rapid business expansion, and pushed forward in periods of contraction. That policy was advocated in 1923 by the President's Conference on Unemployment. The American Federation of Labor indorsed the policy; also numerous chambers of commerce and public officers. Mr. Coolidge expressed his approval in a mild manner, Mr. Mellon with much force, and Mr. Hoover with unanswerable argument. Not to to be be outdone by Republicans, the Democratic Party put a plank in its platform calling for long-range planning of public works.

A remarkable unanimity of opinion. And what have been the results? Virtually no results at all. The reasons are plain enough. Without the guidance which we propose, there is no means of knowing just what to do, or just when to do it. Moreover, nobody is now responsible for carrying out the policy and nobody has the power. This is one of the numerous cases in which everybody agrees that it would be splendid for somebody to do something, and nobody does it. The situation is this: No Federal department has any money to spend that has been appropriated with a view to stabilizing business; no department has sufficient leeway in the use of its funds to accomplish much, even if it wanted to do so; and, in any event, no department has sufficient information as a basis for action or sufficient urge to act. As long as that situation prevails, everybody might talk himself hoarse about the advantages of allocating public expenditures with reference to the needs of business, without having the slightest effect on business.

The only reason why such a situation does prevail is that the Government has not yet grappled with the problem. Witness the Jones Bill, introduced last January. That bill provides for the expenditure of about one hundred and fifty million dollars for public works, after the President has reported to Congress that a serious slump in the construction industry has continued for three consecutive months. The first objection to the bill is that it provides no means of preventing business depressions, and does not even provide remedial measures until after the country has suffered for at least three months. Under the bill, moreover, a single index-the volume of building contracts awarded-determines the time of action. No attention is paid to price movements, money conditions, or volume of unemployment. In short, no adequate provision is made for measuring the need of action. Another defect of the bill is that it has to do only with periods of deflation; but no program is adequate unless it prevents inflation. Finally, the bill affects only one comparatively small appropriation. All the larger fiscal affairs of the Government are left, as in the past, to be carried on without reference to the needs-without any consideration of the fact that the very act which promotes public welfare at certain times, has the opposite effect at other times. Yet this hopelessly inadequate program is the nearest approach to a solution of the problem which Congress has yet considered.

Moreover, there may be times when consumer demand cannot be sufficiently increased merely by tak

ing money away from consumers as taxes and giving it back to them as wages in the same period of time. Progress requires a constant flow of new money to consumers. If, therefore, business indexes show the need of a reinforced consumer demand which cannot be met without additional Government expenditures, the Board should bring about such expenditures, not only out of funds previously accumulated for the purpose, but at times out of loans which involve an expansion of bank credit. This feature of the plan is essential. It follows that the Government should borrow and spend money whenever the indexes show that the needed flow of money will not come from other sources. At most times, the needed flow will come from other sources, because private industry will be stimulated, under this policy, to make capital expenditures which involve expansion of bank credit. And that is the chief way in which consumers do obtain the needed money when times are good. Still, we cannot be sure whether the flow of income from this source will be too large or too small. So the Government should stand ready to borrow money, when more is needed, and reduce the volume, when less is needed.

At first sight that may seem a radical departure; but it is not. The Government regularly borrows money to cover immediate needs. Last spring, for example, following the usual custom, the Treasury Department borrowed about five hundred million dollars, through the sale of certificates of indebtedness, maturing next December and next March. If necessary, money could

be borrowed in the same way to meet the temporary needs of planned prosperity.

The proposed policy calls, then, for less public spending at times and more public spending at other times. But spending for what? For whatever is most needed, as determined by Congress in the usual way. Projects are already before Congress for national highways, inland waterways, parks, buildings, harbors, reforestation, and reclamation of waste lands. Construction can be pushed forward or held back, as the general business situation requires. Nothing but the expense holds them back now. Nothing else kept us from taking flood prevention measures in the Mississippi Valley long ago. Such projects could be so financed as to increase consumer buying throughout the country. Thus the Government could sustain business and at the same time acquire wealth. Public works built in that way might actually cost the country nothing; for if they were not built, the country might lose more than they cost, through the idleness of men and capital.

Imagine what would happen if the United States Government announced its intention to use all its fiscal operations, as far as feasible, during the next twelve months, in order to achieve prosperity. At once most people would expect that business would be good; little danger of inflation or deflation; just an orderly market, keeping up with production. And because of the widespread conviction that business would be good, nearly everybody, in his own interest, would so act as to make business good. The result, we feel sure, would

Some people may object that such a plan will permanently increase the public debt. There is no reason to think so. In any event, to increase the debt is sometimes sounder public policy than to decrease it. Last winter, for example, one column of the morning paper told about our great success in paying off the public debt, and the next column told about the great number of workers who could not find jobs. Whenever such conditions prevail—with production far below capacity and many workers unemployed because consumer demand is insufficient-it is far better for the Government to spend money on public works than to use the money to pay debts. The question is, when debts should be paid; and that is one of the questions concerning which the proposed Federal Budget Board would give expert advice.

To what extent it would be necessary, under this plan, for the Government to make special expenditures in time of special need, we have no means of knowing. We shall have to go slowly and find out. Possibly, as explained above, the very fact that business concerns know that the Government stands ready to increase consumer income promptly, if the need arises, will induce business concerns to increase their own capital expenditures at a sufficient rate to make additional Government expenditures unnecessary.

So, also, when prices start to shoot upward, the very fact that the Government has declared its purpose of preventing extreme fluctuations will

help to achieve the purpose; for it will discourage speculation which thrives on shifting prices, and encourage enterprises which thrive on, and tend to preserve, stable prices. As we know from experience, if prices start upward, it is in the interest of individuals to do the very things which drive prices higher still; whereas, under the changed conditions, it would be in the interest of individuals to do the very things which help to keep prices stable.

To curb a rapid rise in prices, the restraining influences of the Federal Reserve System and warnings by various departments of the Government, especially by the new Federal Budget Board, would usually be enough. If they were not enough, the new Board would not authorize additional expenditures for public works. Furthermore, it would oppose reduction in taxes, favor treasury surpluses, and take money out of circulation by borrowing it and retaining it until business! indexes showed the need of putting it back.

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But how can we expect business men to favor further Government control of business? We expect no such thing. The proposed policy gives the Government no new powers; it merely provides for the more intelligent use of its present powers. The Government now has the sole power to levy Federal taxes, expend money for public works, regulate the currency, impose duties, fix wages of its employees, borrow money for Federal uses, and pay its debts. In exercising these powers, the Government now acts one way or the other, with or without adequate guidance. Thus it affects business

and will continue to do so. Inevitably. Even those who cry "less Government in business" do not propose to destroy these powers. As a matter of fact, our policy means less interference with business; for it provides more accurate and more comprehensive business information, more promptly and more widely distributed. Under our policy, moreover, the Government makes its own expenditures with reference to business needs, slackening its competition with private concerns for men and materials, precisely when competition is keenest, and adding to the income of buyers precisely when buying is falling off. That also means less Government interference with business. The Government now puts

up storm signals at every port without boarding the ships and telling the captains what to do. Surely the Government could announce that it is or is not a favorable time for expansion of plant without taking control of the Steel Corporation.

In short, we are urging a plan through which the Government, by more intelligently using the powers it already has-including the spending of the billions which it is certain to spend anyway-will not only interfere less with business, which is merely an incidental advantage, but will lead the way, thus enabling private business itself to act more intelligently, and thus increasing human happiness everywhere. Government has no other excuse for being.

S

IPPING my bitter black coffee at dawn in the corridor of the night-train from Berlin to Bayreuth, I watched the other Wagnerites come creeping out of their compartments. They still had the dry fixed stare, the look of desperate determination that people assume when they go to sleep knowing they must get up at an unheard-of hour in the morning. When we set an alarm-clock or caution a porter to wake us at five thirty sharp, we unconsciously prepare ourselves for the shock of that hideous clamor by lying rigid and ready through the long hours; to relax easily in our slumbers would be to expose ourselves to heart-failure when the summons comes. So here we were, of a summer morning in Bavaria, aching from fatigue, our nerves jagged and our faces pale, while the train jolted us toward a festival.

Near me were two middle-aged American women quarreling monotonously over the loss of a tin of crackers. They needed those crackers to fortify their strength. Each insisted that she had told the other to pack the precious cargo. "Parsifal" and the "Ring" were forgotten in that profitless sisterly bicker that quavered on and on.

up to me and, in the tone of a fellow conspirator, asked me how much I had paid for my seats. Seven dollars and fifty cents a performance? So had he. Preposterous! He'd wager the Germans didn't pay anything like that. I hate to be talked to in the early morning; I'm afraid I showed it, too, for he wandered away disconsolately, snapped down one of those tricky wall-seats that abound. in the corridors of European trains and hurled himself into it before it could betray its folding-bed ancestry by springing back again. Then he took out of his pocket a libretto of "Rheingold," a libretto with a gray cover upon which there posed a laurel-crowned woman in bulky Greek robes-a figure as familiar to opera-goers of New York as the Statue of Liberty. For this was a Fred. Rullman libretto and must once have reposed on the table in the Broadway lobby of the Metropolitan. My friend was reading pages five, seven, nine and so on-in other words, the barbarous English translation. Pages four, six and eightthe German text-he left severely alone.

A door opened back of me and a woman's nose emerged, greedily sniffing the air. Coffee! She must