Evening star., 1933-11-29

publishes the first OF series OF
crticles by DR.. Sprdgue in iCllich he
presents critical analysis OF policies
NTH Which he disagrees. These ar
ticleS wiH reflect the opinions OF DR..
Sprague, and The Star presents
them merely as an important point
of vieD in the present controversy
ouer fiscal and recovery policies.
The second article 10iH appear
Friday, and thereafter they 1oiH be
printed on Tuesday and Friday.
BY DIR. O. M. w. SPRAGUE,
Professor of Banking and Finance, Harvard
Business School.
TN this series of 10 articles I am
gcing to discuss ways and means
OF extricating the country from
depr ssion.
We all know where we wish to
90. We seek a situation in which there
shall be full employment of labor and
an active demand for capital, with re-
sultant enlarged production and con-
sumption-in short, higher standard
of living.
We also desire a higher level of prices
in order to tighten the burden OF exist
ing indebtedness and because rising
prices may be expected to exert much
needed stimulating influence on pusl-
ness activity. 49,,
There l. no disagreement on tneSe
matters, but we are less certain wnetner
we are moving steadily toward the de-
sired objective
Monetary Causes Not Sole Blame.
I have no doubt that many readelS
devastating criticism of the commodity
dollar and would enjoy a lurid picture
of the frightful things we may experi-
ence If a traditional Sound-money pohcy
shall come to questions of this sort pc
fore the end of this series Of articles.
I do not begin with them because l 40
not believe the depression Is primarily
due to monetary causes and because
hold that no monetary policy. however
wisely formulated, is sufficient to bring
about a trade recovery. We had souno
money and no doubt about the security
of the currency between 1929 and 1883.
There was also during those years a
plentiful supply of credit aVal!aple at
low rates and at intervals widespread
confidence that prosperity was at nano;
And yet the country drlfted more aho
more deeply into depression. Senator
Borah was quite right. therefore, the
other day in saving that those who
favor a more or less traditional none
tary policy must in addition be con.
structive and suggest positive means OF
bringing about trade recovery.
For somewhat similar reasons shall
also defer consideration Of that intrigu-
ing. or shall I say perniciouS, product
of statistical ingenuity, the wholesale
commodity price index. A general rise
in prices would doubtless be stimulating
to business but we need to know
whether it would stimulate desirable
activities activities that could be main
tanned. We need to know whether the
rise in prices would be associated with
conditions that would induce and main
tain the full employment of labor with
resultant higher standard OF living.
Clear Picture Is Necessary.
To form a judgment in this matter,
we need to begin our inquiry with an
examination of the non-monetary as
poets of the problem of trade recovery.
In order to test any proposed meas
ure designed to contribute toward trade
recovery, it is necessary to have very
clear picture in ones mind OF what the
situation will be like when We finally
arrive where we wish to go. 1t goes
without saying that the increased pro-
duction of goods and services, which
will accompany full employment, does
not mean an even increase in the pro-
duction of each and every commodity
and service that is now being produced.
There are scme products, as for example
salt, the present output OF which is
fully adequate for all requirements
under conditions of abounding pros
perity.
There are other products, and this
holds generally of agricultural products.
the supplies of which are currently pro-
duced or that could be produced with
full use of the land now under culti-
vation, that are much in excess OF what
can proftably be produced and market
ed. Reasonable prosperity for agrlcul-
ture will not be attained unless con-
ditions become such that considerable
number of people now engaged In agrl-
culture find occupation elsewhere.
Farm Help Is Not Permanent.
We do we'll to extend temporary aid
to agriculture by devices designed TO
contract supplies coming on the market,
but this is not a permanent solution
of the agricultural problem. At best,
these devices can only serve with Gov
ernment assistance to do for agriculture
that which most industries have been
able to do for themselves. Farmers are