Evening star., 1940-01-07
Production Reaches
Highest Level Of
Decade in 1899
Gain in Buying Power
Declared Necessary
In Coming Year
Special Dispatch to The Star.

special Dispatch 10 Ihe star.
NEW YORK, Jan. 6.-When the
European war broke out last Sep
tember, there was wave of specu-
lation which caused a rise in pro-
duction to a higher level than
would have otherwise been attain
ed, according to the Alexander
Hamilton Institute.
Consequently, the year 1889 ends
with production well in excess of
the Nations purchasing power. This
means an accumula ton of inven-
tories which will tend to have a
depressing effect on production in
1910. Consequently, the prospect is
that output will be curtailed next
year unless there is ri3e in pllr-
chasing power to level sufficiently
high to make possible not Only
the absorption of this years surplus
production, but also absorption of
output at the high rate prevailing
at the present time.
On the basis of preliminary fig
ures. the national income produced
in the United States this year was
practica:~ equal to the 1887 ma
tional income of S7l,853 ,000, ,000
Consequently, the national income
this year was consideraS..; larger
than last years income of $63 $685.
100000 and, with the exception of
1887, it was larger than in any year
since 1929 While it failed to equal
the 1929 national income of $82,-
69l 100000, the fact should not be
overlooked that, during the last part
of 1889. the national income was
practically at the 1929 level. The ma
tional income in october, for in
stance, was larger than in any
north of 1929 with the exception of
October of that year.
More Produced.
The expansion in the national in
come from. 1888 to 1889 was due
entirely to an increase in the
quantity of goods produced Despite
the rise in prices after the outbreak
of the war, prices for the full year
of 1889 averaged over than in 1888.
The quantity of goods produced in
1889 was 13 per cent larger than in
1888 Production was also larger
than in 1887 although there was
practically no change in the ma
tional income. This was due to the
fact that prices were higher in 1887
than in 1899.
The quantity of goods produced in
1889 was thus higher than in any
year since 1929 and with the eXcep-
ton of 1929 and 1923, it was the
highest on record.
1t is apparent, however, that the
entire output of goods in 1889 was
not consumed. This is indicated by
the fact that while production was
only ga per cent lower than in 1929,
distribution of goods, as measured
by freight car loadings, showed
decrease of about 35 per cent. The
annual number of freight cars
loaded in 1889 was slightly more
than 34,000000 as against nearly 53,-
100000 decade ago.
Another indication that the entire
production in 1889 was not consumed
is the fact that building operations
as measured in square feet of floor
space showed decrease of So per
cent from the 1929 volume. With
out greater activity in the building
industry in 1889, which is a large
consumer of manufactured goods, it
Is evident that the factory output
was excessive.
Regarded as Unfavorable.
Consequently, the figure on the
national income produced in 1899
presented more favorable picture
OF the economic situation than that
which actually existed. This exces-
sive production in 1899 is an unfa-
vorable factor in the business out
look for 1940
The overproduction in 1899 will
tend to result in a business recession
in 1910 unless there is an expansion
Of purchasing power this coming
year. At the present time, there is
little indication that purchasing
power will be increased by a reduc-
ton in the prices of manufactured
goods. Consequently, an increase in
purchasing power in 1910 will depend
on the development of imitation.
Since war and imitation go hand in
hand, it may be assumed that the
tendency in 1910 will be in the di-
rection of imitation. 1t is question:
able, however, whether the infla-
tionary movement will be extensive.
After the outbreak of the World War
In 1914, little imitation developed
until 1915. This suggests that any
pronounced imitation will be post
poned until 1941.