, 1935-02-24
The World
At a Glance
BY LESLIE EICHEL
Central Press Staff Writer

Central Press Staff writer)
NEW YORK. reb. 23.-An inter-
esting. but quiet revolution, is &C.
curing In money.
Interest Is losing It's value.
Since time immemorial interest
has formed the basis Of what we now
term the capitalistic system. With
out interest there could be no capt.
talists.
The best example Of the change Is
IN New York City.
Mayor Fiorello III. LaGuardia or
New York. desires 10 borrow huge
sums from the federal government
for municipal improvements at an
interest rate Of one-eighth Of one
per cent.
He would borrow a billion dollars
az that sum-s250. 600. 900 this year.
He expects the improvements 70
pay for themselves through com-
penSatlng social values and Increase
IN property values.
The second half of that, Of course.
is distinctly capitaliStic.
But the depreciation OF interest
rates for the public good Is. in the
minds OF many. communiStic.
YET, what else can either local
government do? They cannot permit
populations TO perish for want Of
services.
In Mayor La Guardia's billion
dollar program, housing calls for
only $50 millions. Probably. however,
prior to the completion OF the pro-
gram. housing may claim a larger
and larger share. That might be
termed socialistic.
Farmers
Farmers, too. arc scratching their
heads ver economics.
The United States government
paid farmers 557 million dollars in
1884.
But was the farmers income any
higher?
The Alexander Hamilton Institute
e@fo AOAs AA lAACc[ MOlQc.
Since the price level is fixed BY
law Of supply and demand, the true
price level Of farm products was re-
duced BY the amount OF the process
ing taxes. Consequently. the amount
which the farmers received from the
government was offset BY the lower
price level at which they sold their
products. Without processing taxes
and with the same quantity OF pro-
ducts marketed the price index, bas-
Cd in 1929 as 100. would have been
67.6 il 1885 instead Of els. This hiqh-
er price level would have provided the
farmers with the same income as
they received with lower prices and
government payments. From the
standpoint OF the money spent by the
consumers. they paid the farmers no
more than they would have paid
them II there had been no process
ing taxes.
This does not mean. however. that
government payments TO the farm
ers had no effect on the situation.
The payments were made in return
for a curtailment of acreage. The
consequent reduction in the size Of
the crops raised prices to a higher
level than would have otherwise pre-
vailed. The price advance. which
was thus caused. did not. however,
alter the farmers income.
Higher prices we're merely subSti-
tuted for larger production. AS a re-
suit, the farmers purchasing power
was lower than IL would have been
otherwise. The rise In the prices OF
farm products was reflected in a rise
In the price OF goods which the farm
ers buy and their income was con-
SeQuently less effective. Instead Of
benefiting the farmers, the govern
ment's measures proved TO have had
the opposite effect.
The non-agricultural population
also suffered. Since the farmers
purchasing power was hurt. manu-
featuring activity WIS retarded with
the consequent continuation OF un-
employment. In addition, the non
agricultural population received less
for their money In their purchase OF
lQQQH AAlG AAAAHNGA ahAG GAAINA ~ IA
processing taxes. since they involved
the curtailment OF acreage, was felt
more keenly because the situation
was further aggravated BY the
drought"
There are certain natural laws that
defeat man and governments.
A Paradox
1T IA a paradox that while the Rev.
Charles z. Coughlin, radio priest,
inveighs against what he terms
"communistic" bureaus or ventures
Of the government. he urges issu-
ance Of government money without
interest. Yet the sweeping away of
interest would be a far greater step
toward a communistic land than any
mere bureau the government has
set up.
Unquestionably millions OF persons
uphold him Oh that - although or
thodox economists predict the issu-
ance Of such paper money until it
would buy little and thus would work
hardships on Millions. while aiding
spectators.
On the other hand. tho supposedly
radical Huey Long would permit men
10 earn a million a year. presumably
BY tho old means Of interest ann