Toledo union journal. [volume] (Toledo, Ohio) 1942-current, 1949-09-16
Big Economic
Study Under Way;
Press Ignores 1t
By NATHAN ROBERTSON

WASHINGTON (DPA) - Most American
newspapers have been so busy building a
molehill out of the five percenter investigation
that they haven't been able to see over the
molehill to for more important inquiry now
going on at the Capitol-an investigation of
what make sour economic system tick, or stop
ticking.
Barely a line has appeared in the news
papers about this investigation ordered by
Congress last May and now we'll under way
under the direction of Sen. Joseph c. O'Ma-
honey Cd, Wyo), who became famous through
his leadership of a similar investigation 10
years ago by the TNEC Temporary National
Economic Committee)
But the investigation has proceeded far
enough so that preliminary report is oelng
drafted on the basis of the data gathered by
the staff during the past six weeks on the
question of capital investment, which most
economists concede is the key to our economic
difficulties. Hearings will be opened as soon
as Congress gets over the legislative hump
that is now keeping most members too busy to
worry about such long range problems.
O'Mahoney has employed to direct the in
vestigation Theodore J. Kreps Professor of
Business Economics at Stanford University,
who was one of his leading advisors in the
TNEC inquiry Kreps has consulted on the pre-
lininary work already done and is now on the
Job here full time He is widely recognized as
one of the best economists in the country and
one of the closest students of our national
economy
The investigation is being made by the
Joint Congressional Committee, created by the
full employment law of 1916 which O'Ma-
honey heads. The Committee was directed by
Congress to study, among other things:
l. The problem of investment and the role
of investment institutions in making those in
vestments - which covers the whole field of
monopoly in the field of capital investment
@ The effectiveness and coordination of
monetary, credit, and fiscal policies in dealing
with general economic policy,
8 The problem of low-income families in
relation to economic stability.
a. The problem of unemployment trends
and their significance.
These problems go to the very basis of our
economic system and reach into the question
of monopoly on higher level than it has been
attacked so far by the House monopoly inVest-
eating committee Although the House Com
mittee expects to reach into this higher field
later so far it has concerned itself with mo-
nopoles on the corporate level The Federal
Trade Commission has admitted that data Is
not available to analyze the monopollshc sltua-
ton at the higher level-the financial level
where big corporate empires are tied together
by almost invisible financial lines.
The Importance of this kind of a study is
hghlighted, however, by some of the test-
mony before the House Committee indicating
almost all investment capital in America is
controlled by the big corporations-and only
a very small percentage is available for new
and competing business.
The importance of the inquiry is empha-
sized also by the general belief among econo-
msts that capital investment is the most un-
stable factor in our economy and the chief
cause of booms and busts Kreps, in a recent
speech, pointed out, for instance, that 1t was
the drop in capital investment that created the
1929 depression which cost America almost as
much as World War II He might also have
pointed out it was the drop in business invest
ment in inventories which created the current
recession.
What Kreps wants to establish is why capi-
tai overwhelmingly controlled in large
part by a very few people-varies so tremend-
ously from 1873 billion dollars in 1929 for ins
stance to only $50 millionsfour years later. He
points out that this contraction started shortly
after the 1923 election which the Republicans
won when from the standpoint of business the
world looked pretty good. The government
budget was balanced, securities makets were
booming labor unions were small and anemic,
corporate profits were high and taxes were al
most unfelt government interference was at
the lowest level in generations In other words,
all the factors business propagandists now
complain about were absent But suddenly,
businessmen got scared and stopped buying or
investing,
Much the same thing started to get going
last winter and was stopped as this column
pointed out last week, only by government
action,
What O'Mahoney and Kreps want TO find
out is why these things start and how they
can be averted Kreps thinks the facts will
show that the key to business investment is
prospective consumer purchasing power That
is what labor economists have been contending
for a long time. If the Congressional inquiry
proves they right it will be big day for
the country and for the working man.