The midland journal. (Rising Sun, Md.) 1885-1947, 1933-11-17
SHOULD WE ADOPT a POLICY
OF INITIATION
Paper Prepared BY e velyn Todd,
1888, Senior Problems of De-
mOcracy Glass Rising Sun
High School

mocracy Glass Rising Sun
High School
To say that we must have imitation
as last resort is just as sensible as
telling a small boy that if he will eat
only few more green apples his
pains will disappear.
All these fallacious arguments are,
of course, based on the idea that
prices must be raised. The idea
that prices must be raised, is, in
turn, based on two underlying as
symptoms: (1) That higher gen.
eral price level-cheaper dollar
will enable debtors to liquidate their
indebtedness; (2) That rising prices
stimulate business activity.
The present burden OF indebted
ness bears most heavily tn the farm
er and owner of city real estate. If
the price of farm products were sud-
denly to be doubled, SO would the
price of things the farmer buys. 1t
is extremely doubtful whether farm
prices could. by any known imitation
airy device be raised by an amount
sufficient to Offset the increase which
might be brought about in prices of
the manufactured goods which are
consumed on the farm. AS for the
owner of city real estate, it would be
impossible to raise rents promptly
enough to increase operating profits
to any great extent.
Any speculative rise in real estate
prices would be liable to sudden col
lapse, after which tho situation
would be worse than before, or at
least no better
That rising prices tend to increase
general business activity is popular
assumption, because over consider
able periods of time, when business
activity is rising, commodity prices
are also on the up grade II is not
true, however. that in the beginning
rising commodity prices normally set
in motion a rise in business activity
The reverse is usually the case. The
record of many previous business
cycles shows the normal sequence of
recovery from depression is first
revival in activity, and second an
upturn in prices.
All previous secondary postwar
depressions have given rise to agita-
ton for various forms Of imitation
airy measures, but recovery has new
err been accomplished until these
proposals were defeated and a sound
currency assured. One of the pro-
posals which has been advanced
since the beginning Of the present
secondary post-war-depression differ
ed from earlier proposals, whereby
the gold content of the dollar would
be changed from time to time.
We have an excellent example of
the basic weakness in all in6ationary
schemes in the proposal for the reg
ulation of the quantity of our bank
deposit currency through the open
market operations of the Federal
Reserve Banks. At first the Federal
Reserve Banks began buying Gov
eminent securities in moderate guam
titles. When this failed to bring
about the desired results the cry i'm
mediately arose that the policy was
not being pursued vigorously
enough. So in April, 1882, the
Federal Reserve Banks began buying
Government bonds at the rate of
| 100000 a week. Even this
was not sufficient to satisfy the de-
mand of the ''ref1ationists" who still
insisted that if the Reserve Banks
would only buy still more and more,
Government bonds, all would be
well.
How much is enough =? That is
the question which the inflationists
have never been able to answer, and
never will be. Once started on its
insane course, imitation becomes a
wild monster, powerful enough to
wreck the best monetary system ever
devised by man, driving all kinds of
business enterprise to destruction