Outlook For Permanent Recovery Now Seems Fairly Hopeful, States Sprague

In general, the outlook for recovery is fairly hopeful at present," said Oliver M. W. Sprague '94, Edmund Cogswell Converse Professor of Banking and Finance, in an interview with the CRIMSON yesterday. "Recovery," he continued, "does not depend entirely, however, on monetary factors or on any steps taken by the government.

"The major influence at the moment, is what business will do, whereas a year ago the whole question of the rehabilitation of the country depended on the action of the government. If business men will be enterprising and willing to take risks, it is likely that a permanent improvement in conditions will result.

"Psychologically the people of the country must have an optimistic outlook if progress is to be made, but this optimism must rest on a good foundation based on an increased volume of trade and a healthy sales market. In the Hoover 'just around the corner' days the country was hopeful, but their hope did no material good because it had no substantial grounds on which to stand. Today, the psychological attitude of the people is enthusiastic because of their sympathy with the new administration, and there is hope that business will improve in proportion with this enthusiasm.

"The leading question at present is whether there will be a satisfactory recovery of trade to take care of unemployment when the government stops its emergency methods, and to justify the devalued dollar. The government policy must be directed to stimulate business and finance; capital must be used to increase volume and sales. This may be done in two ways, namely increasing the purchasing power of the working man by allowing him more pay, or reducing the prices of those commodities, which, if they were produced in more volume, could be sold cheaper while the same profit was taken. This latter method is well illustrated in the automobile industry which has gone on the policy of decreasing prices and producing better cars. In doing this they have increased their sales greatly, but they have returned the profits made on these sales to their customers in the form of better automobiles at lower prices.

"It is a mistake to increase prices of those goods for which there is a large potential demand; rather the volume of trade in these goods should be increased. There is an abundance of credit ready to be used in the country, and this has been increased greatly by the devaluation of the currency. This credit must be used to stimulate good business enterprises.