Newspaper Page Text
THE CLEVELANDJCGU
xjqcvim no. n
By HAROLD G. MOULTON
President, The Brookings Institution, Washing'on, l). C.
MitUCH current discussion of economic
1"* problems it focused too intently
on the depression to shed real light on
our fundamental difficulties. Today’s
troubles obscure our view of what
happened yesterday and what is likely
to happen tomorrow. Actually otir eco¬
nomic structure was being undermined
by grave maladjustments long before
the, depression; In our "prosperity”
years, millions of American families
were poor.
Farmers and people in the small
towns scarcely need to be told this. In
1929 and before, agriculture was not
prosperous. Farmers had to pay high
prices for the things they bought, but
got little for what they sold. They
were in a depression even then—caiight
between what looked like irresistible
forces and an Immovable body.
There are about 54 million farmers
and people living In the small towns.
In addition, professional men. domestic
workers, small shopkeepers and others
PRODUCTIVE CAPACITY AND ACTUAL PRODUCTION, 1922-33
*F#-|
Thli chart illustrates tha extent to which we have failed to utilize our full productive
capacity. The black area represents what we produced; the shaded area, the additional
amount that could have been turned out. Over most of this period, our plant, as a
whofa, could have produced about 20 per cent more than it did, but after 1929 this
percentage of non-utilization became much larger. Productive capacity also ceased to
expand at it* former rate, constituting one of the greatest costs of the depression.
Much pf this failure to utilise our entire productive capacity is due to monopolistic
forces which have held up prices artificially. Reduction of prices under the force of
fret competition, so that people can buy more, is the way to production of more
goods and higher standards of living for all.
; living in the cities were similarly af
Cached, Inasmuch as they could not
utilize organised pressure to force up¬
ward: the return on their services.
Those With their dependents total
about 29 million. While their standards
of living perhaps were not actually
lowered, most of them realized little
gain from the great advance in produc¬
tive efficiency made In that period.
The diminution in purchasing power
of these groups, or its failure to rise,
in turn, reacted on others. Business
men sold less goods, and workers
everywhere found it harder to get jobs.
The forces that were retarding the
farmer’s prosperity were by no means j
helping the man in the city.
Progress—But Not Enough
It is true that our economic system
haa brought us living standards higher
than those existing anywhere else in
the world. Between 1900 and 1930, as
an example, per capita income, in
terms of what K would buy, increased
about 38 per cent, at the same time,
working hours were reduced about 13
per cent. But the fact of idle plant ea
pacity indicated that we could have pro
duced more goods and thus raised liv¬
ing standards.
Studies we have made at the Brook
ings Institution, aided by a grant from
the Falk Foundation, of Pittsburgh
throw significant light on this. We
made a detailed survey of productive
capacity in manufacturing, mining,
farming and all the other major divi¬
sions of industry, resulting in the find¬
ing that our productive plant could
have turned out;about 20 per cent more
than it did- *
If nobody had wanted to buy any
thing, the idle'plant would have beer
easily explained. But, millions of fami
lies were not getting nearly enough
Income to satisfy their wants.
Nearly 6 million farm and city fami
UeB received incomes of less than
$1,000; millions received less than
2,000; and 19 millions, or 71 per cent
of the total, leas than $2,500. More
than 54 per cent of farm families go;
less than 1^900. Of course, in consid¬
ering farm Income the lower living
costs of rural areas should be kept in
mind. But, no matter where they lived
families trying to pay for food, cloth
Ing, medical service, education, etc., on
$1,000 were not prosperous.
The extent of unfilled wants may b*
Judged by the fact that nearly all fam
i]y income in the $2,000 class or lowei
is spent for ordinary consumption
goods—food, shelter, clothes, edycn
tion, etc. Fifteen million families go;
less than, this figure.
Purchasing Power Mast Expand
Our productive efficiency Is increaa
ing year by year in normal times. Thai
ia, we are learning how to make things
more cheaply. But if the people are to
buy the added products thus made pos
sible, their purchasing power mu*’
grow with production.
Expanding purchasing power cannot
be created simply by printing more
money. That would just raise prices
An»l we cannot accomplish • much by
"sharing wealth or income.” Such a
program would entail taking income
from skilled workers, many farmers,
small shopkeepers, government clerks
II I" -- ..... ......... -
Devoted to the Agricultural, Commercial and Industrial Interests of White Cm
etc. It would not merely "soak the rich."
Purchasing puv r can be Increased
only as we learn h>,w to produce goods
and services more efficiently and pass
the benefits of I i t efficiency on to the
masses. If we d vine a way to make
two articles wl> re we formerly made
one, and we p; s on this gain to the
people, purch g power is actually
created-~the ;.ra article can be sold.
Higher V. :: :,es and the Farmer
Organized labor for many years has
tried to obtain the benefits of increased
efficiency by pressure for higher wages.
When improvements in product! in
methods in a given plant, made it pos¬
sible to turn out two articles at what
one had previously cost, organized
labor sought to direct the savings into
higher w^ges.
This gafve certain groups of workers
more purchasing power, but the effect
on farmers has not been favorable. It
has forced them to pay higher prices
for manufactured goods or has pre¬
vented them from obtaining lower
ones. The same was true in large de
gree of the city dwellers meuttened
above who do not work for wages,
numbering 20 million. An economic di
parity was created between t\v. great
segments of our population, rr. ■' -g
serious barrier to economic p, .i- ss
But if we permit the fruits of m"i ’
inventive genius and technology a! ad¬
vance to reach the people in the form
of price reductions, no such !> riers
are raised. All classes benefit alike to
the extent that they are cor.aimers;
the chief gain is in the lov. income
groups where it is most need - d
To the farmer, it means better
houses, tools, food, clothes, . ad in gen¬
eral a steady rise in his t i andards of
living that he can get no ,;her way..
Price reductions, of course, must not
come from wage cuts, if -they are to
increase purchasing power. But we j
must reduce prices as we learn to make
things more cheaply This is the way i
we can expand consumption solidly, }
year after year,‘which in turn will call
forth larger produc; ion. It is the way
forward envisaged in the theory of our
profit and loss system. Increased effi¬
ciency makes price reductions pos¬
sible; competition insures that they
actually take place.
Price Stabi . ation Tendencies
Whereas thd period of great techno¬
logical advance between 1870 and 1890
brought notable price reductions, con¬
tributing much to raising living stand¬ 1
ards, there was little reduction of
prices in the similar period of 1922-29.
Productive efficiency in manufacturing
in the latter er/i as measured by output
per worker, Increased about 25 per
cent. But forces of price maintenance
had become so strong that retail prices
in the aggregate remained practically
stationary.
Of course, there w T as competition in
many lines, and prices declined ac¬
cordingly. But this was not true of ail
producers. Artificial devices to main¬
tain prices dammed up the stream of
progress.. Producers neglected to face
the fact that in the long run they could
prosper only as the masses could buy
ah expanding volume of their goods.
Tliis fact must be faced. We must
remove the obstacles to price reduc¬
tions which now exist, wherever they
are. It is the only way that people who
live in small towns or on farms, or
otherwise do not work for wages, can
fully participate in our'economic prog¬
ress. And, unless these do participate,
we can have no broad, continued prog¬
ress.
The failure of industrial prices to de
ciine is primarily responsible for the
movement in recent years to attempt
an improvement in the farm situation
by ariiticial methods of restricting pro¬
duction, with a view to restoring “price
parity” with industry. However brip
ful such policies may be temporarily,
agriculture and industry combined oh
viousiy cannot expect to increase the
total production of goods and services
for the American people as a whole by
restricting output and raising prices
National cooperation in the expansion
of output, giving to all the people the
largest possible consumption, is the
paramount necessity.
CLEVELAND. GEORGIA, J-A'N ISBb.
mm crowd
SEES NEW FAIR
Street c Villages Get* Big
P ay; Lights All
New.
— — ^
Chicago. .Mure than 235,000 persons
saw the now World’s Fair here On Its
firs -1 week end. A record opening (lav
crowd of 151.603 Saturday, May 20,
surpassed Inst year’s opening day tlg
ure by 34.U88. The following day’s
crowd of S1.2-41 was greater by 28,557
than the same day in 1933.
President Uoosevelt, through the me¬
dium of n motion picture shown at tu;v
eral points on the grounds, officially
opened the Kxposifion. As he closed
an electric switch the new tights
blazed fort It for the first time.
Visitors were surprised to find the
Fair complete, and fully up to the
■promises made dial it would he new.
Lights Traci Sky Ride.
Mrs. Franklin D. Roosevelt, first
lady of the land, inaugurated the but
standing new feature, the world’s larg¬
est fountain. Like the President, -she
appeared in u motion picture, ffy a
magical wave of her hand, the giant
waterspouts rose from the north ia
goort, livened v a play of colored tight.
Lighting. 1 most talked-of thing
about the 1 Fair, revealed wonders
never appr- >ed on the 1934 opening
night. Co , nation ot lighting and
color wer. -re in evidence, linger
the lights >ew Century of Progwas
purple-red me color of ihe new fix
position mted a glowing hearty
that ivn •rent. Buildings, grouped
with cespc.-t to color ift light as Weil
as color in paint, revealed a new har¬
mony.
The Sky Hide, almost lost to vision
at night formerly, greeted visitors wi h
all its catenary system traced again -i
ihe sky in electric tight Bright rh d
neon lubes outlined the ohservath n
platforms 628 feet above the Far
Farther south, front the rotunda >f
the Ford building, a pillar of blue ligi t*
200 feet thick and more than 8 rr (>
high,- pierced the clouds overhead.
lighting load of this 900-feet-long build¬
ing Is more than one-third the totai
load of the entire Fatr of last year.
Foreign Villages Popular.
New lights in the iagoori and a new
•Aurora Borealis” of searchlights at
the north end of the grounds, comple¬
menting that at the south end, conr
pleted the major changes in the night
time Illumination.
Mecca for the opening day throngs
was the new Street of Villages. The
“tour of the world in a singL day" of¬
fered hy the fifteen reproductions of
far-away lauds in the new Fair proved
to be an idea that ‘'clicked.”
Eleven of the foreign viltages are
grouped together where the Midway
was in 1933. Here are an Irish vil
lage, with the atmosphere that was
known by the ancient chieftains who
met in Tara Hall; the Spanish village,
largest ever built for any Fair;
Tunisia, tlie “Land of the Bedouins”;
the Italian village, with its leaning
tower and rime-worn Roman ruins.
Fraa Entertainment.
Visitors s a tlie Tower of London
and watched Shakespeare’s plays pre
seated in a reproduction of Shake
speare's original Globe theater in the
English, village.; saw ice skating under
the summer sun in the'German Black
Forest Village; saw Old North Church
Mount Vernon, and the home of Paul
Revere in the American Colonial vil
alge; relaxed in the luxury of a North
African desert village in the Oasis:
thrilled to the charm of native folk
dances in the lovely Belgian village
and entered the gaiety of Montmartre
ill the Streets of Baris.
Elsewhere on the . grounds they
found a Dutch village, u Mexican vil¬
lage, a Swiss village, and the Street*
of Shanghai.
Free entertainment projects caught
big crowds. Among them were the
concerts, on tlie Swift bridge, the spec¬
tacular lion and tiger shot* ia the
Standard Oil amphitheater, the cir¬
cuses of tiro Lagoon theater, the seem¬
ing miracles performed in the Science
theater and the many shews present¬
ed f..v exhibitors in tlie various exhibit
buildings.
Fair Better Host.
Opening day throngs found that no
exhibits remain ng from last year were
unchanged, r motion has been add¬
ed everywh’ The Ford “exposi¬
tion, a Huge . r new, is a world of
motion, sim : tlie manufacture of
virtually ev part that goes into a
motor car. ioiir nnd compan; and
Wilson a;- 1 -mpany, packers, have
done ton; h - same with their ex¬
hibits; s>. in ve the Continent. Bak¬
ing company. Hiram Walker, the Brook
Hill Dairy farm and others new to A
Century of Progress
Perhaps most Unportair of all, vis¬
itors found the new Fair a better host.
Eighty per cent of the toilets are free,
transportation and restaurant prices
are iower and there are more free
resting places for the weary, most of
them where free entertainment U in
BANK GROUPS MA.\E ^
NATIONWIDE SURVEY
American and Stwte Banking
Associations Collaborate
in Investigation
LOAN SERVICES STUDIED
Activities of the Government in
the Banking Field Are
Reviewed and Position of
Banks Analysed
NEW YORK.—Detailed Tank re¬
searches, covering ail phases of prac¬
tical operating nd economic facts and
conditions related to banking, are be¬
ing marie bv be American Bankers
Association 1 he resulting materia) is
being placed at the disposal of all
state banking associations, which in
many instances are extending the re¬
searches of the national association in
their own states. These activities are
said to -be a part of the general pro
gram of banking development which
is being carried on by the organized
banking business.
Among the most extensive re- i
searches being conducted by the I
American Bankers Association is
that of its Committee on Banking
Studies, which is making a detailed
survey of Federal Government 1 Hid¬
ing agencies and policies. The i
material, which is kept up to dm w
continuing studies, shows whet e
government agencies get the m
they lend, what liability the Govern¬
ment assumes, what subsidy it
tends, what return it gets, for
and to whom the money goes and on
what terms it is loaned
The Government In Banking
“It is not the intention ot the com
mittee to express its viewpoint about
any agency," says the foreword t, this
material, “Its intention is only t- de¬
termine the facts. These facts r. op
erly assembled and presented should
help banks to meet Governmeni - a
■ petition if and where it exists The ,
committee believes the Govern,,
entered the lending field at a critics ;
period in order to aid banks and •
financial institutions. If the time has
come for the Government to with¬
draw, it is the duty of bankers to [
demonstrate their readiness to take ;
care of all sound credit needs.”
It adds that ihe banks must be
equipped with full factual material i ,
as to the Government’s emergency i
lending activities and practices, and ■
that full coopeiation has been given
the committee by Government agqri- j
eies in obtaining facts Bind -rs of the 1
material gathered have be; n placed j
by the committee in the hands of
state associations.
Investigation ol Postal Saving's
The Committee on Bai bng Studies :
has also made a survey of the Postal :
Sa^jngs United System tb ugtiout the
States to ascer. . . to what ex- ;
tent it is competing v, h chartered j
bank* Questionnaires u. .re sent to j !
banks in all places wh re Postal Sav
ings their depositories will are operated and j
answers be analyzed as a j
basis for the committee’s findings.,
The Bank Management Commis- 1
sion of the American Bankers Asso¬
ciation has made a nation-wide sur¬
vey covering the movement among
banks to increase their earning abili¬
ties “through fair and legitimate rates
for services they render their deposi¬
tors.” It has developed a plan of ac- j
count analysis as a basis of fair !
charges.
“Ail business in order t# justify its j
existence is founded on the economic j
principle that a reasonable return I
should be expected from services i
rendered,” the commission says.
Personal Income Loans
The Bank Management Commis- !
sion has also formulated methods for j
installing and operating personal in¬
come loan departments in hanks. ;
“This plan contemplates making j
loans primarily to individuals and I
small business concerns, based upon I
the character and assured incomes of j
the borrowers, as distinguished from :
the usual basis for ‘commercial ■
loans,' " the commission says.
It. points out that a large part of
the population is not now making use
of available bank credit and that “to
these people the personal loan de
partment extends a valuable service
which at the same time is profitable
to the bank.” It adds that it is “the
-duty of the banks to educate the pub¬
lic to come to the bank for all flnan
.cial services Small borrowers should I
be informed that the local bank is ■
willing to care for their demands.” j
Other Researches
Other researches are being made oy
the Economic Policy Commission of
the association dealing with shrink- j
ages in liquid commercial loans
caused by economic changes in the
nation's business methods while the
National Bank Division has made
studies of the lending and investment
powers of this class of bank, the pres¬
ent status of the real estate invest¬
ment field and of detailed data by
states on earnings and expenses.
The Savings Division has gathered
« chowiro »evvrt*r* Cr» K—
P r i n t i jj <4
w the muster key of ku dvilizatiurt, •
the means through which we have {
achieved irt, education and industry,
ft is w, 1] worth the very iughe- !
efforts ri its craftsmen.
?> 1 HE CLE V EL \ \ D < iouii J Eft %
Commercial Printing of fh u cripcion
h
■f- jk ^,, • s*
Pay Tsar iHaimioy uw
Vtnir ?'«>;> Is (i H i sr l(. S ) A P v V I I •; r >[]#{£ *
* Bette i • Bi ea
mm 111
* r 4%.^ V \\\ ‘ * ?
, ir
*v1 s|c.' m
, •
-r m
A \ GOOD .f ,t is worth
figlitil; ' >r at least
that the squirrel
and the bine rat limes feel
about'it. If . te.has fought
the battle . ■; r the booty
while you’ -. nack in the
feathered no ure that jmu
tuakc the ir. I e spoils,
Here is a fust that you.
too, can gloa- for, although
he has mastf . drought home
the bacon, htr - a not broiled it
to a golden c and turned
pancakes to t . .ection? The big
moment of this breakfast, how
ever, comes at the start—so we’ll
give you the simple recipe for mix
ing the fruit drink.
A word, first, about the coffee.
It must be freshly made, of course,
and you will find the drip method
gives the. best regulte. It it :r
Electrical Gifts
95 C DOWN!
It’s £>ii aa*y to give endearing electrical yiits that endure--
jest ■' 5c down; $.1 a month with your monthly electric kill,
1 . ii hav* your Christmas presents paid lor before you
!<-. w it. Give practical, be . la; electrical appliancer-—and
ycu. will be gratefully remembered for many, many years.
N ' uLECHRON 5.50 ANDERSON-PITT 4.95
A i .RM CLOCK 12” SPOT HEATER
W'.i 2NING-BOWMAN q Tt MODERN I. E. S. 3.98
Shi’nDY TOASTER O.I&O DESK STUDY LAMP
GENERAL PURPOSE O.tJO r> An MS
t E. S. FLOOR LAMP
WESTINGHOUSE 6.70 ROYAL ROCHESTER 5.70
HANDY GRILL WAFFLE IRON
8-CUP SILEX' 5.70 HOTFOINT AUTO¬ 6.70
COFFEE MAKER MATIC IRON
NEW DESIGN HOT- O./U r-. r, A
POINT PERCOLATOR
MANNING-BOWMAN 3.70 "PIN ANYWHERE” 2.25
KEATING PAD WALL LAMP
95c Down-—$1 a Month — I'.ach
GEORGIA POWER CO.
MMMMNKliMMHMKaL’ .;ii':iiiiiiiiauiili«iuiiiii»i;i;iiiii,i!;,.:;iiiiiiiiiiaffliHiw i iiiffliiB iiwiwH8iH mi MniiMW»iuiiiiiuiiiHiwwnBii»B^i
vacuum-packed it has retain©*
that fresh coffee flavor anti that
CjHijfiag aroma which inakea
..LtawSast the most inviting meal
$ay -—and sends us forth to
r.CarjSto.
dowries in Pisuiapple Juiee
I, hale Wheat Pancakes toiilt
Syrup
Canadian Bacon
Coffee
Cherries ...._____ in _______ Pineapple Juiae i
Drain the syrup from a No. 2 cart
of pitted red cherries (reserving
the syrup for futur use in cock
tall., beverages, etc.) Sweeten,
itlj the No. Z
of" fiineapi 'e juice, or use it
v : ■ a out sweeten ing, if y<: u prefer,
, p r chOI
^vi rniglit. m-rvea eight persons,®
