The Sauk Centre herald. (Sauk Centre, Stearns County, Minn.) 1886-current, 1931-01-15


many elements of the community,
but its aftermath is not SO pleasant.
Past Prosperity Genuine?
Briefly, the reason why I ques-
ton whether our recently past pros
perity was genuine is that the in
crease in the production of wealth
was Insignificant compared with
the orgy of spending and the delir-
ium of the stock market. Most of
the industrial advance we have
made in the last ten years was
made prior to 1923. We came back
from the short postwar depression
severe as it truly was, with live
ly bound; but since then our real
progress has been nothing to boast
of.
According to the figures Of the
United States Bureau of the Census
the value of manufactures in 1925
was IS billion dollars, in 1927 it was
66.3 billion, and in 1929 68.4 billion.
The nominal gain in four years of
supposed high prosperity was less
than three billions of dollars, which
can easily be accounted for by
price variations. We know also that
during this period there was at
times great unemployment, and al
ways a serious amount. In the win
ter of 1928 unemployment was for
time almost as great as it is now.
Between 1928 and 1929 employ
ment in the manufacturing indus
tries fell off 10 per cent and the to-
tai yearly wages in these industries
was 4 per cent less in 1929 than in
1923 and yet 1929 was considered
as the peak year of the boom.
There was nothing in the progress
of the country from 1923 to 1929 to
| Justify the enormous increase in
the valuation of securities. I attri-
butte the initiation to the counter de-
fation of which we are now suffer
ing, to the stimulation of security
prices, started by the Federal Re
serve Board when it reduced redis-
count rates in 1924. Federal Reserve
credit has mostly benefited-or
shall we say injured?-the stock
market. The great speculative
boom was caused by the policy of
the Federal Reserve Board, which
in 1924 actually purchased billion
dollars worth of government secur-
tiles, thus turning losse flood of
money that was largely absorbed in
speculation.
Emergency and Fundamental Mea-
SureS
To restore prosperity and main
tain stability thereafter we must
consider both emergency and fun
damental measurers. One of the
latter is the question of the world
gold supply and its proper utiliza-
ton. Another is legislation affect
ing the authority of the Federal
Reserve Board and banks. The Fed
eral Reserve is, unfortunately, a
bankers institution, whereas the
central banks of England and
France are merchants banks. in
cline to think that ultimately we
shall need legislation that will re-
strict the functions of commercial
banks The scrambling of CONNER
cial banks, trust companies, invest
ment companies, investment trusts
and investment banking houses has
produced an unsound and I think
unethical condition, The banker
who accepts the funds of the COM
mercial community ought not to
leave these diverting and confusing
side lines. The situation promotes
the dangerous diversion of custo-
mers' money from construction and
productive use to dubious security
flotations and the financing OF
speculation. Strictly speaking, the
ordinary commercial bank ought
not to lend money for the financing
of speculation. 1t is not prudent
and faithful use of deposited funds
for while such a loan is, perhaps
the most secure type of all it tends
to stimulate initiation and unsettle
substantial business.
! Another fundamental problem
that will have to be cleared up be
fore the world can become COM
mercially and financially stable is
that of the international debts. The
collapse of commodity prices-and
they are going lower so piles up
the debtors burden-and also that
of the producers-that wholesale
reputation aboard is not impos-
sible, and this may include in
Europe certain private as well as
public debts. A powerful contribu-
ton to the sterilization of COM
modify prices would be the propos-
ed reconciliation of silver in the
Orient, where the purchasing pow
er of billion people has been cut
in two by the fall Of silver.
The Remedies
Among the measures that can be
undertaken at once to relieve the
situation are:
1. Legislation for direct unemploy-
ment relief.
2. An aggressive public works pro-
gram, including inland waterway
Improvement, the rapid completion
of Mississippi river flood control
highways and federal buildings.
8. Steps to prevent the initiation
and deflation of credit.
4. A better balanced distribution OF
national income.
5. Tariff legislation.
6. Conservation of natural resourc.
es.
Senator Wagner of New York