Haskins & Sells Bulletin, Vol. 14 (1931);

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VOL. X I V (QUARTERLY) N E W YORK, JANUARY, 1931 No. 1
The Economic Dilemma
SOCIETY, as a whole, is faced with the
fact that business is not good. It is
not as good as it was a year ago. The
bottom of the decline may have been
reached. Business may be getting no
worse. Business men may be facing the
future with the "hope and confident ex­pectation"
that the situation soon will be
better. But business is not good.
The cause, or causes, of the business con­dition
have been discussed at great length.
Individually, some of the suggestions ap­pear
to have some bearing on the matter;
others seem entirely irrelevant. Collec­tively,
the suggestions leave the situation
unexplained.
What to do about correcting the situa­tion
has been discussed almost as much as
the causes. The recommendations have
been so many and so varied as to leave one
in a daze. Saving has been deplored as
harmful, inasmuch as already there is too
much money which cannot be employed at
profitable rates. Yet, savings bank depos­its
are increasing, as is the volume of life
insurance being written.
Spending is advocated. But, here the­ory
and practice clash. The individual of
moderate means, who could spend as much,
if not more, than formerly, may be in ac­cord
with the theory. When it comes to
practice, the fear that conditions may be­come
worse is likely to act as a deterrent.
All but pressing needs are set aside. De­mand
thus is slackened.
One might obtain some idea of the effect
on New York stock brokers by making a
comparison of shares traded in on the New
York Stock Exchange. For eleven months
ended November 30, 1929, the number was
1,041,023,130. For the corresponding
eleven months ended November 29, 1930,
the number was 751,171,364. Commissions
computed on the difference of 289,851,766
shares would indicate that the purchasing
power of the brokers, as individuals, has
been materially decreased.
A master economic mind which could dic­tate
a business policy for the entire world,
presumably would have no difficulty in
straightening out the tangle in which this
country is involved. The individuals who
make up the masses, however, are con­fronted
with what appears to them to be a
two-horned dilemma. If they spend, they
may rue it later on. If they save, they
make business worse. The situation, in­deed,
is complicated.
A perspective of the whole matter per­mits
of conclusions which are as certain
almost as time itself. The successful con­duct
of business is dependent upon suf­ficient
demand to utilize the available fac­tors
of land, labor, capital, and business