Evening star., 1949-07-12
Things Are Not as Bad
As They Seem Is Gist
OF Economic Report
Effort by Truman Is Seen
To Place Blame for
Recession on Congress
By David Laurence

Recession on Congress
By David Laurence
Things are not as bad as they
seem-and they may get better II
many American businesses are
willing to "go into the red" this
year and bet on q general i'm
provement next year.
This, in a nutshell. is what the
President and his Council Of Eco
nomic Advisers say in their mid
year economic report which, with
tables and charts. runs well over
10000 words.
All these words add up to sew
eral kinds Of advice-political
economic. financial. and, above
all. psychological. The burden OF
the report Is that America Is In
a transition period-going from a
point of high imitation to q read
justment which can level of and
prove healthy or produce q tai
spin Of deep recession If bushes:
tries to maintain q 1948 profit OF
labor tries to raise wage levels
There must be a realistic accept
ance of the fact that a general
curtailment of investment on q
program of wage-cutting can seri-
ously disturb the country's eco
nomic foundations. The idea
seems to be to avoid a panicky
approach and to look at the pic
ture with a full realization that
demand for more and more pro-
duction must come as our popula-
ton grows and as the needs of
world reconstruction are gradually
understood and financed.
Effort to Place Blame.
Running through the Presidents
own commentary Is an apparent
note of political defensiveness and
an effort to place blame on the
failure of Congress to bring in
f1ation to an end sooner by means
of controls. There Is pointed ref
erence, too, to the tax reduction
voted in 1948. But hardly any
consideration is given to the
enormous damage that might
have been done to the national
economy if high tax rates had
been continued in 1948. For Con-
gress now would have been strug-
Cling with proposals for tax re-
duction to take effect only in part
In 1949.
Such a messing up of the 1949
tax picture would have been far
more injurious and might have
produced a greater recession than
is now being experienced, because
the full effect of the lower rates is,
after all, being felt currently in
1949 when most needed.
Speaking Of psychological in
fluences and deterrents to eco
nomic expansion and business
confidence, there Is not a single
word of self-blame by the Presi-
dent for his demoralizing state
ments in the autumn Of 1948 and
repeated in his January. 1949,
messages to Congress. In those
documents. Mr.. Truman almost
brought on a panic in the world
by his stubborn insistence on the
revival Of wartime excess-proflts
taxes and by his request for a
generally higher tax level for in
dividuals.
There is no way to measure the
damage done psychologically not
only by Mr.. Truman's tax policies
but by his advocacy of Govern
ment entry into the field Of pro-
duction in basic industries-a pro-
gram resembling too closely for
comfort the ill-fated nationaliza-
ton which has all but ruined pri-
vate incentive in Britain.
It Is significant that the Presi-
dent now abandons publicly the
radical tax program which the
CIO and the cleft wing" advisers
sold him earlier in the year. But
he clings nevertheless to the Sec
ond instrument of torture for
business confidence. This is re-
vealed when he proposes that the
Government shall make a study
Of potential business investment
and maximum use Of our pro-
ductive resources" He says: This
study should be designed espe-
cially to discover inadequacies in
capacity in basic industries which
may serve as limiting factors to
expansion when the upward
movement Of business is re-
sumed."
Note Of Radicalism.
Here then is proclaimed once
more the intention to build or
finance steel mills in competition
with private industry. What can
be done to put the Government
into the steel business can be done
in other industries. II is precisely
this note of radicalism and threat
of Government ownership which
serves to dilute an otherwise COR
structive approach taken by the
President in surveying economic
conditions. What business men
need today is encouragement for
the long-range as well as Short
range future. Otherwise, there
can be no planning or prudent
use of available capital. Investors
do not relish the risks Of an era
in which Government competi-
ton or Government recklessness
in the use of its vast economic
powers can diminish the oppor-
tunities for fair dividends. The
financial markets have been sag
ging and will continue to have
their fluctuations within narrow
ranges until, once and for all, the
direction Of Governmental policy
Is set.
On the whole, the midyear
economic report-especiaily that