Evening star., 1932-01-28
Anti-Defation, Not Imitation.

chuSettS for issuance Of an additional
one billion dollars in national bank
notes emphasizes the administration
opposition to currency imitation as a
method Of fighting the depression. Mr..
Mellon points out that If there was
shortage of currency, or If the legal au-
thority for currency expansion was IN
adequate, there might be reason TO in
crease the national bank circulation,
but conditions now warrant no such
step, even as an emergency measure.
The administration has been careful,
since the formulation Of its reconstruc-
ton program, to avoid any semblance
Of inf1ationary methods. But as the
Nation has suffered all the character
istic accomplishments Of deflation-
falling prices, reduction of money yield
in taxes, reduction of profits to business
men and traders-there has been a no
ticeable tendency to interpret the Gov
ernment's relief plans as an effort TO
fight fire with fire. in other words, to
cure detiation by imitation.
AS imitation Is probably the most grave
OF the two evils, indationary policies,
or even hints OF such policies, are
something TO view with alarm. Senator
Watson is quoted as believing that "a
little imitation would do the country
good" and the Baltimore Sun is quick
to point out that "a little imitation" Is
a dangerous thing, for the simple but
sound reason that ones iGea of little
is an uncertain quantity at best, and
imitation" as such, is a tricky Thing
to fool with under any conditions.
Undersecretary of tr.e Treasury Mills
gives the view Of the administration
when he explains that credit expan-
sion must be looked upon as conSuuc-
tive and desirable rather than infia-
tionary and dangerous. The whole
effort now being eXerted is to prevent
further def1ation and to restore the
economic machinery to an even bal
ance In the process of this restoration,
it is as important to guard against ef-
fecting the counterbalance by tarow-
ing it off as far IN one direction as it
has been in the other. Walter Lippmann
in the New York Herald Tribune, with
characteristic ability for succinct ex-
preston, writes that whether the Fed
eral program is Ito be called imitation
or authorization is mere verbiage. If
it has to be described with catch words,
it might be said that the present Amer
ican policy is to reduce production costs
and governmental costs in orcer to
make it profitable for borrowers to bor-
row and safe for lenders to lend.
1t is a policy designed to justify the
expansion of credit to solvent producers
and has nothing whatever to do with
imitation by the printing press"
If they stood alone, the Govern
mentS newly created Reconstruction
Finance Corporation and its other
plans for extension OF financial relief
could be regarded as infationary
tactics, and such steps would be dan
gerous in the extreme. But the Federal
Governments program is being applied
at time when industry and commerce
are beginning to settle to new level,
much lower than the peak Of prosperity
level, but level, nevertheless. The
natural processes Of readjustment are
getting to work, independent Of the
Governments program, which is to
facilitate and to expedite, but not to
force, these processes. The most i'm
portant phase of the Government pro-
gram is yet to come. That part lies
in balancing the budget. An unbal-
anced budget, with expenditures ex-
ceeding income, represents imitation Of
itself.
Real application of the term anti
defation" as opposed to imitation" de-
pends upon the Governments ability
to balance its budget by process Of
higher taxation and drasticauy curbed
In campaign year such
q thing Is, of course, doubly difficult.
The difficulty is increased by the ab-
sence of flag-waving and trumpet
blowing that otherwise would serve to
tighten the task and make the road
more smooth 1t is a thankless job,
requiring real courage.
laval NAV nav visit to Mussolini