Milford chronicle., 1955-11-25
A DEPRESSION PROOF ECONOMY

Everyone would like to see a depression
proof economy. All major grOups-business,
labor, agricultuTe-have programs which,
in their view, would contribute to this
achievement. Since the great depression OF
the '30s, government has acquired enormous
economic powers which, il il hoped, can aid
in preventing any really major crash. Even
so, no one. knows if depressiOn-proof econ
Onny can ever exist, much less If we have
reasonable facsimile of one now.
A booklet recently issued by the Cham
ber of Commerce of the u. S. is devoted to
this matter. 1t does not provide an Unequi-
vocal answer to whether we are depression
proof or not. But it does sum up some of the
factors now influencing the business cycle
and it reaches certain significant cOnclu-
siOns It uses, in point, our experience dur
ing the transition from the Korean War
BOOM Production, employment, and gov
ernment and business spending all went
down. But the recession was ShOrt-llVed-
and the fears of the many who thought we
were in for massive depression proved un-
founded.
One factor involved here is the present
day attitude of business executives. Presl-
dent Eisenhower, in an economic report, de-
scribed it thus: Expecting our economy to
grow and prosper, they do not permit minor
variations in sales to divert them from the
objective of strengthening, or at least main
tanning, their competitive position five or ten
years later" In other words, planning-ike
research and capital Investments on a
long-term basis
Another structural change in the econ
Omy is that our industries are far less hO-
mogenous and far more numerous today
than they used to be. Competition has become
more intense. The Chamber cites many ex-
amples of this, and says: "FOr any company
10 Ic
to invite the threat of competition and even
bankruptcy. An enterprise anticipating soft
er markets for it's products for the next six
months or a year formerly delayed innova-
tions. Today, one of its rivals may introduce
the improvements first if the enterprise in
questions delays" 1t also observes that such
structural changes 'will not of themselves
make our economy depression proof. But
added to the other forces making for greater
stability, they can be a potent ally"
The Chamber deals with the so-called
'built-in stabiIizers" Of our economy. These
include government spending; farm price
supports; unemployment compensation; pri-
vate and public pension systems; the enor-
nous volume of liquid assets in the hands
of businesses and. individuals; the self-amor-
tizing nature of most private debt; insur
ance of bank deposits, etc. We have had NJ
real test of these stabilizers, but they mast
be considered.
Finally, to what conclusion does the
Chambers study come? 1t is cautiously Op
timistic The gist is found in these words
prolonged and deep depressions are avoid
able and will not occur again, unless we take
complete leave of our wits-Which could be
Minor fluctuations and rolling adjustments
in industry after industry are inevitable.
/ If we have the courage to avoid. excessiv,
booms and the wit to use what we know
there is reason to believe that future insta
bility can be kept within fairly tolerabl,
limits"
1GgoOSS