Evening star., 1933-11-29
DIR. Sprague Sees Business Readjustment Necessary
Believes Tendency Washington Attack
RENE of Fundamental Defects n Econom

protection from one another. Many
of them apparently believe that pros
perity can be restored by establish
ing a condition under which every
one now in an industry, whether
efficient or inefficient, whether well 10
Gated or badly located. shall somehow
have his status maintained with pros
poets of enjoyment with comfortable
profits. This is not a path which will
lead to trade recovery. 1t will not cre-
ate situation in which there will be
an increasing demand for an enlarged
output. By and large, 1t is precisely
like that policy which employers have
commonly, with bitter denunciation,
attributed to the leaders Of trade
unions.
Broad Codes Are Required.
This failure of industries to adopt
policies designed 10 open up additional
demands for indsutrial products is, in
my judgment. the chief cause of the
persistence of the depression. During
the years of activity which eliminated
in the Autumn of 1929, there was an
active demand for great variety Of in
dustrial products, naturally accompan-
led by an upward movement of the
prices Of many of them. Prices in
general did not advance in striking
fashion. Indeed, If one looks merely
at the course of the wholesale COM
modify price index between 1925 and
1929. one is unable to infer that
anything untoward was taking place.
The price level vas as stable as one
could reasonably expect 1t to be. Rela-
tive prices, however, although not I'M
balanced at the moment. became un-
balanced as soon as certain influences
which had created an intense temporary
demand for many products ceased to be
operative. In particular there was an
excessive foreign lending. Again, there
was an evanescent demand based upon
speculative gains from stock exchange
operations, and a large demand for la
Dor and materials employed in the en-
largement of facilities for production in
certain industries that were at the mo-
ment exceedingly profitable. And final
ly, there was something of the nature
OF boom in the construction Of Office
buildings, hotels and apartment houses
and homes for that limited class in the
community enjoying large incomes.
After the collapse in 1929, the policies
generally adopted were directed toward
going forward as If nothing had hap
universal that somehow or other it
would be possible to return to pros
perity without any considerable read
justments or liquidations of indebted
ness incurred during the so-called new
era. 1t Is to the everlasting credit of
the present administration that it
recognized that fundamental changes
and adjustments were necessary. I'm
happily. 1t does not appear that the
business community even yet is similar
ly convinced that fundamental changes
and adjustments are required. In con-
centrating attention chiefly upon the
disturbing effect of abnormal and un-
fair competition, the business commun-
ity is concerning itself with depression
symptoms rather than with policies that
will yield speedy trade recovery.
Housing Leads Recovery Hope.
In some Of the particular policies
which have been adopted in Washing
ton one perceives the same tendency to
attack symptoms. Particularly is this
the case with the legislation and ad-
ministration concerning public works.
AS temporary measure Of relief,
spreading work by reducing the num-
Der of hours to 80 per week is perhaps
duction in hours together with the
restoration of high hourly rates in
creases the relative cost of construction.
it must tend to choke the largest single
potential demand for additional labor
and materials, the demand for better
housing with appropriate equipment and
furnishings for the mass of the people
The business community cannot rea-
sonably criticize the public works policy
when at the same time we find pro-
ducers OF all sorts Of building materials
raising prices, prices which had been
reduced comparatively little during the
years OF the depression When pro-
ducers of timber. cement and steel
adopt short-sighted policy of pushing
up prices long before improvement has
gained momentum. it is difficult to see
how they can raise objections to those
policies in the public works administra-
tion that tend II to establish high con-
struction labor costs.
Doubtless there are industrial prod
uctS the prices of which. during the last
few years, had declined far below a
profitable level even with full employ
ment of existing plant capacity, but
the number of such products is COM
paratively small. BY and large, the
great mass of industrial products de-
clined in price less than 25 per cent
between 1929 and 1888. In the case of
most of them, a far-sighted policy
should be directed toward an increase
in volume leaving for the future a pos
sible advance in prices after the trade
recovery has proceeded far beyond the
stage in which We now find ourselves.
Copyright. 1893, by North American News
paper Alliance, World Rights ReservedD
lMulCKV DEDEI InAI