 It's time for the Lawn Jean Chronoscope, a television journal of the important issues of the hour brought to you every Monday, Wednesday, and Friday, a presentation of the Lawn Jean Wittner Watch Company, maker of Lawn Jean, the world's most honored watch, and Wittner, distinguished companion to the world-honored Lawn Jean. Good evening. This is David Ross. May I introduce our co-editors for this edition of the Lawn Jean Chronoscope? From the CBS television news staff, Larry LeSir and Winston Burdette, our distinguished guest for this evening is Dr. Gabriel Haughey, economic advisor to the president. He goes without saying that it's difficult to get an appointment with the president of the United States, but few persons see President Eisenhower more often than our guest tonight. He has a set date at the White House at 11 o'clock every Monday morning. He goes there and keeps the president informed of the economic pulse rate of the nation. Now, Dr. Haughey, the president has reported that the recession of or the business downturn of last year or in the early part of this year is over and that he predicts that the next months will see a business upturn. Could you tell us on what he bases these calculations? Yes, Mr. LeSir, yesterday the president put out a statement, as you know, in which he said that in his opinion the slump, the recession, the adjustment, whatever you want to call it, that's been going on since about the middle of last year had come to a halt. I think his confidence is based on things like this, hard facts, the level of construction and the perspective level of construction, the very satisfactory performance of retail sales. The business expenditures on plant and equipment, which create jobs and create demand for heavy goods and for the metal industries. The strength of the financial markets. The fact that inventories, which have been very heavy and have had to be adjusted downward over these months, are now getting into better shape with respect to sales. I think things like that, hard facts in the business situation, have given him reason for cautious optimism. Well, Dr. Haage, isn't it true, though, that the unemployed situation is worse now than it has been for several years? Is this, is there any assurance that these fellows are going to get their jobs back? Well, this matter of unemployment, the president also considered yesterday in his statement, Mr. LeSir, he pointed out that unemployment now at something over three million is up from what it was a year ago. It is, however, lower than it was in 1949 and 1950. And also, he pointed out that the increase in unemployment has been brought to a stop and that employment has been rising steadily and out of these facts, he thinks that when fall comes, we'll begin to get a good attack on that unemployment figure. Well, Dr. Haage, does this administration think that the present level of unemployment is necessary to the economic health of the nation? Indeed not, Mr. Burdette. The present level of unemployment, which, though it is moderate in comparison with previous levels of unemployment, is more than the economy needs or can usefully have with respect to a good level of employment. I would think that it's at least a million higher than any normal kind of unemployment or whatever you want to call it. Dr. Haage, is it possible to avoid political bias when making reports to the president? Is it possible to paint an economy of a political administration in anything but the most rosy at colors? Well, the people who have the responsibility of telling the president what the true picture is certainly have to be on guard. Any doctor who deliberately misreads the thermometer or the electrocardiograph is not going to be very much help to the people he's working for. The facts are presented to the president. The advice that comes to him from political advisers, whether among his congressional associates or his cabinet associates, in connection with the evaluation of the total economic picture is, of course, something that then must be made. But the president himself is a hard shooter for facts, and that's the way that he puts them out to the people. Do you say so, if I may? Winston, wouldn't you say that it would be very difficult for the president to make a prediction that things were going to, were very bad and they were going to get worse? Wouldn't you have to put it in the best possible light, political light? Well, I think President Eisenhower, in any particular situation such as this, would adduce the facts like he did yesterday in his report to the people. And these reports from government sources are available to everybody. And I think that yesterday in his statement, he used these facts and indicated that in his opinion, these facts meant certain things about the economy. And as far as I can tell from the reaction, people generally have agreed with it. Sir, how great a personal interest does the president events and economic problems? Well, I'm glad to respond to that question, Mr. Burdette. I recall in 1952, people used to say about the president that, well, here's a military man. What does he really know about the problems of the country? I first met the president to be in the summer of 1952. And in the conversations we had about economic matters, I was immediately impressed with how much he knew about foreign economic affairs, about the economies of other countries, and also how much he knew about industrial mobilization problems in connection with war. Today, I would be willing to assert flatly that there are few people with whom you or I could sit down who could go as deeply and wisely into the problems of agriculture, into the problems of resource use, into the problems of many aspects of our economy than the president. I think it's extraordinary how he has mastered this tremendous range of problems and brought to bear in his own judgment now a wide range of information. Well, you were talking in technical terms before, Dr. Haughey, about inventory recessions. And we've in the past heard of overproduction and underconsumption. But how much does psychology actually play in the economy of the country? And is it possible to control the psychology of the buyer or the producer? I think psychology is a very important matter. After all, in our kind of an economy, the decisions to buy are made by millions of individuals and by millions of farmers, by millions of businessmen who produce things. Whether or not they elect to spend their money or go into debt to buy something is dependent upon their judgment of what the future is going to be like. Can they sell what they make? Can they liquidate their debts? Psychology is tremendously important. And therefore, the period that we went through, I think, in the first half of this year, when there were tremendous fears in certain areas that we were going to grind our way down into a depression, that frightened certain people. I think now, however, that more and more people are emerging from their economic stone sellers. They believe the president when he says that the road ahead looks like it can be a good road for us if we do the right things. But Dr. Hockey, which is more important, the psychology of the businessman who might order things from a factory or the psychology of a consumer who might or might not want to buy? Well, the consumer, of course, in the aggregate is a bigger spender than a businessman in terms of purchases of plant and equipment, several times over. And therefore, in the aggregate, if consumers went on strike or if consumers indulged in the buying or G, such as they did after Korea broke in 1950, you get profound effects. But it is necessary in our kind of an economy, I think, Mr. Lassour, for that section of our total spending, the section that we identify as business spending on plant and equipment, which runs now around $27, $28 billion a year, which is perhaps small compared to consumer spending of upwards of 10 times that much. But it is very important for the demand for the heavy goods industries and for the workers who work in those industries, that the psychology of the people who have to commit funds, who have to spend on those things, is a confident one and is a buoyant one. Well, speaking of the heavy goods industry, how much of a role does defense play in the economy of the country and the business cycle? Well, defense, of course, in the last several years has been a big taker of labor and of materials in this economy. In the past year, this has been declining. And certainly that was one of the items which had to be taken into account in the adjustment that we have been having. We are undoubtedly going to go ahead and have reasonably high levels of defense expenditure compared to anything we knew before World War II. And it's going to play a role, but I think it's going to be a much more steady role unless, of course, the Russians make a mistake and push us into war. What do you foresee for the rest of this year a slow climb or a sudden surge? I would expect, Mr. Burdette, that with the resumption of activity in the fall, according to a typical seasonal pattern that's existed for many, many years, we ought to see a steady resumption of activity, re-employment, increasing production of a more stable kind perhaps than has typically marked the surges of activity up and down in the history of this country in the last 20 years. Well, Dr. Haag, let's face it, every economist was very optimistic in 1929 and recently they have made predictions which have fallen wide of the mark. Some said they were going to be recessions, some said they didn't. How can we actually be sure that in looking ahead to the future that we aren't completely wide of the mark and there may be a tremendous boom or tremendous bust? Well, you know, somebody said once that if you'd lay all the economists end to end, they wouldn't reach a conclusion. And I think that perhaps you will find economists are having different views about the future. I think the majority of people who follow this closely today, however, have gotten over the depression jitters of six months ago and now the debate rather is the rate at which we're going to grow over the next period ahead. Well, how much of a role, Dr. Haag, is the federal government actually playing? Can you create an inflation or a deflation or is that up to the businessman and the consumer? The federal government, of course, if it wants to pursue radically altered policies such as trying to, for example, unbalance its budget very rapidly by billions of dollars of spending in various ways and by pursuing an exceedingly unwise monetary policy I think could make an inflation rather quickly. And similarly, if it wanted to pursue monetary policies and budgetary policies of a radically constricted restrictive type could have a profound effect. But I think by and large, the economy of America is increasingly going to be dominated and directed by the millions of Americans all throughout this land who are confident about the future and whose decisions are going to aggregate into a growing, reasonably stable economy. And if the government can pursue right policies in that area, I think we're going to have a fine period ahead. Well, thank you very much, Dr. Haag. It's been very interesting to have you here tonight. The opinions expressed on the Laun Jean Chronoscope were those of the speakers. The editorial board for this edition of the Laun Jean Chronoscope was Larry Le Sir and Winston Burdette. Our distinguished guest was Dr. Gabriel Haag, Economic Advisor to the President. A Laun Jean watch is one of the most perfectly functioning mechanisms made by man. On first acquaintance, one is astonished by its day-to-day performance. As months pass into years, its qualities of greater accuracy and reliability become truly priceless. 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