The Glenwood post., 1923-06-21
The HIGH COST
OF CHEAP MONEY
Widows and Orphans Among
Chief Losers From Unsound
Currency.
e. AGGER CITES EXPERIENCE
Spectators Rather Than Inves-
tors and Producers Win From
Currency Depreciation.

The losses and costs borne by the
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-
tions, it is declared by E. L. Agger,
an authority on economics, in the
Journal of the American Bankers AS
sociation. 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
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-fire. 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
ing to kindle the kind of conf1agra-
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 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 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 If government
be unwilling to stoop to Reputation
it must raise much more in taxes tc
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 S6OO,OOO,OOO, Mr
Agger says, continuing:
Much more serious than the costs
of unsound currency to the govern
ment are the heavy direct and inIl
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 harmonizine
of the different lines of production
Price changes are not instantaneously
or uniformly effected throughout the
whole system. The result of an in
fiationary movement is stimulation
of speculation and over-investment il
some lines. with adequate 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, Neme.is-like, fol
lows on the heels of the boom"
Wealth Unfairly Rs-distributed
Mr.. Agger then describes the dis
tressng effects of an unsound money
on the distribution OF wealth among
classes and individuals. Cheapeninl
money through inhationary expedi