Evening star., 1933-12-31

Gates.
With the passage Of this act confer
Mate ria IN his lha t3at: ago
tation for imitation by Congress was
suspended and Congress soon after ad.
gress is coming into session again. The
infationiStS will remind the President
that he was given this discretion eight
months ago and that he has not ex-
ercised it, or at least that he has not
exercised it enough. And the infla-
tioniStS will say that it IS now time
| for Congress to withdraw the discretion
conferred upon the President and do
its own initiating.
That is the situation as respects in
fation. If, in answer TO the demand
of the infatiCnists Mr.. Roosevelt re-
sists-as he probably will-tne Presl-
dent will win. 1t is probably, true, as
inf1ationist leader. Senator Thomas, OF
Oklahoma. claims. that majority OF
both houses favOrs imitation. But a
majority is not enough TO Initiate
against the will of the President. To
/ do that requires twO-thirds of each
| house. And the inflationists do not
command two-thirds Indeed, if the
| President announces. in advance, that
! he will veto any initiation measure, he
( will not be called on actually TO eX-
ercise the veto Merely a firm stand
| in opposition by him will be enough.
/ In that case-and in all cases-there
/ will be much talk on initiation; but
there will be no act Of imitation by
Congress if Mr.. Roosevelt makes 1t
known that he does not approve. This
Congl eSs is strongly Democratic, While
most. CT the Democrats are for infta-
ton their Difference to a President
who is their party leader Will prevail
over their desire for inflated currency.
What Prevents Rise.
Why is it that prices do not rise, or,
at least do not rise as far as the
President wishes and has undertaken
to bring about?
Here is an extraordinary situation:
The head of the richest country in
the world. having at his disposal all
the resources of the Treasury and OF
the Nation. publicly and formally an
nounces that he proposes TO bring
/ about price-rise to a level which, for
example. would be something like ID
cents a pound for cotton, somewhere
above s110 a bushel for wheat. and
/ analogous prices for other commodities
One would suppose that the price-rlsc
would almost take place automatically
upon public announcement of the Presl-
dents intention; upon the sight, plain
in the eyes of all. Of the Government
embarking vigorously upon action after
action designed to bring about the
price level which the President desires
Why does the rise not take place?
Several reasons or sets of reasons are
given. The most dependable of the
explanations say that in any program
for raising prices, one element Is in
| dispensible. There must be active busi-
ness-not merely active business in the
sense of buying and selling, but active
business i'll the normal sense which in
cludes manufacturing. Apparently II
is impossible for the Government, or
any other agency. however powerful,
to achieve a price-rise in the mere ma
ture Of marking up values The Presi-
dents efforts, well adapted to the de-
sired end, must be accompanied by
one factor not within the Presidents
power to command
There must be active business and
business in large volume. Why has
not this taken place? One perfectly
natural reason is that business men are
still under a spell of fright, an easily
understandable hangover from the
son is fear of initiation OF the cur
rency Much Of industry. especially Of
the heavy industries. like steel. which
compose the bulk of all business is
done on basis Of lOng-term payments
A steel manufacturer contracts to build
a bridge which will consume SiX
months in making. and for which.
therefore the builder will not receive
pay for six months. If there is doubt
about what the value of the dollar
will be in six months, the msnufac-
turer, and all others similarly situated,
hesitate TO make the contract. They
fear they may pay out in the u91medi-
ate future, for materials and labor, dol
lars having a value of, let us say, 100
cents. and may receive in payment six
months later dollars having a value OF
only so cents.
Bedeviling Situation.
In short. it is one of those bedeviling
situations in which fear Of a thing
~4sends to bring about the thing feared:
Men hesitate to make long-term con-
tracts for fear Of imitation; failure to
make long term contracts in sufficient
! quantity keeps business inactive: in
activity of business keeps prices of
goods low-and low Price of goods leads
to demand for imitation.
There is another reason why business
does not attain the speed and volume
which would cause a rise in prices.
This reason is fear on the part of
business. fear of something the Gov
ernment may do. Due to occasional
utteranceS from some within the ad-
ministration and due also to certain
policies Of the administration, many
business men have been led to fear that
if they go ahead and expand their buSl-
ness operations they may be prevented
by the Government from getting and
keeping the profits which they regard
as the reward Of business. This appre-
hension is vague and untangible-but,
nevertheless. powerful enough to re-
strain much business activity that
might otherwise take place
Business is held be OK by a conflict
of purposes within the administration
Mr.. Roosevelt has two objectives: One
is recovery from the depression: the
other is a reform of the country's so
cial and industrial structure. The one
purpose may be described as to recover
from the depression of 1929; the other
is to prevent the boom of l929-which
boom might lead to a subsequent new
depression.
1IlcoS INO oUJtClIFtS VI lle GONeIIl-
ment Interfere with each other. What
would promote present recovery would
tend to promote also a future boom
In trying to prevent the latter. in hi
course as a whole, Mr.. Roosevelt Is
like man who steps on the accelerator
this would be to promote recovery;
but then quickly pulls on the hand
brake-this is to prevent the future
boom. In the effort to attain both o.
jectives there is some risk that one Ct
them, the objective of recovery, me-
fail
A Chance for + anne.