Pine Bluff daily graphic., 1920-09-12
[ato, Robert |. Owen Scores
 Federal Reserue Defation Policy


 then compeis the retirement of de- posit. This has taken place on a rge scale rerently. Many banks show a serious loss in deposits be- cause of the action of their own bank or of other banks in dcflating credits. The transaction is simple. There is no sense whatever in re- tiring credits which are employed in production and distribution process es. This is to check husiness and to stop these processes just to the extent such a policy is carried out.
 The banks are thoroughly justi- fled in giving preference to those en- gagged in production over these en- gagged in mere speculation, but there is no justification whatever i'll deny ing the productive processes the cred it essential to carry on the business of the country. To do this necessar- ily brings on an industrial depres- sion. If this is being done with a design of stopping the business en- tcrprises of the country and making labor walk the streets unemployed, as a means of teaching labor les son. it may carry mischievous con- seouences of a still more serious character. It is of urgent importance that all the people of the United States should consequently be em- ployed and to cause men to be thrown out of employment as means of improving the conditions of the country is not wise remedy for the abuses which may be charged against la Dor in exacting too high rates for service rendered it. There are oth- CT remedies, which do not lie in the hands of the Federal Reserve Board.
 Deflation.
 Deflation carries with 1t the inn plication that there is an imitation of credit. This implication is false.
 Initiation means the extension of credit which is unsound. The exten- sicn of credit for production and dis tribution to the extent of the busi- ness requirements of the country is not unsound, and the premise upon which the theory of deflation is plac- ed being false, the conclusion ex- pressed in the word deflation must fall.
 It is true that the United States expanded its credit for war-making purposes to the extent of billions, but it was not subject to reproach. It was justified expansion, and these credits extended to the government by individuals for the purpose of preserving the life of the nation can not be treated as inflated credits de- serving deflation. To dcflate the cred it extended to the government by the individual can only be properly ac- complished by payment of the debt and this payment is more advantage ously extended over many years time than to demand immediate liq- uidation. To deflate the credits ex- tended to the government by the in- dividual means that the individual should demand of the government immediate payment, and this is not the contract Moreover, to discredit I the government bonds by using a government instrumentality such as the Federal Reserve Board is to do great wrong to patriotic citizens who extended these credits. These bonds have been brought down from par 10 or 15 per cent by the unwise policy of raising the rates of inter- est broadly under this policy of the Board. I think, therefore, that ihe policy of defiation is based on a false conception and is already hav- ing effect so harmful tha. any citi- zen of average intelligence can clearly perceive. .- Manufacturers Record.