Half a Trillion

A backwoods preacher once explained his homiletic methods thus: "Ah tells 'em what Ah's gwan to tell 'em. Then Ah tells 'em what Ah done told 'em." The Eisenhower Administration has used a roughly equivalent brand of economic preaching, and last week, in his annual Economic Report, the President told how well it had worked in stemming last year's "contraction" (i.e.,mild recession).

A year ago, Ike's Economic Report made it clear that his Administration was on top of the incipient recession, and predicted that it would end before the year was out. The Government was cutting taxes, easing credit, and holding a public-works program in ready status. But Government's main economic job, said the 1954 report, is "to create an environment in which men are eager to make new jobs, to acquire new tools of production." Faith & Hope. Last week Ike reported that the contraction had proved mild indeed. Slashed Government spending and private inventory liquidation had dropped a total of $24 billion, but the economy as a whole (gross national product) dipped only $14 billion. Clearly something was holding it up. The U.S., said the President, had followed "policies that inspired widespread confidence on the part of people." And, just as the President hoped they would a year ago, the people took it from there: "Consumers maintained a high rate of spending, businessmen kept capital expenditures at a high rate, builders stepped up their activities, trade unions conducted their affairs with a sense of responsibility, farmers recognized the dangers of piling up ever larger surpluses, private lenders made ample supplies of credit available on liberal terms, states and localities carried out large construction programs, and export demand remained strong." To keep things that way in the future, Ike continued to preach optimism, pointing anew at the presence of prosperity's ingredients--population growth, business initiative, technological advance, etc. "The vigor of the recent recovery," he said, "suggests that economic expansion will probably continue during coming months." Study of History. But the economy requires constant watching, and the President cautiously pointed to some of the things that both the Government and the public should watch. Items: P: The stock market, the President implied, might dip, but it is not necessarily a good indicator of business conditions: "Continued economic recovery must not be jeopardized by overemphasis of speculative activity." P: Labor strife might become a problem this year: "History tells us that industrial disputes have usually been more frequent in periods of expansion than in periods of contraction." P: Pension plans, which now cover 12 million workers and absorb $3 billion a year, are a growing sociological and economic influence. Government studies, said the report, may learn more about their impact on worker mobility, spending habits and investment trends.

Then, looking ahead from 1955 to 1965, the President made a prediction which eloquently capped his hearty confidence in the nation's economic health. Within ten years, he said, the gross national product, now $360 billion, will soar over the half-trillion* mark.

* Trillion in the U.S. and France means 1,000,000,000,000; in Britain and Germany it means 1 ,000,000,000,000,000,000.

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