Milford chronicle., 1935-10-04
THE PRTCE.RATsTNG BLUNDER

THE PRICE.RAISNG BLUNDER
Conservative economists, combat.
ting the theories Of the New Ordeal
have contended that the Roosevelt
Administrators policy of creating
scarcity in a land of potential plenty
and thus artifcally raising prices to
force the return of prosperity was
economically fallacious. Now comes
the Brookings Institution, indepeD-
dent and permanent research organ
ization, with the finding, after a long
study of the subject, that the only
sound method by which to increase
the wealth of the masses is to re-
duce prices and enlarge production.
Many conservative commentators
or national conditions. including this
newspaper, have for months past
counseled the New Dealers to re-
appraise their fundamental premises.
With recovery long delayed, as COM
pared with progress toward renewed
prosperity in other countries and
with unemployment seemingly frozen
at approximately ten millions, it
stood to reason that somewhere in
the basic thesis of the New Deal
there was grave error.
This error. as Brookings defines
il is the attempt by Government to
stabilize" existing business situ-
atiOns dncluding pricesl and to ''un-
derwrite the prosperity of individ.-
uals. corporations or large business
groups" On the contrary. the econ
Dmists find that fluidity of prices is
essential to general prosperity and
that for fiuidity mot reduction but |
expansion of production is required"
If industrial progress is not to
come to an end, there must of neces-
sity be continuous chronological de-
To be of value socially |
hese chronological improvements
must be passed on to the greatest
possible number of consumers. In
)rder to increase the number of con-
iumers the general tendency of
Drices must be downward rather than
Upward. Only by this means can in
.reased production, hence more work
or all. be made possible.
But what has happened? The New
Dealers, thinging in terms of prices,
instead of the creation of more abun-
ant wealth, have fOrcibly prevented
lhat they held to be excess prOduc-
ion in order to keep prices high. 1t
; quite true that there has been ex-
ess production in some lines. But
4 a country possessing the poten-
al wealth of the United States and
nth the material needs and wants
millions of people unsatisfied
here can be virtually no such thing
5 OverproductiOn in the broad sense.
If people have work. and prices are
ight. people will buy. Their con- /
nuous buying is necessary for their
DntinuOus employment. But both
uying and employment are dead !
,cked. when prices are forced high Ii
: than their natural level. i
The NRA failed to provide the !
of goods and wages which
'nsumers and workers need because #
was based on economic scarcity. I
he AAA is proving as great fail
'e in its own bungling way. and for T
e same reason. Mass production
Id mass consumption go hand in "
md. and. he who divorces them in
eases unemployment. human mis- u
y and the costs of relief. y
When and if the Roosevelt Admin r.
ration ever becomes convinced that a
entire price-raising. wage-fixing. y
limiting policy is not only p
ntrary to traditional American "
n. but is a gigantic and tragic a
lnder. real hope for prosperity
Il have Observation-Disclosures In "
irer. vi