EDITORIAL NOTE:

The totalitarian leaders of the old world are trying to provide economic security for their followers by despoiling minorities and crushing small nations.

They have declared their determination to destroy both democracy and the institution of private property because, they say, democracy and capitalism have failed. The heavy yoke of Hitler was accepted by the people of Germany because he held out to them the hope that he would establish a new order which would provide economic security for the "master race".

The basis of his propaganda attack upon the governments of France and England was that these nations were controlled, to use his own word, by "plutocrats" and the masses could not expect economic justice from them. The same argument was held out to the people of Russia by Lenin and his successor, Stalin, and to the people of Italy by Mussolini.

In all three cases the attack has been carried out by denying to the individual the basic rights of political and economic liberty upon which the democratic system depends.

Clearly, if it is our intention to preserve democracy, it is our task to make the system of free enterprise work; that is to say, it is necessary for us to surround free enterprise with such safeguards as will guarantee to every man the opportunity to labor and to possess the fruits of his labor.

Monopoly Is Dangerous

Whatever restricts the economic opportunity of the individual citizen is hostile to the principle of democracy. The studies of this committee seem to make it clear that the first

foe of free enterprise is not the dictatorial state, but private monopoly in all its manifestations which tend to close the door of opportunity to the masses.

The dictator does not arise until the monopolist has prepared the way for him. The authoritarian state does not appear until after arbitrary private power has restricted the economic liberty of the people.

This report does not confuse size with monopoly as do some who seem to fear any attempt to diagnose our economic ills, and its recommendations for strict enforcement of the antitrust laws do not proceed from any desire to break up all big units, but from its belief that free enterprise can survive only in a competitive economy.

Some businesses must be big, if they are properly to serve the community. Some businesses are of such a nature that they cannot be conducted competitively, as for example, the telephone business.

It is not against mere size, or even against mere monopoly, that the committee directs its fire, but against those restraints of trade which have been traditionally recognized as destructive of free enterprise, those restraints of trade which, by depriving men of the opportunity to work and by suppressing free enterprise, produce unemployment of both men and capital.

The elimination of competition by the type of business conspiracy condemned in the antitrust laws has always, under any democratic system, been regarded as contrary to the public interest, because its result is unfairly to deprive men of the right to earn their living. Offenses of this kind are bad enough when

committed by individuals, but when committed by huge aggregations of economic power and wealth, they are not only destructive of free enterprise, but they are the primary cause of the expansion of government power.

"Declaration of Faith"

The central theme of the report is a declaration of faith in free enterprise announced in the following language:

"The Temporary National Economic Committee, therefore, avows its faith in free enterprise. Every recommendation which it makes is intended to keep enterprise free. It condemns the regimentation of men by government because that is the antithesis of individual liberty. It also condemns the regimentation of men by concentrated economic power, because that likewise is the antithesis of liberty. Economic power which becomes so great that it can regiment men enjoys but a temporary triumph, for eventually, by its restrictive policies, it invites and makes inevitable its own subordination to arbitrary political power."

So the committee has recommended national standards for national corporations, not for the purpose of extending federal control over business, but solely for the purpose of abolishing the corporate power to follow practices, universally acknowledged to be harmful.

The general trend of the recommendations is toward this goal, the elimination of unethical and restrictive methods which all experience shows are hostile to free enterprise.

The report declares that "the social desirability of new enterprise and new employment is so great that Congress can well consider the advisability of material reductions in the rate. of taxation on returns which come from investments in new, independent businesses."

Would Stimulate New Investments

This, in particular, is a suggestion of immediate importance. The huge government ex

penditures now being made for purposes of defense are rapidly increasing new opportunities for employment, but they are also creating the conditions which will produce a new and even greater economic crisis when the time for military preparedness has passed.

The workers who are now being mobilized for the manufacture of materials of war will have to find other employment when we turn our thoughts again to the problems of peace. It is of the utmost importance, therefore, to consider the ways and means by which such opportunities for employment may be created.

It is doubtful if any method can operate more effectively in this direction than the adoption of a tax policy consciously intended to stimulate the investment of private capital.

Members of the committee were a unit in the belief that the problems with which we are confronted cannot be solved by any single group in our society, but require the united and patriotic attention of all groups. Not capital alone, not labor alone, not agriculture alone, but the loyal cooperation of all Americans working as a unit with an unselfish determination to preserve our free institutions will be effective in this crisis.

The supreme task of democracy is so to adjust the economic life of the individual to these huge enterprises as to preserve liberty and maintain economic justice. The dictators of the old world are destroying the liberty of all mankind in order to preserve prosperity for a few.

Our task is to show the world that, under the democratic system, prosperity for all can be secured while maintaining individual liberty. The man need not be made either a cog in a machine nor a slave of the state. It is the supreme duty of democracy to demonstrate this principle.

Summary

Demand for paper at the mill during April continued at the high level established in March. Reports indicate that orders during both months were well above seasonal, reflecting the growing influence of defense expenditures.

Distributors' ("wholesalers") sales during March were 9 percent above February, while April sales were maintained at the March level.

The paper industry operated at approxirately 97 percent of capacity during the month, kesed on a c-day week. Ey the beginning of May derard had become so pronounced that many mills were operating 7 days per week.

Wrapping, writing and printing paper branches of the industry were very active during the first quarter of the year, with the Reserve Board's wrapping paper production index standing at 126 during March.

Several advances were made during April in the published prices of certain paper items, increases ranging from 2 to 6 percent over the previous month's quotations.

Orders for paperboard during April were the highest ever recorded, due in part to defense activities. Current demand is probably for consumption not speculation. With output failing to equal orders since the beginning of the year, the unfilled order file continued to rise steadily during each successive week.

Spurred by heavy demand for both paper and paperboard, wood pulp production attained an all-time record during March. Since paper production during April apparently exceeded. that of March, it is believed that the April

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Specifically, March orders for wrapping paper 28 percent higher than during February were the second highest on record, exceeded only by those placed in September 1939, when stepped-up purchases were chiefly for inventory-building purposes.

Increased orders were believed to be due largely to accelerated industrial activity. Following customary demand patterns, orders for other major grades of paper likewise increased during March. There is nothing to indicate that current orders are inventory accumulations.

Increased demand was also reflected in higher sales by paper distributors. Sales by the wrapping paper division increased approximately 9 percent over February. While this increase was less than the usual seasonal rise in the past 10 years, the volume level in recent months has been above "normal."

Sales by fine paper distributors advanced 6 percent in March and were 17 percent above the corresponding month of 1940 -a record exceeded only once since the beginning of the war.

Distributors' inventories during March increased 1 percent over the previous month, reversing the downward trend in evidence since November 1940. It is believed that this slight replenishing represents nothing other than a re-stocking in certain items.

Stimulated by heavy demand, paper production during April utilized nearly 97 percent of 6-day capacity 5 percent above the previous month 15 percent above April 1940. The trend was upward as the month closed. It is reported that beginning with May a large portion of the industry was operating on a 7day basis.

Due to Spring advertising and the longer month, consumption of newsprint during March increased 18 percent over February and was above that of a year ago. April consumption approximated that of March.

Following increased demand domestic output of newsprint during March rose 9 percent was 14 percent above the monthly average for 1935-39. Substantial withdrawals from their newsprint stocks were made by publishers in March.

Since the outbreak of the war, it has been the practice of domestic publishers to purchase newsprint in equal monthly lots, thus estabilizing production and offering the publishers a substantial stock reserve from which increased demand in any one month may be served.

Paper Price Increase Registered

Paper prices have fluctuated only slightly in recent months. Several advances, ranging from 2 to 6 percent, were reported during April; M. F. book paper, Southern kraft standard, and other wrapping papers being affected. In view of the substantial increases registered in wood pulp prices since the beginning of the war, these increases were not unexpected.

Paperboard Orders Highest on Record

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Partially in line with seasonal expectations, demand at the mill for paperboard was exceptionally strong during April. Orders approximated 744,000 tons slightly above the previous all-time mark reached in September 1939. At present orders probably represent current requirements. April demand was believed to be in anticipation of heavy Spring business, plus generally higher industrial activity.

In line with heavy orders, paperboard output reached the highest mark in the industry's history. Since production continued to fall below orders, the unfilled order file by April 6 had increased to equal nearly 3 weeks' full time output.