Evening star., 1941-08-12
Curbing Of Initiation
Depends on Citizens,
Bell Says in Forum
Cont Be Done Entirely
BY Decree, He Points
Out, Asking Cooperation

Undersecretary of the Treasury
Daniel w. Bell discussed program
to combat imitation in an address in
the National Radio Forum broad
cast last night over the blue net
work of the National Broadcasting
Co., and heard locally over Station
WMAL. The forum was arranged
by The Star.
The text of Mr.. Bells address fol-
lows:
America today is arming on an
unprecedented scale. We have dedi-
Gated ourselves to the task of Gre
ating a military force strong enough
to meet any challenge from what
ever quarter it may come. We have
also pledged ourselves to give all
out aid to the democracies that are
so valiantly fighting for the princi-
pies in which we believe. We are
united on these purposes and de-
termined that nothing shall stop us.
It is going to cost a great deal Of
money to provide an Army and
Navy strong enough to make our
country secure from attack and at
the same time to furnish our
friends the tools with which to
carry on to victory. Already ap-
proximately So billion dollars have
been appropriated or recommended
for these purposes and the ultimate
cost is not yet predictable. In. the
present fiscal year the Federal Gov
ernment expects to spend more than
% billion dollars, of which about 10
per cent is for national defense
alone. This is, of course, large
sum to spend for one governmental
function, but it is less than one
sixth of the national income we ex-
pect to have during the same period
of time. 1t is certainly a small
price to pay for the preservation of
our way of life.
Many people are worried, however,
by fears that these large expendi-
lures will lead to imitation, and
fear of initiation may of itself bring
about initiation, unless adequate
measures of control are undertaken.
Initiation is word of many mean
ings and it is difficult to get econ
omists to agree on specific defni-
ton. In fact, it is said that when
five economists get together to dis
cuss this intricate subject, there are
likely to be six definitions of infla-
ton. each with many qualifications.
But I think that imitation means to
most of us a substantial and con-
tinuing increase in prices, leading
to what was known during the pc
riod from 1917 to 1920 as the high
cost of living"
Evils Well Recognized.
The evils of such a rise in prices
are well recognized. From the Gov
ernments point of view price in
creases will raise the cost of the
defense program. This in turn will
require larger borrowing by the
Treasury and will place higher
burden of debt and interest pay
ments on this and future genera
tons. Those whose incomes are
relatively fixed will find that in
f1ation reduces the amount of real
goods that their dollars can buy.
A rising cost of living will lead to
labor unrest, as labor will demand
higher wages to keep pace with the
increase in prices. Not only will
such unrest directly impede the ma
ttonal defense program but in
creased wages will raise the cost
OF production, which in turn may
justify further increase in prices.
And so runs the inf1ationary spiral.
The Treasury clearly recognizes
Its obligation to the American pub
lie to do everything in its power
to prevent unwarranted price in
creases and to protect the country
from the evils of imitation. This
disease, however, cannot be con-
trolled by fiscal policy alone. Only
If we proceed against the problem
on all fronts and with the co-opera-
ton OF the people of this country
viii we be successful 1 should like
to outline tonight the broad pro-
gram by which the Government
plans to prevent our large defense
expenditures from increasing the
cost OF living, to describe the part
that the Treasury is playing in
these plans, and to explain how
each citizen can make his own in
divldual contribution to this pro-
gram.
Pr-t-
The most desirable defense against
imitation is, of course, an increase
in the output of goods. The more
goods available for consumption
the less prices will rise. But already
much of the productive capacity of
American industry is being strained
to manufacture the things needed
for national defense. More than a
million and a half men in a swiftly
expanding army must be supplied
with weapons in order to make them
an effective fighting force. Industry
is being called upon as never before
to manufacture battleships, de-
stroyers, cruisers and other craft
for the Navy, and above all planes
Ill CfCl 1IlSlSooAllS 1udileiClSo bCOil
for ourselves and for the democ-
racies abroad.
Curtailment of Production.
IT is already clear, therefore, that
we must drastically curtail the pro-
duction of civilian goods which COM
pete most directly with national de-
fense. The production of automo-
biles will be materially reduced next
year, and many other durable goods
will have to be restricted also to
make way for defense production
There are several steps which car
be taken to prevent an inflationary
increase in the price of goods made
scarce in this way. A price ceiling
can be imposed on the commodities
involved. But this cannot be done
effectively unless Congress vests the
appropriate authority in the Presi-
dent. Hence, it is highly desirable
that the President be given statu-
tory powers to impose price ceilings
whenever he finds such ceilings te
be in the best interests of the
economy as whole. A second ster
Is to restrict extension of install
ment credit wherever extensions o1
such credit are likely to increase the
demand for those goods which are