Evening star., 1924-02-10
END BOOMS AND PANICS.
! HOOVER PROGRAMS AIM
Yearly Waste of Billions of Dollars Due
to Alternating Periods Of Initiation :
and Depression.


| crease. Business is good and profits
great, SO there is a rush for addi-
| tional stocks. Orders come in at the
factory faster than they can be filled
Merchants duplicate their orders.
Thus is an unnatural demand created.
There is a heavy demand for credit,
money rates go up. There is ex-
pansion everywhere. The boom is on.
People begin to spend more than they
can afford-to spend paper profits.
People begin to slacken in their ex-
ertion-speculation and gambling
come on. and efficiency goes off.
Then the Bubble, Bursts.
Then comes the bursting of the
bubble. Some incident like the denial
Of credit may shake confidence. Mer-
chants. fearful Of the future, begin
the cancellation of orders Manu-
facturers. in response, reduce their
forces. Stocks soon exceed orders
and pile mountain high. Prices fall.
There is retrenchment, unemploy-
ment, all along the line. There is a
slump.
Now, why did manufacturers begin
to expand their plants and produce
goods beyond consumption require
ments? Why did merchants buy be-
yond the certainty of selling? Be
cause they lacked fresh and dependa-
Bile information upon which to predi-
cate their business programs Sta
tistics, even when reliable, often were
stale. Before they became available
to business men conditions often had
50 changed as to render them worth
less. And unreliable information is
likely to be a great deal worse than
no information at all.
Waded Through Red Tape.
Mr.. Hoover and his lieutenants de-
cided that it was within the province
OF the government to collect and
make available to every manufac-
turer, every merchant, every farmer
and every other man engaged in the
production and distribution of goods,
fresh and reliable information. which
would enable him to take an in
telligent survey of the whole busi-
ness field and to govern himself ac-
cordingly. In order to accomplish
this a great many time-honored
methods had to go into the discard.
There was a ruthless cutting Of red
tape and roofing up of ancient
practices-but the vital fact is that
they are getting results.
Though the new machinery was not
then, and is not yet, fully organized,
there is evidence that in April Of
last year it actually did function to
put the brakes on an incipient boom,
which undoubtedly would have
brought on a slump. Production was
above normal, and untitled orders
were above production. There was
expansion, rising prices, increasing
money rates. The facts were given
to the business world and it prompt
ly acted upon them. Immediately
there was great falling off Of un-
filled orders. Production got itself
in hand. The situation steadied it
self. Business continued good. Had
the government not produced the
facts that showed beyond question
that business was rushing head-on
to a boom there is little doubt but
the summer of 1923 would have gone
down as another era of depressio
IN the cycle of American business.
No Government Regulation
1t should be emphasized that Mr..
Hoover does not propose the govern
ment should do any regulating to pre-
vent overproduction or enforce cur
tailment. He does not propose to
make any prophecies or give any for
NAL warnings! His proposition is that
if American business is kept proper
ly informed as to conditions, through
the Department of Commerce and the
Federal Reserve Board, business men
can see the economic signs of the
times and by use of their own judg-
ment keep the business ship on an
even keel. And there will be neither
booms nor panics, because excuse for
them will not exist. 1t is not ex-
pected this revolutionary achievement
will be accomplished all at once. 1t
will take time for the public to get
about this understanding Mr.. Hoover
asks for the corporation of trade
chambers of commerce
and like bodies.
What 1t Means to You.
Now, what does all this mean to |
the average man-the man in the |
street, as he is sometimes called? I
What does it mean to him in dollars !
and cents, in the way of his share |,
of the good things of life? Well, the
value of our national production is /
placed at fifty billion dollars a year. |!
The cost Of slumps and panics, year
In and year out, is estimated by !
some experts as high as 20 per cent |
Of the whole production. Suppose |
We be conservative and cut the fig
urc in half, making it 10 per cent! |
Ten per cent of fifty billion is five
billion dollars. Five million dollars1
among a hundred million peo-
pie equals $50 per person. So, to the /
American family of five per-
sons. elimination of panics and slumps
from the nations business would
mean an increase of $3.50 a year In /
the family income, either in cash or
consumable goods.
It is a standard truism Of economics
that If the cash income of everybody !;
could be arbitrarily increased 10 per
cent overnight no one would be any
better of in. the morning. That is
because the increase in cash income
would not have increased produc-
tion. But il the per capita income
-ap ha increas ased IN nor cant +h,o