Evening star., 1937-11-21

control was Prof. Fisher. Said he:
THE main reason for the present
recession, as well as for the original
depression, was monetary: the main
remedy must be monetary.
Between 1929 and 1893 the Ma
tion's check-book money (demand de-
posits) shrank by $4,000 ,000, 900. That
great shrinkage could not help but
make a great depression. Between
1888 and 1896 that shortage Of money
was more than made up. It's restora-
tion could not help but make recovery.
In 1887 this money supply has
been shrinking again. So far it has
shrunk by $1,000. 900 900. That shrink
age could not but make a recession
Restoring the shortage would largely
cure the recession.
Federal Lending Urged.
The best method is one which
could be applied almost overnight If
Congress would enact the necessary
legislation.
This method is for Federal Re-
serve banks to lend to member banks,
without interest, enough new bank
credit to bring present 20 per cent
reserves behind demand deposits up
to 100 per cent 50 as TO get the VOL
ume Of our money under control, and
then to buy bonds with still more
cradit ninth aro,,oh AAposits .hsn -
in circulation to bring back prices,
business and employment.
Another effective remedy would
be to speed up use of our money
by encouraging business, especially
by repeating the capital gains tax
and the tax on undistributed profits.
There are other factors, of course
Balancing the budget is desirable
as soon as feasible, but it has far less
to do with our prosperity problem
than commonly supposed. In fact,
it was through our unbalanced budget
that recovery up to 1896 was actually
accomplished. The Government sold
its bonds to banks, receiving in turn
demand deposits. This new check
book money was spent not only by
the Government. which thus put it
into circulation, but it was respent by
the public at least 20 times 4 year
Yet it would be = mistake to re-
turn now to an unbalanced budget
as a method of restoring the destroyed
money"
Reduce Taxes"
Another advocate Of credit control
by Congress was Mr. Cromwell, econo-
mist husband of the former Doris
Duke, the tobacco heiress. Mr.
Cromwell, who is being considered
as . successor to United States Sen
ator Harry Moore of New Jersey,
said:
THE first remedial step to be
taken Is drastically to reduce income
and corporation taxes, particularly in
the higher brackets. This would in
duce capital to fiow into industry and
thereby increase employment and
raise the bargaining power of labor.
"As matters now stand, the money
Of the wealthy, which would other
wise be used in the creation Of new
business and new jobs, Is hidden away
in tax-exempt securities, Is lying idle
in banks or is boarded in safety de-
posit boxes.
The result is that the Govern
ment pays out in doles and for un-
productive public works the very dol
lars which should be used to create
new business and give employment.
Only about Is per cent of the
total expenditures of the Federal Gov
ernment is procured from the super
taxes upon the incomes OF the wealthy
individuals and corporations-yet it
is the extraction OF this stream Of
life blood from our national economy
which has brought on the present
serious recession.
Budget Will Balance Itself.
When tax reduction has engen-
dered an increased national income
and fiow Of goods, then the second
remedy is for Congress to equip its
agency, the Federal Reserve Board,
with the means to positively regulate
the flow Of our money and to synchro-
nize it with the now Of manufactured
and agricultural products. Then, and
not until then, can national prosperity
and full employment securely and
permanently be attained.
The budget will balance itself If
the national income can be raised to
one hundred billion dollars or more
year. 1t is impossible to balance
the budget now because we must con-
tinue to support our unemployed dur
ing the recession. This Nation can
easily afford an unbalanced budget for
another couple Of years."
An entirely different point Of view
on credit came from Col. Ayres. who
contended the cure for the present
slump cannot be successfully sousht
in monetary or credit stimulants, but
It could be found through removal
of business barriers" by Congress.
Restoration Of railroad and utility
purchasing power" he said, would
do It,"
A balanced budget, Col Ayres held,
rs not Immediately essential, but It Is
essential that the public become con-
vinced that the administration Is de-
termined to balance the budget and
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