The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1921-12-04
Caught In Financial Bog,

the participation OF the bank con-
sortium in the scheme"
Caught In Financial Bog,
Mr.. II. G. Wells in his article
dealing with the armament confer
ence sketches a gloomy picture of
Europe and most of the rest of the
world. Even America he sees af-
fected by the general decline of
civilization unless steps are taken
soon, with the United States lead
ing the way. toward a general CO.
operation for the reconstruction of
Humanity and human institutions.
But Mr.. Wells is not alone in his
pessimistic vision or in his demand
for speedy action to save the world
situation. Not only statesmen, but,
more particularly. thoughtful econ
omists and financiers see a danger
Gus state of things into which the
world is slipping. and are calling
for or suggesting methods of cure
Students of the worlds present
ailments are coming more and mora
to the view that the monetary sit
uation is very largely at the seat
of the trouble. In other words, thew
uation in many countries shows i'm
provement or possibility OF i'm
provement, the situation. with re-
gard to finance and currency. is bad
and continues to grow worse. Money
Is an artificial creation, but its
power in human affairs, for good
or evil, is none the less real because.
of that fact. Our whole business
nd aN-
upon the basis Of a sound medium
of exchange. The economic rela-
tionship between countries has be-
come so close that the business
welfare, and. indeed, the material
welfare. Of practically all countries
Is found to depend upon the sound
ness Of the currency of all the prin-
cipal commercial nations. It fol-
lows. then. that a violent disturb
ance OF the currency of a consider
able proportion of the important
nations is injurious to the welfare
of all nations. The nations which
have kept their currency sound
in which class the United States is
almost solitary-and the nations
which have relatively prevented in
fation. such as Great Britain, Hol-
are not free. in spite of their wise
behavior, from the Ills brought on
by the actions of other less wise or
less fortunate nations The insane
currencies of Poland. Austria, Rus
STA, Germany and others. as well as
the less extreme but nevertheless
hlgnly abnormal currencies Of
France and Italy. cause general dis
IN h.
duction and industrial life OF the
world. The depreciation of the
currencics of so many countries.
with further depreciation continu-
ally going on through the uninter-
rupted use Of the government print
ing press. has converted business
into a gamble. and has unjustly af-
fected the economic life of countries
which. were 1t not for such a cur
rency situation. might be found on
the road to after-war recovery.
Imitation Must Cease.
To stop the continued imitation of
currencies. the thesis continues. is
one necessary factor of the way out
or the financial bog. This. of course.
requires the balancing of the bud
gets OF the offending nations. Tax
alton equal to expenditure must
necessarily be put in effect. The
continued issue OF more paper cur
rencv is really form of taxation.
but a very vicious form. Neyerthe-
less, some countries find It difficult,
II not impossible, to operate on the
normal basis of collecting, through
taxation of the usual sort, sufficient
money to equal their expenditures.
They have to consider the psychol-
ogy OF their peoples and, on that
account, or for lack of courage |
those in power take the risk NJ
complete ruin of their CURRENCY
with consequent relapse into barter
such as now obtains in Russi.
which would be a return to a yerv
primitive condition, from an eco
nomic point Of view.
The Injurious effect Of Initiation ..
well recognized by the pres. ~
Europe as reflected in the WRITINGS
IN many OF the leading publications
me financial situation was recent
~ discussed by Professor Ernest
Cassel or sweden. Professor CasseI
ure" up the report on the curren-
cy problem for the Brussels inan-
cial conference and has now. ar tha
invitation or the league of nations
written a Second Memorandum on
the Worlds Monetary Problems"
Professor Cassel's survey of The |
present situation was ,renroduced
In the Basler Nachricbten Tbis
article Is reproduced in the Economic
Review Of London. Professor CAS-
sci states that the Initiation N
which most attention was directed |
at the Brussels financial con,sr-
ence has been followed, in coun-
tries better circumstanced finan-
cially, by a deflation which has
considerably reduced the general
level OF prices. He then proceeds
TO show that too rapid defIation
may be injurious as well as infla-
ton, saying:
This policy of deflation, even ~
II was at the commencement in :.
measure justified. has shown IN -
increasing extent injurious results
The prospect OF continually faIIing
prices has crippled production
especially in those domains where
the fruits of productive labor r;nsn
slowly The uncertainty In ~.
international exchange rates has
exerted a specially disturbing in
fluence on the trade between the
various countries - Interna-
uonal trade can adapt itself to anv
La n