The news scimitar. (Memphis, Tenn.) 1907-1926, 1919-08-18
inflated CREDIT
CAUSES 5OCENT
DOLLAR OF TO-DAY


creased Production, Is Rea-
son for Present High Prices,
Says GEORGE E. Roberts.
NEW YORK, Aug. why has the
dollar declined in value, so that today
it is worth only about half as much as
1t was before the outbreak of the Eu-
ropean WARP The answer is that it has
beer diluted, and Americas bloated
credit system is held to blame.
II the United States had issued
greenbacks instead Of bonds to finance
the war there would be a clearer I'M
Outstanding Of the initiation which has
cut IN half the purchasing power Of
the dollar. 1t would be apparent that
the production Of useful commodities
having been eurtailed, and the turnout
o., dollars having been greatly expand.
ed, II would take more dollars to buy
a gwen commodity, under the law Of
supply and demand, But the step from
greenbacks to bonds was a step out 81
the realm Of currency into the realm OF
credit, and it confused the issue.
Factor in High Prices.
The man who had a savings account
OF $1,000 before the war has only half
as much now. The nan who works for
YOU a week, say, is actually getting only
$25. Those things are true, whether
you blame high prices or initiation. But
II you are prone to consider high prices
a KIND OF unacceptable juggernaut 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 infla-
ton from which this country is suffer-
ing, and the inflatioh is remediable,
Twenty years ago the people of this
country rallied against the 50-cent dol
lar" Mr.. Roberts said the other day,
and free silver was voted down. But
we have got the b0-cent dollar today
and 1t is a question whether we are
going to make 1t permanent.
Everybody knew that the purchas-
ing power OF money has declined, that
prices are twice as high, but most peo-
pie think it is due to the fact that
something has happened to commodi-
ties. Few think Of Il as due to changes
on the side of money, There is some
thing 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 and bring profitable en-
ployment. We have had a great In
crease in bank deposits. and some peo,
that as prosperity, They think 1t Ii
proof OF an accumulation Of wealth.
Deposits Not Wealth.
But bank deposits are not wealth
If you borrow $1,000 from your bank
err, and 1t is credited to your check
ing account, the deposits of that banl
rise $40, 900. And when you check i
out, your checks will be deposited II
other banks, and will increase thei de-
posits. Bank deposits constitute pur'
chasing power, and the $1,000 we hav'
taken as an example remains in cir
culation until somebody pays off tn
$40, 1000 out of savings.
$50 long as that 1000 remains I
circulation 1t is not an increase Il
wealth. But that is the kind of pur
chasing power we have in this coun
try. 1t Is pure initiation, a kind 0
bloat or oropsy.
IF the present level of prices is per
manent the value of money n OF a
obligations to pay fixed sums Of none
will be deprecated approximately one
half. II means that all the savings {
the people which are in the form {
bank deposits, promissory notes, or II
Insurance are In large part, posslbl
one-half, wiped out as with q spong
The farmer or business a VINO,
the declining years Of life, has cor
verified his property into bonds I
mortgages will find the interest as
receives 1t, and the principal when
Is paid, of only about one-half the pul
chasing power that he ~bargained 10
A great many salarled people and wac
earners are unable to get a prom
ana public utilities have been reduce
to a state Of almost financial rui
Nobody gains anything by the high
scale except at the expense of someor
else. The distribution Of higher pa
is not based upon n principles
"The inflated state of bank credit
a factor in these high prices. II
whole situation Is artificial. Bank d,
posits are all up 50 to 100 per cen
and a large part Of the increase
pure imitation, due to the INCREASE
into thinking this state Of things
economists in all times. These d
posits have the same effect as 50 mu'
paper money.
Liberty bond loans in the ban
ought to be paiu off, and the loans
the federal reserve banks ought to
l~uuidated. The federal reserve ban
were never intended to be a resort I
continuous borrowing. They were !
tended, as the name implies, TO
banks holding reserves Of credit !
emergency and reasonable reauir
ments.
Prices and Unrest.
Nobody is responsible for the risi,
cost Of the common n~ecessaries OF III
but when great numbers OF people a
disappointed and Disconnected som
| III hnd,T iz alxuouc hald IN he
The most thoughtful students OF n
tory have held that all the great cris
and upheavals of society have been q
to economic causes, to direct econon
pressure upon the people, rather IN
to logical reasoning or intellectual lea
ership. Twice in my own time l ha
seen the monetary system and standa
value nearly upset in this country, !
cause times were hard: once by \
greenback party and once by the II
silver party. In both OF these instanf
the farmers were the chief complal
were too low; now 1t is the wage -eaI
ing class and the grievance Is u
prices are too high.
"The arguments for greenbacks .
= free silver were all washed away IN
periods Of prosperity which lollow
- but the same type Of agitator is alws
on hand-just as ready to argue ir
high prices as Tow prices, and alwt
finding the most effective appeal in
play upon class suspicion ana CT
prejudice. The solution OF our pr.
lem lies In reducing u credit I'M
ton out Of savings and getting oi
to a rational economic basis
YANK SOLDIERS ARE TO
WEAR FRENCH HONOI