Evening star., 1939-08-06
Discusses Dangers in
Two-Price Plan
By O,Den L. Scott.

"lower one-third" of the population that
is highly popular with businessmen.
This subsidy, potentially, is very ex-
pensive. 1t is radical in its implica-
tions. 1t is more subject to abuse than
important industries are lobbying for
more and more of this particular sub
sidy. Seldom is reference made to the
effect of the subsidy on Federal finances.
Here, apparently, is the ideal hand
out-painless, popular, costless and effec-
tive.
But is it?
A little study of the idea provides the
answer. The idea that has taken hold
in amazing fashion is simply to give so
cents to a low-income individual for
each dollar that he spends for foodstuffs.
This SO cents in paper money must be
spent by the recipient for certain desig-
mated foodstuffs, with that spending done
through the regular retail channels.
In practice, the idea means that
low-income family-lucky enough to get
in on the subsidy-will have so cents as
gift from the Government to supple
ment each of the dollars it spends for
food. This additional SO cents is spent
with the grocer, who gets larger volume
of business. 1t is spent at regular prices,
and the retailer enjoys his profit. The
larger volume of trade gives more busi-
ness for the wholesaler, and the professor
and the transportation agencies. Even
tually, the effect of larger sales gets back
to the farmer who finds that he has
sold more and that prices may be af-
fected by the larger scale.
All of this is commendable and draws
praise from tradesmen and commen-
tators and industrialists.
Seldom does anybody inquire about the
source of the money to achieve this
desirable activity. Those who complain
about the w. p A. subsidy and the P.
soil conservation subsidy are strangely
silent about this latest and potentially
most expensive Of all subsidies.
In the City of Rochester, N. Y.-center
of the first experiment-the Government
finds that $500 relief families are taking
$4,000 week, or 100000 a year, in
food orders" These food orders, or
blue stamps, in reality are hard cash,
as good to all intents and purposes as
a dollar bill or a gold dollar of the pre-
1888 days. These orders are exchangable
for foodstuffs. and then, in the hands
Of the merchant, are exchangable for
cash at the bank.
X
At 100000 year in a city of 100000
individuals. the cost of this subsidy plan
very quickly could rise to 100000 900
year if applied to selected cities and If
limited to few commodities.
Now however, pressure is growing to
extend the plan.
Congress already has voted to spend
S14000,000 on an experiment in giving
away cotton goods. The meat-packing
industry is hot after the Government to
add lard and pork products to the list
of foods that will be given away. If lard
and pork are put on the free list, why
not milk and beef and wool and wide
variety Of fruits and vegetables?
At the moment the Government is
starting an experiment to find out
whether or not it Is wise to give away
food to the low-income wage earners
employed in industry, extending the idea
beyond the unemployed. Officials have
been unable to answer successfully the
arguments of employed persons that they
should be as much entitled to Govern
ment subsidy as the unemployed. The
intention now is to limit free food and
later cotton goods to wage earners with
yearly income of $1,000 or less. But
why limit this subsidy to those with an
income of this size? Aren't workers earn
ing s1,10O or 1900 just as deserving as
those earning $1,000?
Once the voting starts, there may be
no limit on the income classes eligible
for gifts Of food and clothing.
This subsidy, popular with business
men, like all other subsidies, is fine so
long as the money holds out. There
really is no definite limit to the dollar
orders" that can be turned out by the
Government so long as the printing
presses operate, and there is no definite
check to the popularity of those orders
so long as grocers can 60 to the bank
and get cash in return. Business. in
reality, is cheering for new system of
paper money.
And in this instance those who have
criticized Government spending have
been sucked in on what can become the
biggest subsidy of an era Of subsidies,
once the idea really takes hold. Free
food and clothing for everybody is its
logical end But with free food and
clothing, much of the population would
possess little incentive to work, and with
less work the Nation would have less
real wealth to show for it's money.
The fact of the matter is that the only
cure for subsidies is to make readjust-
ments that must be made to enable the
Nations economic machinery to function
at much higher rate of speed. Only
through work is wealth created. With
jobs, the Nations idle could produce
goods and earn an income sufficient to
absorb the surplus farm products that
now are being given away. AS yet, how
ever, nobody has figured out the way to
give jobs for all who want and need
them.
The failure of industrial and govern
mental policy also accounts for today's
tangled farm problem
That problem-if it were not for sub