Evening star., 1933-01-23
FAVORABLE REPORT
MADE ON PROPOSED
TRADE AID INQUIRY
Continued From First Page.)

were able through open market opera
tions to arrest the process Of deflation.
That process has been arrested.
ITO stop. at this tine would bring
about contraction"
Representative Goldsborough, Mary
land, Democrat, said the House in pass
ing his price stabilization bill last
session had the intention of setting
definite policy of expansion and stabil-
ization which the board must follow.
IF I may give my individual
view" Mills said. no matter what may
be the inclination Of the central bank
to keep money easy through the pur-
chase of Government securities, you
first must have corner stone of bal
anced budget to operate successfully.
Would Stabilize Exchange.
Otherwise, all you would be doing
is mopping up a Treasury deficit year
after year. 1t has always proved dis
aStrous to continue that way.
You have got to break the vicious
circle at some point-if you could bal
ance the budget; then through the Fed
eral Reserve System pursue vigorous
course; then aid in stabilizing foreign
exchange by removing some OF the OBJ
stacles which interfere with free
various categories OF debts individually
rather than attempt to cure all at
once
IF you do this, then I think there
would be such a lift in the world that
it would be bound to raise prices.
This is the right way rather than
the manipulation of currency
Mills said that I'VE are so close to a
balanced budget that it can be had b.
a vigorous cut in expenses and small
increase in taxes"
Representative Busby, Mississippi
Democrat, asked if Mills thought sCa-
bility OF foreign exchanges would not
require a gold standard for all coun-
tries.
Il think it best for the principal in
dustrial and commercial countries he
replied.
Fears Credit Contraction.
Mills said failure to re-enact the pro-
vision permitting the use OF Govern
ment bonds as collateral for reserve
notes would almost certainly force
Federal Reserve Banks to sell Govern
ment securities, resulting in a con-
traction of credit which would be in
terpreted as a deflationary operation Of
the first magnitude"
Representative Busby, Democrat, Of
Mississippi, insisted that more currency
was needed. He is author of bill to
issue $4,000, 100000 Of Federal Reserve
notes on Government securities.
You can't keep currency in circula-
ton if there is no demand for it,
Mills replied, cit comes right back on
you, if anyone visualizes the problem
as simply one of pumping out currency,
he has too elementary view of the
whole problem. Currency is bound to
return if there is no demand. 1t is
credit We do business with
Senator Harrisons proposal author
ICES the Finance Committee to con-
duct a far-reaching study of the
whole economic situation during which
the views of economists, financiers, and
other experts will be obtained.
Costigan's resolution calls upon the
Tariff Commission and other Federal
agencies to investigate and report to
the Senate not later than March /,
data which may assist the incoming
administration in tariff bargaining"
with foreign powers.
The Costigan proposal asks the COM
mission generally to advise such ways
and means for tariff bargaining as may
appear relevant for most advantageously
promoting expanded traoe between the
United States and foreign countries
with the purpose of increasing employ
ment in the United States and markets
abroad for products of farms and fac
tories of the United States"
1t requests information on tariff
rates, foreign trade statistics. produc-
tion figures and other pertinent facts
including the extent of the export of
capital from this country to build or
buy factories and employ labor abroad
The number of employees in Amer
ican-owned foreign factories also is re-
oueSted.