Evening star., 1933-06-19
LAW EMPHASIZES
PURCHASING POWER
Chief Aim for Recovery Held
Putting Money in Pockets
of Labor.
BY MARK SULLIVAN.

The fundamental theory upon which
business, beginning this week, proceeds
under the industrial recovery law lays
primary emphasis on purchasing power
The key word in the title of the bill is
recovery" and the campaign for re-
covery begins with putting purchasing
power into the pockets Of labor. SINH
larly, the other new law. associated in
purpose and method, the farm relief
measure, aims to put purchasing power
into the pockets of farmers.
The objective of the administrators
of the industrial recovery bill especially
is to build up the purchasing power of
the country to a point where, taken in
connection with prices of goods. pur-
chasing power will be in excess OF cur
rent production of goods. That condl-
ton, the administrators say, is the
assured foundation for new cycle OF
business prosperity which they believe
will equal any that America has en-
joyed in the past.
View of Administrators.
In the immediate future, as the ad-
ministrators of the measure envisage it.
purchasing power in the pockets OF
labor. and also of farmers, begins at
once to buy goods from retailers. Re-
tailers sell stocks of goods on hand at
a profit and order more from manu-
facturers Manufacturers make profits
on the new orders and at the same time
order more raw material from produc-
ers. Producers in turn make profit
eo1o eqSPd
production. In the meantime, manu-
facturers, in making up new orders,
will have to put more labor at work
Producers will have done the same
These additions to employment OF
labor become further additions to pur-
chasing power Thus the new cycle
begins as an upward spiral Of constantly
broadening circles.
In the present beginning Of the
process the initial addition to purchas-
ing power is made in part by the
Governments expenditure for public
works, and also, of course, by the IN
creased prices for farm products
brought about by the operation OF the
farm relief act. These initial additions
to purchasing power compose the
primer" which starts the upward spiral
in motion.
That is the theory as the admins
traitors explain it with enthusiastic
conviction in minute detail and with
probative charts which they will show
YOU on the walls of their offices, or If
YOU meet them elsewhere, draw on the
backs of envelopes. They are expert
enced business men and they talk con-
vincingly.
About the efficacy OF "priming" a
new upward spiral there is not serious
argument. The debate, the reluctance
to approve, arises, not from DOUBT
about efficacy, but from doubt about
necessity. The doubters merely say
that once bottom was reached the up
ward spiral would begin anyhow, and
more wholesomely than through Gov
ernment subsidy for public works and
Government regulation of industry
What the older school would rely upon
for new purchasing power is the rise
in prices of goods and securities which
takes place after the end Of depres-
sion and which in the present instance
has taken place on a huge scale. A
man who owned wheat worth 46 cents
a bushel March l has his purchasing
power greatly increased when wheat
is 70 cents in early June. The quoted
prices of 1000 stocks listed OH the
New York Exchange was SIG, 700 600 600
on March anu Nv JuiiC "oo poN'
47O OcO, 900. That, similarly. is an enor-
mouse increase in purchasing power.
Have Both Kinds.
Dismissing argument about relative
merit of the two kinds OF purchasing
power, the fact is we now have both.
AS to the merit of the artificial prim-
ing of purchasing power by Government
action, the fact is this idea did not
originate wholly. or even mainly, with
the brain trust" Those whose distrust
of the innovation arises from suspicion
that it is too theoretical and untried
should know that the real authors OF
this method of campaign for business
recovery were mainly business men. A
list of the persons who have been urg--
ing this plan of government "priming"
since we'll back into the Hoover ad-
ministration would include the heads
of many of the principal corporations
and other business institutions in the
country. They asserted not only that
this is a good way, but that. due to
peculiar attributes of this particular
depression, it was the only way