Washington, October 24, 1933.

President Roosevelt has taken a logical and conservative step toward stabilization of the American dollar.

At first blush, the orthodox economists and experts thought they saw only confusion in the plan for a commodity standard, but they overlooked a much more essential point in the President's policy. It is his rejection of the idea of devaluing the dollar by changing the gold content at this time.

It is to be noted the President frankly confessed that nobody knew the present level of the dollar and that too many artificial forces were at work in world currencies to enable America to fix now on a definite value for the dollar.

This line of reasoning has been urged upon the President for several weeks in opposition to the plan for an immediate stabilization, which would have meant fixing the gold content of the dollar at 66 cents.

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Mr. Roosevelt's refusal to make the decision about gold content at this time will unquestionably be found upon reflection to have been a wise move. Now entirely apart from this phase of his policy, there will be criticism of what he refers to as a managed currency and issue will be taken with him as to whether it is sound ever to try to fix the value of the dollar by changing its gold content every now and then to conform to price changes. This theory, which is sponsored by Professor Irving Fisher of Yale, is not new and has had the penetrating criticism of economists and gold experts for a decade.

Whether Mr. Roosevelt ever will be able to put such a policy into effect depends upon the cooperation he gets from the other nations of the world. When he first proposed it at the London economic conference, the gold countries turned a cold shoulder. The British ever since the war have been hearing virtually the same suggestion from John Maynard Keynes, one of their leading economists.

Stripped of its technicalities, the commodity dollar is a means of keeping the unit of value in constant relationship to price changes. It is a perfect theory and in a financial Utopia would work excellently. But since governments are not immune from politics and manipulation, especially abroad, where central banks and governments are in intimate contact every day, the chances of a practical and sound method of maintaining a unit of value by the commodity standard are remote.

But whether we have the commodity standard or not, ultimately, the President had to have an alternative to his refusal to stabilize now or fix the gold content. He had to meet the pressure of the inflationists. He had to continue to try to persuade the other governments of the world to try the commodity standard experiment. So inasmuch as he came to believe there couldn't be any stabilization now anyway, there seemed no harm in an academic espousal of the commodity standard.

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The establishment of a government market for gold has more significance than appears on the surface. It is the American substitute for the British exchange stabilization fund. It is hoped to correct wide fluctuations in gold exchange by buying and selling the metal. The administration wants to achieve stability so that price rises in domestic products due to the NRA and the agricultural adjustment act will not be interfered with by gyrations in the unit of value.

So, briefly, the administration is trying an experiment in controlling the purchasing power of the dollar by buying and selling gold in the open markets. It is virtually the same as buying and selling gold exchange--so far as effects on the value of the dollar are concerned.

But the basic policy of the American government is to prevent speculation in dollar exchange and bring the dollar along closely to the purchasing power in America, a process not unlike that which has preceded stabilization in European countries. Had the President announced this policy without pointing to the commodity standard as one of his objectives, his step would have been halted in conservative quarters as sound and practical.

By eliminating from consideration, therefore, the commodity standard, which is as yet far from being accepted by other governments, a different perspective on the President's policy will be obtained. America is moving toward a stabilization of the dollar and the curtailment of fluctuations is likely to be followed by a gradual removal of exchange restrictions on the shipment of gold, another step necessary before stabilization can be achieved