Evening star., 1933-01-15

(which pays them no interest and
which earns them nothing" but which
would sustain at least four billion dol
lars Of bond purchases" II these banks
had sufficient confidence in bond prices
to invest.
How to restore confidence? Balance
the national budget" said Lionel D.
Edie, the well known economist Of Wall
Street. To-day securities of the United
States are piled up in the banks. Peo-
pie are afraid to invest, because capital
does not see any profitable safe place
In which to put its funds. Therefore,
the first thing to do Is to put our finan-
cial house In order. Balancing the Fed
eral budget, and 50 remove a major OBJ
stacle TO the free flow Of labor and
capital"
Budget viii BE Balanced.
No economically sane person doubts
that the budget must and will be bal
anced. The government that refuses
to balance its budget will grow sicker
and sicker. But the thing cannot be
done without inflicting incalculable
nick still deeper the buying power of
the masses Salaries of Federal en-
ployes will have to be cut by hundreds
of millions of dollars-and industry
and trade will feel the curtailment of this
buying power Taxes will have to be in
creased by hundreds Of millions Of dol
lars-and the people who pay those
taxes will have that much less to spend in
the stores. But a revival in business
consequent upon the restoration of con-
fldence might quickly offset these re-
suits by providing additional employ
ment, earnings and purchasing power.
DR.. A. w. Taylor. dean of the Grad
uate School of Business Administration
of New York University, posed this as a
fundamental: I'VE have got to get the
price of consumers goods on basis
comparable with that of purchasing
approximately rs per cent between
October, 1929, and October, 1892, but
purchasing power dropped so per cent. "
II the cost of living can be sliced
down another Is per cent, obviously
the result will be as though purchasing
power had been increased by the same
amount. But how to do it?
Il am willing to make q prediction" !"
continued Dean Taylor, "that part Of
1885 program will be a liquidation of
the capital structure of business to-
gether with further reduction of the
hourly wage of labor. If properly
oil 1icuaIcu, ieuuStiou VI Tie nOurly
wage should bring about a reduction
in prices. The workers dollar then
will buy more goods, therefore the
lower wages should mean little or no re-
duction in purchasing power.
"A liquidation Of capital, too, seems
inevitable. A company that is bonded
for, let us say, S3,000,000 may be stag
gering under an unbearable interest
burden, Cutting its indebtedness to S2,-
100000 would not reduce its plant; it
would have the same number of ma
chimes, the same production capacity,
but 1t would have less debt to pay
interest on. A good deal of the ,reor-
ganization should be by the process of
giving bondholders proprietary inter-
est In exchange for their bonds. That
leaves them a chance to recover their
investment when business improves.
If the capitalist contributes by
giving up his interest, and the worker
by accepting q lower wage per hour.
think We can look to the establish
ment OF some sort of equilibrium be-
tween prices and purchasing power
and when that occurs the upSwing
ought to be on its way"
Advocate Higher Wages.
There are others who see the remedy
"a OAA SNSAASAA4G PAA5kAt AL AlA6klCI WAKES.
DR.. Irving Langmuir, the distinguished
research scientist Of the General Elec-
tric Co., who last month received the
Nobel prize for his discoveries in the
bprderland Of chemistry and physics,
recently declared himself an advocate
Of this idea.
"The direction In which the cure for
depression lies," said DR.. Langmuir, sis
to make labor scarce by restricting the
hours of labor II this were done every
where throughout the Nation 1t would
have an immediate and wholesome ef-
feet. In some industries. where the
operations are wholly mechanical, pro-
duction should be held to fixed quotas
In agriculture the acreage Of various
crops should be limited.
Under our present system" he con-
tlnued, -there Is no provision for wages
CONTINUED On Fourth PageJ