Evening star., 1949-07-11


an increase of about 100000 @
prices 3 per cent, from their high
points of last August.
Wages increased in some indus
tries, but, at least in manufacture
ing, the increases were more than
Offset by reduced overtime and
shorter work-weeks. Since the
cost of living decreased by about
as much as workers average earn
ings, real earnings generally were
maintained.
Profits reflected the decline in
prices and production.
Farm Income Drops.
Farm income was about 8 per cent
below the first half of 1948.
Business investment decreased in
the first half of 1949 from the 194S
level. Allowing for seasonal varia-
tions, in the second quarter it was
26 per cent below the peak rate
Of the fourth quarter of 1948, chiefly
as a result of reductions in in
ventories. Plant and equipment
outlays were still about as high as
a year ago, but some decrease is
anticipated in the last half Of
1949. ."
Housing starts were less than in
the first half of 1948, but since
March have been moving up toward
last years levels.
Personal income of consumers
after taxes decreased only about
l per cent from the level of the
last half of 1948. Since consumers
prices dropped per cent, real In
come did not change signifi-
cantly. -"
Government fiscal transactions
were a source of support against
other factors making for decline
in the economy during the past
half year.
POLICIES FOR ECONOMIC STA
BILITY AND EXPANSION.
- 1t is fundamently important
to recognize that We should direct
our policies and actions not merely
toward preventing a depression or
holding our ground. Many times I
have pointed out that the life and
spirit OF the American economy is
progress and expansion. We need to
use the productive capacity of a
growing labor force. We need to
translate improved productivity and
managerial skills into constantly
increasing output.
If the real needs and aspirations
of our people are translated into ef-
fective demand through constantly
growing employment and purchas-
ing power, our markets can absorb
vigorously expanding output. We
can achieve within few years a
national output well above 800
billion dollars, valued at current
It is vitally important that Gov
ernment policy be based upon the
determination to achieve constant
ly growing economy. While some
businessmen may find it difficult to
expand their operations under cur
rent circumstances, the Government
can always take conscious and posi-
tive action to counteract recession
ary forces. ..l
Yet there are those who assert
that the decline in national income
requires that we cut essential ma
tional programs. Nothing could
represent greater economic folly
than to follow this course of action.
It would contribute to the very re-
cessionary forces that we should be
counteracting.
1t would be a defeatist admission
that we cannot prevent our economy
from running downhill and that
those programs which are vital to
the international security and do
mestic welfare of our people, as well
as to the strength of our economy,
must be steered in the same down.
ward direction.
This issue is fundamental. Are
we going to admit that the forces
Of progress in our economy have be-
come so feeble that we must content
ourselves with lower levels Of edu-
cation, health and housing, interna-
tional and domestic security, and
national development? Or are We
going to move forward toward max
ing our economy as strong and pro-
ductive as our resources and skills
permit, and adopt the programs
which are consistent with that kind
Of economy and necessary, for its
attainment?
I propose that we follow the latter
course.
BUSINESS INVESTMENT.
=" I have previously recon-
mended, and I again recommend,
that the Congress provide for q
broad study Of potential business
investment, expansion, and market
opportunities under conditions of
maximum use Of our productive re-
sources in growing economy
ditions which the Employment Act
of 1916 contemplates and which can
be achieved If we have the conf
dence and determination to achieve
them.
This study should be designed es-
pecially to discover inadequacies in
capacity in basic industries which
may serve as limiting factors to ex-
panson when the upward movement
of business is resumed.
PRICE AND WAGE POLICIES.
- Businessmen have a great