Evening star., 1932-08-21

! v. u
! celerated to a pace never before known
suddenly found the brakes locked on g
! slippery road The law of gravity die
| the rest.
Back in 1923. when the Republican
candidate told us that cur prosperity
was permanent and safe. red flags Of
warning were flying unheeded.
Collapse Of Farm Prices.
For scme years the collapse of farm
prices had prostrated agriculture. with
nothing done to help. In industry
larger industrial groups, mergers, hold
ing companies, began to return fabu-
lous paper profits, but the number OF
corporations reporting net income was
steadily diminishing. In banking, Pau
Warburg. a great financial authority anc
great man who had given years OF his
life to the original building up of the
Federal Reserve System. issued early ir
1929 public warning that speculation
had gone wild and that the country
would have to pay for it. Notwith-
standing the appearance of prosperity
unemployment was steadily increasing
Months before the American Fedora
ton of Labor had sounded an alarm
with regard to the rapid decrease in
the number of Jobs.
And the Federal Reserve Board saw
the clouds. too, but did little.
The administration lined up with the
stock market; and the warnings went
unheeded The President apparently
forgot that in 1922 he himself had
written: Thirty years ago our busi-
ness community considered the cyclic
financial panic inevitable. We know
now that we have cured it through the
Federal Reserve Board" And he took
the opposite course, nullifying the
boards effort.
1t has been suggested that the Amer
ican public was apparently elected tC
the role of Alice in Wonderland; and
agree that Alice was peering into the
wonderful looking glass of the new eco
nomics. White knights had great
schemes of unlimited sales in foreign
markets and discounted the future 1C
years ahead. The poor house was to
vanish like the Cheshire Cat. A Mad
Halter invited every one to have some
more profits" though there were nc
profits, except on paper. A cynical
Father William in the lower district OF
Manhattan balanced the sinous eel of
a pool-riGden stock market on the enc
OF his nose. A puzzled, somewhat
skeptical Alice asked the Republican
leadership some simple questions
Jabberwock Answers Query.
Will not the printing and selling OF
more stocks and bonds, the building OF
new plants, and the increase of eff
cheney produce more goods than we can
buy? No. shouted the Jabberwock, the
more we produce the more we can buy.
What If We produce surplus? Oh
We can sell it to foreign consumers.
How can the foreigners buy it? Why
We will lend them the money l see
says Alice, they will buy our surplus
with our own money.
OF course. these foreigners will pay
us back by sending us their goods? Oh
not at all, says Humpty Dumpty. We
sit on high wall of a Hawley- -Smoot
tariff.
How will the foreigners pay off these
loans? That is easy; did you ever hear
OF moratorium?
At last we are at the heart of the
magic formula of 1928. Strange as it
may seem the road to abolition of pov-
erty was a constantly increasing mass
and machine production. The absorp-
ton OF the surplus was to be through
the development of backward and
crippled countries by means of loans
as Mr.. Hoover explained
The lift yourself up by your own
boot straps theory was believed: 1t np-
peared TO work. People voted the ex-
ponent Of the new economics into office
and rushed into the markets to buy.
Under the spell of this fable they sac
riflced on the altar of the stock markets
the frugal saving of lifetime. Busi-
ness men sincerely believed that they
had heard expert advice and risked
their solvency by new burst OF ex-
panSlon. Bankers, trusting the words of
the leaders Of party which had advo-
Gated sound money and sound credit
made their loans not wisely but too
much. Common sense was hushed be-
fore the spell of an economic necrom-
ancy sponsored by Washington itself.
Market Went Up Steadily.
Between the day when the abolition
OF poverty was proclaimed, in August.
1928, and the end of that year. the
market balloon rose 80 per cent 1t
did not stop. 1t went on. up and I'D.
up and up, for many fantastic months
always up and up, until at last it was
0o per cent higher than the year be-
lore. These were as the figures of a
dream. The balloon had reached the
economic StratoSphere, above the air,
Wnere man cannot survive. Then came
the crash. The paper profits vanished
overnight; the savings pushed into the
markets at the peak, dwindled to Moth
ing. Only the cold reality remained
the debts were real-the only realities
IN the cold dawn of defiation amid a
nebulous welter Of magnificently en-
graved certificates not worth the cost
OF the artistic scroll work on them.
And now came what I believe to be
the real crime Of the Republican ad-
mlnlstratlon. They had a sea of sta
tlstics at hand, but the administration
old not tel! the truth. On October Is,
I929-the day after the big break-the
PRESIDENT observed: THE fundamental
business OF the country, that is pro-
ductlon and distribution of commodities
is on sound and prosperous basis !"
After further violent breaks, he insisted :.
There is no reason why business could
not be carried on as usual"
On December 3, the President sent q
message to Congress: "The sudden
threat OF unemployment and especially
the recollection of the economic con-
sequences Of previous crashes under a
much less secure financial system
created unwarranted pessimism and
fear. We have re-established conf
dence," And again. with what seems
now like CHASTITY humor. the speech
continued, Il wish to emphasize that
during the past year 1929 the Nation
has continued to grow in strength.
our people have advanced in comfort. -
Meanwhile common citizens in their
family affairs and industrial and com
mercial agencies. began to trim their
sails. The President disapproved of
this prudence. He attacked what he
called "a tendency to pause in their
plans for continuation and expansion of
business
Measures of Relief.
Il have" said he, INSTITUTED svstem-
attic and voluntary measures of CO.
operation with the business institutions
and with the State and municipal au-
thorities, to make certain that the
fundamental business of the country
shall continue as usual" On March Z
1890. came the classic remark of the
HpnroScinr Coil L