The Washington times., 1933-03-11
LACK Of CREDIT
MONEY WORST
TRADE CHECK
By TIMES FINANCIAL EDITOR


The Wall Street Journal has
done a good job this week in
hammering it's clientele with
front page editorials, trying to
drive in the fact that less than
one.tenth Of the business Of this
country normally is transacted
by the use Of formal money, the
various forms of Government is
sued currency and coin.
No conceivable. expansion Of
the currency, it points out, can
begin to make up for the con-
traction in credit money-checkS,
drafts, acceptances. etc.-with
which nine-tenths of all business
ordinarily is done, which has
been taking place at a rapidly
accelerating pace and now can
be halted only by a changed vi
sion and practice among bank
erS.
Hard for the Bankers
However, having in mind the
caption over an article by
Thomas F. Woodlock in a column
adjoining one Of these editorials
which reads Bankers Needed
This Nation Has Always Been
short Of Them and Long of
Banks" it is too much to expect
that there are enough bankers"
to remedy this situation, of them
selves, without Government aid
or compulsion. On the record of
what the "banks" have done with
the unprecedented Government
aid extended during the past year
and more through multitude of
agencies and easements, 1t per-
haps is fair to believe that only
compulsion can accomplish much
along this line.
For the figures on this credit
money shrinkage let us jump the
wide economic chasm which sep
arates the Wall Street Journal
and the American Federation of
Labor, whose Monthly Survey of
Business currently presents the
most succinct and graphic COM
pilation of official data this
writer has seen.
Big Circulation Increases
First note that formal money
in circulation-United States cur
rency-actually has expanded
largely during the past few
years, from $4,748, 900, 900 at the
peak of the boom in January,
1929, to 1888, ,O0O,O 900 at the close
of business Friday last week.
The point made here is that
there was $1744 worth of business
done for each dollar of currency
in circulation, in 1929, while the
past years rate of turnover has
been less than one-fourth that, or
$4.34 of business per dollar of cur
rency circulation.
How grossly subnormal this con-
dition is, and the ratio at the mo-
ment must be much below the
years $4.34 average, will be under.
stood when compared with the
rate for 1922, during the turn
from the 1921 depression, when
$7.72 worth of business was done
for each dollar of currency circula.
ton, close to double what it is
today.
How Credit Has Shrunk
Turning to the matter of credit
money, it is shown that this
shrunk from $41,542, 100000 in
1929 to $26, ,985 900, 900 in Septem-
ber of last year, a matter of
nearly $15.O00,000,000, or IS per
cent, on the latest available COM
plete figures. The shrinkage
must have been tremendous since
that date.
Clearly the increase of less than
1900, ,O00, 900 in currency circula-
tion, even at last years average
turnover ratio of 4.34 to /, cannot
compensate for the 15- billion
shrinkage of credits above estab-
lished, let alone the shrinkage
that undoubtedly has taken place
since last September.
President Roosevelt. we may be
assured, has under consideration.
while he is expanding the cur
rency, methods whereby the
bankers" will be enabled to CO.
operate with him in inducing the
banks" to loosen up some of this
credit money so necessary if the
country ever is to get upon a
stable economic basis under the
T0roYoieol SSSooHxy %oo1O -