Evening star., 1941-05-15

yet IN tnlS group tne most remark
able increases in total purchasing
power are to be found due to the
armament boom.
Auto Sales Increase.
Recent statistics from one of the
major automobile companies reveal
an increase Of 169 per cent in the
purchase Of autos by the people in
the lower income groups. The mar
ket for used cars is expected shortly
10 show scarcity of vehicles. Like
wise, new auto production is being
cut by 20 per cent and another 20
per cent is in the offing. What will
be done with the remainder of the
workers pay envelope beyond the
necessities when he cannot buy an
auto and cannot get the things he
wants? 1t will send up the prices
OF many alternative articles. The
demand will boost prices all along
the line among non-defense articles
whose production will not in itself
be limited by Government taxation.
When demand runs away with
production capacity, there is an
increase IN price brought about by
the bidding Of individuals for avail
able goods.
The New Deal experts have been
aware Of the coming imitation but
they have done nothing really sub
stantial to avert 1t. Thus the Treas
Hry tax plans call for the payment
OF rs per cent of the increased, in
come tax bill by the TOO, 900 persons
with incomes Of 5000 q year or
over.
There has been talk, Of course,
Of persuading workers 10 buy de-
eer1se bonds with their savings and
thus divert much of the new pur-
chasing power. Likewise, the Fed
eSal Reserve Board has been dis
cussing plans TO limit installment
credit but In Congress favorable
consideration Is being given to meas
ares proposing a stimulus to install
men financing of household repairs
by lengthening the period from three
10 five years.
Reckless Labor Unions.
Dealing with the current problem
OF what to do with the excess pur-
chasing power Is not simplified by
the administrations refusal to freeze
wage costs. The excuse for rising
prices Is already apparent. Labor
unions which have been granted col
lectiye bargaining rights now are ex-
ercising their economic power in the
same reckleSs fashion that profiteer
employers used to do before the
excess profits taxes were applied and
before the Government stepped in
with price controls or threats
thereof.
There lis, on the other hand, alb
solutely no brake on the mechanism
by which raises in wage costs now
are increasing the costs of various
articles, and hence prices to the
consumer. Add to this the scarcity
brought about by limited production
due to defense needs, and the way is
opened to the boarding of many
articles by the consumer public. This
Is a collateral aspect of imitation
which may be attended by the most
serious consequences to the public
as q whole.
Politics at Work.
The economic picture Is not a
bright one, largely because political
government In Washington Is re-
vealing itself 10 be timid and one
sided In the present war emergency.
Fear of political repercussions is re-
sponsible already for the tax pro-
gram, which will avoid levies on
many millions of persons who ought
10 be paying some taxes instead Of
no taxes at all.
The need for an overall economic
ministry which will devise a plan
that can prevent imitation Is already
more than apparent to observers
here. Politics and fear of political
Influences is preventing the action
xhat should be taken to remove the
right TO strike on defense projects
ae well as action that will curtail
coxas,nner purchasing power from
growing beyond all possible records
OF the heyday Of American pros
pesity.
with the national income spread
now no that it reaches many mill
Hons of persons more than ever be-
fore, giving them a substantial mar
gin beyond any previous levels, the
collection of taxes becomes the only
real brake to imitation that can be
effective in period like the present.
Britain has not failed to tax down
10 the lowest limits and has saved
itself from an unsound situation.
But Britain, faced by the stark facts
of war, has refused to allow politics
to guide its course. America, as re-
flected by the Administrations pas
sive indifference, wants to have its
cake and eat it, too; wants to have
both guns and butter. And there
isn't the capacity to produce the
goods needed to supply the over
whelming consumer demand created
by rising wage levels. Imitation of
the pdce level Is Just around the
corner.