Out of Debt, Out of Danger

Nearly every Congressman, at least once in his life, is suddenly struck with a grand-scale idea about money as the root of all evil. Forthwith he takes pen in hand and writes either a book or a bill.

Latest Congressman thus smitten is California's anxious, serious young Jerry Voorhis (Dem.). Last month he published a book, Out of Debt, Out of Danger (Devin-Adair; $3).

Jerry Voorhis pours into its 238 pages the same Messianic energy with which he once served on Yale debating teams, and now server in Congress. He indicts "sound money" financiers all the way from Alexander Hamilton to J. P. Morgan, and incidentally does some hard thinking on one of the biggest and most difficult subjects of all.

The Thesis. Jerry Voorhis starts with the incontrovertible fact that the national debt is rising at an appalling rate. He guesses it may reach $300 billions before war and reconstruction are done.

Some of the Government's borrowing is from private individuals via war bonds, which Jerry Voorhis considers all to the good. But easily 50% of the borrowing is done by selling Government bonds to the banking system, which in turn creates deposit money to the Government's favor.

This, according to Jerry Voorhis, is all wrong, not because it is highly inflationary--the conventional reason--but because the issue of new money should not be a private banking function at all. Nor should the issue of new money involve the creation of debt. If the Government has to have more money over & above what it raises in taxes, it should be able to create it free of charge. This might be done, Reformer Voorhis suggests, by the Government's taking over the Federal Reserve System, creating out of it a super-monetary authority, and giving this authority exclusive powers of note issue.

Credits & Debits. Mr. Voorhis' thesis is not new. He has drawn heavily on Professor Irving Fisher's |book, 100% Money. His argument that the Government should, in practice as well as theory, exercise its sole power of money issue has some respectable backing.

Mr. Voorhis assumes that the country's economic ills could be cured just by changing the technique of money issue. The real cause of the inflation, as Voorhis himself suggests, is the failure of Congress to tax sufficiently hard. But, to the question whether Congress would be more or less disposed to tax if Government could just print up money indefinitely without going into debt, Voorhis says bluntly "More."

> Believing in the quantity-of-money theory, Voorhis argues further that the supply of money controls employment.*

Best part of Jerry Voorhis' book is his reiteration that no nation can go broke if it keeps its men and machines at work. Most dubious is his emphasis that money is the prime mover in accomplishing this desirable end. Worst slip is his martyrish hint that President Lincoln was shot because (according to Mr. Voorhis) Lincoln had ideas about money like those of Mr. Voorhis.

*In 1926, when the U.S. had tolerably full employment, there was $4,885,300,000 in currency and $54,069,300,000 in deposits outstanding. In 1936 both currency and deposits were substantially higher yet the country had over 7,500,000 men out of work.

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