The Waterbury Democrat., 1935-03-07


 first as a dole makes it's way into the channels of trade, to the re- taller, the manufacturer. the raw material man, to their employees who spend 1t in turn at other re- | tail stores and so on endlessly. It is very plain, therefore, that when the government poured lnto the blood stream of business near ly ten billion dollars in the last twenty months that that ten bil- lion aided not merely the people who received 1t from the govern ment, but retail merchants, wholesalers, manufacturing plants of all sorts, railroads and so on. You may think that govern ment doles are not being used to buy automobiles. But they are. The man who gets the dole does not buy autos. But the man he spends it with buys automobiles and radios.
 ALTERNATIVE
 Is it not perfectly plain. there- fore, that if that ten billion had not been spent, not only would those on relief have per- ished, but busipess itself would have had none of the advances we have recorded? Factories have been able to put men to work, wages have advanced slightly. production has increased, profits have risen because that half bil- lion dollars a month was poured into business every month since the middle of 1893.
 Of course, 1t must be said that the government did not spend all this money outright. Some of 1t was loaned to others-to rail. roads, banks, etc. But whether spent directly or loaned by the government, the funds were intro duced into the streams of busi- ness where they were available for spending over and over again. Without these spendings 1t is safe to say we would have had a com plete and paralyzing collapse. What is more, if they were to be stopped or even diminished we would have a complete and parai- yzing collapse. The government. of course, has no intention Of di- minishing them. And as long as not likely to have anything re-
 
 But why has not this vast flood of government money made, more of an impression? In January, 1892, before the New Deal, busi- ness was at level represented by an index number of 72. It is now at an index number of 87. This Is a rise of but 15 points. In Jan- uary. 1892, the government was spending little or nothing. Why. with this vast stream of govern ment spending, has 1t risen but fif-. teen points? BUILDING INDUSTRY
 The answer is more or less ob- vious. have said that the country may be looked upon, as two great making consumers good two great workshops-one engag- ed in making consumers goods. things sold in stores and at retail to the public. and the other en- gagged in making heavy machin- cry, roads, houses, buildings, To- comotives, railroad equipment etc., and sold, not to- the public for cash but to business enterprises on cred- it. This second great workshop has been almost completely shut down.
 The most important single ele- ment in this great workshop is the construction industry-that great industry which puts up our houses. buildings, roads, schools. and so on. And this industry has been in a state of great depres- sion. For instance, if you will go back to 1929 you will find that construction contracts amounted to from 300 to 472 million dol- lars a month. It has been declin- ing ever since. By 1881 it was down to over a hundred million dollars a month. By 1882, 1t had shrunk to between 75 and 105 million dollars a month. During 1893 and 1894. if 1t were not for various government projects un- dertaken to aid business. there would be almost no construction industry. Tn January of this year private construction. had fallen to about 22 millions.
 The hope of the g Government has been that this industryq would revive: that shortage in homes. in commercial buildings, in in- dustrial plants would revelop and trldL lIle UutiulUB uIuuFtIy WOuAu go to work to supply these things. But 1t has not done so.
 PROSPERITY INDEX
 To state the matter simply then, it is this great heavy indus- tries workshop which must get un- der way and take up the burden which is now being borne bzy the government through public spenw- ing. Until this is done there can be no end of government doles and subsidies. You can tell just when recovery is coming by watching two sets of figures. One is the record of private building construction. The other is the record of new financing.
 In watching the figures on fi- nancing. 1t will be important to distinguish between refundifg op- erations and new financing. When corporation puts out one bond issue to pay off an old one this, while important to the corpora ton, does not supply any fresh funds to, business. But when it puts out a new bond issue or stock issue, and the securities are sold for cash to buy new machinery or to erect new plants, llten the capi- tai goods industry is being stimu- lated; this great idle, workshop Is