Evening star., 1946-06-03
Letters to The Star
Moley's Discussion of Wealth
Prompts New Questions


To the Editor of The Star:
Raymond Moley's column in The Star
of May n gives occasion for some re-
flections which I venture to submit in
the hope they may produce reactions.
He suggests that Secretary Vinsons
estimate of our national wealth as being
somewhere in the neighborhood of 600
billions, i!e., roughly double the esti-
mates for prewar conditions, is based on
the consideration that gross national
income supposedly is 200 billion, roughly
double the income of the prewar years.
I believe his assumption must be ac-
cepted as the reasonable explanation.
Then he asks some very pertinent
questions: Has the value of land dou-
bled? Has the value of our public utili-
ties doubled? I very much would like
to add: Has there been any addition
at all to our national wealth, even
though the gross national income has
been rising toward 200 billion for a
number of years? The production of
war equipment is useless as far as a
civilian economy is concerned. Further,
I doubt if at present, with all the inter-
locking strikes, ETC., there Is any in
come at all comparable to the 100 bill
lion mentioned. I should be aston
ished if the national income for the
current year is much above 100 billion.
But what, then, does the war produc-
tion represent? 1t represents an entirely
temporary utilization of a grossly over
expanded production capacity. This
temporary production finds its compile
ment in the bookkeeping of the country
in credit and debit balances to the
amount of 270 billion: Cash balances
and bonds on one side; Treasury obli-
cations on the other. There are, how
ever, no physical assets or values of
comparable size anywhere in the sys-
tenn because the war equipment which
has been produced has been destroyed
or has no actual value. Thus the whole
process corresponds to a tremendous
watering down" or expansion of the
balance sheet of the country. The ques-
tion is: Can this water" be driven out
OF the balance sheet without reorgan-
lzation? That is very serious question,
To answer it. let us consider the pro-
ductive equipment which is available
BY demonstration it is adequate to
handle volume of production of the
magnitude, of the war production.
America can rebuild the total tonnage of
all ships afloat every five years. America
can rebuild the entire commercial air
equipment in the whole world maybe
in half year. America can rebuild all
automobiles in the world probably every
six or seven years and so on down the
line. And please note: Unless America
does that, or the equivalent, available
equipment and workers will be idle-or
at least partly idle.
Now in order to repay the 270 billions
OF war debts, or rather transform them
into physical assets, the creditors (cash
or bond holders) must call on some
one to deliver goods which are paid for
out of liquid assets. In distinction from
the war goods these peace goods or
services stay in the system. They in
crease the wealth of the Nation. On
the balance sheet money figures are
transferred from liquid assets" to
plant and equipment" thouses, furni-
ture. etc.. Thus, If there is no loss the
water" in the balance may be driven
out over period of years.
But quoting MIR. Moleys own ques-
tions: Will the value of land ever
double? 1t seems inconceivable unless
there is an imitation. Will the value of
public utilities double7 They have been
sufficient to take care of the volume of
war production. How much can houses
and furniture and equipment be In
creased with present-day income dis
tributions? Double in five years? May
be! But that is only a score OF. billions
at best.
However if all this is approximately
as outlined, what then is the conclu-
sion? 1t seems to be that liquidation of
the debt to anything even approximat-
ing the full amount is impossible. Not
because the production capacity isn't
there. BY no means. At full utilization
the whole debt could be transformed
into assets in three to five years No, the
debt cannot be repaid because the con-
sumption OF peacetime economy isn't
big enough to keep the productive capac-
ity of a war economy working full time
for any long while.
For that reason, venture to predict
that the war debt never will be
liquidate. L. r. NIENSTAEDT.