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Jack Ranger

Tapping the Wall Street Wire

A Close-Up of the Economy

(13 January 1947)

From Labor Action, Vol. 11 No. 2, 13 January 1947, p. 2.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

Here, in brief, is a picture of U.S. economy today. Total production is now roughly 13 per cent greater than the average of 1941, the last pre-war year. But the 1941 average, because of the “defense program,” was far above any earlier peacetime level in our history. This year has not only brought a restoration of the activities of peace industries, but has sent them soaring to record levels – this, despite strikes and materials shortages ...

Business inventories again rose in October, by $1.6 billions, largest rise on record, to an all-time high of $34 billions. The value of total inventories held by manufacturers was over $19.5 billions, the largest increase taking place in the form of finished goods, which accounted for 45 per cent of the rise ... Stores are full, warehouses are full, factories are full, the pipelines between are bursting. The only shortages, save for a few exceptions, are those artificially stimulated by Big Business. Put a pin there, as Daniel De Leon used to say ...

The Department of Agriculture reports that food prices have risen more in the past four months than in any comparable period during the 33 years in which records have been kept. Farm income for the first eleven months of 1946 totaled $21.6 billion, 14 per cent more than in the same period last year, and also an all-time high in history. Put a pin there ...

But now look. Savings of individuals are now the lowest since 1941, according to the quarterly analysis of savings compiled by the Securities and Exchange Commission. The trend of savings Increased sharply in 1942 and ‘43 (forced purchase of war bonds, lack of consumers’ goods), leveled off in 1944 and ’45. Not only have savings declined but there has been an increase in consumer indebtedness, as the masses fight a losing battle against high prices. Consumer debt increased by $1.4 billion In the third quarter. In the third quarter of 1946, savings declined from $5.3 billions to $4.3 billions, in marked contrast to the normal Seasonal INCREASE. A year ago, savings totaled $19.3 billions. In 1944 they stood at the peak of $39.9 billions. IT DIDN’T TAKE BIG BUSINESS LONG TO STAND US ON OUR HEADS AND SHAKE THE MONEY OUT OF OUR POCKETS. DID IT?


National income in 1946 reached $165 billions, twice as high as it was in the boom year of 1929, four times as high as in 1932. (Remember when we used to quote from the Brookings Institute study of America’s Capacity to Produce, and have some scissorbill in the audience challenge us.) ... Well, we ought all to be rich today, shouldn’t we? But we very obviously aren’t. Indeed, millions of us are worse off than ever. Our real wages – the goods our pay checks will buy – are lower. That this is so is shown by the unprecedented borrowing now occurring – what the >Wall Street Journal> refers to as “a borrowing binge.” People all over the country are trekking to commercial banks, personal loan companies and pawn shops for cash. Some borrow to patch up their homes. Some to pay the doctor. Most just seek money to meet the day-to-day bills that their wages don’t cover.

Federal Reserve figures show personal loans (both instalment and single payment) at the end of September at $3.9 billion, compared with $2.5 billion at the close of 1944. Charge account credit jumped from $1.7 billion to $2.5 billion over the same period. Loans made for the purchase of autos and heavy household appliances increased from $835 million to $1.2 billion ... A loan company official in Boston says that “in the last two or three months, personal borrowing, here has bounced up 50 per cent above the 1945 level.” Bankers in Cleveland say that people in that city are now borrowing money at about double the rate of last year. Police department records in Detroit show 670,000 pawnbroker tickets issued there in the first 11 months of 1946, an increase of about one-fourth over the 545,000 of a year ago. In San Francisco the Bank of America in October had strictly personal loans totaling $32 millions, compared with the total a year ago of $18.8 million. In Portland, Ore., a pawnshop owner says: “I’ll say more people are asking for loans. Gold watches are piling up so fast in this place that I can’t move around it any more. I gave $20 on a watch a few months ago. I’m only giving $10 now.”

The bankers aren’t fooled when people say they need the loan for “medical expenses.” And the bankers ought to know for it’s their system and they own the country and the very souls of the scissorbills. “If all the people who said they needed cash to pay doctor bills in the last year have told the truth,” says one Cleveland bank official, “then the medics have been paid up 200 per cent.” Another banker says: “The high cost of living has taken the savings margin out of many persons’ incomes. And when a contingency arises, they have to come to the bank for help.” Another says: “More and more people are getting behind an making ends meet.” ... Who is doing the borrowing? In city after city, they report: “Workers, mostly. Then office help, followed by foremen, sales people, school teachers, the unskilled, professional people, people with independent incomes.” That is just about everybody except America’s 69 families and their trusted retainers, isn’t it? ...

A big Seattle loan company reports that most personal loans have been going to people making $170 to $250 a month. “But very recently,” they say, “we’ve noticed an increased volume of borrowing by skilled laborers making $300 to $400 a month. And money requests from steadily employed white collar people are definitely on the increase.” ... In Washington there’s a state law that restricts the amount of a loan to any one family from one company to $500, but doesn’t prevent multiple loans from several companies. Many families have received as high as six different loans from as many companies. That is, they are in hock to the sharks for months to come. So loan companies in Seattle have organized an exchange designed gradually to limit the number of loans to three to a family.

I know there’ll be some brainy liberal reading this column who’ll say knowingly: “Sure. It’s just the workers taking out loans to blow themselves to the new gadgets on the market.”

But it is not that at all.

“During the war,” says one big hockshop operator, “we got the sporting element people who wanted to play the horses or gamble some other way. They brought in cheap rings and gadgets. Now we’re getting people who have to pay the rent. They bring in good jewelry, fur coats, expensive cameras.” ...

Loan men say that not much of today’s loan money is going to buy autos, furniture, household appliances. First, there aren’t too much of these commodities on the market. Second, government credit restrictions prevent a lot of time purchasing by lower income groups. Third, a lot of the durable goods sold are going for cash, to the profiteers. One loan man explains that it takes a monthly income of $500 to handle a new car on time. “And most people aren’t making that kind of money,” he says.

What It Adds Up To

Peacetime production highest in history. Big Business profits highest in history. People not getting hack in wages the value of what they produce. Over-production. The masses going in debt. B-O-O-O-O-M. The economists of the CIO are a hundred times correct when they contend that business, by and large, can raise wages 25 to 30 per cent without increasing prices, and STILL enjoy profits higher than the pre-war level. But will business agree to that? Why should they? They have the power, they own the government. But that is what unions and national labor parties and a workers’ and farmers’ government in Washington are for. To take that power over our lives away from Big Business and vest it in ourselves. Future generations will wonder why we took so long to act.

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