Shenandoah herald. [volume] (Woodstock, Va.) 1865-1974, 1920-01-09
WORKING AND SAVING
WILL REDUCE PRICES
Governor Of Federal Reserve Board
Tells How Living Expenses May Be
Cut Down.-Why Everything Went
Up.

What is the best way to reduce the
high cost of living?
Work and save" is the answer CIV
en- by the Federal Reserve Board in a
letter written by its governor, W. P.
G. Harding, to the Banking Commit
tee of the United States senate. The
committee had under consideration the
proposal to reduce the volume of
money in circulation. Governor Hard
ing opposes this plan, holding that it
will not afford the relief expected.
The Federal Reserve Board be-
neves" says Governor Harding in his
letter. that any currency legislation
at this time is unnecessary and unde-
sirable and would suggest that wheth-
er viewed from an economic or tin2n-
cial standpoint, the remedy for the
present situation is the same, namely,
to work and to save; to work regular
ly and efficiently in order to produce
and distribute the largest possible
volume of commodities, and to exer-
else reasonable economies in order
that money, goods and services may
be devoted primarily to the Hquida-
ton OF debt and to the satisfaction to
the demand for necessities, rather
than to indulgence in extravagances
or the gra LITIGATION Of the desire for
luxuries"
During the last two years there has
undoubtedly taken place certain
amount Of credit expansion, Governor
Harding shows, and this in the cir
cumstances connected with the financ.
Ing Of the war was inevitable But II
Will be corrected as the securities
issued by the government for war
purposes are gradually absorbed by in
vestors. This expansion Of credit is
equal to the difference. Governor
Harding says, between the total war
expenditures Of the government and
the total amounts raised by the gov
eminent through the medium OF taxa.
ton and from the sale OF its bonds
were paid for out OF the savings OF
the people He does not believe that
any reliable estimate OF this differ
ence can be made. but he is positive
that, whatever 1t Is, it will be grad
ually absorbed through future savings
for the reason that banks are lending
and may always be expected to lend
freely on the government bonds de-
posted as collateral.
The principal cause Of price I'D.
vanees just before and during the per
fcd Of the war was the need Of the
governments Of the allied nations for
all E.7Hs Of commodities and for i'm
med ste delivery In large volume, and
the competition OF this buying by
governments with purchases by pri-
vate individuals who failed to contract
their expenditures at rate common
surate with the growing expenditures
OF these governments"
One of the features of the postwar
period. through which the nation is
now passing and which has been
marked by rising prices, is the gen
eral relaxation Of wartime practice Of
personal o2omy. This has resulted
in an increased demand for food and
clothing and other commodities by
many persons who during the wa,
practiced a more or less rigid econ
omy in their personal purchases Also,
It must be borne in mind that they
are not only buying at market prices
but are buying In competition with
the export demand. In addition. largo
ly increased wages and incomes dur.
ing the last Ave years have developed
. demand for many commodities which
are not Of real necessity. This nat
rrally has diverted labor and raw and
manufactured materials from essen
tails to non-essentials, contributing no
small part to the trend OF increasing
costs.