The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-05-23
Depression About to End
Prof: Fisher Tells Club;
ASsaiLs Bankers Tactics
Yale Economist Bases View
on Return of Credit
Money.
BIZ Uuitcd Press

SAN ANIONlO, lex May Zo.-
The growing conviction that the
depression is nearing its end is justi-
fed" Irving Fisher, economist and
Yale University professor, told the
nineteenth annual convention OF
Kiwanis International here today.
He stated his belief was based on
tie restoration of credit currency.
According to my own diagnosis, "
Prof. Fisher declared, this depreS-
sion could have been almost wholly
prevented. After it was in process,
it could have been stopped very
quickly at any time. 1t is being
stopped now.
This diagnosis is that big booms
are usually due to observation-disclosures
with imitation of credit currency
while depressions are Que TO
liquidation of debt with deflation of
credit currency. At any rate. this
diagnosis fits the facts perfectly. If
the facts were known we could have
predicted the boom ending in 1920,
the depression ending in 1922, the
prosperity ending in 1927. the boom
ending in 1929, the depression to
date, and the recovery now in
process.
Two Main Theories
There are two main theories of
the depression too little money and
too much goodS-so- called over
production" If the latter theory
were correct, a policy of wealth de-
struction would be justified. But it
is not correct.
Our trouble is not too much
goods but too little money to buy
them with. Merely to raise prices
will not help us. The price rise
must be by making more money.
Raising prices by making goods
scarce is not the same thing as
raising prices by making money
more abundant. Rather it Is the
opposite. In a depression, raising
prices by monetary means is good;
raising them by curtailing produc-
ton is bad. Those who confuse the
two sorts of price-raising are in a
mental fog.
Cites an AllegORy
LET us put it in allegory. Once
a great country had great catas-
trophe. Out of $4,000 miles OF
railway track 5000 were destroyed
so that only $4,000 remained to
carry the freight. Traffic being
INSTRUCTED, goods accumulated at
every railway station.
But a fog hid the destroyed
tracks from the eyes of the public.
People only saw the unsold goods
piled up at the stations and said:
this must mean over production!
Money. more than railways, is
the highway of commerce. When,
out of that highway consisting OF
% 900 100000 dollars, S,O0o,OOO,OO
are destroyed, leaving only 15.-
OOO,OO0,OO0 to do the work requlr-
ed. traffic is INSTRUCTED. Goods pile
up unsold. What is needed is to
rebuild the missing 1900 ,OUO,OoO
of highway, not to destroy the
goods.
Lauds Bank Bill
"The greatest hope for the fu-
ture lies in Title II of the Omnibus
banking bill. While I would like
to see this amended to make a
more definite mandate of stable
money, it will, I believe, under
Eccles, governor of the Federal re-
serve board, be wisely administered
and the strong policies will be re-
vived. Governor Eccles will have
a new instrument furnished him
in this bill to prevent uncontrolled
imitation, namely, by raising the
required reserve ratios so as to alb
serb the excess reserves which
might lead to imitation.
Governor Eccles not only thinks
for himself. but has very able think
ers as SSiStantS-Currie and Ed
mission.
IF the bankers were wise and
understood money as we'll as they
understood how to make use of it,
they would rejoice over having
such group as Eccles, Currie and
Edmiston and such a prospect of
recovery before us. A very few
of them do. But the mass of them
hesitatingly oppose everybody and