Evening star., 1937-11-01

MI. ~ u U y e y
does not know
when he is defeated-he didn't know
that he had lost the Supreme Court
fight, for example, six months before
the final roll call. The handwriting
on the wall already tells of the i'm
pending defeat of New Deal econo-
mics by a severe business depression.
Today the President faces the ne
cessity of reversing his economic poll
cies. Statesmen frankly acknowledge
error and retreat and so do great gen.
erals. Will Mr. Roosevelt turn about
and save America-the two-thirds who
have Jobs and the one-third who are
'ill-housed, ill-clad and ill-nourished?"
Or must there be more breadlines,
more panic and more depression before
Americas economic dictator will swal-
low pride and abandon the so-called
economists who have been mislead-
ing him or rather leading him from
one morass into another?
Moving National Income Up.
The Presidents position as revealed
IN his press conference last Friday
was that he was not thinking of tax
revisions, but of moving the national
income up to the fantastic heights
of 100000, 100000 and 100000, ,000,-
600, This reference to such huge
national income is familiar, indeed.
to those who have followed New Deal
strategy. The Roosevelt idea is that
the present tax burden isn't burden
1r,I Ia@ L. f,,x u
increased by moving the national in
come upward. The orthodox methods
of increasing national income aren't
working or being permitted to work.
MIR. Roosevelt has the choice of con-
tlnuing the pump printing with Fed
eral funds or resorting to more infla-
tion or letting private industry ex-
pand. The first two courses mean a
continuance of unbalanced budgets.
The third course means an equitable
tax revision.
While the President is non-com-
initial about tax plans, what he did
say last Friday would seem to indicate
that he still thinks in terms of the first
two plans-moving up the national
income by artificial inflationary de-
vices. Perhaps the best analysis of
what is happening today was made
by the Brookings Institution-com-
prising the most eminent group of
economists in America-in a book en-
titled THE Recovery Problem in the
United States" which was published
last January. Here is an all-impor-
tant excerpt that throws light on the
Government policies Of the hour:
The possibility of a serious break
down OF Government finance still
exists. We are still gambling. so to
speak, upon a sufficiently rapid growth
IN national income to permit a bal
ancing of the budget before confidence
in the credit of the Government wanes.
The continued ability of the Treasury
10 obtain all the funds required at
low rates of interest has given rise to
false sense of security. We are
working on very narrow margin. and
adverse developments could quickly
upset all present calculations.
There is always a tendency when
predicted crises, whether in business
or public finance, are slow In reaching
an acute stage, to assume that the
dangers have been grossly exag-
eerated, If indeed they are not alto
gether fanciful. Whether the present
fiscal situation will lead to a break
down OF Government credit and
disastrous period of imitation. no ono
can predict with certainty. One NAV
fairly conclude, however, that though
tne task OF establishing financial sta
hility is not insurmountable. it is one
winch cannot be taken lightly"
Taking Situation Lightly.
Unhappily the President is taking
the situation lightly. Ee never saws
word about increased OUTPUT. hut
emphasizes policies that mean shorter
hours for the same pay. He still
thinks he is fighting the Liberty
Leaguers and the economic royal-
ISIS He continually refers to the
haVes" and the "have-nots" and be-
neVes that the average man will eat
eplthets and invectives when he loses
his Job or when the boss starts in an
other one of those 10 per cent wage
reductions which made Hoover 50
popular with the workingmen of the
Nation.
What Mr.. Roosevelt fails to prasn
= that unless the whole capital or
'noivlduallstic system is to be de-
stroyed and the slate wiped clean as
IN Russia, he must still pay some
attention to the operations of human
nature. Capital is today frightened
and stagnant. MIR. Roosevelt's tax
system and his sporadic attacks on
the business system itself without
providing a workable substitute have
at last coincided with the complete
collapse of pump printing" as a
method of building sound prosperity.
On every side the reports are coming
IN OF more unemployment, severe re-
trenchment, cancellation of orders and
all the gloomy news that made the
prosperity around the corner" slogans
OF 1880 hallow mockery. Mr.. Roose-
velt talks of the hidden taxes paid by
the persons of lowest incomes. He is
right that this is vicious hurGen and
NC oQb IL lie DuUS q
few of his swivel chair economists to
work in the field, they will find that
the hidden taxes paid by the low
income groups are passed on because
Of the price levels forced by indis-
criminate taxes at the top or by high
costs Of labor imposed by the few on the
many. Indeed, the tax burden of the
American people has now reached un-
bearable proportions. The total cost
Of Government, Federal, State and
city, Is now around $4,000, ,0o0, 900 a
year. Only about $4,000, 900, 900 is
being paid for in taxes. That's about
II per cent of the national income.
II the whole SIG, ,o00, 600, 900 were being
collected in taxes, we would be paying
nearly % per cent of our national
tncome--a dangerous per cent.
When Mr.. Roosevelt talks about q
$1,000 100000 national income, to
4,