Toledo union journal. [volume] (Toledo, Ohio) 1942-current, 1949-09-09
Depression Danger
May Be Over Under
New Economic System
By NATHAN ROBERTSON

WASHINGTON DPA)-While the evil
dece is not conclusive, America seems to be
escaping-for the present-the depression that
some economists feared few months ago. I'm
employment is still far higher than it should
be in a full employment economy but busi-
ness activity apparently is turning upward
again, although many basic economic malad-
justnents remain uncorrected.
If we escape deep depression, as now
seems likely barring world economic crisis,
it will be tremendous triumph for the wei
Z fare state" that was launched under President
Franklin D. Roosevelts New Deal and carried
on under President Harry Truman's Fair Deal
It will be proof of our successful conversion
from free enterprise" system.
For if we escape depression now, 1t VIII
be largely due TO the action of government,
rather than business 1t will be because gov
ernment spending and government supports OF
economic system prevented the development
of vicious downward spiral last spring when
business became panicky and began contract
ing in typical depression manner.
Unquestionably we faced the danger of a
serious depression at that time. There were
unmistakable beginnings of a downward eco
nomic spiral-of the kind that has created
such havoc in other years. Business was
frightened, and cutting down inventories,
which slowed down production, and resulted
in unemployment In times past, this kind of
action would have spread quickly into gen.
eral depression
Even this time it might have developed
that way, if the economy bloc had had its way
in Congress sharp curtailment of govern
ment spending, on top of the business panic,
would almost surely have sent us into tail
spin But President Truman and his economic
advisors, fought off the short-sighted econo-
mixers who were trying to practice Hoover
economics Government spending continued at
a high level-and even the most reactionary
businessmen seengt the demand for goods al
most certain to continue began to buy again.
Many labor and liberal economists believed
all the time that the depression could be avert
ed by continued government spending, in view
of the basic supports for the economic system
erected under the Roosevelt Administration.
They felt that this system of supports had bullt
foundation for new kind of economic sys-
tenn in America, where booms and busts could
be avoided.
This Viewpoint was described in an article
wrote for Harper's Magazine last November,
pointing out that we no longer had system
of free enterprise but new kind of system
that might be called safe enterprise sys-
tenn under which the government was support
ing farm prices, wages, bank accounts mort
cages and the purchasing power even of un-
employed workers, and also offering outright
government subsidies to many industries such
as shipping and air transport.
"What this all amounts to-" the article said
sis not free enterprise system, but COM
paratively safe enterprise system under which
our economic health is founded on government
credit and government credit is used not only
to battle depression but to avoid it.
At that time | did not flatly forecast that
we had rid ourselves of booms and busts, but
did say that "many economists believe we Will
never again have anything like the crash OF
1929" If we have succeeded this year in avoid
ing depression, as now appears likely, there
will be many more such economists-and there
will be more pressure on us to recognize the
fact that we have a new kind of economic
system.
Such a system which | believe we are
building toward, would have vast implications
for business and labor leadership. 1t would
remove from business the necessity to hoard
profits as business has been doing for the past
10 lush years in order to be safe during de-
preston Instead of building up huge reserves
of undistributed profits, business could dis
burse its profits more widely in dividends,
higher wages, and lower prices, which are the
ingredients of lasting full employment econ
omy We should encourage business to take
this constructive action by either raising taxes
on undstributed profits, or lowering taxes on
distributed profits, preferably the latter
Labor leaders, If they accept the existence
of this new system, should bargain with EN-
ployers for higher wages and lower prices,
rather than higher wages that force prices up
at the expense of labor consumers. In full
employment economy workers would not need
such projections as much as they would need
to encourage industry to work on a narrower
profit margin for the benefit of the economy
as whole
II we are approaching this new economic
system as | believe we are, that fact has vast
significance to every American-particularly
to the labor, liberal and farm leaders, who are
doing so much today to bring the change
about.