The mirror., 1923-12-06
Vol. XXXVII: No. 19

PIeCeuihS year OF l9LZ or 44S5 5,OO0,OVV.
This must be the inevitable result when
we compete with our high cost merchan-
disc against the cheap goods and cheap
labor of Europe. And with normal con-
ditions on the continent our trade position
will rapidly change from that of cred
itor nation to one of debtors position.
A treatise of this sort would not be
complete without some comment on our
banks and their condition as they are
most essential part of our economic plan.
Their chief representatives are, as we all
know, the Federal Reserve Banks which
were epical in their establishment and are
of predominating influence and responsible
ity in their field. and one of the most i'm
portant achievements in our country's f.
nancial history. Established about ten years
ago after most careful study of all the
banking systems of the civilized world,
their advent into the financial field had
hardly been accomplished when they were
confronted with two of the greatest prob
lens of present day history: five years of
world war with its accompanying inHa-
ton, followed BY as we might say, FIVE
years of peace with the resultant deAation
Judging by the comment being passed
upon it, its policies since the termination
of the World War have not meet with
general approval. The main contention of
its critics are that by advancing the re-
discount rates during the early part Of
1920 i brought about an unwarranted,
drastic and ruinous decline in commodity
rates, bringing with it business unsettle-
ment throughout the land and particulars
and unnecessary hardship in the agricult-
ural regions. If the facts are considered
with care and without prejudice it will
be found that the greater part of these
charges are without foundation. By taking
advantage of the popular desire or fashion
to fix the blame for an unfortunate act
or condition upon some person or group,
certain elements in our national makeup
have to measure succeeded in electing
the Reserve system as the Escape goat for
the financial ills of their following. Little
consideration is apparently given to the
fact that the cessation of the World War
caused an abrupt decrease in the demand
for commodities that had risen in price to
an average of LAT per cent above normal.
With such tremendous elimination Of
buyers there was only one way for prices
in general to go and that was-down. The
law of supply and demand and that of
diminishing utility would have brought
about dehation of their own accord and
in perhaps more disorderly manner if
the Reserve System had never existed.
But popular opinion will have its way
and the Federal Reserve Act has been the
subject of some tinkering and lately a
"dirt farmer" has been added to the board.
If he understands finance and remembers
he is to represent the country's interest as
whole, instead of some particular faction,
increased faith and confidence should re-
suit and much unjust criticism of the
Boards acts and policies in the future be
avoided.
1t should always be bourne in mind,
however, that agriculture or food produc-
ton is the paramount basic industry of all
humanity, supplying as it does the vital
necessities of life, it is also the source Of
all economic existence. Too much con-
sideration cannot be given to the part the
farmer plays not only in (Paes 4, Ool ~