to friendly discussion, especially because of our common desire to work towards common standards. We shall be glad at any time to explore these larger problems with your representatives.

Accept [etc.]

The Honorable SAO-KE ALFRED SZE,

Chinese Minister.

CORDELL HULL.

The CHAIRMAN. The time of the gentleman has expired.

Mr. SMITH. I should like to ask one more question. Has there been a tendency on the part of governments to greatly increase their paper issues in the last 5 years?

Secretary MORGENTHAU. In most countries there has been an increase in the total volume of currency in circulation in recent years. Mr. SMITH. I ask permission to insert in the record at this time some figures taken from the United States Treasury report relating to this particular question and having to do with some 9 or 10 principal countries.

1933 Annual Report-Treasury-Director of the Mint-Paper circulation in monetary unit of issuing country

The above figures show the increase in paper circulation in the monetary unit of nine important countries, from 1932 to 1937, amounting to 18,058,384.

Mr. SMITH. Mr. Secretary, I want to thank you for your patience. I know that the questions I have asked are hard ones; but, nonetheless, they are important and thoroughly germane. I did not set up any question for the purpose of making it catchy. I have not asked a single question of that sort.

If it has appeared to you, Mr. Secretary, that I have not asked these questions in the proper manner, I wish, naturally, to apologize to you.

I wish you to understand very distinctly that in no event did I intend to be personal.

The CHAIRMAN. Speaking for the members of the committee, I think I can say that we have not and do not question the high motives and integrity of the gentleman. We realize that he has had serious and proper motives in trying to develop his questions.

I have a few simple questions, many of which may have been answered. If they have been answered, you need not answer again, Mr. Secretary.

The CHAIRMAN. Does any country have a larger stabilization fund than ours?

Secretary MORGENTHAU. Yes; Great Britain.

The CHAIRMAN. How many stabilization funds are being operated? Secretary MORGENTHAU. The principal countries which have stabilization funds are the United States, United Kingdom, France, Netherlands, and Switzerland. There are others, but they are of lesser significance.

The CHAIRMAN. How much would be realized from the gold of the stabilization fund by further devaluation of the dollar, and should the returns go to the stabilization fund?

Secretary MORGENTHAU. About $340,000,000.

The CHAIRMAN. And that would bring the fund up to about $100,000,000 more than the British stabilization fund?

Secretary MORGENTHAU. I think the British stabilization fund amounts to about $2,800,000,000.

The CHAIRMAN. We would still be short of the British stabilization fund?

Secretary MORGENTHAU. Yes; by about $500,000,000.

The CHAIRMAN. Would you care to tell us, Mr. Secretary, if you have an opinion, the advantages of silver certificates over Federal Reserve notes?

Secretary MORGENTHAU. So far as fulfilling requirements of the public for circulating media is concerned, both serve equally well. The CHAIRMAN. Our exports are about 6 percent, and if those were eliminated we would have a surplus of 6 percent more goods. What effect would that increasing surplus have on our internal prices? Secretary MORGENTHAU. If we should lose our exports entirely, it would have a most severe effect on our internal prices.

The CHAIRMAN. In order to protect internal prices, is it essential to have some export business?

Secretary MORGENTHAU. Yes.

The CHAIRMAN. You have stated that since 1929 more than 50 countries have changed the gold value of their currencies. Have any countries dropped their currencies more than we have? Secretary MORGENTHAU. Yes; many.

The CHAIRMAN. Please give us the names of those countries. Secretary MORGENTHAU. Some of the countries whose currencies have depreciated in terms of gold since 1929 more than the dollar has depreciated in the same period are as follows: United Kingdom, France, Norway, Denmark. Finland, Spain, Union of South Africa. Japan, China, Australia, New Zealand, British India, Brazil, Argentina, Chile, Colombia, and Uruguay.

The CHAIRMAN. Cannot the leading European countries change the gold value of their currencies without legislative action? Secretary MORGENTHAU. Yes.

The CHAIRMAN. Can Great Britain do so?

Secretary MORGENTHAU. Yes.

The CHAIRMAN. Is it not true that while other countries were depreciating their currencies in 1931 and 1932 our prices fell almost one-third?

Secretary MORGENTHAU. Yes.

The CHAIRMAN. And is it not also true that within the year following our action the price level in the United States rose over 25 percent?

139157-39- 7

Secretary MORGENTHAU. That is true.

The CHAIRMAN. You have said that the stabilization fund is in an excellent position to protect our credit base against heavy withdrawals of gold from the country. I wonder whether you would explain that; or have you done so?

Secretary MORGENTHAU. I have. That is true.

The CHAIRMAN. You have answered this question: I have heard it said that many currencies move together; that for example, there is a sterling group of currencies and that if the pound sterling should drop a lot of other currencies would drop along with it. How many countries are tied to the sterling and how many are tied to the dollar? Secretary MORGENTHAU. Some dozen currencies have moved closely with sterling during recent years and may therefore be said to be tied to sterling. The countries whose currencies are tied to the dollar are fewer in number and are principally Latin American countries. The currencies of many countries are tied neither to sterling nor to the dollar.

The CHAIRMAN. I think you have answered the other questions I have in mind.

Mr. WHITE. You asked the advantage of silver certificates over Federal Reserve notes. The difference is in the interest on the security behind the notes and the lack of interest that is not required to support the silver certificates redeemable in silver dollars in circulation.

Secretary MORGENTHAU. The Federal Reserve Act permitted the Reserve banks to issue Federal Reserve notes with interest-bearing obligations as partial collateral. Silver certificates, of course, are issued against silver. Despite the necessary brevity of my answers to some of the questions, I have tried to the best of my ability to cooperate

with the committee.

The CHAIRMAN. In closing, I think, I can safely say that this committee is under great obligations to you, Mr. Secretary, for answering so clearly and definitely the difficult questions that have been propounded. We are most appreciative of the efforts of the various members of the committee to get some enlightenment upon this rather complex problem. The Secretary, of course, realizes that we have to take this bill to the floor of the House, where we have to be able to answer many questions that will be asked.

There will not be any question taken in connection with the bill in question until after the members of the committee have met in executive session and threshed the subject over among themselves.

If there is nothing further at this time, the committee will adjourn to meet at 10:30 tomorrow morning.

(Thereupon at 1:45 o'colck p. m., Tuesday, March 7, 1939, the committee adjourned, to meet at 10:30 o'clock a. m., Wednesday, March 8, 1939.)

EXTENSION OF STABILIZATION FUND AND POWERS, ETC.

WEDNESDAY, MARCH 8, 1939

HOUSE OF REPRESENTATIVES,

COMMITTEE ON COINAGE, WEIGHTS, AND MEASURES,

Washington, D. C. The committee this day met at 10:40 o'clock a. m., Hon. Andrew L. Somers, chairman, presiding, for further consideration of H. R. 3325.

STATEMENT OF FREDERICK A. BRADFORD, LEHIGH UNIVERSITY

The CHAIRMAN. The committee will please come to order. This morning we have two representatives of the Economists' National Committee on Monetary Policy who have been invited here by the committee, representing as they do some of the economists connected with the larger universities of the United States. It is thought that their thought and study of this problem may be helpful to members of the committee.

Is Mr. Bradford ready?

Mr. BRADFORD. Yes.

The CHAIRMAN. Please tell us something as to background of the Economists' National Committee on Monetary Policy. May I say at the outset that this hearing will close at 12 noon today; and the time below now and then will be divided between Mr. Bradford and Mr. Beckhart.

Mr. BRADFORD. The Economists' National Committee on Monetary Policy was formed in December 1933. In one sense it was the result of a letter sent to the President of the United States on October 22, 1933, which letter was signed by 44 monetary economists. It was said in that letter that we were not trying to urge upon the President any action, but we simply wanted him to know that these men in the monetary field felt that a return to the gold standard would benefit the Nation, increase confidence and effect business recovery, and that inflation of the currency would injure the Nation.

As a result of that, some of the men who signed that letter got together in New York City in November for the first time, I believe, and organized the committee in December; and it has been functioning every since.

The committee has printed on its letterhead the purposes of the committee, which purposes you might wish to hear.

The CHAIRMAN. We shall be glad to hear them.

Mr. BRADFORD. The purposes of the committee are, first, to enlighten the public as to the economics of the monetary issues before the

country; second, to combat unsound monetary programs such as those of the inflationists, devaluationists, and commodity dollar advocates; third, to issue public statements on current monetary issues as circumstances seem to warrant; fourth, to place speakers at the disposal of the public; fifth, to distribute its own and other literature; sixth, to suggest from among its members experts for those who wish such aid.

Those are the purposes of the Economists' National Committee on Monetary Policy, as stated on the stationery of the committee.

The CHAIRMAN. Who supports this organization; where do you get the funds?

Mr. BRADFORD. Funds are contributed by those who are interested in sound monetary policies. There are in the neighborhood of 1,600 contributors.

Mr. WHITE. Are they principally bankers?

Mr. BRADFORD. No. I cannot remember the names of the contributors, but the Committee has a comparatively small budget. We operate on about $30,000 a year. Most of the money we expend is for the purpose of hiring clerical help in New York City and for the distribution of literature.

The CHAIRMAN. You do not know the name of any particularly large contributor off-hand?

Mr. BRADFORD. No.

Mr. WHITE. Does your committee keep a list of its contributors? Mr. BRADFORD. There is such a list.

Mr. WHITE. There is such a list?

Mr. BRADFORD. Yes.

Mr. WHITE. I am going to ask that the list be supplied to the committee.

I should like to get an understanding of the time this morning. As I understand, two gentlemen are to address the committee until 12 o'clock noon. Is there any limitation on the initial statements they may make, so that there may be ample opportunity to interrogate the gentlemen?

The CHAIRMAN. Each gentleman has 40 minutes. I suppose each may consume 20 minutes in a preliminary statement before members of the committee question them.

Mr. WHITE. I shall insist that members of the committee be accorded opportunity to interrogate the witnesses. I am anxious that all the facts be brought out thoroughly.

The CHAIRMAN. I think it has been evidenced that the committee has given some consideration to those who may want to interrogate the witness. Mr. Bradford, is your statement 20-minutes long?

Mr. BRADFORD. I doubt that it will take that long. I have only three typewritten pages.

The CHAIRMAN. The remainder of the time can be given to interrogation.

Proceed with your statement.

Mr. BRADFORD. I understand that the hearings now being held by this committee are concerned with the advisability of extending to January 1941, the life of the stabilization fund and the President's power to alter the weight of the gold dollar between 40 and 50 percent of its former weight.