Show the new cetera Ne era TEra by albert ill mareden INFLATION the question ot of ini sni Alii atin perplex ts es a great many pe peep pic ever even leaders of our nation s sen cm to be in ili a tog fog in inflationary from non inflationary phenomena only recently alfred E smith r suggested ug to the senate financil committee that the government 1 nance nanca a pit public alic works program by i t bond issue rather than resort to ln ili nation as a means of stimulating cur dormant industries the fact I 1 is that it makes little difference whether the government issues bonds or curr currency encyl both are measures of inflation per se inflation can be effected in several ways the vigorous open market policy of 0 the federal reserve system tit in the purchase of government securities was inflation purpose purposefully ful fully under taken that policy has been relaxed and had tailed failed in its ive it pumped credit into the vaults and reserves ot of its member banks but very little has ever reached the public during the nationwide nation wide bank mor the currency was inflated by two billion dollars most alost ot of this new money has never been called hi fit to active use with the file subsidence of 0 tear fear there has been no der demand nand upon banks tor for it all these inflationary measures vindicate the old adage that you can lead a horse to water but you cant make hint him drink we can pump billions ot of credit luto into banks and print billions of currency but unless it Is used it is of 0 little value ln in returning prosperity our currency Is backed by govern ment bonds gold and ana commercial se curit chrilles cu rilles les ot of individuals and private institutions government bonds form a very large percentage of the assets back of 0 our currency since the recent issue of 0 currency they form the major asset in the reserves supporting our entire money and credit structure they are merely the promissory notes of the government the tha greater part of the value ot of the dollar therefore is dependent upon government credit the faithful performance for mance biot of its promise to pay whenever the federal government gov emment issues bonds it runs lu in debt it it issues so many that tho the bond pur chasing public feels that it is going beyond its ability to retire then them they are not so readily sold as in the absence ot of that feeling each succeeding bond issue becomes progressively less acceptable higher and higher interest rates art ir asked by strA when tho government finances itself by bonding the case may become analogous to a financially distressed man who continues to issue promissory notes to provide for or current needs unless he enlarges ills his income lie he will find his bis notes are unacceptable and himself bankrupt I 1 am of the firm opinion that the federal government govern men t has not yet shaken the confide confidence nee of the people in the soundness of its credit it is 4 to be noted however that the last loud lond issue bore a higher rate of in lerest and was not as enthusiastically subscribed for as recent previous lis issues sues ilow how far it can go wita out appreciable detriment is a matter of keeping public confidence A government may safely issue more bonds during a war when patriotic fervor Js Is high than in a peacetime depression when confidence Is at a low ebb and the enemy invina ble it becomes apparent that every federal bond issue is directly anti anil ii iri directly an measure it results 1 in a depredation depreciation of government ment credit hence a depree lation letlon ot of the dollar and 21 it pro pra illes a medium against which national and federal reserve eanls may issue their notes inflation tnt tation to be effective must reverse the process of deflation led us to the bottom let us hope ot of this depression it ought to be of the sort that would inflate most where deflation has been greatest and that indisputably Is in our agricultural ri sections the farmers income has been dried up by deflationary processes dating back to 1920 21 the most pertinent causes are arc 1 the cruel and shortsighted policy ot of the federal reserve board in 1321 1921 calling tor for a thirty day liquidation of loans in agricultural sections 2 high tar life itta which a did not benefit the farmer because ot of an exportable surplus of farm products the price of which was fixed in ili a world market and which b forced him to pay it a disproportionately high price tor for urban manufactured 3 the desertion by private batik banks making him a distressed beller 4 continued to back page C 10 6 typical of much beautiful scenery in the second lefthand left hand canyon which a ne new 1 toad road will make accessible 7 A ces sible to the public A the new era inflation lation continued from page 1 increased ncr eased distribution costs viz freight rates and handling charges etc 6 5 increased taxation 6 all 0 of which concentrated money in III cities and large financial centers I 1 am not unmindful of 0 the extra JUnie Amest stio lo forces that have contributed to our economic ills such as abandonment of oc the gold stardard by corty three nations since the austrian bank failure in 1931 the of the foreign cx f changes by great britain the recent subjugation ot at our tariffs by depreciated currencies and the issues arising out of war debts and separations these sinister forces have stifled the recovery ot of american industry I 1 endorse any inflation that will put our econ economic omle mac machine tillie in order ithe ahe problem is not one of issuing snore anore currency but making what we have circulate by scaling ilig down the farmers fixed charges such as mortgages taxes and interest and providing tor for generous loans based on normal values our government Is taking a most effective step tor for the return of prosperity give to agriculture purchasing power and in my opinion the urban industrial will receive a demand tor for his goods that will go farther in restoring aing prosperity than any measure yet proposed |