The Wilmington morning star., 1947-02-17

In the last quarter of 1916 CAPT
tai investment, that is to say ex-
p%enditures for new capital aud
equipment by American business,
not counting agriculture, was rum
ming at the rate of fourteen billion
dollars annually. The question is
how long a American business
continue prudently and profitably
to invest capital at this rate, and
what happens to employment, to
wages, to industrial and farm
prices, when this capital expendi-
ture tapers off?
That question is not easily an
swered, and no one can quarrel
with Senator Taft for not having
a glib answer. But to fail 10 ask
the question, to appear to be I'M
aware that there is such a ques-
ltion, is to be blind to experience
and to the facts of life. For in the
postwar period of the TWenties
purchases Of new plant and equip
ment rose to their peak in 1929 at
something over nine billions, and
fell to a little over two billions in
the depth of the depression in
1888. They never got much above
six billions during the New Deal
era until war production began
after 1899.
MI. Taft's problem, and the
country's problem, is posed by the
fact that if there is a serious de-
cline from the present rate of
private capital investment, a
serious depression is as certain as
anything can be. How long then
can American business continue to
buy new plant and equipment at
the present rate of fourteen bill
lions annually? No n can say
exactly how long. But what is
sure is that it cannot and will not
be done indefinitely and con1in-
ually. In each established business
the time must come when it has
all the plant and all the equip
ment which it can use profitably
to make the goods and services it
has a reasonable prospect of sell
ing. Then, unless there are great
new enterprises calling for capital
investment, new areas to be open
ed up, built and developed. the
capital will not be invested, and
the whole national economy
thrown out of balance.
That time of trouble will surely
come within a relatively few years
perhaps not in three years but
almost certainly within ten. 1t will
come, that is to say, unless we are
fully aware Of it long in advance,
and are prepared and resolved to
deal with it before it comes.
There is nothing in Mr.. Taft's
speech to indicate that he is ever
aware of the problem, much less
that he is preparing for it, Oh is
resolved to deal with it. There is
on the contrary, d~isconcerting rea-
son to think that Mr.. Taft has as
a matter of principle-quite sin
cere principle - closed his mind
against any of the possible solu-
tons.
They are, one, to export abroad
the surplus capitai that cannot be
invested at home, and to reinvest
abroad the profits of that foreign
investment. Mr.. Taft regards for
eign trade as highly desirable
but of trifling Importance and he
wishes TO cut to the bone u eco
nomic action abroad. Second, to
invest large sums in the upkeep
and development of a great mill
tary establishment and of the sup
porting war industries: Mr.. Taft
wishes to trim the military budget
to a point where our tar-flung
commitments cannot be adequate
ly supported. Third, to engage in a
large program of public invest
ment for the conservation and de-
velopment of our national re-
sources, and for the, improvement
of our altogether inadequate sys-
tenn of education, scientific and
cultural research, and public
health: Mr.. Taft will certainly
shrink from anything like that if
it is to be done on large scale.
What then, is there left to him
as a policy which he car support
as the day comes, as come it
must, when private capital invest
ment a no longer be sustained
year after year at anything like
the present rate? He does not ap-
prove of public investment, he dis
likes the export of capital and
does not care much for the ex,
pansion of foreign trade, and he
has never liked military power.
All that is left to him is to act
as if private business could go on
investing capital indefinitely, and
to say nothing about what will
happen to business and to the
country when it becomes i'm
possible for prudent business men
to continue investing huge sums
of new money.
mat may for the time being
serve as a sufficient policy for the
dominant party in this postwar
era. 1t might. serve as a political
program through the election of
l948. But it contains nothing
which can avert, or prepare the
country for, that repetition of the
disaster of. 1929 to which this phi
losophy Of unregenerate laissez-
faire will surely take us.
Copyright, 1947, New York Tribune Inc.
british EAII0RH