Willett Declares American Bullion Should Not Back Dollar Overseas

"The only way for the U.S. to solve the present monetary crisis is to get off the international gold standard," Thomas D. Willett, instructor in Economics, said yesterday.

Willett--whom Otto Eckstein, professor of Economics, considers one of the best-informed Faculty members on the current crisis--said he expects the Johnson Administration will stay on the gold standard and fight the gold drain.

The U.S. government has fought the drain in the past by tightening credit and imposing new taxes, which discourages business investment abroad. In raising the discount rate from 4.5 to 5 per cent Thursday, the Federal Reserve Board seemed to be following the same course.

Willett predicted that tightening credit would also discourage business expansion at home. Unemployment will rise, he said, and discontent in the core cities will grow. "With the summer coming, this is particularly bad," he said.

In defense of his position, Willett pointed out that all other countries have gone off the gold standard, and now support their currencies with reserves of dollars. By going off the gold standard, the U.S. would give the other countries the choice of accepting all currencies on faith or supporting them with their own gold, he said.

An alternate solution to the crisis is to raise the price of gold. Willett said that this would "reward our enemies, who have bought heavily in gold, and hurt our friends," who have been selling it to support the dollar.

Government representatives of the U.S. and six European countries ("the gold pool") will meet to find a crisis solution in Washington today.