Evening star., 1933-05-29
Debating Salaries.

the Reconstruction Finance Corpora
ton. is in a position to become the
car of industry, transportation, bank
ing and insurance in this country. The
rule which Jesse Jones, chairman OF
this corporation, has just laid down
regarding the salaries which may be
paid by railroads to officials OF COM
panies borrowing from the corporation
is a striking indication of the extent
of this power. Furthermore, the Sen
ate not long since wrote into Dill
dealing with loans to insurance COM
parlies a provision that salaries paid TO
officials of these companies borrowing
from the Reconstruction Finance Cor
poration should not exceed $17,500. The
bill has still to be written into law
and the House committee removed the
fixed limit, leaving to the officials OF
the Reconstruction Finance Corpora
ton authority to deal with the matter
Apparently Chairman Jones already
feels fully empowered to lay down rules
regarding the payment of salaries by
these corporations.
The Reconstruction Finance Cor
poration was devised as an aid to IN
dustry, to agriculture and to financial
corporations. 1t Is an agent Of the
Government. So avid were many cor
porations for Government aid during
the period of distress that the loans
of the corporations have been enormous
and have extended far and wide. 1t
may have been that the borrowers did
not consider the fact that the lender
would be in a position to impose terms
in the operation of their businesses.
But whether they did or not. it seems
clear that this Government agency IS
able to dictate as long as the loans
remain unpaid and especially in the
case of new loans.
II the Reconstruction Finance Corpo-
ration can fix the salaries of the officials
of corporations borrowing from 1t, Just
because it holds the purse strings, there
seems no logical reason why it cannot
dictate in other matters of operation as
long as the loans are unpaid to this
Government agency. 1t may be that it
is entirely just that cooperation which
is in such straits that it must go to the
Government for loans should curtail the
salaries paid its officials. Many of them
have done so already. If the Recon-
struction Finance Corporation has the
power to compel lowering OF these
salaries, it might also have the power
to compel lowering Of wages. or even
to compel increases. Should it under
take to tamper with wage scales, par
ticularly in an effort to lower them,
there would be an immediate repercus-
sion.
Undoubtedly this dictatorship of the
Government to private industry through
the loans extended will serve as an
incentive, if any is needed, to corpora
tions to set their houses in order as
early as possible so that they may repay
their loans and become in fact dictators
Of their own policies. To that extent the
policy now adopted by the Reconstruc-
ton Finance Corporation may be salu-
tary. 1t would be an indefensible stu
alton If a private corporation were en-
powered to borrow from the Government
and to continue to let the Government
hold the bag" while it paid excessive
salaries to officers or was extravagant
in the operation of its business in other
ways.
Chairman Jones has laid down the
rule that an officer of a railroad corpo
ration lin the RED" and borrowing from
the Government agency must have his
pay cut by so per cent if he is receiving
more than 100000 year, and that If
he receives from $4,000 to 100000 the
cut must be so per cent. Other salaries
to officials are scaled down until 10
per cent cut is ordered for officials re-
ceiving $4,000 to $4,000. Many of
these officials will regard the rule as
drastic and unfair. Nevertheless, public
opinion is likely to applaud the rule.