The Washington times., 1934-11-21

debt u q e II. M$$#
The walls about
"the vicious Lewis Haney
spiral of deflation" are the walls
of people who can't pay their
debts, and who don't want to face
their bankrupt condition.
60 Then came the Scotch ad-
venturer, John Law, and offered
to "save" the French government.
His prescri p tion was more
money" and by money he meant
government credit. Commerce
depends upon circulation" said
Law. He sold his scheme to a
debt-ridden government.
So it is in the United States.
Our John Laws are saying that
all we need is "mOre money
more adequate" currency.
They seek to sell another debt
ridden nation a magic formula
for putting money into circu-
latiOn.'
go Laws first step was to set
I'D a bank, the Banque Generate,
with the backing of the govern
ment. Its capital was three
fourths payable in government
notes.
So it is in the United States.
We are seeing our government
seize control over our commercial
banking system. even holding
stock in member banks. 1t is on
the way to complete control over
bank credit, because that gives it
control over our currency.
a. Then Law united his bank
ing operations with business ven
lures. He went into various trad
ing ventures, including the in
famous Mississippi Company.
Such operations helped to put his
"notes" into circulation!
So it is in the United States.
Our John Laws are going into
business so that they can put into
circulation the government credit
now piled up in their banks. The
IVA is their Mississippi Company
(MC). The PWA is their Com
pany of the Indies (CDD.
5. Then Laws schemes crashed.
There came day of reckoning,
when it was found necessary to
''convert" the enormous amount
of paper which he had issued in
merging his bank" with his buSi-
ness ventures. The concealed
bankruptcy of his position became
apparent. He fled to Venice,
where he died. a poor man.
So
Within three years, Laws
bubble burst. Confidence col
lapsed, and people sought to ex-
change his paper notes for real
money (coin). Finally the Gov
ernment issued decree reduc-
ing the value of the bank notes
by so percent, thus writing off
part of the initiation. Then the
final panic ensued.
But, for a time, Law rode high,
and confidence" was rampant.
In fact, his is sort Of "confl-
dence game" Now you see 1t
(plenty of credit money; now
you don't (credit is debit. The
people liked it while it lasted. The
poor adventurer who died in OBJ
Scurity was for time the savior
Of France.
Laws schemes were built upon
two notions: Cd That money is
all.important, and that economic
troubles can be cured by doing
things to money; CD That money
gets its value from "use," or cir
culation, and that the Govern
ment can make people use it, thus
giving it value.
The results show what comm on
sense teaches. Cd Money is not
wanted for itself, and is impor-
tant only as measure of values
values of land, labor and CAPT
tal-aS we'll as values of finished
goods. It is in these latter things
that business troubles arise.
We can no more cure "over-
production" by dealing out more
circulation, than We could give
everybody seats at the movies by
merely printing more tickets.
We can no more pay debts
by making more money, than
you can pay your note by Civ
ing your creditor another note.
2. A government can make
people use its paper as cur
rency, but it cannot make them
like its notes, or use them at
any fixed value. The more a
government spends, the less
able it is to pay-and you know