The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-05-01
Withdrawal of Federal Aid
Threat to Business, Sur
Vey Says.
Times Special


NEW YORK, May 1.-The crucial
test Of the whole recovery program
will come when the federal govern
ment withdraws its support from
the many millions of persons who
have been wholly or partly dependent
on it and the burden must be as
sumed by private business, accord
ing to survey by the Guaranty
Trust Company of New York.
The termination Of emergency
employment under the civil works
administration and the apparent
tendency to avoid further drastic
emergency legislation have brought
the country face to face with per-
haps the most crucial question of
the entire recovery program--hoW
and to what extent private business
will be able to resume its normal
functions and permit the govern
ment to withdraw gradually from
the economic field" the review
states.
The question does not apply to
the CWA alone. 1t covers the whole
range Of emergency activities where
by the government has undertaken
to relieve the conditions resulting
from the depression"
A Critical Problem
The critical nature of the problem
IS only too obvious. The announce
ment of the plan for rehabilitation
Of the CWA was followed by a storm
Of protest not only from CWA
beneficiaries but also from local of
1lcials and social workers who saw
themselves faced with a set of seri-
Gus problems after the withdrawal
Of federal aid"
THE situation furnishes one more
Illustration of the well-known fact
that it is much easier for a govern
ment to embark on paternalistic
schemes than it is to escape from
them later on"
If recovery is to proceed in nor
NAL way, it is absolutely essential
that business concerns be allowed to
earn reasonable profits-that is,
profits sufficient to meet their OBJ
legations, to attract new capital, to
offer an incentive to enterprise, and
to provide adequate reserves against
future contingencies. At present, the
earning power Of many business
concerns is being threatened from
two directions. First, there exists in
some quarters great enthusiasm for
the idea of a redistribution of in
come with the redistribution to be
effected, apparently, at the expense
Of business enterprises"
Second Great Threat
The codes adopted under the re-
covery act, for example, provide for
minimum wage rates and maximum
hours of labor; and an effort was
made recently to bring about
sweeping revision of the rates and
hours in order to increase con-
Sumers' purchasing power and to
spread the work.
The second great threat to bust
ness profits lies in the possibility of
excessive increases in governmental
expenditures and in the public debt.
Inc present plans OF the admins
tration contemplate a level of fed
eral expenditure in coming months
that is without precedent in times
of peace, and an advance in the
public debt to a total several billions
of dollars in excess of the postwar
peak in 1919.
In the face of such a prospect, the
credit of the government can be
maintained only if the administra-
ton adheres rigidly to its plan to
bring the budget into balance by
the end of the coming fiscal year
Otherwise, the government, to
maintain its solvency, must impose
upon business a tax burden that will
defer the return of prosperous con-
ditionS for an indefinite period" the
ctirXroU reveals