Evening star., 1934-12-30
N. R. A. IS CALLED
W|SHFUL THINKING
BYPR0F.C.F.R0 R00S
Science Association Given
Study of Labor and
Machine Costs.
BY HOWARD w. BLAKESLEE,
Associated Press Science Editor.

Associated PresS science EQltOr.
PITTSBURGH, December pa
scientist, who has made a statistical
study of labor and machine costs
under the shortened hours of the
N. r. A. concluded today that the
N. R. A.. "as administered, consisted
mostly of wishful thinking"
Prof. Charles F. RooS of the Cowles
Commission for Research in Econom-
les and Of Colorado College. address
ing the American Association for the
Advancement Of Science, added that
the final net gain Of the N. r. A
seems to have been an absorption Of
housing vacancy"
Summarizing his study. he said:
Increased wage costs might cause
prices. In the uncertainty regarding
what increases are justified the en-
trepreneur may in general be able tc
recover more than his increased costs
and make profits. Studies of prices
under N. R. A. indicate that this
happened.
Relation Of Values.
"a fairly general increase in wage
costs brings about increased values
of inventories: that is. a relation OF
values. When inventories increase il
value, corporations can hardly be pre-
vented from making windfall profits
Profits on management or inventories
cause relation of equity values ano
increased equities ought to bring about
feeling of financial security tC
middle-clasS holders of equities, who
as a consequence might spend more
freely.
BY increasing prices Of goods ano
wages. corporation debts and taxes
are effectively scaled down. Slow cir
culating income, that derived from in
terest. becomes q smaller proportion
of the national income.
Distribution of work without de-
crease in wages produces more con-
sumers who are not living of saving;
or gifts; /. e., consumers who consume
more. A general increase IN wage
costs of 10 per cent need not produce
a 10 per cent increase in price. since
there are fixed prices not affected to
dly kTedl CAtCklI Wy tliC AN' Ae' Ah'
Distribution Of work leads to abb
sorption of vacant housing through
increased number of marriages and
undoubling of families. This demand
will not develop until considerable
portion of the present vacancy Is
absorbed and will be delayed by high
construction costs. fooliShly initiated
l,,, tho odp,ipiS c ra tinD
Runaway Price Check.
Inventories provide the only check
on runaway prices. Therefore, to &C
complish most higher wages and costs
in consumer goods industries should
be threatened for several months be-
fore being brought into effect. Once
they are made effective. decrease in
production for a short time can be
expected due to the pressure of in
veptories on high prices.
After allowing several months fol
adjustment, increased costs should
again be threatened. and so on. While
hours are being shortened bit, busi-
ness is upset and q drop in produc-
ton Is almost inevitable 1t is this
factor which makes the author Won
der whether any improvement at all
can be obtained through N. r. A.
I'm other words, N. r. A. might
have been regarded as an infiationary
mechanism that could bring about
controlled imitation of prices which
are most out Of line. AS administered,
the N. r. A. consisted mostly of
wiShful thinking"