William Penn, 1957 (40. évfolyam, 1-12. szám)
1957-12-04 / 12. szám
t AGE 2 December 18, 1957. William Penn THE BUSINESS OUTLOOK FOR 1958 (Continued from page 11 Manufacturing industries account for 40% of business investments and the , cuts now planned amount to abouit 16%. Of course, we must not lose sight of the fact that certain industries have expanded their capacity to the point where there now is an over-capacity in certain lines, such as aluminum, paper, and steel. These plant increases' of capacity were geared to the rise in population in the early 60’s, and it was assumed that the capacity should be made available io take advantage of the demand when the additional consumers came into the market. Excess inventories are also plaguing the copper industry, caused by over-production, new capacity coming into being and no sizeable upturn in demand. This accounts for |the fact that copper prices are now lower than at any time in the recent past. Some plants have already cut back or stopped expansion programs. There are some good sides to this dismal picture, however. Our research and development expenditures will increase in 1958. Technological change through research will be more rapid. There will be an intensified effort toward development of mineral resources. There will be increased expenditures made for electric power generation, communication; petroleum re fining, exploration and development. Therefore, by adding the pluses and subtracting the minuses we can conclude that the boom has passed its peak and we are about to enter a cyclical decline, which decline will be relatively mild with very rapid recovery during the latter part of 1958. Confidence is a priceless ingredient in our economy and it functions upon, it. If people have confidence they will buy. and about half of what a man spends he spends for things he has to have, and about half for things he would like to have but can postpone. Take away his confidence and you will ultimately have a lull scale depression I do not believe that there has been anything in recent times as dramatic and which has stirred the imagination of the American people more than the advent of the “Russian Sputnik.” This is a scientific achievement of great significance and importance and will quicken our technological competition with Russia. I think it will bring home to all of us the danger of underestimating the scientific know-how and competence of the Russian scientists. This event will stimulate more than ever our imaginative thinking and speed the progress of our technology in this vital field. It will also greatly elevate the importance and prestige of scientists and engineers in this country and increase the scale of basic research which, in turn, helps raise the standard of living of everyone. I have been told that we are two to five years behind the Russians in this important field of science and, if we are to catch up and surpass them, as we musit, then it will call for the combined efforts of the best scientific and business brains throughout this country. We might also have to embark upon a “crash”’program similar to wbait had taken place at the time of the development of the A-bomb. Above all, we must eliminate the red tape now 'tying our efforts in this very important field. We must coordinate our activities and use an imaginative approach in this branch of science for man is on the threshold of a new era — space travel in the 20th century. ^ i Underlying an imaginative approach is one basic fact which we must recognize, a fact which is playing an ever-increasing' rcle in our forecasts of future growth. Basically expansion is built into our economy. Dynamic forces, namely people, power and research, are constantly at work within the framework of our economic machinery, which causes things to happen. It is the inexorable pressure of innumerable factors within business and government which brings about these vast changes on the face of America. Of course, our government has contributed generously to these forces by the seemingly unlimited supply of funds placed at the disposal of our various branches of armed forces to keep America strong. It is unlikely that this will change in the near future and, as a matter of fact, all indications point to increased expenditures as time goes on. The American people have come, I think, to recognize that this is a part of our way of life and. if it brings about prosperity and enables everjVme to get a greater measure of the good things, then there is very little desire on anybody’s part to change it. Mos't of us are concerned about employment conditions as this effects all of us in some fprm or another, and naturall'/ the degree of unemployment will vary from industry to industry. At this time it certainly appears that there will be a flattening of employment in 1958 in areas where the majority employed depend upon the auto or defense industries. The auto industry should produce about 6,000,000 units in 1958 which will be a little less than in 1957, and it is expected that with easier money available and with the traditional three-year buyer back in the market the auto industry will have a fairly good year. However, there is a big “if” in this picture and much will depend upon the outcome of wage negotiations between the auto industry and the union and how far the irrepressible Walter Reuther is willing to go in forcing the issue. Just what his demands will be is anybody’s guess but it ’s virtually certain that the auto industry will resist these demands with all the power at Its command. Should the auto industry find the sales of new cars not holding up, the inevitable could happen and result in a longdrawn, costly strike paralyzing the industry as well as business m general. This could culminate in further' serious business deterioration and widespread unemployment. The labor intelligence of Mr. Reuther should not be discounted and, should his theory of a shorter work week with equal pay be adopted, it would set a far-reaching pattern for American, industry to follow. There are many points in his favor in this approach, the major one being the continuing rate of automation in the huge industrial enterprises under their influence. I think at this point it would be well to call the aittention of our readers to how government policy can intervene to cushion violent dips in the economy. Ever since the passage of the Employment Act of 1933 the government's policy has been to maintain full employment regardless of the cost and their monetary policies have been carried out with this view in mind. Through the operation of the Federal Reserve System, various cushioning effects have been devised which can be instituted on a national basis either to stimulate business or artificially retard it from too rapid an expansion. By making money more difficult to obtain through appropriate banking devices, or by artificially raising interest rates, thereby discouraging the borrowing of money for expansion purposes, a brake can be applied. This is precisely what happened recently, from about February to August, in an effort to halt the rapid rise in prices with the consequent demoralizing effects of inflation Of course, should there be widespread unemployment with plant expansion materially reduced, an opposite effect would take place' and the government through the operation of the Central Banking System would take measures to ease credit, put more money into circulation and stimulate capital expansion by virtue of the reduction in interest rates. At the same time, in all probability, the government itself would embark upon a mass program of public improvements thereby lending support to the economy. All of these would have a tendency to again stimulate bank borrowings, restore confidence, and pump new blood into a faltering economy. It is thought that this method of economic control will eliminate the violent ups and downs of boom and recession and tend to even out our growth to a more uniform pattern. This theory, however, remains to be tested, but we certainly hope that we will never again go back to a period in history such as 1933 for a “testing opportunity.” Franklin D. Roosevelt once said, “All we have to fear is fear itself.” Similarly, I say that we are in the midst of unprecedented growth and, even though the immediate year ahead, for the first few months, may be filled with frustrations and disappointments, there is nothing to fear. The basic trend is clear-cut — a continued ever-widening spiral of growfth with ever-increasing abundance of the good things for everyone. With the built-in stabilizer in the economy, plu* the enormous initiative of the American people and the ever-constant sitruggle to increase the standard of living, plus our dynamic expansion in research and development, we are certainly embarked upon a glorious era which can appropriately be called the dynamic 50’s. Pessimism has no place in this environment. The future is bright indeed. DO YOU KNOW THE WHEREABOUTS OF . . . Anna Maruska (maiden name), born 1886 in Fancsika, Hungary, daughter of László Maruska and Borbála Borsos ? Anna' Maruska. went to Fiume, Italy in 1913 and a few weeks later left for New York. She was< an actress. If you have any information pertaining to this inquiry, please communicate with: Otto Gulacsv, 2 Sandra Dr., Farsippany, New Jersey; telephone: DE. 4-2236.
