Note, Diagram C
The graphic statement opposite may seem to exaggerate the situation to the advocate of the gold-standard, who will contend that our gold supply, instead of being an inverted cone, is a thin basic plane upon which all other values rest. If this contention were valid we would not find producers of value ruined at regular intervals; and the aged exerters of thrift forced to go to work again, to make up for the duplication of their accumulated units of value.
Conceding the difficulty of graphically representing economic chaos the cartoon may still be validated by the record.
One of our large insurance companies in soliciting further business writes as follows under date of May 1st, 1922:
“It has not occurred to the average man, who has not taken out additional life insurance in the past four or five years, that he is now carrying only about 60% as much insurance.
“The face amount of his policy may be the same, but the lower purchasing of the dollar makes the difference.”
The National City Bank[1] in discussing the effects of the gold-standard before the advent of the Federal Reserve System states:
“The principal relief was by importing gold from Europe, to obtain which securities and products were sold at a sacrifice.”
And Bradstreet's Journal[2]states, that notwithstanding the beneficent action of the Federal Reserve System which permitted us to let off steam gradually instead of blowing up the boilers, 1921 must be remembered for furnishing the heaviest total of large commercial failures and the second largest total of bank suspensions since modern failure reporting was begun in the early eighties.
We could not find more conservative witnesses, and it is fortunate that their observation overlaps so cleanly. Let us claim them as witnesses for the prosecution and turn them over to the defense for cross-examination.
