Evening star., 1934-07-22
BY WILLIAM HARD.
%HE economic events of this last
week seem to indicate that We
have come to great new

II there arc advocates o
economic advance through economic
restriction. and II there are philoso
pliers Of prosperity through scarcity
they are beginning at last really tC
have their way
Steel production, after runninl
steadily for a long time well sbov'
the level OF last year. has now dropped
sharply below 1t. Automobile produc
ton, after a spectacular rise above
last years level, has now similarly
dropped sharply below it, Lumber
production Is less than 1t was las
year. Bituminous coal production
after six months OF superiority 10 lasi
years performance. is now only equal
ing IL. Approximately the same re-
mark can be made Of electric power
production. And cotton receipts are
well below the record of the CORE
spending period Of last year.
Speaking Of Consumption
And let the reader note When We
talk OF cotton receipts. we are talk
ing not OF output but essentially OF
consumption. It may be all very well
OF the South should be reduced tC
some sort OF correspondence with the
market demand. But surely the mar
ket demand, If we are indeed return
ing toward prosperity, should grow
1t does not In the IL months which
ended on June 80 of this year, we
actually consumed a bit less of cot
ton than in the IL months which
ended on June 80 of last year. The
capacity of the American people TO
consume cotton had not advanced 1t
had declined.
But the most startling fact in this
general weakening of consumer
capacity or desire are to be found in
the heavy construction industry. In
the last week Of full record the con-
tracts let for heavy construction work
in the United States amounted in
value to some $4,000, 900. But more
than $l6,500,00 we're contracted out
by governmental bodies, national and
local Less than $2,5000,000 we're
representative of private enterprise.
And now for the final shock in this
Development
Public contracts for heavy con-
struction, in that same last week of
full record, were $50 per cent above
last year. Private contracts were so
per cent below last year. Below!
Has Not Primed Pump.
And what has been the Justification
the Justification which ] myself
over and over again have humbly but
earnestly defended-for great public
expenditure on great public works?
Why, the Justification, the alleged
Justification, has been that great pub
lie works would prime the pump" of
private enterprise. Can l say now
that it is doing it? ] cannot. No
body can.
Nor has our vast expansion of pub
Lie credit done anything to prime the
pump" of private credit. The Cleve-
land Trust Co. Of Cleveland, Ohio, has
recently compiled the figures on this
point. In the course Of this year, so
far, the borrowing from private banks
by the Government for purposes of
public finance have gone up more
than 81 500 ,000,0 But has this en-
couraged the banks to lend more
money TO private enterprise? Or has
it encouraged private enterprise to
ask for more money from the banks
and to get Il? Not at all. While the
governmental borrowings from the
banks have been going up billion
and a half. the private borrowings
have gone down half billion
The Cleveland Trust Co. sums the
situation up in one tragic sentence. It
saws:
Pay rolls are greater now than
they we're year ago and the volume
Of industrial production is consider
ably less"
In other words. We seem TO be we'll
forward on the route of trying to earn
more and more by producing less and
less The logical END would be to try
to produce one steel ingot per year
through workmen earning $1,000 an
hour and then try to sell II TO the
public for Sl.000.000 a pound
apologize for so fantastic an illustTa-
ton, but 1t embodies the Towering of
an economic philosophy broadly cur
rent still in governmental circles, in
labor circles, and in contemporary
gatherings of business men. In multi
tudinouS cases our industrial and
commercial managers. as well as our
trade union leaders and our govern
mental administrators, are still negli-
gent of the idea that II is the volume
OF production and consumption that
matters. and they are still centered
on the idea that the thing that mat
ters is the price and the wage.
The outcome inevitably is reduced
production and thereupon ultimately
reduced comfort for the population
We see that outcome now plainly for
the first time. showing itself 10 all
who may have the patriotism and the
courage truly to face it.
VIII Be Two Reactions
calculate that there will thereupon
be two reactions, In fact. / can see
both of them in process already.
One is 10 put on still more govern
mental restrictions. This was Illus
trated the other day here in Wash
ington in a resolution passed by the
Planning and Coordination Commit
tee in charge of the operations of the
petroleum industry code.
This committee consists Of business
men engaged in the production anc
distribution Of petroleum. Its resolu-
ton cannot be taken as an act Of ths
Federal bureaucracy" 1t must bt
taken as an act Of a private business
element. And what was il? 7 forbesi
to quote its long language. but It's
purport was actually literally as fol-
lows:
Whereas great and grievous ruin has
been inflicted upon the petroleum in
dustry through violations of the pc
troleum code in the matter Of the pro-
duction of illegal oil over and above
the legal "allowableS' and
Whereas additional great and griev'
Gus ruin has been inflicted upon tht
petroleum industry through unre'
pressed and unpunished violations o.
the petroleum code in the matter o.
marketing practices, both by refneriei
and by distributing stations. and
Whereas further horrible great anc
erievous ruin has been inflicted upor