Evening star., 1947-04-21


more for houses than they are ablt
to afford.
Families Are Using Savings.
1t provides no answer to many
millions OF American families II
every city. town and rural area
Because Of high prices, too many
of these families are spending thetl
meager savings and cashing theil
war bonds. They are postponins
necessary medical care. They have
gone into debt in an amount Sc
per cent greater than q year ago
They are doing this. not through
choice, but in order to make both
ends meet. And most OF these many
millions have no one except Their
Government to speak for them.
In addition to this human aspect
it is a dangerous economic fallacy
to say that prices are not too high
simply because people are still buy
ing. A bridge designed to carry Il
tons is not safe with Is tons on II
even though it has not yet begun
to cave in. The excess weight mus,
be taken of the bridge In time
When it begins to crack, 1t Is toe
late.
There is one sure formula for
bringing on recession or de-
preston. This is to maintain ex-
cessively high prices. Buying stops;
production drops; unemployment
sets In; prices collapse; profits van
ish; businessmen fail.
That formula was tried after the
first World War. And we paid for
it. Between 1920 and 1921, annual
income fell by $4,000, 100000. In
dustrial production dropped 23 per
cent. Unemployment increased by
more than 1000 900. Business fail
ures more than doubled. Farm losses
were appalling.
Prices Must Be Reduced.
We must not choose that formula
again. If we are to avoid recess
sion we must act before 1t starts.
Prices must be brought down.
speak first to those businessmen who
have it within their power to reduce
their prices.
Price reductions will bring more
prosperity and profits in the long
run. Lower prices will sustain and
further increase the present high
volume of sales and stimulate great
er production. This Nation will
grow only through increased pro-
ductivity and more and more pro-
duction. Higher prices for the same
amount of goods will lead only to an
artificially inflated economy, not a
sound economy.
Present business conditions per-
mit-in fact, they reQuire-lower
prices in many important fields.
Profits in the aggregate are break
ing all records although profit mar
gins vary greatly in individual cases.
In 1916. corporate profits after taxes
were 80 per cent higher than IN
1945. In the first quarter Of 1947,
they ran even higher. These figures
are total figures and do not, OF
course, apply to every industry or
every business.
Business Has Responsibility.
I do not have to name the par
ticular Industries or the particular
businesses. The men who run them
know exactly which are included
and which are not.
Our private enterprise system now
has the responsibility for prices.
During the war, the Government
shared that responsibility through
the mechanism OF price control. In
the spring of 1916, I strongly recon-
the continuation OF price
control 50, that We could attain an
orderly withdrawal from control of
prices as supply approached de-
mand. A group saw fit to sabotage
price control and represented to
the public that prices would come
down in a free market.
This has not taken place. On
the contrary, prices rose sharply
after controls were taken of and
they have continued to rise. Pri-
vate enterprise must display the
to make our free economy
work by arresting this trend. Some
price reductions have already shown
that this leadership does exist. I
commend what has been accom-
plished. I ask other business lead
ers to step forward in the same
In the present economic situation,
labor also has responsibility.
I said In January of this year
that excessive wage demands would
threaten another infiationary wage
price spiral. I also said that some
moderate wage increases were JUS
tilted by economic or equitable con-
Since then, this counsel of moder-
alton has generally been followed
by wage earners and their leaders.
Wage Demands Urged.
Some moderate wage adjustments
have already been made this year
peacefully. Some others may be
Price adjustments and
wage adjustments have been the
method of sustaining
mass buying power and sharing the
benefits of our increasing wealth.
In our immensely productive econ
omy, fair prices and good wages
are the earmarks OF American pros
perity.
To wage-earners and their lead
ers repeat my counsel of modera-
ton.
But it does not require much fore
sight to see that, if the cost of liv-
ing does not come down, the size of
wage demands might be magnified.
Peaceful management-labor rela-
tons would be jeopardized. Bitter
ness and strife would become harder
10 avert.
This is another reason-and a
most compelling one-for bringing
prices and the cost OF living down
This will help wage negotiations to
proceed toward peaceful adjust
ments beneficial to all. Another i'm
portant contribution in bringing
about lower prices Is increased pro-
on the part of labor. High
er productivity results in greater
which in turn leads to
lower prices to the public.
After war and postwar imitation.
1t is difficult to find solutions fair
IN the cons,,ronr fa3r to tha x,,orln~