are quarterbacks on a football team who do not know a minute in advance what signal they will call next. They determine the plays on the basis of 'hunches.' Of course, this is just another name for opportunism. There is nothing new in it. It never pulled a great industrial nation out of a depression. ... In the absence of anything definitely known to be better, I am for a return to the gold standard. I am for gold dollars as against baloney dollars. I am for experience against experiment."

* Dr. Sprajjue was to resume his teaching at the Harvard Business School next month.

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