Evening star., 1932-01-03
American Business Is Demanding
State-Credit System to Remedy Ills

/, outrightly printing more of it. II the
British have improved their situation
through pound notes no longer tainted
in international commerce by a gold
background, Senator Shipstcad Is will
ing to improve the American situation
by an equal disregard for a gold back
ground here.
This advocacy by him of what used
to be called derisively fiat money"
aWakens objections now but no great
number of laughs. Almost any idea has
become respectable here now in the
midst of the obvious present failure of
all economic PHILOSOPHERS hitherto
called sound" In fact, the tendency
here toward flirtations with theories
hitherto denounced as "unsound" Is
glaringly and sensationally obvious in
even the highest and most cautious
quarters.
A day or two ago this writer heard
one Of the most eminent of Federal
financial authorities discourse among
friends, as follows:
The gold standard is a rule for the
maintaining of international economic
health. 1t is a rule applicable to a
condition of health. When a condi-
ton of health does not exist, the ex-
istence of the gold standard may be-
come an error. A sound man needs one
sort of way of life. A sick man may
need another. I think it might have
been advantageous to us last Summer If
international circumstances had forced
us to abandon the gold standard. We
ought not to seem to abandon it of our
own motion. If however, we could seem
to be nuShed off it, we might experience
not an economic loss but an economic
gain"
When such sentiments can be uttered
amid the pillars of contemporary eco
nomic society 1t is not surprising that
Senator Shipsteads defense of goddess
money is regarded as no great exploit
in incendiarism.
The rock-bottom base Of Senator
Shipsteads contention is simply that
imitation" by more currency is neces-
sary because imitation by more borrow
in and by more credit is evidently fail
ing. The credit "inf1ationists" main
tain on the other hand that they have
not yet really begun to put their philos-
ophy into action.
4 4 +
When the Presidents new home loan
banks have issued half billion of dol
lars of debentureS, when the Presidents
new Reconstruction Finance Corpora
ton has issued two billions of them,
when Secretary of the Treasury Mellon
has issued two or three more billions of
dollars of Federal securities for the
meeting of the deficit and when Senator
La Toilette has secured if he does Sc
cure) the issuing of five billion dollars
of Federal bonds for the construction of
public works then, and only then, we
shall see, it is claimed, what credit can
really do.
The rejoinder of the unconvinced is
that in their view the depression was
caused by excesses of private bonds and
other private debts and that they def
nitely do not believe that the remedy
can be found in supplementlng private
debts by new loads of public debts.
The retort to them is that they are
academic and theoretical Certainly
they do not seem likely to have their
way. The pressure of circumstances is
against them and the prospect holds
that during the next IL months we
shall see American business indivld-
ualism deeply penetrated by American
credit statism
(Copyright. 1887