what the Me^nbers Say 



The Money Question 



I do not see how we can hope for stabil- 

 ization in the price of farm products when 

 bank credit, which we have been taught 

 to use as money, is so variable. The amount 

 we have in circulation at any time depends 

 on whether the banks are willing to loan 

 and whether the producers want to borrow. 

 It seems to me the commercial bank so far 

 as it creates checkable credit is virtually 

 a private mint in contravention of Art. 1 

 Section 8, par. 5 of our U. S. Constitution. 



As Irving Fisher points out, "we allow 

 the banks the special privilege of creating 

 money as pen and ink figures in a ledger, 

 pen and ink money, and except for these 

 records in ink that money has no real phys- 

 ical existence." 



I remember Congressman Goldsborough 

 pointed out a few years ago during the 

 A. F. B. F. convention, the banks can create 

 and destroy the nation's money. Our money 

 is debt money. The world's most amazing 

 paradox is that the greater the wealth pro- 

 duced by the people, the deeper they must 

 sink into debt, for debts payable, not in 

 wealth which the producing classes are able 

 to increase almost miraculously, but in 

 claims to wealth — money, which under 

 our present system producers cannot create 

 nor increase no matter how hard they work. 

 Private creators of the medium of exchange 

 have all producers completely at their mercy 

 for they control the necessary medium 

 through which the various kinds of wealth 

 can be exchanged. 



I remember quite well, Charles A. Lind- 

 berg, Sr. warned that the Federal Reserve 

 Act would bring panics scientifically created. 

 As I see it the creation, issuance and regula- 

 tion of our medium of exchange is a govern- 

 ment function according to constitutional 

 mandate and should be completely divorced 

 from the business of private banking. Our 

 present system is unjust and unscientific 

 and unsound. Unjust because 9$ per cent 

 of our money is loaned into circulation at 

 interest which should be paid into circula- 

 tion by the government, interest free. It 

 enriches the few leaders at the expense of 

 the many. Unscientific because no one is 

 responsible for determining the amount of 

 money needed at a given time in a ratio 

 corresponding to goods produced, which 

 would prevent either deflation or inflation 

 by private individuals. Unsound because it 

 is based upon a state of mind — confidence. 



Shouldn't wealth cancel debt and why 

 doesn't it? If we cannot exchange our 

 products for money we cannot pay our debts 

 for by our monetary and banking laws we 

 cannot "make money" ; only one class is 

 given that privilege, viz. the bankers who 

 are permitted to issue debts as money. We 

 are not prosperous only during the periods 

 when we are piling up debts, either public 

 or private. 



Surely a system so undemocratic and un- 

 sound as well as unscientific, should be re- 

 formed if we are to have stabilized agricul- 

 ture. It seems to me such a fundamental 

 reform should be made a topic for dis- 

 cussion at unit meetings for the Farm Bu- 

 reaus throughout the land. Must America 

 forever be a nation of appalling economic 

 illiteracy? 



Mrs. Samuel Grossman 

 Macon County, 111. 



Well said Mrs. Grossman. To study and discuss 

 this and other vital questions at Farm Bureau unit 

 meetings would make them worth while. But let's 

 not overlook the other factors that influence farm 

 prices. — ^Editor. 



I am a retired high school teacher of social 

 sciences and have devoted my leisure time 

 since 1932 to a study and research of our 

 money problem. Over two years ago I 

 organized an Economic Forum here for the 

 discussion of this problem and Mrs. Samuel 

 Crossmann of Warrensburg was a faithful 

 attendant of all meetings. 



I, too, was reared on a farm and my deep- 

 est sympathies are with the rural people. 

 My research has convinced me that such 

 eminent thinkers as Mr. Robert L. Owen, 

 Robert Hemphill (both with years of bank- 

 ing experience). Prof. Soddy of Oxford, 

 Arthur Kitson, Prof. Irving Fisher, and 

 Thomas A. Edison cannot all be wrong in 

 condemning our present monetary practices. 

 But strange to say it was not the writings 

 of the above named, but the testimony of 

 Mr. Eccles (chairman Federal Reserve 

 Board) himself, that convinced me that no 

 permanent solution to our economic problem 

 can be found without monetary reform. 



In his testimony on the 1935 Bank Act 

 (H. R. 5457) he admits that Bank-credit 

 is money and now makes up to 95% of our 

 total money supply. He also makes clear 

 that our modern monetary systems are now 

 a matter of bookkeeping. On page 399 

 he says "When the banks buy a billion 

 dollars of government bonds they credit 

 the TREASURY account with a billion dol- 

 lars. They debit their U. S. bond account 

 or they actually create a billion dollars by 

 a bookkeeping entry." What startling con- 

 clusions can be drawn from this statement, 

 since bank credit is created by banks making 

 loans and debiting their depositor with the 

 amount borrowed 



I certainly do not think decreasing pro- 

 duction is in any way solving the problem 

 of "increasing purchasing power" which the 

 President and so jnany others have admitted 

 is the great NEED. 



I believe that the amount of money in 

 circulation (not in banks) does have a direct 

 eflfect on prices. Everytime in recent years 

 when there has been a great contraction of 

 bank credit (95% of our money) we have 

 seen a fall in prices. But even that is 

 nothing compared to the loss in farms from 

 foreclosures due to bank activity (admitted 

 by Mr. Eccles) which occurred in the early 

 '30's. Is it not logical that when tickets 

 of exchange (money) are out of proportion 

 to units of marketable consumer's goods to 

 be exchanged with it, the amount of tickets 

 required to obtain a unit of goods must 

 be affected? When money is scarce it takes 

 more units of goods to secure one of money 

 (prices are low) and vice-versa. Does not 

 an increase in money supply always increase 

 demand and effect a rise in prices? 



The big problem as I see it is to provide 

 some means of getting money into circula- 

 tion without forcing some one to go into 

 debt for it. People's willingness or ability 

 to borrow and the bank's willingness to 

 lend is in no way proportionate to our 

 NEED for tickets of exchange. To get 

 money to consumers some means must be 

 provided besides going in debt for money, 

 for this the consumer can no longer do. 

 Etta M. Russell, 

 Decatur, 111. 



The money question will be considered again at 

 the annual convention of the American Farm Bureau 

 Federation this month. Earl C. Smith, president of 

 the I. A. A. and vice-president of the A.F.B.F. is 

 chairman of the Resolutions Committee. Suggestions 

 for resolutions on this and other matters should 

 be sent to Mr. Smith at once. — Ed. 



I. A. A. Organizers 



John Frazier of Edgar county, W. F. Smith. 

 Woodford county, and C. H. Root, Grundy 

 county all identified the organization solicitors 

 of the 1919-'20 period whose picture appeared 

 in the October RECORD. Frazier won the 

 prize by sending in the first accurate identifica- 

 tion*. In his reply, C. H. Root said: "I was 

 county superintendent of schools here from 

 1902 to 1925, with a break of three years, 

 from August, 1919 to August, 1922. My 

 successor resigned and I was elected by the 

 Board of Supervisors to fill the unexpired 

 term. While county superintendent I was 

 secretary of our County Farmers Institute for 

 15 years, and aided in the formation of our 

 County Farm Bureau in 1914. It was because 

 of this activity that Mr. Gregory of the Prairie 

 Farmer, and Wm. Eckhardt, farm adviser in 

 DeKalb county, vouched for me in getting the 

 appointment as field solicitor for the lAA. 



There was no such organization, however, 

 then, but in Januaty of 1919 at the Peoria 

 convention to which I was a delegate, the 

 organized counties united to form the lAA. 



This group picture was taken in 1920, as 

 Mr. Culp was not in our team in 1919, but 

 the worthy Peter Clausen of DeKalb was the 

 eighth man. Following the month of August, 

 1919, the demand for solicitors came from so 

 many counties that by the end of the year 

 there were some five teams of about eight 

 members each." 



• Solicitors left to right, back row are : W. H. 

 Smith, A. B. Culp, Lewis A. Moore. J. Z. Frazier. 

 Front row: C. H. Root. H. B. Welch, V. W. 

 Randolph, L. E. Frazee. 



George N. Peek of Moline, visited the 

 lAA offices on Nov. 18 while enroute home 

 from meetings in New York and Washing- 

 ton. He will spend the winter with Mrs. 

 Peek in San Diego county, California. 



Secretary of Agriculture Henry A. Wallace 



announced, November 10, that the corn crop 

 estimate of 2,480,958,000 bushels establishes 

 the rate of 57 cents per bushel for loans 

 made on 1938 corn to farmers in the com- 

 mercial corn area. 



The Agricultural Adjustment Act of 1938 

 provides that the loan shall be 70 per cent 

 of the parity price for corn if the November 

 crop estimate exceeds a normal year's domes- 

 tic consumption and exports by not more 

 than 10 percent. The corn crop indicated 

 exceeds a normal requirement by six million 

 bushels which is less than 10 per cent. With 

 the parity price of corn estimated at 81 

 cents per bushel, 70 percent of parity is 57 

 cents per bushel. 



The new lineup in Congress following the 

 Nov. 8 election is. 



House Senate 



1937-38 1938-39 '37-'38 '38-'39 

 Democrats 328 263 76 69 

 Republicans 88 169 15 23 

 Progressives 7 2 11 



Farmer-Labor 5 12 2' 



Independent — — 11 



Total 435 96 



The Republicans gained 81 seats in the 

 House and 8 in the Senate. Low farm prices 

 and failure of congress to enact price-raising 

 legislation in 1937 are thought by many to 

 have influenced the vote especially in the 

 wheat belt. 



T 



ti^' 



L A. A. RECORD 



