MAY 24, 1951
HYDE PARK, Wednesday—On the way home in the plane I read an article written not long ago by Alvin Johnson. He faced squarely the fact that something had to be done about inflation and one of the ways to do it was to get people to buy government bonds. However, the series "E" bonds, which are, the easiest ones for people to buy, had lost much of their appeal because many people felt the government was letting these bonds deteriorate in value as the dollar became less valuable.
Of course, in the aggregate the loss is not so very great, but any loss in government bonds frightens the public.
Mr. Johnson made the suggestion that bonds be issued on a sort of sliding scale, promising that their value would never really go down. Then if the dollar deteriorated, the purchaser would get more dollars when his bonds matured. In this way the government would be the loser. It is better for the government to stand behind this obligation because it would not be a good condition for any of us to lose confidence in the government.
This might work. At any rate, something must be done, as it is very necessary that the buying power of the people, now that there will be full employment for some time, should be siphoned off in some way.
There are two reasons for this. One is that we will need savings when the present crisis is over so that the consumer can buy the civilian goods that will then be produced in greater quantity. If there are no savings to start the ball rolling, we are apt to find no market—the seed of unemployment. The other reason is that if we have money that we do not invest in some way, most of us will buy things that we do not really need. When we do that we almost always use up some materials that should go into the necessities of the moment and not into things that most of us should be able to do without.
I think it is good for us every now and then to explore an action that we might advantageously take and not always be worried over the difficulties that we happen to be passing through.
I am quite sure if the United States, Great Britain and France would agree on a plan for the Middle East, for instance, something could be done to change the whole miserable picture that is developing into greater chaos day by day.
It is true that these three great nations rarely have agreed on their policies in any part of the world. Quite naturally each of them, through their businessmen is seeking its own particular advantage. Nevertheless, we now have reached a point where I think it is more important for the free nations to collaborate. We must stop trying to cut each other's throats by stirring up trouble in the hope of gaining some economic advantage.
The governments in the Near East do not seem strong enough to clean house and meet their peoples' need without help from somewhere. If it doesn't come from the U.S., Great Britain and France, there is one nation that will promise everything the people want and leave it to the future to show whether they actually make good on their promises or not.
That nation, of course, is the Soviet Union—and its goal, as everyone knows, is power and control of more and more areas of the world.