The Raymer enterprise., 1923-08-09
WHO INFLATED
the CURRENCY?
George E. Roberts Gives Com.
mon Sense Explanation for
Currency Increase and
Decrease.
GOVERNMENT TOOK NO PART
Due to Changes In Supply. Demand
and Prices Of Commodities
Caused BY War-Fsdsral
Reserve Not to Blame.

and Prices Of commodltIss
Caused by War-Fsdsral
Reserve Not to Blame.
The mistaken notion that the cur.
fency IL inflated and debated BY the
government In the United States from
motives beyond the understanding OF
average people is effectually set at
rest by George e. Roberts, noted
banker and exponent Of sound money.
IN an article In the Journal OF the
American Bankers Association.
There has been imitation BY the
governments Of Germany and other
European countries, which have is
sued money for the purpose Of paying
their expenses" Mr.. Roberts says
"The United States Government has
done nothing Of this kind since the
Civil War.
There IL Z genuine need for elias.
ticity In the volume Of currency, and
for machinery to adjust II to the legit-
innate needs Of the country. The
means provided are the Federal Re.
serve Banks, authorised to issue cur
rency to their member banks. either
In payment Of deposits or for loans
sids.rracksd Like Freight Care
"More currency 10 needed In Sep
tember. October. November and D.
cember than in January and February.
As business slackens. currency nat
urally retires from circulation. Money
accumulates in the member banks
and they send II in to the Reserve
banks, which in effect retires It. -
freight cars are retired when traMc
falls Oh.
what caused the great imitation Of
credit and currency! It was due pri-
marily to the war. which made ex.
traordinary demands upon the indus.
tries and caused = great rise Of wages
and prices. II was inevitable that
more credit and money would be
called for to carry on business.
1.-THE boom year Of business that fol
lowed the .armistice was likewise ab.
normal. The end Of the war released
q great many demands that had been
held In check. The foreign demands
upon US at first increased. There was
a temporary stimulus. but the volume
Of business was abnormal and could
not be sustained. Agricultural pro
duction in Europe revived, the prices
of agricultural PRODUCTS moved back
toward normal, importations from the
United States fell of. prices declined,
. "dehation" began.
Some say imitation should not be
permitted but II war occurs imitation
IL unavoidable. Recruiting armies
makes a labor scarcity. Contractors
bid above going wages to attract men.
The war industries did the same and
the peace industries raised wages to
hold their men. Governments Of Eu.
rope sent representatives to this coun.
~ to buy food and they bid up prices
"a the grain exchanges. Higher levels
u wages and prices meant that more
oredit and money was required to
handle business.
More Business, More Money
"The increased issues Of currency
vas q result Of allowing business to
- ahead, upon the rising level Of
1ages and prices. When q factory
|ay.roll doubled, twice as much cur.
7sncy had to be furnished for It
1hen cotton rose from 10 cents q
ound to so and 40. more currency
"a required to handle the crop. and
all around the circle.
l.Deflation did not come BY an act
ne government or the Federal Re-
ve authorities In suddenly with.
1Swing money from circulation. De.
lion came naturally when business
OF and prices declined. Just a.
increasing volume Of business at
her prices called more currency
" use, so q decreasing volume Of
Illness at lower prices released cur.
kcy from use and caused Il to 70.
p to the Reserve banks.
There has been absolutely nothing
or strange In these price move.
hts related to the war. Imitation
denatlon have been just ~ al.
W when wars have occurred. The
~ new factor has been the popula-
That Is always being renewed,
most people do not learn By the
6perince Of others. When hard times
ne It Is always the thing to lay the
Iamed on somebody. and this time
~ Federal Reserve System has taken
1st Of It."