The Washington times., 1938-02-18

but nc pre-
cautions were "
taken against Paul Maiion
misunderstanding that one.
The basic fact is the Govern
ment accommodates price in
dex was 80.8 for January 22
when the President first spoke
and 8O.l for the last available
week February 81 when he
seemed to reverse himself-a diff
ference of seven-tenthS Of a
point, which is quite a bit larger
than nothing at all, but not
quite large enough to be q sat
isfactory explanation.
EXPLANATIONS being offered
II by various officials and sub
officials off the record in the
past "A hours would fill book
but might not be worth a para
graph of reading time for q man
on WPA. They say he was talk
ing the first time about finished
goods prices, the second time
about commodities - the first
time politically, the second time
economically, ETC., etc.
In spite of the explanations,
the fact seems to be as clear as
the contradictory nature Of the
two statements. that:
The Administration is under
going q reversal of front. It may
enly be a reversal Of official
talk, but as policies these days
seem to consist mostly Of talk,
it appears likewise to be q re-
versal Of policy.
The deflationary official atti-
tude is turning inflationary.
The psychological brakes ap-
piled vociferouSly if not ear
nastly on prices and credit are
being relaxed. The official foot
is being changed to the infla-
tionary accelerator in a mild
and psychological way at least.
THE authentic reason seems
L to be thai the AdminiStra-
ton has decided this is q de.
preston. Up to now it has been
"a temporary recession" This
phrase is sprinkled perSistently
through all official handouts up
to February Is. particularly in
Treasury Secretary Morgen-
thau's statements.
What caused the changed
viewpoint is not exactly clear,
but it was far more than the
recent weakness in commodity
prices. One inside explanation
is that the Treasury must refi-
nance $455, 900, 900 bonds on
March Is and Morgenthau is in
terested getting the same inter
est rate as the December IS f.
nancing and he will. This ex-
PLANTATION would make the
move appear to be just a little
Treasury hocuSpocus on the
bond market.
A more convincing eXplana.
tion is that Mr.. r. was talking
good politics, but bad economics,
when he said. at first that prices
should be cut, but not wages.
Some of his own economists
have not been able to figure
out what was intended by the
first statement. as prices and
wages, in their unanimous opin-
ion, are relative. That is q price
reduction without a wage reduc-
tion is in fact a wage increase,
because it represents increased
purchasing power.
THE President himself is said
l. by some who should know
to have become slightly con-
fused by ensuing repercuSSions.
This seems to be the real reason
why the committee Of econo-
mists was suddenly formed un-
der Treasury auspices. There is
good ground for believing-de.
spite the naive statements be
ing handed out officially-that
Mr.. r. himself ordered the con-
vocation Of his economists for
the purpose Of Strengthening out
the Government price policy.
How far the Government viii
90 in it's new course has been
hotly debated even among the
economists involved.
Most authoritative guess is the
immediate steps may be limited
to further deSterilization moves
and probably accelerated open
market operations. There is
much talk of further dollar de-
valuation but the insiders do not
like the idea Of upSetting the
AngloAmerican trade agree
ment now in the process Of con-
cluSion.
Whatever develops, most Of