Evening star., 1937-12-19


From the study OF the French imitation
and from other causes, this economist and
some others cling to the notion that infla-
ton is still possibility with U.S. But
other competent economists think that in
f1ation is not a probable American ex-
perience.
do not know what the present propor-
tion is between those who predict imitation
and those who do not Taking the period
of the New Deal as whole, from 1898 UP
to the present, the number of economists
predicting imitation has been much larger
than the number who claimed that irfa-
ton would not come. Some historian 10
or 20 or 80 years from now is going to get
amusement out of reading the year
predictions of forecasters in various fields
during the 1930s. The historian will have
the advantage OF knowing what the final
chapter of the story was.
Heavier Drain on United States.
This we know There is a business re-
cession. The recession must result in in
creased unemployment Increased unem-
ployment means more money taken out of
the Federal Treasury in order to support
the employed-assuming Mr. Roosevelt
continues in his position that it Is the
duty of the Federal Government to be
finally responsible for supporting the un-
employed.
Now go back and trace another corse-
quence of the recession. The recession
means less profits for business Less profits
means smaller quantity of tax money
going into the Federal Treasury.
So in its influence upon Government
finance, business recession, if prolonged.
has a double effect. 1t increases the de-
mands upon the Federal Treasury-and it
reduces the amount of tax money with
which the Treasury can meet those de-
mands. In this situation what happens?
The answer to the same situation for four
years past has been more borrowing by
the Government (they call it borrowing"
actually, comparatively little of 1t is bor-
rowing in the true sense; much Of it is a
kind of manufacture Of new money by the
indirect method of issuing bonds More
borrowing by the Government. we always
have been told, leads toward imitation Ar
80. by this line Of reasoning, we are little
nearer to imitation now that ever before.
Security Tax Enters Picture.
But the administration has q gadget
which may alter this picture. The admin
istration (acting strictly according to the
law is taking the money paid in as socia
security taxes, and is using this money
If it were taxes of the ordinary kind. Tho
administration is using this money to pa
its ordinary outlays, for relief and every
thing else. The use of social security re-
celpts in this way may make difference il
the probability of imitation. do not kno"
whether 1t does or not-the process Is so
strange that it is beyond my understand
ing. Somebody who does understand it
ought to study it and make it clear to the
public.
II the present business recession were
an ordinary incident Of the normal eco
nonlic cycle, plenty Of persons could tell
what the next phase would be. They would
probably say that our rebound from the
depression of 1929-l932 had gone too far,
that prices of many things had gone too
high, that there was a buyers strike in
many fields. They would look upon the
present recession as mainly a buyers
strike OF the type that occurred in 1920
and 1921. And looking forward they would
say that presently prices would drop a lit
tie farther, that thereupon BUYERS would
begin to buy. and that some time during
1888 we would be off into new and higher
range Of business activity and prosperity.
Precedents Untrustworthy.
That is what economists would say If
they could look upon the present as a
phase in normal economic cycle, COM
parable to what happened after the de-
preston of the 1905 and after that Of
the early 1905. But can they look upon
it that way? Can they reason from the
experience of the 1905 and the 1905 to
the present? Are they not obliged to take
into account factor that never existed be-
fore?
There Is throughout the world a move
ment toward a new conception of society
and a new form of government, toward
collectivism as form of society and CEN
tralized, one-man power as form of gov
ernment. The existence of this tendency
requires us to ask ourselves question. The
question, in its mildest form, is, can this
tendency exist throughout the world with
out affecting America? Ideas, both sound
ones and fallacious ones, are infectious.
They tend to be more infectious in propor-
ton as the spread of ideas is facilitated by
the radio and other agencies of communi-
cation.
In this condition, can we watch during
20 years past, the inception of this new
lOSd LII ISlScld, oPiCda AAi oiAANiC 4oA LILO
to Germany, Italy and other European
countries. and finally to South America-
can we watch that and remain confident
that America will not be infected?
In another form, the question would be.
are there in America persons who wish to
impose this new conception on us and root
it here; or who think the old American
conception of individualism (Which its enc
mics misleadngly call "capitalism'O Is
doomed anyhow and that it is no harm to
give it kick? Are there such persons, and
are some of them within the administra-
ton? Gen. Hugh johnson says there are,
and he should know, for he himself was
within the administration as head Of the
NJ r. A. George Peek says there are, and
he, too, should know, for he was within the
administration as head Of A. A. A. and in
other positions.
Clearly, in considering the present recess
sion and its possible outcomes. we cannot
divorce the ordinary economic picture from
the existence Of a tendency In the world
toward a new form Of society and govern
ment This u the new factor the predictery
ne3t week must take Into account.