Excerpts from the Press Conference

Q. Can you tell us anything about your conference yesterday with a group of Representatives concerning the continuation of PWA?

THE PRESIDENT: Yes, I gave them an economic dissertation. I don't see any reason why I should not try to put in words of one syllable what I said to them. Everybody who has been reviewing the existing economic situation is pretty well agreed that the present increase in the production of durable goods is more rapid than the production of consumer goods and that that, judging by the past—going back over thirty or forty years—does constitute a danger sign. Almost every time in the past that the curve of durable goods has gone up above the curve of consumer goods, we have run into, not a depression, but a falling off in the production of both consumer and durable goods within the next twelve to eighteen months. Now, that is history and I think almost all economists are agreed on that. Well, that means that we have got to think about the connection of the Government in stepping up the production of durable goods and I have about reached the conclusion that the time has come for the Government, insofar as is possible, to discourage Government expenditures on durable goods and to encourage Government expenditures on consumer goods.

Another way of putting it is this: We need more distribution of national income, not Government expenditures but national income, which would include Government expenditures. We need more expenditures at the bottom and less at the top, because of the fact that expenditures of funds at the bottom go primarily to people, millions of people, who are the consumers of consumer goods rather than consumers of durable goods.

Just for example-taking up again the Government end of it—this past six months or a year we have been buying, inclusive of the Army and Navy contracts, two hundred and fifty million dollars worth of steel. Those are Government purchases. The Government has been purchasing a very large percentage of the total cement output. Of course cement is durable goods. Well, the net result is that we are coming to the conclusion—you raised this question in speaking about public works— that with respect to future expenditures of Government money during the coming year, we want to slow down on things like steel bridges and great permanent structures that use certain materials, the prices of which are going up and up and up.

I am concerned—we are all concerned- over the price rise in certain materials that go into durable goods primarily. For example, we all know that there are a great many mines in this country—copper mines that can turn out copper at a profit at five and six cents. Even the high-priced mines, like Anaconda, can probably make a profit at eight and nine cents. Yet today copper is selling at 17 cents or more, pushing up thereby the prices of all kinds of articles into which copper enters, and of course it does enter into a very, very large field of articles of all kinds. Primarily, however, it enters into durable goods articles.

I think this policy of the Government in regard to its own expenditures is in line with what we have been talking about in regard to planning. On public works we have all talked about our old figure of five hundred million dollars. Now, in a time like this, the less we spend on great, permanent public structures like bridges and concrete dams, and so forth, the better it is. At the same time, in taking care of relief, other necessary things like dredging channels and building dirt dams and things of that kind, are all to the good because they give a larger purchasing power for consumer goods, as opposed to durable goods.

Therefore, to wind it up, that was the economic story that I told those gentlemen from the Hill the other day—yesterday- that in my judgment the Government ought not to encourage too great purchases of durable goods at the present time—to slow down on them because they are in an upward spiral which is at least a danger flag, judging. by the past.

Q. Isn't that somewhat a matter of reversal of conditions? It seems to me that early in 1933 and 1934 not enough durable goods were being purchased.

THE PRESIDENT: Absolutely. You remember that was the principal thesis of Lew Douglas all through 1933—do something to get the durable goods started.

Q. Mr. President, on that basis the Wagner program is more or less out except as a blueprint for tomorrow.

THE PRESIDENT: What program?

Q. The Wagner housing program.

THE PRESIDENT: That depends a good deal. Of course you and I know, as a practical matter, it is a blueprint in the sense that, if the Wagner Bill goes through this year, there will not be a heavy expenditure under it for a year to come. It will take so long to get the various projects put together and started.

Q. I wasn't thinking of that so much, Mr. President, as of when you were talking away back of having a public works program ready for next time.

THE PRESIDENT: That's right. But when you come to 17-cent copper, you are slowing everything up. Or six dollars a ton increase in steel. Of course people are figuring how much of that increase was necessitated by the wages paid to steel workers.

Q. I was going to ask if you thought some of those increases in prices are far above what they should have been.

THE PRESIDENT: Well, copper is an excellent example. I think the Central Statistical Board may have some figures on that. I think that the price increase of ordinary steel was much larger than was justified by the increase in the pay of the workers; it was probably somewhere between twice and three times the amount that went to the workers.

Q. Was there any thought to trying to check that?

THE PRESIDENT: I wish you would show me a way of doing it.

Q. Doesn't this constant increase in armaments throughout the world have an effect?

THE PRESIDENT: Of course it has; it has a tremendous effect. I haven't got the actual figures but I suppose you can get them. Steel orders that have come to us from Great Britain just in the past month—I am told they run forty or fifty million dollars. You had better check on that because I don't know that those are the correct figures. It is an amazing thing for us to be sending forty or fifty millions to England, if those figures are correct.

Q. Any relationship between that 17-cent price on copper and that 4 cents excise tax?

THE PRESIDENT: None at all.

Q. Are you in favor of the revision of that tax?

THE PRESIDENT: I don't think it makes much difference because the world price is 17 cents. In other words, there would be no imports to this country if there were no tax. It would make no difference if they left it on or took it off. . . .