Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-10-14
SCIENTIFIC CREDIT
CONTROL IS URGED
Dr.. Edie Suggests Adjust
Il ment of Loans to Bust
ness Growth.
BY CLAUDE A. JAEGER,

NEW YORK. October f4.-The
United States, fguratively speaking,
has come to occupy the position OF
bankrupt Midas. says Dr. Lionel ID.
Fdie. in a newly published work on
central bank policy.
DR.. Edie attributes much of the cur
rent disecuilibrium in TIE economic sit
uation to monetary and banking poll
Cies and calls upon the Federal Re-
serve system and other central banks
to take a more aggressive ana sclen-
tifc policy toward flattening out the
economic cycle.
His work. entitled The Banks and
Prosperity" appears at time When
billion dollar credit corporation Is pc
ing formed to supplement the work OF
the FEDERAL Reserve, ana Wnen tnere.
is considerable agitation for Iberallza-
ten of the Federal Reserve act.
Credit Control.
Dr Edie believes the central banks
should determine the normal rate OF
growth of industry, and the normal
expansion of credit needed Tor TINS
growth. and follow rigid policy OF
increasing the volume OF credit only,
a, needed to take care of normal
growth.
we have seen the dangers of allow
inc this question to be decided by OPP
poytlnism and eXpediency of the mo-
incnt." he SAYS. after a review OF the
extreme fluctuations of credit IN tne
years leading up to the present sltua-
ton. and ADDS. I'VE hnally come ouC
to a specific, constructive principle
which / have called the production
standard. This is principle OF
straieht-line trend of growth equal 10
the iorg-t term trend of productive en-
tnrprise " ....,,
Dr, Edie. who is vice president of the
American Capital Corporation and was
formerly professor of finance at the
University Of Chicago, explains tna Una
cests is "the vicious circle principle OF
overeXpansion and underliquldati2n:
This has proved dangerous and costly.
He expresses conviction that we
shall make very little progress In banker
control of prosperity and depression
until the experts. the economists aho
the committees face the necessity OF
defining concretely how much creolt Is
enough"
1t is as necessary to check speculative
eycesses as to increase credit at time
of extreme def1ation. DR.. Edie explains:
He finds the central bank policy OF
attempting to base activity merely on
the legitimate needs OF trace Whoily
INADEQUATE. for this habit of thought
t3ntdmOult 10 IlldhIl!5
dictator Of policy. It puts the lido! OF
demand on a shrine before which all
offcialdom must bow down and Wor-
ship"
Money Only One Factor.
DR.. Edie acknowledges that money IS
only one factor in the great process OF
balancing the economic mechanism OF
the world, but asserts that this COM
pleyity is no excuse for inertia on the
part of central bank authorities.
He describes the interrelationshlp
between money and other factors as
follows:
"A given fuctuation in the money
factor may (aD at times be an initiating
impulse in broad industrial maladJust-
ments tb) at ether times an accentu-
ating and aggravating influence in
EMBELLISHMENTS originating independ-
entity; Co at other times conditioning
influence. a factor without whose pres
ence EMBELLISHMENTS would not go to
extremes"