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 ~~