Evening star., 1937-12-15

after the first
shock that fol- D,,,
lowed the rather
precipitate decline in stock market
prices and in the various indices that
reflect current business activity, but
now it may be said the President and
his associates have crystallized their
thinking into definite lines.
Naturally when an administration
viewpoint crystallizes, it is then ex-
pressed in various ways. Anybody
who reads carefully the speeches be-
ing made by Secretary Wallace of the
Department of Agriculture, Attorney
General Cummings and Assistant At
torney General Robert H. Jackson
and also Gov. Eccles Of the Federal
Reserve Board can see in clear out
line Just what the administration
thinks about the recession and what
1t may have in mind to do about it.
Blame Price Mark-Up.
First of all, the different agencies
OF the Government seem to feel that
they can place the blame for the re-
cession on the way business marked
up prices early this year and stocked
up on goods at higher prices without
taking into account consumer resist
anee From such premise. the ad-
ministration reasons that there was
an absence of competition and too
much private price fixing. This is
the signal for more trust busting" :"
namely, the filing of more antitrust
suits and considerable public speech
making on the subject of monopolies.
Some of the realists such as Secre-
tary Wallace have not hesitated to
point out that there is too much eco
nomic power welded by groups in
their own interest. This touches the
vital problem of labor unions de-
mands as we'll as corporation power.
Mr.. Wallace puts it this way:
Even more important than the ef-
feet OF technology are the actions Of
highly organized groups equipped with
great bargaining power which has been
intrusted to them by the Government.
Among these are the corporations,
labor unions, and farm organizations.
These great groups all too often try
to increase their profits, wages or
prices without regard to the public
welfare; all too often they everyday
their hand and bring about either
shortage or an unbalanced abundance
which is equally destructive"
Cites Labor's Demands.
This is the nearest any administra-
ton has come to putting some of the
blame on organized labor's demands,
though Gov. Eccles deals with this
delicate point in his speech this week
on the causes of the recession. He
says Of the course of events since last
spring:
Among the factors contributing to
the surge in costs. prices and inven-
tory buying were the bonus payments
coming on top of already heavy Gov
ernment expenditures and giving a
sharp additional impetus to consumer
buying. The organizing campaign of
labor, together with the drive for
higher wages and shorter hours, added
to expectations of higher prices.
THE rearmament program in va
rious countries contributed to the gen.
eral inflationary sentiment. A sellers
market developed and widespread ad-
vantage was taken of it to increase
prices. Various important sectors of
which had not added to their
productive capacity in the preceding
years found themselves unable to
promise quick delivery, leading to still
further piling up of orders and higher
prices. The prices of various inter-
controlled raw materials
skyrocketed while bond prices de-
clined."
Hints at Control.
What to do about it? Mr.. Eccles
hints at some form of control. First,
he says, "it could only have been the
absence Of competition that permitted
building costs to soar on the low
volume of building that took place
last spring; it is only the absence of
competition that can explain the
maintenance Of fixed prices and wage
rates when the volume of activity
declines sharply"
Some idea of what the administra-
ton may have in mind may be gath
cred from this significant paragraph
in the same address by the governor of
the Federal Reserve Board:
"How are we to achieve and main
tain full employment if private groups
and organizations raise prices and
costs whenever increased demand ap-
pears, although there is still an abun-
dance of idle and unused manpower,
plant facilities and raw materials?
Does this necessitate steady increase
IN consumer buying power through
deficit spending? How long can we
pursue such a course? Are we to at
tempt to return to truly competitive
laissez faire economy? II not, are the
alternatives facing organizations of
capital and labor either SELF govern
ment in the public interest or in
creased regulation in the public in
terest?"
Mr.. Eccles hopes it will be the former
alternative but immediately says "a
return to laissez faire" is not possible
and remarks that the development Of
the industrial process itself has Gre
ated larger units and brought into
being various forms of organization
OF both capital and labor
Feel Dip Is Temporary.
The administration unquestionably
feels that the dip in the business curve
Is temporary and that what it has in
mind to do, especially in housing and
IN forcing more competition will be
helpful though, to be sure, what may
Be- happening concurrently is that
labor of its own accord will be less
aggressive In the use Of its economic
power and business men will be less
inclined to force prices up when there
y no economic Justification. Some Of