IGNS of crisis in the U.S. econ-
omy, arising out of overpro-
duction, have become so evident
that they are now openly spoken
about. Newspapers and economic
journals are debating the ques-
tion: when will the long-awaited
decline of economic activity com-
mence? How deep will it be?

“Tt is now generally recogniz-
ed,” says United States News and
World Report (August 7) “that
the end of the boom is already
near. The only disagreement is
about when this end will come.
Eisenhower’s advisors on econ-
omic problems tell him that the
slump* will commence at the be-
ginning of 1954, not in the last
months of 1953. Other govern-
ment and industrial experts be-
lieve that the slump will be
evident to everybody in the last
three months of 1953.”

In either case, the end of the
“boom” is forecast within a few
months. Insofar as the depth of
the approaching decline in econ-
omic activity is concerned, this
journal, as well as all U.S. bourg-
eois newspapers and magazines,
in an attempt to lull the fears of
their readers, declares that the
“slump” will “not be deep.”

“The general level of business
activity,” the same journal writes,
“is lower by an average of 10
percent; in some branches more,
in others less.”

Of course, it is necessary to
look on this and similar forecasts
with scepticism: the organs of
big capital, naturally, cannot
write that the decline of business
activity will be deep and pro-
longed. Such news would cause
panic on the exchanges, hasten
the fall of prices, limit the pur-
chase of goods — in a word,
sharpen all the signs of -crisis.

The question arises: why,
nevertheless, is so much written
in the U.S. about looming econ-
omic difficulties caused by over-
production when in the first half
of 1953 industrial production
was higher than in any year

1943 1949 1950 1951 1952 1953 (6 mos.)
239. 176 200 220 219 2338

At first glance, the steady
growth of the index of industrial
production might seem to in-
dicate that U.S. industry has no
cause to be alarmed.

But it is not so. The rapid
rise of the production index only
emphasizes the correctness of the
basic provisions in Marx’s teach-
ings about reproduction and
crisis. As is known, the level of
production must be at its very
highest immediately before an
‘economic crisis. Marx’s teach-
ings are verified by a century of
history of world economic crisis.

Bourgeois economists deny
Marx’s theory of the cycles and
crises — the only theory on the
basis of which it is possible sci-
entifically to forecast the course
of the economic life of capitalism.
However, bourgeois researchers
cannot but deal with facts, and
the facts say that the end of the
“boom” is apparent, that signs of

the approaching economic crisis
become clearer and clearer.

Here are the facts:

A significant portion of manu-

- factured products long since fail-
ed to find a market and are piled
up in the warehouses of manu-
facturers, wholesale and retail
merchants, farmers and the gov-
ernment.

According to the U.S. trade de-
partment, stocks in the hands of

- manufacturers and wholesale and
retail merchants rose by $6 bil-
lion from the end of July, 1952
to the end of July, 1953. In July
alone they rose by $600 million!
- Altogether they reached the

huge sum of $77.3 billion.

- - How huge it is can be seen in

_ the fact that it exceeds the value

and
term ‘“‘slump,”’ asserting that the
“stump’’ is caused by the so-called
“adaptation” of industry to the
mands of the market.

houses.

Signs of crisis
in U.S. economy |

By EUGENE VARGA

of the whole of U.S. industrial
production in 1949 — $75.4 bil-
lion.

Besides these stocks in the
hands of private individuals and
companies there are large gov-
ernment stocks of _ industrial
goods, mainly of a strategic char-
acter, from steamships and light
metals to oil products and mili-
tary stores. :

*

In recent: years huge stocks of
agricultural products have been
accumulated in the farmers’
granaries and government ware-
At the beginning of
April, 1953 these stocks were (in
millions of dollars):

Corn Wheat Cotton Tobacco Misc.

In govt.
410 284 32 1 $e

storage.
In farmers’
granaries 316 3817 250 2660 «17

Consequently, before the cur-
rent year’s harvest, a dead
weight of agricultural stocks to
the value of almost $3 billion lay
in the country’s warehouses,
twice as much as a year ago. Be-
sides this, farmers and mer-
chants possess their own large
stocks of unsold goods.

The purchase of agricultural
products by representatives of
special government farm organiz-
ations is intended to artificially.
maintain the prices of these goods
in the interest of large farmers
and milling companies. But over-
production is so great that, des-
pite government purchases, the
wholesale prices of produce be-
gin to fall:

Priec Index (1947-49 — 100)
1951 1952 1953 (June)
Whelesale prices of
farm products . 113.4 107.0 95.3

In order to keep prices at the
highest level, the agricultural
monopolies, operating through
the department of agriculture,
succeeded in having a_ refer-
endum taken on the artificial
limitation of the acreage sown to
wheat.

The monopolists and officials
of the department declared that
they resorted to this measure be-
cause there was “too much
wheat.” They say this at a time
when hundreds of millions of
working people in the capitalist
countries are literally hungry:
when, as even former President
Truman was compelled to admit,
one-third of the population of the
U.S. itself eats poorly.

If all types of the stocks of
goods in the U.S. are considered,
they can be estimated at $100
billion. ’ This is twice the mini-
mum required for normal repro-
duction.

Without a serious shrinkage of
industrial production, or a sharp
drop in prices, there is no pos-
sibility of relief from this “sur-
plus” of products.

Industrial orders are notice-
ably declining. In June, unfilled
orders for industrial goods de-
clined $1 billion. This decline in
the first place affects the goods
of department 1,* the means of
production, especially machinery.

In recent years an increasing
amount of U.S. consumer goods
has been sold on credit, on time
payments, in other words, on the
account of future purchasing
power.

It is clear that such sales do
not constitute an actual realiz-
ation of the sale. When the crisis
ot overproduction begins, in-
comes and wages will inevitably
decline and a large number of

purchasers will not be in a posi-
tion to complete their payments.
Homes, automobiles, television
sets, furniture and other goods
sold on time payment will return
to the creditors, as provided by

law.
Total Consumer Credits
{in billions of $ at end of each year)
1949 1950 1951 1952 1953 (June)
Total .. 17.1 20.8 21.5 25.7 27.2
Time-payment
Credits . 11.5 14.5 14.8 18.6 20.9

From the above it is clear that
in the last 18 months credit ex-
tended on time-payments has
risen by $6.1 billion. This greatly
exceeds the total time-payment
credits in force at the end of
1939, which was $4.5 billion.

*

Despite the high level of pro-
duction, wholesale prices recent-
ly began to decline. The fall of
prices proceeds very unevenly.
At first glance the list prices of
goods produced by the most
monopolistic branches of the
economy, those which receive
the greatest quantity of war or-
ders, appear not to be declining.

Price Index (1947-49 — 100)
(at the end of the year)
1951 1952 1954 (June)
114.8 111.6 109.4
113.4 107 95.3
110.6 99.8 97.5

All commodities
Farm products
Textile goods
Metals and
metal goods 112.8 123° 126.8
Machinery 119 —-:121.5 122.8

As this table shows, the mon-

~opolists, the owners of heavy in- °

dustrial enterprises, seem _ to
have maintained the high level
of prices up to the end of June.
But actually it is not so. The truth
is that large-scale monopolies are
reluctant to reduce prices open-
ly. They prefer to do it in a
round-about way. As long as de-
mand exceeds supply, they sell
their goods at the highest obtain-
able prices, taking orders for
“fixed deliveries,” for “special
qualities” and so on.

This was the case with steel
up to the middle of 1953. But
at the beginning of June, Presi-
dent Fairless of the U.S. Steel
Corporation, was quoted in the
Statist as saying: “The period of
‘compulsory’ prices has ended.
We will charge ordinary prices
to all buyers.”

When demand is lower than
supply the monopolists sell their
goods below the list prices and
allow many hidden discounts.

The U.S. automobile market
has many specially interesting
features. The auto industry in
the first half of 1953 produced
1,060,000 more light cars than in
the same period of 1952. But car
sales are very tight. Car sales-

“Sure, Buddy — turn right at
the Statue of Liberty, thru the
Security Office, past the Un-
American Institute, thru the Pub-
lic Screening Centre, and Wool-
worth’s is on the left.”

‘ond-hand cars.

men — actually agents of the big
monopolies — are forced to take
cars from the companies at the
old prices. But it is already im-
possible to sell cars at the old
prices. Salesmen are compelled
to cut prices at the expense of.
their commissions.

The New Zurich Gazette, a
Swiss paper, wrote on July 26:
“Individual car salesmen _pro-
pose to advertise cars for $300
cheaper than the list price set
by the manufacturers.”

The sale of new cars is made
more difficult also by the fact.
that the market is glutted by sec-
The U.S. car
buyer purchases a new car, as a
rule, by turning in his old car to
the seller. The old cars are
bought by the poorer sections of
the population. But the worsen-
ing of their living conditions
slows down the sale of second-
hand cars.

Therefore, according to Auto-
mobile News, the prices of sec-
ond-hand cars fell 20 percent in
the past year, and in some cases
30 percent. The number of sec-
ond-hand cars in the hands of
car traders was 27 percent high-
er at the end of May than a year
ago.

Worsening conditions in the
U.S. market forced the monop-
olies, one after another, to cut
prices in the third quarter of
1953. One of the three largest
auto manufacturers, Chrysler,
cut its prices last March. In Sep-
tember U.S. Steel cut tin prices
by 5 to 7 percent. Oil monop-
olies have reduced the price of
gasoline. There are other ex-
amples.

As an indication of the ap-
proach of a crisis of overproduc-
tion it is specially important to
note the decline of prices for
steel scrap in August, for the
first ‘time this year. The fall of
scrap prices always forecasts a
drop in the production of. steel.

In the third quarter of 1953
the decline of industrial produc-
tion began. In July, for the first
time this year, the index of in-
dustrial production fell from 242
to 233. U.S. “optimists” say that
this was because of summer vaca-
tions. But in August and Sep-
tember the expected rise in pro-
duction did not take place. The
comparative index for September
reached 234,

There are more frequent signs
of a decline of production. For
example, the production of steel,
which through 1953 was at the
100 percent capacity, fell to 87.3
in the third week of August.

_ In August the large firms mak-
ing farm machinery announced
cuts in production — Internation-
al Harvester, Caterpillar Tractor
and others. Vehicle production
is down. The New York Times
(September 14) reported that a
number of auto plants, including
General Motors, reduced the out-
put of light cars. G.M. has cut
production of diesel locomotives.

A reliable sign of the approach
of crisis is the prolonged decline
of industrial stocks. The index
of average share prices of 30
asthe industrial enterprises,
according to Dow-Jones, fell fro
295 at the beginning of 1953 “
255 in the middle of September.

On some days during Au
gust
and September there was almost'
panic because of the decline of
stocks. In the middle of Septem-

ber they fell to their lowest po
in 16 months.

*

U.S. “optimists” quote figv
to show that in August the m
ber of “employed” was grea
than at any time past, and that
the number of unemployed had
fallen to 1,240,000. |

But the falsity of U.S. statist
about employment and unempl
ment is well known. They

ccnstructed on the basis of ee

son who has a place

does not work, or a man W!

been promised (!) work m

course of the month, or W ee

works even an hour (!) during

week. ; ital :
How mercilessly U.S. capi

uses the working force 1S i ;

from the report of the vs

eau of Records on working ti :

in the middle of 1953:
Length of the Work We

Hours of Work Number of
(in thou:
250

90 and more

1 to 14 d.
We see that, on the one
4.6 million workers worked #
nine to 15 hours a day, while is
the other hand 8.3 millioon W' f
ers worked a work week of aa
to 6% hours a day, and 2.1
lion were simply unemployed on
they had a few hours of occas
al work throughout the week.
So as to decrease the num et
of unemployed in the OO
crisis the government @ coe
U.S. capitalists that when “ney !
omic conditions deteriorate kers

should not discharge the WO" jj
but share the work “edu,
among them. But the drive Al
profit does not allow seri
ready workers are being Jal
in Detroit, in farm imP
plants and elsewhere.
The reactionary mags
Fortune, (September) of
that increasing signs _
promises an army of unemploY
ed of 7 million.
U.S. “experts” are soe
worried about the econo arnais*
sequences of the Korean © ge
tice and the possibility °
cline of war orders. oe
when the Soviet Union
the conclusion of an at
Korea, the Boston Hera a
(April 23): talk
“On all sides we aret

i eace
that genuine Pp der our su
into

jemen!

the ground from un
... America has fallen syste™
a deep crisis that OUl  joad:
would be threaten' endure
ly danger . .. We canno ;
peace ... The fear

almost as strong amo

the fear of world war

The U.S. press

capitalism has ra

point that the orga

ital almost openly propose i
war as a means 0 vere
economic crisis.

The figures and facts show
the U.S. economy faces
of overproduction. _

The ee of panic mes
quently heard from the a
bourgeois economists 2
ists proves ey a ae ‘
are fearful 0 se ae
approaching economic, St
the U.S. They try t0 @
means of a continu

But this path will
capitalist {
avoidable crisis. It weary iy
the U.S. On the conta’ ge
inevitably sharpe? of u
the contradictions ~ vars

® Academician Ege own
is one of the bee mist
viet political eare'
article originally @ |
Pravda and all quot the
re-translated
sian.

PACIFIC TRIBUNE — NOVEMBER 13, 1953 ~~