Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-12-28
BUSINESS
AND
GOVERNMENT
BY DAVID LAWRENCE.

Nineteen thirty-one will go down in
history as the year of readjustment.
The process of recovery which began
in 1880 will be in full operation dur
ing the next IL months. Some time
during 1882 the sterilization which has
become necessary throughout the world
will have been effected.
To get a perspective of what has hap
pened and what IS going to happen,
there is no better source of information
or understanding than the various an
nouncements from the Federal Reserve
Board, which began as early as Febru-
airy. 1929, to warn the country that
speculation had gone too far and that
the brakes had better be applied.
Causes Deeper Than Speculation.
To say that speculation caused the
bursting of the bubble is merely to re-
cite one Of the numerous manifestations
of an economic period which was ap-
preaching abnormality. The search for
causes has by no means ceased, but
out of all the discussion has come a
phrase which will not soon be forgot
ten-the maintenance of an economic
balance.
Too many people, of course, seek a
key to the process of recovery by ex-
aiming from day to day the f1uctua-
tons In the stock market-as If the
stock market could nowadays tell tale
| of business reimbursement The stock
market is. after all, often either a be-
lated reflection of prosperous business,
or, too often, an inaccurate prophet Of
bad business.
More and more, therefore, the trend
of business, on the one hand, and the
trend of stock market prices, on the
other, will travel along divergent lines.
The reason is clear. The recovery of
business is slow and steady. The stock
market Is mercurial. A group of un-
favorable developments will hang over
the market for months, while a group
of favorable developments Of probably
transcendent significance and impor-
lance will either be discounted or ig-
nored.
The most interesting phase Of
American psychology with respect to
business Is the utter confidence that
prevails as to the return ultimately Of
a prosperous condition. The only ques-
ton on every lip is, How long will 1t
take-when will the agony be over?"
During the last seven or eight months
of 1880, too many business men merely
assumed that the upset in business
was a temporary affair and that some
how business would readJuSt itself.
They did not realize that real problem
of readiustment faced them. 1t was
when September and october failed to
reveal the expected upturn that bust
ness men settled down to realization
of the fact that America was In the
midst of a real depreSsion-not local TO
this continent, but world wide IN its
terrible consequences.
To restore normally depends upon
the meaning of the word normal;
Perhaps the next period in our economic
evolution will not resemble any otner.
This is only another way of saying that
when unemployment has been reduced
materially and an era of prof1tmaking
has been started once more, the coun-
try will feel a sense of satisfaction
which may not be comparable to other
periods because 1t may mean diminished
profits-but by comparison with the
present state of mind, the country will
feel happy over the transition.
Redistribution of Wealth.
Redistribution of wealth is one Of the
phenomena of a period of economic
change During the last 10 years the
number of millionaires in the United
States increased many times, but so
also did the number of people increase
in the class receiving $4,000 year or
more. The movement has been upward
in almost every income group.
The purchasing power of the dollar
has climbed upward. Commodity prices
are lower than they have been for many
years Economists may argue that the
sterilization of the dollar is the key to
the whole worldwide problem of read
iustment. But it is difficult in COM
plex economic age like ours to stand
ardize anything where political govern
mentS exist.
Granted the political machinery of
parliamentary or congressional govern
ment on the one hand. and the ineXor-
able laws of supply and demand, on the
other, we shall try through 1881 to keep
the two forces from grinding the people
between the proverbial upper and neither
millstones.
United States a Nation Of Owners.
Radicalism flourishes in a time of
stress and strain, and this will provide
its own handicap. But the United
States has become nation of prop
erty owners and security owners, which
means that the weight of conservatism
will be allpowerful.
The theorists are having a wonderful
opportunity to analyze and dissect the
past, present and future, but the Amer
lean business man began in September
and October of 1880 the process of re-
organization which collectively will do
more to bring back equilibrium to
America than any artificial measures
the Government can undertake. The
old law of the survival of the fittest
viii be applied, perhaps. with cruel
results in individual instances, but with
corresponding benefit to the commu-
nifty. The essential industries will sur
vive and the inefficient units. within
those essential industries will ~ forced
to combine or merge in the Interest
of lower costs and fair return on
the investment. 49,