The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-09-14
INSTALLMENT v

the principle ot America First" it
doubtless seemed at the time the
best thing to do. Roosevelt's pol
icy was thus in the nature of a
half-measure. steering midway be-
tween claims of the paper inf1a-
tionists on the one hand, and the
Out-and-out gold bigots on the
other. and yet holding all the while
to the ultimate ideal of a dollar
eventually possessing internal sta
bility. which entails (as I have
explained in other books a fluc-
tuating exchange rate in terms of
gold.
As regards the Presidents po-
litical bias: He is neigher out
and-out Socialist nor out-and-out
capitalist. He certainly desidres to
help the underdog, and apparently
thinks that there is room for a
fairer redistribution of wealth.
He also intends to eliminate all
financial abuses; but for all that
he fully realizes that under the
capitalist system profits are the
handspring of industry, and that
If the prospect of profit is elimi-
mated, either through overtaxa-
ton, too high wage rates, con-
trolled prices, confiscation or de-
fiation, employers will become
lOath to produce and employ.
Unemployment will, in conse-
quence, grow, and the size of the
distributable cake will diminish.
The administration first aim,
therefore, must always be to let
industries make reasonable profits,
and thus stimulate expansion and
general employment; for it is only
If the cake expands as a whole
that all vii be able to have big
ger portions.
But that is not to say that the
Presidents sympathies lie only
with the capitalists. He merely
realizes that, so long as capitalism
remains, he must take full account
of the all-controlling profit motive,
If the workers are to benefit.
NOR, incidentally, does the
L Y fact that the government
tries to raise general wages with
prices, prove that its Sympathies
are solely Socialistic. Raising
wages with prices is not an anti
business measure, for, if traders
are to be prosperous, and if profits
are to continue, effective demand
must keep pace with prices and
supply.
Meanwhile. the Presidents plan
to eliminate financial abuses should
have the moral support of all. His
general policy, of course, is a
mixed one of relief, recovery and
reform. and all his bills have these
goals as their motive, although
some of them, e. g., the securi-
ties act and his bill for
shorter hours, have temporarily
interfered with the upswing of
business, and thus for a while
have appeared contradictory.
His rules and regulations at
the moment are stiff, but when
young horses are being broken in
they require a tight rein at the
outset. Subsequently you can
ride them on the snaffle with
safety.
As regards the administrations
financial policy as a whole:
Later on it will probably be
necessary to establish some form
of central banking system, and
also to try to arrange that never
again will industrial progress
be held up solely by shortage of
money or by institutional defects
in the monetary machine.
For the moment, however, the
plan is. briefly, First relate,
then stabilize"-and when Roose-
Welt talks of sterilization he GER
tainly refers more to the internal
price than to the less important
factor of the foreign exchanges.
This he has stated again and
again.
DERSONS. however, who have
Il not studied the theory of
money and the theory of the busi-
ness cycle seem to think that the
whole policy of the President is
dangerous and crazy. Firstly, they
argue that no imitation has ever
yet occurred without giving rise
later on to disaster.
Secondly. they say that since it
is lower prices that stimulate de-
mand the objective should be to
lower prices instead of trying to
raise them. Thirdly, they say that
Roosevelt is destroying all conf
dence by tampering With money
and dangerously increasing the
the government debt. They argue
that until the burden of taxation
and debt is lifted industry can
not be expected TO recover"
A controlled relation is, how
ever, entirely different from the
uncontrolled mutations of the
past.
Secondly. although lower prices
may stimulate the demand for a
single commodity, the prospect of
lower prices in general merely
makes production dry up and
makes consumers hold off, while
bankers begin to restrict credits
cumulatively, and thus bring about
further falls in trade. The Presi-
dent is therefore forced, as part
and parcel of his plan, to create
the PROJECT of rising general
prices.
Thirdly, as regards increasing
the government debt: The ideal
would, of course, be to be able TO
improve general trade without any
government expenditure; but since
the public is nervous about using
the surplus bank credit facilities
now available, it is essential to
provide a primer" This might
be done by printing and spending
paper money direct, but this goes
too near TO dangerous imitation;
the alternative primer" of govern
ment borrowing and government
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