Companionate Currencies

The latest international monetary announcement by U. S. Secretary of the Treasury Henry Morgenthau Jr., in which he said that the U. S., Britain and France have set up a "new kind of gold standard" (TIME, Oct. 19), was considered in some of the World's fiscal capitals last week important chiefly in persuading U. S. voters on the eve of election that the future monetary policies of President Roosevelt may be less radical than his acts to date.

The one place in which the Secretary's new kind of gold standard was taken seriously was Paris, where Premier Leon Blum and Finance Minister Vincent Auriol, attacked by enemies of their devaluation move, have been trying to convince the skeptical French public that they actually have obtained from Mr. Morgenthau and from British Chancellor of the Exchequer Neville Chamberlain a binding accord to keep the dollar, pound and franc all stabilized at their present level (TIME, Oct. 5). Cried M. Auriol: "Mr. Morgenthau has made the best answer both to the skeptics who called our original accord illusory and to men of bad intentions and bad faith who did not hesitate to sow anxiety in the public mind!"

Questioning by Washington correspondents divulged the following features of what Secretary Morgenthau calls a "new kind of gold standard"

Reporter: Why is this new kind of gold standard on the basis that the U. S., Britain or France may change its price for gold from day to day?

Secretary Morgenthau: It has to be a daily price. Otherwise we would be slipping back onto the gold standard. This is a new kind of gold standard.

Q.: What effect, if any, will this new kind of gold standard have on the dollar in the pockets of the man on the street?

A.: None at all. . . . If we find it does, we'll discard the agreement.

Q.: May not an effect of this new kind of gold standard be the movement away from the U. S. of much gold now here?

A.: If the gold goes out of this country, there is nothing to worry about.

The Secretary of the Treasury rounded out his picture by explaining that the new kind of gold standard is "a way of doing business which has never been tried before" and that President Roosevelt thinks it is a "good idea."

Said the London Financial News: "It would be wholly incorrect to assume--despite Mr. Morgenthau's statement--that a sort of 'new gold standard' stabilization is hereby achieved."

Soon current in Wall Street was the jest that "the new kind of gold standard" is about as much like the gold standard as companionate marriage is like holy wedlock. What had actually been done was to make the dollar, pound and franc companionate currencies pegged from day to day at a common level, with Washington, London or Paris free on 24 hours' notice to pull the pegs.

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