Evening star., 1940-01-07
Sees Business Coins
Throughout 1910
By Frederic J. Hdskin.

States are the two elements which will
exercise the chief influence on American
business in 1910, If past experience OF
such matters is of any value in forecast
ing. What the issue Of war or Of the
election may be only the most hardy man
would attempt to foreshadow at this
moment. Most Americans believe today
that the democratic allies will be VIC
torious in the European war; but that
victory may be delayed far beyond 1910
and politicians are at least partially
agreed that the result of the presidential
election will depend upon the identity
of the nominees. So it might be haz-
arded that few years have started with
so much of Importance in doubt.
The new year marks the beginning Of
new decade of the Goth century, but,
more significantly, 1t marks the lapse Of
10 years of relative depression. While
it is true that some industries are in q
better position than they were even In
1929, the circumstance that millions OF
people remain unemployed and that the
national income is far below what it
was in 1929 the national debt far great
er, impels the conclusion that the heavi-
est depression in American history has
not been lifted. Will 1910 mark the end?
The last World War brought great
prosperity while it lasted, to be followed
by cancerous after effects. Because Of
the determination to tax war profits to
the utmost, there is some thought that
CT hri,, Nv,1,,
fractional and qualified prosperity even
while the guns are speaking and the war
industries operating at capacity. Yet
some economists are thinking that
enough of a lift will be given to place
the country back on the track which will
lead it into normal and. perhaps, pro-
tracted, period of prosperity.
All the statistics tend to show that
long strides must be taken before solid
prosperity can be attained The fact
that production in many lines is greater
than 1t was in 1929 looks we'll enough as
detached statement but it may not be
detached. 1t must be taken in co-ordi-
nation with the plain facts that the pop
ulation is larger, that there are more
people to consume and more people to be
employed that they may consume.
The cold fact which stares the student
in the face in spite of the recovery which
has been thus far made is that, on the
list of % nations compiled by the League
| of Nations, the United States ranks next
| to the bottom in the scale of recovery
from the world wide depression of the
30s. Only France ranks below us.
That business is retarded in presi-
dental election year is at least half
myth. 1t can be shown that there have
been good election years, but the mere
! circumstance that some people are in the
| habit of slowing their pace at such
period may act as brake especially as
| the 1910 election presumably will be q
| test of fundamental theories Of govern
ment; New Deal against, at most, mod
if1ed old deal.
One thing has been demonstrated
private capital must renew its flow into
business investment before any lasting
benefit may accrue if the capitalist sys-
VILLA 40 " So1leAAAdC. SOA ACOlld1o ESlSS
heads school of political economy
which points out that Government
pump-pflming money is low-powered
money. little of which goes into capital
or permanent goods, but into goods which
are destroyed with their use. The in
crease in employment brought about by
pump-priming money is only temporary:
| t1,1 !, u, L.
no longer than the pumped flow Of tax
raised or Treasury borrowed funds On
| the other hand it is shown that money
which goes into long-term capital invest
ment is high-powered money which re-
veals astonishing qualification.
When money is invested in long time
capital goods enterprises it multiplies
employment. Studies have revealed that
when capital goods industries employ
two new men, three additional workers
must be employed by the industries
which serve them. If money is put into
factories, into machinery, into the things
which last and can be continuously used.
scores Of tributary industries become ac-
tive.
| To turn back to what has occurred in
the recent past it is found that for full
10 years after the last World War, there
was an investment OF private capital in
the primary industries of 100000 a
DAY. Except for the brief, inevitable
postwar slump of 1920-21, the period
marked the greatest prosperity in the
history of this or any other country, the
high plateau of the Coolidge Hoover
decade. With the turn into the '30s, pri-
vate investment began to drop away.
For the five-year period from 1893 to
1887 private investment had fallen to
only 100000 day.
| Then came the New Deals gigantic
| mp-priming efforts. BY 1886 the Gov
| ernment money poured out reached 4
total surprising the previous private out
flow;ai it reached s12,0o0,o00 a day. And
yet the same effect was not achieved.
True, there was momentary improve
ment, but the money had been invested
in such way that it did not reproduce
itself. 1t was invested, if one may use
the term, in consumption rather than In
production, with the result that when
the pump-priming ceased in 1897 the
country underwent the most sudden COL
lapse 1t had ever known. The decline
was far more abrupt than it had been
IN 1929-30. In few months the index
plummeted to depth it took two or
three years to reach in the heoinninr ~