Evening star., 1934-07-17
Defeatist Pessimism Will Not Correct
The Economic Ills of the Country
To the Editor Of The Star:

To the Editor of The Star:
The fact that labor is actually de-
prived Of its fair share of production
by our commercial bank loan"
scheme for counterfeiting the unit
claims (money) which should imple-
ment the equitable and efficient dis
tribution Of wealth as the reward Of
intelligent industry must become
more generally appreciated before We
can solve the conundrum of modern
economies on other than an auto
cratic basis.
We shall have dificulty in even ap-
preaching these problems until,
through this understanding of money.
the public mind Is diveSted of those
more or less prevalent socialistic fall
lacies which would wipe out interest,
rent and profit as the reward of in
telligent thrift. For the notion that
the distribution of ownership land of
capital income) has any casual rela-
ton to industrial depression is pre-
cisely contrary to fact. Maldistribu-
tion of capital ownership is an effect,
not q cause, and attempts at redistri-
button through taxation can do moth
ing but add to our troubles. Effective
reform must deal with the cause, not
the symptoms, of maldiStribution.
Prosperity and a high total of real
wages are related, not to a proper
tionately small "unearned" capital in
come, but to a proportionately small
wage-earned income, in the total pur-
chasing power Of the community.
Even Russia has recognized this in
building up her capital at the cost of
starvation wages for virtually con-
scripted labor.
Necessary monetary reforms in the
relation Of taxation to the public bud
get cannot be attained in the pres
ence Of this popular delusion that
labor can be benefited by soaking
the rich" with taxes, for taxes do not
redistribute capital They destroy it.
Thus industrial insurance, pensions
and doles cannot be substituted for
the more fundamental banking and
budgetary reforms.
These essential reforms are also de-
pendent upon divesting our stereo-
typed economic orthodoxy of its sta
tistical alterations in economic inter-
probation. Statistical conclusions re-
fecting upon the applicability Of a
price index to monetary control are
the chief impediment existing in the
overturned, technical mind today TO
the substitution of fair formula dol
lar for the essentially unfair, discre-
k;zrary. r,anaoad dal1ar iJaa Tf {e
this mistake which is raising new
hopes for the illusory gold" standard
through the impractical notion Of try
ing to differentiate between CONNER
cial and investment banking.
This fundamental injustice that
arises in making loans from demand
deposits is thus overlooked because Of
the overweaning influence of the
vested interests of the commercial
loan" business. Needed, new money
(unearnedD should not originate in
private loans" as q special privilege
to q consortium of bankers and their
commercial clients, but should be
earned into use through, the public
budget; and the equity and effective
ness of a price index as a basis for
balancing such budgetary imitation
against taxation as a deflationary,
controlling influence is dependent
| not upon any assurance Of literal sta
bility in such an index. but rather
upon practically calculable result
that is available to every one on the
same basis. Statistical data on trreg-
ularities in the relation of . price in
dex to commercial conditions are,
therefore. largely not pertinent. rele-
want or material TO the question of
! ths utility Of Q price index under q