The Rock Island Argus and daily union. (Rock Island, Ill.) 1920-1923, 1922-07-07
Frederick Haskin's Letter
MAKING BAD MONEY B00Ms

brought to terms. II these specu.
lators In necessities could borrow
no more money they would have To
0ell their food It reduced prices
This resulted and It constituted he
first successful step taken by apy
governmental agency to reduce The
cost Of living.
But the time had come for q r.
action. The Japanese silk market
collapsed and the beginning Of De.
preston extended to this country
A Philadelphia and New York mer.
chant. foreseeing a price recession,
overnight reduced every article IN
his stores 20 per cent. The buyers
strike spread and the overall move
ment came into evidence, people
wearing overalls In preference to
paying the high clothing prices.
1t was inevitable that all prices
should fall speedily. This includ-
ed food prices. As the summer
wore on food products became
cheaper and cheaper.
Reserves Were Threatened,
Food comes from the farms. II
takes year to make a crop. When
the farmers had bought their seed
and hired their planting and cult
waiting labor. the high prices were
still prevailing. When the time
came for them to sell their CROPS.
the prices had been cut in two.
They sought to borrow money at
the banks to enable them to hold
their crops in the hope Of another
rise in the price. The banks extend
ed credit up to the point where re-
serve requirements were threat
ened. Then a halt was called.
To go beyond this reserve re-
quirement by lending more money
to farmers and others-for business
generally also was demanding
loans-would mean to take the
American currency OF a gold basis.
The reserve board had before 1t the
spectacle OF the German and Polish
masks and the Russian rubles, as
we'll as other foreign currencies.
They saw what happened in those
countries when the gold basis was
lost by the issuance of currency
beyond the reserve requirements
and decided that it would be better
for the United States to draw In
its belt for a few months than to
put the dollar in the same class
with the mark and the ruble. Re-
serve requirements were not sus-
pended, although money was lent
right up to the point where further
loans would have meant suspen-
sion.
| Hundreds of millions Of dollars
we're sent out Of Wall street to be
lent to western farmers and bus
mess men. Credits were extended
as far as there was real credit to
extend, but the end came. There
was no more credit, no more mon
ey. Farmers and others had in
their possession more borrowed
money than ever before in the his
tory Of the country.
| This raised the storm. The farm.
ers said they should have more
credit at any cost. It was said that
they were willing to have the DOL
lar enter the mark and ruble class.
The federal reserve board stood By
the gold standard and insisted Il
, should be maintained inviolats
The result was the formation O
the agricultural bloc in congress
a group Of men determined Y
change the law regarding fam
credits and other farm matters.
/ The country's belt is still draw
tight, but it is loosening and b.
ing gradually filled out to its form
er proportions. Also the gol
standard still stands. The va.
volume Of loans is being paid bac
steadily and the national currMc
has a strong gold backing.
But now has come the expiratio
. iof Governor Harding's term. tn
farmers are determined that b
!. shall not be given a chanos ;
handle the situation again as b
did during the depression. Bank
ers and other business me
throughout the country, who desir
protection Of the gold standard, ar
equally solicitous that he renal
, in office The decision is up to th
, president.