Evening star., 1935-10-20
BY THOMAS r. HENRY.
A MEXICAN agriculture and in
N dustry has a potential $50,000,-
~ O0o, 900 market.

AV - eaAS 6AN1VSce AAnA hSS
ever dreamed Of In the history of the
world. The wealth of the Indies was
minute In comparison with it. II it
could be tapped 1t would restore pros
perity and place the American people
on new peaks of prosperity such as
they have not imagined.
Where is this market? In the vast,
unmapped gap between the country's
potential production and potential
consumption. To provide for the en-
tire American population the goods
necessary for a reasonable standard
Of living" as defined by Government
experts, would involve a rs per cent
increase above the production capacity
of the country's farms and factories at
the peak of prosperity.
Such, essentially, are the conclusions
Of q searching analysis Of the present
economic condition of the Nation by
DR.. Harold G. Moulton Of the staff of
the Brookings Institution. The report
Of DR.. Moulton's research has just been
issued.
oACIS ENO 7 1dHdCcdS.
How to reach this domain of fabu-
lous wealth is another question. The
world-famous economist offers no new
panaceas. 1t is as battling a problem,
perhaps, as confronted Columbus look
ing westward from the coast of Europe.
He conceived the idea of reaching the
Orient with all its fabulous wealth by
sailing in the opposite direction. Why
not, asks DR.. Moulton in effect, sail for
the Indies Of economic prosperity by
taking the westward passage Of lower
prices2
In 1929 the United States supposedly
was fabulously prosperous. 1t was, at
least, enjoying the greatest prosperity
ever known by any people in the
wollo'S history. Something happened
which changed this prosperity almost
overnight into the profoundest depres-
sion Of all times. Just what did hap
pen nobody has been able to determine
very clearly. DR.. Moulton set out to
cut through the maze of obScurity.
In the first place, as has been
pointed out by previous reports in the
same series, the prosperity was not so
great as it seemed on the surface.
Wants Far From Satisfied.
Says DR.. Moulton: "The consump-
tive requirements, or wants, of the
people were far from satisfied during
the period Of our highest economic
achievement. The value Of the total
national production Of goods and
services in 1929, If divided equally
among the entire population, would
have given to each person approx
mately $665. There were nearly six
million families with incomes less
than $1,000; twelve millions with in
comes under $1,500: over 100000
with incomes less than $4,000, and
over 100000, or II per cent of the
total, with incomes less than S2,500.
A family income of S2,500, at 1929
prices, was a very moderate one, per-
mitting few of the luxuries of life.
Hence it was clear that the consump-
tive requirements Of the people were
far from satisfied.
ITO raise the incomes of 19,4o0, 900
families receiving less than S2,500 in
1929 to a s2,500 level, with no changes
in the incomes of those receiving more
than that amount, would have required
an increase in national production of
more than $4,000, 900 900. A horizon
tai increase Of 81 900 in the income of
all families receiving less than SIS 900
in 1928 would necesSitate an expansion
Of production to the extent of over
SIS, 900, 100000. To give all the fami-
lies Of the nation q reasonable stand
ard OF living, such as is set forth in
the studies made by the Bureau of
Home Economics of the Department
Of Agriculture, would have necessi-
tated an increase in production over
the 1929 level Of approximately rs
per cent. The full utilization of our
productive capacity, it will be recalled,
would have permitted an increase in
production Of only about 20 per cent,
or $4,000. .000. 900. The desires of the
people were vastly greater than could
have been satisfied by the productive
power then available"
$4,000, 900, zoo Gap.
At the best, he shows, the Nations
productive power was far above its
actual output. There was a gap rep
resented by about $4,000, 100000 in
value between the goods produced by
American farms and factories in 1929
ond tho rtfy,,
duced. In 1884, after five years Of de-
preston, this gap had widened to
nearly $40 1000, ,000, 900. In the year Of
greatest depression, 1892. the volume
Of goods and services produced was
approximately 81 per cent less than
the production Of 1929. Assuming that
the productive capacity remained sta
tionary during the depression years,
the actual output Of goods and services
in 1884 amounted to only approx
mately 81 per cent Of what might have
been produced.
In 1929, of course, farmers and
manufacturers wanted to run their
plants to capacity. They saw the gap
although perhaps not as clearly as
it appears in present-day statistical
tables. There could be expanded pro-
duction only with an expanded mar
ket. Sales had to be increased. There,
as DR.. Moulton sees 1t, was where the
manufacturers especially made their
big mistake, and this mistake was one,
at least, of the outstanding causes Of
the depression.
They started high-pressure sales
campaigns. They offered liberal credit
terms. Installment buying loaded the
American people with debt The point
soon was reached where capacity to
purchase and capacity to produce
were far apart. The gossamer bridge
Of credit stretching over the gulf soon
snapped and the national economic
structure was precipitated into the
depths.
Mistaken Policy.
It was, holds DR.. Moulton, mis-
taken policy from the beginning. There
was a gap Of 20 per cent between po-
tential production and actual produc-
ton. Had industry departed from its
traditional ways and produced this
extra 20 per cent-leaVing aside sales