Professor G.F. Warren

January 5, 1934- P. 4

against the gold so purchased. This is a transaction upon which itwould be impossible to involve the nation in a loss.

I, Therefore, suggest that the technical problem can be handledin the following way:

Abolish the legal fiction of a price of gold of dollars 20,67 tothe ounce.2-

Create an authority charged with the responsibility of buying andselling all gold offering at rates fixed by the President, up tothe legal maximum of dollars 41,34 to the ounce.

A similar policy has been in operation in Australia   since Decem=ber 1931 and it has been entirely successful. In Great Britain  , asyou know, the official policy has been to prevent the price of golafrom falling too low. The exchange equalization fund has I think beenused more frequently to keep up the price of gold than to promote afall in the price.

I hope, in the light of this experience, that the President willimplement his gold policy with the courage he has shown in the budgetpolicy.

In case you are not in Washington, I am sending a copy of thisletter to Rogers for his information.

Yoursb sincerely,