Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1920-07-01
CHEAP CREDIT NOT
PRICE REDUCER
AS MEANS OF LOWERING LlV-
ING COSTS is COMPLETE
FAILURE SAYS BANKER.
PRODUCTION HAS NOT
RESPONDED THERETO
Increased Competition For Labor and
Higher Prices Have Been Only Re-
sults-Graduai Increase in Produc-
ton and Lowering Of Costs to Be
Expected With Higher Credit.
Special to Times Republican.


Des Moines, July 1.-Credit and
credit expansion constitutes the big
gest problem that confronts the
world of business today in tho
opinion of Arthur Reynolds, former
lowan. now vice president of the
Continental and Commercial Nation
al Bank of Chicago, who has been
in Des Moines the past few days at !
tending the Iowa bankers convention
In Il statement given out here he
analyses present business conditions
and declares we are not apt to have
panic but are merely in a slowing
down process, or an Intern ediate
stage in a hong series of years OF
great activity in the world which,
started with the recovery from the
hrst shock OF the war, continued
with slight hesitation only, down
thru the months following the war
and, as economists claim. is more
than likely to last for some yeais
yet
4
The surrender to the belief that
the continuation of cheap credit
after the war would stimulate pro-
duction ard thus assist In bMngius
about reduction. III the high cost Of
living was a big mistake he be-
lievcs.
The cheap credit policy as q
means of stimulating production and
lowering the price level has been q
| complete failure he said. ''Fifteer
months after the armistice the loans
OF the reserve banks were 100000
900 more than In the preceding veal
and upon the basis. of these enlarged
reserves The. commercial banks has
| expanded their credits to severa
times that amount. The treasury
continued to place certificates at Tow
rates for more than year and thu
ease with which money was obtain
able contributed to Fundamental ex.
travaga nce and all the machinery 81
war, except troops was maintained
The railroads continued to be run al
a loss. The fcry for a bonus tte
soldiers wns raised and production
was not increased.
Cheap Credit an illusion.
Suddenly we find that chear
credit is an illusion and we proceed
to make credit dear. The reserve
| banks rates are increased and ther
increased again and they may be in.
creased again. Sliding scales are
adopted In some cases to penaliz'
! heavy borrowers"
He declared that the reason cheal
credit failed as the stimulant t.
production is obvious.
when every one who is willing t,
| work is already employed. whe'
short hours are curtailng output ant
increasing the demand for labor, adj
/, 6itional credit serves only to inten
sify competition for goods and labor
enhancing the price of both he said
4 1.-The increase in prices and the hgf
cost OF livingis not the result OF tn
scarcity Of goods alone. That ha'
been the chief factor, providing thu
basis for an Unsuitable demand. I
became available as result OF thu
cheap credit policy of the govern
ment."
He believes. now that credit is M
longer cheap. a gradual increase II
production I.lay be hoped for. HI
believes also that the labor situation
! will eventually right itself but wnel
no man knows.
THE essential and first point II
the settlement of the labor problem
is a clear understanding by all tina
in most establishments the only pos
/ sible source of a permanent increas'
! in wages or profits must come from
i an added value to the product rela
tire to the capital and labor expend
/, ed and in the end. neither wages o.
| Profits can be increased at the heX.
pense of the oher Any attempt X
shift the burden of added wages OF
profits to the consuming public i
lapt to defeat itself quickly by les
SEEMING the demand. And if this does
not happen We must remember thai
the great mass of consumers are also
workmen so that the burden in the
case is merely shifted from one sci
Of workers to another"