From Harper’s:
Stuart Chase on the auto industry in the last Depression.
From “The Enemy of Prosperity: Overproduction,” in the November 1930 Harper’s Magazine.
Overproduction, particularly in this
year of world-wide depression, is on
every man’s tongue. What precisely
does it mean? There are indeed distinguished savants who affirm there is.
no such thing. In one sense they are
perfectly correct. Let us look into the
term a little more carefully.
The actual overproduction of goods
destined for the ultimate consumer, in
the sense that they never reach him but
have to be thrown away, is a reasonably
rare phenomenon. Cases have been
cited of shiploads of bananas and carloads of vegetables making gay the
waters of Manhattan because they
could not be given away, but the authenticity of such reports is dubious.
Far more frequent is a conflux of
goods upon the market which can be
absorbed, but only by a very painful
lowering of the producer’s price–often
below the cost of production. The
phenomenon is however a very ancient
one; the consumer often secures some
advantage from it, if not the producer;
while the nation-wide policy of hand-to-mouth buying by both manufacturers and merchants, inaugurated
after the depression of 1921, has tended
to reduce the ravages of overstocked
shelves and sacrifice sales.
The average wage in the United
States is somewhere in the vicinity of
$1,500 a year. If the gentle reader has
ever tried to support his family on that
sum he knows the number–the very
considerable number–of goods he
would like to purchase but must
forego. In respect to the whole body of
finished goods, it is not so much over-production as underconsumption which
is the appalling fact. As a nation we
can make more than we can buy back.
Save in certain categories, there is a
vast and tragic shortage of the goods
necessary to maintain a comfortable
standard of living. Millions of tons of
additional material could readily be
marketed if purchasing power were
available. Alas, purchasing power is
not available.
Thus one horn of the dilemma is a
money and credit system which does
not throw off purchasing power as fast
as factories can throw out vendable
commodities. It is the more acute with
the entrance of mass production upon
the economic field. While average income creeps slowly upward, potential
industrial output may increase at twice,
five times, a hundred times the pace.
Read the rest of “The Enemy of Prosperity: Overproduction” for free
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