Evening star., 1950-01-17
Unsound Fiscal POLICY
Reflects Weakness
In Value Of Dollar
Will Be Worth 18 Cents
In so Years If Present
Trends Are Continued
By David Laurence

By David Laurence
When President Truman saw
o vision of $4,000 a year as the
income Of the average family in
the year 1000. he omitted to pre-
dict what each Of those dollars
would be worth.
Economists have figured out
that. If the present trends con-
tinue. the dollar will be worth
18 cents in purchasing power 80
years hence.
All that one has to do to realize
how much everything is de-
pendent on what a dollar will buy
Is to go back to 1900 and see
how much could be bought then.
On the basis of a 1935-1939 dol
lar Of 100 cents, it was possible
to buy $1.94 worth Of goods or
food for $1.00 in 1900, whereas
in 1850 the dollar buys only go
cents worth in relation to the
1859 dollar.
That's why 1t is important to
know what the dollar will buy
and not depend on mere quantity
to paint pictures Of millennium.
What 1900 Dollar Could Buy.
The 1900 dollar could buy a
haircut for Is cents, a suit for
$40. fresh country eggs for Is
cents a dozen and a quart of
milk for only cents in most
cities. Shirts were 80 cents and
good shoes $2.75 a pair. For $4,000
q big house could be built.
It Is true wages were low, but
80 were prices. A family that
managed to save $25,ooo could
retire and have comforts that
could not begin to be bought to-
day for the interest on that sum.
But gradually the dollar under
went change. By 1920. after World
War I, the dollar had shrunk to
10 cents in purchasing power.
Incomes had to go higher but
they apparently did not have to
rise prectpitately. because prices
did not rise uniformly. Bread was
II cents a loaf. however, and
milk had gone to nearly II cents
a quart and eggs were up to 68
cents dozen.
Then prices began to turn
downward in the '20's. During the
depression Of 1929 to 1888 the
purchasing power Of the dollar
rose. but by 1899 the dollar had
started to shrink in value once
more.
World War II, of course, brought
serious complications in the price
structure. Although controls
helped to restrain prices, wages
nevertheless moved slowly but
surely upward, and early In 194e
the movement was begun to pay
workers the same amount of money
for 40 hours OF work In time OF
peace as had been paid In wartime
for 40 hours plus time halt
for 4 hours Of overtime.
Less Than 1899.
This sent the price structure
into an upward spiral and the Ma
ton has not recovered from 1t
since. The dollar buys much less
now than 1t did in 1889. A SIC. 900
house Of 1899 costs $21 900 to build
today. Milk Is 81 cents o quart.
Medium priced suits are $50 and
shoes are around 80 a pair.
Some products fortunately are
less. Despite all the hullabaloo
about electric power companies
and the alleged advantages Of pub
lie ownership, the rates which are
paid for electricity are less than
were paid by the average family
rs years ago. An automobile, even
at $500. Is less expensive than
the 1900 models.
So If President Truman is really
thinking in terms of a good stand
ard of living, he must find a way
to get the average family income
up to $4,000 in order for that
family to enjoy the equivalent of q
$4,000 income of today when 200C
AID. comes around.
To retire and live on what a
per cent income Of s25, 900 would
have brought in 1900, the citizen
would have to look forward to q
nest egg Of $270. .000-and then
find O way to get a. 6 per cent
yield on income.
More attention will have to be
centered on the purchasing power
of the dollar when forecasts OF
what incomes will be so years from
now are made by the politicians
It suggests really how weak the
dollar Of today is and how much
1t can be affected further by un-
sound fiscal policies Of the Gov
ernment and irresponsible press
ures by economic groups In our
midst.
Reproduction Rights Reserved)
-------~---------