The people's voice., 1958-03-21
Repr. Leroy Anderson
Reports To You From
The Nations CAPITOL

Germ and inevitable subject of every
discussion here in Washington is the
state of the national economy and
what to do about it. The cost of living
has hit an all-time high, in spite of
the fact that there are 51a million
men out of work, and warehouses and
dealers shelves are bulging with ev-
erything from automobiles to knick-
knacks. Never before has continued
rise in unemployment taken place at
the same time that there has been a
continued rise in the cost of living.
| Our basic trouble is that the Ameri-
can economy no longer operates on a
supply and demand basis. Except for
raw materials such as Montana pro-
duces-m minerals, timber and agricul-
tural products nations economy
operates under a managed price sys-
tenn which is responsible for the para
dox of lower demand and higher
prices. The tight money policy has
backfired.
AS the New York Journal of Com
merce said in July, 1857, C. the
Administration and the Federal Re-
serve authorities believe that mod
crate recession now would be a small
price to pay for avoidance of another
boom and bust later on So they
frightened money and raised the in
terest again. The results are now evil
dent to everyone. They got their re-
cession all right, but they didn't stop
initiation, because steel and automo-
biles and the rest of big industry reg
ulate prices with small regard to sup
ply and demand.
There is no pleasure in saying, 81
told you 500 under such dismal con-
but I want to point out that
the current developments are no sur
prise to me. About eight months ago
was interrogating William McChes- |
ney Martin, chairman of the Federal
Reserve Board, who was called before
our Banking and Currency Commit
tee. United States News and World
Report devoted quite bit of space
20 his answers to my questions. Per-
laps they would have done better
OBJ of viewing the future if they had
,arried few more of my comments.
Nay I excerpt the following state
nents from the official record of
hearings held August 1, 1857?
''Mr. Anderson: :. your justi-
fications for high interest are
based on an assumption that not
only money works on a supply
and demand basis but
that when things are in an over
supply the prices are going to
drop until somebody is willing to
buy them :. prices of consumer
goods don't seem to respond to
supply and demand :. The fact
of the matter is that prices go up,
even when demand is down."
Mr.. Martin then defended his high :
lterest, tight money policy in words !
nat were extensively quoted in U. S. r
JEWS AND WORLD REPORT at =
ne time. Quoting again from the Of
cial record of the hearings:
"Mr. Anderson: Do you see !
any indication that the situation
is improving when, in the face E
of drastically reduced demands ;,
for steel che cost of steel goes 9
up, then in the face of a cut in
the demand for farm tractors
and farm equipment to approxi-
mately so per cent of what it has a a
been in the past years, the price II
of an actual piece of farm equip -
ment goes up from 20 to SO per ::
cent; do you see any basis for ,, :,
thinking that our managed econ y
omy, or that these managed -
prices are going to respond as a. a.
you hope they will?" is it
"Mr. Martin: Yes, I do. 1t is a u
slow process, Mr.. Anderson, but
| still have a great deal of con- "
fidence in the long-run impact of W
the judgments of the market :"
The headlines today are "Record T.
employment" "All-Time High Cost be
Living" and "51s Million Unem- be
Dyed" Who was right last year? g
Congress has a tough job getting re
ti-depression measures under way. er
ia
acy for fourth term in the House.
, is a Republican. Sc