Evening star., 1932-04-25
MILLS ASKS CREDIT
AND CONFIDENCE AS
PROSPERITY HOPES
Secretary Urges Controlled
Expansion Guarded by
Federal Reserve.
EXPRESSES HIS FAITH
IN AMERICAN PEOPLE
Drastic Federal Economies and
Additional Taxes Necessary He
Declares at A. P. Luncheon.
BY the Associated Press.

Blythe Associated Press.
NEW YORK, April 25.-A reinvigo-
rated credit structure and a "restoya-
ton of national confidence" were called
for today by Secretary Mills as twin
weapons which must be forged to turn
back the forces of destruction"
The Treasury chief, addressing the
annual luncheon of the Associated Press
at the Waldorf Astoria Hotel, said that
the wave of fear and the tide of de-
f1ation has to be turned back"
THE only way that know to bring
adequate relief to the people of the
United States" he said. sis to set in
motion forces that will make economic
recovery possible"
Against Pure Initiation.
AS one of these forces, Mills outlined
controlled credit expansion, amply safe
guarded by the Federal Reserve System.
Controlled credit expansion is only
possible through the operation of that
system" he said. Il emphasize this to
bring out the contrast between con-
trolled expansion of this kind and pure
imitation, such as Is involved in pro-
posals now before Congress for printing
fiat currency, or such as would result
ultimately from series of unbalanced
budgets"
On the budget question Mills was en-
phatic:
mo greater blow could be dealt to
national confidence and to the national
credit" he emphasized, than the fail
<,f
like these to follow sound fiscal pol
icy and TO balance its budget.
This means for the Government,
drastic economies; for the people, an
additional burden of taxation. What
is the alternative? Continued borrow
ing at constantly increasing interest
rates, progressive depreciation in the
value of all outstanding Government
securities loss of confidence and in the
end uncontrolled imitation and a sad
day of reckoning"
Mills termed it most extraordinary
and battling paradox that this country,
richer in actual and real wealth than
anything ever dreamed Of by any ma
tion in the world, at the same time
has been and is undergoing the most
severe depression ever experienced"
Cites Causes and Effects.
He outlined the causes and effects of
the latest and most serious phases of
the worldwide economic arrangement,
beginning last May with the insolvency
Of the great Austrian bank, Credit
anstalt, which, he said, in turn under
mined Germany, causing collapse
which shook confidence throughout the
world, force Great Britain off the
gold standard and swept down upon
the United States and the American
dollar.
That battle was won, but the cost
was heavy" he continued. When the
battle was over the gold resources
of the United States were over s70O,-
100000 lower, hundreds of banks had
failed, the banks were heavily in debt
to the Federal Reserve System and
currency was being boarded on an i'm
mense scale"
But for these events, he said, recov-
cry might have begun many months
ago. Even then, when the economic
forces working toward contraction and
def1ation had fairly well spent them
selves" Mills said, the forces of recov-
cry were more than offset by the
"paralyzing fear which gripped our
people. the loss of confidence. and the
terrible contraction of credit which
forced business and prices to new low
levels"
Successful Recovery Steps.
There followed, as he sketched the
process, the various means taken by
the Government to halt bank failures
-86.4 per cent of those aided by the
Reconstruction Finance Corporation
were In towns of less than $4,000, he
sald-aid the railroads, insurance COM
panles and other units affected with
the public interest" On top of these
came the anti-hoarding campaign and
the steps for credit expansion. The
antl-hoarolng campaigns results and
other evidence, said Mills, indicate
clearly that there is a definite, if
gradual, return to confidence
nave tried to point out that credit
ana confidence are the magicians that
must solve our paradox for u.s." said
Mllls; / have pointed out that progress
has been achieved. But it takes time
TO arrest and reverse these great move
mentS and while it seems almost cruel
TO urge patience after an already pro-
tracted period of waiting, yet 1 can
not help but feel that we should give
the forces which have been set in mo-
tlon an opportunity to exert themselves
pefore yielding TO doubt as to whether
we are on the right path"
l nave seen nothing" he concluded,
even in the darkest hours of doubt, to
impair my faith in the promise of
American life -