Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1919-08-11
Bloated Credit System Cause
OF 50-Cent Dollar, Saws Expert

New York, Aug. 11.-Why has the
dollar declined in value, so that today
1t is worthy only about half as much
as 1t vas before the outbreak Of the
European war? The answer is that II
has been diluted. and Americas bloat-
ed credit system is held to blame.
If the United States had issued
lgreenbacks instead of bonds to finance
the war there. would be a clearer un-
Outstanding of the imitation which has
)cut in half the purchasing power of
the dollar. It would be apparent that
the production Of useful commodities
having been 'curtailed, and the turn
out of dollars having been greatly ex-
banded, 1t would take more dollars. to
buy a given commodity, under the law
Of supply and demand. But the step
from greenbacks to bonds was a step
out of the realm of currency into the
realm OF credit, and it confused the
Factor in High Prices.
The man who had q savings ac-
count Of a Thousand dollars before
the war has only half as much now.
The man who works for $50 a week,
say. is actually getting only $25. Those
things are true, whether you blame
high prices or imitation. But If you
are prone to consider high prices a
kind of unacceptable j~uggernaut, you
are wrong, because, according to
George E. Roberts, former director
Of the mint, and now vice president of
the National City bank, high prices
are chiefly a reflex Of the credit infia-
ton from which this country is suf-
fering, n the imitation is remediable.
Twenty years ago the people Of
cent dollar" MI. Roberts said the
other day, land free silver was voted
down. But we have got the afty-cent
dollar today, and it is a question
whether we r going to make it per-
manent.
Everybody knows that the pur-
chasing power of money has declined,
that prices r twice as high, but
most people think it is due to the
fact that something has happened to
commodities. Few think Of it as due
to changes on the side Of n
There is something delusive about a
rise in prices due to depreciation in
currency. 1t sets up a situation which
looks like prosperity. and which for a
time has some of the features of real
prosperity. Rising prices stimulate
buying and stimulate production while
they last. They make business good
have had a great increase in bank de-
posts. and some people, including
some bankers, regard that as prosper
ity. They think it is proof of an &C
emulation of wealth.
Bank Deposits Not Wealth.
But bank deposits are not wealth.
If you borrow $4,000 from your
banker, and it is credited to your
checking account, the deposits of that
bank rise 10000. And when you
check it out, your checks will be de-
posted in other banks, n will in
crease their deposits. Bank deposits
constitute purchasing power, and the
$4,000 we have taken as an example
remains in circulation until somebody
pays off the $4,000 out of savings.
so long as that $4,000 remains
in circulation it is not an increase in
wealth. But that is the kind of pur-
chasing power we have in this coun-
try. 1t is pure imitation, a kind Of
bloat or dropsy.
IF the present level Of prices is
permanent the value of money and
of all obligations to pay fixed sums of |
money will be deprecated approx
mately one-half. 1t means that all the
savings of the people which are in
the form of bank deposits, promissory