The times-news. [volume] (Hendersonville, N.C.) 1927-current, 1933-06-23
NEWSPAPERS OPINIONS,
SPECULATION

Sir Josiah Stamps warning with regard to specu-
lation comes most OPPORTUNITY. The noted British
economist. railway and banker has told the peo-
pie of the United States that unless they place
bride upon speculation and keep initiation in the
commodities market, where it is needed and out
of the securities market where it will be danger,
their plans for rehabilitation will end in failure
To put it shortly Sir Josiah is afraid of boom.
The materials for boom, of course, lie all
about. For more than three years. now, the specu-
lating public has been under leash, and has had
no opportunity for a fling. =. Initiation, when 1t
comes promises a sensational rise in prices and
much easy money, and already the future is being
discounted in the market advances. The depres
sion for all its agonies, has evidently taught no
lessons at all as to the foes of 1928 and 1929
We are even being RECALLED with arguments in
favor of sizzling, old-time boom. 1t would start
things, we are told. 1t would stimulate buying. 1t
would get production going. 1t would Danish the
bread lines and the relief camps, and chase the
megrims off to limbo.
Well suppose it would what then? The boom of
the late twenties did all these things, and where
did it land us? 1t seems hardly worthwhile max
ing a sensational rum just to find ourselves at the
end in the depths of bigger and better depres-
sion. What the world should be seeking is a way
out of the mudde, not way further IN.
great deal has been made, in the discussion
of currency imitation of the danger of going to
excess. and Germany is held up as a horrible ex
ample But the real danger is not in currency in~
1ation at all but in credit initiation. 1t credit
initiation that permitted and encouraged the late
boom, and it was a belated attempt to restrict
credit that pricked the bubble. In 1929, it has
been estimated, United States banks had loans out
amounting to fifteen and one-half times the actual
money in their possession. And with much
credit available, of course prices went soaring
That was when the thing occurred of which 81:
Josiah Stamp gives warning-the imitation got into
the security market.
Well what can be done about it? How can the
credit necessary for industry and commerce be
made available without at the same time, furnish
ing the materials Of speculation? The problem IS
admittedly difficult one The old plan in England
was for the Bank of England to very the discount
rate This was an indirect method of controlling
credit The London Chamber of Commerce sug-
gested recently that the bank act directly by pac-
ing its veto on the issue of credit above agreed
ratio Credit up to ten times the money available
might be issued egitimately, it suggested, but
beyond that there was danger of undue initiation
and of course there can be speculation in COM
modites as we'll as in securities in the United
States, the Federal Reserve bank could be employ
ed to put a curb speculation. In Canada, there
is no authority that could act, and the lack of such
an authority constitutes of the strongest argu-
ments for a central bank. The need is for sta
bilizing influence Speculation unsettes business,
runs riot with prices, destroys morale, subordinate
production and development which are the impor-
tant things to the fluctuations of price, which
should be a controlled, not a controlling factor
Vancouver (B. c. Province.