Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-10-18
BY MARK SULLIVAN.

WarQ on one OF Two pains. IL Is ST.
uation which is at the bottom Of every
aspect of business, which will be the
principal influence and most contro-
versial subject in the coming session Of
Congress; which-if the situation takes
one of the two paths-will be the prin-
cipal influence and the most con-
troversial subject in the Presidential
year ahead: which is the primary cause
of Wage-cutting, of reduced dividends,
of inability of some debtors to pay their
debts of bank failures, of boarding. of
runs on banks; in short affects literally
every human being in the United States
but which is one of the most difficult
of all possible subjects for writer to
make clear or for human understand
ing to grasp.
If in that opening paragraph I seem
to waver between present tense and
past, between lis" and has BEEN" the
reason is that right now as I write
and during IL days since President
Hoover acted to end the panic the sit
uation has been in chaotic flux. 1t
has been in process of determining
which Of the two paths 1t is going to
follow.
Commodities May Jump.
One of the two paths is rising prices
Of commodities. If, during the next
few weeks or months, wheat begins to
rise in price and seems likely to. go
higher; if cotton should go to Z or 8
cents a pound; if copper should rise
from its present Z cents a pound to
9 or 10-in that event most of what
is said in this article would cease to
| have meaning.
Since no man can tell whether COM
modify prices are going to rise: since,
in short, no one can tell yet which of
the two paths this situation is going
to follow-because of that 7 shall de-
scribe the situation as it is and has
BEEN
I begin with a newspaper headline
which epitomizes the situation: "One
Dollar Now Equal to Dollar and
Sxty-four Cents" That is not an ac-
as good a way as can be contrived to
convey the condition to the common
understanding. What is meant is that
what was 81 five years ago Gin purchas-
ing power of food or wheat or copper
or any other commodity is now 81 "a.
Not all the authorities agree that the
change has been exactly from 81 to
Sl.64. The calculation of DR.. Irving
Fisher of Yale University, for example,
says the change has been from 81 to
about Sl.40. Also the change varies
|
Dollar Has Doubled.
ignore these variations, assuring the
reader that the fundamental truth is
accurately stated in what is here said
The variations from literal exactness
are made only in the interest of clear
ness. Economists and experts will see
these departures. but will agree fully
that the central truth is as here stated.
noly hNy "a
variations from eXactness is 1t possible
to make the central truth clear to the
lay reader.
With this explanation and this
apology to the experts, I shall express
the. process as the headline writer has,
saying that the dollar has enlarged its
size. For simplicity's sake I shall say
that what was one dollar has become
double doliar-S2. Though. in fact,
the enlargement, on the average, is
much less)
Let the reader follow with as much
patience as he can and as much con-
centration. Concentration, especially,
is needed) For as sure as the sun
shines he will have before year has
passed over his head much need to
understand what is here said. unless,
as I have pointed out, there should be
rapid rise in commodity prices)
We can approach clearnesS by taking
wheat as a typical commodity. In the
same interest of clearness let us turn
the proposition around and express it
thus:
Must Give Two Bushels of Wheat.
farmer five years ago, wanting 81
could get one by giving a bushel OF
wheat for it, today a farmer needing
81 must give two bushels of wheat for
it. (The price of wheat (average) in
1926. Chicago Board Of Trade, was
S1.58, the price today is 40 cents }
Similarly in 1926, miner of copper
wanting 81 could get one by giving
seven pounds of copper for it; today
he must give IA pounds Of copper
for 81.
So to achieve complete understand
ing of what has happened I ask the
reader to reverse his habitual way OF
thinking about what he calls prices -
I ask all readers and all persons to do
this. Universally people say the price
of bushel of wheat is so cents. They
will make progress toward understand
ing the money question If they will
turn it around, saying: 1.-THE price of
81 is two bushels of wheat"
And make no mistake about 1t, the
money question" Is with us and de-
mands understanding. That there
should be perfect or universal under
standing of it is impossible to hope.
The best we can do is to labor toward
making it simple.
Through the change in the price Of
81 an immense disparity has arisen be-
tween debtor and creditor. This, again,
can best be illustrated by using wheat
as an example. In 1926 a farmer bor-
rowed $4,000. That Is, he borrowed
what was atLthat time 1888 bushels
of wheat. Today, however, his debt is
not, truly speaking, $4,000; 1t is three
times $4,000. For today, the farmer. to
pay his debt. must tender 10000
bushels of wheat. The debtor finds his
burden tripled; the creditor, on the
other hand, finds his wealth tripled.
Affects All Glasses.
This disparity, this increase of the
burden of the debtor, this augmenta-
ton of the wealth of the creditor exists
wherever debts exist, wherever the re-
lation Of debtor and creditor exists
It affects all classes. A wage-earnel
borrowed 500 in 1926 when his wages
were $40 o day (and he was working
full time1; today he is called on to re-
pay when his wages are So q day. A
steel manufacturer borrowed 81 900 ,00C
in 1926 when the steel he sold was S41
ton; today he is called on to pay il
back when his steel is worth only $2s
a ton.
This disparity is hardship. 1t is the
sort of hardship that leads to Geo.
nomic distress and to political dis
content.
But, having said this, let us at once
clear away one of the fallacies that
has always arisen in this connection
fallacy that rose in 1925 and will
arise in the political money fight
ahead of us. The fallacy, gloriously ex-
plotted by demagogues, is that all
debtors belong in one class, now put