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Labor in U.S. Must Prepare
for Coming Economic Crisis

Fear Sweeps Country as Farm Prices Fall
with Record Speed

(16 February 1948)

From The Militant, Vol. 12 No. 7, 16 February 1948, p. 1.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

Is this it: was the fearful question that flashed through every worker’s mind last week as press headquarters screamed of tumbling commodity prices and stock market jitters. Is this the beginning of the bust that must inevitably follow the collapse of the inflationary boom?

It is a grim irony that under capitalism our anxiety outweighs our hope at the prospect that skyrocketing prices may now be on the way down. For the profit systems swings us continuously between, insecurity and want. Either, inflated prices to rob us of our purchasing power during “prosperity,” or a fall in prices that heralds mass unemployment, wage cuts and relief lines.

No one – least of all the capitalist soothsayers – can say with certainty whether the drop in commodity prices will continue, or whether the government will succeed in temporarily holding them up by huge subsidies, purchases and other means of artificial respiration. We do not yet know whether we are hearing another subterranean rumble – a warning – or whether the earth will rock and open under our feet by tonight.

What we can be sure of is the instability and anarchy of American economy and the need for the American workers to be prepared for the worst. We may be receiving only the most urgent warning to date. But this may well be IT – the beginning of the bust. American labor must PREPARE.

Previous Warning Signs

There have been previous warning signs – the stock market break in September 1946, and the cotton market crash shortly thereafter. Government measures succeeded then in shoring up the cracking walls of the economy.

This time the cracks appear broader and deeper. The price structure has been raised to shakier heights. The foundation has been riddled by the speculator-termites. A slight breeze might topple the works. That fear gave a tone of near-panic to press headlines when grain prices fell farther between Feb. 4 and 6 than during any three-day period in 100 years.

In the wake of this violent break in grain prices, followed all along the line by other farm commodities, there came a reaction in the stock exchange. That barometer of the hopes and fears of the ruling capitalist circles started to sink at once, warning of an economic storm in the offing. If the stock market prices did not break as sharply as commodity market prices, that is because securities prices had never regained much; of the ground lost in the summer of 1946.

When plummeting grain prices were temporarily braked over the weekend, livestock prices started to toboggan, falling in one day, Feb. 9, to a 16-month low. The next day all commodity market prices, including such products as cotton and rubber, resumed their plunge. Prices of securities in the New York Stock Exchange felt the worst slump in eight’ months.

Business journals and financial columns have cited the immediate factors that started the skid in commodity prices. Crops in Europe are better; Australia, Argentina and Russia are exporting more wheat. It is the bitterest jest of all that U.S. capitalism is getting jittery because there is a little more food available for the hungry of Europe and Asia. These factors are described and analyzed in John G. Wright’s article on Page 2.

Elements of Capitalist Crisis

But more deep-going and explosive elements underlie the instability of American capitalist economy – the classic elements of capitalist crisis: The widening gap between the wealth of the few and the poverty of the many; the inability of the workers to buy back what they produce; the growing glut of goods that cannot be sold profitably either at home or to the ruined peoples abroad. “Supply pipelines have been rapidly filling up,” wails the Feb. 5 Journal of Commerce.

Average real take-home pay per week for American factory workers fell from $35.33 in January 1945 to $29.58 in December 1947. Factory inventories have reached an all-time peak of nearly 28 million dollars. Savings have fallen to 5.6% of national income, a dangerously low level. Business failures have tripled over a year ago. Industrial production has been declining since November. On Feb. 6, the U.S. Census Bureau reported unemployment on the rise, up 400,000 in January alone. Retail sales are down in many cities. Credit and loans have swollen to top-heavy dimensions.

Despite the drop in commodity market prices, workers must think that retail prices will necessarily fall sharply at once. Here and there retail grocery chains have cut prices slightly on the most inflated items. But only a drastic overall slash in retail prices can restore the buying power of wages of even a year ago. Moreover, clothing, industrial products and rents are still going up.

Labor therefore faces a two-fold task: 1. To press more strenuously than ever for higher wages and for assured protection from possible further inflation – the sliding scale cost-of-living bonus; 2. To demand the 30-hour week at 40 hours pay, and unemployment insurance equal to trade union wages.

The handwriting on the wall is clear. The crisis? may be forestalled a while; on the other hand, it may be under way right now. To delay protective measures may be ruinous. We repeat: LABOR MUST PREPARE NOW.

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