Evening star., 1938-02-19
Advice to Industry.

President Roosevelt's statement re-
garding price structure in this country
falls into the category of advice to in
dustry. He has suggested a balanced
system of prices such as will promote a
balanced expansion in production" A
balanced expansion in production must
take into account, necessarily, the abil-
ity of the people to absorb or consume
that production. 1t is clearly the Presi-
dents belief that an expansion of pro-
duction will create a compensatory pur-
chasing power among the people who
work and thus make sure the necessary
consumption to prevent gluts of the
market.
What the administration can do about
the price structure-outside of advice
is not entirely clear 1t has already
moved by legislation to effect the price
structure SO far as agriculture and its
products are concerned. 1t Is seeking
through its new Federal housing pro-
gram to effect an expansion of produc-
ton in the building industry. And
third step-which has all the earmarks
OF pump priming'-is further appro-
priation of s250,0OO,OO0 for work relief.
The administration, through both the
Treasury and the Federal Reserve
Board, is seeking to keep credit easy. 1t
is also moving through the Reconstruct
tion Finance Corporation to make credit
easy for the small business man.
These are all important steps by the
Government. How to establish the price
structure Of manufactured articles as
whole, or even of the raw materials that
60 into such manufacture, without some
method of price agreements is a real
problem. So far the administration has
made no step toward such agreements,
although there has been desultory con-
versation In regard to the possibility of
agreements and of the control of produce
ton IN industry. So far as the costs of
labor are concerned-the wages that in
dustry must pay-the Government has
given encouragement to labor. It has
by law made collective bargaining right
for the worker.
In the field of agriculture, the Gov
ernment has gone much further. The
President has just approved the new
crop-control act, which is designed both
to control production and to increase
and stabilize prices of the crops the
farmers grow This new law, which has
still to be tested in operation, seeks to
control, If it does not disregard, the old
economic law of supply and demand.
Whether the country can operate, eco
nomically speaking. one-half controlled
as to production and prices and one-half
free of such control is another matter.
The complexity of the industrial pic
ture, however, presents a difficult task
when any program of production control
and maintenance of price levels is con-
cerned.
The ideal situation for industry is
maximum output, maximum wages and
maximum sales and consumption. Their
interrelation is of greatest importance,
for If output and wages outstrip sales and
consumption the whole is thrown out
of gear.
The picture presented by the Presi-
dent is Of many prices Of commodities
that are too low, and another group of
prices that are too high. In the main,
however, he recommended 4 moderate
general increase in prices today. These
are matters with which, under present
conditions, industry itself must deal.
The administration is opposed to great
price reductions on the ground that
such a movement is deflationary. On
the other hand, too rapid increases in
prices choke consumption, and in the
end make for unemployment and for
a reduction in the purchasing power.
What is sought apparently is a happy
medium.