News of the Week D ETAILS of the action to be
recommended by President Roosevelt to his new Congress for the relief of the financial situation are still undisclosed as these lines are being written, but it is clear that the original idea of the issue of temporary scrip certificates has been abandoned. That is not surprising in view of the fact that they were to be of local issue and would con- sequently have been available only at a discount, if at all, for transactions involving different States. Instead a large issue of Federal Reserve currency is apparently to be authorised. That means inflation, even though there is an ample margin of gold cover in hand. Moderate inflation will do no harm and it ought to be perfectly easy to maintain control in this case. Penalties on hoarding may bring out hidden money, but what will bring it out most effectively is the growth of a general belief that the Government has the situation in hand. Up to a point no doubt it has, but the problem of what to do with the insolvent banks is still baffling. It is difficult to make them distributors of the new currency, but on the other hand if the sound concerns only are utilized the relief will be no more than partial and local. If for one reason or another the dollar sags in relation to the pound, as there is every prospect that it will, the advantages accruing from our departure from gold eighteen months ago will be sensibly diminished. * *
