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Show National Topics Interpreted jt. w by William Bruckart fllllllflM National Press Building Washington, D. C. fIff Washington. It may be, as I have frequently been told, that the average aver-age person Mr. Federal j0hn Q. Public Reserve has verv httle interest in-terest in the doings do-ings of the federal reserve system. It may be true that the average citizen accepts the federal reserve banks as a thing apart and of little or no concern to him because they are so far removed and, further, because they indulge in what the demagogues used to call "high finance." fi-nance." Whether my information is correct cor-rect and regardless of the public concept of the federal reserve system, sys-tem, I am devoting some space this week to a discussion of certain developments de-velopments in the federal reserve banking structure in an attempt to show the trend of money conditions in this country at the moment. Lately, the federal reserve board of governors announced a revision of its regulations governing discounts dis-counts and advances by federal reserve re-serve banks. Now, it may be said that these regulations affect only the banks that are members of the reserve re-serve system. That is true but it is not the whole truth because everything ev-erything that the federal reserve board of governors and the federal reserve banks do affects you and me and everyone else whether we are little fellows and, therefore, unimportant un-important individually, or whether we are trustees of great sums of money such as is the case with corporation cor-poration presidents. The board of governors, in the revision of its regulations, has made it possible if not obligatory for the reserve banks to take almost al-most any kind of paper that is an evidence of debt. That is, the reserve re-serve banks are now empowered to receive from the member banks that paper upon which you and I borrow, any paper that shows that a citizen owes the bank money, and to give that bank money in exchange ex-change for the evidence of that debt. Everyone, of course, is familiar with a note or a mortgage on a piece of real estate. Most people understand about installment paper which is simply a note providing for payment of the amount due over a period of months. But there are many other kinds of evidence of debt that is in frequent use. among business men from the smallest storekeeper in a rural village to the greatest banker in the world. Under Un-der the regulations now operative in the federal reserve system there seems to be almost no paper which the local banker cannot send to the federal reserve bank and receive cash in exchange. Of course, that obligation must be paid off some time and the arrangement simply permits the federal reserve banks to carry the debt until its maturity. All of this obviously sounds as though the federal reserve system is at last to be helpful to us little fellows. That is true. It is going to be helpful in increasing the number num-ber of us little fellows who get ourselves our-selves in debt. It is going to do that because it makes getting into debt easier. I think no one should object to the reserve board regulations in all details. There must be credit given where credit is needed; that is to say when you prohibit borrowing money you choke off eighty-five per cent of all of the business done in the United States. Yet, credit is dangerous, a double-edged sword and must be handled with extreme caution by the borrowers as well as by the lenders. As we have seen from the inglorious debacle of 1929, there can be too much credit extended, ex-tended, and when I say that, I refer not only to loans by banks but the sale of goods, wares and merchandise merchan-dise that enter into everyday life. And, going a bit further on that line, there can be too much credit cred-it extended by the manufacturer and jobber to retail merchandising establishments just as easily as there can be too much credit extended ex-tended by the retail merchants to you or to me. One can get into debt over his head just as easily by purchasing at retail or wholesale as by buying more land than we can aflord to own or a home larger than we need. So, a discussion of what the board ot governors of lhe federal reserve system has done can lead in thi3 instririce only to a conclusion that danger flags are waving. I do not want to exaggerate present pres-ent conditions or signs as I see tliern. This is no time to Don't Get become excited. Excited There are, however, how-ever, boundaries beyond which we cannot go In the rnal'er of credit without facing nn-bJkt nn-bJkt tail:;pm of the type of '.)2). J I, at Is the thing I f".'ir rn;iy rcmilt from an accumulation of federal folieii of which the late fiction by the fwl'-ral re:':rve biard in only Jl h p'.-rfi clly human and natural f ' j r e.i' h one of un to a;.pire to beller thin:':, lo hav: rnoi c of thin world'H H'jO'!;i for our enjoyment and to fquip oni r.elvii by way of greater rir, iirc'-n for lb" future. Wo will do those things sometimes when we ought not to do them simply because be-cause the instruments are available and we do not stop to count the ultimate ul-timate cost. To the extent, then, that the federal reserve board probably has made borrowing easier it has tempted a certain percentage of citizens, cit-izens, or will tempt them in the future. The condition of easier debt that is now presented is, as I have said, only on-ly one of many temptations and inducements in-ducements for getting into debt that has been offered by the Roosevelt policies. It is unnecessary to recount re-count here how many pieces of legislation, how many executive and administrative rules have been made to permit citizens to use money mon-ey that is not their own. They are almost numberless. The result has been, is, and will continue to be the creation of a lot of debt that will hang over us all for years to come. The federal government itself has taken the lead in getting into debt. The latest Treasury statement shows that the United States government owes more than thirty-seven billion dollars. That amounts to $281.63 for every man, woman and child in the United States. Compare that with the national debt as of 1932 when it stood at $19,500,000,000 or a debt of $155.93 for every living person in the United States. I do not know when, if ever, this gigantic national debt will be paid off. I think prob-Pay prob-Pay Off ably the American Sometime people with traditional tradi-tional tenacity will stick by the job and get it done some time, but I must refer to the job as a very slow process. It required twelve years after the World war debt reached its peak of twenty-six billion to reduce it by ten millions. That reduction was more rapid than had ever been known before in any nation and it was made possible because be-cause of the prosperity which we enjoyed en-joyed during those twelve years. It would seem, therefore, that we must consider not only a slowing down of individual debt making, but a sharp curtailment of national debt making as well. If we do not, a yawning cavern of unsounded depths awaits us. Some weeks ago Mr. Roosevelt sent instructions to the various agencies of the government to save ten per cent out of the operations for the current fiscal year to help in balancing the budget. There were no ifs, nor ands, nor buts about President Roosevelt's instructions. The spending agencies were told simply to fay aside that ten per cent which, in the aggregate, would amount to around four hundred million mil-lion dollars. The President said during a speech at the great Columbia Colum-bia river dam the other day that he hoped to balance the budget in the next fiscal year. Most other people hope that the President's hope is realized because Mr. Roosevelt has stated several times that the budget will be balanced "next year" and some of us are beginning to wonder whether his budget balancing statements state-ments are not like the statements which President Hoover made at the beginning of the depression. He said, you will remember, a number num-ber of times that "prosperity is just around the corner," a corner that still seems to be next year. But Mr. Roosevelt must be commended com-mended and criticized at the same time for his budg-Budget budg-Budget et balancing ideas. Balancing Milld yu. n0 criticism criti-cism can possibly be attached to the objective a balanced bal-anced budget. But commendation must give way to criticism on some of the things that are happening under the fiat order for a reduction in spending. Take this case for example: The National Park service, like other agencies, laid away ten per cent of its operations. This impounding of money happened to coincide with the greatest flock of visitors ever to enter the gates of the country's national na-tional playgrounds. It costs money to police and protect the parks; it requires funds to provide for the comfort of the throngs of visitors to national parks. The result, in the case of several parks, was that they were forced to close their gates to visitors from a week to a month earlier than they usually do in the fall. Their money had run out. Well, say you, what harm does that do? Simply this: Visitors to national parks, such as Yellowstone, for example, pay much more for entrance fees and the things they must buy while in the parks than it costs the government to maintain the parks. But that Is the crux In this situation. situa-tion. The National Park service d'jes not keep the money that is paid in by park vicilois. Tlioso funds ore turned directly into the treasury as general revenue. The; books of the National Park service, therefore, there-fore, show only outgo. 'lhe condition Is one, therefore, It seeinn to foe, that almost warrants a (.latcinent that lhe policy is "penny "pen-ny vl.':" and pound foohah." Hj Wrslrin M('Wf;papcr Union. |