Evening star., 1934-04-08

D1 4NLIL SEhho
Professor of Economics at Lehigh University
EAR CONGRESS: Once upon
a time lot of soldiers at
tackled the house in which !.i
- Congress was assembled with
stones and jeers and threats,
causing the members to flee from
Philadelphia. The reason for this
riotouS behavior was that Congress
had inflated the currency. If you
are inclined to ask, in the words of
popular comedian, Why bring that
up?" the reply is that this episode has
a timely interest just now. Inasmuch
as you have not had time during the
last two sessions even to draft the
bills you have passed. but have had
them prepared for you all ready for
your approval, it is obvious that you
have no time for delving into the
history of your country.
1t may be worth while. none the less,
to review this Philadelphia affair.
This Continental Congress had been
moved. just as you are, by a single
purpose-to promote the welfare of
the Nation. The country was engaged
in desperate war. 1t had no gold
and it had exhausted the possibilities
of taxation. 1t had been forced to
resort to the printing press, the last
recourse of a bankrupt nation facing
an enemy army. They had for their
initiation of the currency the one ex-
cuse that is recognized by history and
accepted by economics. And yet an
ungrateful people permitted mob of
hoodlums to force Congress to flee al
the way to Princeton, N. j.
What the sturdy citizens of 1888
would have done to a Congress that
inflated the currency in time of peace
is fearful to contemplate. Suppose, for
illustration. that Congress had turned
to the printing press at a time when
the country had 40 per cent of all the
gold in the world and when they had
only recently taken all this vast hoard
away from its owners and split each
dollar into two pieces and then de-
clared each piece a dollar, thus
doubling, according to their quaint
method of calculation. the supply of
| money in the country. Assume,
| further, that their only excuse for
initiation was the desire to make a gift
! to an unimportant but noisy minority
that was yelping for Government
subsidy. But the point to consider,
brought home by this incident from
history. is that the people are abso-
lutte pragmatists. They look solely at
results. They care not for reasons
or excuses or motives. In the par
ticular case the result of the resort to
the printing press was the ruin Of the
country.
An 1890 Example.
| It is always thus. A Congress with
the best motives cnacts measures in
the interests of the people. These
measures work out badly. And the
people very promptly rise in wrath
and retire that Congress to private
life Take the one example out of
the many in our history. The Con-
gress of 1890 tried to please every
body in the country. They passed a
vicious silver purchase bill that pleased
| the powerful silver interests and the
Far West. They passed an ambiguous
antitrust law that pleased the masses,
but did no injury to the oil and sugar
companies. They passed the Nc
Kinley tariff, an abomination that
satisfied the interests that drafted it
and yet fooled the Middle West with
heavy tariffs against agricultural
products we could not possibly import.
They passed bounty for the Louis
| lana sugar planters. They passed a
pension law drawn up by the veterans.
But within a very short while the
people discovered that these measures
/ worked badly and they summarily de-
feated the Republican Congress that
had enacted them.
The present Congress, to which you
belong, might we'll ponder some other
historical events. Consider the ex-
perience of France a long time ago.
| The French legislators of 1890 were
| the idols of the people. They started
imitation of the currency in small
way, to please the masses. They as
serted violently that a little issue of
paper money would stimulate business,
bring a desirable price rise and aid
the beneficiaries of government spend
| ing. Before they were done with this
notion they killed French economic
| life. What happened to the legis-
lators themselves need not be set
down here. Take a more modern in
stance. In 1914 the people of Ger
many undertook to win a world war
by a new method, the paper-money
method. They lost the war and in
cidentally they lost their accumulated
capital and their productive power
They were reduced to paper clothes
and black bread, and their children
died from malnutrition. In the end
they got Hitler.
Move Toward Precipice.
In the last year you have gone a
| long way toward the precipice. Last
May you passed the Thomas imitation
act. Senator Thomas explained to you
that this was going to transfer $780,
OO0000,000 from those who had it to
those who did not. Did you look up
the figures before you voted? If you
had you would have discovered that
this amount was just about the value
of all the wealth in the country. You
passed an act that would, you had
been assured, take all the homes
farms, factories, mines and goods from
their owners and give them to others
This would be hard on your own men,
bers, including Senator Thomas. But
a peculiar thing happeRd. Wal