Evening star., 1938-07-03
President Cheerful Over
the Business Outlook
BY OVEN L. SCOTT.

dent about his political position and
very cheerful over the Nations business
outlook.
Until now 1t has been automatic that
a President in power gets the blame for
hard times and enjoys public acclaim in
times OF prosperity. That, however, was
before the days of what economists call
compensatory spending" This is a high
sounding name for vast government sub
sides.
If the turn is far the worse, then the
number of grateful recipients Of Govern
ment. subsidies rises sensationally. That
number Is expected to pass thirteen mil
lion before November, to Offset in part at
least the loss of support of those who
want to throw out the "ins'' during
time of trouble The millions receiving
and to receive Government bounties al
ready are being admonished not to bite
the hand of the giver.
But if the turn Is to be for the better,
then not only the grateful recipients of
subsidies, but the bandWagon riders as
we'll will tend to feel friendly to the
party in power.
President Roosevelt finds himself in a
unique position. He is armed with vast
amounts of money which is going to flow
in increasing amounts to millions of vot-
ers. This money will be described as
depression antidote Yet at the same
time, Mr.. Roosevelt faces the prospect
that business recovery will 60 along WITH
or even precede, the large new Govern
ment outlays.
This combination gives ample ground
for the present White House cheer.
Until now most attention has been de-
voted to the depression and it's effect on
elections. Few people assumed that re-
covery could make its appearance soon
enough to affect the primary elections
or the general elections in November.
Because of that assumption OF slow busi-
ness through much of the remainder of
this year, plan was devised to sell vot-
ers on the idea that big business delib-
erately was sabotaging recovery in order
to try to generate political overturn.
X +
But, as one important Government off,
cial now explains it,
IT business did have any such inten-
ton, the prospect of profits is going, in
the months just ahead to overcome any
urge to hold back in the vague hope of
gaining few Congressman hostile to the
White House"
The TACT OF the matter is that the past
lew days have seen a sharp reversal of
attitude on the part of the Government S
principal business forecasters. Opti-
mlSm Is becoming as pronounced as was
the previous pessimism. The explanation
Is that this countrys economic ma
chlnery Is geared in way that causes it
either to push ahead or to fall back,
never to stand still for long
1t was Leon Henderson, former head
OF the N. r. A. Division of Research and
Planning and now economic adviser to
Harry Hopkins w. P. A. administrator.
who first publicly called the turn on the
start OF the present depression His first
warning came in April, 1897 Mr.. Hen
dersons views have a way of influencing
the attitude and policies of the White
House. His quiet prodding only recently
led to what now is to become a $500 600
full dress investigation of American busi-
ness practices and policies under the
gulse OF an investigation of monopoly.
Leon Henderson and his staff have
just completed an analysis of the factors
underlying the present business situation
comparable to the analysis that led to
tne prediction year ago in April that
the present depression lay ahead. Tha.
~AA"ASSAo SoAAo give SlOuIlO GIlc FTeSl
dents cheerfulness, just as it gave ground
Tor MS warning on price advances on the
previous occasion.
The conclusion now is reached that the
definite turn in business is to come in
July and August and will be reflected in
the indexes that appear in September.
The further conclusion is reached that
the recovery, once it starts, will be rapid
T2tner than rYeonin0 nd u,ilI foll
pattern OF recoveries in 1921, 1924 and
1892.
Should rapid recovery continue
through next spring. and there is a very
good possibility of this Mr.. Henderson
said. 1T appears that Government
spending should be decreasing at that
time IN order to avoid driving into
boom period"
This observation, pointing to a posi-
bility that all of the money that Congress
just has made available might not need
to be spent, could provide a bit of cheer
for taxpayers now that President Roose-
welt has let it be known that he wants
to devise new and higher taxes to raise
more Of the money that the Government
is spending.
But whether or not there is to be a
boom, Economist Henderson and his staff
can marshal impressive arguments to
support their thesis that real recovery
now Is at hand.
They discover that inventories of goods
that had been mountainous now are
rather well iquidated in many lines.
Few frozen assets are cluttering up banks
and insurance companies and corpora
tior treasures. Farmers have much
more money to spend than they had in
1882. The stock market is generating
some "easy money" with its discounting
OF imitation. Furthermore, depression
this time has largely been confined in its
acute phase to few manufacturing and
mining centers. People generally have
not suffered the loss of their savings nor
have their incomes suffered as they did
in the last depression.
Now Government spending is to aug
ment those incomes where they have
suffered.
AS matter of fact, the national in
come, now running at the rate of about
$50 900 900, 900 year, is more than am
pie to support level Of industrial activ-
ity 10 to Is per cent higher than at pres
ent. The country has been using goods
previously produced, thereby accentuat-
ing the depth of depression. Now that
inventories are lowered industrial activ-
ity, the forecasters say, must move higher.