The Washington times., 1935-01-23


such huge amount because there
Is no demand for it in business.
Fabulous sums of currency
might be issued on the basis
of the present devalued gold dol.
lar and the inflated bank de-
posts. You might say that there
is practically no theoretical limit,
since the amount now in circula-
ton is so small compared with
what might be figured as the
total allowable sum.
For example, as result of split
ting up the gold held in the Treas
ury into smaller pieces, we can
now say that we have monetary
gold stock of about 8.3 billion dol
lars.
It is ordinarily figured that gold
will support about 10 times its
price in currency. So in this way
it would enable one to figure the
possible currency at 83 billion dol
lars! (To say nothing Of SilverD
Or if you want to figure the
thing out in banking terms, it
would work as follows:
Bill DOL
~ Reserves in Federal Reserve
banks NEUTRALITY-SUSPICIOUS.. 30
,I2) Required reserves (notes and
deposits) ..................... III
Free Cash" G-2) ............. 2.S
Credit available for banks (x275j. rs
On the basis of this 7.8 billion
dollars which the reserve banks
might extend to member banks,
something like 78 billion dollars
might be put into circulation as
bank credit.
Thus you see that Father
COughlin is unduly modest in
saying that we could issue
twenty-five billions. IF he knew
more about economics, he might
even increase his extravagant
arguments for inflatiOn.)
But, at the same time (if he
knew his ecOnOmicS), he would
know that no such sum is pos
Sible or desirable. If our cur
rency were to maintain any pre-
tense of SoundneSS, the practical
limit would be reached long be.
fore these huge legally allow
able" totals were reached. Dis
AstrOuS currency initiation would
result.
You see, if the banks were to
increase loans and note issues by
q few billions, the value of the
dollars would fall and prices rise
rapidly.
Then gold would flow out of the
country. (Or if the Treasury
boarded it, as would now be prob
able, the dollar would drop in re-
lation to foreign currenciesO The
banks would then lose cash re-
serves, and the assumed basis for
all this issue of currency would
soon cease to exist
Another way of putting it is
that prices would rise, so that
dollar would not buy so much. If
they rose 100 per cent, each dol
lar would be worth only half as
much as at first. So the in.
creased currency would do no good
to anybody, except possibly a few
spectators.
We do not need more money in
this country. The total sum now
available is ample. (You and I,
as individuals, may need money,
but the nations business does
not). The amount "in circulation"
is now only about $54 billions, but
that is nearly a billion more than
was "in circulation" even in 1929!
There is absolutely nothing in
the law or in the banks to pre-
vent immediate issues of all the
currency that business can pos
Slbly use. Bank deposits are
enormous, and so are excess re-
serves. Money rates are fantasti-
cally low.
The one great reason why all
the potential currency now in
existence does not come out and
circulate is the depressed con-
ditiOn of business, and nothing
keeps business depressed as
much as does the fear of cur.
rency juggling and initiation.
Fabulous amounts of money
are available, right now, if only
we would open the door for
them by ceasing all this con-
misunderstanding propaganda
for more silver or nOn-intereSt
bearing notes (greenbackS), or
ofher infIatiOnarv schemes.