Evening Star Newspaper, December 15, 1929, Page 48

Speculation—Construction (Continued From First Page.) written & book about individuslism and in favor of it. Yes. He is very able. Yes. But! But! We know , and we know very well that he won't leave us alone.” Show Warm Satisfaction. They were precisely right in that an- ticipation. They did not realize, though, that they so soon would be ardently welcoming his tendencies toward not leaving them alone. A short time be- fore these words were written the American Railway Association held & meeting in Chicago. The railroad ex- ecutives present were in receipt of President Hoover’'s proposal that thelr capital expenditures for permanent im- | rgvmem‘? on their raiiroads during &u next 12 months should not be per- | mitted to slacken off. Instead of re- | sentment toward this interposition in their affairs, they showed warm satis- faction and approval. Not a voice was raised against the President or his pol- jey. On the contrary—and not only in public statement, but in private con- versation—the feeling was virtually unanimously expressed that the Presi- | dent’s policy was the rendering of a great service to the country and that the railroads, so }-!x:d as was feasible, should follow his “lead.” Let us then analyze the quality of | the sort of “lead” that Mr. Hoover in i such matters furnishes—and has fur- | nished. It is not & “lead” simply to- ward shouts of “all is well” and toward the ballyhoo and the whoopee of the declaring—and _inflating—of _“confi- dence.” Tt is just as possible to inflate confidence as 1t is to inflate commodi- | ties or securities, and it is just as in- evitable thereupon to reap the conse- quent deflationary process. Mr. Hoover {8 not engaged, and never has been en- gaged, in being a promiscuous “boem- er’ and ‘“confidence artist” Quite otherwise. the key to his policy in this general field, and the key to comind possible developments in the Federal Government in matters of this sort. is | %o be found not in the blindly uttered word “Forward,” but in the sclentifi- cally formulated expression ‘“business balance.” Once Took Oprosite Stand. ally to understand Mr. Hoover now, 'en:hn\ild recall what he did in March, 1923, in the matter of the construction industry. He formally and officially ested at that time that ‘public building by the Federal Government should not be accelerated, but retarded snd postponed. In the succeeding month the committee which he had set up on “business cycles and unem- ployment” repoited that all building, private as well as public, should pro- ceed with cauticn. This policy was the precise opp{c:ég of the policy customarily expected people in high Federal station. It was | &n outright “discouragement” to a cer- tain variety of business effort. The rea- gon for it was based on ideas gained from the theory or principle which now 80 often has been mentioned in this article—the theory or prineiple of 3 Prices of building materials were seen to be advancing toward be- ing out of “balance” with prices in gen- eral, and there was the prospect of an “infiation-deflation” turn of the wheel into the mud. To escape it. Mr. Hoover | was willing to “discourage” instead of | trying to “stimulate.” | ‘We may then proceed to observe his | policy, as President, toward the recent colossal flow of funds into stock market operations. It wos thoroughly known | that the President looked upon that | flow with anxiety and with disapproval | for the volume of it. The action of thc Federal Reserve Board, just before he ‘became President, in striving, through | moral sussion, to privent the use of Federal Rescrve credit for speculative urposes, was taken iu large degree "hrou:h ‘the persstent sxoport given to it, within the board, by M\. Adolph Mil- ler, one of Mr. Hoovers uost intimate friends and assoclates. Economic “Balance” Cited. At 2p] ately the same time the report of “the committee on recent ecu- nomic changes of the President’s Con- ference on Unemployment,” signed by Mr. Hoover as chairman, devoted itseil centrally to the philosophy of the eco- “balance” and spoke pointedly, of the process whereby “in- vestors, as well as a large body of spec- ulators, have invested through the stock exchanges not only their savings but the | proceeds of loans secured through banks | and brokers, until the credit structure of the country has been sufficiently wweighed to indicate a credit stringency, resulting in an abnormally high rate for | call money and an appreciable increase in the rate of interest for business pur- poses. . . . If money in quantity is taken out of production and employed for speculation, to this extent equilib- rium will be desiroyed, and destroyed for all.” ‘These warnings did not avail to check the leaders of the speculative upward movement. Any more drastic interven- tion by the Government ip the circum- stances would have been fraught with great peril, for two reasons. In the first place, a merely personal utterance by the President regarding | the level of steck market loans and of | stock market prices would have been a | thing so arbitrary as to call down upon | him, with justification, the "complaint | of every investor and speculator who thereby might sustain a personal finan- clal loss. In the second place, the Gov- | ernment contained within itself no ef- fective organized body which could give | to the President and to the country an suthoritative, comprehensive, rounded and “balanced”. view of the whole in- dustrial and commercial and tranepor- | tational and agricultural and financial | situation and movement. Aims to Resume “Balance.” ‘We here come to the only possible anent and valuable outcome of the whole crisis through which we have been passing. The President is engaged | at present in a governmental effort to encourage industry, without panic, to | resyme the “balance” long ago deranged | by the excestive attraction of capital to | stock_market uses. Might there not | have been a better governmental organ- | 1sation through which a more effective | warning against th:* derangement could heve been delivered and through | which the extremes of that derange- | ment might ‘possibly have been pre- | vented? 1f we are to use government to pick up the pleces after the crash, is it not valid, perhaps. to use government to Relp avold the happening of the crash, or at any rate to aelp avoid its happen- ing so loudly and so disastrously? To that question we shall presen:ly and concludingly recur. Here it may be | well to say a few succinct words about the new constructional activities which | the President has been helping to sum- | mon into emergency being. To begin with its earnestly hoped that people will not be mesmerized into thinking that a few new Federal gov- emmental contracts and a few sincere assurances of uninterrupted construc- tlonal work by great industrial leaders will excuse the average citizen from all | further participation in the matter and | ‘will properly enzble him to confine him- self to the role of the satisfied looker-on. | The new Federal governmental con- | tracts, for instance, are really only evi- dences of good faith on the part of the | administration and cannot be regarded | 88 being actually importantly conse- | quential in bulk in comparison with the total of our American annual construc- tional effort. Government Plans Construction. ‘The Secretary of the Treasury will ask Congress to authorize the expenditure of | some $15,000,000 of additional money | annually on public buildings within and | without the District of Columbia. The President has already suggested that our | Federal expenditures for waterways | could now reasonably be increased an- | nually by a margin of $20,000,000. The | Becretary of Commerce and the Post-| master General and the chairman of | the Shipping Board are proceeding with | plans which, under a system of ocean- mail “subsidies” and of givernmental dow-interest building-loan ‘‘subsidies,” might give us in our shipyards for the construction of new ocean-going vessels an increased annual outlay of perhaps $25,000,000. ‘These sums, when expressed in the newspaper reports in terms not of year, but of decades, wear a titanic guise. Re- duced, however, as they should be, to their merely annual proportions, they are but a moderate trickle into the cup of our annual American offering to our continuously expanding American con- structional needs. For what is the to- tal of our new construction, public and THE .SUNDAY STAR, WASHINGTON, D. C, DECEMBER 15 1929—PART TWO. private, in the United States of America annually during this current era? It runs, according to the information of the permanent personnel of the com- mittee on recent economic changes, to approximately seven billions—not mil- lions—billions of dollars. To this vast outpouring our railroads have been contributing at a recent aver- age rate of approximately $800,000,000 & year. The contribution of our electric companies and gas companies and other public utilities has been at a rate quite similar. The most important managers t:!x’] flm:;sre owlr::pl ht;‘f bl:sln'eu enterprises T importan ups have | been highly intelligently lnfllg’l‘flly pa- triotically responsive to the presidential | suggestion that they shall do their best Convenient Credit NACHMAN'’S Fibre Rocker not to allow their contributions to our annual bullding fund to drop. ‘Their behavior has left nothing to be desired, either for earnestness or for promptness. It nevertheless remains true that the largest single item in all our annual constructional fund is the item for “public works,” such as streets and roads and sewers and water mains and parks and police stations and hos- pitals and so on and so on, bullt by our State government and our county gov- ernments and our city and village gov- ernments. The total of such “public works” expenditures by our “local’—as distinguished from our Federal—author- ities is now approaching some $2,500,~ 000,000 every 12 months. It is in this item that we shall pos- sibly either win or lose the present pv?ar against the consequences of our stock FREE Presents with Every Sale, Large or Small i 2772 2% 552 22 5% 2R % 47 ly woven, loose, auto spring d comfort. AT Open a Charge Account A New Desk for Xmas Spinet Style ....$19. Drop-lid Style...$24. Wall Style:.... Open a Charge Account Mahogany Veneer Secretary 135 A gift that will please any onme. Ample of writi Complete $6:5 75 75 $17.95 Living Suite for lmuket dissipation. And recession in | this item at present would be a catas- trophe. An even moderate enlargement of it—moderate relatively to its total bulk—would mean a complete victory. This is 8 mement when local taxpayers, as well as the Federal Government and the large private corporations, must do their bit throughout the war's duration in_order that total success may be ‘hieved. That achievement would mean tri- umphantly—and yet merely—the resto- ration of our economic ‘“balance.” It would mean that, having leaned too far toward speculative activities, we got ourselves back to our feet and to our “equilibrium” by a sort of sudden de- termined leaning in the opposite direc- tion of sheerly and purely construc- Room Xmas Special Low Terms Until Xmas Handsome 3-Pc, Velour Suite $ 75 Styles of Smokers Metal Style Glass Tray 69c Handle Style Cabinet Style This will make an ideal Gift. buy one and money now. 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The ultimate question would be, and is: A move toward that idea] would be the best fruit of our present woes. Such a move, out of suggestions from many quarters, is now under serious way. It is, of all the developments that have followed our stock market crisis, the one most worthy of intense observation. Effective Organization Lacking. A few paragraphs back the remark was made that our Government at the present time contains no effective or- ganism for finding and declaring the proper “balance” of our economic af- fairs. Our economic governmental bod- fes are for the study and control of separate special aspects of those affairs. ‘The Department of Commerce can ad- vise the President about exports, the TOTe Tk Yorog A Stcre Where You'll Like to Buy © g D Pull-Up Chair Upholstered in Jac- quard velour, scoop sg.gs seat ......icc0iennnn Easy Terms Gataeg Table Solid mahogany $19.75 top. Wil seat four POoplst s e s atisvns ions. 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