Newspaper Page Text
VOL. 19, NO, 9
ICauses of the High
v,?. ' ;,; , Cost or Living
"Following is special Washington staff corre
Btfdndonco to "the Chicago Tribune:
"The Federal Reserve board bolieves currency
legislation at this timo is unnecessary and un
desirable, and would suggost that whether
viewed froinan economic or financial standpoint,
the remedy for the present situation is the same,
namely, to work and save; to work regularly
and efficiently in order to produce and distributo
the largost possible volume of commodities; and
to exorcise reasonable economies in order that
monoy, goods and services may be devoted pri
marily to tho'liquidation of debt and to the satis
faction of the demand for necessities, rather than,
to indulgence in extravagances or the gratifica
tionOf a desfro for luxuries.
WAR OVER ONLY MILITARILY
"The war is over in a military sense and
while the bills' have boon settled by loans to the
government, these obligations, so far as they are
carried by the banks, must bo absorbed before
tho war chapter of the financial history of the
country can bo closod."
With these words tho federal reserve board,
through Its governor, W. P. G. Harding, closes
a letter today to Senator George P. McLean,
chairman of. the committoo on banking and cur-
' roncy, responding to a request for an expression
of its views as to the advisability of legislation
" providing for a gradual reduction of tho currency
in circulation as proposed in a senate resolution.
CREDIT EXPANSION INEVITABLE
' The boa.rd admits that there undoubtedly has
' takon place in the last two years a certain
' amount of credit expansion which was inevitable,
in view of tho circumstances of war financing;
but says this will be corrected aa securities is
sued by tho government for war purposes are
absorbed by the investors.
The principal causa for advanced prices1 bofore
and during tho war tho board attributes to tho
urgent needs of allied governments for goods
and for quick deliveries, while it holds respond
sible for the present rising prices:
General relaxation of wartime personal
Increased demand for commodities by in
dividuals who heretofore restricted their pur
chases and are now buying in competition with
Accrued incomes and increased wages leading
td demands for luxuries and semi-luxuries and
to diversion of labor and material to non
essentials. GOLD COIN IS ALL RIGHT
Tho board assumes that it is generally recog
nized that no legislation is necessary with re
spect to gold coin, gold certificates, standard
silver dollars, silver certificates, subsidary silver
arid treasury notes of 1890, and that tho ques
tion of currency reduction arises over fodoral
"The amount of federal reserve notes out
standing," the letter says, "has increased from
$357,239,000 on April 1, 1917, to $2,504,753,000
on AugUBt 1, 1919.
"It appears, therefore, that those who see in
tho larger volume 'of circulation in the United
States tho prime cause of increased costs of liv
ing, and who serek a remedy by a forcod contrac
tion of tho currency, must have in mind the
federal reserve note and section 16 of the federal
reserve act, as amended June 21, 1917, wliich
provMos for its issne and redemption.
-f '"; causes of Situation today
'Ih analyzing our present monetary situation,
" r $$ ln considering the causes which have led to
, rj1Jio .expansion tf -credits and note issues during
, the war, wo should not lose sight of some of tho
' developments of tho pro-war period and of their
Effect upon credits and prices.
,, "Very heavy purchases of supplies of $frl kinds
f Were made in this country by European bellig-
$el du.rins th0 ?!rs 19,15 antl 1010. Payment
,fqr which involved tho shipment to us of large
.ajcno'unts of gold.
a VPNNJ stock of gold in the United States on
v.July 1, 1914, was $1,890,678,304. This amount
.increased steadily until April, 1917, tho date of
our own entry into the war, when it reached
an increase of
BANK DEPOSITS SOAR
"Bank deposits likewise show a large increase,
tho net deposits of national banks haying ris6n
from $7,496,149,000 on June 30, 1914, to $10,
489,217,000 on March 5, 1917, while the net
deposits of all bank in the United States in
creased from $17,966,160,000 in. June, 1914, to
$24,891,218,000 in June, 1917.
"Net deposits of national banks has further
increased up to May 12, 1919, to $11,718,095,000,
and those of all banks in June, 1918 (the latest
date for which figures are available), to $26,
769,546,000. " X1
"Shortly after April 6, 1917, when the con
gress declared' war, tho treasury began, to sell
bonds, notes, and certificates in large amounts,
resulting in a net increase in the public debt to
August 1, 1919', of $24,518,064,840.
VAST INCREASE IN MONEY
"On July 1, 1914, tho total stock of money
in the United States, exclusive of that held by
the United-States treasury, was $3,419,168,368.
On April 1, 1917, tho stock ot money, estimated
oft tho .same basis, was $4,702,130,941, an in
crease of $1,282,962,573, of which increase
$883,481,028 was in gold.
"The corresponding amounts of money outsido
the treasury and federal reserve banks in circu
lation on April 1, 1917, December 1, 1918, and
August 1, 1919, are shown in the following tablo:
APRIL 1, 1917
Gold coin and certificates $1,989,162,000
Silver dollars and silver certif
icates (including treasury notes
of 1890) 532,700,000
Federal reserve notes 357,239,000
Fodoral reserve bank notes 3,170,000 '
Air other currency 1,218,715,000
Amount per capita outside the
treasury and the federal re-
serve banks 37.88
DECEMBER 1, 1918
Gold coin and certificates ;$, 861,245000
Silver dollars and silver certif- ;' - '
icates (including treasury notes -,!k
of 1890) - .. .. 372,480,000
Federal reserve notes 2.607,445,000'
Federal reserve bank notes 87,737,000
All other currency 1,201,069,000
men reining to their homes in foreign
trios, r , . j usn conn.
"T.ho fact that the circulating media nr .
Philippine Islands, Hawaii, Cuba, VoL h
Santo Domingo, Haiti, Honduras, HmZ ,1
in part, Mexico, include United Stdtes paper " '
r"viT uuu.u.ioj U.T121
'The increased volume of federal reserve nAt.
nfrniiln.t1nn during th loo i.. lcaBr notes
far as it is not tho result of direct exchanie if!
gold and gold certificates which have been i !
drawn from circulation, is the effect of advanZ
wages and prices, and not ther cause " 6
Amount per capita outside the
treasury and the federal re
serve banks 48.13
AUGUST 1, 1919 '
Gold coin and certificates $ 728,046,000
Silver dollars and silver certif
icates (including treasury notes
of 1890) 241,505,000
Federal reserve notes 2,604,753,000
Federal reserve bank notes 166,289,000
All other currency,'. ...'.' 1,156,297,000
Total .'. ; . .V $4,796,890,000
Amount" per capita outside the !
treasury and the federal re- .
servo banks i.'1 15.16
GRADUAL DECREASE SHOWN
"Assuming that December 1, 1918wmarks the
beginning of the post-war period, tho table shows .
up to August 1, 1919, a not decrease In. circula
tion for the post-war period of $333,095,000 or
$2.97 per capita. ,,.. .
"In considering tho question ot currency in
circulation, thore should be taken into-account
the various factors which have entered into the
demand for currency, among which ajre:
"The gradual enlargement of pay rolls,, both
as to the-number of workers and amount paid
"The effect of higher wages upon deposits in
banks and upon the amounts of money carried
by shopkeepers in their tills and by individuals
in their pockets.
"The amounts of money locked up or carried
on their persons by workmen who have been re
ceiving high wages and who, especiallyin tho
case of ignorant foreigners aref "unwilling to
deposit their savings in hawks or" Wfnvest in
government bonds. i v ,
EMIGRANTS '6ARRY OFF COIN
"The amount of money carried away by work-
WALSH OPPOSES LOANS
. A Washington special, dated Sept. 11, Bat8.
A resolution providing that no further Ioabi
should be made by the United States to foreign
nations for the creation or maintenance of anna
merits was introduced into the senate by Senator
Walsh of Massachusetts.
After -showing that tho United Stages had al
ready advanced to other nations a total of
$9,684,272,567, the resolution states that further
advances as from four to five billions of dollars
are soon to be asked for by the President to help
rehabilitate the industry and credit of foreign
. countries. In the statement prefixed to his m
lution Senator Walsh asserts that these proposed
loans will in all probability be used, for the
creation of new rivalries in armaments, and
therefore subversive of the peace of tho world.
"The purpose of this resolution," said Senator
Walsh, "is. to serve notice to the world that
public sentiment in the United States Is em
phatically in favor of mutual disarmament, and
is emphatically opposed to a resumption by the
' nations of Europe of the race in armaments
which was largely responsible for the conflagra
tion of 1914, and which if resumed will compel
this nation to adopt a militaristic policy of vast
proportions in self-defense. Under tho circum
stances, it is monstrous that our national re
sources should be drawn upon to aid other na
tions in creating fleets and armies tiie Vory exis
tence of which is a menace to our national
security and our national prosperity."
v ' WAR" LOAN PREDICTION DENIED AT
A Washington dispatch, dated August 20,
says: Reports that the war loans made by the
' United States to allied and friendly nations are
to be canceled are unfounded. This information
is brought out in a letter which R. C. Leffing
well, assistant secretary of the treasury, has
written in response to an inquiry from John J.
, Chester, a Columbus lawyer, who inquired as to
the amount of these loans and the prospect for
"The cancellation of these loans," writes the
assistant secretary of the treasury, "has not
hofin RiicrirfistGd hv an-- of the Governments of tne
allies nor, so far as the treasury is aware, by any j
one in authority in this country."
rplia ooolafortf oonrofflrv Hftts foftll in detail lH0
amounts of these loans, which now wach jJ
nafniinrHir fnfnla nf $9.fiK3. 348.904.79. U
credits established by the secretary of tho tress-
,,,.,,. tvi 4n-r. 4 4m.ntyn. irnvornmAIltS US Uk luv i
nlnn nf hiinirmnq .Tnlv 28. 1919. Were aS fOlIOWB.
BelKium $ 343,445,000.00
555?- :. , m.ooo.ooo.oo
uuuu, ..,.,.., . . .... . ... ;; ooA ooo oo
ureal amam "lq 412 966.00
Italy . . v. ,.u. &.?. x 5'ooo,000.00
Liberia -v. .. . . . .-. . ..- ' ' 30 00 000.00
Rumania . . . . , ,. JKKro.OO
Russia ;....... ;'Jo0'465.56
.W, . '"" A MEAN' THICK
Sam Blythe;, who takesupon hifXfS
-nialiy the .duty of listing ' for PuJ?7pres-
names of all purchasers ami 1-" fl,flt the
l1 lightning rods, is of the opimu -
republican- oltf guaru naa jhj "w them
idential lightning rods, is or uw i'""" 'n trjclc
n . Tt -T 1nn ninVMII L AXv-
UDUQan oi.a guaru uo ; " hinr them
Borah and; Hiram Johnson by PnA"btreaty
alPut Ae the Uett e
liPly, veryiKeiy, y- litlcs
'f.iit re iAti niiii iiiM - it-
nave round: 10 ,mn ou y 1lllMn flgwiM
been tp a5t flomairpgreJ ;epr1 Siemocrat
a progressive dedcrat fr a'prpsreBBhe
slittfng up a progressi7e repuouuiu.