Evening star. [volume] (Washington, D.C.) 1854-1972, 1933-09-15
An Other states and Canada.
More Credit.

The administrations answer to the
demands OF Senator Pat Harrison OF
Mississippi and others for immediate
"tnflation" Is the announcement that
the Reconstruction Finance Corporation
Is ready to loan a billion dollars to
banks and trust companies at per
cent interest for periods Of six months
or less, with the agreement that the
banks loan the money to industry At
not more than S per cent. The money
is to be loaned to industry for the
purpose of meeting the requirements OF
the N. r. A. Chairman Jesse Jones OF
the Reconstruction Finance Corpora
ton, In making the announcement OF
the plan to aid industry. has termed
It correctly an expansion Of credit
credit imitation rather than currency IN
fation. Further, the r. F. G. mas
clipped its interest rate on long-term
loans to banks and related financial
institutions from ~ per cent to
per cent.
Here is the Government going into
the discount business on a large scale.
The R. F. c. with its new system oe-
comes either a rival of the Federal Re-
serve system or its complement. It Is
to be assumed that 1t will be more
lenient In its discounts than Is the
Federal Reserve system, or else there
would be no need of the new system.
The administration Is determined TO
do all it possibly can to bring about
easier and more credit, which the
banks have not been willing, 1t Is said,
to extend, although the bankers con-
tend that industry Is not demanding OF
them much of the money they have on
hand to loan. Clearly, the adminSra-
tons latest mode of attacking the de-
preston is calculated to encourage IN
dustry to get going more briskly. Should
the banks fail to borrow from the Il. +.
G. and to lend the money out In SUI
fcient quantities and quickly enough
to meet industrial needs, then local
mortgage companies may be formed to
handle the loans to industry.
Such credit imitation, II 1t succeeds,
must act first to aid industry. Its
effect upon the farmers OF the coun-
try, for whom Senator Harrison has
demanded aid, will be secondary, II 1t
has any effect at all. By putting more
money into the hands Of labor and the
white collar class" 1t will make 1t pos
sible for them TO purchase more food
stuffs and other products Of the farm.
The truth OF the matter appears to be
that prices Of industrial products have
increased more rapidly than the prices
of agricultural products. In other
words, the disparity between the farm
er's dollar and that Of the industrialist,
which has been against the farmer for
years, still continues. Nor does 1t
appear that imitation Of the currency
would of itself have any bearing on
wiping out this disparity. The admin
istration has so far declined to enter
upon currency imitation, except for its
withdrawal from the gold standard. In
this stand the administration has been
particularly wise. Currency imitation
of the printing press kind would merely
put more money OF less value into cir
culation. Its value would decrease
faster than would its volume In the
hands Of the workers, leaving them in
the end in disastrous condition.
After all, the problem of the depres-
sion is more money in the hands of
the consuming public rather than more
currency. There is plenty Of currency
today to meet all demands. But there
Is not enough work nor large enough
pay rolls. The effort to expand credit
and thereby place in the hands of
industry the means to expand the num-
Der Of jobs and to increase the pay Of
the workers Is an effort in the right