Evening star., 1933-12-05
nv nm n. M. w. SPRAGUE,

Professor of Banking and Finance, Harvard
| Business School.
| am in hearty accord with Senator
| Thomas, Prof. Warren, and indeed with
all the world in desiring an early gen
| eral rise of prices from the present low
| level.
A higher level of prices and Of money
incomes would tighten the intolerable
burden of the huge mass of indebted
ness that was incurred during the war
| and the decade which followed the
armistice. Moreover, rising prices would
exert a needed stimulating influence on
business activities generally.
IT Is the appropriate means, IN pres
ent Of bringing aDaas
n0t upon me 0p1fcHYe 1IeH' Al 0'S-
cussing the means that seem to me ap-
propriate and in the course of critical
examination of those means which I
believe to be inadequate, I shall not
resort to personal abuse Of those with
whom happen to disagree.
There is no reason to suppose that
differences of opinion about monetary
policies are due to any lack of public spirit
or of patriotic desire to serve the best
interests of the country. However great
these shortcomings of particular indi-
viduals may have been in the past. we
shall get nowhere by tomenting distrust
between classes and groups or between
different sections of the country.
Influence Questioned.
Broadly speaking, differences of opin-
ion about desirable monetary policies
are due to divergent views about the in
duence which purely monetary action
exerts upon the price level. Those who
favor q far greater use OF silver than
f aTes as we a hoSe who Of are IN
ernment paper money, apparently be-
lieve that prices are directly and imme-
| diately related to changes in the guam
tity of the basic supply of money,
whether that be gold, silver or paper.
| Similarly, those who favor the gold
! purchase policy upon which the Gov
ernment has embarked seem firmly to
/ believe that the price level is very di-
rectly responsive to changes in the value
OF our money relative to the value of
! the currencies of other countries.
Now, should not deny that the use
of more silver than at present, large
tion of the dollar would have no in
,fluence on prices. On the other hand,
I do insist that the adoption of
measures of this character will not in
existing circumstances yield a rise in
prices that will hold and that will be
accompanied by full employment of
labor and higher standard Of living.
The movement of prices is a process
subject to numerous influences. The
supply of money is only one Of num-
ber of price-making factors, and this is
also true of the value of our money
relative to that of other countries.
Given a long period of time, say a
decade or more, it is doubtless true that
the supply of money or its relative val
ue will lead to a price situation that
would not be reached if the supply of
money had been much greater or much
less or the relative value of the cur
rency quite different.
Four Courses.
But we are concerned here with the
immediate future. We desire an early
rise in prices. The problem, then, is to
consider what monetary policy will con-
tribute to bringing about this desired
end.
At the outset we may distinguish four
ways of influencing prices by monetary
policy:
We may issue additional Government
about a rapid upward movement OF
prices as consequence Of widespread
We may N1[ 4 hlghtT NNr level
ton Of the dollar relative to foreign