The Waterbury Democrat., 1936-03-12

Washington, March 12-On Presi- dent Roosevelt's desk, among the top animals, memorandum pads, pencils, and other paraphernalia, visitors have sometimes observed a small brown book.
 Both the president and Mrs. Roosevelt have been known to rec ommend the book to friends. Its purpose is to tell people how to keep the capitalistic machine oper- ating without running into the ditch.
 Presumably one is justified In assuming that 1t at least partly re- fleets whats going on in Roosevelt'S mind as he grapples with the prob- 1ems of recovery and reelection. Especially since readers of the little brown book now realize that 1t forecast the presidents unexpected proposal to revamp the corporation tax system by taxing undistributed corporation profits.
 The book is called Brass Tacks" and its author is David Cushman Coyle, 6 consulting engineer Of note.
 Here's what Coyle had to say about corporation surpluses, which now seem 50 significant:
 C. there is another type of insurance against hard times that already has been widely used. This is the habit of laying up corporation surplus for the pur- pose of paying dividends when not currently earned.
 "The corporation reserve is the grandfather and president of the Bootstraps Club. Here the fallacious notion that money should be made to work has had the most devastat- ing effects on the business world, and no program for stabilzing busi- ness will be really effective until this notion has been swept away. How It All Starts
 "The first stage in using surplus earnings to bring on ruin is to deposit them in the bank during tho early stages of prosperity. The banker naturally lends the corpor- ation's money to one of it's com petitors for expansion of capacity, which stimulates business and for q time shows no indication of the inevitable crash. As the bubble grows larger and more iridescent, tho corporations turn their surplus flirs3s loose in the call market. This is called preserving Q liquid condi- ton [.
 "Then when the bubble bursts the companies draw out their funds, wrecking the banks or calling loans on spectators as the case may be, and generally defiating everything in sight"
 Assails 'PIoughing In"
 Coyle excoriates the "ploughing in theory, admitting 1t to be "con- servative and respectable" which uses company earnings ito overeX- par1d its plant to such extent that competitors wil lbe forced to cut prices until the industry is ruined.
 "The idea that every man and every company can grow indefi- nitely at everyone else's expense Is the basis for many an ambi- tious program, which when added to others of it's kind paralyzes the whole economic organism -.
 "Some day there will he pro- hlbtlve tax on all corporation profits which arc not either dis tributed immediately in dividends or laid aside in currency"
 All of which proceeds from the Coyle theory that the nation must "avoid wasting our substance in riotous investment" and that eco- homie salvation lies in an increase in personal and national spending accompanied by @ reduction of the rate of saving and investment.
 
 Cites Prime Requisites
 Prime requisites. he says, are:
 l. Genuine old age pensions and other forms of economic security which will diminish the urge for thrift.