Evening star., 1922-10-07


WELLESLEY HILLS, Mass. October
7.-Discussing the statement OF certain
bankers that the country is headed Tor
another period of imitation. Roger w.
Babson today issued the following state
ment, from his statistical offices at
Wellesley Hills:
For readers who are not bankers and
economists let me first explain In a
simple language what IS meant by IN
flation. Men who are acquainted with
the Babsonchart Of Business Condi-
| ttons know it is made up of two lines
first, a normal line, representing the
permanent growth Of the country which
looks like a simple uphill grade and a
second line which looks like the outline
of hills and valleys. This second line
represents temporary business condi-
tiOns. For a few years 1t is above the
normal line and then for q few years
1t is below the normal line. When the
two lines coincide, business is normal.
but when the second line is above the
normal line bankers say we are haying
imitation, while when this line is below
the normal line bankers say we are hav-
ing def1ation. Just now they say that
We are threatened with another period
of imitation.
1.-THE normal line Of business is de-
| termined by the honesty, intelligence,
! industry. and thrift Of the people. Com
pairing the health Of business with the
health Of a person, we would say that
the normal growth depends upon how
we behave and how We take care OF
| ourselves. The temporary business line,
however. is affected by stimuli the same
as our body. A stimulant may greatly
eXhilarate US. but we know the effect is
only temporary and the reaction after
| ward is very depressins-we feel much
IN fovy gCien.
tifc explanation of the common say
ing, i feel like the morning after. There
are several reasons why the bankers
may be right In saying that temporary
period Of imitation is at hand The
country during the past year has been
given three distinct stimulants. which
| should artiicially help business and
thereby cause imitation.
The first Of these stimulants was
the immigration law passed year ago
This is known as the 80 law, which
limits the emigration from any country
in one year to 80 Of the people now
here from that country. 1t is practically
a tariff on manual labor and on common
labor. II continued, 1t will cause
It is the reason why the United States
Steel Corporation and other concerns
are increasing the wages Of common
labor. II this law continues very much
longer 1t will cause an imitation in the
wages of common labor and thereby
Tho tariff bill, which was passed
last month, is a second cause Of in
fiation. Whether or not such tariff
Is good for tho country is political
question. and is not for me to dis
cuss, but all students are agreed
that it is largely q temporary stimu-
liant The tariff helps the manufac-
turer the same as the immigration
law helps the wage-worker. But
neither the tariff nor the immigra-
tion law increases production or
makes two blades Of grass grow
tariff will cause an increase in the
price of goods the same as the i'm
migration law will cause an increase
in wages. Increasing prices and in
creasing wages. however, do not
make the country any richer. The
| country becomes richer only as it
has more houses, more bushels, more
tons and more yards of goods. Mark
ing up the price of goods accom-
plishes nothing. With about thou
| sand dollars you can today buy a
! million German marks and become a
millionaire, but you are no richer
"The third event that will help
! bring on the imitation happened last
week when England gave in to Tur-
key. England has been the one great
country outside Of America which
has stood for law and order; for the
payment of debts and sound currency.
The lack Of France and Italy to back
up England on the Turkish matter
has shaken the confidence of the
world in Europe and European Sc
curities. Even some Englishmen
| themselves are saying, What's the
use? II no one will back us UP, we
had better let nature take its course
This means that Europe, instead of
checking it's bad leaders, has given
/ in to them. The Turkish victory is a
victory for the inf1ationists of Europe.
The backing down OF England is de-
| feat for the sound money interests Of
the world. This is bound to have an
! unfortunate effect in this country and
cause higher interest rates. The
cheaper interest rate period in which
we have been entering may tempo
rarily be checked, and even money
may be scarce for a short time As