Evening star. [volume], February 07, 1932, Image 25

About Evening star. [volume] (Washington, D.C.) 1854-1972

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- ■ EDITORIAL SECTION' _ if———
Editorial Page | J§Un(fcttJ gfaf. Special Articles
- part 2 _^ pa es WASHINGTON. I). C, SUNDAY MORNING, FEBRUARY 7. 1932.
MACDONALD TO DOMINATE
LEADERS AT ARMS PARLEY
Political Crises to Keep Real European
Leaders at Home Except for
Brief Period.
BY FRANK H. SIMONDS.
PARIS.—A significant decline in
the vogue of international con
ferences. and the severity of do
mestic political crises which is
keeping statesmen at home, is
the contrast revealed between figures
present at this year's Geneva gathering
and the past great meetings. Whereas
at Paris Clemenceau, Wilson and Lloyd
George were in almost continuous at
tendance, and more recently (1928) at
the London Naval Conference Secretary
Stimson and the late Dwight Morrow
sat daily with Fhemier MacDonald while
Andre Tardieu was a frequent conferee,
only Prance among the great powers
this year sends a public man of first
rank as a permanent delegate. True,
Premier MacDonald and Chancellor
Bruening are coming for a brief stay,
but in their absence Great Britain and
Germany are represented by men without
great international reputation or large
domestic political influence. Moreover,
there are such difficulties and dangers
in their home situations that both Mac
Donald and Bruening give only passing
attention to Geneva. Nevertheless, they
are sure to exert great influence at
Geneva as did the "big three” of the
brighter Locarno days—Briand, Strese
mann and Chamberlain.
Tardieu Is Strongest Man.
It is impassible not to recognize the
Strategy of France in sending her ablest
and most experienced public man to the
Geneva front at the moment when her
fortunes are visibly at stake. Briand
gone, no Frenchman has Tardieu's
training abroad, as a journalist, as a
diplomat, twice as prime minister and
now the power behind the Laval cab
inet. Alone among the more consider
able figures he need have no fear of
home politics. Again, he possesses the
inestimable advantage of speaking
three languages, German and English,
as well as French. The new Tardieu
that Americans will see at Geneva this
year will be tempered by a measure of
adversity. He is not quite as robust in
health as he was at London, he is less
sure of himself and less cynically arro
gant. for Clemenceau's former lieuten
ant has had h‘s share of ill luck in
recent months, and learned from it. At
Tardieu’s side will be Boncour, next to
Benes the most experienced delegate,
and as an orator second only to Briand
himself.
Tardieu has three allies of long
proven ability. Benes of Czechoslo
vakia is the oldest foreign minister in
Europe, author of the once famous
protocol and beyond debate the great
er statesman of any little country in
Europe. Titulescu of Rumania, like
Benes an old hand at Geneva and a
great figure in international affairs,
will pJay a considerable role. Finally,
Zaleski. the foreign minister of Poland,
a less considerable figure than the two
others but representing one of the larg
est new countries in Europe, is bound
to have a conspicuous part in the pro
ceedings.
Allies to Put Up Fight.
Tard:eu. Benes, Titulescu and Za
leski constitute the combination of
France and her allies, the Little En
tente and Poland. They are certain to
make an uncompromising fight against
any attempt of Germany and Italy,
separately or united, to disturb the
present balance of armed power in
Europe. They will be the "Big Four"
in upholding the status quo against
treaty revision. All are strategically
strong in the situation because their
public opinions support them.
Opposed to this combination, Ger
many sits with Bruening, if only temp
orarily. But Bruening. despite his
courage and constancy, has been dis
closed as politically clumsy at home,
tnd his is not a happy record in for
eign affairs. His indorsement of the
Hitler program for revision of the
' Polish frontiers, his acceptance of the
Curtius maneuver for the Austro-Ger
man tariff union last Spring, resulted
in grave German reverses abroad; nor
has his recent blunt announcement of
German repudiation of reparations
payments increased his diplomatic rep
utation.
Actually, Bruening is no politician,
nor is he a diplomat. In both fields he
has measurably failed. In the present
conference, the real representative of
Germany against Tardieu will be Born
hard Buelow, nephew' of the old chan
cellor, whose memoirs filled Europe with
amusement and dismay last Winter.
He has become the real power in Ger
man foreign affairs although his posi
tion is only that of undersecretary of
j state. He is responsible for the aband
i onment of the old policy of Stresemann
and the Locarno spirit, and a return
j to a new’ and more independent and
intransigeant tone. Thus when Bruen
ing speaks, Buelow guides.
Grandi I'nder Handicap.
Foreign Minister Grandi. who repre
sents Italy, already is well known to
America. He is one of the most experi
enced European diplomats. He baa
charm, sincerity and adroitness. He la
handicapped, however, because he rep- i
resents a dictator and not a counVV. i
j His actions will be indicated by tele
graph. He and Tardieu are old antag
onists. They fought the battle of Lon
don together, and although personal
j friends, they have a clear record of
I political disagreement.
MacDonald, while here, is destined
to be the great figure. It is not im
! probable that he will stand with Bruen
j ing rather than with Tardieu, in the
' debates over security and armaments.
But MacDonald is by no means the
I European power that he was in the
days of the naval conference. His do
mestic position is steadily weakening
and his resignation is regarded abroad
as only a question of time. He is ut
terly distrusted in Prance and secretly
hated in Italy. Undoubtedly he will
resort to his old strategy of eloquence,
but at Geneva he has never earned
applause equal to Boncour and Briand.
MacDanald to Meet Foe.
One of the odd details of the confer
ence will be the meeting of MacDonald
with his old associate and present chief
of the Labor party, ' Uncle'' Arthur
Henderson, whom MacDonald threw
over last Summer. For Henderson, like
all Laborites. regards MacDonald as a
traitor, guilty of desertion and treason
to his party. The split between these
two precipitated the most acute political
recriminations in recent British politi
cal history. Now they meet again at
Geneva, with Henderson in the chair,
but, by reason of the MacDcnald coup,
without a seat in Parliament and with
out any present political importance.
Cne doubts if even the Disarmament
Conference will serve to disarm these
bitter foes.
Such, briefly, are the larger figures at
Geneva. There also is Venizelos, the
great Greek, who at Paris almost re
constituted the Byzantine Empire, and.
despite later reverses, is still the archi
tect of the new Hellenic state. Today,
however, Venizelos has abandoned the
great adventures to steer a safe course
between the French and Italian politi
cal reefs. Tardieu. Bruening, MacDon
ald—these are the big three, but cnly
the first is not a part-time performer.
Grandi. Benes, Titulescu and Zaleski
make up the second string in this gal
lery of Europeans setting out on another
political campaign. It is difficult to
find a place for Miss Woolley and her
two American associates. Senators
Swanson and Davis, all shepherded by
Hugh Gibson, who have crossed the seas
to attend a Disarmament Conference
w hich no European expects to contrib- j
ute to disarmament.
'Copyright. 1932.''
Karl Marx House in Vienna, World’s
Largest, Shelters 1,382 Families
VIENNA. Austria.—Here it is—the
biggest residential building in the world.
J have just walked aroiiid it and it took
jne 40 minutes.
The Karl Marx house, newest and
most impressive as well as the largest
of the buildings erected by the Vienna
municipality for its workmen, is five
eighths of a mile long, a quarter of a
mile wide. It houses 1.382 families—
£.000 people—neatly and comfortably,
and is one of the landmarks in social
[history in Europe.
Here people live at the rate of 25
groschen (about 3‘i cents) per square
•meter, so that their rent is seldom more
than $3 50 to $4.50 per month—and
ere happy.
Like Series of Castles.
Like an enormous series of buff-col
ored castles, the Karl Marx house in
terrupts the Vienna horizon near the
Danube. The structure is an agglom
eration of half a dozen huge blocks,
(with green courtyards and fountains in
between. Fifty per cent of the ground
space of all Vienna municipality apart
ments must remain unbuilt and opened.
Hie center courts are in pale buff, over
laid with deeper sienna; arches and
towers demarcate one block from an
other, painted warm blue-gray. The
window frames and door decorations are
Vermillion, the lampposts blue. Every
flat in the total of 1,382 has access to
the sun. so that the building as a
whole is magnificently striated with bal
conies, grooved with intersecting porches
ar.d roofed with terraces.
The Karl Marx house is more, of
course, than a house; it is a city. It
contains a clinic, a post office, a club,
a library, a kindergarten, huge com
munal baths and laundries, a garbage
disposal plant. And the people who
live in it once lived in wretched slums.
We visited a flat, one of the larger
ones; it had a tiny hallway, a well
equipped kitchen, a living room and a
big bed room. The porter who was our
guide lived in it, paying 32 schillings
(,<4.501 per month rent, plus a small
Mini for taxes, out of which the mu
nicipality will build similar houses in
future. The flat was so clean it
glistened There was no central heat,
but stoves in two of the rooms kept
ft fairly warm. Our porter was fairly
prosperous, his income, 2 schillings
from each of 60 tenants, being 120
schillings ($17) per month.
V/hen he wanted a bath our porter
■went to the central block of the build
ing—at least on Thursdays, Fridays
and Saturday, the three days each week
when the baths are open. A shower
costs 50 groseben (7 cents); a tub,
1 schilling (14 cents).
Housewives Share Laundry.
In the same block are the laundries
—amazing to see. Shining steel-like
rooms, whirring with the most modern
machinery, housewives bent over the
tub, mangier, automatic steam drier or
presser, to which each has access one
day each month; workers in white
smocks and slippers. To pay off the
cost of the glittering machinery house
wives pay from 6 to 12 schillings a
month to the laundry—84 cents to $1.68.
Across the street—the Karl Marx
house is so huge that new streets inter
sect in between yawning cream-colored
arches—is the kindergarten, where we
passed a happy hour. The delicacy and
precision of the furnishings is inimi
table. Each group of children has its
own washstand. set low in the wall so
they can comfortably reach it: the
miniature towels, tools, etc., are identi
fied by amusing drawings and symbols;
the equipment for play, including a
delightful miniature orchestra, rivals
that of the most expensive school for
children of the very rich in America.
And it costs the Viennese exactly 4.28
schillings <30 cents) per week—includ
ing the noon meal!
That is, it costs them that—if they
have the money. The Karl Marx kin
dergarten has room for 150 children
(for whom there are seven expertly
trained teachers), and the present en
rollment is 107. Twenty of these pay
nothing—their parents are out of work.
Unemployed men may keep their flats
in the Vienna houses for two years,
rent free—until they get a job.
The teacher in the kindergarten
showed us the work of the children,
amazingly interesting for such little
tots, much of it inspired by the great
Vienna children's artist and teacher,
Prof. Cizek; we inspected their toy
corners and ''houses '; they rose as we
left, shouting in unison “Auf wieder
shen.” As nice a bunch of youngsters
as I've ever seen. I shall certainly want
to send my small boy there when he
grows older.
No Interest Charged.
The Karl Marx house cost 23,000.000
schillings to build—only a bit over
$3,000,000. The Vienna municipality
gets work cheap because of the enor
mous bulk of its operations. Rents are
so low because no interest is paid on
the investment. The 23,000,000 schil
lings came simply out of the taxes—of
the unfortunate rich.
The waiting list to get in numbers
5,000, and applicants to have a ghost
of a chance of admittance must be
members of the local Socialist party.
Much heartburn attends this. It is
the familiar charge of the conservatives
and the bourgeoisie that their money
goes to give these dwellings only for
workmen.
The Karl Marx house is only one
of many similar "Gemeinde Wien"
apartment blocks scattered picturesque
ly through the city. Sixty-four thou
sand dwellings are to be completed by
the end of 1932. Ten years ago the
200,000-odd people living in them were
homeless or decaying in filthy slums.
Thus the Karl Marx house and what it1
symbolizes is generally accepted as one
of the most stimulating and satisfying
experiments in social reform the post
war years have know-n. And it is cer- j
tainly Socialist Vienna's proudest mon- j
ument. *
(Copyright, 1M&)
----- r—
U. S. Billions in Latin America
America Loaned Vast Sums in Boom Times—Will We Get It Back? Situation Is Analyzed.
-
_-_ _______—- !
KING
I
THE SAO JOAO RIVER DAM. ONE OF THE HUGE POWER PLANTS BUILT BY AMERICAN DOLLARS.
BY WALLACE THOMPSON.
TWO hundred thousand people in
the United States have invested
close to $6,000,000,000 in Latin
American bonds, and by the fig
ures of the bear market this in
vestment shrunk to a resale value last
year of about $2,000,000,000. Good pay
and defaulted bonds alike have suffered.
Bolivians, among the first to default,
fell to 7 per cent of their issuing price,
but Argentines, the interest and sinking
fund on which have been paid regu
larly, and which promise to continue
this record, have sold for 31 per cent
of their value. Uruguayans, which also
have paid promptly, have sold for a
fourth of their issuing price. These are
government bonds, and yet the stocks
1 of even sound American companies op
erating in Latin America have suffered
S drastic drops in market value.
Congress has an elaborate investiga
tion under way, studying the activities
of the investment bankers who floated
the loans, and these hearings before
the Senate subcommittee have been
front page new's. The Department of
State has been brought into the dis
cussion. and its careful scrutiny of
Government lo£ns abroad, devised in
(Continued on Fourth Page.)
Millions Held in Slavery
Men, Women and Children Exchanged, Traded and Sold in Half Dozen Countries of World.
BY ALBIN E. JOHNSON.
GENEVA.—There are more than
5,000,000 slaves in the world
today. In at least a half
dozen countries, thralldom, in
the simonpure sense of the
word, exists. Men. women and chil
dren are owned body and soul, ex
changed, traded, sold and captured b\
thousands yearly.
Four of the countries which coun
tenance slavery are members of the
League of Nations; a fifth, Irak, will
soon apply for membership The above
statements sound a bit fantastic to the
average newspaper reader, yet never
theless they are absolutely true. Fur
the more, several countries officially
recognize slavery through social and
religious custom.
Six years ago the League of Nations
undertook to stamp out slavery, inso
far as it was possible. An international
convention, which defined slavery as
“the status or condition of a person
over whom any or all of the powers
attaching to the right of ownership
are exercised," was drawn up in 1926
and has been signed by practically
every nation in the world.
Evil to Be Probed.
Certain countries, however, have not
lived up to their international obliga
tions, it appears, and the recent dis
closures, in connection with the
League's and Washington's inquiry into
conditions in Liberia, once again have
turned the spotlight upon the evil.
Discovery, a short time ago, of a "slave
market" on an island in the Red Sea,
where humans captured in Africa and
other places were assembled for dis
tribution over Arabia and the Middle
East, has again abused civilized na
tions and an International Slavery
Commission, under the League, is being
urged to investigate the evil.
In private and public archives of the
League and International Labor Office
are to be found official government re
ports, personal accounts and semi
official communications which reveal
facts that are stranger than fiction.
A British Whitebook tells of 139 au
thenticated slave-raids by traders from
Arabia. Abyssinia and the Red Sea lit
toral into the Soudan and Kenya Colony
during the past decade Official Italian
government reports reveal a clandestine
traffic in humans across Raheita and
the Obak districts from Abyssinia to
the Red Sea. Lord Lugard, British
member of the League's Mandate! Com
mission, says: "Many thousands of
ARAB SLAVE TRADERS.
slaves (10,000 appears trustworthy) are
brought yearly by traders into the
northwestern districts of Abyssinia
where slaves can be purchased at any
time in the markets.”
Reports to the International Labor
Office describe chiefly the "Mui Tsai"
V*
>
system of China, where Britisn author
ities found 10,000 of these unfortunate
girls in Hongkong alone. Other records
tell of "forced labor” in India and
Africa, of slavery in the Irrawaddy
Triangle and other districts.
The two greatest sore spots which ex
ist today, so far as slavery is concerned,
appear to be Abyssinia and Arabia, al
though certain sections in India, Cen
tral Africa and China encourage slavery
in its generally accepted forms. The
Abyssinian and Liberian governments
have, it is true, officially abolished slav
ery by royal decree or law. But the Em
peror of Ethiopia, “conquering lion of
Judah and direct descendant of King
Solomon,” admits that his decrees
mean nothing to the rases or chiefs of
the interior, who regard slaves as their
greatest source of wealth.
The high priests of the Abyssinian
Church, who consider themselves the
guardians of Mosaic law, hold that
slavery Is an institution decreed by
Jehovah. Likewise the nomad tribes of
Arabia justify slavery by their religion,
and many chiefs have announced that
they will fight to death to keep their
slaves.
The population of Abyssinia today is
anywhere between 8.000.000 and 12,
000,000. Of these about 4.000,000 are
pure Abyssinians and 2,000,00 are slaves
—the property of the 4,000,000.
Laws Mean Nothing.
The laws of Addis Ababa, Ras Tafari's
capital, mean nothing to the paramount
chiefs of the interior, and when Brit
ish protests against slave raids into the
Soudan were lodged they met with the
answer that the chiefs were merely tak
ing reprisals against rebellious subjects
or seeking to collect taxes.
Describing these raids the British
Whitebook mentions one conducted by
Ras Fitauri Zallaka with 170 armed
slave hunters in British Soudan. The
slavery patrol found that the raiders
had combed 200 square miles of terri
tory.
So effective has the patrol become
that it has almost put an end to these
incursions, although a recent report
tells of 300 slave hunters entering Kenya
Colony to a depth of 25 miles in an at
tack an villages along the Labarin
River. They captured many slaves and
killed 25 British subjects.
In his report to the colonial office,
which is to be found in the League rec
ords, Maj. Henry Darley says he
counted more than 50 dead and dying
along one trail, '‘victims of a merciful
spear or of the hyenas and jackals
which follow the slave raiders." To the
account Dr. Dyce-Sharp adds that:
"Gangs of slaves, marching in misery,
the men chained together in rows and
the children and women dragging
tConthifced or* Third Page.)
ROOSEVELT FAR IN LEAD
AS DEMOCR ATIC CHOICE
Renomination of Hoover Declared a
Certainty, Even Before Coolidge
Announcement.
BY MARK -ULLIVAN.
THE Republican presidential situa- j
tion continues as simple, its !
outcome as sure as it has always j
been. That Mr. Hoover will be j
lenominated has always been
sure; it was sure even before Mr. Cool- )
idge firmly declaied himself out of the |
picture—because it was certain that !
Mr. Coolidge would do just that thing. 1
Nor was the certainty of Mr. Hoover's
renomination affected by the talk about
Dawes, for it was inevitable Dawes
would laugh such talk out of the head- ;
lines. The only doubt about Mr. Hoo
ver is whether he will have all the
1,057 delegates in the convention, or
whether a negligible score or two may
be for some other candidates.
In the Democratic field the outcome j
is such that no prudent person would ;
trv to predict. Gov. Franklin Roose- j
velt of New York is iarthe’- in the lead !
than most of his opponent-3 and critics i
realize. He is thp only candidate whose ;
campaign is organized on a Nation-wide .
bads. A'most it is true to say, Roose- ;
velt is the only candidate running in
SlaUs other tlrn his own. Ritchie of ;
Maryland is the only one in whose be- j
half there is organization outside of his j
own State, and Ritchie's organization '
compared to Roosevelt's is so sl’ght as j
to be negligible. Excepting these two,
all the other avowed candidates, aspir- ;
ants and possibilities restrict their ef
forts to their own States. Roosevelt i
is almost a beneficiary of that sound
rule of practical politics which says,
"You can't beat somebody with no
body.”
Indorsed bv States.
The work of organization on a Na
tion-wide basis in behalf of Roosevelt
has been under way for nearly a year, 1
and the fruits of it are now beginning
to appear. As the State primaries ap
proach, the official Democratic organi
zation in S.ate after State indorses
Roosevelt—and once that is done the
opposition to Roosevelt *.n any zuch
State will have almost insuperable dif
ficulty. True, the States in which
Roosevelt has been thus indorsed are :
small: the first examples have been
Vermont and North Dakota. But in j
some 14 other small States the official ;
Democratic organization is ready to
take the same step. This is portentous
in itself and even more significant in
what it symbolizes. It means that
Roosevelt's friends through something
like a year of work, with no other can
didates active, have succeeded in get
ting the support of the dominant Dem
ocratic leaders and workers in many
States and in a very large number of
counties. The aggregate of this is very
formidable. If it were in the Repub
lican party, where a candidate wins the
nomination by getting a majority of
the delegates, Roosevelt would almost
have the nomination “cinched." In the j
Democratic party, however, with its
two-thirds rule, it has never happened
that any amount of preliminary or
ganization could quite make the nomi
nation sure, except in the case of Presi
dent Wilson, when he was a candidate
to succeed himself and had no rival
to speak of Under the Democratic
rule, one-third the delegates can veto
a nomination—and Roosevelt's rivals,
opponents and critics will command
much more than the necessary one
third. Whether they will exercise their !
veto, whether they will Keep the nomi
nation away from Roosevelt, or let him !
have it. depends on conditions at the
time of the convention. It will depend j
in part on what the issues of the elec- I
tion. as between the Democratic and
Republican candidates, is to be.
The "Paramount Issue.”
The outcome of this year's presiden
tial election and most of the other
major events of this political year will
be determined by—dreary phrase, but
potent in every aspect of politics and
business—the price level—that is, the
price of commodities, wheat, cotton,
copper—everything, including wages.
From price level, everything in this
year's politics starts. Price level will:
determine the platforms, whether there
will be a powerful third party and
which and who will win the presidency.
Compared to this one dominating in- j
fiuence, price level, all the commotion
j about candidates—whether Franklin ;
! Roosevelt will be the Democratic can
didate, what ex-Gov. Smith will do,
whether Hiram Johnson will try for the j
Republican nomination or lead a third
party, whether Gov. "Alfalfa Bill” Mur- j
ray of Oklahoma will get his economic
views into the Democratic platform and
come near the nomination—all that is
the mere village gossip of personalities,
compared to the fundamental influence
of price level. Price level is the primal
cause of the political forces and pas
sions of this political vear. To under
stand price level is the A B C lesson
of this year's politics.
To begin—the price level of commod
j ities is very low. it has gone, as an
average, from an index figure of 12.5
jin 1929 to less than 8 today. One ex
ample, used here because it is concrete,
is the price of wheat. Wheat has gone
down from $1 in 1929 to 50 cents todav.
Because the price of wheat is low.
farmers cannot pay their mortgages. A
typical farmer in 1929 put a mortgage
j oi $5,000 on his farm—that is, a mort
gage for 5,000 bus' Is “f wheat at the
price wheat then was. Today he is
called upon to pay back 10.000‘ bushels
of wheat. He cannot do it. If he is
pressed he must lose his farm. If he is
not to lose his farm he must have
relief.
And the question what form relief
is to take, or whether relief comes at
all, is at the bottom of all the politics
of this year. Tire farmer, of course, is
but one example; it is the same with
corporations having bond issues, with
city home owners having mortgages on
their homes, with borrowers owing
notes at the bank. You can’t pay dol
lar debts with 50-cent commodities.
Out of this situation must come one
of two courses. The alternatives are:
(a) Either widespread inability to
pay debt, widespread foreclosure, wide
spread distress, widespread resentment
—followed by radical demands in the
coming presidential campaign.
(b) Or relief of debtors through ac
tion of Congress.
Debtors and Congress.
What has so far occurred in Con- j
gress about relief of debtors is only b, \
beginning. This problem will within a j
week or so become the principal one in t
Congress. It will continue to be the J
princiapl issue till the end of Congress, j
Depending on what Congress does about
it, it will be the principal influence in I
the presidential campaign.
Relief of debtors by Congress can
take one of two forms;
Either (A) Extension of debt or par
tial forgiveness of debt by legal mora
torium, or (B) Increase in the quan
tity of currency, which will raise the
price level; raise, among other com
modities. 50-cent wheat to $1 wheat.
In Congress so far the attempt has
been to enact moratoriums. When the
bill for increasing the capital of Fed
eral Farm Loan banks and the bill
for the Emergency Reconstruction Cor
poration were before Congress, some
30 attempts were made to add amend
ments providing for a moratorium on
debts. The attempts, the impulse
toward relief, came from Senators and
Representatives of both parties and
from every section and reflecting every
business group. An important one,
typical of all. was proposed by Senator
J. Hamilton Lewis of Illinois. Senator
Lewos’ amendment would "authorize
any court of equity of the United States
or "of any State * * * to suspend
any action seeking judgment or to en
join execution of foreclosure.”
That was a direct attempt at statu
tory relief of debtors by arrest of fore
closure. In the same spirit were some
30 others.
All these attempts failed. They
failed, it is true, largely because Con
gress was in a hurry to enact, the prin
cipal measures to which these amend
ments were attached. We may say that
for the present Congress has showm a
disposition not to relieve debtors in this
particular way. But it is abundantly
clear that Congress is determined to re
lieve debtors in some way and is Under
overwhelming pressure to relieve them.
The other way to relieve debtors is
by raising the price level. The price
level can be raised in several ways. The
one that Congress is certain to at
tempt is by circulation (and, therefore,
the quantity of credit).
Congress and Currency.
Debtors can be relieved by raising the
price level—for example, by raising
wheat from 50 cents a bushel to $1
a bushel. The price level can be raised
by increasing the quantity of currency
in circulation among the people. In
creasing the quantity of circulation is
commonly called "inflation." In the
present situation it ought not to be
called inflation. Accurately, it is rather
a case of "stopping deflation." "Infla
tion” is a word leaving a bad name,
because it is properly the term.to de
scribe increase of currency and credit
at a time when there is already too
much. What we have now is an ex
treme in the other direction, an ex
treme contraction, an extreme deflation
And the purpose now is to arrest ex
treme deflation by increasing the quan
tity of currency and credit.
Increase of currency i and credit t can
be achieved by Congress in one of two
ways:
iA) Increasing the quantity of cur
rency which Federal Reserve banks can
pass out in exchange for commercial
paper.
itsi (joining sliver, m aciamon 10 goiu
and in a certain ratio to gold.
The attempt to increase currency
through Federal Reserve banks will b
made first. If that fails, then we sha
be face to face with a demand lor coir
age of silver. The demand for coinage
of silver will appear in Congress; if it
fails there, it will appear in the presi
dential campaign. Coinage of silver as
a political issue can only be forestalled
by legislation to increase the quantity
of currency through the Federal Re
serve banks.
To understand thus it Is necessary to
understand first how currency is cre
ated by Federal Reserve banks.
Any business man can take certain
types of ' commercial paper" to his
bank. His bank in turn can take !:
to a Federal Reserve bank, and tb»
Federal Reserve bank will hand Ctft
currency for it
The kind of commercial paper tl f c
can thus be turned into currency is
severely limited. A mortgage will not
do. Henrv Ford might give a mortgage
for $1,000. secured by all the real estate
he owns, but the Federal Reserve bank,
under the present law, will no; give
out currency for It.
The attempt In Congress will b; to
enlarge the kinds of commercial piper
which can be exchanged for cunt-ncy,
which are. in the legal phrase, “eligible
for rediscount privilege.” When that
attempt is made. It will be resisted by
some conservatives (though decidedly
not all—many conservatives are strongly
in favor of increasing currency by this
means).
The leader of the opposition will
probably be Senator Carter Gifs; of
Virginia. Senator Glass was one of the
authors of the Federal Reserve Sys
tem 16 years ago He regards himself
as the defender of his child. Against
any attempt to “tamper" with the sys
tem, Senator Glass is ' Horatius at the
bridge." or. as one of his irritated op
ponents put it, “Johnny at the rat
hole."
Senator Glass is alertly and violently
critical of proposals to increase the
currency by expanding the kind of
paper for which Federal Reserve banks
can issue currency. His opponents say
that the whole method and system of
carrying on commercial business has
changed since Senator Glass helped
writs the Federal Reserve act in 1915
and that limitations adopted at that
time are now absurd.
Fight Will Come.
The fight on this point will come. It
will be probably the major fight of
this Congress. If it is won. if the kind
of commercial paper eligible to be
turned into currency is enlarged, that
will end the matter. Thereafter, pre
sumably. the quantity of currency in
circulation will increase. In conse
quence of that, presumably, the price
level will rise. In consequence of rise
in price level debtors will find it easier
to pay. All that—or. if it does not hap
pen. the lack of that—will have a pro
found effect on the presidential cam
paign.
If, however, Senator Glass and the
extreme conservatives win; if the quan
tity of commercial paper exchangeable
into currency is kept limited, in that
event we shall have infallibly a demand
for increase of currency in another
way, a demand for what is called,
roughly, to use Bryan's phrase, "free
coinage of silver." The silver fight is
surely ahead of us unless the Federal
Reserve System is modified.
If the free-silver fight comes, it may
have a powerful effect on the Demo
cratic nomination. The demand for
free silver in the Democratic platform
will come—indeed, has come—from
Western Democratic Senators, such as
Wheeler of Montana. If free silver
should be Inserted in the Democratic
platform, would Franklin Roosevelt
then take the nomination? Would it
do him any good to take it? One of
the chief reasons for nominating Roose
velt is the presumption that he can
carry New York State. But could he
or any one else carry New York on a
free-silver platform?
Free silver Is a Western issue and
if it should get into the platform wouta
seem to call for a Western candidate.
Herein lies the long chance which, one
suspects, may be inspiring Gov. “Alfalfa
Bill” Murray of Oklahoma in his pres
ent peregrinations up and down the
land.
Must Be Popular.
From the Toledo Blade.
Mrs. McCormick says Mr. Hoover is
unpopular. But she can't stay that of
Mr. J. Hamilton Lewis.
Patience Unrewarded.
From the Bakersfield Californian.
Tlie reason people are patient with
statesmen is because they don’t know
what do, either. g
I