The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-04-11
i. S. SPENDING
HELD SLOWING
PRIVATE TRADE
Government Interference
With Business Also Seen
Contributing.
BY CLARENCE w. FACKLER
Assistant Professor Of Economies.
New York University.

New York University.
NEW YORK. April 11.-Business
continues to be exposed to but as
yet is not much improved by the
Administrators inhationary pro-
gram of excessive spending. To be
sure. writing checks for 10000
100000 in 20 months is not child's
play. and so is not to be taken at
all lightly.
But if it develops. as II has. that
neither capital nor labor IS finally
utilized any more extensively than
before. initiation has certainly failed
to induce any sort Of a general
economic recovery. which. AFTER all.
is worth yelling oneself hoarse
about.
Perhaps the blame can be shifted
partially 10 government interior
ence in business and to the dam
pening effects Of the Securities Act
Of 1888. But the planners and
soothsayers at Washington are sun
posed to iron out all these incon-
sistencieS. And so one can tacitly
assume that these obstacles are
merely the Nightmares which capa-
BILE business men Of long experience
have in their off moments hypno-
tized themselves into believing are
real.
Business Inhibited
The truth is, however, that these
are the precise reasons why prices
do not respond readily and vigorous
ly to the Congressional acceptance
of such proposals as the S4.880,000.<
900 Work Relief bill. a silver amend
ment to expand the currency by
some S375 100000. or bill to print
$4,000, 900 for the veterans.
At the first glance it probably
seems to many people that if more
money and credit corpuscles are
sucked from the arms Of the tax
payers and banks and are pumped
into the blood stream of inactive
business revival should occur I'M
mediately.
1t comes closer to the truth to
say, however, that the heart action
of business is still so weak that add
ing more purchasing power fluid
causes each thousand, million or bill
lion dollars of bank credit to flow
less rapidly through the arteries of
trade and industry.
Bank Deposits SweIled
For example. since March, 1888,
$500, 100000 of the bank credit
which the government has borrowed
and spent have passed from the
hands of the Treasury to the ac-
counts of individuals and corpora
tons. Added to what credit these
private interests held previously, the
transfer has brought the total de-
posts in the principal commercial
banks Of the country to S14,500,-
600 900.
Circulation is, however, extremely
poor. Being used at the rate of 70
times a year at the beginning of
1888, these bank deposits outside of
New York City, fell to a turnover
of 65 by the beginning of 1885. And
in New York City during the same
period their velocity declined from
81 to As.
Meanwhile member banks reduced
their borrowings from the Federal
Reserve banks to practically nothing
and increased their excess legal re-
serves to approximately $2,450000.-
900. Seemingly, every effort has been
made, and is being made right along
to widen the credit base so that
larger and larger sums can be
loaned. But the fact is that, with
the exception of the government, en-
terprisers who wish to borrow funds
are few and far between.
Not in Competition
So of consequence, it may be said
to the credit Of business that, VOL
UNFAIRLY or otherwise, it has not yet
manifested a desire a keep up with
the administrative Joneses at Wash
ington.
BY approprlatlng almost five bill
lion dollars, sum larger than any
nationality heretofore has provided
at one time, the government will, of
course, become an enterpriser-phi-
lanthropists par excellence. But the
progress toward economic recovery
very likely will not be more rapid
than it has so far as long as the sd-
ministration clings to the idea that
the art of cooperating with business
is more like wrestling with an ad-
versary than like dancing with a
partner.