Evening star. [volume] (Washington, D.C.) 1854-1972, 1947-06-05


Senator Taft, Republican, of
Ohio and, prices:
Senator Taft is reported to have
said that apparently the President
and the administration are aban-
doning talk of keeping prices down
in favor of spending abroad that
will keep them up" The Senator
said that loans to other countries
for the purchase of goods here in
crease the competition on home
markets and thus force prices up.
The administration did not advo-
cate the Greek Turkish program for
the purpose of bringing prices down.
It advocated that program for two
important reasons-first, to extend
aid to starving millions and to help
restore their economies so that the
world may regain its prosperity in
the long run; and second, to help
those nations which want to pre-
serve their freedoms and to set up
a bulwark against totalitarian ag-
erosion.
The administration fully recog-
nized that these foreign aid pro-
grams would place some strain upon
the American economy, particularly
in thescurrent infiationary situation
caused by the high domestic de-
mand and the shortages of some
goods. But the fact that necessary
foreign-aid programs add to our
economic problems at home makes
it all the more important that we
handle these domestic programs
with vigor and common sense.
Price Cuts Urgent.
Price reductions, wherever they
are possible, are even more urgent
because of the additional strain
which the world situation inescapa-
bly, places upon our own economy.
To say that We should abandon our
efforts directed toward enduring
world peace and freedom because
these efforts create economic prob
lens is like saying that we should
have abandoned our war effort be-
cause IL created economic problems.
During the war the tremendous
demand for goods would have
forced prices to Enthusiastically high
levels, except for price control. With
price control, we held prices at rea-
sonable levels. Yet. because of the
tremendous volume, business made
fine profits, even after taxes. We
now have tremendous peacetime
demand, domestic and foreign, but
we have not price control. In such
situation, it is up to those whose
profits are high at the current in
f1ated prices to reduce these prices
voiuntarily-in their own interest asl
well as the interest of the American
economy and the world situation.
The very heart of my, request for
voluntary price reductions is that
business intelligence must now take
the place Of Government regula-
ton If our economy is to operate in
the interest of all the people.
Implications of Argument.
The economic implications of Sen
ator Taft's argument should be fully
recognized. The Senator states that
the only way to bring prices down
is to reduce the demand for goods.
If this were true of foreign demand.
it would also be true of domestic |
demand. Let us see where this would |
cad us. If the Government were to
abandon its vitality necessary loan
and expenditure programs, if wages
were reduced, II savings were ex-
nausted and If unemployment set
IN, then there would be less demand
and prices would drop. /
Senator Taft would call this an i
adjustment. would call it tragic |
recession or depression. There is
nothing novel and nothing worthy
about getting a price collapse |
through reducing the demand. That
IS the typical road to a depression. |
The problem facing the American
people is to maintain full employ
ment, full production and high de-
nand and still to keep prices at
reasonable levels. This is the prob
lem to which have constantly ad-
dressed my efforts. Senator Taft's |
argument that high demand justi-
les or necessitates high prices .ix
and dangerous. 1t is
based upon the idea that prices
should seek as high level as the
traffic will bear, rather than the
lowest level that is consistent with
fair profits. That kind of practice
is indefensible and in the long
run it would destroy both pros
perity and profits.
The higher and more stable the
demand, the more opportunities
there are to sell goods-and with
assured high volume operations
there is less and less justification
for wide margins of profit per unit.
Boom and Bust" Idea.
Senator Taft's economic philos-
ophy follows the old idea of boom
and bust. Under this economic
when demand is high,