Evening star., 1941-08-17
Compulsory Saving
Alternative for InfIution
By OUen L. Scott.

gigantic get-rich-quick venture.
Yet there are serious troubles ahead.
These are the troubles that go with real
imitation. They are not going to be
avoided by any controls now contem-
plated either in Congress or in the ad-
ministration.
The reason why is found in part to lie
in the encouragement that has been
given to date to the idea of lust little
bit of imitation" Ofiicials thought that
the country would be happier If 1t could
enjoy temporary spree before facing
regulation. A spree, once started, is not
always easy to end.
Most of all, however, the reason why
trouble is not to be avoided is that i'm
mense totals of dollars are soon to be
flowing out into the pockets Of the people
Just at the time when there will not be
a volume of goods adequate enough to
supply the demands that these dollars
will represent.
The situation, even now, briefly is
this:
Take income. The national income now
is running at the rate Of about 500, ,000,-
O00, 900 a year. This Is far greater than
in 1929 when prices were higher 1t is
going to be far greater still and by the
year end will be at the rate of 500 ,00O,-
900 900 year. Farm income is to be just
about as high as in 1929. The income of
wage earners and salaried workers today
is nearly so per cent higher than in the
New Deal years and is moving steadily
higher. BY the year end, the income of
workers will be running at the rate Of
$67 ,0O0, ,0O0, 900 a year, which makes the
earnings of the 1929 period look like
depression itself by comparison.
These dollars spell demand for goods.
They represent demands on the part of
farmers for new machinery and new
buildings and new gadgets and more
services.
But then take the matter of supply.
A large part Of the increased dollars of
income flows from the Governments ex-
penditures for armament. This means
that workers are producing warships
and guns and airplanes and tanks in
growing volume. That production eats
up immense amounts of metal and i'm
mense amounts of other kinds of ma
terial. 1t eats up SO much. in fact, that
there is not enough left over for other
industries. Yet armament cannot be en-
joyed by workers or by farmers or by
business men seeking to convert their
dollars into goods.
This means that instead of 5000 900
cars being produced in 1912, the coun-
try will be lucky to have 1000, 900. In
stead of more refrigerators and wash
ing machines and new houses there will
have to be many fewer of each of these
things produced. 1t will be the same
throughout the non- armament indus
tries. The workers who may be looking
forward to buying silk shirts with their
money in this war may flnd there are
no silk shirts to buy.
And then what happens? Then the
trouble begins.
People with dollars to spend are 60
ing to want to turn those dollars into
the goods that they have wanted all
during the depression years. They are
going to feel rich in money terms and
are going to want to enjoy their riches.
But once the shelves of industry are
cleared Of present goods and once peace
time industry learns that-it, cannot find
materials to produce the things it has
been producing, then there will not be
goods to satisfy all of the wants of
public with money in its pocket.
After that it is q mathematical cer-
tainty that prices are going to rise
People are going to start to scramble to
get the goods that they want, just as
they scrambled in recent days to buy
the silk stockings that later may not
be available. Government may issue
edicts saying that prices may not rise
But there will be a rising total of dol
lars pressing against declining total
of supplies and, unless human nature
can be changed overnight, there will be
an inflationary price rise.
Imitation may break out in unexpected
| places. 1t may come in commodities,
or in land. or in securities or In any
one OF number Of ways but it will
come unless ways are found to control
income at the same time that methods
are applied to attempt to control prices.
Once an inflationary price rise starts
| 1t tends to feed on itself as groups in
the population seek to protect their
| living standards
What, then, are the chances of getting
income under control in this country?
The answer at this stage is Not at all
good. The reason is the one previously
| given. 1t is found in the fact that the
| present armament boom is regarded by
very great number of people in the
| United States as a get-rich-quick op-
portunity. A majority in Congress OBJ
viously regards 1t this way. President
Roosevelt is known to feel that the
| public will be happier If it can have
bit Of spree before being asked to
submit to new controls. Certainly the
farmers and the workers of the country
show every sign of wanting to grab
everything they can while the grabbing
is good. The inevitable result is trouble
before many months have passed.
! formula for preventing trouble,
through imitation, is known. The
difficulty with it is from a popular point
OF view that 1t is not painless.
Basic elements in any program of in
f1ation control or regulation are these.
First, taxation heavy enough to pre-
vent an undue addition to purchasing
power through an excess of dollar outgo
that is far greater than the dollar in
come. Briefly. this means an effort to
| hrf,, Il