The Western news. [volume] (Libby, Mont.) 1933-current, 1938-01-27
SEEN
HEARD
around the
NATIONAL
CAPITAL
ID ~ ~.
By Carter Field ]

Washington.-Where is this capt.
tai which is ION strike? Where
are the dollars which, if put to work,
would, as President Roosevelt sees
it, save the capitalistic system?
There is SO much misinformation
going around on this subject that
little fact, CLEANED by questioning
reserve board experts, bankers and
other authorities, might be injected.
First, it is not in banks. Money
in bank is not ION strike" The
bank can use it for commercial
loans, or for buying bonds in some
enterprise. 1t is not in govern
ment bonds. Selling these would
merely mean that some one else
would hold them, which would not
change the situation at all.
Some of it is hoarded--currency
and perhaps a little illegally held
gold in safe deposit boxes, or buried.
But this amount, so far as the
total goes, is chicken feed.
Actually, this capital is potential,
not actual. 1t does not exist, but
it could be made to exist. The
President thinks it should be made
to exist. The folks who could make
it exist are not willing to take the
chances involved. That is the whole
story, but hardly anybody seems
to believe it,
Let us illustrate. A thinks there
is an excellent opportunity to make
some money by starting factory
to make soap-bubble-blowing ma
chimes. A has no ready cash, but
he has good credit, is favorably
known to his bankers, not only as
a man who has always paid his
debts on the nail, but as a good
business executive. In short, good
risk.
So A has no difficulty borrowing
100000 to erect this factory and
start operations. He also has the
confidence of half a dozen friends
who happen to have good credit,
SO they borrow another 100000
from banks and take a chance with
A.
How It's Done
In any real transaction of this
sort probably the loans would be
made by several banks, but to SIM
pity matters let us assume that
one bank loaned the entire million
dollars.
Actually the bank does not pay
out cent of currency. 1t merely
enters up the loan on its books. It
thereby increases its eposits-tem-
porarily-one million dollars, and
increases its loans by the same
amount.
Let us assume further, to make
the illustration simple, that the
bank had already loaned up to the
limit permitted by reserve require
ments of the actual money on de-
post, plus capital and surplus.
The banker would merely take the
notes of A and his friends, plus per-
haps few others, over to the Fed
eral Reserve bank. The reserve
bank would hand him ST ,000,00
or whatever amount was covered
by the notes in bright new cur
rency. Or it would, more likely,
merely enter on the books that this
| particular bank making the loans
for the new factory had now SO
much on deposit.
So it might be that no new money
would ever be printed, though that
could be done if it were advisable
for any reason.
So a million dollars would be put
to work. A million dollars which
did not exist before A and his friends
called on the bankers. A million
dollars which would never exist if
A and his friends did Ii not think
there was good chance for a profit
if they built new soap-bubble-blow-
ing machine factory.
That's the money which is ION
strike"
Court Vacancies
Three more Supreme court va
cancies within a year will insure a
minimum of five appointments to
the high bench that President
Roosevelt will have in his second
term, as against none in his first
four years. The three expected to
follow Justice George Sutherland off
the high tribunal are Justices Louis
D. Brandcis, James Clark Mercy
nolds and Pierce Butler.
Of these McReynolds and Butler
are the last two of the real con-
servatives, Sutherland and Willis
Van Devanter with these two having
made up the conservative front on
the court. So that there will be
only four men on the court not APP
pointed by Roosevelt, and one of
these four an out and out liberal
Justice Benjamin NJ Cardozo. The
remaining three, Justices Harlan f.
Stone, Owen j Roberts and Chief
Justice Charles E. Hughes, are all
| more or less in and outers," so to
speak, so far us cleavage between
| progressiyism and reactionaryism