These changes in industry and agriculture add to our unemployment problem The problem may become more acute with every new invention. New industries do not create jobs as fast as new machines in old industry destroy jobs. Techno logical unemployment is one of the hazards of living in this scientific age. Means to mitigate this and other hazards of unemployment call for sympathetic understanding, foresight, future planning, and cooperation among employers and employees.

Now to approach more directly the subject matter of this report stabilizing the purchasing power of money and the relation of the fluctuating purchasing power of money to employment and the distribution of resources. The fluctustion in the purchasing power of money has agitated this country and the world for generations. Gold is the basis or measure of value of the leading commercial nations of the world. A study of the index number of wholesale commodity prices over a period of time will disclose that the index number rises with the increase in the gold supply and falls with the decrease in the supply of gold. After the Civil War, from the early seventies to 1897, there was a gradual decrease in the supply of gold and a constant decrease in commodity prices. During that time we had the granger movement, the fiat-money agitation, and the free-silver issue. Whatever we may now think of the issues of those days, it must be conceded by every unbiased student that back of it all was the purpose to stabilize the purchasing power of money. As money became less in volume its value increased, thereby reducing commodity prices and making it more difficult for those in debt to pay off their obligations.

Following 1896 gold was discovered in the Klondike and only a year or two later South Africa poured a great stream of gold into the world's supply. This increased the money supply, and ere long there was an upward trend to the index of general prices. The condition of the debtor class was improved, and thereby was removed in a large measure the spirit of discontent, especially in the West. The increase in commodity prices was more rapid than the increase in wages, which resulted in 1910 in the beginning of a strong agitation against the high cost of living.

The index number of the United States Bureau of Labor Statistics on the basis of the average wholesale prices for the year 1913 is 100. Beginning with 1914, there was an increase in the index number, which rose to 225 in 1920. After the middle of the year 1920 there began a contraction in money and credit, and the index number fell to 140 in 1921. In this inflation and deflation of the World War period other factors than the gold supply played an important part. We appear to be in another period of diminishing gold supply. George E. Roberts in an article dated April 1, 1931, observed: "A recent inquiry conducted under the auspices of the League of Nations has developed that mining engineers over the world are in general agreement that, based on present prospects, the gold production is more likely to diminish than increase. A continued period of falling commodity prices, such as distressed the people of this country from the early seventies to 1897, must certainly be averted.

Any change in the purchasing power of money touches every kind of moral question and every kind of obligation. To every business transaction not on a cash basis there is a promise on the part of one to pay and on the part of another there is a promise to be paid. Those who promise to pay are in the debtor class and those who hold such promises to pay are in the creditor class. In the latter class are holders of life insurance, savings-bank depositors, pensioners, annuitants, wage and salary earners, owners of notes and bonds, the endowment funds of colleges and hospitals, etc. Cheap money, resulting in the rise of commodity prices, adversely affects the creditor class; on the other hand, the debtor class in time of inflation can more readily pay off the debts contracted before the inflation. In the increase in commodity prices from 1914 to 1920 the creditors had the value of their investments and incomes more than cut in two. During the same period the debtors were enabled to pay their debts at the peak of 1920 with dollars less than one-half in value of the 1914 dollars. It is estimated that in this period by the process of inflation $60,000,000,000 were transferred from the pockets of the creditor class to the pockets of the debtor class. With the deflation of 1920 the operation was reversed in a somewhat less degree to the benefit of the creditors and to the distress of the debtors. Those who gave mortgages on real estate at the peak in 1920 had almost double the load, a few years thereafter, they had originally contracted to assume.

Says Owen D. Young:

"The proper handling of price stability is one of the most important matters facing the capitalistic system. In it will be found the roots of those maladjust

ments which result in unequal and unfair distribution of wealth, in unemployment, and other serious problems.

Sir Josiah Stamp says:

"A stable price level is the most bitterly practical of all questions."

H. G. Wells has said that civilization is at the cross roads; that the test of civilization is whether or not we can learn to control the purchasing power of our money.

The International Labor Conference at Geneva, May-June, 1929, in an exhaustive report on Unemployment and Monetary Fluctuations, had this to say: It seems to be possible to declare emphatically that abrupt, or even slow but prolonged, variations in the general price level, or, in other words, disturbances in the equilibrium between production and the means of payment, play no small part in determining the alternating acceleration and retardation of economic activity, and are hence an important cause of the recurring unemployment crises which mark one phase of the cycle.

"If, then, the magnitude of variations in the general price level could be reduced, an important cause of unemployment would be rendered less potent. But is such reduction feasible? This is the vital question, to which these competent in the matter are becoming more and more inclined to return an affirmative answer. ""

The Stable Money Association, which has among its officers and directors leading industrial and financial leaders, economists, and statesmen, including such leaders of thought as Chief Justice Charles Evans Hughes and Hon. Frank O. Lowden, in a recent statement said:

"This is a world problem. Every leader of public opinion in the world, therefore, should feel it incumbent upon him to make it his own problem.

Responsibility for progress in the stabilization of money and credit must rest to a very large extent upon the shoulders of us in America, because we have a disproportionate share of the world's gold; and as the world's creditors we are able to draw gold from the rest of the world at our discretion; we have a closely integrated, highly organized, and widely used banking and credit system; and our statistical material is abundant; yet no one country can or should attempt to control the situation alone, and every country should assist.

Quote from report of the committee on stabilization of money standard of the South Carolina bankers' convention, 1930:

"Unless some improvement develops in the utilization of gold, inevitably the long trend of price level must continue downward. The benefits will accrue to the creditors and the owners of fixed income-bearing securities, the losses will fall on the debtors and the producers, who must sell on a declining price level.

*

"Stabilization is vital to the well-being of both possessor of money and the seller of things money will buy. During a period of inflation the owner of money finds its purchasing power reduced, and during a time of deflation the seller of goods finds his products generally bringing lower prices. The well-being of the world requires a reasonably stable money, so that upsets may be limited and the disasters that always result from such changes may be avoided."

The stabilization of the purchasing power of money is of vital importance to our State. Iowa is primarily a State of production, and her prosperity depends on a satisfactory level of prices. Many of her citizens are debtors, who suffer with tragic consequences when the price level declines.

The index number heretofore referred to is made up of the weighted average of wholesale prices of 550 of the leading commodities in the United States, and is compiled monthly. There is a distinction between the price level of all these commodities as reflected in the index number and individual prices. The price level is affected by inflation and deflation. To stabilize the purchasing power of money is to stabllize the price level, and to stabilize the price level is to prevent inflation and deflation. Even though the price level is stabilized and the index number remains stationary, or nearly so, individual prices may move up or down according to the law of supply and demand.

This problem of stable money has been tackled during the last year by the American Farm Bureau Federation, the National Grange, the American Federation of Labor, some State bankers' associations, and other organizations, including the Iowa State Bar Association. Committees are at work on the problem, some reports have been submitted, but to date no definite specific program has been recommended.

There are some plans that have received wide discussion. One plan is that we do away with the gold standard altogether and have nothing but credit money.

This has the support of John Meynard Keynes, eminent British economist and financier. This plan has not received widespread approval on account of the feeling that we should have a money redeemable in some certain metal or metala The late Professor Lehfeldt, of South Africa, proposed a plan that the goldproducing nations buy up the gold mines and operate them in the public interest His proposal was that when there is too much gold, resulting in rising price leve shut down some of the mines; and when there is too little gold, resulting in falling prices, operate more mines even at a loss. Thus by regulating the world supply of gold the price level would be regulated.

Another plan which has received much discussion is by Prof. Irving Fisher, of Yale. His proposal contemplates a change in the number of grains of gold in the dollar, so as to maintain a stable price level. When gold becomes chest put more grains of gold in the dollar, so it will buy the same quantity of commodi ties in general. When gold becomes dear reduce the grains of gold in the dollar, so it will buy the same quantity of commodities in general. Thus he would stabilize the purchasing power of money and maintain the price level. What we have to find is a method of arranging means of exchange and also means of payment in such a manner as to prevent violent fluctuations in the price level. This is another way of saying that means of payment should be adjusted to the commodity price level. In a period of falling prices it is not so much that commodities have fallen in price as the value of gold has gone up In other words, the Fisher plan contemplates that the value of gold in the dollar should be determined by the general price level of commodities instead of determining the price level of commodities by the value of gold in the dollar.

Every question that involves the welfare, happiness, and prosperity of the people is of concern to the members of the legal profession. A well-known maxim is, "Equity will not suffer a wrong to be without a remedy." This max should be applied to economic wrong. It is the business of every well-wisher of the Republic to find remedy for wrong.

The problems that have confronted our Government and our people in the past have been many, complex, and trying. The problems have been political, social, moral, and economic. Each problem was faced with frankness, courage, intelligence, and toleration, and solution was always found. The problems confronting the country since the late war have been the greatest and most complex since the foundation of our Government. We can depend upon the intelligence and spirit of our people to carry forward and onward in the future as in the past.

Mr. RAMSEYER. As a result of this report, which fell into the hands of the President of the American Farm Bureau Federation, I was asked to join a committee of that organization on the stabilization of the unit of value. This Farm Bureau committee had several meetings in Chicago last fall, and the committee saw the importance of two things, and acted on them. One was to get out a brief and readable statement on the money problem to arouse interest, with the result that, the first of this year, under the direction of this committee, the booklet which I hold in my hand, entitled "Honest Money," which you have all seen, was published. Mr. O'Neal, the president of the American Farm Bureau Federation, referred to this publication in his testimony before this committee, and every Member of the House and Senate has one of these. The second was to get all of the farm organizations united in a program, and not make it a bureau proposition alone.

At a meeting of the American Farm Bureau Federation the early part of December, last year, for the first time in the history of the three national organizations, the presidents of the three organizations stood on, and spoke from, the same platform in Chicago. These presidents were here in December, and decided to meet early in January, with the result that, on January 6, 7, and 8 the three presi dents, O'Neil, Taber, and Simpson, were in session here and agreed, together with other farm leaders on a resolution setting forth a united program, one of which is on the monetary stabilization. This has also been called to the attention of this committee.

Then, to arouse the interest among all the Members of the House, the House Members who had introduced bills on monetary stabilization, called a meeting of the Members of the House in the caucus room of the House Office Building for January 9, to be addressed by the three presidents of the farm organization. Such meeting was held, and about 100 Members of the House showed their interest in the problem by their presence at that meeting, and were present, and the meeting was addressed by the presidents of the three national farm organizations.

The next move, of course, was to get a hearing before this committee. Of course, this committee was busy on nonpartisan bills, which had the support of the leaders in the Senate and in the House, and of the administration. Your committee was busy with other problems. Since the 16th of March you have been holding hearings on this problem of monetary stabilization. The farm leaders testified before you, and have shown a united front for legislation such as you are considering.

Another thing, the committee decided, before I go further, that in addition to getting all of the farm organizations back of this movement, it was important to get labor.

Mr. GOLDSBOROUGH. What committee was that?

Mr. RAMSEYER. I refer to American Farm Bureau Federation Committee on the stabilization of the unit of value. I spoke a moment ago that the object of this committee was to get all the farm organizations together; then, further, to get out a brief and comprehensive statement on the monetary question; then the leaders of the farm organizations did contact the leaders of labor, with the result that, last week, there was a representative of the American Federation of Labor here and indorsed, in principle, the program of the farm organizations on restoring and stabilizing commodity prices.

On the first Monday in December, I introduced a bill (H. R. 128), on monetary stabilization but I want to make this statement now to the committee and to the country, if the country finds out what I am saying here, that I am wholeheartedly back of the Goldsborough bill. Of course, it has some defects, which will have to be ironed out, and which I am sure the committee will do.

Now, in addition to hearing the agricultural representatives and labor representatives, you have heard the economists. I had the pleasure, the other day, of sitting through all of Professor King's testimony, and I have heard part of Professor Fisher's testimony. The problem has been thoroughly presented to you gentlemen, but the end is not yet.

There has been progress made, and I think a lot of progress has been made in arousing the interest in the House of Representatives; because nearly every Member of the House that I talk to now concedes that something must be done to raise the commodity price level; and I think Members who, at first, were afraid of raising the commodity price level, because it might hurt labor, have gotten over

that fear, especially since labor has come in and indorsed this proposition. Of course, the history of these inflations and depressions Mr. PRALL. May I interrupt there?

Mr. RAMSEYER. Yes.

Mr. PRALL. I think everybody that has testified, in addition to the labor representatives of the American Farm Federation, and the labor representatives, have also agreed that it would be beneficial to labor.

Mr. RAMSEYER. I think so.

Mr. PRALL. That is the general testimony, the general opinion. Mr. RAMSEYER. Every period of declining commodity prices is accompanied by unemployment; and every period of rising commodity prices is accompanied by increasing employment, and better conditions all around.

Now, as I have a chart open here I just want to make one observation. You probably have all thought about it. Different witnesses testified here before you in regard to the relation of the gold supply to the increased volume of business. They testified that, from the Civil War, or soon after the Civil War, down to 1896, the gold supply of the world did not increase as rapidly as the volume of business increased; along about 1880 there was an upward movement in commodity prices. From about 1880 to 1896 there was a constant decline, a downward movement of commodity prices.

Mr. GOLDSBOROUGH. Mr. Ramseyer, if you will excuse me, right at this point, after Mr. Prall's question and your answer about unem ployment, I am going to suggest, if Mr. Prall would like to do it, that we put in these charts which have been brought here by Mr. Ethelbert Stewart, bearing out your statement that, during the period of a rise in prices there is employment, and during periods of declining prices, there is increased unemployment.

Mr. PRALL. Yes, and they follow very closely together.

Mr. RAMSEYER. Yes, I would be very glad to have them put in with my testimony.

There is another thing that has been called to the attention of the subcommittee, and that is along about 1897 or 1898 there started an upward trend in commodity prices, and that is about the time that gold was discovered in the Klondike and in South Africa, and which brought in a large supply of gold and, to use plain language, cheapened money and raised the prices of commodities.

Gentlemen, I wonder what would have been the history of the country, if the discovery of gold had been made 10 years earlier. Would not the effect have been that, instead of a declining commodity price level, with all of the agitation in the country on the question of greenbacks and free silver, we would probably have had ascending commodity prices during that period; and the history of the country, especially the political history of the country, might have been very different.

Now, I think it is important for this committee, as soon as possibleI am not suggesting that you curtail the hearings-but as soon as possible get something concrete before the House of Representatives. Now, it is going to require some more education to get this proposed