Evening star., 1934-03-25
BY OWEN L. SCOTT.

Inc pront system-oI mucn con-
Germ to those who are critical Of the
present national recovery program
appears not to have Jared so badly
during the first year Of the new deal
Profits and the prospect of profits
make the wheels of industry turn in
capitalistic society. The N. r. A,
with It's stress on wage increases and
hour reductions. its encouragement OF
labor organization, its rapid thrust OF
Government into the field Of busi-
ness. combined to produce the cry
that the profit system was to be stified.
But what actually has happened ?
For company after company, net
earnings are being reported for 1888
where deficits were the rule in 1881
and 1892. Yet the first quarter OF
last year was the worst Of the de-
preston.
Income tax returns, based largely
on profits of corporations, have shot
ahead of estimates and are far above
a year ago. They should total $780,
600. 900 for March.
Other Federal tax income. based
largely on business activity. is run
ming fully up to expectations. Rev.
enue In eight and one-half months
of the 1884 fiscal year was larger than
the total collections for the 1888 fiscal
year.
As ofacials view 1t, there is scarcely
any evidence in the reports reaching
Washington to show a sitting Of
profits. In fact. the talk Is all IN
the other direction.
y \ r
An excess profits tax. similar to
that imposed during the war days, Is
being discussed. This pre-supposes
that there will be excess profits to
tax.
Senator Robert F. Wagner. Demo-
crat, of New York is concerned be-
cause Of what he says is evidence that
profits again are outstripping wage
Increases. He asserts that II the trend
continues. there will be another COL
lapse.
The Federal Trade Commission, In
vestigating price-setting practices In
the steel industry, disclosed how un-
der the NJ r. A. business has gained
broad sanction for price-flxing that
can assure profits. President Roose-
welt was impressed by the disclosures.
1t is at this point that new N. r. A.
policies are to enter, and that labor
trouble becomes factor.
The theory on which the Govern
ment now is proceeding is that pri-
vate industry has become strong
enough to start absorbing q larger
proportion of the unemployed.
To accomplish that it wants the
industries that have gone back to a
profit basis, and are relatively strong
financially, to cut hours and raise
wages so that they can add at least
1000 900 more men to their pay rolls.
The added expense incurred in this
operation would be met partly from
profits and partly from increased
prices. II the Government had its
way. To insure stable prices 1t would
agree to permit some Of the price
control practices that now are under
scrutiny.
But industry has baked 1t coun-
ters with the charge that this is evil
dence that N. r. A. actually may
turn out, as some of its critics
charged, to be a profit-stifiing mocha
nism. This accounts for the slow
ness with which the industrial lead
ers are responding to the challenge
of President Roosevelt and Admins
traitor. Hugh S. johnson. Their re-
quest for a 10 per cent reduction in
hours and 10 per cent increase In
wages has been met by silence In
most industries.
This situation may be a factor in
the big poker game that is being
played to determine the part that
organized labor is to take in the new
set-up. Those officials who feel that
industry has gained too much under
the N. r. A. assert that the best safe
guard against excess profits is to en-
unions which then can bargain for
bigger share of the industrial income.
That this idea seems to have caught
hold is indicated by the wave Of labor
disputes now sweeping the country.
Senator Wagner, chairman Of the
National Labor Board. advises that
more than 10 per cent Of these dis
putes arise over the issue Of employer
recognition Of worker unions.
y r Il
This indicates that employers are
questioning whether they got what
they hargained for when accepting
the national industrial recovery act
That act gives employers the right
to cooperate. by eliminating unfair
trade practices. by establishing price
controls and by engaging IN other ac-
tivities that formerly we're prohibiLed
by the antitrust laws.
But In return they agreed under
section 70 Of the recovery act to give
labor the right to Organize and to
bargain collectively through repre-
'entativs' Of t3sir own choosing" free