The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1922-07-12
TOPEKA STATE JOURNAL
Information Bureau
sTABILIzING BUSINESS ACTIVITY
FREDERIC j. HASKLN, Dtreceog,
Washington, I'D. g.

washington H. ~ July Sine re-
port of the select committee of the
presidents conference on unemploy-
ment, appointed. to inquire into the
subject of business cycles, is expected
in the near future and economists and
< industrialists are looking forward to
will be based upon a study unique in
charter and purpose. The plan is to
devise ways and means OF equaliZing
the cycles OF business activity which
bring about alternate periods of keen
activity and periods of depression re-
\ sulting in unemployment.
l. The effort constitutes in effect an
attempt to harness and control the
forces defined by political economy.
Heretofore these forces have been re-
tty of human regulation.
| Business cycles are as old as mod
ern organized business Before the
war the cycles were held within ma
| groups of nations, having series OF
| cycles. Since the war the whole
world has become so inter-dependent
in an economic sense that it appears
more than likely that henceforth in,
Idustrial depression in any country Will
be practically the same as to time and
effect as in other lands.
Business grows increasingly active
! in periods of peace Prices gradually
rise over a period of years and wages
/ rise with them, DuI usually SlA6AtAS
behind them. AS the period nears its
climax prices and wages begin to
shoot up. There is tremendous de-
mand for labor at high wages and
people are willing to pay almost any
prices for goods so long as they can
obtain what they want. Then comes
a collapse. The prices which took
decade in climbing, fall literally over
night The depression from which
| the United States is emerging now
came in the late spring of 1929
The result of such q change is that
business stops dead. Stores which
have goods on their shelves purchased
at the high rates dislike to see not
only their profits but a large part of
the money they paid for the goods
lost, and so are slow to reduce their
prices. The public is unable longer to
pay the high prices. many persons be-
| ing out of jobs and having no money.
This means that factories normally
engaged in producing the goods shut
down Railroad traffic falls, off be-
cause there is so little to ship.
Keen Distress Results.
The result of this is unemployment.
The transition from a period of the
utmost activity and prosperity to one
in which men are walking the streets
by the hundreds of thousands out OF
work, takes but a few weeks. Keen
distress results and frequently, if an
election is near, there is party over
fturn.
The great task which the special
committee on business cycles is seek
ing to perform is~to discover means
of esqualizing these periods. Some.
declare 1t is folly to try TO make
PERIODS of prosperity more restrained
and periods of depression less dis
tressing. The plan has been called an
anti-boom scheme designed to take the
romance and fun out of business. One
of the observers attending the first
meeting said the plan of preventing
booms reminded him of the tender
hearted farmer in one of the southern
states who never used wagon but
invariably hitched his horses to a stone
boat, a sort of sled which drags on the
ground. Questioned as to his reason,
he explained he used the ragging sled
rather than the rolling. wheeled wagon
because of his horses.
when I use a wagon" he said, tit
pulls SO hard going up hills that I
feel sorry for the horses. When l use
the stone boat, it pulls so hard all the
time that the horses don't notice the
difference on the hills"
The proponents of the plan say that
what they desire is not so much to
take the Joy out of the booms as to
sion Depressions in business have
been regarded as so unavoidable in
character that following the one of
1907 a defense was made in a lawsuit
that mans failure to pay the amount
for which he was sued was due to the
panic which, it was claimed before the
court, was an act of God and there
fore a valid excuse for non-paymentI
of the debt The court did not allow
this construction to relieve the man
from responsibility but the fact that
such a pleading was made reveals how
general is the idea that periods of
business depression are beyond human
control
The theory on which the committee
now at work is proceeding is that
much of the distress can be taken out
of periods of depression by provid-
ing, in times of prosperity, for work
which can be performed during bad
times. One of the activities most
depended upon for aid is public
during periods of prosperity when
work is abundant and wages good.
the federal government and state and
municipal government should have as
little work done as possible. Only
absolutely necessary public buildings
should be erected and practically no
great new public enterprises, such as
parks, extended water or subway sys-
TENS, irr.gation and reclamation pro-
jects and the like, undertaken. 4
Public Works a Safety Valve.
Then, it is claimed. when a period
of depression comes and private en-
ployers lay off their workers, the fed
eral, state and municipal governments |
snouAo 1Haugurate great programs or |
improvement. embarking upon the |
stored-up work which has been held |
in abeyance during prosperity.
During the waiting period, the plan |
would provide that reserve of funds |
should be laid aside to pay for the !
public work TO be done in periods of |
depression and therefore thousands of |
people would obtain employment and |
receive pay out of these funds who |
otherwise would not be employed.
The plan can be applied to private |
work as well. During periods of pros
perity a corporation could accumulate |
reserve funds and hold in allegiance
desirable extensions and improve |
ments not essential to the making of |
the product Then when depression |