Evening star., 1944-04-02
Full Employment After War
HeldDependent on Spending
Economists Urge Maintenance of Cycle of High
Purchasing Power, High Production, High
Employment and High Wages
Bp Charles G.. Ross.

Inc.), which Donald M. Nelson, the
WPB chief, has praised for its broad
comprehension of the major economic
and social problems the Nation will
face" Nathan, an outstanding young
economist, is the former chairman of
the Planning Committee of the WPB.
He wrote his book while an Army private
In hospital with a back injury, suffered in
training The incentive to write about
postwar economic problems came, he
says, from talks with his fellow soldiers.
He found them, in the main, not articu-
late on these problems, but with views
that point definitely to the possible
emergence of potent pressure group
among veterans after the war"
"They will be insistent," he says, "on
being taken care Of in the future, not in
the sense of pensions and relief, but in
having steady jobs. This pressure can
be constructive force behind the de-
velopment of sound economic measures
which will assure full employment and
sustained prosperity within the frame
work of our democratic, free-enterprise
system. Or the soldiers may become
dangerous group if ignored by the lead
ers of democracy and thereby delivered
into the hands of demagogues who have
no respect for or desire to follow the
principles of democracy"
Nathan cogently develops the thesis
that idle dollars prevent the sound
functioning of our economy. Everything
possible, he says, must be done to dis
courage total savings beyond the level
necessary to provide for healthy in
vestment demand.
Field of Controversy.
This does not imply in any sense"
he continues, that a considerable vol
ume of savings is not desirable. In
fact, savings are necessary If we are
going to provide for new productive
assets and increase our wealth, but
savings beyond that level which can be
effectively and continuously used are
economically harmful. In fact, not only
do such excess and idle savings fail to
result in greater wealth, but they cause
much less production and employment
than would be achieved had these idle
savings been spent for consumption.
Also, these are largely washed away
during periods of depression
Nathan gets into highly controversial
fleld-that of the ''spenders" vs. the
'non-spenders rs"-when he says ''there
isn't the ghost Of chance" of finding
private investment channels to absorb
the 100000 900 which he estimates
will be saved voluntarily out of gross
national production of $150,O00, 900 900.
He cites in proof the record of the 1920s,
when there were the most favorable
circumstances for private investment.
Our economic salvation" he contends,
"lies either in more spending and less
saving by the people as whole or in
large-scale Government spending. Per-
haps a combination of the two will be
necessary"
Nathan's reasoning has been con-
tested at some points by other econo-
mists. For example, DR.. Harold G.
Moulton, head of the Brookings Insti-
tuition, says in his recent book. THE
New Philosophy of Public Debt" that
the argument that we are confronted
with permanent excess of money
savings" is based on a fallacious COM
parison which takes no account of in
creased taxes and their effect on
savings.
Savings Held Reduced.
1t is true, he says, that in the decade
OF the 1920s, as he himself established.
there was such an excess, owing pri-
marlly to the high concentration of the
national income that then existed. But
he says there has been since then
Verltable revolution in the distribution
of the national income; the lowest in
come groups have been aided in various
ways, while on the upper level profits
have declined somewhat and salary and
bonus payments have been appreciably
restricted. In consequence, he argues,
both the aggregate volume of money
savings and the percentage of the ma
tional income directed to savings chan
nels have been materially reduced.