Harris Criticizes President For Inflationary Program

Seymour E. Harris '20, Chairman of the Economics Department, continued to attack President Eisenhower's economic policies yesterday when he declared that "the economy is not so stable as the Washington authorities claim."

Harris had recently claimed that government tariff and tax exemption policies tended to injure industrially depressed areas, citing New England as an example.

Although he foresaw no crash similar to the 1929 tragedy, Harris said in a letter to the New York Times that there were several similarities between the present times and the 1920's. Prices rising relative to cost, expansion of credit, rise of security prices compared with steady wholesale prices, and the drop in farm prices are all "reminiscent of the late Ninteen Twenties," he stated.

Harris declared that the administration was not trying to balance the budget but "to give an appearance of the balanced budget." He cited as evidence the rise of $12 billion in the national debt since 1952.

Criticizing the great increase in credit extension since 1952, he pointed out that residential mortgages rose four and one-half times the national product, consumer credit two and one-half times, and automobile credit five times. In the last year alone automobile credit rose by $3.7 billions, he added.

The Harvard economist felt that "a prosperity built on this kind of progression is at least in part a sham."

In order to combat rising credit, the Republican administration must put controls on such financial outlets as savings banks, insurance companies, and pension funds," Harris said. "These agencies are not as easy to control as commercial banks," he added, "but we shall have to find ways of dealing with all such financial intermediaries."

Although the price level has remained at 111 during the Republican administration, there is much inflation inside this stability, according to Harris. He stated that a rise in industrial prices has been offset by a corresponding drop in agricultural prices.

Harris added that "we seem to be on top of a boom fueled by an unusual expansion of credit and banking...a matter worthy of investigation and action."