Evening star., 1934-10-11
ARTIFICIAL PRICE
CHANGING IS SEEN
Manipulation as Emergency
Function of Government
Predicted.
BY DAVID LAWRENCE.

the Roosevelt dQnlllSIIdtlOU JuuBLIS
by the latest word from the powers
that be.
But the setting of goal in terms
of a particular year like 1925 has been
abandoned Indeed, it now is asserted
that the Government never really
thought of the 1926 level as the nor
NAL anyway.
The new attitude is that some prices
today are too high and some are too
low and that by process Of trial and
error. prices will be stabilized to
point where they will not f1uctuate so
widely.
Stable Dollar Sought.
Concretely, the administration feels
that there is too much disturbance OF
the economic mechanism when the
prices of goods or materials range
widely over a period of time and that
a stable dollar is a much desired
objective.
1t is conceded that, in the last ID
months there have been wide fluctua-
tions in some instances. In fact the
significant pronouncement is that the
admipistration is not satisfied with
such means as are at its disposal, an
effort will be made to force prices
upward.
The administration, on the other
hand. confesses that 1t must use every
influence to prevent runaway prices.
There is no set formula for the man1p-
ulation or control of prices here, but
there is. nevertheless, an attempt to
bring about some kind Of balanced
relationship between demand and
supply.
1t is important to note that, among
the ways and means of bringing about
a stable dollar, little is said concern
ing monetary control Apparently,
the United States Government is not
thinking about devaluation moves or
imitation, of the currency kind, but is
hopeful that world stabiliZation of
currencies may come.
Initiation Not Wanted.
Every evidence points to the fact
that the President has concluded no
good could come by wiping out debt
through a currency imitation. He Is
convinced, on the other hand, that
readiustment of the debt structure,
through corporate reorganizations, or
by the composition of individual debts,
or by reduction of interest rates, all
helps to curtail liabilities and enhance
assets.
Just how the Government has in
creased the value of assets is difficult
to determine, unless it be assumed
that the administrations production
control of farm prices is responsible.
This will be disputed by those who
think that farm price rises are due
largely to the drought and to the
operations Of the law Of supply and
demand.
The tariff wall has been used In
the past as means of protecting
price levels, so that a certain amount
of governmental power has been ex-
erted In the Republican as well as
Democratic administrations of the
past to bolster up prices.
The unexplained element in the sit
uation here is how far the Govern
ment expects to go in controlling price
levels and how far 1t will devote it
self to the encouragement of normal
operations Of business and commerce,
so that prices will then rise out of
the velocity of transactions rather
than restriction of output.
Mr.. Roosevelt is, of course, study
ing, from time to time, the recon-
mendations and suggestions of econ
omists of various schools. 1t is worth
while noting that he does not put his
faith so much nowadays in none
a ariVs ontc If ic-
ing prices, but looks rather to the
building up of business and industry
through such aid as the Government
has given them as way of producing
better business conditions.
Velocity Theory Held.
The velocity theory of money has
been tenaciously held by a number
Of economists throughout the de-
preston. They insist that the VOL
ume Of money and currency is ample
and that natural trade relations, If
properly encouraged, will cause money
to turn over rapidly and thus create
demand for goods, which, in turn,
raises prices. For, when business ac-
tivity starts up, there is usually a
limited amount Of goods available, and
fabrications must begin in the manu-
featuring establishments Of the coun-
try, thus causing a new demand for
raw materials.
The Roosevelt administration feels
that, during the emergency period,
natural laws cannot be permitted to
operate freely and that restraints must
be imposed by Government itself.
Some OF these are the assurances that
competition will be limited or that
production will be controlled or that
price cutting will be prevented. In
sense this is all modification of
the planned economy" idea, for it
doesn't presuppose a complete control
of production or distribution, but the
exercise by government of its power
and influence to bring about what IL
considers to be price stabilization.
Business Men Frightened.
The very existence of this manipu-
latory weapon is what frightens some
business men and causes them to
hesitate to make commitments. For
it is not yet accepted in the business
world that the Government bureaus
and industry as an individual regu-
lateS a radio dial Also, due to our
constitutional restrictions, the Gov
ernment cannot control prices or
feally fix them.
Hence, one view of what has Just
been given out from responsible au-
thorities here is that the Government
recognizes its own limitations and is
merely trying to add its moral force
and persuasive powers so as to bring
about higher prices and better econ
onic conditions, and the other is that
We are in for further legislative ac-
tivity, concentrating control over
credit and manufacturing and wages
and working hours in Washington's
bureaucracy.
The truth is the administration
probably would like to do the second,
but is aware that, probably it had
best try the first through processes Of
voluntary cooperation with business
and by moral SllaSion