The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1932-05-17
Foreign Representatives
SMALL. SPENCER, BREWER
uncorporated)
CHICAGO NEW YORK BOSTON

: (lncOrpOfaCeQD
CHICAGO NEW YORK BOSTON
Financial Applesauce
!. A bill which has attracted both
!. support and condemnation in con-
gress is that offered by Rep. Colds
borough to stabilize prices by con-
!. trolling the issuance Of currency and
!. the extension Of credit.
/ In simple it works out very simply.
II prices begin to go up. currency is
withdrawn from circulation and they
come down. II they start downward,
> more money is issued to bring money
and commodities into better balance.
The idea probably is wrong. viewed
from the standpoint Of the long pull,
because it assumes that the price
level Of 1926. which would be the
/, standard Is the ideal one and this is
{ hardly true. 1t allows little room for
progress and improvement.
! The bill would employ the federal
: reserve system as stabilizing agency,
but bankers observe that 1t has a
man-sized Job on hand already to
! stabilize the currency.
/, Inveighing against the measure,
Benjamin M. Anderson, Jr., Phi. D.,
economist for the Chase National
Bank Of New York, offers arguments
! against it and re-affirns his belief
! that q central bank should stick to its
/ own knitting.
The purposes Of a central bank, he
asserts. are these:
"U It Is the business Of cen
trail bank to protect the paper
, money Of the country by convert
ing it into gold on demand. This
is its first and most essential
function, and everything else must
be subordinated to this.
"(2) It Is the business of Gen.
trail bank to ease off monetary
stringencies and to prevent bust
ness crises from degenerating in
to money panics. In crisis, the
central bank supplies whatever
money Is necessary, at a steep dis
count rate. It enables solvent
men to protect their solvency, but
it does not regard it as its duty
to validate the unsound assets of
really insolvent men, or to help
defer the liquidation Of stale po-
sitions.
"(O In times Of great specula-
tive excuses, whether in COM
modities or in securities, central
banks should act to prevent the
extension Of unsound credits, to
protect the uquidity Of the banks
Of the country, and to check spec
ulative excuses, by tightening
the money market.
40 It is not the business Of q
central bank to finance a boom
least Of all, stock market BOOM"
+ The theory is sound enough but one
Is justified in wondering whether it
always has been applied by the pow
ers controlling the federal reserve
system and organizations affiliated
with it.
Item number one is based on the
theory that the gold standard must
be protected-and it must unless and
until we find something better.
Purpose number two sounds good,
even il one wonders whether the
functioning in this respect always
has been 100 per cent.
But items numbers three and four
may start some real argument.
There IS more than q little reason
ito believe that the federal reserve
system made no real efforts to curb
speculative excuses. On the contrary
There is evidence that it became in
,oculated with the same germ that af-
tected President Hoover when he an
nounced that We were on a sound
basis and that prosperity, in the full
blush Of its perfection, was to be our
steady diet.
And last, but not least, it is going
70 be hard to convince many people |
that the central bank did not finance
the boom Of 1920 which has given US |
al such . protracted headache.
Furthermore, there Is plenty Of ev-
1deuce that the august employers Of
tho erudite Professor Anderson did
their full share.
TWO wrongs never make . right
and It lends no support to the Colds |
borough ban to point out the errors Of |
those who att<1k It. Nevertheless |
some Of those who are quick to hurl |
verbal stones ut the IDEAS Of osl1er |
persons might easily spend some time
sieaning ~ their own doorsteps.
a Real Hero
Risking ones Me In = brief and
valiant gesture lint half e. hard q j
being consistently brave over q Pc
lftod Of weeks. Perhaps this = why
I'm unknown 12-year-old Eskimo boy
Is being acclaimed . hero today.
- -s-. 90 IL ~