Imperial Valley press., 1938-06-05
News Behind
the News
Pump Priniing
The Three PTODS

WASHINGTON. 49, NOW that Con-
gresS has made it clear that there
is to be pump priming in accordance
with the Presidents plan for econ
nmic recovery. it becomes interest
ing To inquire into the reasons Why
the pump-primers think that it can
succeed.
New Dealers say tnat business
went ON the toboggan between 1920
and 1888 when the pump wasn't
primed, that 1T started UP in 1888
when the pump was prlmed and
only went to pot again in 1887
when pumppriming was to drasti-
cally curtailed.
The printing theory has
three props. 1t assumes the system
will work like this: l. Government
provides some purchasing power
when private enterprise and IN
veStment stagnates. 2. Governments
new spending and investment goes
to persons who will spend. take
goods off the market and create a
demand for more goods and em-
ployment. g. Business activity then
increases. Corporations and wealthy
men make profits and invest say
ings in new plants, equipment and
So on, giving private employment
and reducing need for government
employment.
The theory struck a Snag after
national income had risen from 4G
billiors in 1882 to 68 billions in
1887. You can get reasons for 4
dime a dozen. but pump-primers
will tell you that pump -priming had
reached zero early this year, as Il
result OF business demands for
budget balancing.
The following figures, taken from
4. conservative New York financial
journal, give you some idea what
has happened in the terms in which
pump-primers are thinking:
New capital investment Cprivate
pump-priming, that Isl reached an
all time high of over 10 billion
dollars in 1929 and dropped to sev-
en- billions in 1880.
In 1881 the flow of capital in
Vestment dropped below six billion
dollars a year and hasn't come
anywhere near it since.
1t hit a low of S70900J000 in
1888. But at that time government
pump -priming came into the pic
ture in large way.
Subsequent annual history, ac-
cOrding to the above mentioned
series of figures, has been as fol-
lows in terms Of capital investment
and government pump -priming:
1893: Private 700 millions; gov
ernment, 1856 millions: total 1868
millions.
1884: Private, 1895; government
1898; total, 1924.
1885: Private, l4l2; government
3l54 total, 1866
1886: Private, 1878: government,
4025; total, 1898.
1887: Private, 2Oi9; government,
900: total, 2949.
In the first quarter of this wear
capital investment had dropped 10
a rate Of about 1900 millions an
nually and government was max
iIIS dlIilOSl no contribution at ALL
Whatever other implications these
figures may have, it is demonstrate
that 1897 showed more private in
VeStment than in any year sine
1882 and that there was a so pei
cent drop from the combined totd
OF the producing Investment
and pump priming of 1897 before
business went sour.
While government cut its c0ntri-
button to purchasing power by three
billions, industry piled up an cX-
cess OF goods amounting to i've bill
lions
inventories have been reduced
to an unknown extent while fac
tories curtailcd and mon were laid
off. Pump-primers don't seem +
think they can build the govern
ment contribution up beyond 81
e00,000000 for 1893. which means
few CT them hope to be able to do
much more than "hold the line"
this year. None Of them dare try
do less.