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m economy
THE EFFECT OF REGULATIONS O N COMMERCIAL CHEMICAL DEVELOPMENT
V J O V E R X . M E M impinges on economic matters in a great main ways— in fact, government is something like the mush room in Alice in W o n d e r l a n d . Yrou may remember that t h e rabbit told Alice to eat some oi a special mushroom: "One side makes you smaller, the other one taller." T h e government mushroom affects the economic structure—enlarging and con tracting—in a great variety of ways, which may be conveniently summarized in four b r o a d groups: 1. Fiscal policy, including such matters as spending, taxing, lending a n d guarantee ing, a n d debt m a n a g e m e n t . 2. Monetary Policy, including such mat ters as selective credit controls over specific kinds of credit, a n d general ef forts to influence t h e volume of b a n k credit. 3. Regulatory functions, as for example, t h e supervision of transportation and communication. 4. Physical controls used in w a r and emer gency periods to influence the use of materials and m a n p o w e r and p u t ceil ing» on prices a n d wages. Raw Materials T h e r e is a general shortage of raw materials throughout the world. In some cases, the shortage is merely uncomfort able; in other cases, it borders on the desperate. I believe this shortage of raw materials has been the single most im portant inflationary factor in the United States since the Korean war began. Prices of raw materials were tending u p w a r d in 1950 even before Korea. After t h e outbreak of hostilities, these u p w a r d m o v e m e n t s were intensified. T h e Bureau of Labor Statistics spot in dex of market prices for 16 sensitive com modities rose by 1 1 % within one m o n t h after Korea. T h e climb continued so that eight a n d one-half months after Korea the 1816
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Labor, Capital, a n d Materials By WESLEY L I N D O W , W e e President, Irving
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