The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-06-19

AORG 0OWAAs
One of the most important studies
of prices the depression has brought
forth was presented to Congress in
a report by the Secretary of Agri-
culture in response to Senate Reso-
luton II. 1t has received consider
able attention from economists, but
business, to which it chiefly pertains,
has given it little attention.
The study upon which this report
was based was made by DR.. Gardi-
ner c. Means, economic adviser on
finance to Secretary Wallace, who
was also co-author with Adolf A.
Berle of 1.-THE Modern Corporation
and Private Property"
Profits Piled Up
This report shows that 1t was
largely inf1exibility Of prices of
goods produced by corporations con-
trolling large proportions of the
market which prevented the ire
mendous increase in industrial eff
cheney, which preceded the depres-
sion, from being passed on to the
consumer in lower prices. Instead,
enormous profits were piled up,
which to a considerable extent were
reinvested in productive plant, I'M
til such investment became no long
er profitable in 1929.
Had the increase in industrial eff
f1ciency been passed on to the pub
lie in lower prices, the report states,
mass purchasing power would have
been increased enormously, and the
depression would have been miti-
gated, if not avoided. The report
suggests downward price revision in
these inelastic groups now offers a
partial key to recovery.
Paul H. Douglas, professor of
economics at the University Of Chi
cago, on the other hand, believes the
preferable manner of increasing
consumption would have been to
increase wages. He makes out a
case for this theory in his book,
Controlling Depressions," which
mas just peen puDLlSneQ.
Shock Seen Lessened
In either event, the building OF
new plants would have been retard-
ed, and the consuming power of the
masses would have been increased
both of which would have lessened
! the shock of the catastrophe.
The result to purchasing power OF
the system-or lack of system
which was pursued in pre-depres-
sion days is indicated by study
which shows the total purchasing
power of the income derived from
corporate investments, contraSted
with the purchasing power of total
of industrial wages and farm in
come.
| Figures upon which the study is
based show that the command OF
goods of workers and farmers, as a
whole, was in 1884 a little more
than three-fourths of what it was
in 1924, and less than that proper
ton of 1929 purchasing power, al
though the population has con-
tinued to increase. 1t is probably
| slightly higher today.
The figures also show that the
purchasing power of the income
from invested capital was last year
considerably higher than in 1924, to
say nothing of the command of
goods represented by accumulations
represented by excess reserves in
banks.
All studies of national income,
however, show that the bulk goes to
labor and to farmers. Hence the
Importance of mass purchasing
power to the national economy,
Prosperity in a civilization keyed to
mass production depends chiefly
upon mass consumption.
This being so, to sell the same
volume of goods reduced in 1924 it
is necessary to bring mass purchas-
ing power up to approximately 100
per cent.