Large Quantities of Scrip at One Per Cent Interest Cure For Financial Crisis, Declares Harris--Will Not Lead to Inflation

"Issuing scrip in large quantities at one per cent interest is the solution to the present financial crisis," asserted S. E. Harris '20, lecturer on Economics, in a speech in the Lowell House Common Room last night under the auspices of the Harvard Inquiry. "This, if it is not allowed to exceed the amount of private deposits, is not inflation. It is merely issuing paper on the money which people have hoarded in Banks, or, if you prefer, it is exchanging one kind of money for another.

"To my mind the only trouble is that the Western banks would need far more scrip than the Eastern ones since they are in so much worse condition. That would mean the transference of a great deal of cash from the East to the West, with a consequent weakening of the East. That is precisely what the Reconstruction Finance Corporation has been doing: it is merely an organization to take money from the stronger and wealthier parts of the country and transfer it to the weak South and West."

From the subject of scrip Dr. Harris turned to the matter of securing backing for currency. He pointed out that of course the scrip would not be backed by gold deposits. "I think that would be a good thing," he stated. "Right now we are off the gold standard; we have been since the banks closed, and we would have been forced off if the bank holiday had not been declared. On March 1 there was a gold reserve of $1,500,000,000; on March 4 that reserve was only $300,000,000. That loss was caused partly by the mania that swept the country for converting all one's money into gold and partly by the action of the Bank of England, which consisted of turning its investments in this country into gold, to be kept in trust at the Federal Reserve Bank in New York.

"If we remain off the gold standard, we can pursue our monetary policy independent of the other nations of the world, as Great Britain has been doing since she departed from the international standard. We could then treat with England on equal terms. On the subject of England I should like to point out that in her case being off the gold standard has been beneficial rather than harmful."

In conclusion Dr. Harris said that in his opinion the banks could be opened at the end of the week with no restrictions on withdrawals.