Evening star., 1932-04-06
Defends Rankin's Plan
Of Currency Initiation

To the Editor of The Star:
I I say, hats off TO Representative
Rankin. He is on the right trail when
ne says that we must have more money
in circulation If we are to balance the
budget. Now that dollars are up SO
per cent higher than they were before
the depression started the real burden
OF our $4,000, ,000,0 budget is the same
as $4,000, 900 would have been then,
At the present cost of dollars our SIG
O00,OO0,000 of Federal Government debt
VIII coSt the taxpayers, in real burden,
the same as $4,000, 100000 would have.
OF course, it Is hard to raise the
equivalent Of an extra So 600 600 0O0
each year and at the same time see the
equivalent of $4,000, 900, 900 extra added
to the debt which taxpayers must even
tually pay. If the dollar goes anv
higher in price we will have to do
everything that Mr.. Rankin predicts.
and lot more, before we can balance
the budget.
When the price of anything else goes
up the manufacturers get busy and in
crease the supply, which prevents the
demand from pushing the price unrea-
Sonably high. However, the Federal
Government has turned its monopoly
control Of dollar making over to the
Federal Reserve System, and they seem
very reluctant to increase the supply.
Yet we know that there isn't enough
money in circulation to support even
the present emaciated credit structure.
for the withdrawing" campaign was
an official, public declaration of Just
this fact.
With both the people and the banks
boarding we simply have to have more
money before confidence can be re-
stored. Powerful stimulants are often
used to strengthen sick person dur
ing critical period of his illness. Mr..
Rankin's plea for imitation is more than
justified in view of the desperate plight
our country is in at the present time.
We must do something, and something
more than "whistling in the dark" too!
The Reserve Banks are in a position
now to take several billions of dollars
OF bonds directly from the Treasury
and issue Federal Reserve notes against
them. Mr.. Rankin's plan for taking
up the soldiers adjusted service certifi-
Gates Is in accordance with sound, ac-
cepted banking principles. 1t is merely
an extension of the present open market
operations of the Reserve Banks, and
would provide them with ample re-
sources to contract the currency later
II prices tended to rise too rapidly or
too far.
The truth Of the matter is, as Mr.
Rankin's assertion implies. that the
real cause Of the greater part of our
tax troubles is the high price of the
dollar, in terms of which the tax must
be paid. I have little patience with
the frantic efforts to balance the
budget when nothing is done to correct
the underlying cause of the whole diff
Guilty. NThe Reserve Banks have ample
margin OF reserves to remedy the trou
Bile without straining our monetary sys-
tenn In the least. I, for one, am whole
heartedly in favor of supplying this ac-
knowledged shortage of money in the
way Mr.. Rankin suggests, or by f1nanc-
ing public works project of consid-
cradle proportions by a similar meth
3D. or even by extensive purchases of
securities in the open market by the
Reserve Banks.
No matter how it is managed, the
high cost of dollars must be cor
rected If the budget is to be balanced.
Dollars today are hardly within hailing
distance of the dollars which created
the debts and wage level Of pre-depres-
sion days. Better times, both for the
Government and the people, await a
more friendly dollar
JOHN w. MCBRIDE.