The Raymer enterprise., 1923-06-28
THE HIGH COST
OF CHEAP MONEY
Widows and Orphans Anon9
Chief Losers From Unsouf1d
Currency.
E-E aeGER CITES EXPERIENCE
SPECTATORS Rather Than inges-
tors and Producers Win From
Currency Depreciation.

soTsrnmsnt and the people OF the
United States from unsound money
experiments, from colonial timea
down, doubtless total more than our
staggering World War appr1yrla-
lions. IL Ia declared by r. T. Agger,
an authority on economies. In the
Journal OF the AmsriCan Bankers A.
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 Etoving that wii-
sws and orphans we're among the
chief sufferers
New generations Of adults, like
children, have to learn over ard over
again that. when playing With FIRE,
one runs the risk OF being burned"
Mr.. Aggsr says, "lndulging curren-
y herssies constitutes such an adult
playing with fire glance over our
own historical experience would dem
onstra,s 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 conaagra.
tion involved In 'soft,money' expert.
mentation are not the only ones hurt.
Indeed. they may e1tort an advan.
tage for themselves. But the record
Is all too clear concerning the mass
Of people. Heavy losses, injustice,
disorganized production and nurner.
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-
ciation IL threatened, because there 10
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
II paper money has been issued 1t
must be redeemed II a government
be unwilling to stoop to repudIaiion
II must raise much more In taxes 10
pay for the paper money than 1t re.
ceiyed at the time OF issue"
The total effect OF paper Issues In
increasing the cost Of the Civil War is
estimated at about $500. 900 900, Mr..
Agger says, continuing:
Much more serious than the costs
Of unsound currency to the govern.
ment are the heavy direct and ind!
rect costs imposed upon the people.
Our productive system Ii controlled
through prices. and the upset Of prices.
caused by a 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
hationary movement is a stimulation
Of speculation and over-inyestment Ii
some lines, with inadequate develop
ment In other lines. The period Of
speculation seems period OF prosper
fty. but how false and unsound Is such
prosperity Is disclosed In the stress
tnd agony Of the Inevitable period Of
liquidation which, Neme'is.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 ano.s
classes and individuals. Cheapening
money through indationary expedi
ents Is a gigantic fraud upon the cred
itor classes as against debtors. All
those dependent on fxed 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
at the expense Of the bondholder-a
fact which implies reward to the
more speculatively inclined at the OK
psnse Of the conservative.
Advancing prices cause discomfort
al =. IL utt