Evening star., 1936-09-03

present administration. And he has
supported many measures Of the
Federal Government, publicly and
privately.
Exact Figures Studied.
The president OF the company has
been kind enough to put the exact
figures at my disposal. They show
that in 1929, following four years of
expanding business and profitable
operation, the company had laid by
reserves Of $1.455. .454.88 in actual
cash or in money due, which was as
good as cash. During the same period
it had constantly increased employ
ment, raised wages and paid increased
dividends. When the depression
came, business fell on Immediately.
The company Immediately ceased
paying dividends. Wage rates were
lowered moderately and hours had to
be shortened more and more. But the
industry kept every man possible en-
ployed on some basis, and for two
reasons.
Leaving humanitarian considera-
tions out Of the picture, this is q
highly personalized industry; 1t is sit
uated in q small town, where the
griefs of the working men cannot be
isolated in some distant slum but are
in the owners front yards. And, sec
ondly. it is an industry requiring q
highly skilled personnel, and the dis
ruption Of the organization would be
serious. It concentrated, therefore,
on improving methods, on active re-
search, on the production of a reserve
OF goods, and, helped by orders from
abroad, managed to survive. But it
spent its whole million-dollar reserve,
and was forced to borrow another
quarter-million from the bank to keep
going.
The reserve plus the debt tided the
industry over.
Profits Earmarked.
What will become Of these profits?
One hundred and thirty five thousand
dollars must be repaid to the bank.
Working capital for increased out
put and increased employment during
the current year will take another
take $4,000 and the Federal income
tax will take $73, 500. That will leave
$106,500 presumably for payment of
dividends and for beginning a new
reserve. But the undEtributed profits
tax steps in here. 1t adds Just $94, 500
to the tax load. For repaying its
debts the industry will be taxed 20h
per cent Of what it pays; for increas-
ing pay rolls and employment it will
be further taxed 201a per cent on
what it diverts for this purpose.
There are other facets to this parti-
cular illustration. From this single
small-town industry, numerous others
have sprung. They were not started
by finance capitalism or by economic
royalists." They were started for the
most part by draughtsmen, who per-
fected some new process, patented it,
and went into business.
Freezes All Industry.
My informant says: This bill
ought to be called "An Act to Prevent
Pay Rolls During Hard Times and in
General to Deepen and Extend the
Next Depression"
Actually what the bill does Is to
enforce practice-that of draining
the reserves-which already, through
the greed Of some owners, has ruined
many small industries. Those stock
holders paid the money to themselves;
these must pay it to the State. The
effect on the industry Is the same
1t will push the weaker small indus
tries out Of existence and it will
freeze even the most ehicient ones
where they are. In fact, it will tend
to freeze all industry in the present
pattern. Small concerns will stay
small; big ones will stay big. If this
is what the administration really
wants shall be very much surprised
(Copyright. 1850