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Are we? Well, let's see: In 1900 our national wealth was said be, in round numbers, 90 billion dollars ($88,517,000,000). In 1930 the statistics accredit the National with the possession of 360 billions of wealth.

Now, keep in mind that we have substituted a 25-cent dollar for a 100-cent dollar. Consequently, in point of quantity, we are exceedingly wealthy, but in point of exchange value or purchasing power, we are no better off today than we were 30 or 35 years ago. The 360 billion dollars with which we credit ourselves today have no greater exchange alue or purchasing power than the 90 billion dollars had 30 years ago.


Moreover, for all these years we've made ourselves believe that we are three times richer than we really are. And all these years the tax collector has been keeping tab on us. In 1900 the tax bill of the people of the United States amounted to less than 3 billion dollars; in 1930 it had reached the enormous total of 12 billion dollars. And yet there is every reason in the world why we should be paying $4 of taxes for every $1 of taxes we paid 30 years ago for the same quantity and quality of goods and service.

In terms of dollars, business has been demanding $4 where only $1 was demanded 30 or 35 years ago. Then why shouldn't the tax collector do likewise? Indeed he has no alternative. We, not he, placed this fictitious valurtion on our “wealth "-on our properties, on our productive plants, on our farms, on our real estate.

The truth is we are paying our taxes with 25-cent dollars, and we shall continue to do this until we change the 25-cent dollar once more to a 100-cent dollar. Minor economies may temporarily reduce the size of our tax bill. Through the partial substitution of a general sales tax--Federal and State for a direct income tax, and sundry other desperate devices, we may delude ourselves into the belief that our taxes are not so bad; but in reality the burden of taxes will grow heavier with the passing of the years.


Economists are clever at inventing terms to take the sting out of unpleasant facts. Thus they distinguish between nominal wages (the amount) and real wages (what the wages will buy). Let us apply this same distinction to our collective wealth and our individual riches.

The man who estimates his wealth at, say, a million, in reality, that is to say, in terms of exchange value or purchasing power, is worth only one fourth of that amount, or $250,000. And so on down the line.

The man who considers himself worth $100,000, actually is worth only $25,000.

The man who nominally is worth $20,000, actually is worth only $5,000. And so on!

Whichever way we turn our scrutiny we encounter the same premises that force the same conclusions. Investments made, bonds purchased, volume of business transacted, rentals collected, income received, and profits made, all must be computed on the basis of a 25-cent value of the dollar in terms of exchange value or purchasing power.

In 1896, $250 had a purchasing power equal to $1,000 today; but a $1,000 insurance policy taken out in 1896, and paid in 1920, let us say, had no greater exchange value or purchasing power than $250 had in 1896. Why, we've gone backward, not forward !

The business man has been misled into believing that under the inflation system his books show a considerably greater money volume of business transacted; and this is true, in point of quantity ; but unless he can show 84 of profit for every $1 of profit in former years, he has not improved his condition one iota.

Today manufacturers must borrow $4 for every $1 they borowed 25 or 30 years ago for the same unit of production; also they pay four times as much interest on their larger volume of borrowings.

If that is true, then surely the bankers are the one group of individuals who have benefited by the inflation system. They do a volume of business three times greater than they would have done under a more conservative system; and logically it follows that their profit is three times greater. Correct! If you consider quantity as the summum bonum. But their profits must be computed in 25-cent dollars. From which it can be seen that even the bankers derive no benefit from the inflation system. (And out of charity I'll not say a word about the billions of “frozen assets "-inflated assets, assets of a mythical value-now reposing in ever so many banks.)

The stock exchange and investment houses imagine that because they do maybe four times as much business as they did 25 years ago they are making four times as much money. But I want to tell them that they are fooling themselves, for the four times greater profit must be computed in terms of 25-cent dollars. Let them think that over!


Oh, gentlemen, all these years we've only been deceiving ourselves; we have been throwing dust into our own eyes. We have deluded ourselves; we are suffering from self-hypnosis.

Isn't it silly to pretend that a given commodity was produced in a plant that cost $400,000, when in reality it was made in a plant that cost only $100,000?

Ion' it the height of folly to demand prices on the country's collective commouities, computed on the fiction that they were produced in plants costing, let us say, $100,000,000,000, when, as a matter of fact, only about $25,000,000,000 were actually invested in these plants?

Isn't it silly to reward capital that was never really put into productive properties; just as silly as if a manufacturer employing a thousand men were to pay wages to another 1,000 men who did no work in his factory?

Isn't it silly to continue to demand rents on an inflated valuation of properties on the theory that land values, materials, and labor costs have risen, when as a matter of fact 90 percent (and that's conservative) of all the buildings were put up at a time when land was cheap, and building material and labor low?

Isn't it silly that farm land, reasonably worth $100 to $150 an acre, should rise in price to $300, $100, and $150 an acre?

Isn't it silly that a building lot that could have been bought in 1896 for 1,500, cost $6,000 in 1920?

Isn't it silly that the building that could have been put up for $5,000 in 1896, cost $20,000 in 1920?

Isn't it silly—but why lengthen the list? I have said enough to show that the inflation system under which we have been operating for the past 30 or 35 years, is without justification. It cannot survive. It may continue for a while longer, in a groggy kind of way, but ultimately it will destroy itself and bring ruin to all of us. That must not be allowed to happen. And I'm here to say to you it can be avoided if we are willing to use our heads.

Good will, common sense, ordinary honesty, simple decency—that's all that's needed to bring us out of the wilderness of despair into the land of promise and hope.



Well, what is the solution? What do I propose? This: We have ample proof that every cent of increase in prices lowers, by that much, the exchange value, or purchasing power, of money, whether that money be called capital, wages, investment, insurance, rent, interest, dividends, or profit. Which being the case, it follows of necessity that not higher prices but lower prices are the remedy for what ails us today. The only question is to what level to go in order to straighten out our badly tangled economic and financial affairs.

I have given much serious thought to this subject, and after due deliberation I have fixed on the 1913 price level as eminently fair and reasonable to all concerned.

First of all, the 1913 price level is just about midway between the low point of 1896 and the prices of 1926.

Moreover, a recent graph prepared by Bradstreet, showing the average purchasing power of gold from 1892 to 1932, fixes the purchasing power of gold in 1913 at 100.

Then, too, it makes liberal allowance for legitimate increase in capital investment on account of normal growth since 1896.

(But it makes no allowance for abnormal development and against which an enormous debt of many billions is chargeable. The penalty for senseless overexpansion, wherever it can be predicated, must be paid. I do not see how it can be avoided. Honest mistakes can be rectified; but I know of no way to insure immunity from the logical consequences of deliberate folly.)

All these things combined suggest the 1913 level of prices as a fair and logical compromise. Of course, if anyone can show that the price level of some other year would be fairer, more reasonable, and more scientific, I have an open mind. But for the present, let us tentatively adopt the 1913 price level as a basis for our computations.


With this agreed upon, here is what we must do if we want to end the depression, and inaugurate a long season of prosperity and good times :

First : Let us universally adopt the 1913 prices as basic and standard.

Second: Let us pledge ourselves to the maintenance of this basic and standard price level. This will stabilize prices, which is the crux of the matter.

Third: With these two things determined upon-namely, a basic and standard price level and stabilized price for practically all commodities—the exchange value of the dollar automatically becomes fixed, the purchasing power of money becomes permanized. With these assurances we are then justified to officially declare that our dollar is and shall be permanently a 100) cent dollar—and that all subsequent adjustments shall be made on that basis: A 100-cent dollar with a 100-cent exchange value and imbued with a 100-cent purchasing power.

With all the emphasis at my command I lay down this fundamental principle of which you must not lose sight even for a moment-stabilization of prices is the only thing that will stabilize the value of money. Changes in prices. whether sudden or violent, gradual or drastic, inevitably disturb the value of the dollar and the purchasing power of money.

In saying this I admit that price fluctuations for some commodities may be unavoidable, and in some cases desirable or even necessary, but speaking generally, I maintain that the fluctuations up or down for practically all manlı factured commodities can be controlled so as not to exceed, let us say, from 5 to 10 or 15 percent, in either direction.

The establishment by universal agreement and the acceptance of the 1913 prices as basic by all concerned, will automatically reinstate the 100-cent dollar by regulating its exchange value and stabilizing its purchasing power.

There is no miracle here, gentlemen; nothing more than a common-sense readjustment, which will revitalize our present vitiated medium of exchange and nefarious measure of value. Once established, and universally adopted. nothing can appreciably disturb the equilibrium of the value of money except drastic price changes; and all that I'm saying is to stress the utter uselessness and folly of any such future attempt.


You may ask: How will going back to the 1913 prices restore the 100-cen: value of the dollar?

I answer that the mere declaration that the 1913 prices are and shall be basic and remain stable, will accomplish that. I lay down this simple principle

For every commodity, for every product, for every service, there is what might be called a fair, reasonable, natural, and normal price--and which people are willing to pay. Raise that price and one of two things will happen either people will stop buying, or if it is an absolute necessity they will materially curtail their consumption. Self interest ought to persuade us ou endeavor to determine what the fair, reasonable, natural, and normal price is for all commodities, and for every service, and make it basic. If today we are somewhat muddled as to the significance and importance of a basic price. we have our index number experts to thank for it. They have repeatedly ani quite arbitrarily changed the index number basis, for what reasons, or by whose order, or by what authority, I have never been able to satisfy mysli. I am dealing with the fact-easily proved from the records. Thirty years az the 1896 prices were used by the index number experts as basic. Then suddenly they dropped the 1896 prices, and the 1913 prices were adopted as hask. tater they were dropped. At present most index number tables I have seen use the 1926 prices as basic.

If the index number compilers had continued to use the 1896 prices as basic for their computations, we would have the complete story of price changes, and the absolute proof that prices advanced around 300 percent in 25 or 30 years-or an average of 100 percent every 8, 9, or 10 years—a phenomenon that carries with it its own curse and condemnation. And the penalty must be paid by the generation concerned. We are paying the penalty now!


The three fundamental things agreed to by all, namely: 1. Adoption of the 1913 prices as basic and standard; 2. There stabilization; 3. Permanently imbueing the dollar with a 100-cent exchange value or purchasing powersteps must immediately be taken to eliminate every factor that has produced the drastic depreciation in the purchasing power and the exchange value of money; and to eradicate as intelligently and expeditiously as possible all the wrongs and abuses that were inaugurated 30 or so years ago, and which have been permitted to grow to alarming magnitude, and develop to their present ruinous proportions.

The rehabilitation of the dollar presupposes the removal of the causes which changed the 100-cent dollar to a 25-cent dollar. This implies the writing down” of inflated valuations of all properties, to somewhere near their actual or natural normal value.


I haven't the time to enter upon a lengthy discussion of all inflated valuations, including farms and real estate. I shall confine myself to a brief consideration of the inflated corporate properties.

Three years ago, when stocks were at the peak, I would have hesitated to make this suggestion, for a proposal to pull values down from their dizzy height to what might be called a more normal level, would have met with almost universal condemnation.

Today, however, I do not hesitate, for the fates have performed the trick; the thing is fait accompli—an accomplished fact. The collapse in stocks was not a collapse in values ; it was merely a collapse in prices—a drop from an artificially inflated and absurdly high point, to a more natural and normal level. Water seeks its level.

On September 1, 1929, the value of the stocks listed on the New York Stock Exchange was approximately $90,000,000,000 ($89,668,276,854).

On July 1, 1932, the market price of these same stocks was less than $16,000,000,000 ($15,633,479,577)—a drop of $74,000,000,000.

Within recent months the price of these self-same stocks has been fluctuating somewhere around 20 and 22 billion dollars—which is considerably nearer their actual value.

My proposal is that we accept this lower price as a value basis not, however, for the purpose of starting the inflation ball rolling again, but to proceed from there on with the inauguration of our lower-price system.

Once more let me stress that a return to the 1913 prices would automatically reinstate the 100-cent dollar. Keep that in mind! Today we have a 25-cent dollar, a dollar whose exchange value or purchasing power is only 25 percent of what it was 30 years ago. All right! Let's see what effect this rehabilitation of the dollar would have on the stock situation.

When all the stocks listed on the New York Stock Exchange were at their height-$90,000,000,000_they had an exchange value or purchasing power of approximately $22,000,000,000.

Today the market price of these same stocks is approximately $22,000,000,000. Computed on the basis of a 25-cent dollar, these $22,000,000,000 have an exchange value or purchasing power equivalent to about $5,500,000,000.

But under my proposal---substituting a 100-cent dollar for the present 25-cent dollar-by the simple process of reducing prices to the 1913 level-the 22 billion dollars would acquire a 22 billion dollar exchange value or purchasing power.

In other words, if my proposal is adopted the owners of these stocks would actually recover all their losses, for, the exchange value and purchasing power of their present holdings, amounting to $22,000,000,000, would be just as great as they were when their holdings amount to $90,000,000,000.

Here we have a genuine miracle of finance of the first order, linked to which are two other major miracles, viz:

1. Corporations now staggering under a crushing load of over-capitalization could decently “write off” their inflated valuations without loss to themselves or injustice to their stockholders; and

2. Banks loaded up with congealed collateral, which, in the main, are depreciated stocks deposited against loans made on an exaggerated valuatiouwould be enabled to take the thaw out of practically all their so-called “frozen assets,” which would become liquid again, and that, too, without any material loss either to banks or borrowers.

Mark you this, too! If stocks were to go up, slowly and conservatively (I hope it will be slowly and conservatively), every additional dollar rise in price will add a full 100-cent exchange value and purchasing power to your present holdings; whereas, under the present system, only 25 cents of exchange value or purchasing power would accrue to you for every dollar rise in price.

I know all this sounds strange to you. Nobody has ever told you anything like this before. And some of you may think I'm all wrong; but all I ask of you is that tonight or tomorrow, or the day after, you give an hour or two to this subject (I've given years to it) and figure it out for yourself.

There are quite a few other things I'd like to comment on while on the subject of stocks and the stock market–brokerage and investment houses, banks, etc.—but I must hurry on. Some other time, maybe !


Now, gentlemen, prepare for a shock! Sit tight in your chairs ! Hold your breaths! For my proposal is intended not only to salvage and give a decent value to what still remains of our assets; it also contemplates a readjustment of the country's debts as well.

The national wealth amounts to $360,000,000,000.

I maintain that of this amount 160 billion is fictitious—sheer inflation. That leaves $200,000,000,000 of actual assets.

Now, the collective debts of the country are said to be in excess of $200.000.000,000; some have put it as high as $250,000,000,000. I'm going to accept the more conservative figure ; let's say 200 billion ! What does that mean? It means that the $200,000,000,000 of assets are mortgaged to the limit. We are broke!

Wealth has been defined as the difference between assets and liabilities. Our national assets are $200,000,000,000, our national liabilities, $200,000,000,000 What is our wealth? And where is it? Who's got it? To whom does it belong? Answer that yourself!

Now, let's look this subject from another angle.

What does the item of inflation, the fictitious valuation of productive properties, mean to the people of the United States? It mean this:

As I've already told you, they are charged at least 5 percent on the 160 bil. lions of inflation-or $8,000,000,000 a year. Now add to this 5 percent on a $200,000,000,000 debt, or $10,000,000,000 a year, and you have a total of $18,000,000,000.

Now, just to be conservative, let us deduct 6 billion-let us say that the total charge on the two items, inflation and debt, costs the public 12 billion a year-and I think that's exceedingly conservative and the mystery that hangs about the present depression begins to disappear.

But I'm not going to go into that now. Let me proceed with my proposal, and let's take things as we find them.

I propose that whatever the actual amount of all debts may be and of whatever kind, I propose cutting in half all debts, contracts, and obligations, public and private, involving money payment.

This, of course, like every other arrangement included in my proposal, pre supposes universal agreement and general acceptance. There must be no ereertion, and it must be followed all the way through.

Once more! Keep in mind that the adjustment here proposed implies the substitution of a 100-cent dollar for the 25-cent dollar with which we hare contracted (and presumably paid) debt and obligations within recent years.

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