The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1936-08-18
DROUGHT SEEN
.H|NDERENCE TO
RECOVERY

lnaC Gf1lS summers drought Will
tend to retard the progress Of bust
ness recovery now seems likely. ac-
cording to an analysis Of the situa.
ton appearing in Poor's Invest
ment Advisory Sevice. To be sure,
the analysis adds, the drought will
not curb industrial activity to any
extent over the near-term, and
other favorable factors may appear
to offset it's future influence.
Nevertheless, such heavy blow
to the nations wealth cannot but
leave scars on the economic pic
ture, Poor's points out, adding:
"The past few years have wit
messed the ascendency of several
schools of unOrthOdOx economics.
1t is characteristic of many such
schools to hold misconceptions
on the relationship between bust
ness conditions and prices. For
a long time, at least, those direct
ing the managed recovery pro-
gam stressed the necessity for
raising prices to bring about bust.
ness revival. To that end prOduc-
ton was curtailed.
BUYING POWER SEEN NEED
"The theory that prosperity
can be achieved through scarcity
witherS in the light of intelligent
analysis. This is true notwith-
standing that tOday's complex
society obscureS the roles played
by the various elements which go
to make up the economic Struc-
ture. If for purposes of analysis
the business and financial fab
RIGS could be unwOven it would
be apparent that in a simple So
ciety the wealth of individuals
would be recorded in terms of
goods rather than in money. In
other words, it would be obvious
that an individuals or cOuntry'S
we'll being would depend upon
ability to secure goods rather
than upon money or prices. For
that reason, expanding prOduc-
ton tends to make for prosperity
and receding output for lower
standards of living.
prime requisite to sustained
production is the ability of con
sumers to make purchases. That
power is curtailed when incomes
are low or prices are high. Even
under the most prosperous con-
ditionS this country has ever
known the greater part of the
population did not have Suffi-
cient income to satisfy its wants.
In 1929, about 10 per cent of all
families in the United States had
incomes of less than $4,000, and
about FL per cent were forced
to live on incomes of less than
$1,000 per family. ManffeStly,
most families receiving less than
$500 in 1929 could not entirely
satisfy their wants, while the FL
per cent receiving less than
$1,000 presumably were hard put
to provide even bare essentials
for themselves. Dividing the
wealth would not have solved the
problem, for if the nations total
1892 income had been split
equally each person would have
received only S665.
WORSE THAN 1929
"AIth Ough a reasonable
amount of business recovery has
occurred during the past three
years, with cOrOllary aid to fam
lily incomes, it will be admitted
that total incomes now. are far
below the 1929 level. Likewise,
the percentage of the population
receiving less than $4,000 or less
than $1,000 a year are much
larger. Thus. those unable COM
pletely to satisfy their wants or
merely able to buy bare essen
tialS are much more numerous.
"The pinch of reduced supplies
is certain to be felt next year.
With meat to be relatively scarce,
high prices are clearly outlined.
Under the circumstances,
larger percentage of the nations
income must be paid out for an
equal amount of fOOdstuffs, to
the detriment of other business
lines.
Fortunately, however, bust
ness appears to have gathered
enough fundamental strength
to offset the obstacle. The much
SOunder position of heavy indus
try alone promises to spread con-
sumner purchasing power sui
ficiently to permit continuation
Of the business cycles upward
trend"