The Lee County journal. (Leesburg, Ga.) 1904-19??, 1923-06-15
TIVE HIGH COST
OF CHEAP MONEY
Widows and Orphans Among
Chief Losers From UnSound
Currency.
{. {. AGGER CITES EXPERIENCE
Spectators Rather Than Inyes-
tors and Producers Win From
Currency Depreciation.

government and the people Of the
United States from unsound money
experiments, from colonial times
down, doubtless total more than our
staggering World War appropria-
lions, il Is declared by Il. 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
torlcal experience showing that wild
ows 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-fre. A glance over our
own historical experience would dem
onstrate this to the most ardent easy
money advocate, but such advocates
are usually those to whom history is
bunk.
Soft Money Advocates Seek Profit
Unfortunately those who are will
frer 20 Il he l. Of
ton involved in 'soft-money' expert
mentation are not the only ones hurt
Indeed, they may extort an advan-
tage for themselves. But the record
is all too clear concerning the mass
of people. Heavy losses, injustice,
disorganized production and numer-
Gus other evils are inevitable.
"Unsound money projects impose
heavy costs on the government itself.
The first effect Of cheap money is to
raise prices. Mounting prices mean
that, to meet it's 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 is
danger of agitation toward the pay
ment of government obligations in the
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
indulgences Of the unsound currency
days leave further costs to be met.
If paper money has been issued it
must be redeemed. II a government
be unwilling to stoop to reputation
it must raise much more in taxes to
pay for the paper money than it re-
ceived at the time Of ISSUE"
The total effect of paper issues in
increasing the cost Of the Civil War is
estimated at about $60O,0O0O00, Mr.
Agger says, continuing:
Much more serious than the costs
of unsound currency to the govern
ment are the heavy direct and indi
rect costs imposed upon the people
Our productive system is controlled
through prices, and the upset of prices,
caused by depreciating currency, in
terferes with the proper harmonizing
of the different lines of production.
Price changes are not instantaneously
or uniformly effected throughout the
whole system. The result of an in
stationary movement is a stimulation
of speculation and over-investment in
some lines, with inadequate develop
ment in other lines. The period OF
speculation seems a period of prosper
ity, but how false and unsound is such
prosperity is disclosed in the stress
and agony of the inevitable period of
liquidation which, Nemesis-like, fol-
lows on the heels OF the BOOM"
Wealth Unfairly Re-dlstrbuted
Mr.. Agger then describes "the dis
tressing effects OF an unsound money
on the distribution of wealth among
classes and individuals Cheapening
money through inflationary expedi-
ents is a gigantic fraud upon the cred
itor classes as against debtors. All
those dependent on fixed incomes, or
receiving specified sums in terms Of
money, are penalized when the pur-
chasing power of money is depressed.
In like manner the stakeholder profits
st the expense of the bondholder-a
fact which implies reward 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 undermines
and weakens habits of thrift. A cor
rosion of the moral integrity of the
people is inevitable Dishonesty is
stimulated and desire TO gain by
speculation rather than to earn live
lihood by productive and useful labor
causes a marked deterioration in pop
alar habits and character"