Evening star., 1933-04-23
SAFE BANK AND MORE GOLD
SEEN DEPRESSION REMEDY
Guarantee of Deposits and Subsidizing
of Production of Yellow Metal Economic
Conference Answers to be Expected.

for two weeks to buy two dollars worth
of goods every day. If, then, I stretch
my credit still further and buy with
promises to pay three weeks later, can
continue for q third week tn buy two
dollars worth Of goods with one-dol-
lar income. If were able to continue
stretching my credit until finally I was
buying with promises to pay year
hence. I could, for the perioa Of one
year. enjoy two dollars worth Of goods
every day for year.
Necessity OF Situation.
But such joys are necessarily ephem-
eral. When my creditors refuse to
trust me for more than a year I must
drop back to a dollar-a-day standard.
When they begin to press me so that
my credit contracts I can't even buy
dollars worth Of goods a day, even
though my income remains at that
figure.
So many people were expanding their
credit during the inflationary period
from 1917 to 1928 that the country
was literally buying more than it had
income to pay for. 1t does not take
much of this to produce vast and far
reaching results. Suppose enough peo.,
pie begin expanding their credit and
perceptible difference on the market
The demand for goods increases slightly.
This at once stimulates business and
increases employment. More people
receive wages and begin spending them.
This sets others to work and they in
turn begin spending their wages. The
results are cumulative. But when credit
begins to contract the opposite tendency
sets in, and the unfavorable results are
also cumulative. The more credit con-
tracts the more men are out of work.
The more men are thrown out Of work,
with no wages to spend, the less work
there Is for others to do. And so on.
At the height of our prosperity the
Observation-Disclosures saw fit to re-
duce taxes. They should have re-
manned high for two reasons. First,
they were needed as drag on the ex-
cessive spending of money at that time.
Second. the surplus should have re-
tired the national debt If that had
been done the credit Of the Govern
ment would have been so good that
it could borrow in this time of de-
preston. It would not be necessary to
raise taxes just when people find it
most difficult to pay them.
Penalties Are Exacted.
Farmers, corporations and the gov
ernmentS manage to get into debt or
fail to reduce their debts in good times
and then have to pay up in bad times.
1t seems that We ought to learn some
time that that is the wrong way When
times are good that is the time to get
out of debt. Then it will be possible
to borrow in hard times. If the Fed
eral, State and local governments had
paid off their debts during the boom
they would not only not need to in
crease taxes now, but could borrow
largely for construction and put some
of the idle men to work.
The mischief has been done. The
guilty parties cannot be punished and
their punishment wouldn't do any good
We must consider constructive meas
ures and not cry over spilled milk.
Credit will not expand again until
confidence is restored. Confidence will
not return until people believe that
their money is safe when In bank or
when invested. They will not have
confidence in banks until the govern
ment guarantees bank deposits. That
is drastic measure, but nothing short
Of that will do.
There is so much talk about over
production that many seem to think
everything is overproduced. There is
one very important commodity which
is greatly underproduced. That is
gold. Instead of trying to put men to
work producing things that are already
overproduced. or things which when
produced are of no use, why not get
some of them to work producing gold?
A few million ounces of new gold would
raise the general price level and be
worth billions of dollars to the world in
countries to subsidize gold production.
For every dollar paid out in subsidies
the world would gain 500 in higher
prices, stimulated business, more en-
ployment and returning confidence.
Gold will be the major factor in lift
ing us out of this depression, as it was
in lifting us out Of the depression Of
the '90s.
Obviously Right Things.
If the Government would do these
two obviously, right things namely,
guarantee bank deposits and subsidize
gold production-it would not be nee
essary to do the many futile things they
are now trying to do. The depression
will end when we have banking sys-
tenn in which depositors cannot lose
their savings and when there is gold
enough on the market to make 1t
cheaper and the prices Of other things
higher in terms of gold.
II war were declared there Is not
much doubt that there would be work
for everybody within 80 days. If we
were to finance it as we did the World
War, the Government would issue
vast number of bonds. There would be
an immediate rise in prices; men now
IN debt would find their debt burden re-
duced and many others would benefit
economically from the war. But nobody
wants a war as cure for the depres-
sion. Besides, if it were financed on
borrowing, 1t would be followed by an
other depression later on.
Why not declare war on some Of our
non-human enemies? A war on dis
ease, on flood, or on ignorance would
have all of the merits and none of the
dement's Of a war on other nations. If
we want to fight human beings. there
are criminals and Swindlers enough to
occupy our time and energy for a few
years to come.
II the people could be reused to a
pitch OF moral fervor in a war against
these internal enemies comparable to
that which we developed in the World
War, there would be an outburst of ma
tional energy which would lift us out
OF the depression at once. Without that
moral fervor, we are likely to continue
grafting-trying to get something out of
the Government rather than trying to
contribute mething-working for the
means of gratifying our animal appe-
tites rather than working for the public