Governor, Senator, Dollar

Last week chunky, moon-faced Governor George L. Harrison of the New York Federal Reserve Bank was in Basle, Switzerland looking on at a regular monthly meeting of directors of the Bank for International Settlements. In his capacity as international banker for the Federal Reserve System, he hoped to collect information from European bank heads on credit and business conditions, explain, in return, what he knew about U. S. business. But because he had never been to Basle before and because he was in direct charge of the Government's $2,000,000,000 exchange stabilization fund. U. S. and French newspapers scareheaded reports that he was secretly negotiating with international bankers to stabilize the U. S. dollar at 59-c-.

Such a possibility filled Oklahoma's Senator Elmer Thomas with violent and vociferous alarm. The Senate's No. 1 Inflationist, who likes to he photographed in tattered overalls to publicize the debtor's plight, considered it bad enough to have President Roosevelt temporarily peg the dollar at 59.06-c- last January but to have Governor Harrison attempt to hammer it down permanently on gold at that level was more than he could stand. To Governor Harrison at Basle he dispatched a sizzling 1,500-word cablegram at 10-c- per word (at his own expense) which indicated how much steam inflationists still have up in their boilers. Excerpts:

"Because the commodity gold exchanges now for 150% more of other basic commodities than in 1926 and we have increased our dollar price of gold only 69%, we have a dollar so deflationary that to stabilize it now would mean continuing disaster. . . .

"You, Mr. Harrison, as head of the New York Federal Reserve Bank which has exercised a dominating influence over the entire Federal Reserve System and the U. S. Treasury, led New York influences in counseling the deflation policy of the Hoover administration. ... It was your personal fate through lack of understanding of monetary forces to be the central figure in the world's greatest, most inexcusable and most costly tragedy of financial leadership. I ask by what right do you now presume to initiate even a partial return to your policies which have been tested and proved so ruinous. . . .

"I warn you that any step you take toward tying our money in any way to any foreign money is a usurpation of the powers and prerogatives of Congress. . . . Your viewpoint and your activities do not represent the best interests of our people, and your acts are certain to provoke a demand for a Congressional inquiry."

Scarcely had Senator Thomas' message been digested by U. S. newsreaders when Governor Harrison shot back a denial, declaring that he was in Europe solely to discuss economic conditions, not to make "any arrangement about anything." Acting Secretary of the Treasury Thomas Jefferson Coolidge corroborated this statement by declaring that Governor Harrison was certainly not representing the U. S. Treasury. Everyone knew that Governor Harrison had no authority to stabilize the dollar even if he wanted to. But such denials mean little to political inflationists. Senator Thomas promptly had his office in Washington give out the text of a letter he had just written to each and every member of the House and Senate.* After warming over his grievances against Governor Harrison, he wrote: "If you agree with me that the dollar is still valued too high . . . that the regulation of the value of the dollar should not be intrusted to the same private selfish interests whose manipulations of our money and credit brought on the most destructive and costly panic in history . . . then let me have your cooperation in the form of a message which may be given publicity and filed with the President."

To most businessmen Senator Thomas' blast at Governor Harrison and his rallying cry to his Congressional colleagues sounded like a significant renewal of the inflationary drive to force the dollar below 59-c---a drive which wiseacres now predict will reach its climax at the Capitol next winter.

*Senator Thomas chose to ignore the fact that Senators and Representatives will not sit regularly again at the Capitol until after the November election when a new Congress will come into being.

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