Senator Thomas and the monetary diehards are having it back and forth with a fine gusto about whether the Treasury shall reap the four billion or so of reward if the dollar is devalued. The best argument that the outraged sound money men seem able to muster is the moral one that no government should appropriate something for nothing in this cavalier fashion. Whereas Senator Thomas and the rest fight for devaluation and confiscation of the gold profit as if the four billion dollars were essential to the financing of the recovery program.

The interesting thing is that none of the combatants seem to realize that the reaping of a gold profit from devaluation is not the only means of pulling virtually out of thin air, the means of financing the recovery program. Even the Number one Brain Trustee assumes that the whole program must some day be payed for through taxation, as the War is still being paid for. But by a little cooperation with the Federal Reserve Banks, the Treasury can finance at least part of the program without its costing a cent. The method is equivalent in effect to the issue of flat money but entails none of the disadvantages, real or fancied, of greenback inflation. It involves nothing more sensational than the sale of bonds to the Reserve Banks. The Treasury will have to pay interest on these bonds? Quite so, but the interest will be in the nature of profit to the Reserve Banks, and who is going to get the excess profits of the Reserve Banks? Answer: the government. The Treasury pays the interest with one hand and takes it back with the other.

If someone objects that the government is in effect creating credit, one may ask who has a better right to create credit than the government. In time of prosperity such a process might raise prices, but in time of depression there is so much slack to be taken up in employment and trade that the "inflation" resulting would be inconsiderable. CASTOR.