xt7wwp9t2q46_100 https://exploreuk.uky.edu/dips/xt7wwp9t2q46/data/mets.xml https://exploreuk.uky.edu/dips/xt7wwp9t2q46/data/59m61.dao.xml American Liberty League 37 linear feet archival material English University of Kentucky This digital resource may be freely searched and displayed. Permission must be received for subsequent distribution in print or electronically. Physical rights are retained by the owning repository. Copyright is retained in accordance with U. S. copyright laws. For information about permissions to reproduce or publish, contact the Special Collections Research Center. Jouett Shouse Collection (American Liberty League Pamphlets), No. 103 "Inflation and Our Gold Reserve" Radio Address by Dr. Edwin Walter Kemmerer, Walker Professor of International Finance in Princeton University, February 27, 1936 text No. 103 "Inflation and Our Gold Reserve" Radio Address by Dr. Edwin Walter Kemmerer, Walker Professor of International Finance in Princeton University, February 27, 1936 2013 https://exploreuk.uky.edu/dips/xt7wwp9t2q46/data/59m61/59m61_103/Am_Lib_Leag_103_001/Am_Lib_Leag_103_001.pdf section false xt7wwp9t2q46_100 xt7wwp9t2q46 AN INVITATION TO JOIN THE * *
AMERICAN LIBERTY LEAGUE
• 4
Inflation
We extend to every American citizen who believes in
the fundamental principles which gave 'birth to the
Constitution of the United States an 1nv1tat1on to be- {
come a member of the American Liberty League; R
< BS PVG
You may indicate your acceptance of this invitation B
by filling in the necessary information as to your name _
and address on the enrollment blank below and mailing
it to American Liberty League, National Press Building, * * *
Washington, D. C.
There are no fees or dues. If you are willing and able §
to give monetary help for the League’s support your E .
contribution will be appreciated, as our activities are Q Radlo Add"°SS by
;u;pl;1;;d entirely by the voluntary gifts of mu DR, EDWIN WALTER KEMMERER
E Walker Professor of International Finance
ENROLLMENT BLANK Q in Princeton University; President,
D Q Economists National Committee
“t°——————————— on Monetary Policy
I favor then principles and purposes of the American E and
Liberty League and request that I be enrolled as a Member, National Advisory Council of
regular b Q the American Liberty League
*contributing mem cl" Q
Signature
Name (Mr. Mrs. Miss) Q
: ERIC
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T .. E lv--
E Street » E, ET SI
0 E Q? VO
g E Ty L9
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¤·• Town
County State I
A AMERICAN LIBERTY LEAGUE
*As a contributing member I desire to give $ Q National Head uarwrs
to help support the activities of the League: Cash here- NATIONAL PRESSQ BUILDING
with___________ Installments as follows: WASHINGTON’ D' C'
mmm * *k
(103) Document No. 103
Q February 1936
Inflation and Our Gold Reserve ‘
>|·
The Growing Deficit
The deficit in our national budget which will
/ average about 3,000 million dollars a year for
_ the three years ending June 30, 1936, will be
` substantially increased next year by the recent
passage of the Veterans° Bonus Act, which
authorizes the prompt payment to the veterans
' of about 2,250 million dollars in baby bonds
that are convertible into cash at par on demand.
Congress has not yet provided the means for
C meeting these enormous cash payments. The
_ entire nation is now wondering how Congress
will get the required cash.
5 With these bonus payments piled up on top
of the heavy deiicits already in prospect for
Q next year, the nation faces a situation for
Q 1937 which the Chamber of Commerce of the
United States has recently epitomized as “( 1)
‘ W the largest revenue, (2) the largest expenditure,
HE-N you have finished with this and (3) the largest deficit in the peace-time
PamPhle$ Please Pass it on te same € history of the country." This maximum deficit
friend or acquaintance who might be will occur in spite of the fact that the tax rev-
interested, calling his attention to the ennee ef tne netienel gevernment have in'
membership blank on page 12. ; creased every year since 1932 and are expected
to be about 50 per cent larger next year than
( this. ln the boom year 1929 one dollar out of
. ( every eight of our total national income went
i into taxes of all kinds; by the depression year
v 1935 the proportion had increased to approxi-
; mately one dollar out of every five. At the
· present time the total annual expenditures of
4 government (Federal, state, and local) in the
3 United States are equivalent to between one-
l third and one-fourth of the nation’s entire
` national income.
The Opposition to Increasing Taxes
Y Wholesale prices in general are today about
35 per cent higher than they were three years
( ago and the cost of living is about 18 per cent
9 higher. They are both advancing. With this
W rising cost of living and the recent large ad-
· vances in the costs of government, the public is
naturally becoming increasingly resistant to
additional taxation.
3
A national election is approaching, and elect- paper money docs not. A momcmss thought
cd °m°1a1S at vvashmgtcm wh° Vote for addr will show that in this reasoning the inflationists
tional taxes this Year will havc t° d° Some f are confusing two very different things, namely,
explaining to their constituents before next money and iHC0m€_b€aI_iHg investments. A
N°V€ml°€r‘ In a Situation like this there is a government bond is an investment to the owner.
great deal of running to and fro in Washington Since it pays interest it gives the Owner an
1n search of a method of obta1n1ng the money inCOm8_ It is Something to be kept and the
that w111 not antagomze the folks at home. longer the Owner keeps it, the more interest
An "01<>v<>¤··=¤¤iw" f<>¤· the 2?Z°EZ£E.;°Zi1ZZZh.lf§Z€yit°§.Z}EE.Zi;“iI.IEEE
Infiativnists cipal function in being passed from hand to
Here is the opportunity of the radical infla- nand in tno Puronaso of goods and so1`Vioos·
tionists. They are now unusually active in » Most Piooos of InonoY in doing tnon-` InonoY
Congress and ready, as always, to solve all our Work Change nands InanY times a Yoan In torms ‘
financial problems by the old-time paper money of InonoY Wo oXPI`oss PI`ioos· If You noatd it»
Panama, a Panama concerning which a great it yields you no income, for it bears no interest.
American patriot, Pelatiah Webster, shortly A bond is a oonnnoditY» an i11C0m€·b€81‘€1`,
after the American Revolution, said: Wnion is bought and sold Wun monoY¤ Wnuo
"We have suffered more from this than from every money is a medium of exchange by moans of
other cause of calamity; it has more men, bonds and other COHIIHOditiCS a1°C
pervaded and corrupted the choicest interests of our . and sold.
country more, and done more injustice than even
the arms and artinces of our enemies. More Money Means Higher Prices
The reasoning of the mflationists is all so Not More Purchasing Power
simple. The Government needs more money
so it prints more, or it may authorize the Fed- In tno studY of n1onoY tno most tiundamonttd
eral Reserve banks to issue more on the security Prinoilolo to be Yotnomborod is, that t}1€ law of
of the Government’s bonds, while the bonds in suPPlY and demand aPPuos to monoY as it docs
turn are payable in the same money which they to tno Valuo of oVo1`Y otnor ooInn1oduY• W-non
secure. Other more devious ways for accom- tno suPPlY of monoy and of bank doPosits that
the Same Purpose are possible. In Ci1`CI1].3tG tllI`OIIgh checks THCYCRSCB faster than
each case the Government gets the money and tno demand for tnoms as that d€m811€t is 6X-
for the time being it doesn’t seem to cost any- Prossod in tno PnYsioal Volume of goods and
body anything. The rain of checks can continue Services to be exchanged. InonoY gots onoaPo1`·
Oh the f0]kS at home and they heed not be ln other words, it takes more dollars to buy
called upon, before election, at least, to pay tno samo amount vf goods- Prices I'iso· A
more taxes. _; CO`l1I1tI'y l)€COI'I1€S pI`OSp€I`O`I1S Zl1'1CI'€3SlI1g its
supply of useful goods. Increasing the supply
Financing by Grccnbacks Instead gf of money does not increase the supply of goods;
by IntcI·cSt_Bcaring Bonds . merely; mglceshthle prices ofheverything one
_ uys an se s i er—ever t in but debts
One·age-worn fallacy now bemg adyanced bY and of them we shsill speak liter. gLet us illus:
many 1niiat1on1sts 1S the cla1m that It 1S cheaper tram by an extreme Case. In Germany Where
fo? the Government to pay its FXPCHSES bY the paper money in circulation, which after
II;11;;;1gf01;a};o;yi1I;oI;‘i;5n;h?0I;r lgelxng é’;;;;; the War was “backed” nearly 100 per cent .by
y _ government bonds, rose from about 2% b11l1on
mem bonds to the Pubhm For the b°mlS’ they marks in 1913 to 497 quintillion marks by the
SaY’ cost the Government mt€mSt’ While the end of 1923, the cost of living during this period
4 s
increased one trillion, 247 billion fold and probability that a currency based upon the re-
wages of skilled labor on the average rose 694 sources of a great nation, the whole of which
billion fold—~a little over half as fast as the will be demanded once in each year for pay-
cost of living. ment of dues to the government and . . . which
_ A may be loaned to the nation upon interest . . .
The “Back1ng” Argument will depreciate 50 per cent, or even 5 per cent.
A striking fact about the experiences of the No sueh paper ever depreciate, and none
world with paper money inflation covering such, 1 venture to predict, ever iwill.” Wiell,
many generations is that those responsible for within three years of this prophesy the gi-een.
the inflation policies in each country nearly back had declined to a low of 35 cents gold to
always argued that the usual results of inllation the dollar and, despite the faot that the max.
would not occur in their country because they imum amount ever outstanding was only 431
said, "with u5 conditions are dittercnt than th6Y million dollars, 17 years were required to bring
were in other countries where inconvertible them baok to Parity with the gold dollar, ·
paper money got out of control with disastrous During the entire time that (}ermany’s om-.
1'€Sl1ltS.” ln repeated iI1St3I1C€S, the I‘eSpCCtS in 4‘· reney was gging down the tebegggu glide until
which conditions were supposed to be S0 dif- it was ultimately stabilized at the rate of one
ferent are the very 0n65 that are heing P1`0· trillion paper marks to one gold mark, the
claimed so widely by the iniiaticnists in the German central bank held substantial gold re-
United States today 35 1°6a50n5 why W6 6ann0t serves. At the end of 1923 the gold value of
have a serious inflation in this c0unt1‘Y· The Germany’s 1,900 million gold marks reserve was
· pI‘inCipI-11 argument of the iI1il3ti0niStS-—- an equal te Over four times the value; ut
argument which takes a variety of forms—is the eurrerit foreign exchange rates, of the 497 quin,
so-called °°ba6l