Evening star., 1939-07-16
Trend Toword Stute
Capitalism Seen
By O1Uen L. Scott.

Almost all Of the world except the
United States appears, on the surface Of
things, to be booming along in the midst
of industrial recovery.
In Great Britain labor shortage is
developing. Industry and trade are near
record levels Germany is almost ex-
ploding with activity. In France produc-
ton is rising and the French people are
amazed by what looks like prosperity.
Japan is operating her industry at top
speed.
Only the United States seems to be lag
ging. Here millions remain without
work Industry is limping along with
much of Its capacity idle. Government
finances never were in such deplorable
condition. There Just isn't anything to
be much pleased about.
Surface comparisons all make it ap-
pear that this country Is falling far be-
hind in world procession.
A look under the surface, however, Is
more revealing.
The British boom grows almost entirely
from armament and war preparation.
One-quarter OF the productive capacity
of the British Isles Is devoted to filling
war orders. The trend of this business
continues to be strongly upward. But
beneath this surface boom there is
continuing disintegration Of British for
eign trade; there is the gradual dissipa-
ton Of British investments abroad there
is continuing flight of British capital
in spite Of restrictions, and there is un-
certainty about the future of the empire
that is spread so loosely over the world.
Britains boom is far from healthy
boom and one that holds little encour-
agement for the longer future.
What goes for prosperity in France. as
in Great Britain, is war preparation.
War industries are operating under gov
ernment orders. Parliamentary goven-
ment has given way to government by
decree. Labor is working under disci-
pline, forced to give up its ideas about
40-hour week and about high hourly
wages Of the type that are so appealing
to American workers.
In Germany more than half of the en-
tire national effort is devoted to war
preparation. There is an acute shortage
OF labor. Workers are being conscripted,
with the retail trade being combed for
men who can be put to work digging
trenches. Capital is regimented. Almost
everybody, in reality, is working for the
state, with only the forms of private en-
terprise remaining. The entire nation is
modified for war and is on a war foot
ing.
Japan actually is engaged in war. That
nation has its industry working at high
rate and is finding difficulty, as Ger
many is finding difficulty, In obtaining
the raw materials to process for war and
industrial purposes.
Take war preparation out of the econ
omy Of any one or all of those nations
and they would collapse like a bubble.
What looks like prosperity is mobiliza-
ton of industry and of manpower for
military purposes. The standard of liv-
ing of the people is being sacrificed In
order that preparations may be made
for war that probably would result in
the destruction of every government in
volved.
The situation, in other words, is funda-
mentally unsound, even though SEEM
ingly prosperous.
And, in measure, the situation in the
United States is somewhat the same, but
with change in emphasis
Like all other nations, this country has
a budget that is persistently unbal-
anced. Unlike other nations, this Gov
ernment Is better able than the others
to enjoy the luxury of this rather chaotic
financial situation. And, unlike other
nations, the United States is using most
of its borrowed funds to support an army
OF unemployed at work outside of pri-
vate industry.
England and Germany and Japan and
France, among others, are using their
borrowed funds to keep industry occu-
pied making arms and ammunition and
airplanes and battleships, thereby giving
work to individuals who otherwise would
be classed as unemployed.
Like other nations, the United States
has its mind on the possibility of war.
But, unlike other nations, this coun-
try has not yet turned it's whole economy
into war-preparation economy, regi-
menting labor and industry and divert
ing its capital into use in a feverish
program of arms production. Also, in
stead of spending money directly through
private industry, emphasizing aid for the
heavy industries like steel and cement
and lumbe- and construction, the United
States ] !; poured out its borrowed
funds on wages to w. P. A. workers, en-
ployed directly by the Government and
engaged in projects that use rather
small amounts of the products of heavy
industry
Both at home and abroad, the results
are highly unsatisfactory from any long
range point of view.
If government in any major nation.
pulled out its supports in the way of
spending of borrowed money, the whole
economic setup would go into a collapse
Yet If governments do not find way to
restore industry to an Independent and
sound footing, the trend will continue in
the direction of state capitalism
1t is this trend that is revealed bv the
Presidents latest lending-for recovery
program.
After years of trying to find recovery
through outpourings of cash to individ-
uals on w. P. A., the Federal Govern