The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-03-12

4
into business every month since the
middle Of 1888.
OF course, it must be said that
the government did not spend all
this money outright. Some of it
was loaned to others-to railroads,
banks, etc. But whether spent
directly or loaned by the govern
ment, the funds were introduced in
to the streams of business where
they were available for spending
over and over again.
Held as Necessary
Without these spendings it is safe
to say we would have had a COM
plete and paralyzing collapse.
What is more, if they we're to be
stopped or even diminished we
would have a complete and paralyz-
ing collapse. The government, of
course. has no intention of dimin-
ishing them. And as long as the
government keeps up we are not
likely to have anything resembling
a great collapse.
But why has not this vast food
of government money made more
of an impression? In January, 1882,
before the New Deal, business was
at level represented by an index
number of u. 1t is now at an index
number of 81. This is rise of but
Is points. In January, 1882, the gov
eminent was spending little or moth
ing. Why, with this vast stream of
government spending, has it risen
but is points?
The answer Is more or less OBJ
vious. I have said that the coun-
try may oe looked upon as two great
workshops engaged in making
consumers goods, things sold in
stores and at retail to the public,
and the other engaged in making
heavy machinery, roads, houses,
buildings, locomotives, railroad
equipment, ETC., and sold. not to the
public for cash but to business en-
terprises on credit. 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 depression.
For instance, if you will go back to
1929 you will find that construction
contracts amounted to from 300 to
/ 472 million dollars month. 1t has
/ been declining ever since.
Building Shows Dip
BY 1881 it was down to over a
hundred million dollars month.
BY 1882 it had shrunk to between
rs and los million dollars a month.
During 1888 and 1894, if it were not
for various government projects
undertaken to aid business, there
would be almost nc construction in
dustry. In January of this year
private construction had fallen to
about % millions.
The hope of the government has
been that this industry would re-
vive; that shortage in homes, III
commercial buildings, in industrial
plants would develop and that the
building industry would go to work
to supply these things. But it has
not done so.
To state the matter simply then,
it is this great heavy industries
workshop which must get under way
and take up the burden which now
is being borne by the government
through public spending. Until this
is done there can be no end of gov
eminent doles and subsidies. You
can tell just when recovery is COM
ing by watching two sets of fig
ures. One is the record of private
building construction. The other is
the record new financing.
In watching the figures on f1nanc-
ing, it will be important to distin-
guish between refunding operations
and new financing. When a corpo-
ration puts out on bond issue to pay
off an old one, this, while important
to the corporation, does not supply
any fresh funds to business. But
when it puts out new bond issue
or stock issue and the securities are
sold for cash to buy new machinery
or to erect new plants, then the cap
ital goods industry is being stimu-
lated; this great idle workshop is
being speeded up.