Recessional

What the U. S. entered in 1929 and emerged from in 1935 was a Depression. The current fall of security values and business indices was officially designated by President Roosevelt in his message to Congress this week as a Recession.

In several particulars the Recession is more remarkable than the Depression. It is remarkable because the 35% plummet from last summer's high is the swiftest decline in the history of U. S. business and finance. It is remarkable because the big, obvious factors which are usually held responsible for economic retrograde-- swollen credit, top-heavy inventories, unmanageable surpluses--are not in existence. Business did overextend itself last spring, just before the President dampered the roaring commodity boom. But in large measure the principal cause of the Recession appears to be purely psychological, the result of Capital's mass pessimism about the future, and a consequent reluctance to make future commitments. The Recession is also remarkable because, of all the men in the U. S. who had the statistical information about it at hand, Franklin Roosevelt was apparently the last man to see it coming. Rapid but not remarkable were the first of the moves with which he undertook, last week, to battle Recession.

Awaiting the start of a special session called before the current slump had been diagnosed as much more than a technical reaction in stocks, Franklin Delano Roosevelt spent the week much as Herbert Hoover spent November's second week eight years ago: holding conferences to find some way to halt the decline, to restore confidence throughout the land.

First came the official callers: WPA Administrator Harry Hopkins, Economist Leon Henderson, Isador Lubin of the Bureau of Labor Statistics and Lauchlin Currie from the Federal Reserve's Division of Research and Statistics. Asked if the situation called for expansion of Government spending, WPA Administrator Hopkins answered that it was much too early to say. Secretary of the Treasury Henry Morgenthau, who presumably stated his chief's views on budgetary matters in his speech two days later (see p. 16), also popped into the Executive wing, as did Daniel Roper, Acting Budget Director Daniel Bell, Edward F. McGrady-- who resigned as Assistant Secretary of Labor in September to become RCA's director of labor relations--and Chairman Robert L. Doughton of the House Ways and Means Committee.

Then came the businessmen: President Robert E. Wood of Sears, Roebuck, President Gerard Swope of General Electric, Chairman Marriner Eccles of the Federal Reserve Board, President Henry C. Turner of Turner Construction Co., Banker S. Sloan Colt. When the stock-market promptly registered a hopeful advance after these conferences, it was so much like old times that the New York Sun printed a parallel series of 1929 and 1937 headlines. In the Hoover tradition, but not the Hoover manner, the President let it be known that he hoped to end the decline not by Government spending but by doing all he could to persuade private capital to take up the slack caused by the curtailment of Government spending. This maneuver entailed a Recession from earlier New Deal fiscal policies.

As the President saw them, these were the chief immediate ills and this was what to do about them:

1) Alarmed by New Deal power competition, private utilities companies have postponed an estimated $3,200,000,000 worth of construction. To a press conference the President suggested that the Government would "cooperate" with private utilities if they would agree to the famed prudent investment theory of valuation (see p. 61).

2) A U. S. housing boom, which has been predicted constantly since 1931 and has as constantly failed to materialize, has long been proposed as the classic remedy for the country's economic ills. The President last week promised to ask Congress for legislation to help start such a boom, revealed that Marriner Eccles and his fellow callers were actually a committee appointed to find ways to interest private capital in backing it (see p. 17).

3) For the past two years, business has been groaning that taxes on undistributed profits and capital gains are in effect a capital levy and a severe obstacle to recovery. Last week, indications were that the President was in favor of modifying both, if only as a token of what his friends wished to be regarded as his "changed attitude" toward business in general. In his message to Congress the President emphasized that any such tax revisions should be made for the particular benefit of "small businessmen" (see p. 16).

Just how changed was the President's attitude toward business and the profit system under which it operates was the imponderable last week which the White House was going to have to solve to the satisfaction of businessmen before his Recession could recede. So thought discerning New York Timesm&n Arthur Krock, than whom the President has few more dispassionate critics and observers.

"The record of Mr. Roosevelt," recalled Correspondent Krock, "has been that of one who distrusts American industrial management and misses no occasion to scold it and imply threatening things. As a result management and investment have grown distrustful and inimical in their turn. Administrative gift rabbits have been more and more examined orally to verify suspicion that there must be something wrong with them. And the President's habit of offering help with one hand and clutching menace in the other has blocked expansion."

Correspondent Krock's suggestion: "If, in presenting to Congress and to the public whatever plans for aid to business he may endorse, he should speak in sympathetic mood, his plans will get a fairer trial and much better results.

"Were there nothing else to justify the apprehension, the President's own use of a certain phrase some years ago would explain it. He wrote he would give business a 'breathing spell.' A breathing spell is what one gives to something or some one being ridden or driven or harassed, whether or not for the good of the soul. The times call, not for let-ups in surveillance, to be resumed at some later date, but for cooperation. ..."

P: Only important social event of a week in which the President's main relaxation from wrestling with a business decline consisted of making a fireside chat to encourage the unemployment census, preparing a message to what may turn out to be a balky Congress, was the National Press Club's annual dinner at which he was the guest of honor. Earlier in the week, the President was made an honorary member of the American Press Society (see p. 49), had been asked to resign by the Newspaper Guild, of which Mrs. Roosevelt is a member. High point of the Press Club dinner was the unveiling of a 28 by 12 ft. mural by PWArtist Andre Pizzini and Washington Cartoonist James T. Berryman (see cut, p. 15). The mural shows the President at the centre having his picture taken, while Harry Hopkins and James Roosevelt welcome arrivals into a New Deal Heaven. Cherubs above the President's head are Vice President Garner and Postmaster General Farley. In the right hand corner Herbert Hoover, with pitchfork, smiles at Alf Landon on the brink of a fiery pit containing Al Smith.

This file is automatically generated by a robot program, so reader's discretion is required.