Evening star., 1938-01-05

crimes are abandoned we shall have
prosperity.
The Actual Facts.
Actually, the facts are these. Be-
tween the calling Of the special session
on October II and today the index of
population has declined about rs per
cent. according to the figures of the
Federal Reserve Board, and unem-
ployment, in man-hours, has risen
about two million. The purchasing
power Of the workers of this country,
adjusted to the cost of living and max
ing allowance for unemployment, is
higher than in 1929, as a result of in
creased wages and cost of living
which Is still lower than then. 1t is
estimated at between los and ITO per
cent of 1929 despite the fact that pro-
duction is very far from the figures Of
that time .
The biggest spurt in employment
and in the national income took place
after the first quarter of 1885, when
there was revival in the durable
goods industries. Unemployment in
the first quarter averaged 11,50O,OO0,
according to the figures OF the Ma
tional Industrial Conference Board
But by autumn, prior to the new re-
cession in business, these figures got
down to 000,000-a phenomenal re-
duction. BY the end of 1888 unemploy-
ment was still around the figures of
midl932, and all the inflationary ac-
tivities of the Government had only
brought it down from 100000 to
1900, 900. 1t hovered around these
figures throughout 1884. and the first
essential change for the better took
place under the impetus of revival in
durable goods.
According to Alexander Sachs, who
is one of our leading liberal econo-
mists, and who presented a brilliant
analysis of the situation to the Ameri-
can Management Association on De-
cember IA, 1887, it was not until 1885
that additions to plant in a single
year exceeded the amount charged to
depreciation, and in 1886 the excess
was negligible-less than per cent.
Invested capital Less.
Taking the four years 1888 to 1896
together, depreciation charges of 26
large industrial concerns totxled $780,
100000, while gross additions to plant
were only s570,900,O00, a deficiency of
almost sl20000,000, and this simply
means that invested capital was dimin-
lshed in period when general buSi-
ness activity was increasing-a wholly
abnormal phenomenon.
There was positive liquidation of
capital at time of increasing busi-
ness. There was an impairment of
working capital. cash was diminished
by s5,000,000 and net short term bor-
roWings increased no less than $780,
100000. Why do corporations borrow
on short-term preference if they can
raise capital on reasonable terms?
In other words, something has hap
pened drastically to check what is
now the essential of recovery and
what was already producing recovery,
although at too slow a pace. And that
is investment in durable goods. What
checked it? Previously in this column
have summarized the opinions of the
leading economists Of this country. 1t
was checked not by a declining pur-
chasing power on the part of the
masses. but by g whole combination of
Government -ihstigated measures; the
impact of unsoumd credit dehation-
gold sterilization and drastic raising
of reserve requirementS-the impact
Of taxation of a nature rejected by
every capitalistic nation in the world
no matter how advanced or socially
enlightened. interference with capital
markets, and now a brand-new and
totally anarchic war on underlined
monopoly.
Business Must Have Profit.
And the Presidents comment on
all this is to suggest that business
act unselfishly and invest regardless.
in the interest of the common good.
But the words mean nothing. be-
cause business does not act unselfishly.
1t is not the Rockefeller Foundation!
1t operates for profit, and without the
hope of profit it will not operate That
is the realistic law of its nature.
We can do what the Germans and
Italians have done: force it to op-
crate, under dictatorial coercion, which
is Fascism; or We can do what the
Russians have done: confiscate it, and
operate 1t as an all-embracing Gov
ernment trust
But incidentally the Russians, the
Germans and the Italians all aban-