, 1923-07-04
The HIGH COST
OF CHEAP MONEY,
Widows and Orphans Among
Chief Losers From Uns0und
Currency.
e. E. AGGER CITES EXPERIENCE
Spectators Rather Than lnves-
tors and Producers Win From
Currency Depreciation.
E. AGGER CITES EXPERIENCE

government n the people of the
United States from unsound money
experiments, from colonial times
down, doubtless total more thar our
staggering World War %appropria-
lions, it is declared by E. E. Agger,
an authority on economics, in the
Journal of the American Bankers AS
ISOLATION. Cheap money" he says,
is very costly. since frenzied finance,
speculation and business disaster
have invariably followed in the wake
Of unsound currency. He cites his
torical experience showing that Wild
W and orphans were among the
chief sufferers.
New generations Of adults, like
children, have to learn over and over
again that, when playing with fire,
one runs the risk of being burned"
Mr.. Agger says. "Indulging curren-
cy heresies constitutes such an adult
playing-with-dre A glance over our
" historical experience would DEM
onstFate this to the most ardent easy
money advocate, but such advocates
arr usually those to whom history u
bunk
seft Money Advocates Seek Prom
Unfortunately those Who are WILL
ing to kindle the kind of connagra-
ton involved In 'soft-money' expert
m%entation are not the only ones hurt.
vnAAoA thAO ma. n.Ao- -. 49,
tage for themselves. But the record
10 all too clear concerning the mass
of people. Heavy losses. injustice.
disorganized production and numer-
BUS other evils are inevitable.
"Unsound money projects impose
heavy costs on the government itself.
The first effect of cheap money is 10
raise prices. Mounting prices mean
that. to meet Its needs. the govern
ment must appropriate always larger
sums. Again. dallying with unsound
money weakens the governments
credit. Prospective bond buyers be.
come hesitant when currency depre-
citation is threatened, because there II
danger Of agitation toward the pay
ment of government obligations in tn.
cheaper money rather than In specie.
Any such weakening Of government
credit means lower prices received for
bonds. consequently greater burdens
on the Treasury. Assuming that. in
the end. sound principles triumph, the
i~ndulgences of the unsound currency
days leave further costs to be met.
II paper money has been issued II
must be redeemed. II q government
be unwilling to stoop to reputation
1t must raise much more In taxes to
pay for the paper money than 1t 70
ceived At the time Of ISSUE"
The total effect Of paper issues IN
Increasing the cost Of the Civil War ID
estimated at about $500 .000. 900. Mr.
Agger says. continuing:
Much more serious than the costs
Of unsound currency to the govern
mont are the heavy direct and indt
rect costs imposed upon the people
Our productive system Is controlled
through prices. and the upset Of prices,
caused by q ~depreciating currency, in,
terferes with the proper harmonixins
OF the different lines Of production.
Price changes are not instantaneously
or uniformly effected throughout the
whole system. The result of an In.
~iationary movement is a stimulation
OF speculation and over-investment In
some lines. with inadequate develop
ment in other lines. The period OF
speculation seems period Of prosper
ity. but how false and unsound is such
prosperity Is disclosed in the stress
n agony of the inevitable period OF
liquidation which. Nemesis-like, fol
lows on the heels of the boom"
Wealth Unfairly Re-distributed
Mr.. Agger then describes "the dis.
tressing effects of an unsound money
on the distribution of wealth amona
classes and individuals. C~heapenina
money through inhationary expedi
ents is a gigantic fraud upon the cred
itor classes as against debtors. All
those dependent on fixed Incomes, OF
receiving specified sums In terms OF
money, are penalized when the pur.
chasing power of money is depressed
In Ike manner the stockholder profits
at the expense of the bondholder-a
fact which implies a eward to the
more speculatively inclined at the ex.
pense OF the conservative.
advancing prices cause discomfort
and give rise to agitation and unrest
among those whose incomes cannot
promptly be adjusted to meet higher
living costs. Strikes are fomented
and production is curtailed. Every.
body shares In these burdens. Lack
OF stability In money also undermined
and weakens habits of thrift. A cor
rosion OF the moral integrity Of the
people Is inevitable. Dishonesty is