Evening star., 1950-01-06

tivity. There are few If an,
major areas in which price in
creases would be justified undel
present circumstances. In SOM
outstanding areas, price cuts ar
feasible and needed to maintain
and expand sales. Furthermore
chronological progress should IL
part be reflected in price reduc.
tions from time to time.
Wage adjustments are one his.
toric method by which buyins
power has increased with increas.
ing productivity. These adjust
ments are now in the hands Q.
management and labor. That i
where they should remain. Al
the same time, the participant!
in collective bargaining, particu'
larly in dominant industries
should recognize that wage ad'
justments affect not only the EN-.
ployers and workers immediatel!
engaged. but also the whole econ
omy. -
The large and imaginative pro.
grams of expansion and modern
ization of plant facilities which
have been undertaken since tht
war represent signal achieve.
ment by private enterprise. The
trend of business investment
however, has recently been down.
ward. and its continued decline
would be- a cause for real con-
There are, in general, ampl,
funds available to businessmen
who want to expand or build new
plants, to replace obsolete equip.
ment. or to extend their opera.
tions to new geographic areas. -
Opportunity for Business.
In order to reverse the present
downward trend, and to achiev,
the rising volume Of business in.
vestment consistent with an ex.
panding economy. businessmen
should grasp the opportunitie.
which lie ahead; and should helr
to make the adjustments in price.
and incomes which will translate
potential markets into real mar.
kets. s',t e
While our primary relianct
should be placed upon private
initiative, the Government car
also help to encourage a reversa
Of the downward trend of business
investment. The tax recommen.
dations I shall transmit to tht
Congress in the near future will
in addition to providing some me-
increase in revenue, propose Ger.
tain changes in our tax structur.
which will make it more eQuitabl.
and stimulate business activity
There is q great need to NEE
the problems Of small business
men who cannot now obtain ad.
equate financing on reasonable
terms. New devices for encourag
ing private financial institution!
Ito furnish equity capital, to small
Fand medium sized concerns ar.
being studied In the Executive
Branch, and I hope to make rec.
concentrations to the Congress or
this subject during the present
session. Meanwhile. I recommend
that the Reconstruction Finance
Corporation be authorized to in.
crease the maximum maturity o1
its business loans substantially
above the present 10-year limit
Housing Is one Of the major
fields In which more investment
lis required to meet the growing
needs Of our people. -
AT the present time the Federal
Budget shows q deficit, principally
because OF the drop in incomes
and employment in 1949. the un-
timely tax reductions in 1948, anc
the continuing heavy demands ol
national security programs. A!
business conditions continue tt
improve, we should bring Govern.
ment receipts and expenditure.
into balance, and provide some
surplus for debt reduction, at the
earliest date consistent with the
welfare of the country.
Despite the current deficit. the
fiscal position of the Federal Gov
ernment Is basically strong. =
In the long run. the Govern
ment's fiscal position depends up
on the health of the national
economy. 1t will not be promoted
by drastic slashes in expenditures
which are essential to our eco
nomic growth and to continued
peace. Neither will it be promoted
by tax increases so drastic as to
stifle business activity. Either ac-
ton would impair our chances for
achieving our major national ano
international objectives and would
threaten further recovery.
To carry out the purposes OF
the Employment Act, the Govern
ment should be equipped, as 8
permanent matter, with the mini
mum tools necessary to contro
the basic factors of credit expan-
sion.
Credit Controls Needed.
To eliminate the competitive
disadvantage of Federal Reserve
membership, the authority of the
Board Of Governors Of the Federal
Reserve System over bank reserve
requirements should be revised
The Board should have broader
powers than it now has to increase
bank reserve requirements in 8
period of imitation. This would be