Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-28
POLITICS IS BEHIND
WAGE CUTS POLICY
U. S. Business Takes Advice
of Bankers for SIashes De-
spite Hoover Stand.
BY DAVID LAWRENCE.

The administration has no power to
interfere with wage-cutting, and OH
Gals know it, but they are nevertheless
expressing the hope and even the wish
that present wages be maintained.
Secretary Lamont's letter to Repre-
sentative Condor of Rhode Island, con-
ceding that in some instances wage
cuts are expedient, is being seized upon
to prove an inconsistency between the
position of the Secretary of Commerce
and the President. If not a change, to
be sure, in Mr.. Hoover's attitude.
Policy Involves Politics.
The truth is, national politics and the
1892 election have much more TO do
with the problem of wage cuts than
economics The administration cannot
encourage or acquiesce in wage cuts
without mourning serious political con-
sequences. 1t is denied, Of course. that
any politics enter into the question, as
administration officials defend their
point of view entirely on the ground
that decreased wages mean decreased
purchasing power and certainly DO not
help the country out of its depression.
But the companies, which are in Sc
we're straits and which already have cut
dividends and salaries of their execu-
tives and are still in danger of financial
collapse, say they have no alternative
but to cut pay rolls. 1t Is this extreme
type of case to which Mr.. Lamont was
referring and not the general principle
of debating wages to maintain dividends
so often suggested when the business
depression started
Plan Like Wage Cut Used.
Mr.. Hoover's remarks on wages were
made in December. 1929. when the de-
preston began to alarm business lead
ers. They agreed then to preserve wage
schedules. but thy didn't visualize
long -drawn-out depression and de-
cline in the markets for their goods.
Many companies, mindful of TIE Presl-
dents request, did not change the wage
price at all, but cut down the number
of hours or days of employment. This
was called the "stagger system" and was
adopted to provide as much employment
to as many people as possible. but
actually it operated as = ge reduction.
For the last several m .,Ths admin
istration officials have = q hearing
about the advice which h Iers were
supposed to be giving thet: ustomers
about the need for reducin> ages in
order to get better balan' . sheets.
Much indignation has been voiced
against bankers in the abstract, sHlt the
process Of balancing books and Keeping
out of the red has caused individual
firms to heed the advice of bankers ard
cut wages. So a deflation of labor has
been going on RICH along. defended. OF
course, as an emergency measure only
and insisted upon as the only way to
keep solvent.
The Government has no power over
the wage scale except on work done
for the Government itself. The last
Congress put provision in the public
buildings appropriations that Govern
ment contracts should be let at the
highest wages prevailing in the district
where the work was to be undertaken.
Generally speaking, there is no iurfsdic-
ton over wages on the part Of the Gov
eminent. But an administration that
argues for retention of present wages
has considerable influence with bust
ness and certainly wins the friendship
of organized labor. even If individual
businesses do about as they please any
way.
tcopyrisht. 1919