Evening star., 1947-01-08


possibility. This would directly in
lterfere with production or employ
ment by creating or intensifying
shortages Of materials, parts, or
equipment. Through creation of
uncertainties about demand or sup
ply and costs of materials, it might
lead to reductions in business out
lays for plant, equipment, and in
/ ventories.
Possibility of Recession.
That is why In my State of the
Union message I placed so much
stress upon successful labor -marl-
agement relations.
During this year, the underlying
favorable factors are strong enough
to maintain high prosperity. But
this year brings us face to face with
Embellishments and unfavorable
possibilities which, If not corrected
Ior prevented, could cause q recess
sion in production and employment.
The Government will watch this
situation and be prepared for action
II needed.
shall now proceed to discuss the
contribution labor, business, agricul-
ture, and the Government can make
to the solution Of these basic prob
lens, along with recommendation
related to other elements in a ma
tional economic policy" as called for
by the Employment Act.
hort-Range Program.
My short-range recommendations
have long-range significance as well.
But they merit immediate attention
from the Congress and from the
people as whole because of their
influence upon economic conditions
in 1947.
l. Prices and wages.
Removal of emergency price and
wage controls has restored the main
responsibility for prices and wages
to business, labor, farmers, and con-
sumers. The Government can point
out dangers seen from the perspec-
tive of the whole economy, but the
correctives must largely be applied
by others.
Business should reduce prices
wherever possible in order to bring
about the necessary increase in con-
smner purchasing power to bolster
their markets. Price reductions are
especially needed in the case of
goods such as many articles of food,
clothing, house furnishings, and
building materials. whose prices
have risen out Of line. If business
makes these reductions in a timely
and orderly way, it will help sus-
tain markets rather than destroy
them
Farmers must realize that last
years exceptional farm prices will
fall somewhat as world food sup
plies increase and as consumers
find a more ample supply of durable
goods to purchase. Existing price
supports afford protection against
a severe price decline. @
High Productivity Required.
Labor, on its part, must recognize
that high volume at low costs and
low prices requires high productive
ity and the absence of restrictions
on production. For its own sad-
vantage as>well as that of the com
try at large, labor should refrain
from demands for excessive wage
increases that would require price
increases or would prevent price
reductions that are necessary tossell
the capacity output of the product.
- Ha x1aN fSN ctr n
recognize that increased productive
lity permits wage increases in some
cases as well as price reductions;
and that wages and salaries need to
be raised where they have Jagged
substantially behind the increase In
living costs in the past few years
or where they are substandard.
But just as there can be no uni
yersal or uniform rule to govern
price reductions, so there can be no
uniform rule relating to wages. Both
price adjustments and wage ad-
iustments are necessary in the ensu-
ing months. Wage adjustments, like
price adjustments, need to be made
with a discriminating regard for
individual situations throughout the
economy.
The Government can help in sew
eral ways to maintain a. balance
between prices and wages. Procure
ment agencies will avoid policies
that stimulate price increases or
prevent reductions. Disposal of sur
plus goods will be speeded. The
antitrust laws will be applied Wig
orously to prevent and eliminate
restrictive practices and pricing
abuses.
Extension of Rent Control.
The Congress should take steps
at once to extend rent control be-
yond next June. A large increase
in rents would substantially reduce
consumer purchasing power.
On the wage side, the Congress
should extend the coverage of the
Fair Labor Standards Act to classes
Of workers in interstate commerce
now excluded, and should raise the
minimum wage in view Of the sub
stantial rise in the cost of living
and in the national production since
it was enacted.
2. Social security.
I shall treat generally Of the So
cial security program In a subse-
quent section dealing with long
range programs and recommends
tions. In view of current economic
trends, however, certain action Is
desirable at once. I urge Congress
to take immediate steps to revise
benefit payments under the, social
security system. The Congress has
already authorized temporary in
crease in public assistance benefits.
This legislation expires by the end
Of this year and new legislative
action is required. Benefits under
the Old-Age and Survivors Insur-
ance System should also be adjusted.
These measures are necessary to al
Ileviate real hardship which has been
Aggravated by increases in the cost
of living. Beyond that, adequate
social security benefit payments pro-
vide a desirable support to mass
purchasing power.
Million Homes Needed.
8. Housing.
i More than q million additional
| L. H. - Il DO