Imperial Valley press., 1937-04-20
News Behind the News
The Professor is Amused &. High Tax
Worry Laugh to Hin, His Protests
Went Unheeded in 1888 -.

WASHINGTON. - The administrations in
creasng concern over high prices and excessive
profits must be giving good deal of quiet sat
isfaction to Prof. Oliver Mitchell Wentworth
Sprague.
Sprague was the Harvard teacher who quit
Job as adviser to the Bank of England and be-
came financial and economic adviser in the
Treasury Department very early in the New
Deal.
Roosevelt then became charmed by the re-
covery theories OF Professor Warren, James H.
Rand and the monetary inflationistS. BY the
end of 1888 Sprague had quit with roar of
protest. Ray Moley Hugh johnson and other
New Dealers OF that day scoffed at him.
The fruition of Spragues prophecies OF doom
has been somewhat delayed. The breakdown OF
government credit and unrestrained imitation
which he feared have not arrived. But Roose-
velt who was strongly bent on raising prices
three years ago. is now worried by fear that
high prices may bring another crash.
He now has come to believe in maximum
production at low prices. And il is interesting
to recall some of the things which Sprague, who
once taught economics to Roosevelt at Harvard,
was saying and wrl,Ing in December, 1888
Fallacious insisted Sprague, was the view OF
young liberals" in Washington, who believed
recovery could come through quasi-monopolies
and increasing prices This view might cause
the country to crash on the rocks of shrunken
markets due to higher prices. Sprague favored
low prices to stimulate markets, productlon
and employment urging business men to adopt
this policy even though it meant sacrifices and
temporary lack of profits.
Business said Sprague, should make rela-
tive reduction in prices of those goods and serV-
ices for which larger potential demand can be
anticipated if relative prices are reduced"
And in view of Roosevelt's promise to cut
down government expenditures flowing into
durable goods as a means OF dlscouraglng price
initiation it seems interesting to remember that
Sprague said:
"If the primary direction of labor and capital
is to be found in the production such as housing,
then a government policy of public works that
increases the cost of that sort Of goods works
against recovery. Recovery should be based on
low production and transportation costs.
THE fundamental question that presents 1t
self in examining trade recovery policies, Whe-
ther they be those of business men the gov
ernment," Sprague wrote, is this Do they
tend TO open up and increase demand for those
products for which, may reasonably presume
a large potential demand exists that can be
made actual by relatively lower priceS-lower
prices, 1 may add, made possible by improved
methods and larger volume, and not by unrea-
sonably low rates in wages"
Doubtless there will be those to say that
Sprague was wrong then and that 1t was I'M
peratiVe to raise prices at once. But those were
the days when Roosevelt was first comparing
the New Deal TO football team trying out at
tacks. And perhaps there will be those to sug-
gest that it's a very flexible game when the
quarterback can suddenly turn his team around
and start carrying the ball in the opposite drec-
ton.
1t is pleasant to be able TO report, however,
that PLAYERS on the local team come nearer una
nimity in supporting the present Roosevelt trend
of thought than they ever did before.