The Washington times., 1935-12-21
NEW DEAL HELD
TO BLAME FOR
J0BLESS
BY LEWIS HANEY
Professor of Economics,
New York University

AS we draw near the end Of an
other year, we can see that we
have learned much-also that We
have much to learn.
For example, we have learned
that it is not possible to raise or
lower the general level of prices
at will Even Mr.. Roosevelt has
ceased to talk about it.
First we tried open market
operations, that is, having the
Reserve Banks buy government
bonds, thus paying currency out
into circulation. Then we tried
gold devaluation and Treasury
buying. Then we tried silver buy
ing.
All have been futile, and most
Of us now recognize the fact.
a Again, we have learned that in
dustrial regimentation under the
NRA scheme does not work. Mr.
Roosevelt seems to cling to the
idea, but most Of us have learned
the lesson.
We found that it led to monopo-
lies and to high costs. We found
that the cost of living was raised
so fast that consumer resistance
hurt business.
The Blue Eagle is dodo, and
General johnson is remembered
as a vocal artist.
We have also learned that there
Is no compromise between busl-
ness and socialism. The business
leaders and bankers at first tried
to cooperate" with the New Deal.
They have now found that the
Thugwell-Ickes side Of the Roose-
velt Administration makes this
impossible.
So the issue between business
and the New Deal is out in the
open.
What, then, are the things that
we have yet to learn? I would
emphasize two following points:
%. We have to learn the disas-
trous futility of letting the Gov
eminent provide. We have to
learn that as long as "the Gov
ernment" is regarded as the
agency to deal with unemploy-
ment there will be unemployment.
Most people today say that un-
employment is our great problem.
Even those who believe we have
had great recovery, say this.
Why does such condition exist?
First, because emplGRer are in
many ways kept from making
profitable employment. The con-
tinued monetary uncertainty
greatly limits investment in in
dustrial expansion. At the same
time, policies concerning labor
organization and wages drive buSi-
ness men to use more electrical
power and machinery in order to
keep expenses down. High taxes
retard business.
The policy of make work" and
boondoggling demoralizes many
people. It makes the lazy lazier,
and tends to make all less eager
to find really productive employ.
ment.
We will have a problem in alb
normal unemployment as long as
we have the New Deal.
g We have yet to learn the
danger Of Government debt. This
debt means deficit financing"
according to which Short-term
Government paper is loaded into
tho honHS Thara II hacoTooc tho
basis for our currency.
The largest single item in our
bank assets is Treasury notes."
Thus Government debt is the
chief basis of our bank credit and
our currency.
Thus Government debt becomes
the basis of bank credit infla-
tion. And this makes Government
spending so easy that the Roose-
velt administration keeps on in it's
vicious CWA-FERA-PWA program.
And the more relief" it gives
this way, the more it has to give.
What should we do?
We should abandon the delu.
sion that Government Works
Administration" is productive en-
ployment of labor. We should ad-
NIT that business recovery" must
come before real progress" can
be made. We should cut out the
boondoggling.
Then we should make relief"
. local problem.
This you'd enable the Govern
ment to quit borrowing, and to
balance the budget. It could then
quit unloading its Short-term debt
on the banks and insurance com.
panieS.
Then monetary certainty could
be restored.
Then real employers would be
able 70 employ the unemployed.
The drain of relief expenditures
would be reduced. The budget
could be balanced. We would
know what a dollar IS.