The Bingham County news. [volume] (Blackfoot, Idaho) 1918-1930, 1923-06-22
A GOOD way TO
UPSET PRICES
Further Exposures of How Edl-
son-Ford Money Plan Would
Fail to Aid Farmer.

The way the Edison-Ford "commot
fly money" scheme, aimed to STABILIZE
monetary values, would have exactl
the opposite effect, is discussed in tn
present article, which is the second Il
q series prepared by the American
Bankers Association, reviewing the 81
! posture of the weaknesses of the plal
as presented by William T. Foster, d.
rector of the Pollock Foundation TO
| Economic Research.
Briefly stated, the Edison-Ford plaI
provides for Government warehousinl
| Of basic commodities. against which
currency would be loaned to the pro
Queer without interest. up to half thu
average value Of the products for TIKI
previous twenty-five years. Th1l
currency would be cancelled as thu
commodities were withdrawn anf
passed into trade. On the other half o.
the value the producer would receive
"equity certificates" which he could
sell or use for bank loans. On these
points Mr.. Foster says:
UpsettIn0 Price Equilibrium
STEADY price levels depend mainly
on the balance between the volume
of goods on the market and the vol.
ume of money offered for goods.
The Edison plan is designed express.
" to upset the balance. A farmer de-
livers, say, two thousand bushels OF
wheat to the Government warehouse
and the Government delivers one
thousand dollars IN new money to the
farmer. When the farmer sells the
wheat he repays the loan and the Gov
eminent destroys the money. Thus
the volume Of money is increased
precisely when goods are stored; and
the volume Of money ia decreased pre-
cisely when these goods are marketed.
In other words, each transaction be-
gins by placing In circulation goods
without money to match the goods
Dollar demand Is created as the sup
ply Of goods Is withdrawn; the sup
ply Of goods Is created as dollar de-
mand Is withdrawn.
Would it enable tho farmer to Dor
row more money on his products
than he can now borrow? When Mr..
Edison contends that farmers would
obtain larger loans on their crops
than they can now obtain from banks,
he is confronted by this dilemma:
Either the banks are now refusing
to make sound loans, or, under the
Edison plan, the Government would
make unsound loans.
Neither Mr.. Edison nor Mr.. Ford
can consistently contend that banks
now refuse to make sound loans, for
that Is the way banks make most OF
their profits, and Mr.. Edison and Mr..
Ford have no doubt that banks are
conducted for profit. 1t follows that
the plan would yield larger loans to
farmers only If the Government met
the risks of unsound banking. In that
case all that insolvent borrowers
Kained would be paid by the rest OF
the population, which, to say the least,
ID not fair deal.
Cutting Down Farm Credit
Apparently, however, the Govern
ment is not expected to run many |
risks, for the farmer is allowed to
borrow an amount no greater than
one-half the average value Of his
product for the previous twenty-five
years. But prices have risen so high
,ince 1896 that the farmer could Dor
.ow on most products much less than
,alf the present value Of the products.
L would be much less, therefore,
han the farmer could borrow directly
rom the banks on graded products;
IN products not graded no Govern
nent loans would be made, for there
would be no way Of determining the
price average.
However, the farmer, having OBJ
aimed the stipulated Government
oan on his goods, could then offer his
ouity certificate to bank for an ad-
Iitional loan. But the equity certih-
ate is virtually second mortgage,
nd no bank would prefer a second
Mortgage to a first mortgage.
Suppose the Old National Bank
vas willing to lend a farmer eight I
undred dollars on one thousand
usheIs of wheat Suppose, however,
he farmer deposited the wheat IN
'ederal warehouse and obtained five .
undred dollars from the Government
the bank would not lend
be farmer three hundred dollars on ,
he equity certificate. The protec-
lon of the bank would be greater II
be farmer relied on the bank for the
nitro loan; for in that case the bank {
ould realize on its security without :
cling obliged to pay Eve hundred dol
.rs to get the wheat out OF Govern
tent storage. The farmer can now
orrow moro money from . bank on
farm products than
nder tho Edison plan"