The New York herald., 1922-01-14


India, Java. England. France. Italy.
the whole of Europe. South America,
Canada and the United States. 1t
embraced all countries and all in
dustries. though not to the same ex-
tent or in the same way.
'As the failing purchasingpower OF
the world began to make itself felt
in the lessening of export demand for
farm products the prices or agri-
cultural products began to decline.
As prices of agricultural products
declined the purchasing power of the
sCricultural population. representing
nearly 40 per cent. Of the total pur-
chasing power of the country. began
TO diminish. As the purchasing
power of the American farmer di-
minished. the production of indus
tries that produced the commodities
of commerce began to decline. and
unemployment. resulting in diminish
ing consumption. gave further inn
Dulse to the avalanche of prices.
"The council is In fullest accord with this
striking analysis Of the situation by the
Joint Commission of Agricultural In
quiry. and without quoting further from
this very excellent report wishes to en-
phasize the fact that the suffering of
the farmer has been peculiarly acute
OecduSt, Wnlie idctOTitS ana I1iIleS can
be shut down and the output reduced,
voluntary curtailment of production. al
ready begun, is well nigh impossible for
the millions Of the individual farmers
scattered all over the world. Unless
nature intervenes or the funds give out
new crop will be made irrespective Of
whether or not the previous one has been
marketed
1T is significant that when prices
rose. apparently without end, It was the
consumer who suffered and threatened
TO investigate the Federal Reserve Sys-
tenn. In fact, the Senate on May IT,
1920. passed a resolution asking the
Federal Reserve Board what steps II
was taking or proposing to meet the then
existing imitation and consequent high
prices When prices finally fell toward
their prewar levels it was the producer
who groaned and blamed the system.
Similar freaks of mass psychology could
be observed in other&ccuntries where
people attributed the Inevitable results
Of an economic law to alleged mishan-
ding of banking credits. But 1t was not
discount rates that were determining the
ultimate courses and levels of commod-
ity prices in this or any country. World
central banks In general or the Federal
Reserve Board in particular, were at
play.
ITO tamper with the natural laws OF
demand and supply has proven a costly
and sometimes fatal experiment for
many a Government which attempted
to 'valorize' its staples. If Congress
wished the country to indulge in such a
scheme it should have taken the respon-
sibility of enacting legislation to that
effect. BY no stretch of imagination,
however. could the Federal reserve
banks be assumed to have been created
to exercise functions of this character.
1.-THE world is not suffering to-day be-
cause of high money rates. but because
OF the crippling of it's power Of con-
sumption. 1t Is because hundreds OF
millions Of people. individually and coll
lectively, have lost their prewar pur-
chasing power that the commodities
cannot find their markets. Better mar
kets for our products will be found. and
the lower standards of living abroad will
cease to menace American standards
when the world. over wasteful Govern
ment expenditures for armaments are
cut down. budget balances and practi-
cal methods found to establish actual
economic peace and order in Europe. In
that direction you, Mr.. President. have
inaugurated a most auspcious move
ment for which the world will ever owe
you debt Of gratitude. II is by aiding
your noble efforts toward that end that
Congress will bring genuine relief to
Americas agriculture rather than by
putting farmer on the Federal Reserve
Board. In fact. the council finds 1t diff-
cult to summarize the whole situation in
any more striking manner than to quote
FRI adn1irahfo statement.
which has been acclaimed throughout
the country. in which you said
''The slump which Is now upon us
Is an inevitable part of wars after
math. 1t has followed in the wake