The Washington times., 1935-01-04

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kept initiation.
Through NOR
atoria, Govern Lew" H"neS
ment loans abnormally low
money rates. and price pegging
policies, we have maintained a
condition Of overcapitalization ana
high costs of production. instead
of real liquidation we find debt.
high and maladjusted prices, and
great uncertainty as to the tu-
ture value of money. We were IN
flated in 1929; we are inflated
in 1885.
2. We try to raise prices, but
we also raise costs.
Through money tinkering, re-
stricting production, and holding
large stock of commodities off the
market, we have kept down the
volume of business, and raised
overhead costs, wages, and raw
material expenses per unit OF
product.
Under these conditions, business
s turned into speculation, and
the course of business becomes a
series of speculative rallies and re-
actions. Look at the curve for
1888 and 1884.
3. We try to initiate the cur
rency, but we also deflate busi-
ness.
While devaIuing the gold dol
lar, injecting Overvalued silver.
and piling up bank credit, we
have made the dollar incon-
vertible into any standard, thus
killing investment in capital
goods. The taxes raised to sup
port the huge public debt Struc-
ture, and the high labor cost,
great restrict profit possibilities
which are the life Of business.
4. We carry on huge govern
ment spending campaign, but we
levy huge taxes and break the
record for public debt.
The effect of the spending Is
offset by the tax burden and the
AAOL U6oSC OA4 Jul ANVAAN'
It should be added that the
spending goes for the purchase of
consumer goods, and merely stimu-
lates trade" leaving the capital
goods industries unaffected, and
stalled by monetary and profit un-
certainties.
5. We manufacture more money,
but we also make the dollar worth
less.
The more money we have, the
less the monetary unit will buy.
6. We pile up Credit" but we
also pile up debt.
Through "open market opera
tionS" we pile up excess reserves
in the banks, and through govern
ment spending we pile up deposits.
But credit is always debt, so all
these operations are offset by the
growing public debt.
Not only this, but the public
debt is, to large extent, incurred
for the purpose of carrying frozen
private debts (e. g., railways and
the RFC) and frozen municipal
debts (e. g., PWA purchases Of
municipal bonds).
7. We try to force this credit
into use, but We also make its
use unattractive.
Through persuasion or threats,
easy loans made by Federal
agencies" and the "easy mon
ey" policy, we raise heaven and
earth to force credit into "cir-
culation." At the same time,
however, we make conditions
such that prudent and honest
business men will not borrow.
This we do by Government in
reference with business, raising
costs, and making it impossible
to figure what a dollar will be
worth year from now.
So such loans as are made are
largely for the purpose of con-
tinuing old debts-which is ex-
actly the condition found at the
peak or crisis of a business cy.
Gle!
The futility of the thing is
demonstrated by the fact that the
credit continues to pile up as bank
deposits" and the turnover Of
such deposits is near the record
low level.
Stalled again!
So we rally around and get
nowhere. We get maximum Of
doing something" and a mini
mum Of accomplishing anything.
Tomorrow I hope to complete
this summary of 1884 policies, and
to state the constructive meas
ureS which my analysis suggests.
Clearings Drop
TOSJ IN uo1SIo-