Evening star., 1938-07-17
ny the Associated Press,

ministration measures designed to pro-
mote recovery. Mr.. Henderson speaks
frankly from that point of view.
This man Henderson, at one time a
member Of the N. r. A. board, is a
hearty, muscular fellow of 43 years,
who talks plain language and chews
gum while he works. Of1cially he is
economic adviser to the Works Progress
Administration. Like two or three
others, he serves, too, as a kind Of
conomist-at-large for the admins
tration.
In addition he now Is permanent
secretary Of the National Economic
Committee. which his associates say is
''popularly misnamed" the monopoly
| investigation
His motto is: Keep your eye on the
consumer.
Watches Price Fluctuation.
And because he believes the man
who buys bread and shoes and houses
| and cars is the man who keeps the
Nations industrial machine rolling,
Mr.. Henderson watches keenly the
rise and fall Of prices the consumer
has to pay.
Some industries are able to control
the price which they charge for their
products, he declares, thereby defying
1.-The law of supply and demand"
When these controlled" prices get out
Of line, there's trouble a-brewing.
Leon Henderson was working for
the Democratic National Committee.
dishing out economic data for the
Roosevelt campaigners Of 1885 when
he FIRST noticed clouds ahead In the
1897 economic sky. sAs
Most others were optimistic Busi-.,
nsss was good. The stesk market was
going up. Men had Jobs
Mr.. Henderson figured that prices
were getting out Of line: Non-ferrous
metals, led by copper, were increasing
tsfApidly IN price; steeIehAd gone upss
lumber and other building materixe
were costing more. @as@ ee
ImbaIance in Pfices. sss-.s... = =
" was firmly convinced" he tells
friends, that an imbalance in prices
was producing deficit In purchasing
power"
In November. 1886. Mr. Henderson
argued strongly for his storm warm
ings in q meeting Of Government en-
ployment experts, called to consider
relief needs
That winter, he gave a series of
dinners at his home. He asked in
Government economists and lawyers,
and he talked to them about what
he saw.
The winter was one long debate
with most Of the experts aligned
against him.
By the spring of 1887, he Was really
getting anxious. One day at the
w. P. A., he ran into Administrator
Harry Hopkins on the elevator. Mr..
Hopkins asked how business prospects
looked, and Mr.. Henderson replied:
"Ill write you memorandum on
that right away"
He went into his Office and tapped
out the memo on the typewriter. It
was called Boom and Bust" And 1t
ended up at the White House.
Forecast Shrinkage.
After stating the problem-"What
can be done to prevent or minimize
the threatened boom and bust?"-Mr.
Henderson wrote:
"Are we really threatened? Yes.
Recovery since 1888 has been char
acterized by sustained purchasing pow
er arising from private and govern
mental sources The effects Of
rises in wholesale prices will be strong
ly reflected in the cost of living within
few months.
Then, unless firm action is taken,
will come the race between purchasing
power (through farm, wage and relief
income) and inflated prices-a losing
race for purchasing power since it
cannot keep up. The inevitable result
Is shrinkage first Of spending, then
OF production and employment"
What weapons were at hand to
combat the boom and bust?"
He cited, first, the Governments
power over money and credit. Then
he turned to means OF fortifying pur-
chasing power. He urged that farm
income be guarded; that wages be
sustained and raised through a mini
mum wage law for sweated occupations
and strengthening of collective bar
gaining.
GA new farm program and wage
and-hour law were passed year
later)
u
He urged creation OF council to
study the need for new legislation
dealing with monopolies. holding COM
panies, Federal incorporation of busi-
ness firms, regulation of industry,
patent rights.
GA year later the monopoly in
vestigation" was voted by Congress,
and Mr.. Henderson was made q
member of the committee.)
He arrived at this conclusion:
"At the same time (the Government)
was hammering at prices at the top, it
could maintain purchasing power with
adequate relief, and a flexible works
program that had some permanence"
Other Government economists still
doubted the Henderson predictions.
Ofhcials talked about cutting relief.
dispensing with public works and bal
ancing the budget And in the fall the
"bust" came.
Mr.. Henderson joked yesterday about
his reputation as "a magician with
figures" He called his predictions
L.