The potters herald. [volume] (East Liverpool, Ohio) 1899-1982, 1942-08-13
Economic . . :.
@M9hA9hA
National and International Problems
Inseparable from Local Welfare

Britain has had forced savings for
over a year," says Business Week
Canada just broke down and put it in
the new budget. We are going to have
it soon. It's question when and what
sort. Several agencies are already
working quietly on blueprints."
The Government, in both it's legis-
lative and executive branches, has so
far shown remarkable ability in avoid
ing coming to grips with the forced
savings issue. Secretary Morgenthau
has said that he hopes that voluntary
sales of War Bonds will prove ade-
quate to absorb excess consumer in
come. For the most part, Congressman
idea as political orge or horrible
mien, which might cost them votes next
November. However, the bulk of econ
Omists seem to be convinced that,
whether for good or i'll, some type of
forced savings will eventually have to
be adopted.
The arguments in behalf of forced
savings are simple enough. This year,
time high, due to the $67 ,O0O,OOO,OOO
which is being spent for war produc
ton. The pockets of the people, espe
cially those in the lower income brack-
cts, are better lined with currency than
they ever have been before At the
same time, the supply of goods avail
able to civilians is steadily diminishing
and it will keep on diminishing until
the war ends, unless an unloOked-fOr
production miracle occurs. The combin-
ation of more money and less goods
adds up to but one thing imitation. Even
today, despite government price cell
ings and controls, an OminOus "black
market" similar to the European
black market, is growing in this coun-
try Inscriptions men are bootlegging
tires sugar, metals and other con-
trolled items precisely as liquor used to
be bootlegged in the prohibition era,
and they are demanding and receiving
eXtortionate prices. A ten-dOllar tire,
for instance, will bring $50 and often
more in the black market.
Economists of all the schools agree
that imitation can be prevented only if
some means is found to absorb and
make inactive large part of the pub
lies income. Taxes, the theory con-
tinues, offer only partial solution
Congress obviously feels that the new
tax bill, which is unprecedented in
severity, comes pretty close to the
limit. On top of that, it is generally
believed that the people will balk and
yell for relief if taxes 60 much higher.
Sales of War Bonds have been excel
lent, but they haven't closed the so
called Imitation gap" Therefore, the
argument goes, forced savings consti-
tute the answer.
In England, the forced savings plan
seems to have worked reasonably well.
Under it, tax rates are hiked to the
hilt-but part of what the Englishman
pays will be returned to him after the
war. In other words, he simply builds
up a credit with the Government, which
Will be rebated once the guns stop fir
ing. 1t is likely that if and when forced
savings is adopted here, we will follow
the English plan in essentials.
There are other possible methods.
For example, Congress could pass IA
law making it obligatory for everyone
to put ten per cent of his savings in
War Bonds. Then, to further encourage
savings, deductions would be allowed
for private savings in making income
tax returns. Whatever method is final
ly decided on, the main point will be to
take money out Of the channels of
trade - to keep it from purchasing
goods. The less the consumer buys in
other words, the more we will have for
war purposes.
There is still another argument
which the forced savings advocates
use perSuasively. When the war ends,
war production will naturally end
and there is going to be difficult
period while we make the adjustment
from war economy to Il peace econ
omy. If people have money saved, the
argument runs, this adjustment will be
eased To quote business Week again,
it would "act as Il kind of automatic
insurance"
There seems TO be little active Oppo-
sition to forced Savings--many econo-
mists hope that it won't prove neces-
Sary, but admit that before long it may
prove unavoidable In both conServa-
tive and liberal circles, there is unani
nifty of opinion to the effect that in
ilation must be avoided at all costs
The very credit and solvency of the
nation is the issue at stake. SO don't
be surprised if the Government tells
you one of these days that you're go
ing to have to save definite percent
age of your earnings.
4 K 4
Some of the best informed commen-
tators are now arguing that there must
be revolutionary changes in the organ
ization of the Government if the war
effort is to be advanced with maximum
speed and minimum delay. They point
out that Washington red-tape makes