Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-09-14
TWO MEANS CITED
TO AID CONSUMERS
Private Capital and Public
Works Seen Ways to Help
Buying Power.

SThere are TWO ways III WHICH hI
times we set up now OF purchasing
power to consumers which enables them
to take away our output and keep busi-
ness prosperous-the first Is by new
private capital works; the second by
new public works.
This is a statement by william T.
Foster. director of the Pollock Founda-
ton for the study of economic policies
made public today by the American In
stitute of Architects, In which he de-
clares that the United States Is about
to emerge into new field. OF economics,
in which President Hoover is the chief
spokesman. -s-.
Discussing the proposed means OF
preventing periodic depressions IN busi-
ness, Mr.. Foster states, in part:
"The reason that the development of
private works helps to sustain consumer
buying is that while we are expanding
our new capital equipment we are pay
ing out wages, but we are not produc-
ing anything with which to glut the
market. The payment of wages in the
process Of building new railroad. a
new automobile factory, a new office
building, are advance payments to con-
sllmers. We expect to get them back
some time in the future, but for the
time being they are a net gain on the
side of consumer purchasing power.
Sustain Buying Power.
"The other way in which we do at
times make up this deficit Is by the
expansion of public works-highways,
roads, harbors, bridges. buildings, parks,
and so forth. So long as the expenoi-
lures for public works by city, State
and Federal governments go on at
suficient rate, they sustain consumer
purchasing power.
"Of course, governments could not
increase the purchasing power OF con-
sunners if they paid out in wages only
what they collected in taxes. but the
fact is that there has been expended in
the last year over $2,000,000,000 more
than there has been collected IN taxes.
That means that there has been some
borrowing. and. directly or indirectly
that has involved an expansion OF the
volume of bank credit in circulation.
Now, as long as these two develop
ments 60 on at the right rate we can
have adequate consumer buying, ano
therefore business prosperity. But that
does not and cannot come by chance
On the contrary, once you get started
toward imitation, once the flow OF
money to consumers gets going at toe
fast a rate, as it did in 1917, 1918 ano
1919. it tends to become not better but
rect itself except over long period
and at a tragic cost in human suffering
The same is true OF def1ation.
Application of Science.
what can we do about it? At least
we can bring to bear in public expendi-
lures the intelligence which is already
brought to bear in some of the most
notable and successful of our private
net has nrIr
procedure upon measurements instead
Of guesses. We can attack scientific
problems in a scientific way.
I'm period of imitation governments
are prone to compete with private in
dustry for men and materials, thereby
making things worse. In periods of de-
fiation they go on with prearranged
program, paying no attention to the
fact that additional government ex-
penditures at that time would help to
offset the deficiency in consumer pur-
chasing power and thereby sustain gen.
eral prosperity.
THE first thing we need Is the facts.
Let me point out to those who fear
governments may have too much TO do
with business that the Federal Govern
I11ent last year spent nearly $4,000 ,000,-
900; that State and local governments
spent nearly twice as much: that these
expenditures are probably going on at
about this rate in the future, whether
we like it OF not.
Such huge expenditures inevitably
affect business. They may be made
more intelligently, provided we have
the right basis Of facts. Obviously, we
must know who the unemployed are,
how many there are, where they are,
and why they are unemployed.
Need Statistics.
"Also we must have better and
prompter statistics than we have had
in the past Of price movements, because
the movement Of prices shows better
than any other single index whether
consumers are receiving the right
amount Of money. Obviously we must
go on with the statistical advances
which we have made in recent years.
1.-THE next thing needed is that gov
errlments shall use this information as
q guide, 50 that they will promptly
spend more for all sorts of capital works
when employment begins to fall OF and
the price level begins to sag and there
are Indications of general overproduc-
ton. Conversely, they should spend
less when the indices show a movement
toward imitation.
THE whole country, so far as we can
eee,' Is ready to follow the leadership
OF the Federal Government In this mat
ter. AS never before, there is a posi-
bility Of getting somewhere"