Evening star. [volume], December 09, 1936, Page A-11, Image 11

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

Image provided by: Library of Congress, Washington, DC

                
'Easy Money’
Policy Seen
Permanent
Low Interest Rates to
Stay in Controlled
Economy.
BY DAVID LAWRENCE.
tASY MONEY,” a phrase of
the headlines that doesn't
I mean what It might seem
on first impression, is ap
parently to be a permanent part of
the Federal Government’s policy.
It means that low interest rates on
w Government se
curities has be
come and will re
main for some
time to come a
definite part of
controlled econ
omy. It means
in a nutshell
that the Gov
ernment of the
United Utates ar
tificially controls
the rate of in
terest it intends
to pay on the
sums it borrows
presumably from
David Lawrence.
ine puDiic uui m uriuaniy iioiu wic
banks which in turn are now pretty
much under Government control.
Is this an unhealthy situation?
What effect will it have on future
business conditions? The questions
•re pertinent, indeed.
The argument in favor of an “easy
money” policy or low interest rates
for Government securities is that
what the Government does affects
Indirectly the whole gamut of interest
bearing securities all the way from
bonds of big corporations to 'the
mortgage rates in small communities.
Low interest rates are deemed by
their sponsors to be essential to a
recovery movement.
Danger in Rate Rise.
Also the Treasury naturally wants
to finance at low rates so that the
cost of the total interest item in the
Federal budget will be kept down.
But even if the Treasury were through
with its borrowings, there is a danger
In allowing interest rates to go higher.
If Government bonds fell off in any
Considerable number in price, the
capital of many banks might be im
paired. Here is how the National
Industrial Conference Board in its
latest bulletin speaks of the “easy
money” policy, contending, inci
dentally. that rates will be kept down
to avoid dangers such as these:
“A decline comparable to that in
the immediate post-war period would,
of course, seriously affect the surplus
and the capital structure of a large
number of banks, and would no doubt
eause a large number of insolvencies.
In the event of a tightening of inter
est rates, the Treasury might attempt
to support the market for its own
securities, but in the absence of an
easy-money policy, it may be doubted
that this approach to the problem
Would be successful.”
Perhaps the most interesting com
mentary on “easy money” policies
is that of Prof. Edwin W. Kemmerer
of Princeton University, who, in a
speech before the American Finance
Conference in Chicago on November
18 last, said:
"During the early part of a strong
Inflationary movement, interest rates
are temporarily depressed. The mar
ket is glutted with money and bank
credit * * •
More Money, Higher Prices.
“After such a period of temporary
glut and of low interest rates, grad
ually the increased supply of money
and of bank credit make themselves
felt in rising prices. The velocities of
monetary and bank deposit circulation
are greatly increased. Then, when
commodity prices once get into full
swing on the rise, they pull up with
them the interest rates.
“A strong seller’s market is created.
This gives an artificial and feverish
stimulus to business, greatly Increases
the demand for capital of all kinds
•nd pushes up interest rates."
Then what happens? Prof. Kern
News Behind the News
Administration Prepares to Turn Red Light
Against Boom in January.
BT PAUL MALLON.
THE din of boom U so noisy as to deceive a casual listener Into be
lieving the boom Itself Is now at hand. The strength and extent of
price advances encourage that premature deduction. The official
Government price chart (Lubln) hit a high of 82.6 per cent of
1926. on the rise, for the last announced week (ended November 28).
Pondering New Dealers see in-these signs not an arrival, but an advance
notice. They are doing nothing openly except crowding the stock market
through the increased activity and
watchfulness of the Securities and
Exchange Commission.
Trustworthy information indi
cates they will let the situation
move along this course until Jan
uary.
The Federal Reserve Board will
then probably increase reserve re
quirements again. The President’s
legislative and budget messages
and his second inaugural also may
simultaneously contribute a sedentary enect. me Treasury may a iso
chime in with conforming action.
These things may be only of immediate moment. When economists
here talk of boom they generally speak in terms of six months to a year.
a * * *
It was not so much the decisions of the Supreme Court this week,
but the unanimity of the justices in making them. The New Deal positions
in the holding companies' procedure and telephone regulation were upheld
unanimously.
Naturally, legal beagles here are sniffing significantly at these hints
of the correctness of Mr. Dooley's assertion about the court following the
election returns.
On the advice of the best of counsel, it may be related that
what the court seems to be. doing is to resolve minor doubts in
favor of the Government wherever possible. The cases really were
not important. That it, they did not pretent fundamental consti
tutional Questions, but only temporary issues of procedure.
When the cases are presented for final constitutional judgment
you may be certain there will be far less unanimity.
Politics is a peculiar business. Certain extremely enthusiastic New
Dealers (not President Roosevelt or any one speaking officially for him)
are talking about cracking down on the press iiTreprisal for some unfair
ness in the last campaign. The question of what is unfairness in politics
has never been decided officially. It may change from day to day.
The best example of that 1s the grating predicament in which Repre
sentative O'Connor, candidate for House floor leader, has caught himself.
When Vice President Gamer began working against O'Connor last week,
O’Connor came out with a statement denouncing the unfairness of sena
torial Interference in a strictly House light. But his opponents immediately
made public a letter he had written November 24 to Senator Clark of
Missouri, soliciting “any assistance you may see fit to render me through
members of your delegation, and other members of the House.” It is quite
possible that, if Mr. O'Connor obtains enough senatorial interference to
win, he will again consider the practice ultimately fair.
Unfairness in politics seems to be whatever jis done by your op
ponents. Fairness it whatever you do.
wawa
A little line in the London dispatches about a Fascist demonstration
in front of 10 Downing street caused many an official eyebrow here to arch.
The incident confirmed suspicion that the Simpson affair is not an issue
of love, but of politics. The British Fascists were quick to take advantage,
almost as quick as Winston Churchill.
Mr. Churchill, as a statesman, is generally regarded here as a good
SIMPiCtK >
y PeacmP
Ion o^j
Ztmsp
frS
nisoorian. his oasic trouoie is said
to be that he has fallen short of
attaining the British premiership
on so many occasions that the
matter Is constantly inspiring his
imagination.
Mr. Baldwin is still the strongest
man in British political life, but not
strong enough to face an issue of
king versus anti-king. ~ound Brit
ish statesmen will work to keep the
situation from getting around to
that issue.
An unofficial subconference of the Pan-American peace meeting
may shortly be held here at the basement bargain counter.
Negotiations toward a Chilean treaty are very active. Also there
is some activity toward Peruvian and Ecuadorian treaties.
Nothing is doing yet on Paraguay and Bolivia. The troublesome
Argentine treaty problem also is said to be still on the shelf.
The United States now has trade treaties with these Pan-American
delegations: Brazil. Colombia. Haiti. Cuba. Costa Rica and Nicaragua.
There will be more announced shortly after the Buenos Aires meeting
concludes.
Trade has become the most important phase of peace.
(Coprrisbt. 1938.)
-----
merer points out that it is almost im
possible for a government to main
tain low interest rates. He says:
"Whenever as a result of a gov
ernmental cheap money policy, a
strong upward movement of commod
ity prices gets into full swing, the
policy breaks down, because it in
creases the momentum of rising
prices and tends to engender a flight
from the dollar.
"All this causes an upward swing
of interest rates that no repressive
measures on the part of the Govern
ment can stop. As well try by gov
ernmental action to prevent the tides
from rising under the gravitational
pull of the moon. Witness the ad
vances in interest rates that accom
panied the post-war inflation of Cen
tral Europe, or in much milder form
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witness our own experience in the
United States from 1915 to 1920.
■ Prom the standpoint, therefore, of
economic theory and financial history
the evidence, I believe, is strong that
this country in the not far distant
future will experience a period of ris
ing interest rates."
(Copyright, ltt.'ifl.)
CTHE opinions of the writers on this page are their own, not
necessarily The Star’s. Such opinions are presented in
The Stars effort to give all sides of questions of interest to its
readers, although such opinions may be contradictory among
themselves and directly opposed to The Star’s.
We, the People.
Observer Sees General Election Nearly Sure as Result
of Simpson Affair.
BY JAY FRANKLIN.
ET us now, with that calm de
tachment which comes to us so
naturally when we consider re
mote events which we do not
fully understand, take stock of the
constitutional crisis in England.
Whether King Edward VIII abdi
cates or the conservative cabinet re
signs. or both, as a result of the King's
friendship for an American woman,
only an innocent would Imagine that
the crisis is solely a matter of associa
tion between him and a foreign-born
divorcee.
It was not the straw which broke the
camel's back, but the heavy load which
preceded that Anal straw.
England—like America Prance and
3paln—faces a general crisis In democ
racy. Even Russia has promulgated a
new constitution. In Spain, they are
arguing over details with bombs and
machine guns. In Prance, there is a
tension so grave as to paralyze French
foreign policy. In America. Roosevelt
is about to close with the Supreme
Court's power to check national reform.
In England, in 1935, the conservatives
stole the Labor party's proposal to
keep Mussolini out of Ethiopia by the
League of Nations, won the election
and then backed down before II Duce.
By this trick, the old guard kept the
Labor party from coming Into power.
When Edward VIII succeeded his
father, he was known to have a pro
nounced sympathy for the British un
ler-dogs. In particular, the fate of the
Welsh coal miners excited his compas
sion and he publicly announced his
will to help them. Since some of the
great conservative peers live on coal
royalties, this was not taken In good
part.
So British society Is playing Its
strongest card against its royal leader:
Middle-class morality and the non
conformist conscience. British society
adopted its present code of morals as
part of the process of reconciling the
dominant middle classes to the con
tinued existence of the nobility.
It is impossible to escape the con
clusion that the conservative leader
and the great newspaper proprietors
have been forcing the matrimonial
issue on King Edward. There Is no
possibility of his marrying Mrs.
Simpson before April—when her di
vorce become absolute—and no law
which would be violated if he did
marry her. While we can easily im
agine our own alarm if a bachelor
President should propose to marry a
foreign divorcee. Mr. Baldwin's will
ingness to force the issue before it
arises suggests that the real conflict
In England lies far deeper than the
marriage question. After all, Vic
toria married a foreigner, other Brit
ish Kings have had lady friends, and
the crown's political power has be
come mainly symbolic.
It is probably because the old guard
fears lest Edward assume the leader
ship of the British masses in their
desperate desire for social justice and
economic democracy that they have
thus fouled their own nest. The
King's recent speeches to the stranded
Welsh miners suggested that the
crown might start a constitutional
new deal in England and curtail the
patrician privileges of the upper
classes—including the all-powerful
newspaper lords.
The immediate consequences are
pretty clear. Whatever the King does.
England can scarcely escape a gen
eral election. Particularly u this true
should he abdicate.
The mere fact oi his existence as a
private personage—either in England
or on his ranch in Canada—would
give the British masses a convenient
symbol: A King who tried to help
them was promptly thrown overboard
by the "economic royalists.” His
presence in Canada would weaken the
bonds of empire, and the British
could scarcely send him out of the
empire with a light heart.
This means an early political battle
in England itself. The conservatives
look on Hitler, Mussolini and Gen.
Franco with a certain amount of im
perial sympathy, and a British Fascist
movement is far from out of the
question. On the other hand, the
masses of the British people sympa
thise with popular front governments
elsewhere and are sincerely anxious
to cultivate their own garden with
out too much worry about the em
pire—which is so often offered as a
reason for avoiding needed reforms
at home. And Roosevelt has shown
what happens when the "have-nots”
vote against the "haves” in an Anglo
Saxon country.
As hinted in the London press the
White House has indicated Its dis
approval of the Simpson marriage.
This unusual intervention in the do
mestic affairs of the British King
took the form of the executive order
of November 28 forbidding American
diplomats to marry foreign wives.
The order was originally designed
to stop Mrs. Ruth Bryan Owen
Rohde from returning with her
Danish husband as Minister to Den
mark but its timing and phraseology,
particularly those sentences describ
ing the matrimonial self-sacrifice re
quired of high public officials, were in
response to informal British repre
sentations that the London govern
ment would appreciate a helpful hint
from the White House.
(Copyr'.tM. 1916J
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A
This Changing World
Commissioner Hazen Finds He Holds Lord Mayoralty
of Washington.
BY CONSTANTINE BROWN.
T T THILE the throne crisis in Great Britain engages the attention
% \ / of five continents and overshadows all other important issues,
y V German and Italian troops have slipped quietly into Spain and
T T are ready to help Gen Franco’s final push against Madrid.
Despite official denials that soldiers of the Reich or Italy are on
Spanish territory, there is definite proof that subjects of the two dic
tatorships have landed in Spain in large groups.
Meantime, equally reliable reports indicate that some 5.000 French
citizens have managed to smuggle themselves over the frontier and are
nghting in the loyalist ranks.
Whether they have left France
with the tacit consent of the gov
ernment and been accompanied by
officers of the line, is a matter
which cannot be ascertained at
present. The French government
has not the same means of con
trol over its citizens as have the
dictatorships.
In any event we may witness
within the next few weeks the first
Oerman-Italian-French-Russlan encounter on Spanish territory.
* * * *
Washington has a Lord Mayor, but tew people know it. It is Com
missioner Hazen. He did not know it himself until he was told what an
exalted position he holds.
This is the story:
Some time ago the British admiral commanding the West Indies
squadron came to Washington to pay his yearly visit.
During a recent visit the British naval attache, who makes the pre
liminary preparations regarding the protocol of these visits, went to see
the American official who maps out the rounds of visits, entertainments
and so forth.
* * * a
This American official informed the British naval attache that while
the question of the admiral paying his respects to the President is a
matter between the Ambassador and the State Department, it was essen
tial that the first visit should be paid to the District Commissioner.
"Why?" asked the somewhat astounded Britisher. "It has
never been done before
"That may be so," was the answer, "but when American naval
vessels go to Portsmouth or to London, our naval officers are required
to call first on the Lord Mayor. And Mr. Hazen, although called
only a Commissioner, is our equivalent to your Lord Mayor."
The Britisher swallowed some
what dryly, but could not help
himself. The admiral was In
formed that he must call on
Washington’s Lord Mayor. He had,
of course, no objection.
When the day arrived, the offi
cer in charge of arrangements
rushed to the Commissioner's office
and informed him of the facts in
the case.
"I know you have a cut-away
mr HAzrx
LORD Mav?r
L~ITJ
■no a suit nai, saia me American omciai, ' out nave you got a military
aide.”
"Of course not." said Hazen. "but l can get a police officer
in my front room, if you think that a uniform is necessary."
The official rushed to the War Department in search of a smart,
bemedaled officer, but none was available for that duty. The Navy
Department was more helpful. Maj. John Halla. a typical figh'ing
Marine, with enough medals to go around his chest and waist, was de
tailed as military aide to Commissioner Hazen for 24 hours.
* * * *
On the appointed day, the British admiral with his aides, all in
regulation uniforms, called at the District Building. In Mr. Hazen's ante
room Maj. Halla had established his headquarters. He was in service
uniform and looked business-like with a mountain of paper at a desk.
He ushered the Britishers into the Commissioner’s room. The
visit, according to protocol, should not have lasted more than a few
minutes. The admiral stayed over half an hour. Like many British
naval officers, he was keenly interested in horses. And when he
saw on the Commissioner’s walls pictures of fine stallions, and dis
covered that Mr. Hazen's hobby was horse breeding, they had a
hard time to get auay from each other, so thrilling was the subject
of their conversation.
A few hours later the Commissioner, frock-coated and silk-hatted,
returned the admiral's official call. This time Halla had his blue uniform
and his rows of medals. Mr. Hazen received a gun salute and was piped
aboard while a guard presented arms. He had become a full-fledged
Lord Mayor and was received for the first time in Washington's modern
history with all honors due to the incumbent of that high civic office.
Prize Writer
Was Failure
as Reporter
Prof. Shepard Would
Not Carry "Garcia”
BY LEMUEL r. PARTON.
EW YORK. December 9—Bom#
commission or alphabetical
agency with power to act
ought to do something about
Elbert Hubbard's "Message to Garcia."
It has led many young men on false
paths. Here's a man m the news to
day, getting money and fame because
he was immune to It In his youth
when most other lads were infected.
He is the Intimate friend of my
youth, Prof. Odell Shepard of Trinity
College, winning the Little Brown &
Co. prize of $5,000 for his biography
of Bronson Aloott. He is the author
of many books, distinguished as a
teacher of English, highly placed in
American letters—and they hand him
a sabbatical year on the slightest
provocation. Which, for definite rea
sons, I believe is because he wasn't
a message-to-Garcia man It has to
do with a certain turning point in his
career.
He was' the handsomest man In
Northwestern University, known as
"the Bard” because he was, inci
dentally. a poet, as well as a musi
cian. He wore a Lord Byron tie, car
ried a stick, with a rapturous up-tilt
of his chin and a look of Olympian
preoccupation which gave him high
visibility among the corn-fed North
western undergraduates.
I got him a Job on the Chicago
Tribune, covering the blue-stocking
North Shore. Johnson, Howie, Wal
ter Bums and a few other raffish
characters were rehearsing for Hecht
& MacArthur's "Front Page” of later
years. "The Bard" moved among us
with amused detachment.
There was a double murder in his
territory. No word all day from “the
Bard.” The high command profanely
held me accountable for having
dragged him in and ordered me to dig
him up. pronto. It was not until
midnight that I reached him by tele
phone. He explained:
“I investigated the matter. It was a
sordid affair. I ascertained that the
city press was delivering all the es
sential facts. There was nothing more
that any civilized newspaper should
want or in which any reader of taste
or sensibility should be interested. £b,
naturally, I paid no more attention
to it.”
When he was cleaning out his desk
drawer the next day, preparing to go
to Harvard for his Ph. D.. he said his
action had been quite deliberate and
he had no regrets. He made it clear
that he intended to sink his life in
what interested him, weighing and
selecting his own values. One could
find more interesting double murders
in Sophocles or Shakespeare than he
could in Chicago. He went his way,
! winning not only this, but other prizes,
while the febrile “Message to Garcia”
i news hounds were lucky if they
: snagged an imitation gold watch on
j a cigar store punch board.
(Copyright. 1836.)
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