Evening star., 1951-02-05
-Four Top Economists
Issue Call for Shifts
In Monetary Policies

MFlUneldFy FOlCleS
Four of the Nations top econo-
mists today indirectly supported
President Truman's emergency
tax and budget program but called
for changes in Government none
tary policies and warned of un-
due reliance on direct wage price
controls.
They also stated that national
defense and higher living stand
ards are both within our reach,
though only after an initial period
of reduced consumption"
The four economists are John
Maurice Clark. professor of econ
omics at Columbia University;
Theodore w. Schultz, chairman
of the department of economics
at the University of Chicago;
Arthur Smithies, chairman of the
department of economics at Har-
ward University, and Donald w.
Wallace, director of the graduate
program in the Woodrow Wilson
school of public and international
affairs at Princeton University.
They recently completed a study
of economic stabilization for the
Twentieth Century Fund. Their
study is to be part of a special
book = length report entitled
Mobilization and Economic Sta
bility," which has been prepared
for the fund by Albert C. Hart,
professor of economics at Colum-
bia, and is to be published next
month.
Chief Needs Listed.
Mr.. Clark and Mr.. Smithies,
along with Mr.. Hart, appeared at
a press conference in the Hotel
Statler Friday preparatory to the
release of the committees report
today.
The chief immediate economic
needs of the country, the commit
tee report holds, are:
l. Pay-aS-you-go taxation. with
a Federal retail sales tax at least
q possibility.
2. Limitation of bank credit,
accepting some rise in the in
terest rate on Government debt
If necessary.
3. A truce on customary con-
tests of bargaining power and
pressure among farm, labor, busi-
ness and other interest groups.
The committee accepted the
Presidents budget message. out
lining expenditures of about ST.
billion with an expected deficit
Of SIG billion during the fiscal
year 1951-52, as a useful bench
mark for tax program at the
present time"
New Taxes Held Needed.
1--WE believe that the minimum
objective of tax policy" the econo-
mists said, Should be to add SIG
billion to the annual revenue
yield of the tax system by ex-
panding existing methods of taxa
ton"
The burden for making up the
SIS billion deficit must fall large
ly on the middle and lower income
groups in which the bulk of the
income after present taxes is
concentrated" the report stated.
"The needs of the present situa-
ton cannot be met simply by
raising the taxes of the rich"
The committee estimates that
additional income taxes should
yield SO to $40 billion above pres
ent levels.
Corporations. the economists
said. can reasonably be expected
to pay 81 billion of additional
taxation" without interfering with
profit incentive, reasonable divi-
dend payments, or the supply of
funds needed for new invest
mentS."
Increase in Excise Taxes.
THE rest of the tax program
'(or 81 to 50 billion must consist
of increased excise taxes" the
economists feel. They see a case
for heavy excises on all goods in
short supply" which would help
cut down demand and eliminate
black market profits.
Controls Are Fait Accompli.
The report said the committee
recognizes the recently imposed
wage-price controls as an accom-
plished fact and sees mo point in
debating the necessity of that de-
cision, although we believe that
had an adequate fiscal and none
tary policy been pursued. we might
have been able to work out a con-
troll system on a selective basis
The economists indorsed the ex-
pressed intent of Economic Stabil-
ization Administrator Eric John
ston Ito make general wage-price
controls temporary If the neces-
sary conditions for removal can be
achieved" In order to accomplish
this important aim. they said. we
must have:
l. A fiscal-credit- debt manage
ment policy tough enough to alb