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steady increase in the income
which the Nation produced, re-
flected in increased wages and SAL
aries, in increased dividends, inter-
est and individuals income In
1887 the total Of our citizens in
cori. had riser. to $4,000, 100000.
At the end of 1885 the efforts of
the Government to aid in increas-
ing the Nations purchasing power
and in stimulating business had be-
come so we'll recognized that both
the business community and the
Government felt that large meas
ure of the Governments spending
activities could be materially re-
duced.
Undesirable Practices
Blamed for Decline.
But the very vigor of the re-
covery In both durable goods and
consumers goods brought into the
picture early in 1887 certain highly
undesirable practices, which were
in large part responsible for the
economic decline which began in
the later months of that year. Again
production outTan the ability to
buy.
There were many reasons for
this overproduction. One was fear
fear of war abroad, fear of in
f1ation, fear Of Nationwide strikes.
None of these fears have been
borne out. There we're other causes
of overproduction, and these causes
differed in each industry.
The net result of these causes
and ll-advised practices was
repetition, on small scale, of what
had happened In 1927, 1928 and
1929 on much larger scale. In
other words, production in many
important lines Of goods outran
the ability of the public to purchase
them. For example, through the
winter and spring of 1887 cotton
factories in hundreds of cases were
running on a three-shift basis,
plling up cotton goods in the fac
tory and in the hands of middle
men and retailers For example,
also, automobile manufacturers not
only turned out a normal increase
of finished cars, but encouraged the
normal increase to run into alb
normal figures. using every known
method to push their sales. This
meant, of course, that the steel
mills Of the Nation ran on a "a
hour basis, and the tire companies
and cotton factories speeded up to
meet the same type of abnormally
stimulated demand. The buying
power of the Nation Jagged behind.
Thus by the autumn of 1887 the
Nation again had stocks on hand
which the consuming public could
not buy because the purchasing
power of the consuming public had
not kept pace with the production.
Rise in Prices
Held Unwarranted.
During the same period prior
to last autumn, the prices of many
vital products had risen faster
than was warranted. For example,
copper-which undoubtedly can be
produced at profit in this country
for from 10 to IL cents a pound
was pushed up and up to II cents
a pound. The price of steel prod
ucts of many kinds was increased
far more than was justified by the
increased wages of steel workers.
In the case of many commodities
the price to the consumer was
raised we'll above the inflationary
boom prices Of 1929 In many lines
of goods and materials. prices got
so high that buyers and builders
ceased to buy or to build.
Once more, as in 1929, the eco
nomic process of getting out the
raw materials, putting them
through the manufacturing and
finishing processes. selling them to
the retailers. selling them to the
consumer. and finally using them,
got completely out of balance. The
Government Of the United States
fearing just such an event had
issued warnings in April, 1887,
against these practices of over
production and high prices. The
Federal Reserve System curtailed
banking credit and the Treasury
commenced to "sterilize' gold as a
further brake on what it was feared
might turn into runaway in
dation.
The simple fact is that the lay
Ing of Of workers came upon us last
autumn and has been continuing at
such a pace ever since that all of
us, Government and banking and
business and workers, and those
faced with destitution, recognize
the need for action.
Only Four Measures
Of Business Import.
1t should be noted in fairness
that since January /, 1887, the
President has recommended to the
Congress only four measures of
major importance to the business
Of the country:
/. Legislation to stabilize agricul-
ture. A comprehensive law was
approved by me two months ago.
2. Legislation to end serious loop
holes in our personal income tax
laws. This was enacted last
summer.
3. Legislation to put a floor
under wages and a ceiling over
hours of labor in industry, and
4. Tax legislation to remove in
equities from the undistributed
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