Evening star., 1934-01-19
Why Not Prime the Pump2

In addressing the National Retail Dry
Goods Association in New York last
night, Gen. Hugh S. johnson made a
few observations on wages that nave
. peculiar significance in Washington at
this time. Some of the things he
said we're:
The sum total of national income, in
last analysis, is wages eS"-lndeed, l Will
90 a step further and say that the total
national income is wages OF one KIND
or another-and that the only way that
cost Is cut-at long LASTS by wage
cuts. 1t is by lower total wages Tor
human labor that recessions and de-
pressions occur. On the other hand,
the only way to keep production up Is
to keep wages up and this-as the
preacher in Ecclesiastics says-is the
end of the whole matter. :"
The whole secret of recovery is to
maintain the buying power OF workers
everywhere.
Normal turnover in this country
Is over eighty billions Of dollars,
and most of all of it is wages. In its
widest dreams Government could not
spend, for business activation, more
than ten billions. All it can do is to
prime the pump with pint for the
purpose of producing gallons In my
opinion, those gallons are on their
way, and, if you will permit me, I felici-
tate you.
In cutting wages the Government, OF
course, has pursued the policy Of the
industries and contributed to reduction
Of purchasing power of wages. But Is
Gen. Johnson's argument for re-
versal of this procedure to be accepted
by industry at large as long as the Ma
tional Government-the greatest single
employer in the country-continues to
hold back? The effectiveness that lies
in consistency and logic is certainly
lost
This is one fact lending strength to
the movement, reported in yesterdays
Star, for an immediate restoration OF
at least part Of the Government wage
cut now, instead Of delaying such res
toration until the beginning of the new
fiscal year. 1t is a difficult thing to
defend inconsistent policy. Members
Of Congress have not been able to find
. ready defense. Gen. johnson has
attempted no defense.
Those who know the temper of Senti-
ment at the Capitol are wondering with
be better to break away Immediately
from a pay-cutting policy that is pro-
ducing more criticism every day than
to risk another close fight in the Sen
ate on an issue so barely won in the
House. The administration might win
in the Senate as it did in the House.
But such victory. based on the alb
stract idea Of budget balancing as
against the concrete facts of present
Government expenditures, is an empty
one at best. The administration may
lose more in prestige from such VIC
tory than it would gain in the rela-
lively small savings to be effected
The new monetary policy, based on
dollar devaluation, has injected another
disconcerting element that must be
faced by the pay-cut advocates sooner
or later. Nobody knows what devalua-
ton of the dollar by statute or execu-
tive decree will do to prices. If the
effect on prices works according to
theory, Prof. Kemmerer of Princeton
has pointed to a possible rise Of
seventy-two per cent in the price level
with a sixty-cent dollar, putting prices
twenty-seven per cent higher than in
1926. A fifty-cent dollar would pro-
duce much higher prices still. If the
Government is going to hitch its wage
policy wagon to the star Of living cost
prices, it must be prepared for higher
flight than fifteen per cent wage resto-
ration. If the effect Of dollar devaluation
Is to raise prices, the national Govern
ment had best be prepared to lead the
way in wage restoration as an example
to industry at large. The rise in price
levels is a curse to the little man, and
sometimes his ruinaticn, unless his
wages rise in the same proportion.