Evening star., 1936-12-29

~ "a the national in
come for 1887 at
'' about $68, ,00O,-
100000 as a minimum.
The annual income has been going
tip in nice chunks since 1882, when it
was around S39 900, 100000 but it is
significant that the rate of growth is
somewhere between $4,000 900 900 and
$1,000, 100000 a year
At this rate. the national income
will not get back up to 1925 figure
of s8l. 900, 100000 until sometime in
1899. But the important fact to be
discovered is what the new national
income figures mean in terms of pur-
chasing power and prices. The old
national income was based on l00-cent
dollars while the new national income,
ever since the devaluation of the dol
lar. is based on 59-cent dollars.
Theoretically there should be nearly
twice as big national income as there
was in 1929 because the dollar has
been cut almost in half and it is just
AS If there were SO cent piece in
circulation which passed for a dollar.
Little Difference Internally.
The meaning of the 59-cent dollar
or the l00-cent dollar depends on
what you can buy with it. Thus FAR,
you cannot tell very much difference
in a domestic market-that is in pur-
chases of articles within the United
States-between the old dollar or the
new. Some articles are much below
the 1929 cent level in price and some
are above that level.
As matter of fact. prices have
not been rising rapidly but rather
gradually toward the 1925 level which
has been regarded as normal. The
sluggishness of recovery heretofore and
the desire of business to make i'm
provements in the product and still
sell at the same price has been in
part responsible but the real reason
has been the fear that the buyer would
strike against precipitate increases in
price.
Now, however, as 1887 comes on the
horizon, there is a quickened pace and
demand is beginning to show itself
in such fashion as to accelerate the
rise in prices. Indeed. in some lines
there is an actual shortage of product
due to the fact that the sudden de-
mands have not been anticipated or
because plants have been permitted to
run down so that full capacity is not
now available In other instances,
labor difficulties have upset calcula-
tions as to price for future deliveries,
while in some companies the passing
on Of increased costs has been made
impossible for weaker types of COM
petitors
Labor Demands Raises.
Tax payments, of course. are
rather vital factor in the prices of
goods The constantly increasing
drain by the Federal Government is
multiplying the problem of all busi-
nesses at time when many elements
of labor are rightly demanding an
increased wage to meet rising liv-
ing costs.
The Federal, State and local govern
ments. therefore, constitute very i'm
pOrtant economic force. For as taxes
are increased, the prices of goods
must be raised to meet the new costs.
At present, the total cost of Govern
ment in the United States is around
$4,000, 900. 900, which means that even
with the estimated $4,000, 100000 ma
tional income for 1887, the cost of
Government is around Is per cent.
Back in 1929. with an $8l 900. .000. 900
national income, the total cost of Gov
ernment In America was around 16
per cent.
Taking out 25 per cent for taxes
instead of Is per cent makes a differ
ence in the ultimate adjustment Of
the Nations price machine and con-
sumption capacity. The cost of Gov
ernment in a recovery period might
be expected to 60 down instead of
up. or at least to be materially cur
tailed There is plenty of talk of
economy hereabouts, but not much
sign of it.
Circle Continues.
Little realized Furthermore is the
fact that as prices go up so also do
the costs Of the articles and COM
modities bought by government itself
The Walsh-Healey law, for instance.
requires companies that buy from the
Government to meet a 40-hour week,
which in many cases simply means
forcing upward of the wage scale not
only for that part of company's
product which is sold to the Govern
ment, but for all other divisions of
the business as well.
This means an increase in price for
consumers generally, including Uncle
Sam. It will be interesting to see
whether the forthcoming budget esti-
mates of the Federal Government and
the States include an allowance for
the increased cost of commodities di-
rectly forced by the administrations
desire to give to labor a reward for
the political support furnished at the
polls. Likewise. it will be interesting
to study whether real wages-that is.
wages in terms of what dollar will
buy-will be found to be coming down
even as money wages are raised. 1t
doesn't matter much what the money
wages are, but what the same money
wages will purchase.
The simple figures show $7,000,-
100000 increase in purchasing power
should make business as whole good
for 1887, but 1t is not the business
man, but the consumer who will be
doing most of the worrying in 1887 If
prices are forced upward by taxes and