Evening star., 1934-08-26

|
steel and the producers Of farm i'm
plements, who buy the steel, there Is
surely none between steel and imple-
ments on the one hand, and the
ultimate consumer-the farmer-on
the other. Not when implement
prices drop 5 per cent during a de-
| preston while farm prices drop Sc
per cent or more.
Industrial policies established by
the corporate arrangements in our
more concentrated but unregulated
industries today do not give us the
balance between economic interests
as OF old, for the reason that the
existing rules of the business game
do not encourage it. Profits come
first and foremost, and the devil take
the hindmost. Industry, which is
! supposed to concern itself with the
production Of goods, becomes pri-
marily a mechanism for producing
profits
The startling thing is that this
placing of premium on profits rather
than production so often results in
losses not only to society as a whole,
but to the businesses themselves. And
the answer to a loss, all too often,
Is to jack prices up still higher at
the expense of volume of production
of employed wage-earnerS and, con-
Sequently, of consumer purchasing
power. If there is a better recipe for
economic suicide have never heard
of it.
Decline in Raw Materials
The evidence is depressing enough.
Between the first quarter of 1929 and
the first quarter of 1888, when agri-
cultural production had changed prac-
tically not at all and agricultural
prices had fallen more than 60 per
cent, industrial production had been
cut in two, building activity reduced by
80 per cent and thousands of indi-
vidual enterprises completely shut
down. At the low point of 1888 farm
prices averaged so per cent lower
than in 1926, textile 40 per cent, food
prices At per cent lower, hides and
leather 80 per cent lower, building
materials 80 per cent lower, metals,
chemicals and house furnishings
about % per cent and metal products
% per cent lower. In general, the
greatest decline occurred in uncon-
centrated raw materials, while the
prices of manufactured goods declined
only little; agricultural prices fell
to greater depths than non-agricul-
tural, and prices of goods destined for
eventual consumption declined more
than prices of goods used in capital
equipment, such as building materials
and machinery,
From 1929 to 1888 is four years.
That should be long enough to permit
the automatic coordination of the
market-place to function and to pro-
duce the necessary balance between
economic interests. The market-pla
has not done so for the very good rea-
son that it cannot. For these many
years it has been hamstrung; and not,
it may be added, by Government but
by the persistent interference of
corporate administrators by means of
their far-from- automatic price and
production policies.
So long as this remains true, it Is
idle to talk of the virtues of free COM
petition as device for achieving and
sustaining recovery. Free competi-
ton we cannot restore in its early
sense unless we wish to go back Sc
years not only in industrial and busi-
ness organization, but likewise in in
dustrial efficiency.
Two Other Alternatives.
Two other alternatives occur to me.
One is to ignore the mongrel nature
of the market-place as a price and
production determiner; to assume. in
other words, that all business needs is
to be let alone, and to sit back and
watch what happens. I should dis
like to be responsible for that course,
for the odds against the workers, the
farmers, the small business man snd
the consumers would be terrlnc.
The other alternative Is to develop
a modern mechanism which will do
what the market-place did century
ago. Without such a mechanism it
seems to me that sustained recovery
is impossible. Granted that the IN
vention and operation of a substitute
for the market-place of 1865 will be
difficult; granted that it may even
turn out, in the end, to be all but i'm
possible: grant all these and ether
possibilities. but there is still the
urgency of the need
For the price inequalities mentioned
above mean, of course, that producers
whose prices have fallen so per cent
cannot buy the products of producers
whose prices have fallen only rs per
cent. In the low-price group of pro-
ducers, therefore, we have a serious
shortage of purchasing power. At the
same time, those industries maintain
ing relatively high prices have had to
do so, in most cases, at the sacrifice
of volume and thereby of employment.
The workers released by the high
price. low-volume industries comprise
another appalling shortage of pur-
chasing power.
Buying Must Be Restored.
1t may be true that the owners of
the high-price industries have some
temporary advantage because their
products have a larger purchasing
power over other products, but that
must be small satisfaction if sales re-
fuse to increase because of an inabil-
ity to buy. And their contribution to
recovery, Of course, can hardly be
seen with the naked eye.
Surely, from the point of view of
the Nation, it is immeasrrably more
important that 5000 900 farmers and
40,000,000 wage and salary earners be
permitted to buy building materials
and farm equipment and automobiles
and food and clothing than that the
purchasing power of a handful of
business men be kept high.
do not say this with any intent
TO make invidious comparisons or to
imply that one occupation is worthier
than another. AS a matter of fact
there is not much point in condemn
ing the reluctance of business men to
| lower prices during a depression. They
have merely acted according to the
rules of the game as they have come
down from the past. In the past,
| after all, prices were lowered because
| they had to be-because, that is, COM
petition forced them down. Since
competition has in later years nc
longer been effective, what immediate
incentive is there to lower prices?