Fiscal Crisis Is Feared Ahead "Day of Reckoning” Within Two Years Held Likely. BY DAVID LAWRENCE. FOR several days there has been a steady barrage of inquiries directed to newspaper men here asking if they could furnish any clue to the steady downward trend of the stock market and the surface signs of a slow-up in business. The theory that Washington knows the answer to economic riddles has grown apace since ‘ planned econo my” and govern ment control of numerous factors in the business world began to be 60 far-reaching. But the truth Is that most of the economists in the government and most of the officials whose work brings them In contact with the economic side „ .. ¥ . . , , , David Lawrence. of things frankly confess they cannot find any one thing as the cause of the latest turn of events in the markets of the country. There is a general disposition to say the situation of today is the result of many factors, both national and in ternational. Naturally the tendency is to appraise the recent happenings as indicating only a temporary re cession and to discount the possibili ties that a major readjustment is under way. Decline Seen Temporary, My own feeling is that the New Deal officials are right in their esti mate, that the decline in the markets is temporary and that very soon the inflationary trend will be resumed. The best answer I can find to what is happening today was written by the man who ought to know from the in side what is going on in the economic and financial world. He is the governor of the Federal Reserve System. What he said last March is just as true today. It was then he issued a state ment in which occurred the follow ing paragraph: “The way to control unjustifiable price advances is by increasing. pro duction. This can be done so long as there is idle labor willing to work, so long as there are unused natural re sources and an abundance of money at reasonable rates. All three of these conditions are present at this time. “Increased wages and shorter hours, when they limit or actually reduce pro duction, are not at this time in the Interest of the public in general or in the real interest of the workers them selves. “When wage increases are passed along to the public and particularly when industries take advantage of any existing situation to increase prices far beyond increased labor casts, such ar > tion is short-sighted and an indefensi ble policy from every standpoint. Effect of Pay Boosts. “Wage increases and shorter hours are justified and wholly desirable w’hen they result from increasing pro duction per capita and represent a better distribution of the profits of in dustry. When they retard and restrict production and cause price inflation, they result in throwing the buying power of the various groups in the en tire economy out of balance, working a particular hardship upon agriculture, the unorganized workers, the recipients of fixed incomes and all consumers.” For the last several months since : Mr. Eccles made that pronouncement labor costs have been rising. The New Deal has bestowed upon labor a power of holding up employers so that many of them merely capitulate to labor demands and pass the cost on to the consumer. The same administration which cries out against higher prices does nothing to restrain arbitrary de mands especially when unjustified by production figures. Thus the National Industrial Con- j ference Board in its report issued only last week declares that between July, 1936, and July, 1937, labor cost per man hour has increased 14.9 per cent and that “this increase in labor cost , has not been offset by increased pro ductivity, either on the part of labor or through mechanization and im proved methods.” The conference Board adds: "The number of man-hours per unit of output increased 3.8 per cent while output per man-hour in July, 1937, was 3.7 per cent below that for July, 1936. As a result labor cost per unit of output has risen 19.3 per cent dur ing the past year and labor cost per each *100 value of output, which takes into account the rise in prices, has Increased 9.6 per cent.” Production Not Gaining. From the foregoing it will be ob served that labor costs are definitely rising but production isn’t. Just how any democratic economy can operate nn tho thflrtrv rvf for less worlf, higher prices for less goods is a mystery which the new fangled economists have not yet ex plained. Mr. Eccles certainly warned against it last March, but like the famous warning of the Federal Reserve Board in April, 1929, it has been given little attention. That the American economic sys tem at the moment is out of balance is conceded on all sides. Business men say arbitrary increases in labor costs are forcing them to push prices Upward. Consumer resistance hasn’t started yet, but wholesalers are plainly cautious and apprehensive about price increases for commodities and raw materials and sudden shifts in the entire base of the price structure. Uneasiness Over Policy. On top of this is the general un easiness about administration policy, its evident contempt for property rights and protection in the courts [or all classes as against confiscatory xilicies and bureaucratic excesses, rhen the tax policy of the admin stration has proved very inequitable and destructive, especially the so called undistributed surplus tax which is a flop as a revenue getter and s machine gun so far as business ex pansion or stability is concerned. Th< uncertainties abroad add to the un easiness but the basic trouble ir America is "unplanned” as well a: ■planned” economy and with th< a’hole economic system threatened bj a Government that keeps an unbal anced budget. Certainly unless communism 01 fascism is introduced, demoeracj aroceeds on the notion that there i; 'ree competition and that the Gov ernment can collect taxes frorr business in sufficient sums to paj ■xpenses. But the Government now adays believes in killing the goose thal ays the golden egg, in stifling in lustry, strangling the producers anc iistributors and forcing more anc nore workmen out of jobs even ai prices rise and the poor people oi America find themselves unable U juy food products or articles of ne lessity from their meager incomes. If prices continue to rise, the one third of our population who are "ill nourished, ill-housed and ill-clad" will have nothing but Mr. Roosevelt'* words to eat. and they will find also that they will be joined by a larger Dart of the DODulation than one-third But the days of hardship and the ! climax of fiscal unsoundness are not 1 yet. The hypodermic of printing press bonds and Government funds pumped into the business world can still fur nish considerable stimulus—enough, at any rate, to buoy the stock market soon and keep the inflation going for another year or possibly two before the Nation faces the days of reck oning. (Copyright. 19,'iT.) Leap Year Problem. LOUISVILLE. Ky„ September 24 (yp.i.—The leap-year birthday question gave Louisville's social security office a puzzler. The subject was Prank C. Bray, born February 29, 1872; age, 16. if you count birthdays; 65, if you count just years. The office decided it by entering Bray's birth date as February 28 and granting him the lump old-age benefit payment he asked. THE opinions of the writers on this page are their own, not mu Jie^stcH^V T^ta Star’s. Such opinions are presented in The Star’s effort to give all sides of questions of interest to its Solving the People’s Ills No State Can Meet Masses’ Demands if They Set the Standards, Writer Says. HV nADOTUV TUAtmcavt ii «_ At. _ * .. .... THE President again suggests that the European democratic governments broke down be cause the people failed to ob tain under them the material benefits they demanded. This is a highly challengeable statement. The German Republic represented the New Deal concept of the social state. It was the providential state par excellence. It had universal old age. sickness and unemploy ment insurances and benefits. It had universal trade unionism, and for many years it was largely governed by the trades unions. It per ished not because it failed to meet D#rothy Th#Blp,01| human needs, but rather because it guaranteed to meet them, and found that the democratic mechanism is incompatible with the blanket mandate to establish the mil lennium. No state can meet the demands of the masses for wealth and security and let the masses themselves set the standard of what constitutes their welfare and security. For what every one wants is to work less for more re muneration, and there is a vanishing point to this process. Mr. Hitler sue* ceeds, where the republic failed, in actually increasing total production because he has persuaded, hypotized or cudgeled the people into working more for less remuneration and taking a bonus in national glory. Mr. Hitler i could have done no more and prob ably a great deal less than the repub lic accomplished if he had not had the dictatorial weapon—concentration camps, espionage, force, suppression of all criticism. The suggestion implied in the President's speech that we can do all the things the dictatorships do without dictatorship has been demon strated to be false over and over again in the last 20 years. There is not a single example of democratic socialism in the world today, whether it is the Marxian socialism of Soviet Russia or the national socialism of Nazi Ger many. As far as Germany is concerned it is the classic example of what happens if you encourage a whole people to believe that the state can solve all their ills. There comes a point where the state, in order to carry on at ail under such a load, must assume complete power, total power, and be able to tell every man, woman and child exactly what he shall do, for what remuneration and under what circumstances. ♦ * * * As for the Italian dictatorship— it came about as a direct result of a deadlock between capital and labor, brought about by political policies not unlike those of Mr. Roosevelt. Labor was becoming more and more irresponsible, because labor leaders at the top had an eye on political power, and the leaders of the rank and file WPTP wif.hnilt. »rfpmiat.P pvr»«»ri*nr>® nr the discipline of long union training The Italian employers became panic stricken, both at the strikers and at a government whom they considered hostile, and were afraid to take old fashioned methods of dealing with strikes which demoraliied not only their own industries but the whole country. Nor were they furnished with any new, legal arbitration meth ods. Instead the Oiolittl government was trying to be clever and was us ing the militant workers as a means of extending its own power over mighty economic interests. So the deadlock continued until a man who had been advocating the most radical methods of the workers. Including that of occupying the factories, went and offered his services to the em ployers and promised to establish or der. That man was Benito Musso lini. * * * * It is certainly a challengeable state ment that dictatorship* have replaced “democracies which failed to func wvbuoc W»cj 1BUCU Kl y 1C1U UJ every popular demand and caprice. The only Important failure of the late European democracies, their tragic and enormous failure, was that they failed to defend themselves against the encroachments and ag grandisements of ambitious men, seeking to center all power In the hands of a state which they eould control. Neither the Italian nor German rep resentative governments were destroyed by an authoritative act of the people. They were the victims of coups d'etat, in which the leaders of powerful political parties interpreted election returns as blanket mandates to amend or overthrow existing constitutions. The greatest test of democracies is their ability to defend themselves against such aggrandizements, and that ability is measured by the public sensitiveness to unconstitutional usur pations. If the German Reichstag had not permitted Bruening to suspend the law and govern by decree, under a misuse of a certain paragraph of the constitution, it might never have yielded to Hitler. If the Prussian state government had been willing to use its own police to defend itself against the absolutely illegal encroachments of Chancellor von Papen, it might have been on hand to oppose Hitler some months later. Democracies, being extremely vul nerable forms of government, must be formal, must insist upon the scrupulous observance of constitutional principles and must observe the disciplines of law. Without a high degree of popular sensibility to principle, procedure, and law, and a great jealousy of liberty, they live in constant threats from a coup d'etat. And, of course, in democracies that coup d'etat will always seek to legitimize itself by the support of the masses. These—if the President had cared to point them out—are only a few of the object lessons that might be drawn from the recent demise of democratic governments. Nowhere did they perish because they failed to bring the millennium, or be re sponsive to popular pressures. And why this apology for the dic tatorships anyhow? What material demands have they fulfilled? The German people, the Italian, the Rus sian, do not eat as well as the people in the democracies, nor are they as safe in their persons or property— leaving the matter of civil liberties wholly out of consideration. They have unity, and a very tense sort of unity; they have no unemployment— because a large part of the popula tion is bearing arms or spades on work for the state at subsistence. The countries with a high standard of living are those countries where energies are released and allowed to function and produce, not bound hand and foot by bureaucratic organization. (Copyrisht, 1837.) Coal for 4,000 Years. The United States is estimated to have coal enough in the ground to last 4.000 years. This Changing World Johnson Would Not Have Left Embassy if Hull Had Been Here, "Insiders" Say. BT CONSTANTINE BROWN. THERE is little likelihood Secretary Cordell Hull will leave Wash ington again while the International crisis continues to remain as tense as It Is now. Insiders In the State Department say that had Mr. Hull been In Washington goon after the Japanese sent their notification asking for eign diplomats to leave Nanking before the air raid, which was to rase Chiang Kai-shek’s capital. Ambassador Johnson would have never left the' Embassy for the comparative safety of the gunboet. These insiders assert that Johnson had been "advised” by one of the Secretary’s many special advisers to avoid anything that might bring about a serious incident with the Japanese. And Johnson reluctantly took the hint. Secretary Hull did not lose time In re-establishing the situation and wiping out another blow to Ameri can prestige in the Par East. The strong note sent to Tokio plainly told the Japanese that the Govern ment of this country is not pre pared to comply with the destruc tive desires of the military leaders in the Par East. How this country could force jlapan to make good any damage American citizens might suffer in China is another matter. Presum ably, at first, by diplomatic notes and urgent demands for reparations. Such action would give undoubtedly a severe headache to the Tokio cabinet. While the Japanese prime minister and his foreign secretary are compelled now to take sleeping potions and headache medicine be cause of the music they have to face from London and Washington, the military and naval commanders are having a nice, peaceful time. They do not care in what kind of hot waters they are placing the diplomats: that’s why they are paid by the people. But the military men carry on, regardless of what the other nations may do and think. * * * * As In any other major war the press in Japan has given a special meaning to ordinary words. Thus the "lack of sincerity” means any failure of the Chinese to comply with the Japanese demands. The Chinese who have accepted the Japanese domination are sincere, while those who want to maintain the independence of their country are insincere. A high official in the foreign office discussing the situation which has arisen from the attack on Peiping told the foreign correspondents: “What's the use of negotiating with those sincere fellows if there are so many insincere ones to upset everything?’’ In the same way the word "legal" has been given by the Jap anese press and government a special meaning. The defense of Shanghai by Chiang’s armies is "illegal" as it was illegal for the Chinese troops to defend Peiping. An official report of the Japanese headquarters during the recent battle around Nankow stated: "While one Chinese unit turned and fled, the other illegally attacked our forces." * * * * Haile Selassie has just sued the Italian government in French courts for the return of 8,000 shares of the Djibutl-Addis Ababa Railroad. When the French obtained from the Ethiopian Emperor the concession to build that railroad, it gave Halle 8.000 of the 30.000 shares then issued. The value of those shares is $100 apiece. The Italian government claims that since Selassie is now only a private Individual those shares should revert to the Em peror of Ethiopia, whom, in their opinion, is King Victor Emmanuel of Italy. Selassie says that the shares are his, not only because he still is the ruler of the country, in the eyes of the French and British governments, but also because they were given to him personally, as an individual, by the French concern. Lawyers undoubtedly will get large fees, but it is highly improbable that Selassie will get more than a long lawsuit on his hands. * * * * , Hitler wants all German citizens to realize that, as in the days of the Roman Empire, they can say with pride "Civis Germanus sum" il am a German citizen). That is why he assured the German residents abroad at Stuttgart that citizens of the third Reich need not fear any interference with their activities abroad. Any government touching even a hair of a Civis Germanus, will have to reckon with the might of the Reich. GRANTED CLEMENCY Illinois Publisher Preed of Sen tence by Roosevelt. The White House notified Attorney General Cummings yesterday that President Roosevelt had granted exec- I utive clemency to John W. Tilton. 24- 1 year-old newspaper publisher, now ! serving a six-month sentence at Syca- j more. 111., for a probation violation. Tilton, who prior to his commit-1 ment to prison last June 1 was pub lisher of a Rochelle. 111., paper, was found guilty in a Federal Court last May of violating a five-year probation ■ imposed for violating the Federal auto theft law in 1932. I Headline Folk and What They Do Politicians Are Awaiting President’s Comments on O’Mahoney. BY LEMUEL F. PARTON. THE national political seismo graph will quiver sensitively today to whatever the Presi dent saya at Cheyenne about Wyoming’s Senator Joseph C. O'Ma honey—who took one of the heaviest belts at his court plan—and to the manner of hto saying it, or not sa- - ing it. Political railbirds wait for a word, a ami!?, a frown to indi cate to what ex tent this is a presidential pu nitive expedition. The compact, vigorous, re sourceful foothill Senator has been an intimate friend and ally of James A. Farley and has been Senator O Mahoner. ^gbtly geared into the inner mechanism of the national Demo :ratie machine. He got a fast run ning start in his first four years in the Senate, a consistent supporter of administration measures', and his spostasy in the court fight was a sharp iolt for the New Dealers. He Is a ng-time, urban citizen, making one think of Broadway rather than the sagebrush country. His political im portance Is such as to make today s opener .an important kick-off. The Senator’s general gregarious* ness and easy-going Western friendli ness have been disarming. There were those who had put him down for just one more of those Western brass rail statesmen, and then, in the court fight, he uncorked amazing legal and historic erudition. That may be a delayed score for the Cambridge Latin School. Columbia and the University of Georgetown, where he was prepared for law. A transplanted Easterner, he broke in a* a newspaper reporter—incidentally at tfhe same old pine desk in Boulder, Colo., where this reporter nearly broke his arm writing his first newspaper story, longhand. After work on sev eral Colorado newspapers, he began law practice in Cheyenne and pros pered through the years, in law and politics. He is 53 years old. In his court fight Senator O'Mahonev rehabilitated himself with conserva tives. His persistent advocacy of the root-hog-or-die licensing plan for business had mistakenly tagged him as one of the wilder and woolier of sheep range statesmen. He is a native of Chelsea. Mass. (Copyright, 1937.) Fox Turns Table*. ST. JOHNSVILLE. N. Y, Septem ber 24 (A'i.—When a fox chases a hound, that’s news. George Heath owns th# hound Henry Sanders caught the fox in his barnyard. They let the fox out of the cage; Sanders shouted ’’Sic 'em!” The fox did. The hound fled. DON'T LET YOUR BABY BECOME A FUSSY EATER Help protect her future health by feeding her Stokely's — the better tasting baby foods Mo«t doctors will caution you against aration, Stokely’s Baby Foods taste fMail $