182

First of all, a Federal Farm Loan Board was set up which encouraged 

the farmers to invest their accrued money in land on long term loans, 

which the farmers were eager to do. Then inflation was allowed to 

take its course in this country and in Europe in 1919 and 1920. The 

purpose of the inflation in Europe was to cancel out a large portion of 

the war debts owed by the Allies to the American people, and its 

purpose in this country was to draw in the excess moneys which had 

been distributed to

115

the working people in the form of higher wages and bonuses for 

production. As prices went higher and higher, the money which the 

workers had accumulated became worth less and less, inflicting upon 

them an unfair drain, while the propertied classes were enriched by 

the inflation because of the enormous increase in the value of land 

and manufactured goods. The workers were thus effectively 

impoverished, but the farmers, who were as a class more thrifty, and 

who were more self-sufficient, had to be handled more harshly.

G.W. Norris, in "Collier’s Magazine" of March 20, 1920, said: 

 

 

"Rumor has 

it that two members of the Federal Reserve Board had a plain talk with 

some New York bankers and financiers in December, 1919. 

Immediately afterwards, there was a notable decline in transactions 

on the stock market and a cessation of company promotions. It is 

understood that action in the same general direction has already 

been taken in other sections of the country, as evidence of the abuse 

of the Federal Reserve System to promote speculation in land and 

commodities appeared."