Evening star., 1937-11-26

Parliament:
In the spring of this year the Presi-
dent of the United States of America
suddenly announced that in his opin-
Ion commodity prices were too high,
although actually they were lower than
the level Of 1926. which hitherto had
been his declared objective He fol-
lowed this by doing everything in his
power to discourage investments in
capital industries of the United States.
confidence, which is SO much easier
to undermine than to inspire, was
absolutely shattered, and this has led
inevitably to acute deflation-deflation
which involved a catastrophe fall, not
only in stock market prices. but in
commodity prices and the industrial
output
''As result of that, at very criti-
cal moment. the underlying strength
greatly diminished and the danger OF
war sensibly increased"
What President Said.
Now what did the President say and
do and to what extent are his COM
ments responsible for the deflation
which has set in throughout the world?
Unfortunately the President did not
permit his exact words of that memoir
able conference with the press on April
last to be quoted directly so the news
papers published in indirect discourse
what he did say. Here it is in sub
stance:
l. Everybody who has been review
Ing the economic situation is pretty
we'll agreed that the present increase
in the production of durable goods is
growing more rapidly than the produce
ton of consumer goods, and this judg-
ing by the past-going back 80 or 40
years-does constitute danger sign.
2. Almost every time in the past
that the curve of durable goods has
gone above the curve of consumer
goods we have gone into-not a de-
pression-but falling off in the pro-
goods within the next six or eight
months. Almost all economists are
said to agree on this. 1t means that
America has to think about the con-
nection of the Government in speed
ing up production of durable goods
and the Administration has about
reached the conclusion that the time
has come for the Government, in so far
as possible, to discourage Government
expenditures on durable goods and to
encourage Government expenditures
on consumer goods.
More Distribution Needed.
3. Another way of putting the prob
lem Is that America needs more dis
tribution Of national income includ-
ing Government expenditures-more
at the bottom and less at the top be-
cause Of the fact that the expenditure
of funds at the bottom goes primarily
to the people who are consumers of
consumer goods rather than con-
sumers Of durable goods.
4. Just within the past six months
or year We have been buying, exclu-
slve of Army and Navy contracts,
about s250,000000 worth of steel that
Is Government purchases. The Gov
ernment has been purchasing a very
large percentage of the total cement
output. OF course, cement is in dur
able goods. The net result is that
the Administration is coming to the
conclusion that, in the future expendi-
lures Of Government money, we want
to slow down on things like steel
bridges and great permanent struc-
lures that use certain materials, the
price Of which is going up and up.
5. In times like these, the less we
spend on great permanent public
structures like great dams. ETC., the
better it is, because then We can give
a larger purchasing power for con-
sumner goods as opposed to durable
goods. That was the economic role
OF the government which the Presi-
dent exhibited to group of members
OF Congress as he told them why in
his judgment the Government ought
not to encourage too great purchases
OF durable goods at the present time
because OF the danger in the upward
spiral-that is at least a spiral and
danger flag, judging by the past.
6. The President was asked whether
the housing program, then only pro-
posed under the Wagner act, would
not be discouraged under such rea-
soning but he remarked that the bill
when passed would not mean heavy
expenditures for at least a year to
come and that it would take a long
time to get various projects started
He thought If the market price of cop
per went to II cents 1t would slow ur
everything
Now the foregoing, which is a rather
detailed restatement of what wa!
given to the press by the White Hous,
on April 2, 1887, is in retrospect O.