Evening star., 1932-01-03
I55.CENT WHEAT HELD CAUSE
OF CURRENT DEPRESSION
Rise in Grain Price May Decide Fate of
Political Parties-l932
Outlook Clear.


some figures given out last week by
the Federal Farm Loan Board were
pretty somber.
From this starts the demand for re-
lief through acts Of Congress or other
political action. The aim of most of
the attempts is, stated broadly, to make
it easier for the farmer to get hold of
dollars, by increasing the number OF
dollars in the country, or otherwise.
Can TIE Government, properly, make
dollars easier to get? The answer is,
within limits, yes. The Government
can, legitimately and by perfectly sound
action, increase the number of dollars
in the country, making them, therefore,
easier to get. Unfortunately, many of
the attempts 60 at it the wrong way.
Let us list the attempts already made
in Congress or certain to be made.
These efforts to increase the number
of dollars in the country will compose
the major politics of this Congress.
The first md most obvious attempt to
relieve the farmer is by enacting that
his debt of $4,000 be arbitrarily cut to
$4,000, or that his interest rate of per
cent be arbitrarily cut to 3 per cent,
or that the due date of his mortgage
in 1882 be extended a year to 1888. This
has already been attempted by Senator
Nye of North Dakota, who, in an
amendment to another measure, pro-
posed that every farmer be given a
years postponement of his debt. That
cannot be done-that is, it cannot be
done by law. 1t can be done by volun-
tary, private understanding, and good
many Of us think that creditors ought
to practice just this sort of leniency
toward their debtors. Many creditors
are doing so. But 1t cannot be done
bU Ia a
tainly would regard it as "impairing
the obligation of contracts"
Move for Cheap Money.
Most of the methods proposed for re-
lief of debtors take the form of creating
a greater quantity of money, so that each
debtor will have better chance TO get
some of it-"cheap money" was the
phrase used in similar political Contro-
versies arising cut of the same condi-
tions in the 1870S, '80s and '90s.
One way proposed is that the Govern
ment shall buy large quantities of silver
bullion and coin it into silver dollars,
coupled with a decree that silver
dollar shall always be the equivalent
of a gold dollar. That was William
Jennings Bryan's plan in the 1905, 1t
is now earnestly revived and commands
increasing support. 1t will fail because
it cannot command majority in Con-
gress. Something can be done about
silver, perhaps, to enlarge the worlds
stock Of currency. but it cannot or
certainly will not, be done by the United
States alone. 1t may, however, be done
by international action.
One way to produce more currency
is through the Federal Reserve System.
The system is actually creator of cur
"a ri dollar
brand-new ones. in exchange for GER
tain kinds of business paper, commercial
obligations having certain safeguards.
There are strict limitations on the kinds
of commercial paper for which the Fed
eral Reserve System will hand out cur
rency One way TO increase the quantity
of currency would be to enlarge the
classes of commercial obligations for
which the Federal Reserve System will
give out new dollar bills. For example,
as the law now stands, the Federal
Reserve System will not give out cur
rency in exchange for a mortgage on a
farm. Whenever it is proposed-as 1t
surely will be-to enlarge the kinds of
security for which the Federal Reserve
will give out currency-when that hap
pens there will be controversy in Con-
gress. Senator Carter Glass of Vir-
| ginia will be on guard. There Is not
space here to say more, except that
there can be some legitimate enlarge
ment of the quantity of currency IN the
country through use of the Federal
Reserve Systems function Of creating
currency. That the country would be
benefited by prudent, carefully guard
ed increase of currency can hardly be
doubted.
Bond Issue Seen Remedy.
Another way, indirectly but fairly
certain, to increase the quantity Of
money is by great issues of Government
bonds for public works. This is pro-
posed by Progressive Senator La Fol-
lette (ive and a half billions) and by
Democratic Senator Wagner of New
York 1.-TWO billions) About this like
wise, there will be much controversy in
Congress.
There is not space for more, except
! to say that the politics having to do
with money and currency. and arising
out of the low price of wheat (assurl-
! ing commodities continue low priced
will be the real politics of the year 1882.
| Compared to this, compared to the poll
tics which will revolve around the low
price of wheat, compared to the issues
which will be called cheap money or
relief of debtors" or free silver
compared to that, all the politics OF
personalities about Smith opposing
Roosevelt, or Curtis getting the Repub-
lican vice presidential nomination or
Baker getting the Democratic presiden-
tial nomination, or Raskob and pro-
hibition-aIl that is merely the small
change of politics, the village gossip
about personalities of politics.
Meantime and all times let those
tempted to bet on the 1882 election
remember that it is no impossibility.
not even novelty, for cotton and corn
and wheat and other commodities to
double in price within the space of
year.