EFFECTIVE CRITICS

Evening Post, Volume CXVIII, Issue 34, 9 August 1934, Page 12

EFFECTIVE CRITICS

EOOSEVELT IMPRESSED

INTERVIEW WITH KEYNES

(From "Tho Post's" Representative.) NEW YORK, July 4.

The criticism of John Maynard Koynes, in his now famous Open Letter to President Koosovelt, has borne fruit. Mr. Keynes spent a: week in Washington last month. Before the President loft for Gettysburg and the review of tho fleet, tho English economist was granted along .'interview.'1

Tho events immediately following are chronicled by the most capable observer at the Capitol, Mr. Arthur Krock, of the "New York Times." "What was said at this interview is not known," ho says, "although, presumably, Mr. ; Koynes advanced his spending theory. But. what followed the interview is significant, and it provides the base for the report among persons who usually know what they aro talking about, that Mr. Keynes won the President once more to his policy." , ' : "■• : ■ " ~ Briefly, what transpired -is this. Before Mr. Keynes saw the President, the Deficiency Appropriation Bill had been drafted to carry.£434,000,000 for relief and rehabilitation during' the next fiscal year, and to hand "over for the President's disposition a limited amount of unexpended 1933 balances of ! the Beconstruction Finance Corporation and the Public Works Administration, which latter controls money for relief works. But the, Committee was disposed to limit tho amount as well as to earmark it for certain purposes. Tho remainder was to go to the credit I of _ the Treasury, and, as a result, prc-.! vailing opinion was that the £2,000,000,000 deficit, envisaged by the President for June, 1935, would be substantially reduced. AN IMMEDIATE RESULT. On tho day after Mr. Keyncs's interview, Mr. Jesse Jones, chairman of the 8.F.C., paid a visit to tho: chairman of the House Appropriations Committee,, asking, in tho President's name, that all B.F.C. unexpended balances be allotted to tho President, without earmarking for "relief and rehabilitation." Tho same request was made concerning tho P.W.A. In that form, the Bill was duly reported and passed. The incident throws into bold relief Mr. Keynes's indication, in his Open Letter, of two technical fallacies in the Boosevolt recovery programme. "Firstly, rising prices" are being brought about at tho expense of rising output, and without tho support of increased monetary turnover. Tho setback American recovery received three months ago—in September last —was a consequence of tho President's failure to organise increased loan expenditure during his first six months of 'office. Tho socond fallacy arises out of the quantity theory of money, out of a rigid fixing of tho quantity of money, which is only a limiting factor, as compared with the volume of expenditure, which is the operative factor."

Thero is much more than passing significance in the revelation that President Roosevelt's policy is being materially influenced by an .English economist. It synchronises with the day-long wrangle in the Senate before that august body agreed, on division, to confirm the President's choice of Mr. Tugwell, as tho new leader of the Brain Trust, of whose activities Mr. Keynes, in his Open Letter, said: "Those who, with me, sympathiso with your efforts, wonder whether some of the advice you get is not crack-brained and'queer,"