The Washington times., 1935-11-15
FURTHER REDUCTION
IN INTEREST RATES
CALLED UNS0UND
By LEWIS HANEY

Professor of Economics, Neo York University
The deficit the Roosevelt Administration for the first four
and onehaf months of the current fiscal year is
S-over billion and half dollars
This is at the rate of four billion dollars year.
Lying ahead be the social security BILL which
will require 100 million dollars in 1885, The growing expend
lures for veterans administration which to COS million
dollars in the last fiscal year. are likely to be augmented Mr.
Rooseves "must bills to be put in effect and will swell
the army of Government civil employees The growing public
debt brings bigger total interest payment despite lower in
terest rates.
In view of the situation, reports from Washington
of interest that the President is going economize
The other that he wants to force still lower interest rates.
AS to the rumored for economy in government ones
first thought that have heard talk of that before We
will want to lot of actual and sustained economzng be-
fore believe it this time.
Ones thought is the question: Isn't it late for the
Roosevelt Administration to change its spots in this regards
This prediction If the President tries to op off his
spending what will Mr. Farley say9 There would be millions
Of hows from Government employees farmers and politicians
Business expansion being claimed as I'VE planned 1T
movement There will be the fear that if the Roosevelt Admin
sration cuts its spending what call private business
will slow up, and Mr.. Roosevelt fail OF election
As lower interest rates. the idea fundamentally opposed
to and sound business infatonary 1t
is associated with Government control banking and bus
Let explain
Low interest rates good they the result Of
natural conditions. When they forced down arfcay
they do harm Today the Roosevelt Administration has loaded
the banks with artificial Credit (debt and shoem money
rates very low. But that is bad sign.
Mr. Roosevelt says that bank portfolios in fine shape
But the chief asset nine billion dollars of Government
debt and this asset has increased by and half billion
dollars in the Bank loans real
billion dollars, and nearly four times acceptances and
merca paper Bank funds heavily in New
York where the deposits of domestic banks billion
dollars, up half billion from year ago.
These not sound conditions.
The risk of monetary changes initiation and political inter-
ference with business great that feels safe in
lending money.
In fact it is thoroughly that
interest rates must down. and the try
raise prices You insofar know Mr. Roosevelt still
for boosting prices he 1926 lev Or he gone back
on that notion, too?)
The to get low interest get AS
long the idea is to have higher prices lenders naturally
gong to want higher interest rates offset reduction
the purchasing of their money during the time it
loaned
We may rightly draw the following conclusions from the
Presidents talk on interest rates.
l. He stands for Government control banking bust
ness.
2 He stands for the easy money policy therefore will
not control credit initiation.
g. He stands for unsound economic deas such artificial
stimulation by Government manipulation of
the notion that loans commercial paper and
estate much the
4. He stands for bigger public debt.
The policy Of reducing interest stimulate business
Is of the oldest and most exploded notions in economic
history.
What should be done leave interest rates land prices
alone and make conditions that increased
saving and lending would make business loans attractive
Profitable business makes good loans.