The Filer record. (Filer, Idaho) 1919-1930, 1924-02-28
A Good WAY TO
UPSET PRICES
Further Exposures OF How Ed.
son-ford Money Plan Would
Fail 10 Aid Farmer.

fly money" scheme. aimed 10 stabilize
HOnefary values. would have exactly
the opposite effect. IL discussed 10 ths
present article. which 10 the second Ia
series prepared BY the American
BANKERS Association. reviewing the sr
posure of the weaknesses OF the plan
a. presented BY William T. Foster. Dl'
rector of the Pollock Foundation for
Economic Research.
Briefly stated, the Edlson'Ford plan
provides for Government warehousins
OF basic commodities. against which
currency would be- loaned 10 the pro.
Queer without interest. up 10 half the
average value OF the products for the
previous twenty-five years. This
currency would be cancelled as the
commodities were Withdrawn and
passed into trade On the other half OF
the value the producer would receive
equity certificates" which no could
sell or use for bank loans. On these
points Mr.. Foster says:
vpssttlng Price Equilibrium
~stsady price levels depend mainly
On the balance between the volume
OF goods ON the market and the vol
ums OF money offered for goods
The Edison plan Is designed express
ly TO upset tho balance. A farmer do /
liv6rs. say. two thousand bushels OF
wheat 10 this 0overmsnt warehouse
aud the Government delivers one
thousand dollars In new money TO the
farmer. When the farmer sells the
wheat he rspays tho loan and the Gov
srnmsnt destroys the money. Thus
the volume Of money Ia Increased
precisely when goods are stored; and
the volume OF money IL decreased pre-
cisely when these goods are marketed.
In other words. each transaction be-
gins by placing In circulation goods
without money 10 match the goods
Dollar demand Is created as the sup
ply OF goods Is Withdrawn; the sup
ply OF goods Ia created as dollar de-
n and 10 Withdrawn.
Would II enable the farmer to Dor
row more money on his products
han no can nov borrow When Mr.
edison contends that farmers would
obtain larger loans on their crops
han they can nov obtain from banks.
10 Is confronted by this dilemma;
either the banks are now refusing
% make sound loans. or. under the
Edison plan. the Government would
make nnsound loans
Neither Mr.. 6dison nor Mr.. Ford
an consistently contend that banks
.ow refuse to make sound loans. for
hat IL the way banks mako most of
heir profits. and Mr. Edison and Mr..
FORD have no doubt that banks are
ondncted for profit. II follows that
he plan would yield larger loans TO
.rmsrs only II the Government met
he risks OF unsound banking. In that
2ss ali that insolvent borrowers
aimed would be paid BY the rest OF
he population. which. TO say the least.
not fair deal
cuttIns Down Farm Credit
Apparently. however. the 0cvorn-
'sst 10 not expected to run many
sks. for the farmer 10 allowed to
orro~ an amount no greater than
ne halt the average value Of his
roduet for the previous twenty-five q
rars hut prices have risen so high .
nc. 1895 that tho farmer could Dor A
~ on most products much less thAn .
All the present value Of the products !,
would be much less. therefore.
ian the farmer could borrow directly
om the banks on graded products. '
! products not graded no Govern |
eat loans would be made. for there
ould DO no way OF determining the Q
senty nvsyear price average. 9
However. the farmer. having OBJ y
iaed the stipulated Government
az en- his goods. could then oner HIS
Iuisy certificate to a bank for an sd
tionsl loan. But tho equity certin- :
.fs Is virtually . seeond mortgage. q
Al no bark would prefer . second .
srtsass to a nr~t mortgage. q
Suppose the Ola National HAM 0
A. wliiius to lead . farmer eixht o
.narsa dollars On one thousand h
,shsls Of wheat suppose. however. a
. farmer deposited the wheat In . a
,ssrzi ~ar~hcas. snd obtained ave a
.nared dollars from the Government G,
,rt.inly the bsnk would not lead a
9 farmer thres hundred dollars On ,
. equity e~rtinease. The prosse A
n o. ths esnk would be greater n
. farmer r~lisd GA the hznk Tor the =,
sirs losn. fer Ia that case the esnk !,
AID realise GA lts security without :,
lag obliged to pay ~. hundred dol I,
~ 10 act the wheat cut Of Govern \,
tss storage. rhs farmer can ue~ I,
rros mors ncney from . bank on =
-s..4l..3 49,. n.ufusts thaa ~