Evening star. [volume] (Washington, D.C.) 1854-1972, 1932-05-29
FAILURE TO USE CREDIT
SEEN AS IMPEDING L. S.
So-Called 'Derivative Money" Now Avail
able, but Potential Spenders
Are Slow to Borrow 1t.
BY MARK SULLIVAN.

TINE timorous aim of this article is
partially to reply to Though not
fully answer the question of a
i rugged old male American who,
the other day. in impotence
and almost disgust with his fellow citi-
zen, asked: What the hells the matter
with the American people anyway"
First, let us, very mcdestly, state the
condition that must provoke any one,
the picture that really constitutes an
indictment, whether of us, or of the
capitalistic system, or what not.
The condition is plain to any one. a
spectacle Of plenty in the aggregate,
yet need on the part of many lndlvid-
uals. Look upon it as a triangle; look
upon the whole of America as three
cornered field small enough to be
brought within the scope of any ones
sight. At one corner is abundance of,
let us say, cotton, at another corner
men and women eager to go to work
and make that cotton into clothing; at
the third corner, multitudeS of people
eager to buy this clothing, but in many
cases lacking the money. And SO all
over the field-at on> corner teeming
abundance of the raw materials to
make automobiles; at another corner,
masses of men eager to go to work in
automobile factories: at the third cor
ner, multituoes of people eager to buy
utomoblles-those who have old Cnes
wanting to buy new ones, those who
have loW-priced ones wanting TO buy
high-priced ones. those who have none
willing to buy any kind-but all lacking
the money 10 buy.
How TO Start Moving.
Now what is the trouble? Why
doesn't the scene begin to move? WIZ
does it not transform itself into what
it was in 1929-or. if you didn't like
1929. any normal pre-depreSsion year.
say 1927. Just what can be done to
transform the America of 1882 into the
America of, say, 1927?
Let us keep the question within the
scope of the present and the future;
let us avoid the other and different
question, how We got that way. To
talk about what caused it merely leads
TO augmentation, to mutual reprCach,
to pot-and-kettle accusations of blame.
How it got that way is poSt-mortem
dissection. Even diagnosis of the pres
ent is not the thing needed now. We
don't need diagnosis. We are aware
what the matter is. The condition is
plain, as pictured above What We want
to know is how to get the patient out
of bed and on his feet and at work;
how, in terms of the picture above, TO
start things moving.
Now it is conceivable, indeed likely.
there may be more ways than one to
start the now motionless triangle going.
1t is, to change the geometrical figure,
circle: to use the phrase common in
economic discussions, vicious circle"
It is a motionless circle. and the ques-
= &c 4;,,& L.
can we do something inject something,
touch the circle with some kind of
stimulus. do something to start the
circle revolving.
Question of ".Iore Money"
To that as many answers are made
as there are to the question what
caused it. Many of the answers come
down to one-more money. More
money to those who would buy if they
had the money; more money to those
who would hire labor if they had the
money to hire. The more money"
answer, III one form or another. is so
general that one may say it must be
the true answer. or at least that it
must be one answer that will work.
Blu some want the more money" to
be in the form of millions of dollar
bills printed offhand by the Govern
ment-that is the answer of the SOL
diers' bonus advocates. Others want
the more money" to be silver coins
minted by the Government and added
to the present stock of currency. To
discuss these forms of more money"
would again involve argument endless
and futile About silver alone. the
quantity of letters. newspaper clippings,
pamphlets and books which comes daily
to the desk of the writer of this article,
has the proportions of flood. 1t be-
gan with a trickle-I find. as an inter-
eSting detail of history, that it began
that came, and the mass of it is now
such as to make me uneasy about the
rent I am paying for office space.
Needed as Credit.
Let us shortcut all that and omit
such a quantity of argument as would
fill all the columns of all the issues of
this newspaper for a month. Let us
just record a fact
The higest financial officials of this
Government, the Federal Reserve Board
and the Secretary of the Treasury,
agree with the answer which says that
the need is more money"-but more
money of particular kind. namely
what is called by Banker Leonard Ayres
of Cleveland 'derivative money; that
is. the kind of money that consists of
credit in banks, available for the banks
to lend. available for properly qualified
persons to borrow
The Federal Reserve Board has
agreed that this is the answer and they
have gone about creating more money
of this kind To state it with closer
accuracy, the Federal Reserve system
has gone about creating the potential
ity of more money of this kind, for the
Federal Reserve Board cannot, in the
exact sense, create money" What the
system has done. and is doing, and will