The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1921-12-10
The Cause of the Worlds Business
Depression.
Manufacturers Record).
Gnstav-Cassel has be


Professor Gustav Cassel has been
described by Lloyd George as one
Of the most brilliant Of living eco
nomists, and it is we'll known that
his views are always given deep
consideration by the British and
other governments. Professor Cas-
sci was invited by the League Of
Nations to prepare a memorandum
on the financial condition Of the
world for the use Of the information
al conference at Brussels. In view
OF the changes in world affairs
since that time, Professor Cassel
was recently invited by the assem-
bly, of the League of Nations to sub
NIT a second memorandum. He
has done so, and the publication of
it has occasioned profound SEN
sation in Europe 1t is believed to
have Influenced materially
change in the British financial pol
icy, and by some is thought TO have
been decisive factor in inducing
| the Harding admin lstrltion to have
the Federal Reserve Board reverse
it's extreme liquidation policy and
announce lower rediscount rates.
/ Professor Cassel denounces dras-
tic defation, which he declares was
deliberately brought about by fin
ancial leaders, to increase the val
ue of money; he charges that the
policy is responsible, in great meas
ure. for unemployment and world
trade stagnation, and he reaches
conclusions in complete agreement
with the position which has been
taken by this newspaper in it's long
fight against the ruinous and de-
structive activity of the Federal Re-
serve Board 1t is supreme vim
dication of the Manufacturers Rec
ord by one Of the foremost of liv
| ing economists, and is corre-
spondingly authoritative criticism of
Governor Harding and those Of his
associates who have co-operated
with him in his dchation campaign.
Professor Cassel, who holds the
chair Of economics at the Univer-
sity at Stockholm, declares that the
policy of dehation adopted in the
United States undoubtedly drove
other countries to follow its exam
pie. Indeed every position taken
by the Manufacturers Record since
/ 1917, when it warned this country
that if drastic def1ation was under
taken at the close of the war it
would result in business chaos,
along which line we have unceas-
ingly fought ever since, is over
whelmingly sustained by Professor
Cassel, q vindication rarely ever
received by any paper in the world
most single handed fight-against
the financial powers Of the country.
We can offer to our readers moth
ing more important than the fol-
| lowing extracts from an elaborate
report to the League Of Nations
made by Prof. Gustav Cassel of
Sweden. at the Leagues request, on
world financial matters. Prof. Cas-
sci said;
The downward movement Of
!. prices has not, as is sometimes as
sumed, been merely q spontaneous
! result Of forces beyond our control.
1t is essentially the result of poll
icy deliberately framed with view
to bringing down prices and giving
a higher value to the monetary
unit. This policy Of dehation has
its root in the popular idea that
prewar price-levels are still to be
regarded as normal" and that
stable economic conditions can be
attained only by bringing prices
down to the old levels. In most
countries in spite Of the enormous
fail of prices that has already TAX
en- place. we are still far from this
end, and there is consequently
plenty of room for continued
policy Of dehation on such grounds.
"A prolonged fall of prices must
necessarily have an extremely dis
turbing effect on production and
trade, and it is this consequence
Of policy Of oeHation which has
manifested itself most clearly dur
ing che last twelve months.
"A year ago the productive ca
pacity Of the world was fairly we'll
occupied. and labor, on the whole.
found fairly sufficient employment.
In this respect conditions are now,
as everybody knows. very different
The worlds work has been brought
to standstill to degree that we
have never witnessed before. and
unemployment has risen to alarm
ing figures, particularly in countries
where the policy OF defation has
been applied most severely.
ut is only natural that our at
tention should now be directed
primarily to the situation created
by this development. and that a
critical examination Of the whole
policy of deAation should occupy
the foreground in any discussion of
the monetary problem at the pres
ent time 1t is, indeed, Of the high
est importance that the aims Of this
polic5- should be reconsidered, and
that the effects Of it. as far as they
have shown themselves hitherto,
should be brought into the clear
est light.
THE United States have. by this
violent reduction Of prices. prob
ably brought themselves nearer to
the rre-war price-level than any
other country. This achievement
has undoubtedly been the result Of
q more deliberate and consistent
policy Of defation than has been
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