Evening star. [volume] (Washington, D.C.) 1854-1972, 1932-05-29

W. 1870 AAASS bC obdlCu lllUS.
They are buying Government bonds.
at rate, since the first week in April,
OF approximately s100,G00,00O a week.
When the Federal Reserve system buys
a SlOOO BOND from local bank some
Where IN the country (or from a local
INVESTOR the result is that there is
now III the local bank 81 900 that was
not there before. This 81 600 can serve
as the basis OF about $1,000 in credit.
The roughly S500,00O,000 which the
Federal Reserve system has thus put in
the banks of the whole country can
serve as the basis of approximately So
00,0OO,000 of credit. This 50 500 600
oUo OF potential new money (ncW de
rlvatlVe money! now exists. II is in
the banks Of the country. All that is
needed Is to make use of it. All that is
needed IS that banks should lend If
ana that sound borrowers should Dor
row it.
Rail Spending Cited.
To cite an example that has taken
place: The Pennsylvania Railroad has
recently borrowed s27, SOC. 900 from
various banks. With this money the
railroad Is going to electrify its system
| between New York and Washington
That means that the railroad will hire
thousands of new men directly: they
VIII buy tons of new wire, and that
VIII put more thousands Of men to work
IN WIRE factories and ultimately IN COP
per mines The men who get these
! wages will spend II; and the things
they buy will in turn create more work
Tor men in many lines
What the Pennsylvania Railroad has
done in large way can be done in one
degree or another by every business
man whose business in the past has
/ given him the status OF an accredited
borrower at his local bank
! The Federal Reserve System has
created this potential new money. It
has put this potential new credit money
| IN the banks and it is putting more
there. 1t has done more Indirectly
and informally, the Federal Reserve
/ System has set up committees Of lead
ing business men III each Of the IL
| Federal Reserve districts, whose func-
ton Is to bring it about that this new
| credit IS made use Of, that it be trans
lated into industry and employment"
SO the machinery IS set UP. II is
ready to move. All that is needed is
! that men should use it who have facili-
| ties to use it, that they should borrow
/ it and hire labor with it and buy goods
/ with 1t.
Partial Answer at Least.
So if one go back to the question,
What's the matter with the American
people," We have a partial answer at
least. The matter with some of them
is their failure to make use of this new
/ money, failure of some banks TO be
willing to lend it out, failure of some
business to be willing to borrow it and
| put men to work with it and buy goods
| with il.
The ore thing needed in this coun-
! try is just a little courage. Some
/ courage is needed from every one. In
/ the nature Of things, more is needed
! from the key men OF communities,
| those who are in a position to lead
/ forward. Without going into a mass
/ of detail, it can be said there has been
/ set up in this country a structure
which leaves nothing needed except
initiative on the part Of a large num-
Der Of men in the banks throughout
/ the country and among the business
men who are their customers.
! Can any one possibly imagine Amer
/ lea is not going to get back to where
/ it was in 1927? Or deny that some
| time in the future We shall have a
volume of business and employment
and prosperity even greater than be-
/ fore this depression?
/ Consider one item in our industrial
+ structure We have IN use In this
/ country about 25,000.000 automobiles.
! But We are only manufacturing this
/ year and last year an average OF some
! 2,500,000: That is, for every 10 auto
mobiles In existence We are making at
! present only one nav one. Stated
another way. it means that at the
/ present rate Of manufacture, every
| automobile in this country must last
/ IN hpfnrn II ic CrlnnlanToH HV a
new one. That, every one knows, is
nonsense. An average automobile
| doesn't last anywhere near 10 years.
What, then. is the answer? There
are but two possible answers. One is
that we are going TO have many less
automobiles; that some millions OF peo-
pie who now have motor cars will get
along without them for all future time
TO say nothing of new users who grow
up with the increase of population.
Does any one believe that answer?
The only other answer, and the true
one is that one of these days. and be-
fore long. we shall have to speed up
and make as many automobiles each
year. as we were making in 1927 and
1928. More than that, for We are, SO
to speak. accommodating a deficit of au-
tomobiles which sooner or later will be
filled. And what is true of automobiles
ordinary daily use.
Further than that, there will be
wholly new industries. The writer of
this article has on his desk specifca-
tons for device that can during the
Summer make his office some 10 de-
grees cooler. The device is somewhat
like kitchen refrigerator One large
costs roughly $500. Variations of this
device are made by several different
manufacturers, including two of the
country's greatest corporations.
May Become Indispensable.
These devices are now in the stage
of the early automobiles. Because not
many are made they cost more than
they will after they are made in qaun-
titles. The time will come when they
will be at least as available to every
office and to every family as the lowest
priced automobile now is. They will
be just as familiar as indispensable
and as universal as steam heat now is
A man Will no sooner get along with
out artificial GOODNESS in Summer than
he would do without artificial heat in
| Winter. Within year or two no con-
tractor will think of building any city
or suburban or village house without
including cooling apparatus as indis-
pensably as heating apparatus. I'm
deed, one possibility seems to be that
the same apparatus can provide both,
with the same valve it may be possible
to turn on heat in Winter, GOODNESS in
Summer
The system exists Thousand- =.
them are in use, chiefly in large forms
which cool whole buildings. They are
becoming familiar The writer of this
article will go from Washington to
Chicago next month in a train which
will be kept uniformly cool, at 10 de-
grees. In Chicago the auditorium in
which the two conventions are held
will be similarly cooled. Several new
office buildings in Washington and
New York are thus cooled. The Office
] az