The Western news. [volume] (Libby, Mont.) 1933-current, 1936-08-06

uiddC ilOlC QdIlScIOQS Wy Tie 1dCt
that, as the negotiations are con-
Quoted in deep secrecy, those likely
to get hurt may not find out that
they are in danger until it is too
late to do anything about it.
Balk at Barter Plan
But the Kansas governor also
knows something about the violent
objections to the Peek international
barter plan-particularly on the
part OF the interests handling inter-
national trade. In a nutshell, as put
by representatives OF these inter-
ests, the barter plan results in fore
ing goods from one country to an
other against the grain" This
process runs up against prejudices
on little details on the part of con-
sumers, well known to those who
make life-work OF the business Of
supplying the public with imported
goods, but apt to prove a treacher-
GUS quicksand to well meaning
amateurs.
Moreover, there Is branded in the
minds Of many people the fact that
the big barter scheme on which
Peek's crusade was finally ditched
by the greater strength OF Cordell
Hull at the White House was to
have been with Germany. And even
il the barter plan were economi-
cally sound in other respects, there
were certain political difficulties
there which would make public en-
dorsement OF Peeks ideas rather
dangerous. There are too many peo-
pie in this country who do not
think we should have any dealings
with Germany whatever SO long as
Hitler is running that country.
The main support OF Peek in that
particular deal meanwhile has
evaporated. 1t was a surplus OF
American cotton that Peek wanted
to give Germany in exchange for
German products. At that time
there was much supporting pres
sure for him from the cotton grow
ing South for that reason. And
some irritation at Hull for block
ing it.
But the soaring price OF cottons
has left Peek with practically no
active backing whatever.
Big Surprise
To the man in the street the re-
cent move Of the Federal Reserve
System in boosting the reserve re-
quirements Of member banks
meant virtually nothing. Even to
the small merchant, who borrows
money from his bank, 1t meant lit
tie. It sounded bad, but his banker
promptly assured him he need not
worry.
But the big surprise, even to the
governors-as they are now called
was the reaction in Wall Street.
For instead of going down, the
market went up!
The point is that the governors OF
the system, and close financial ad-
visers of the Administration as
well, have been worrying about
this step for long time. They
feared it would result in a flood of
selling orders in the stock market,
which in turn would produce a col
lapse. And a collapse might inter-
fere seriously with the New Deal
claims that prosperity is no longer
around the corner, but, under Roos-
evelt's directions, is here.
The whole thing of course is a
study in financial psychology, which
not only the laymen, but very
few OF the experts, understand.
AS a matter of fact, perhaps the
least understood important factor
in modern business, simple as it
sounds, is money. And, like many
other things, it is the experts who
admit privately that they know SO
little, while the American who has
once travelled abroad, and ex-
changed dollars for francs or lire,
thinks he understands perfectly.
The new move goes into effect
August Is. But the governors of the
reserve system admit frankly that
even on that date, allowing for nor
NAL development meanwhile, the
excess reserves of the banks will
amount to something like one bill
lion, nine hundred million dollars.
Real Explanation
Every financial expert has known
for some time that the various
changes in our banking laws have
laid a foundation on which a credit
imitation can be built in this coun-
try which would approach the dam
ger mark. There has been no tend
ency in that direction because there
has been no great demand for
money on the part of normal bor-
rowers. Very early in the depres-
sion business simply pulled in its
horns, and would take no risks
whatever. Which meant that it was
not borrowing money. This was true
even before the run on so many
banks, which finally resulted in the
bank holiday of early 1888.
What has been WORRYING the fad