The Washington times., 1934-05-09


Again, many consumer goods"
(Which are said to be different
from durable goods") are highly
durable-residences, jewelry, and
pleasure cars, for example.
Nor is there any clear differ
ence as to the use of credit. Re-
tail grocers extend large credit to
consumers. Instalment plans for
clothing, ETC., require much credit.
The plain fact is that economic
goods class as follows:
/. Producers goods, or capital
goods. (a) Durable - Industrial
buildings, machinery. etc.; Cb)
transient - fuel, raw materials,
goods in process.
2. Consumer goods. (O Dura-
ble-Houses, automobiles, jewelry,
etc.: (b) transient-food, clothing,
etc.
The big and important differ
ence is between capital goods and
consumer goodS-now and always.
Some say that the old econo.
mists were dealing in economic
distractions, while so-called mod
ern economists are thinking in
terms of business recovery. If
that is true, it is high time to get
back to economic principles. We
will never have business re-
covery" till we do.
Anyone who does not see the
difference between Cd anthracite
coal and bituminous coal, CD resi-
dence and industrial buildings,
90 motor trucks and pleasure
cars, is blind. And the difference
in these is the difference between
capital goods and consumer goods.
In each of these three cases, the
durability is similar.
Ono of our great problems
Centers in capital goods"
This is the problem which is
concerned with high wages and
short hours. You see, indus.
trial production is a joint af.
fair. That is, capital goods
(plant and equipment) and
labor have to be used together
in producing consumer goods.
Both capital and labor have to
share in the joint product.
1t follows that if we try to
give labor too large share of
the product, there will be too
little left for capital. Then the
capital goods industries will
suffer.
This is one problem of industry
today. Under NRA we are in dan
ger of forcing industry to give so
much to labor that in many cases
there is nothing left for capital.
The railways use capital goods,
but I read that "a railways did
not earn fixed charges in the first
quarter. This is partly because
railways are required to employ
more laborers and pay higher
wages than their earnings allow.
And they will never buy much
equipment while this is true.
Don't misunderstood me: Labor
ers have to be provided for. But
this is because they are human
beings, and as consumers they
must have consumer goods in
order to live. AS producers, how.
ever, working in cooperation with
capital goods, they have to share
with capital and enterprise. And
if we force "capitaI" to pay the
necessary "doles" under the dis.
guise of wages, the capital goods
industries will continue to suffer.
Other problems may be seen in
the effect of high taxes on the
demand for capital goods, and in
the uncertain value of money os
affecting saving and investment
in capital goods. Capital goods
are created only by saving and
investmentO
All this should make it clear
how utterly futile are the various
schemes now proposed to stimu-
late durable goods" From amend
ments to the Securities Act, to
RFC and intermediate" Federal
Reserve credit loans, all are vain.
The capital goods industries will
languish as long as wages are too
high, taxes are too high, and the
dollar is uncertain as a standard
for deferred payments. When it
becomes reasonably safe and prof
liable to save and invest in indus
try, the capital goods industries
.,,:I1 GnIx~ aa~a IS &IooVoaenlHynS