Evening star., 1939-08-09
Wall Streeters Feel
'Pump-Priming' Plans
Are on Way Out
Soy Pendulum Swings
Away From Deficit
Spending for Recovery
BY the Associated Press.

By the Associated Press.
NEW YORK, Aug. 9.-Some Wall
Street commentators profess to see
large scale Government pump
printing" on its way out as result of
the defeat of the administration S
works financing bill and the proposed
$500, 100000 additional appropria-
ton for the United States Housing
Authority in the closing days of the
congressional session.
AS these observers interpreted the
reaction against the spend-lend
program, the pendulum is swing
ing definitely away from heavy
deficit" spending as an experiment
IN business recovery promotion.
The fact that never during the
big spending years was unemploy-
ment eliminated, they contend, has
badly damaged "pump-priming"
theories.
The flow of money from WASH
lngton, this school notes, probably
will remain around peak peacetime
levels for some time, but it has been
rising from sources not strictly la
beled pump priming," such as So
clal security and armament pro-
grams.
Pump priming" was a phrase
Whlch came into the Nations vo-
cabulary six years ago, when the
New Deal launched its big relief
spending after slash at Govern
ment operating expenses.
Provide Purchasing Power.
Boiled down to the core. it called
simply for Government use of the
money creating machinery of the
banking system to provide purchas-
ing power for the unemployed
either, through a semi-dole or for
ambitious projects to increase the
Nations capital wealth, like hydro
electric systems and housing.
The followers of the pump-prim-
ing thesis argued money so created
by borrowing from banks and spent
widely would make itself felt several
fold. In the long run, they con-
tended, the expansion in the money
supply would, for one thing. help
give an initiation" slant to business
psychology and thereby stimulate
spending for materials and capital
improvements as precaution against
higher prices.
Critics, however. said the attempt
OF Government to attain full busi-
ness recovery by that route was
sonnet hlnO ol-ly, RI al,
his tail-the gap between Govern
ment spending and private spend
ing for capital improvement was
never quite closed so that there
were enough jobs to go around.
Now that some think Congress
has called halt to further pump
printing at least until the gen.
eral public has opportunity to have
its say in the 1910 presidential cleo
tion-Wall Street has been looking
over the financial remains of the
six years of deficit spending" un-
der the New Deal.
Views of Financial Minded.
What the financial minded see
primarily are the following:
l. A great expansion in demand
deposits in banks, arising in large
part out Of Treasury borrowing to
finance pump printing through sale
OF Government securities to COM
mercial banks
2. A corresponding rise in bank
holdings of the national debt.
This is what Wall Streeter usu-
ally has in mind when he says the
pump-primlng program has left a
lot Of imitation materials living
around" He exercises his imagina :
ton on what might happen to busi-
ness and prices if private borrowers
turned over the increased supply
OF money resulting from Govern
ment spending at fast clip.
Behind the financial ledgers strik-
ing monuments to the mp-prim-
ing experiment might be found in
bridges, tunnels. w. P. A. projects
and other public improvements.
Bickering between friends and foes
OF the spending idea partly pivots
on whether these assets justify the
debts that have come out of it.