The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1936-02-25
TUESDAY. FEBRUARY IS. 1896
THE CREDIT RESERVOIR

TNHERE are good dams-Boulder Grand Coulee,
Bonneville, and the system down in the Tennes-
see Valley-that will turn waste lands into rich and
fertile gardens. And there is another dam that we
have built in this country, the money dam, which
may or may not prove good
Piled up behind the money dam are vast supplies
OF credit which may contribute to putting the coun-
try again on the road to prosperity or may lead it
again to misunderstanding on the way the banks
permit this credit to be used
Picture how good dam like Boulder works Be-
hind the great structure lies placid Lake Mead Be-
low in Imperial Valley are the farmers on the land
AS different sections of the land require water the
stored up floods are turned into penstocks and run
through power houses and then out to the spots
where the water is needed No section receives more
or less water than it needs and to advantage
This is the way our credit system should work
Instead of alternate floods in one section and
droughts in another credit should feed to the com
mercial, industrial and investment fields as it is
needed.
Under the new legislation of 1926 the Federal Re-
serve Board has four instruments with which to
control and direct the stream of credit-open market
operations in government bonds changes in discount
rates and reserve requirements and changes in mar
gin requirements for stock purchases With these
safeguards, the danger Of feeding credit into the
STOCK market at SO rapid rate as to cause an un-
healthy speculative boom, while deprving commerce
and industry of needed supplies should be mnimized
ME time has come now to open those penstocks
- that will let the dollars flow to business and in
dustry while keeping close watch upon those which
would drain credit off into speculation While idle
bank reserves stagnae there are II million idle men
and millions of idle machines Industry now is PROF.
Vldlng chiefly consumer goods. Consumer goods in
dustres are operating at SO per cent of their 1929
level producer goods industries at only 81 per cert
This consumer demand has been fed largely by gov
eminent public works and relief funds; financed
principally by government borrowings from banks,
process which has helped to swell the credit reservoir
SO far the public debt resulting from this spend
ing has not affected the public credit but there is
limit to borrowing and limit to artificial credit
which can be kept in check. The American Fedora
ton OF Labors monthly survey of business warns that
IN SIX years the national debt has almost doubled
rising from 1877 billions in 1929 to 3O billions at the
close OF 1885. This exceeds by billions the wartime
peak OF 265 billions. New pressure groups from the
ard economic valleys below are pounding on Con-
gress door for more and more help from government
The government would be relieved of much of
thlS threatening pressure if the banks would open
the penStockS Of commercial credit where CONNER
cial credit is justified
Private finance and business should ponder we'll
the lesson OF the dams. Failure to irrgate the in
ouStrlal valleys may result in a disaster