During a recent check through the Mid-Western and Atlantic states, we were greatly encouraged by the favorable business reports gathered from dealers in electrical and power equipment and even machine tools.
Optimism prevailed in spite of the anticipated recession in many quarters. This optimism, of course, is based upon the continuing demand for industrial equipment. The millions in war surplus equipment and plants that have been absorbed by industry during the past two years have not had the reverse effect anticipated.
It does not take much of an economist to figure the answer to the continued demand for durable goods. As far as we can see, the surface has hardly been scratched. There is still a shortage of homes, refrigerators, automobiles, roads, hotels, yes even paper and ink. And when these demands are supplied, the potentials in the world market are unlimited. This may sound like optimistic chatter, but the facts are there.
However, we feel that we should heed the warning note in the apparent abundance of money. The wage-price spiral is gathering momentum and, as Major Bowes used to say when he spun the wheel of fortune, “where it will stop, nobody knows.” The businessman who thinks that the ever-increasing high wages are an excuse to pass proportionate increases along to the public will be due for a sad awakening if he feels that he must become a partner-in-crime with the labor groups who sponsor inflationary wage demands.
We think that B. B. Smith, economist for U. S. Steel, sounds a logical warning in an article which appeared in the May ‘47 issue of SURPLUS RECORD. “Roots and Fruits of Boom” is the title, and it warrants reading and rereading by every businessman, labor and public leader who would like to preserve our present economy against the inroads of another 1929 debacle—or even worse.
Mr. Smith sums up his opinion like this: “The roots of inflationary boom are public ignorance about or indifference to the meaning of honest money and the means of maintaining it; the fruits of boom are injustice, wasted resources and economic maladjustment while it lasts, and deflationary depression unemployment and social unrest when it is over.”