Evening star., 1932-12-25
HIGHER PRICES -CUTDEBTS
HELD i. S. ALTERNATIVES
Must Follow One or Other Course,
Writer Declares, as Road
to Recovery.
BY MARK SULLIVAN.
to Recovery.

BY MARK SULLIVAN.
ONnsxtt t,: SUNDAY and i'd, nearby ,,512 days
those tH0s w5eh a5ifles review OF tba 1am1,st pasf
year, or forecast the coming
one, or both. The present article aims
at rather a different objective.
As it happens, we are, just as the
year ends, at a dividing of the road
with respect to several fundamental as
poets Of business and politics. The al
tentative paths ahead can be easily
identified-though it will be the writer
of year from now, as the year 1888
ends, who will be able to say which
path We took, and what followed
choose one Of two paths about dirst)
the prices Of goods, and (second) the
size Of debts, and the relation Of these
to each other. I say choose" 1t is
not necessarily that. I am not sure
whether We are going consciously to
select one course and reject the other.
1t may be more accurate to say events
are going to take one turn or the other.
The one certain thing is that entrance
upon one path or the other is just
ahead of us, either higher prices for
goodS-or reduced debts
Illustration Cited.
What We are about to decide can be
made clear in the terms of a farmer.
the price of his wheat and the size Of
his mortgage. CThe same condition eX-
lists for home owners, for city real es-
tate, for practically everybody
A farmer in normal times (say 1926
borrowed $4,000, and gave a mortgage
on his farm for that amount, with 6
was, to take rough figure, 81 bushel.
With wheat at that price the farmer
could easily pay the $500 year in
terest.
Today wheat on the farm is much
below so cents a bushel. With wheat
at this low price. the farmer literally
cannot pay his interest 1t is a sheer
impossibility. The situation is as un-
escapable as mathematics. The farmer
may wish and hope-but the hard
reality remains 1t is as inexorable as
dreamer should memorize, and which
might advantageously be printed in
large type on the walls Of every school
room:
That two and two make four,
And never five nor three:
The heart of man is sore,
And evernore shall be.
Cannot Meet Payments.
For the farmer to pay his mortgage
or the interest on 1t Is a mathematical
impoSsibility. He is entitled to SYM
pathy, and not only to sympathy, but
to consideration-consid both
from his creditor and from organized
society. The thing that has happened
to the farmer is not his fault. Perhaps
We had better not use such words as
fault" or blame" any more than We
should use them about tornado. If
We are to use the word fault" at all,
let US say it is the fault of societys
imperfect understanding of, or imper-
feet management of, what ought to be
soclety's concern, namely. variations in
the value of money. When in, let us
say 1926. the farmer borrowed $4,000,
he borrowed 10000 bushels of wheat.
Today he is called upon to pay back
10000 bushels Of wheat. That is So
cially an injustice; economically it Just
cannot be done.
Applicable Otherwise.
And while I use the farmer as an
example, and wheat as an example, the
case is the same with nearly every
kind OF person and every commodity.
This situation Is. one may say. four
| fifths Of what is the matter with all
Of us.
From this impasse, this paralysis.
there are two ways Of escape, and
only two:
Either (A) The price Of wheat must
or CB) The mortgage must be re-
duced.
Those are the two ways out. And
the decision We are just on the point
OF making, or having made for us by
circumstances, is: Which of these two
paths Is ahead? The commentators
who year from now write a review
OF 1888 dncluding the present one If
he Is still alive and writing) will say
OF 1888 that during the year one Of
two things happened: Either (A)
Prices OF goods went up; or(B) Mort
cages and debts were scaled down.
Those are the only alternatives; dur
ing 1888 one of them must take place.
Which one is likely to be apparent
fairly early in the year. If not appar-
ent earlier, it should appear soon after
the new President takes Office on
March and calls a special session
OF the new Congress.
=. ~ Wv INV AiiCoil " Say lllcSc dlIcIIld
tlves are mutually exclusive. There
can be partial price rise, which will
make some debts partially payable;
and at the same time a scaling down
of that part of debt which is recog-
nlzed as not possible to pay with prices
at the present level Indeed, both
processes going along together is quite
probable.)
Will Prices Rise?
One would have said last Summer
that the first path would be taken.
that prices of goods would rise, and
that this rise would be the solution of
our dilemma. Prices actually had
considerable rise Starting from the
hitherto low point, about June, prices
OF all sorts of goods rose markedly.
Cotton rose from roughly 6 cents a
pound to roughly 9. That was a
remarkable ascent It illustrates how
quickly and how far a price rise can
go once 1t gets under way. Few people
recall that twice during the past
IL years several typical commodities,
including cotton. wheat and corn,
actually doubled in price. In short,
price rise can be saviour in such cir
cumstances as the present and great
price rises can take place and often
have taken place.
But the price rise which began last
July, and which for two months
seemed the path out Of our troubles,
| IN a nj