Evening star., 1936-10-03

the Treasury prints the WORD pond
and the figure, "Sl ,000." 1t is now .
81 900 Government bond. It Is per.
fectly good bond.
This bond Mr.. Morgenthau takes
to . bank. The bank accepts the
bond. In return the bank credits the
Treasury with $1,000. Credits" b
the technical term. The bank now
says that the United States has 81 900
on deposit In the bank. The bank
does for the Government the same
thing that It does for private citizen
when the citizen brings . Thousand
real dollars to the bank. You Will
observe the Government gets its de-
posit much easier than the citizen.
Against this so-called deposit OF
the Government the administration
draws checks. These checks the Gov
ernment passes out to pay for 'Quoddy.
to nav relief workers or whatnot.
There il now another $1,000 In cir
culation.
making" Of Dollars.
It Ia all that simple. That Is the
way the Government makes" dol
lars. II not too much OF 1t Is done,
there is nothing irregular about 1t.
But the reader will see 1t Is very dif-
ferent from the way he himself
makes" dollars. The average man
makes dollars only by work. by pro-
ducins goods or dealing in them. The
administration makes dollars by a
hind of magic. The average man
knows that for him to get thou
sand dollar deposit In the bank ne
must work and save.
For clarity, let US say the dollars
of the average man are earned DOL
lars. while the dollars OF the Gov
ernment are made" dollars.
Now what Is the effect Of all these
Government made" dollars? What
is the effect on the average mans
earned" dollars and on lie 1nsur-
ance policies and savings?
In the banks, in trade. everywhere,
n Government made" dollar is pre-
cisely the same as the citizens earn
ed" dollar. Every Government made
dollar. introduced into circulation,
mingled with oil the earned dollars,
is a kind of watering Of the milk.
ANYBODY can see how 1t works. Every
time the administration creates q
dollar in this way it takes tiny frac-
ton Of the purchasing power OF every
other existing dollar. II this water
ing of the milk goes on long enough,
the milk win become very thin. If
It goes on long enough. every dollar
will be so reduced that it will take
whole dollar to buy pound OF conee
or q pair of socks.
Danger Seen by Knox.
Col. Knox Ii quite certain this will
happen. He said the condition have
described as q simple fact" He SAID
it steadily eats away the value OF
the dollar" He said imitation Is in
evitable." Col. Knox said this on
Thursday night. That was after it
was known that Mr.. Roosevelt had
entered into a stabilization agreement
with France and Britain. Some per-
sons think that stabilization abroad
will help, mildly at least. toward avert
INK lll nAhOA A11s SsAANAof e@s~
apparently Col. Knox is among them.
think the stabilization agreement will
not avert imitation of the dollar. 1t IS
true that stabilization can best only
help, and help but family. The only
real safeguard against imitation is for
the Government to stop making
dollars in the way I have described.
That means the Government must stop
spending more dollars than 1t has,
must keep within Its income.
For the distrust which many feel
about the administrators fiscal prac-
tices, there is one reason easy for the
average man to grasp. The country
has seen Mr.. Roosevelt appoint many
fiscal advisers and officials-and has
presently seen those fiscal advisers
resign. The list includes Mr.. James
p. Warburg. who resigned and has
written books and articles declaring
that President Roosevelt's fiscal prac-
tices are dangerous to an extreme de-
gree. The list includes Mr.. Lewis
Douglas, whom Mr.. Roosevelt ap-
pointed director Of the budget, who
resigned. and who has since written
and spoken as Mr.. Warburg has. The
list includes DR.. Oliver NJ. w. Sprague,
whose skill and experience Mr.. Roose-
welt described in lofty terms. but who
resigned and has followed the others
in expressing grave apprehension. The
list includes Mr.. Thomas Jefferson
Coolidge, a high-minded and able
banker, whom Mr.. Roosevelt appointed
Undersecretary of the Treasury, but
who resigned and. like the others, has
uttered serious warning.