The Washington times., 1937-01-05


will the forces of demand not be released SO = sM
give any boom" the usual form of an LOWS nancy
inflatonary spiral?
The to these questions seems to me to be YES with
probability of about three to No certainty can exist
under political social plannng.")
First the signs all set for "break through indus
trial activity. For example, factory rolls approaching
their usual relation employment but have not yet risen to
the point that they usually attain before cycle eliminates
Steel production up normal but always swings above
Pig iron production is in line with steel but when has it failed
to relatively higher?
Then too the commodity price structure by the relative posi-
ons of materials semifnished goods and finished goods
shows that the way boom but have not yet
rived In due time will relatively higher materials
and much higher "semfnshed goods" prices.
Second there clear signs of that development of conf
dence which has been the thing needed touch off credit
initiation We have become familiar with radical schemes and
have the defeat of good deal of cackpo radcam In
important industries shortages have taken the place of
pluses.
Many business leaders have profit possibilities
Thus find l bank loans increasing (2 uprn in Sc
curty issues to raise capital funds and @ even trace
of rapid of bank deposits Machine tool orders
high
The major obstacles are of that defs definite fore
One may have reasonable opinions however and mine
are as follows:
likely to break out in 1887 Germany too weak The
Spanish conflict to be approaching insulated state
Labor warfare in country will certainly make trouble
and reduce both profits and employment. While not mpo
sb it be- however that fanatica cass struggle
will rule abors attitude in 1887 The limits of public tolerance
will, therefore, hold labor leaders in check.
Furthermore, employers will be aided by initiation in pass
Compromises with recognition of unions and less short
ening of working hours, are easily possible.
Political experiments with radical reforms are bound
to threaten and will put some restraint upon prosperity But
inevitably prosperity grows conservation Rad
cal action will be less and less necessary and be less popular
The Presidents minimum wage will make trouble.
but labor will be the chief sufferer If anything important
is actually done, the results will be: N Leveng down of
the higher and (2 reducing employment for those
who can't the minimum.
Thus venture to predict interference and delays but
final stopping of business upward sprang credit nfaton
popularly hailed as prosperity"
During the process of "breakng through" into the boom
stage probable that period of fairly reaction
will be experienced This be realized by spring Say
time about March By that time trouble with in
vntores accumulated beyond requirements be expected
Some of the smuans now taking effect may have worn off
"cred control" moves by the Administration, social
form of moHes by Congress, or both may fears
At about the time talk of difficulties in the of
passing higher wholesale prices to the through
higher retail prices is likely to be heard Some resistance
on this is to be expected.
To the extent that labor troubles spread this reaction
be earlier but this would reduce the correction of mad
justments later
philosophy that prevails at Washington is to share the wealth
among motors and this means by creang purchasing power
for consumers GAS voters nearly equal
it is the problem of production that is being sghted
This philosophy will take of resistance by
means of initiation and the boom will be resumed.
We do vet realize fully the significance of the
huge volume bank deposits that has been credited the last
three by Government borrowing and spending Billions
Of deposit dollars have already into stocks real estate
and commodities; there many billions still in the
banks merely awaiting the touch of nflatonary prosperity
to begin that turnover which with boom times
Those deposits the prosperity of corporations and nd
vduas They not offset by loans Thus they not sub
jct to control through requirements interest rates
1t probable that will be large and that at the
time farm prices will be rather high Thus farm income
is likely to be large.
Also probable that building activity will increase The
situation is not uniform and developments likely to be
spott but the whole rents have gained building
that stimulus is indicated.
do not hope for fear effective restrictions credit
expansion. If the politicians could they wouldn't stand be-
tween the people and their prosperity But they can't First
the deposits there-already inflated Second debt
has become large that it will be unpleasant and
will therefore continue borrow which living
the savings of the past We will debt with debt
This continue to do for good while and do not
likely the crisis in 1887 The problem of Gov
credit which has become the main one will not
to head until the price level has high enough to show
that the undervauation of the dollar By that time
the total loans and investments of the banks will probably
have risen far above deposits indicate credit strain
Then gold leave the country and the adequacy of reserves
begin to be questioned.
mO adv nced vnntO 10 e