The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1934-10-04
HONEST Money IS
HELD TO Be CURE
IN PRESENT CRISIS
Congressman Sinclair Would
Have Congress Exercise
lts Authority

It's Authority
Belief that an honest" money sys
tenn Is one Of the chief needs OF tn
United States and will lead us
stabilized prosperity is expressed b
Congressman J. H. Sinclair, indie
pendent candidate for reelection. i
Foreign Service magazine, a publica
ton devoted to discussion of nationa
problems. .........
A part OF the article is reproduce
herewith in order that Tribune read
ers may be familiar with Congressman
6inclair,s position on this importan
question.
The excerpt from the article fol
lows:
Congress Is authorized by the Con
stitution to coin money and fix tn,
values thereof. It has not exercised
that function except In most limited
manner. It does coin the specie
money and print the paper currency
but 1t has made no effort until re-
Gently to fix the buying value of it!
money. The result is that we have
never had a stable dollar. instead
OF Congress controlling the volume Of
money in circulation, which is the
most important attribute of money
It has conferred thai power upon ma.
tional banks. The effect OF this has
kAnn uoct1,, ~ ;y,nroocn fhn v@ou,o,
welded by banks in our commercial
life. We find business being carried
on more and more by means OF checks
and drafts. In the decade ending II
1929. 1t Is estimated that over 80 pe,
cent of the total business Of the ma
ton was done with these evidences Of
bank credit This volume of bank
credit was a greater medium Of ex.
change than the actual cash money
Of the country, and performed nine
times as much work. It has the same
influence upon prices, dollar for dol
lar, as cash money.
Initiation by Bankers
In September, 1929, at the peak OF
our prosperity. we had approximately
five billion dollars of money in cir
culation and fifty-seven billion dol
lars Of bank credit. subject to be
drawn by check or draft. There was
eleven times more credit money on
deposit in banks of The country than
there was actual money with which to
pay these deposits. Yet that fifty
odd billion of deposits acted as q
s>aadi,,,,, ~ ovrho poo i,,cf Tho ca MN q G
currency. That was an example Of
uncontrolled initiation, until some
thing happened to shake public con-
fidence.
when the stock market crash came,
It set in motion forces that destroy
ed confidence in our whole commercial
structure. People demanded cash tor
their bank deposits, but the cash with
which to pay them did not exist. So
many banks were forced to close their
doors that our whole banking organ
ization was threatened with ruin. The
bank holiday of last March saved the
larger city banks, and with the aid
Of the Federal Government most Of
them were finally able to meet the
demands Of brighten ID depositors.
Cites Credit Shrinkage
The banking resources Of the
United States have shrunk nearly
thirty billion dollars from 1929. We
still have approximately the same
amount Of cash In circulation-five
billion dollars-but the bank credit
which had heretofore done 80 per
cent Of our commercial! exchanges
has fallen from fifty-seyen billion
dollars to less than thirty billion
dollars, deflation Of nearly 43h
per cent in the circulating medium
And yet. with these facts we'll known
there are those. who express concern
that the government will make 'ba-
l0ney' dollars If 1t attempts to re-
store part of this lost bank credit
Another problem that must be met
Is the large amount o. debt, both
public and private, which has been
created during the period beginning
with the World War down to the
present time. A, very careful survey
Of these debts has been made. and
the total has been placed at the
stupendous figure Of two hundred
fifty billion dollars. This amounts tc
practically dollar of debt against
every dollars worth o. property In
our country. The earnings OF all Of
the people can scarcely pay the in
terest on this vast sum, let alone
paying anything on the principal
Unless we are to have reputation
there must be relation Of oul
u:oney and credit to pay these debts
Debt-Making System
Our money system for the pas,
6' years has been a debt-makina
system. operating for the benefit o.
. selfish few, rather tran as a ser.
vice for all the peoplc We know
that the basic money, gold, is limitec
In quantity. Therefore. in order t
carry on business and meet the need.
Of trade. people are forced to borrow
and thus create bankers or credit
money. This credit money is usu.
ally secured on goods and chattels
and is part Of the circulating med
!rm. the same as II 1t we're gold.
But when payment is due. golf
money is demanded, not chattels q
credit money. II ever, body has t,
pay 1T the same time, credit col
lapses, values contract, and a perio,
Of depression starts. A further dis
advantage In the use OF bank credit
for money Is its high cost. It ma
be illustrated in this way. A SINAI
community has altogether only $lO0
IL gold In its bank. The bank ex
pands this amount by loans to $1,000
9. credit money secured on notes an
goods. The interest rate is five De
cent per annum. The result Of thi
procedure is that at the end Of onl
che year Of lending operations, one
half Of the total gold Of the com
u.unity has passed into the owner
ship Of the bank.
Want Good Old Days
rs 1t any wonder that our Resery
Bankers are very fond Of the preser
system, and are demanding q speed
return TO the gold standard? Hardl
has = little confidencn hnen rosfora