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Show WHO INFLATED THE CURRENCY? George E. Roberts Gives Common Com-mon Sense Explanation for Currency Increase and Decrease. GOVERNMENT TOOK NO PART Due to Changes In Supply, Demand , and , Prlcea of Commodities Caused by WarFederal ' ' Reserve Not to Blame. The mistaken notion that the currency cur-rency Is inflated and deflated by the government in the United States from motives beyond the understanding of average people Is effectually set at rest by George E. Roberts, noted banker and exponent of sound money. In an article in the Journal of the American Bankers Association. "There has been Inflation by the governments of Germany and other European countries, which have ls.J sued money for the purpose of paying" their expenses," Mr. Roberts saya.-"The saya.-"The United States Government has done nothing of this kind since the Civil War. "There Is a genuine need for elasticity elas-ticity in the volume of currency, and for machinery to adjust it to the legitimate legit-imate needs of the country.- The means provided are the Federal Reserve Re-serve Banks, authorized to issue currency cur-rency to their member banks, either in payment of deposits or for loans. 8lde-Tracked Like Freight Care "More currency Is needed in September, Sep-tember, October, November and December De-cember than In January and February. Aa business slackens, currency naturally nat-urally retires from circulation. Money accumulates in the member banks and they send it In to the Reserve banks, which in effect retires It, as freight cars are retired when traffic falls off. "What caused the great inflation of credit and currency T It was due primarily pri-marily to the war, which made extraordinary ex-traordinary demands upon the industries indus-tries and caused a great rise of wages and prices. It was Inevitable that more credit and money would be called for to carry on business. "The boom year of business that followed fol-lowed the armistice was likewise abnormal. ab-normal. The end of the war released a great many demands that had been held In check. The foreign demands upon us at first increased. There was a temporary stimulus, but the volume of business was abnormal and could not be sustained. Agricultural production pro-duction In Europe revived, the prices of agricultural products moved back toward normal, importations from t he-United he-United States fell off, prices declined, "deflation" began. "Some ssy 'inflation should not be permitted.' but if war occurs Inflation a- ...... .Al4nKlA T a IMno- a vm Icta is unavoidable. Recruiting armies makes a labor scarcity. Contractors bid above going wages to attract men. The war Industries did the same and the peace industries raised wages to hold their men. Governments of Europe Eu-rope sent representatives to this country coun-try to buy food and they bid up prices on the grain exchanges. Higher levels j of wages and prices meant that more credit and money was required to handle business. More Business, More Money "The Increased issues of currency was a result of allowing business to go ahead, upon the rising level of wages and prices. When a factory pay-roll doubled, twice as much currency cur-rency had to be furnished for It When cotton rose from 10 cents a pound to 30 and 40, more currency was required to handle the crop, and so all around the circle. "Deflation did not come by an act of the government or the Federal Re- j serve authorities In suddenly with- drawing money from circulation. De- ! flatlon came naturally when buslneas ! fell off and prices declined. Just as I an Increasing volume of business at higher prices called more currency i Into use, so a decreasing volume of j business at lower prices released currency cur-rency from use and caused It to return re-turn to the Reserve banks. "There has been absolutely nothing j new or strange In these price move-ments move-ments related to the war. Inflation and deflation have been just as always al-ways when wars have occurred. The only new factor has been the population. popula-tion. That Is always being renewed, and most people do not learn by the experince of others. When hard times i come It Is always the thing to lay the blamed on somebody, and this time the Federal Reserve System has taken most of It." |