Evening star., 1934-07-22
NEW DEAL EXPENDITURES
HAVE NOT "PRIMED PUMP"
Noted Observer Opines We Must Have
Perfect Mania of GovernmentalIsm or
Give Orthodox Economics a Chance.

after shall buy any crude oil at less
than the present prices posted in the
Fields, and that nobody hereafter shall
sell or buy any gasoline AT less than
prices fixed or 10 be fixed
What a happy and optimistic state
Of mind Having been ruined. as we
claim. by the failure to enforce the
present rules Of our code, We will Just
go ahead and write an additional new
rule. which will be the toughest OF
all to enforce. Having failed to push
production sufficiently down with gov
ernmental help. We will now endeavor
with governmental help TO push prices
up. Irrespective OF production
And, though the reader may be un-
able TO believe it, give him my word
that the resolution passed by this as
semblage OF business men suggests
in obvious desperation-tha the pro-
posed fixed prices for crude oil shall
be paid not only for oil legally pro-
duced. but for hot" illegal OIL that
is. the committee gives up hope that
the Government can stop the produc-
tion of Illegal oil. but demands then
that the Government shall see to it
that the producer of illegal oil gets
legal fixed price for It!
This is one sort of reaction that l
observe here in Washington and else
where. Since the quantity OF govern
mentaliSm that we have had to date
has not brought us out of the de-
preston, let us have more govern
mentalism and see further what it can
do There will be a great deal of re-
action of this kind.
Return to Private Capitalism.
The other is its exact opposite. It
is a proposed return-except for few
simple control measures in the natural
resources industries-to outright genu-
inc free competitive private capitalism.
BY this I do not mean a mere re-
production of what we had under Re-
publican rule. The Republicans are
always forgetting that planning" was
not invented by the Democrats. Our
first American "planner" was Alexan-
der Hamilton, with his national bank
for governmental participation in the
country's credit and finance and with
his protective tariff for governmental
creation of American industries not
previously existing.
And under Harding and Coolidge
and Hoover we had large extensions
of tariff planning" and we also had
great deal of concerted private busi-
ness planning" in the way of
mergers and combinations which arti-
ficially kept prices up.
All the way through the period from
1922 to 1929 the costs of producing
Industrial products were going sharply
down, and the prices of those products
should have gone down correspond
ingly. They did not. All through
that period we had an artificial price
imitation due to the combined inf1u-
ences of private planning" and also
of public planning" as illustrated
by the tariff and by the easy money
policy of the Federal Reserve Board.
Had "Corporationism."
We did not then have pure competi-
tive capitalism. We did not then
have really orthodox economics.
Prof. Frank A. Fetter, distinguished
economist of Princeton University,
who has been working here in Wash
ineton with the Federal Trade Com
mission, has applied the right name
to it. We then had what Prof. Fet-
ter calls "corporationism."
observe no reaction of any con-
sequence toward that Corporation
ism" I do observe a considerable re-
action, both among scholars like Prof.
Fetter and Republican progressive
leaders like Col Frank Knox of Chi
cago and industrialists like George H.
Houston of the Baldwin Locomotive
Werks, toward a capitalism actually
competitive and actually unartifcial-
lied either by excessive bureaucratic
planning" on the part of the Gov
tional planning" on the part of big
business.
Mr. Houston. who is certainly an
eminent business man and who is
chairman of the Durable Goods Com
mittee set going by the NJ r. A., ex-
plicitly says that We must abandon
both the bureaucratic Capitalization
which We have now and the corpora
tional Capitalization which we prac-
ticed before the new deal came into
existence: and we must establish he
says, a decentralization" which will
give us unit enterprises sufficiently
small to come within the scope of the
Intellectual capacity of the individual"
Denounce Monopolistic Groups.
Mr. Houston, as fervently as Prof
Fetter or Col Knox. denounces-
whether under the new deal or the
old deal-the effort 10 sanction the
organization of employers or employees
into 'monopolistic groups controlling
the goods or services in which they
are interested and enabled thereupon
to collect from society line of prices
much higher than those to which
they are fairly and properly entitled
by virtue of the competitive value of
what they SELL
Such sentiments are now spreading
rapidly. They are spreading IN the
Republican party and they are spread
ing also in fact in the Democratic
party and even in the innermost ad-
ministrational groups here in the Ma
tional Capital One of two things.
feel sure VIII emerge
One. In pursuit of the hair Of the
dog that has bitten US. we shall go on
to perfect mania of governmental
ism Or.
Two. We shall discard both govern
mentaliSm and corporstionism and 60
on TO free competitive small
neSs-unit system freer than We have
ever had before. We shall give "ortho-
doX'' economics-st laSt-for the first
time-a chance. Perhaps.