Evening star. [volume] (Washington, D.C.) 1854-1972, 1933-07-10
johnson URGING
BOOSTING WAGES
Seeks Increased Buying Pow
er as "Primer" for
Recovery.
BY MARK SULLIVAN.

One feature of the industrial recovery
program simple to detach, which is just
now much to the front, is desire of the
administration to increase purchasing
power. This purpose proceeds mainly
from Gen. Hugh johnson, administrator
of the recovery act. The theory that
increase Of purchasing power at this
time is absolutely indispensable to re-
covery, especially to safe and perma-
nent recovery. was worked out by Gen.
Johnson III association with practical
business leaders of the most important
type. 1t Is business proposition
Purchasing power is increased in sew
eral ways. The kind that Gen. john
son has chiefly in mind is increase
OF purchasing power in the pockets of
labor. Up to recently, purchasing
power m the pockets of large part
OF labor was zero. and 1t is still small.
Gen. johnson wishes to increase this
purchasing power until 1t. with other
increases achieved in other ways, is
greater than the aggregate price Of
current goods for sale.
Regarded as Sure Key.
This condition is regarded by Gen.
Johnson and business associates OF his
as the sure key, indeed the only sure
Key. to recovery which shall go on
into normal, enduring cycle of pros
perlty. They want this increase of
purchasing power as starter.
primer" They are not now concerned
with the permanent relation between
wages and prices. They wish TO achieve
as beginning a condition in which
the total purchasing power of the coun-
try Is greater than the total of prices
of goods for sale. That condition, pur-
chasing power greater than supply, they
regard as the initial catapult. Once it
eXertS Its force. the rest will follow.
Gen. Johnson IS. SO to speak, asking
business men and heads Of industry
to make an investment in purchasing
power, just as they would invest i'll
some other form Of indispensable raw
material. The investment he asks for
would take the form of paying more
wages to labor. He would have bust
ness men increase the rate of wages
generally, and also increase the total
OF wages by spreading employment out
to take i'll those now unemployed. The
latter part of the objective would be
accomplished by having a shorter work
week of thirty to forty hours. and by
paying for the shorter week something
more than living wage.
1t is felt that many business men
are following different course. They
see business revival under way, they
realize there IS large accumulated
need and they are hurrying to make
goods to be prepared to meet this need.
They are making these goods at the
lowest costs they can manage. They
foresee higher wages for labor and
higher costs of materials, and they are
hurrying to stock up with goods made
at the present low costs.
Regarded As Dangerous
Normally this is the soundest sort
OF sound business practice. Under
present conditions however, it is re-
garded as dangerous. The fear Is that
presently there may be more goods on
hand for sale than there is purchasing
power TO buy them. That is precisely
the condition that has spelled depres-
sion for nearly four years. Renewal Of
that condition. it is feared, might mean
renewal of depression. What Gen.
johnson is pleading for is that just for
the present. just for the emergency:
Just as starter business men should
reverse this condition. His plea is that
DA''AiiNo-' mil anu III pOldlI lIlSlSdu
OF putting their funds into increased
stocks of goods. should for the moment
invest their funds in purchasing power
IN the form OF increased expenditure
tor wages
The idea sounds unorthodoX. To
most business men it seems actually
unorthodox. In normal times it may
be unorthodox. Yet exactly this is
what Henry Ford once did even when
conditions We're normal When Mr..
Ford raised his lowest wage-rate to SIS
a day. in time when the current rate
was 81, his purpose. among others. was
TO sell more automobiles He put into
the pockets Of labor purchasing power
which later would come out to buy
automobiles. In Mr.. Ford's case. it
worked
Gen. johnson is not at this time con-
celned with the theory as permanent
device for normal conditions He wants
IL Tor the emergency. He regards pur-
CHASING power greater than supply of
goods as an infallible formula for re-
coVery. perfect springboard for a new
cycle OF prosperity He regards the
reverse, supply Of goods greater than
purchasing power, almost as an equally
sure formula for failure to recover
Copyright, 1933)