The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1936-01-02

The proceeds OF Government
borrowing have been largely dis
tributed for ''relief" and "Stimu-
latiOn." The stimulus of q profit
motive being absent, however,
we have found that once the
funds distributed among the
people are spent, they merely
pile ND as unused balances in
the banks. These unused bal
anceS Of idle funds, together
with gold imports (partly caused
by our inflatiOnary tacticS), are
chiefly responsible for record
breaking "exceSs reserves"
This means enormous potential
initiation. It is definitely deter
mined, moreover, that this poten-
TALLY will not be held in check
by applying the various controls
which are within the power of the
Federal Reserve authorities. The
question, then, is: How and when
will this initiation become effec-
live?
There are just two general ways
10 make initiation effective: Cd
Fear, leading to boarding and
panic: ca Hope, leading to opti-
nistic expansion and speculation.
The first way has been avoided,
md does not seem likely to be
opened up. The question, there
lore, reduces to this: Is there a
basis for sufficient optimism? Can
sufficient confidence" develop in
1896 to bring expansion and start
die funds to circulating?
AS I see it, monetary uncer-
lainty and the suppression of the
profit motive, have thus far been
he chief barriers, aided by the
Eecline in foreign trade. Now the
irst two factors are being
changed.
People are becoming convinced
hat so-called monetary infla-
ion" and "greenbacks" are out
" the picture. The prospect of
o-called credit initiation" has
Iecome more definite and certain,
md at the same time talk about
control" (and talk about reduc-
ng the deficit-not the debit has
Degotten a sort of confidence.
The approach Of an election
lay makes for a certainly that
easy money policies will be con-
inued as a basis for borrowing
md spending, and that taxes will
lot be much raised.
As to the profit motive, hope
fitness has been reS0rted in sew
eral ways. Unless unexpected
political upheavals intervene,
it seems possible that this de-
velOpment may release the
flood Of potential credit infla-
ton before the end Of 1886.
Some of the conditions tend
ng in this direction are as fol-
ows:
/. Court decision unfolding
Constitutional guarantees of in
lividual property and contract
tights notably the Schechter
saSe-and anticipation of similar
decisions.
90 Definite organization of
business men and bankers in op-
position to New Deal radical pol
cies.
90 Growing appreciation by a
majority of the people that Gov
ernment waste and growing pub
ic debt are dangerous.
"a Straw votes indicating that
} majority of the people are op-
posed to "the Roosevelt policies"
Ind that even if the President is
reelected, he will find the House
# Representatives opposed to his
.adical schemes.
90 Evidences of some tendency
IN Mr.. Rooseevlt's part to Swing
dght," as in the matter Of reduc-
ng the deficit, and sponsoring
recovery" (This at least shows
hat he sees the force Of the
preceding pointSO
In addition to the foregoing
here are other sentimental fac
tors. Some conservative observ-
ers still profess to see an "irre-
istible" or inevitable" natural
recovery. Others hold that The
oankS are Sounder than ever. and
The Government credit is the
strongest on earth. These people
argue that no initiation exists,
and so define initiation that
they probably never will see it.
Still others are lulled by the
thought that "the Government
will provide"
Finally, there are a number Of
developments which tend to give
some substance to the preceding
political and sentimental bases OIL
confidence. The most important
Of these is some expansion in the
"heavy" or capitalgoods indus
tries.
For about a year. there has beer
D gradual rising trend in building
activities. This has been so sus
tanned, and is now backed by such
plans for stimulating building
that it seems likely to carry fur
ther. Shortages of modern hous
Ing, "undoubling" Of families, ant
more numerous marriages, are tt
be mentioned.
Along with building, go create
business in tractors, machine tools
farm machinery, and even rail
way equipment.
Bank loans, too, have latel
shown some tendency to expand
largely on account Of real estate