Evening star., 1936-03-01
i. S. May Avoid Initiation
Unwarrant

the rich and benefit the poor. that
they would relieve the debtor at the
expense Of the creditor. II capital
could be cheapened until the inter-
est rate is zero. then the capitalists
and big business men would be not
only appropriated but destroyed.
Assault Was Failure.
The general assault on the price
level has been complete failure. The
proper basis for judging the effects of
devaluation is the general level of all
prices. If, by the best general prices
index, we consider the level of prices
as 100 at the time of devaluation in
February. 1884. we find the present in
dex to be 100 plus, rise of less than
10 per cent. If deyaluation had
worked" as the Government said it
would and the economists said it
would not. the reduction of the dollar
to 50 cents would have increased
prices 6y per cent.
What can be drawn from all this?
The first obvious conclusion is that
the whole devaluation, credit ex-
pansion and squandering program has
failed to revive investment, raise gen.
eral prices or relieve debtors. Strange
ly enough, it did not work the way
the administration said it would, or
the imitation bloc in the Senate said
it would, or the Committee for the
Nation said 1t would. It worked the
way the economists said it would.
But we are concerned about the
future. This futile policy has left us,
first. without a money system; second,
with bloated bank reserves; third,
with an endless expansion of Govern
ment bonds in private hands; fourth.
with practically unlimited possibilities
qf paper money issues through the
Federal Reserve; fifth, with a hope
lessly unbalanced budget; sixth, with
a relentless pressure from a paper
money imitation group in Congress.
What will be the outcome?
Differ on Outcome.
Even the best of authorities differ
as to the eventual outcome. Many be-
lieve that large imitation is now
inevitable. They believe that the COM
bination of continuing deficits, ir-
redeemable money, swollen bank re-
serves and vast bond holdings is too
much for the Nations economy to
resist. Many of them believe that this
explosive combination will be set of
by some such thing as the passage of
greenback measure to pay of the
bonds just achieved by the bonus
raiders. Some of this group believe
that the imitation will come without
any decorating spark.
There is another group which takes
a calmer view. But they agree that
the present policies cannot continue
Indefinitely. They cite the fact that
there are less than $4,000 ,00O, 900 in
paper money in circulation and about
100000 in gold lying dead in the
vaults. They do not believe that the
excess reserves in themselves can
generate imitation, and they believe
that the Federal Reserve System can
control feverish developments from
this source.
We Can Take 1t.
This writer belongs to the second
group. This is tough Nation eco
nomically. We can take it. We have
in three years endured depression,
N. r. A., A. A. A., P. w. A., Gen. John
son, the Rev. Coughlin, Congress and
promotion of recovery by guess. Re-
covery still comes apace The in
creased industrial activity from busi-
ness recovery will absorb much of the
excess credit now available. Even the
payment of the bonus bonds by green
backs would be taken in our stride.
The money We have now is hardly
more than greenbacks 1t is not re-
deemable in anything. With the
present state of business an issue of
s2,000,000,000 in greenbacks would
merely do what the issue of silver
certificates is doing-it would drive
about the same amount of Reserve
notes back into the Reserve banks and
add to the explosive materials now
accumulating.
There Is no question that We face
an era of rising prices. Recovery
from depression will alone insure that.
Devaluation will also in due time bring
about a heightened price level. More
than a year ago this writer said that
this Government, by doing the wrong
thing at the right time, would end
up by doing the right thing at the
wrong time. We can see now the
working out of this prediction In
due time. long after the poor debtors
have taken their losses and the last
excuse for rising prices is gone, de-
valuation will raise the cost of living
and reduce the value of savings.
Stop Government Squandering.
But it is not too late to save this
country from a calamitous imitation.
More than so years ago statesman
became famous through his repetition
of a slogan: 1.-THE way to revenue
is to revenue" The way to stop
governmental squandering is stop gov
ernmental squandering. AS for the
whole monetary policy, there is the
story of the lady who told the nurse
to 60 upstairs, find out what her
little boy was doing. and make him
stop it. The Government should stop
running round in circles long enough
to find out what it is doing to the field
Of credit, of expenditures, Of silver
purchases and of gold sterilization
and when it finds out what it Is
doing, it should stop it and do just
the reverse. It should repeal the
silver purchase law. It should cut
all expenditures to the absolute mini
mum. It should stop all subsidies to
farmers. public works or any other
unworthy recipient. 1t should re-