The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1932-04-23

@~N"AAa
Sy DIR. Barnes on previous currency in
hation experiences.
BY HARRY ELMER BARNES. Ph.D.
Beginning with an act Of Feb. 25.
1862, the federal government issued
greennacks, or legal tender notes.
by 1854 they had been issued to a
grand total of SAC 900, 900. This
produced a great imitation Of prices
and speculation in specie.
Gold stood at 285 in July, 1864,
making a greenback worth only IS
cents in gold. The government lost
millions on this. With gold at 285
This meant that a man could buy
government bonds with paper dol
lars worth only 35 cents.
on the other hand, the govern
ment, which paid interest on its
bonds In gold, was paying what
amounted to II cents in greenbacks
on per cent bonds.
While the greenbacks were III full
circulation, it was grand time for
debtors. But they got pinched
when, in 1865, Hugh McCulloch, sec
rotary of the treasury began to re-
tire the greenbacks. The debtor
classes, who then would have to pay
back their loans in dear money,
vigorously opposed the defiai sonary
retirement of greenbacks.
Confederate Money ColIapses
They started the Greenback party,
which ran Peter Cooper and Ben
Butler for President in two cam
paigns. Finally, in 1875, it was pro-
vided that specie payment should be
resumed in 1879.
The south also resorted to vast
issues of paper money during the
Civil war. BY the beginning Of
1864, Confederate paper money was
worth only cents in gold to the
paper dollar. 1t lost all value as the
southern cause collapsed.
The main effort at currency in
fiation in our country since the
greenback movement was the free
silver agitation. But this collapsed
in 1900 with adoption of the gold
standard. The lesson of the panic
in 1893 brought this about.
Will ~ DllilCJdlllC oIdIlAldlQ legal
Cleveland, nevertheless, redeemed
government notes in gold. Federal
Reserve notes have been well Sc
cured and their issues rigidly con-
trolled. But they have not been
able to stabilize the currency.
The most thorough-going infia-
ton in all history was carried out
by Germany after 1914. Germany
began to initiate currency during the
World war instead of resorting to
heavier direct taxation. After the
war her greatly increased expendi-
lures for reconstruction and her lack
of credit abroad perpetuated and in
tensif1ed the imitation tendency.
Mark Goes Crashing
The pre-war mark had been worth
approximately four to the dollar GA
cents. BY May, 1921, it took sixty
marks to buy dollar. BY Novem~
Der, 1922, the mark had declined to
the ration of 1000 to dollar. This
was, however, only a first faint step
toward the ultimate imitation.
When the French and Belgians
invaded the Ruhr, in 1929, infla-
ton became not only fiscal, but
defensive, measure. 1t began in
dead earnest. In 1923, Professor
Benns points out, 30 paper factories,
1873 printing offices and 1888
machines were engaged at top speed
in producing paper currency.
BY November, 1923, the mark
stood in Cologne at 1000, 100000, 900
Qour trillionS) to the dollar. Prices
sometimes changed 100 per cent dur
ing a single day. Count Montgelas
told me that at one time they would
not accept paper currency for a
long railroad ride. He and his wife
had to pawn silver spoons to ride
from Munich to Berlin.
Savings, pensions and insurance
were wiped out. AnnuitieS disap-
peared. Professor Luijo Brentano
of Munich, one of the most highly
paid of German professors, told me
that he put all of his large life saw
ings in very extensive annuity.
Savings Fade Away
In 1928 it had dwindled to far less
than the price of postage stamp
at 250,000,000,000 marks a quart in
November, 1923.
Wealth generally was transferred
from the creditor to the debtor class.
The holdings of the middle class
evaporated. The national debt was
wiped out.
Mortgages were lifted, bonds re-
tired and notes maid off with CIR
rency worth only an infinitesimal
fraction of its value" A few great
induStrialists and capitalists, like
SHINES, prof1ting by the practical
disappearance of wages when paid
in paper, piled up great fortunes.
Their taxation became merely nomi-
nal as well.
The orgy was brought to an end
when farmers and merchants re-
fused to sell goods for q worthless
currency. Starvation and want
faced the Germans. So they issued
the new Rentenmark based on a
blanket mortgage on all the pro-
ductive lands and industry OF Ger
many.
This new gold mark currency was
stabilized at the old rate of AZ to
the dollar.
Germany thus wiped out her war
Indebtedness Except reparations) at
the cost of the ruination of her
middle class.
Ito Be Continued.)
TECH FXERcIcES GET