Americus times-recorder., 1920-05-02
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WASHINGTON, D. c., May IA
" lot of people have been trying
lately to "sell" US the story that
there is to be panic and a univer-
sal smash-up in business. The argu-
ments are quite convincing. The land
boom, the high prices, the extension
of credits, the speculative fervor-
all the things that forerun the bust
up.
Although in a very small minority,
am venturing to defend the negative
OF this proposition. | do so for Sne
reason, namely, all the precedents
which are cited find no application,
for the simple reason that the pres
ent status of world economies is nm
precedented. If things were as thew
ordinarily are, then all signs would
prove true signs.
But things are absolutely the re-
verse of what they ordinarily are.
In times past the so-called panic has
been based on overproduction. The
worlds industrial machinery runs
along producing things until it pro-
duces an over-supply and it is no
longer possible to keep on produc-
ing at profit. Then everything
comes to a stop until the consump-
ton takes up the slack. When the
surplus is eaten up and people get
their confidence back and see more
profits ahead, business is resumed.
In the present condition of the
world, there is great scarcity, in
stead of a great over-production.
Thpfo Ic cooroi4xy oh
at home. There is scarcity of every
finished thing from food to tooth
picks.
On the other hand, there is a great
plenty of money and credit-the two
essentials to capital and industry. In
the past it has been possible to ''run
corner" on money. 1t was done by
the Morgan banks in 1907, when they
put out clearing house certificates in
place of money. Today there is
different banking system in the Unit
ed States. Under the Federal Re-
serve system, the merchants promis-
sorry note is discounted in the Fed
eral Reserve bank and turned into
greenback currency. Of course this
initiates currency and makes the dol
lar cheaper, but it makes it impossi-
bic to hoard money or to contract
the currency to the point of panic.
If currency panic started the Fed
eral Reserve printing presses would
start up and paper money would be
plentiful enough to wade in.
In the absence of the two elements
of the panic-overproduction and the
contracting money supply do not
see how it is possible to have a panic.
In the face of worldwide demand
for production, | do not believe it is
possible for labor to remani idle. In
the face of opportunities to make
profits ranging from to 5000 per
cent, | do not believe it is possible
for capital to keep out of the busi-
ness game.
All this is in part regretable. A
business slump would help to bring
down prices. A reduction in prices
would help the salaried person and
the person living on a fixed income
from invested capital. 1t would even
help the laboring man who gets moth
ing very much nowadays for his dol
lar. Prices have got to come down
or wages and salaries and interest
have got to go up. But this pro-
cess will have to be worked out prob
ably without a so-called panic. 1t
looks as if the world had lot of work
to be done at high prices. The peace
profiteer is getting his, and / am
afraid he will continue to get his until
a few riots put the fear of God into
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