Evening star., 1941-08-12
average We are going to have large,

materially increase the toLal dmount
of goods available for civilian con-
sumption, for the total production
of such goods in the immediate fu-
ture will be limited by the needs
Of production for national defense.
Hence, If we spend all OF our en-
larged incomes, we will only push
up the prices Of the limited goods
available. All or almost all Of our
expanded incomes would then be
absorbed by higher prices, leaving
us with little or nothing extra to
show for our higher earnings. II,
however, enough of us voluntarily
restrict our spending during this
national emergency, investing the
difference in Defense savings bonds
and tax-anticipation notes, total
spending will not increase, and we
will be able to buy the limited goods
available without Q rise In prices.
Here is the situation that con-
fronts US: Suppose that the maxi
mum amount Of goods for civilian
consumption that we can possibly
produce in this fiscal year would
be worth 50 billion dollars at the
present level Of prices, and that
people are going to have so billion
dollars Of purchasing power after
they have paid all their taxes. If
they insist on spending that entire
go billion dollars, the price Of the
limited goods available will rise 20
per cent. Goods which had cost S. 4
will, on the average, then cost $6.
But II people spend only so billion
dollars and use 10 billion dollars to
buy Defense savings bonds. the price
Of the goods available will remain
the same, and in addition people
will have acquired the savings bonds.
In the first case we will get the
limited amount OF goods at such
high prices that we will have Moth
ing left to show for our enlarged
incomes, but in the second case we
will get the same goods at their
present prices and will have saw
ings bonds as well.
1t is particularly important that
people In the middle and lower in
come brackets purchase savings
bonds. OF the total of 80 billion
dollars Of additional taxes recently
approved by the House OF Repre-
sentatives, almost 73 per cent were
income and allied taxes, and only
n per cent were taxes on goods and
services. Even next year it Is prob
able that less than half Of the in
come Of the country will be subject
to income taxes. Moreover, many
Of the most rapid increases in earn
ings are taking place in the middle
and lower income brackets. While
we should not ask those at the very
lowest income level to reduce their
consumption, the necessary restric-
ton OF purchasing power clearly
cannot be contributed by those sub
Ject to income taxes alone. In fact,
the increase in income taxes will
leave many Of those subject to such
taxes with net incomes lower than
in the present year.
Depends on Cooperation.
1t Is obvious that these people
alone cannot purchase enough saw
ings bonds to restrict purchasing
power adequately. A substantial
part OF the necessary reduction must
come from those not yet subject to
income taxation. 1t is in this way that
such people can make their contri-
button both to the financing of the
defense program and to the pre-
vention of an increase in the cost
of living.
From what have told you of the
broad program by which we hope
to prevent an inflationary increase
In prices, 1t should be clear that it
is not program which can be car
ried out by orders from Washington
alone. Rather. 1t is program
which depends for its success on the
cooperation of every American.
Every worker who works longer
hours and every manufacturer who
expands his production is making a
contribution by increasing the sup
ply of goods. both for civilian con-
sumption and for national defense.
Every consumer who directs his ex-
penditure toward goods which can
be made available in larger quanti-
ties without impeding the defense
program is also helping. Each tax
payer who saves regularly in antici-
patton of the higher taxes he will
have to pay is aiding in restraining
price increases. Above all, every
one who refrains from spending all
OF his income and invests a portion
of 1t in Defense savings bonds not
only provides himself with assets
which will be available when goods
are plentiful after the emergency is
over, but also helps to finance the
defense program with the smallest
possible increase in prices.
Each of us. therefore. can make a
concrete contribution toward hold
ing down the cost of living and in
suring the success of the defense
| Drorrann