Evening star., 1934-10-14
Truce in the Making Between
President Roosevelt and Business

peTmlIteQ 10 WOrk pretty mucn as II
always has worked in the past.
Just how or where business men re-
ceived the impression that the Presi-
dent intended to take away from
them their opportunity to make a
profit is a mystery.
A rereading Of Mr.. Roosevelt's
speeches fails to reveal any state
ment that could be interpreted as
forecasting an end to the capitalist
system. He has talked of fair
profit" but never Of forgetting profit.
Similarly, Donald Richberg, a promi-
nent New Deal spokesman, has said:
IF our business institutions were
all operated in a generous spirit of
cooperation and mutual helpfulnesS,
with genuine desire to earn only
the profits that are a compensation
for service rendered, the faults and
difficulties in our present system could
readily be corrected"
But that Is as far as Mr.. Richberg
has gone. DR.. Rexford Guy Tugwell,
Undersecretary of Agriculture and
presidential adviser, has come the
nearest to suggesting that profits
might be threatened by Government
action. He was speaking back in
1881, before he was in any way as
sociated with Mr.. Roosevelt. At that
time he said:
"The essence Of business Is its free
venture for profits in an unregulated
economy. Planning implies guidance
of capital uses. To take away from
business its freedom Of venture and
expansion and to limit the profits
it may require is to destroy it as
business and to make Of it something
else"
Whatever was the source Of the
fear that permeated the business
world concerning the Presidents at
titude toward profits, it now has been
dispelled. A sigh Of relief went up
when Mr.. Roosevelt said on Sep
tember 80:
I'VE count, in the future as in the
past, on the driving power of indi-
vidual initiative and the incentive Of
fair private profit, strengthened with
the acceptance of those obligations
to the public interest which rests
upon us all"
And there was added reinsurance
when Mr.. Richberg said October g:
"The only tolerable way out of this
depression is being found in the
steady increase of employment in
profitable private business"
There is evidence in the figures to
show that the New Deal has been
anything but destructive of the profit
system. Thus the net profits of 4O7
corporations for the first six months
Of this year, as offered by the Fed
eral Reserve Bank Of New York,
totaled $685., ,000, 900, as compared with
$75,000,000 in the first six months of
1888 and $4,000, 900 in the first half
Of 1882. Even in 1881, before the de-
preston really deepened, these corpo-
rations earned but 1851 ,0o0, 900, or
less than in the first six months of
this year.
AS further evidence that the profit
system has not Jared so badly under
the New Deal, there is a report by the
National City Bank of New York.
This report shows that for the first
half of 1884 only two groups of re-
porting industries had loss on their
invested capital. Those two were
building materials and railroads. In
the first half of 1888 eight groups of
industries reported losses. In the 1884
half year the automobile industry
showed a profit Of 1872 per cent on its
invested capital, chemicals 10 per cent,
coal 2.3 per cent, food 10.4 per cent,
machinery 81 per cent, merchandis-
ing 40 per cent, mining 8.7 per cent,
petroleum 38 per cent and textiles
So per cent. For 16 groups the aver
age earnings were estimated at ST
per cent on invested capital, as COM
pared with II per cent year ago
and 81 per cent in 1927.
AS matter Of fact, some New Deal
economists argue that one Of the
country's troubles today grows out of
the fact that, through N. r. A. codes,
industry found way to run up prices
and assure itself good-sized profits
on a small turnout of goods and
services.
Mr.. Richberg accepts this theory.
He believes too many industries took
advantage Of their opportunity to get
together outside the antitrust laws
and used that opportunity to assure
themselves a profit. This accounts
for his statement that, in developing
its future policy, the reorganized N.
R. A. is going to seek gradually to re-
store competition and to remove price
controls. If industry desires to use
Government power to help it check
production and keep prices steady,
then, in the Richberg view, 1t must
submit to more Government regula-
ton. He is Of the opinion that the
surest way to put an end to the profit
system lies In the insistence OF busi-