The Key West Citizen Newspaper, April 22, 1938, Page 3

FRIDAY, APRIL 22, 1938. THE KEY WEST-CITIZEN eae 3% » ol 5 \ | EoommnGe i aN at L, » _. WA SHENGION By HUGO S. SIMS, Speci —<—— ‘’ashington Correspondent of The Citizen Economic Picture Is Not Reassuring ; Facts and Debate Fail To Make Sense The failure of business to im- prove and the apparent inability | of industry to provide employ- ment presents an economic prob- lem to the nation. Recognizing the danger of a continuous decline, | President Roosevelt last week at- tempted to outline steps which the Government might take to help the present situation. Already Congress had authoriz- ed the RFC to use $1,500,000,000 in funds already appropriated in making loans to industry and in- definitely extending the period within which these advancements can be made. Under immediate consideration was the appropria- tion for work relief. Congression- al and WPA authorities estimated , the outlay for the next fiscal year will be around $2,000,000,000. Under discussion and awaiting the development of national sen- timent was the proposal to use $1,500,000,000 in a new spending program \denignedy Ap Ctxansfuse public fund ip! fhe arteries of trade an as ay tly how: this pri ¥ would. be uses: was: u Oppose Pump-Priming It seer’ reasonably certain tha’ any effort at “pump-priming” will meet with serious opposition. The attack in Congress will be based on the opinion that huge expen- ditures at this time will injure business and destroy confidence and that further increases of the Government debt might lead to inflation, if not repudiation. These arguments will be emphasized by business interests with a notable exception in favor of the use of Government funds to aid ailing industries, such as the railroads. Of course, there are two sides to the argument about Govern- ment spending. The spenders ‘hold that the Government must pour out its money to “fill the : vodi" left by private capital. This, é they say, will provide purchasing “power and permit consumers to {buy necessarv products. As prod- ucts are consumed, the need will arise for industry “to make new products. This cycle, it is assert- * ed, will léad to recovery. Oppo- nents insist that the importance of a Government spending pro- | fram is over-estimated. that even four billion dollars will add less | than six percent to the income ; of the American people, and add that additional spending, involv- {ing additional national debt, will , create uneasiness in the business community and frighten away j Three Giant Industries La many times this amount in priv- ate capital. Different From 1933 Meanwhile, it is important to realize that the country is not in the position it was in 1932, and early 1933. There exists a con- fidence in the safety of bank ac- counts, farmers are assured of a treasonable purchasing power, WPA employment has removed fear from the hearts of millions and there is no absence whatever of abundant capital resources. There is. however, one must ad- mit, a definite antagonism be- tween Government and big busi- ness. The hostility between Govern- ment and business is extremely interesting. It has been empha- sized by opposition toward prac- tically every reform advanced by the Administration. It has been accentuated by increased taxation and efforts on the part Jof the’ Government to use the tax | weapon to force business and in- dustry to accept its program of {pefOirny.(sBdsiness leaders, rebell- fing against‘this Government reg- hulatidh, witordusly denounce Gov- @enment intétference with busi- eed andoassert that. if let alone, \private industry and capital will provide the means of successfully combatting the business recession. Profits In 1937 There are some strange angles to the picture. Earnings of many large corporations in 1937 set new records. In view of the fact that these profits were made under regulations, restrictions and tax- es, which, if anvthing. have been lightened in 1938, the profits made in 1937 tend to disprove the allegation that the Government has wrecked business. On the oth- er hand, some officials, notably Harry L. Hopkins, assert that monopoly and controlled prices have enabled business to take ‘the cream of the Government's efforts. and thereby prevent the full suc- cess of the Government’s pro- gram. Business, however, in the face of declining activity, ¢on- tinues a clamor for relief from taxation-“and ‘reform and the plaintive plea is heard from va- rious spokesmen that the Presi- dent do something to remove fear by issuing a reassuring state- ment. Altogether the economic pic- ture of the country is extremely futuristic. To this observer, the ~ ECONOMIC HIGHLIGHTS Happenings That Affect the Dinner Pails, Dividend) Checks and Tax Bills of Every Individual; Na- tional and International Problems Insep- arable From Local Welfare When the slump in business first hit the country, at the beginnnig of last fall, most expert. opinion leaned. toward,the view, that it didn’t amount to, much, constitut- ed but.a mgmentary dip in. the long-pull recovery.,cycle that. be- gan in 1935, ,and would shortly be over and forgotten. When, despite these predictions, the slump not only continued but grew steadily worse, the usual forecast was that it would con- tinue throughout 1937, but would be overcome by a marked spring business improvement. Today, this forecast has been exploded—spring is over, and, while improvement has occurred, and been better than seasonal in some lines, the grip of the “reces- sion” is still strong. Sufficient time has passed for authorities to adequately review the causes of the decline, and the influences that have maintained it There is more realistic, factual thinking eoing on new—as against the “wishful thinking” that charac- terized the statements of ‘even the, best experts some, months ago. It is probable that the cur- rent forecasts of the country’s outstanding economists are more important, and have behind them a better basis for sound prophecy, than those of the past. What are the experts thinking? Newsweek recently questioned 40 of these experts—and 24 of them gave complete replies—as to the business outlook for the near future. The 24 men answering constitute an unusually represen- tative cross-section of opinion— they include conservative au- thorities, such as Leonard Ayres and O. M. W. Sprague; govern- ment experts such as Willis Bal- linger of the Federal Trade Com- mission and Mordecai Ezekial of the Department of Agriculture; economists close to operating in- dustry, such as Willard Thorp of Dun and Bradstreet, and Rufus change, Tucker of General Motors, and more or less “left-wingers”, such as Rexford Tugwell and Leon Hendérs6n.” * * Three of the 24 forecast that there will be a further slump in business, ,,Three forecast no Eighteen forecast slight improvement. None forecast marked improvement. To make the forecasts as exact ! as possible, Newsweek asked the economists to state where, in their opinion, the seasonably adjusted industrial index of the Federal Reserve Board would stand in May. This index reached 118 in 1929, averaged 110 in 1937, and in February hit a three-year low of 79. The lowest prediction of its I‘ay point was 75; the highest 88, and the average of all predictions, 81.1. For June, the average of ali predictions placed the index at 81.8; with the lowest forecast 74, the highest 91. Sixteen of the experts say that June will be bet- ter than May; five forecast a drop; three anticipate no change. To sum up, if these’ authorities are right, there is no reason for either optimism or pessimism to- day. Business will improve be- fore the end of summer—but to a very slight extent. The “reces- sion” will continue to hang on— but it will not grow stronger. In brief, the economists think that, we are facing a waiting period now, during which conditions will be just about as they are at present, with the trend upward. Newsweek adds that nearly all of the 24 answering specified that their forecasts were based on two assumptions: first. that there will be no major, startling foreign de- velopments in the next three months; second, that thefe will be no importnat change in the policy | of the Administration toward business. Unlooked for occur- ences in either of these matters COOKING SCHOOL x ‘Sweet ‘roun’ mah mind, Bella would say. here!” It's Auntie Bella her- 1 eeccccccveccsoocseces Today’s Lleroscope: At the SOCOSSSSSSSESSSOAHSOSEEES | Palace Theatre “APRIL 27-28-29 There may be too great ambi- tion today, a too strenuous reach- | ing after something too remote. If you dare to hitch your wagon to a star, you must not grumble if you get hurt when you fall. Yet! today’s aspiration may be its sav-_ ing quality, if combined with the judgment to know when you have , reached the end of your ability., ) | Postmaster General Jim: Farley has, designated May. 15+21 as. Na- tional Air Mail Week, commem- , orating the inauguration of the first regular air mail service es- tablished twenty years ago. Sn ANNOUNCING ... PALMER’S ROOFING COMPANY thoughts running as Auntie “look who's self, who presides over Mike Anders’ kitchen in “Star in My Kitchen,” and who pro- vides many a laugh for wo- men attending the cooking school. Folger buys $2,500,000 Harmsworth col- { lecti could. of course, smash even the 3 best forecasts to smithereens. Peeccecerccccesscsgoseres Bishop William F. Anderson of Boston, retired M. E. bishop, born at Morgantown, W. Va., 78 years ago. Ellen Glasgow of Richmond, Va., novelist, born there, 64 years ago. Mark F. Ethridge, Ky., newspaper manager, Louisville, first recriminatory debate now going \“czar” of radio, born at Meridian, on and the facts do not make sense. g As Rail Problem Awaits Congressional Action ' Several weeks ago, we discuss- fed the railroad problem, particu- , larly in relation to the securities held by various institutions in the f nation. The importance of the , failroad industry, however, to the economic well-being of the coun- {try cannot be over-estimated. of gear, as they are today, the economic state of the nation is certain to be bad. With housing only slowly responding to Gov- ernmental stimuli and the auto- mobile industry overstocked on materials bought in the past, the importance of some recovery on , Ordinarily, the railroads purchase, the part_of the railroads is easily § twenty percent of the capacity { output of such i key industries as a sie steel an i - ~ BS e entire quéstion w: {employes in 1936 received near- ly two billionViddidrs W- Wages f and another million men employ- ,ed in industries .-working .on * equipment orders earned approx- s imately the same amount. It is easy to sec what prosperity for " the railroads would mean to the recovery which everybody is hop- ing for. ‘ » In February, the railroads had , an aderegate deficit of more than * $40,000,000 and since last June, {their cash on hand has dwindled by over $110,000,000. Some of § them have merely sufficient funds ito cover ordinary day-to-day ex- pens-s and conseauently no hope | of buying needed locomotives and freight cars. To illustrate how the railroads’ purchasing power j has declined, figures show that in 1937 the carriers bought only f twelve percent of the steel indus- j try’s output. This is proportion- ately about the same share that they were able to take in the dark { year of 1932. Not only are the railroads unable to buy necessary ‘ rolling stoek, but they are unable , to buy materials and supplies or to take care of adequate mainten- ance expenses. Observers point out that the na- tion has three great industries— building, automobiles and rail- Toods, Complete prosperity de- pends «non the profitable oper: linn of these industries. Anyor of them can prevent a serious de- Pression. When all three are out apparent. f as thrown into the lap of Congress by the President three days after the tes defeated his Reorganiza- tion Bill. While declaring “some immediate legislation” on the railroads is necessary at this se- sion, the President did not tell Congress what the legislation should be. He transmitted the rec- ommendations made by three In- terstate Commerce Commission- ers, together with considerable data, but refrained from advising the Congre: s to particulars. Some observers saw in the presi- dential action a left-handed re- buke, with the implication that the problem afforded Congress an opportunity to show its efficiency in directing governmental affairs The President had already made clear his opposition to anv subsidy to maintain present levels of employment, present wage rates and present interest pay- ments. He has insisted that there is no reason for the Government to guarantee railroad reorganiza- tion bonds and he has been posi- tive in his declaration against Government ownership and op- eration of the railroads Definite Relief Unlikely Despite the interest and efforts of a few congressmen, there are slight indications that Congress itself will do anything effective to meet the railroad situation. Undoubtedly, there will be many bills pr Congress but few of t ~ practical. It Miss., 42 years ago. Dr. Oliver M. W. Sprague of Harvard, noted economist, born near Boston, 65 years ago. Dr. George F. Zook, president of the American Council on Edu- may end in some proposal to pro- vide funds to enable the carriers to continue their business and re- pay the loans, if possible. If not, the Government will face the ne- House Vote Hailed As + ‘a The Reorganization Bill, ft brought-forward in 1937, arodsed very little interest. It had been generally conceded that some means were needed to tighten up the Government in the interest of greater efficiency. When the measure was brought up in the Senate last month, telegrams and letters of protest poured into Washington. A barrage of critic- ism was directed against the President himself, who was ac- cused of seeking dictatorial pow? er. When the Senate finally pass- ed the bill—49 to 42—the Presi- dent remarked at Warm Springs that “the Senate cannot be pur- chased by organized telegrams based on direct misrepresenta- tions”, Subsequently, when the Bill was about to be considered by the House, the President. issued a statement, saying, “I have no in- clination teibé.o tor” is, however, did not stop the attgrk on reorganization. The telget and letters continued and midst observers became convicted that the bill, not important in itself, had become a symbol of a de- termined effort to administer a rebuke to the President himself. The President, who was work- ing openly for the measure, un- doubtedly exerted full pressure to secure passage. Although com- promises had so altered the bill that it represented only a part of the Senate measure, the incessant attack effective the was and cation, Washington, born at Ft. Scott, Kans., 53 years ago. Thorwald Solberg of Washing- > ton, D. C., former Register of Copyrights, born at Manitowoc, Wis., 86 years ago. Plans are underway for construction of a quick-freezing plant at Melbourne this summer to handle next winter’s perishable vegetable crop. The proposed plant will have a capacity of about 1,000 pounds per hour and will assure good markets and in- creased production. cessity of taking possession of some of them and this will pre- sent the advocates of Government ownership and operation with a basis for renewed agitation. buke To F.D.R.; | ti Opponenty Declare It Ends His Control measure was killed b} the vote of 108 Democrats, 88 Republicans, six Progressives and two Farmer- Laborites. The final tabulation showed 204 to 196 in favor of re- — commiting the bill. A Personal Defeat Undoubtedly the controversy was seized upon by opponents of the President's political program as an opportunity to administer a personal defeat. It is just as certain that some of the opposi- tion within both house of Con- gress was motivated by a person- al dislike of the President. There can be no question of this when one considers that the bill defeat- ed was much milder than other measures similar to its essential sections whieh’ were passed by the House in a special session last winter While opponents of the Presi- dent hailed his defeat as the be- ginning of the end of his influ- ence and the termination of his control over Congress, the Presi- dent termed the question “solely one of policy”. He concluded, therefore, that the defeat of the bill offered “no occasion for per- sonal recrimination™ and said, ‘There should be none”. Despite this, the chances are fairly cer- tain that’ the issue will rise again in the coming campaign. 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