Evening star., 1948-10-10

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But for the 194Os, with the shift
from civilian to war production and
then back to civilian production, the
data are confusing and conflicting
Such statistics as do exist can be
used to show increased or lessened
productivity. depending on the year
chosen as the base for computa-
| ton.
Tools Are a Factor
But productivity, although meas
ured commonly in terms of output
per man hour, is not wholly de-
termined by the skill and willing
ness of the worker. A larger factor
is the tools and equipment with
which the laborer works Another
is management ability and plan
ming.
Capital investment in tools and
equipment has not kept pace with
growth of the labor force and higher
wages, with the result, as the cur
rent monthly survey Of the Amer
ican Federation of Labor points
out, that postwar buying power in
the United States is capable of pur-
chasing a living standard so per
cent above that OF 1899, but indus
try is not equipped to produce the
goods and services to provide that
living standard.
Throughout the depressed 30s and
the war period, the average annual
investment of industry for new ci-
william production tools and equip
ment Jagged far behind what had
been spent in the prosperous 1920s.
Since the war industry investment
for tools and production, has av-
eraged about SIS, 5,500,0O0, 900 a year
and is still rising. but postwar in
vestments have not yet overcome
that l5-year deficit.
Savings on a Decline
Prof. Rostow puts it this way:
From now on we can increase
our output in physical terms only
by working harder, by producing
more machines, or more workers, or
both. We can expect our physical
output to increase perhaps 8 per
cent a year, but no more, If we
maintain a very high level of saw
ing and investment"
That is a big If" as the Yale
economist goes on to point out. Saw
ings have been declining since the
war, and it is out of savings that
funds are obtained for investment
in productive capacity.
President Truman asked Congress
for 4 series of anti-inf1ation
measures, including re-establish-
ment of the excess profits tax, re-
imposition of curbs on consumer
credit, increased authority to regu-
late bank credit, regulation of spec
ulation on commodity exchanges
ALLEGATION and inventory controls,
strengthened rent controls and Sc
lective rationing, price and wage
controls.
Congress gave him what he asked
on control of consumer credit and q
portion of what he asked on regula-
ton of bank credit. The other
powers were denied.
Reserve Demands Boosted
Congress gave the Federal Re-
serve Board authority to increase
reserve requirements of member
banks only, not all banks, as the
administration asked, and the in
creases authorized we're less than
those asked. The authorized in
creases were IL per cent on time
deposits and per cent on demand
deposits. The Federal Reserve
Board subsequently ordered an in
crease in the reserve against time
deposits by the full IA per cent and
in the reserve against demand de-
posits by 2 per cent, leaving it with
authority to boost these reserves
another 2 per cent.
theoretically, this reduced the
lending capacity of Federal Reserve
member banks by about IL billion
dollars, for it required them to hold
in cash reserves an additional Q
billion of deposits, and a rule OF
thumb Is that each deposit dollar
provides the basis for Sc of loans.
The Federal Reserve System is
committed to buy Government
bonds from member banks. Within
a week after the increased reserves
were ordered sales of Government
bonds to the system jumped by more
than half billion dollars.
All banks have large holdings of
Government bonds. It would be a
(See HANLON, page CD
L.