The Waterbury Democrat., 1937-03-22

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 es Only Partly Compensate
 for Leaping Commodity
 Prices.
 Washington, March 9 The dangers of price inflation, which many government and private econ- ; omists believe is moving us right along toward the next big depres- sion, have now been recognized ofl- cially in a public statement by Federal Reserve Board Governor Mariner 8. Eccles.
 Hardly anyone seems to dispute the dangers of the present price trend. But there is disagreement here as t~:
 1. Whether the next crash if 1t comes, is most likely to hit in 1888. 1889, or 1940;
 2. Whether business is using wage increases to charge consumers for much more than than the costs of such increases.
 B. Whether the government can formulate any industrial policy ade- quate to head off the next depres- sion, or coro with 1t, when and if 1t comes. There is no such policy now. Eccles says "the government should intervene in the public
 interest by taking such action'as
 Is necessary to correct the abuses"
 Insiders argue hotly as to what type of action" might be necessary Fear of economic crisis is one mo- tive behind Roosevelt's demand for a more liberal Supreme Court, but few insiders claim to be sure the President would know what to do to meet such crisis.
 Facts Hard to Find
 Roosevelt recently asked for con- fldential reports as to the added arl- rlual labor cost involved in the steel industry's new wage increases and 40-hour week, and added cost of steel likely to result from the in- dustry's price boosts. The Depart. nlent of Labor fixed the first figure at $l25, 100000 and the second at $375, 100000. The Department of Commerce passed along the esti- mates of $lO4,00O,oo0 and $l08,000,- UOO. A
 Leon Henderson, former chief of research and planning at MIRA, and now economic adviser to Harry Hopkins, was warning of price in- dation year ago. He has persist ently urged national economic council and a pooling of industrial financial information. He has suc- ceeded in getting other New Deal- CTS alarmed, but SO far that's all. Seek Depression Causes
 Nevertheless, Henderson and others among the best government and priva.s economists have been trying to isolate the main causes of the last depression, and a substan- tial group agrees that the follow ing sketch of economic history is very much to the point in consider ing the present dangers:
 Man-hour productivity increased 30 per cent between 1922 and 1923 Unless this was passed on irl the form of higher wages and lower prices 1t meant lower labor costs.
 Labor income was increased eight per cent in that period and the net reduction in labor cost for industry was IA per cent.
 The wholesale price level drop ped from 97.6 points in 1921 to only 95.3 in 1929. Profits increased g per cent and production 37 per cent. Consumers, laborerS and farmers failed to benefit appre- ciably from lower costs. Some of the new profits went into specu- lation. some into Overbuilding of the nations productive capacity.
 The price level dropped to 65 in 1892, was back at 30 in 1935 and stayed there until last October Then the prices of steel, copper, building materials. hides and lea ther and various basic and semi- finished commodities began to go up.
 Big profits were made in 1885 and 1886, but they were made on production volume. Ten of B groups of industries made bigger profits in 1886 than in 1929. The price level Is now about S7. Economists say 1t is going out of bounds.
 Assuming that 3,500,000 workers have received or soon will receive wage increases, theoretically they're compensated. But there are 32,000,- 900 other persons at work, 12,O00,. 900 farmers. and 9,000,000 unem- ployed for whom price increases mean reduced purchasing power. Falling purchasing power means re. duced demand for goods. Reduced demand means unemployment. which means still less purchasing power. And there you have that spiral again.
 That Word Inevitably"
 The Alexander Hamilton's Bu- reau of Business Conditions says: Past experience suggests that the major collapse toward which we are inevitably headed is not to be ex- pected before l939 or 1940."
 This is more optimistic than some guesSeS. tut you might like to pom der on tha word inevitably" for a while.
 Copyright 1931, NEA Service, Incl
 lll G NA A l" "