The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1933-02-07

now discussed:
l. Currency imitation, which is
involved in bi-metallism, printing
Of more money backed by less gold
per dollar, basing money on other
commodities than gold, and other
current plans.
Credit Initiation Considered
2. Credit initiation, involved in
lending by the federal reserve banks
and the Reconstruction Finance
Corporation to augment cash re-
serves of banks and stimulate
private investment.
3. Bond initiation - government
floating big bond issues and using
the money in operations designed
to stimulate business or provide for
the common need, as the Liberty
bond issues in the World war or the
proposed La Toilette plan for huge
public works program.
Pressure of inflationists now is
chiefly for currency initiation, their
plans being based on two ideas
To create a larger volume of cur
rency and to force it into circula-
ton.
The theory is that this additional
money will increase demands for
goods, thereby increasing prices
the owners of the goods knowing
that there is more money available
thereby also increasing business
volume, creating jobs and restoring
prosperity.
Emphasized by Inflationists
The necessity of resorting to this
process of pumping life-blOod into
business and simultaneously solving
the key problem of the debt burden
is emphasized by inflationists. They
hold that conversion downward Of
debts and interest thereCp is a
piecemeal job, which amounts to
bankrupting most of the nation.
They believe the present process
of debating creditors, through
wiping out of debts, will continue
for two or three years more at least.
Some even fear it undermining our
capitalist system. The Wiping out
of eleven billion dollars in bank
credits in three years is cited.
The currency inflationists point
out that the government already
has tried credit initiation on a mod
est scale, and it has not worked.
Three ways were tried. Commercial
credit paper-disCOunted business
notes and the like-were made avail
able as the basis Of currency under
the GlassSteagall act.
The Borah amendment to the
home loan bank act authorized iSSu-
ance of national bank notes-money
of up to about one billion. The
federal reserve board bought up
hundreds of millions in government
securities, taking them off the open
market in an attempt to force the
money boarded in banks into bust
ness investments.
Business Fails to React
These should have succeeded, on
the theory that credit, not money,
is what makes our wheels go around.
Nine-tenths of American business
is transacted by credit-check or
draft-without a single dollar bill
changing hands.
But there was no stimulation of
business. The banks merely held
the money for their own protection,
the same as they had done when
loaned huge sums by the Recon-
Struction Finance corporation
Either the bankers were timid. or
the business men hadn't enough
confidence in their future to borrow.
AS private credit has become
stagnant, the governments credit
has become better and better. A
quarter billion dollar treasury note
issue the other day was over-Sub-
Scribed thirty-one times, more than
seven billion dollars being offered to
the treasury for the issue. This is
one of the inhationiStS favorite
talking points.
The foreign trade issue is another