The Washington times., 1920-10-18
Consumer Is Winning
In Fight to Bring Doun
High Cost OF Lining

| than the prices now offered for them.
What the Government officials are
saying in reply is that, however dis
appointing and unfortunate this may
be, the fact remains that IL is out of
the question TO take money from the
pockets of the average American con
sumer In order TO stave off effects Of
the, law of supply and demand now
ruthlessly operating. and help the
farmers hold their goods for, higher
prices. Both board and Treasury have
declared themselves against such q
policy.
FURTHER EXPANSION UNSAFE.
But aside. even. from their views
on whether or not the cost of living
should come down, an analysis OF the
condition of the banking system
shows that IL would be unsafe for tn.
banks further to expand loans. The
business men and farmers of tho
country now have in their hands moro
borrowed money than at any previous
/ time In the history of the country.
/ There has been complaint in some
sections that money is tight, that
| credit has been curtailed, and the
| banks won't lend. The real situatioH
us that there has been no relaxation
| of the old, fundamental truth that YOU
can1 eat your cake and have il. The
| reason the banks are slow about max
! ing new loans is not that they are
contracting credit. but that they have
lent so much money 1t is nearly all
gone.
Reserve requirements must be main
tanned II banking soundness and free
dom from panic are to be vouchsafed.
| The Federal Reserve Board is unwill-
ing to see SO much paper money is
SUEDE that the United States dollar
will be like the German mark
material for burlesque comedians.
! Now every American dollar of paper
is worth an American dollar of gold.
To harken to the farmers, 1t would
be necessary to issue so much more
paper money that we would have two
prices in this country. A pair Of
shoes could be bought for $40 in gold
but would cost $l2 or SIS If paper
money were offered. And, of course.
under the operation of Gresham's
law, no gold would appear in circu-
| lation, for where two kinds and
| qualities of money are in existence
the more valuable always retires.
| This would mean that the cost of
/ living would start up and up again
and there would be no telling where
| it would stop. That is what happen
| ed to Confederate paper money in
/ the latter days of the civil war when
| IL took $50 of ConfcdC rate ln.-u.
money to buy a pair of socks or (if
! that is not regarded as an csscntiaD
| a sack of -four.
| PUBLIC Is WINNING.
/ So far the CCSeYnmcnt has not
budged one inch ot tbe bchest of the
producers who would like to see the
! hign cost or living maintained on the
]
ming in the battle so far and there is
every indication that il will win n
/ final victory and that the price re-
! cessiou will not be artificially
! checked, even IL that were possible.
! One thing the strugglesdoes make
| clear. however, is that supplement
tai credit system is needed in this
country 70 assist the farmer finan-
/ c'ally. Tsken"from the point OF view
/ Of the individual farmer. this ST.
! uation is extremely unfortunate.
| Some of them have been compelled to
| take their children out of school be-
! cause they cannot sell their crops
| for even as much as they cost to pro-
! duce. However much sympathy the
! individual farmer eXcites-and real
| sympathy is felt for him by the Off
! cials who Are opposing him in this
| contest ,and by everyone else-still
! the struggle is not between individ-
uals but between consumers and pro-
| ducers-consumers who have been at
their wits end for the last few years
| to find the money to keep alive at
prevailing high prices, and producers
who have been buying extra sutomo-
biles from the proceeds of bumper
crops sold at fabulous figures. The
| picture is too big to single out the
| unfortunate case of the individual.
! still the difficulties in which tho
! farmers find themselves show Tho
need for new farm credit system, and
II Is practically certain that the forth
coming session of Congress will give
consideration to legislation along that
line. The Federal reserve system was
| designed primarily as credit ma
chine for the commercial business OF
| the country, Its successful operation
| depends on quick turnover OF goods
! and funds lent on them. II is recog-
nizcd that II would be unwise to warp
this system to use for which IL Is
not designed. The existing farm loan
system was designed TO assist farn-
ers to buy land. 1t grants long-term
loans on mortgages.
WHAT is NEEDED.
What is needed TO help the farmer
in such situations as the present
emergency is n middle system, paral-
leling, but supplemcnting these other
two; one which will lend him operat-
ag capital. The Federal reserve sys-
tenn Is designed to giant short-term
credit for commerce--hfteen 20 ninety
days: the farm loan system Is de-
signed to grant iong-term investment
/ mortgage crcdit--flve to thirty years.
| What now Is needed for tho farmer 10
a middle type Of credit--six months %
two years, TO tide him over the grow
ing timc. to help him weather bad
crop years and 90 let him have thN
use OF the wcalthN he produces Will