Evening star., 1936-02-02
Printing Press hflationists
Led bv Patn,an and Thomas
Fiat Money Men in Congress Are Pre-
pairing for Ne,o Assault on Pri.
cipIes of "S0und Financing"

COuluu IlIlu any OIlt WIlO WdUttU W
borrow on it, he probably would de-
post it with the Federal Reserve sys-
tenn. The result is obvious. The lat
ter's already excessive surplus re-
serves would be boosted higher.
Should this prove to be the case.
there would be little danger Of injury
to the Governments credit standing
by adopting the Patman proposal.
But, at the same time, there would be
no appreciable improvement In busi-
ness conditions, because the money
would have been taken out of circu-
lation too quickly.
Money Spree Inevitable.
''Its like taking drink of whisky"
one economist said. The immediate
result is pleasantly stimulating, but
after bit this wears of. Still, 1t
seems as though no harm has been
done. Why not take another one?
And then another and another until,
finally. the drinker passes the point
OF reason and becomes deliriously
drunk.
The same thing can happen with
imitation. If it gets cut of hand a
money spree is sure TO follow II it
goes so far as to affect public conf
dence. one of two things could be ex-
pected-a flight to the currency of
some other country or a flight to
goods, mad desire to convert money
into some tangible property. Prices
soar and can be met only by the issu-
ance of still more money. The final
result would be the collapse of the
Governments credit and financial
chaos"
In referring to the deficit created by
bonus legislation, President Roosevelt,
in his veto message last year, struck a
similar note.
In the majority of cases." he said.
printing press money has not been
retired through taxation. Because Of
increased costs, caused by the inflated
prices, new issue has followed new is
sue, ending in the ultimate wiping out
of the currency of the afflicted coun-
try.
Il cannot in honesty assert to you
that to increase that deficit this year
by $4,000, ,000, 900 will in itself bankrupt
the United States. To-Day the credit
of the United States is safe. But it
cannot ultimately be safe if we en-
gage in a policy of yielding to each
and all Of the groups that are able to
enforce upon the Congress claims for
special consideration. To do so Is to
abandon the principle Of government
by and for the American people and
to put in its place government by and
for political coercion by minorities
We can afford all that we need; but
we cannot afford all that we want"
Monetary Views Interpreted.
Narrowed sdown to essentials, the
conflictirg monetary views in Con-
gress, as interpreted In general terms
by economists. are:
/. Pay the Governments obliga-
tions through controlled imitation"
of the currency. The danger Is that
initiation has rarely, If ever. been
controlled and ultimately additional
taxes are necessary If the new money
is co be retired and the Governments
books balanced.
q Pay the Governments debts by
borrowing the needed money. This
is the orthodox" procedure, but it Is
no less infiationary than resort
to the printing presses unless the Gov
ernment is living within its income
and can raise enough money by tax
alton to pay the new debt and the
interest on IT. It is just as easy (while
credit Is good) to defer the day Of
by borrowing as by print
ing money. and excessive borrowing
can ruin q governments credit just
as effectively as unlimited printing Of
There are but two alternatives
II q government lives beyond its in
come" one fiscal expert declared. 1T
must resort to imitation in one form
or another to pay the bills as long
as 1t can. or it must raise additional
revenue and that means new and
higher taxes for you and me-"