Evening star., 1936-11-16

sung activities of few engineers. with
the financial backing of few rugged
individuallSts.
The saving was achieved in the au-
tomobile industry and the manner
and method of it's accomplishment
conveys a lesson that bears directly
on the course of future recovery in
America. 1t bears on the question
of price, of pay rolls, of economies.
a OF saleSmanship-in fact, the whole
thing is worth studying as an example
of what can be done in America with
out Government aid and in spite of
governmental interferences.
Pay Rolls Maintained.
Back in 1923 there were approxi-
mately 3,250,000 cars sold to the
American public. and the total cost
was S2,925 100000, while in the year
ending November /, 1886, there were
sold just about the same number of
new motor cars at total cost to the
American people of only S2,920, 100000.
oOo
Everybody will concede that this
saving of 100000 has been ac-
companied by an actual improvement
in the quality of the American auto
mobile, both in speed and comfort.
But most people will be surprised to
learn that this has been brought
about without cutting the total num-
Der of persons employed and without
any appreciable difference in the pay
rolls.
Thus in 1928 there were 435,O00
men employed in the motor industry,
and in 1886 there were 442 1000.
AS for the pay rolls, the figure for
1928 was S742,000,0 900, and in 1886 the
pay roll reached 36,OOo,OO0, and is
still going up.
Here then we have an increase in
efficiency without a drop in pay roll
or number Of employed, but with
diminution of price 10 the American
people and better product for the
price than ever before. What sort of
phenomenon is this?
Brookings Institution Theory.
The answer is to be found in the
four remarkable books published by
the Brookings Institution within the
last two years, wherein it offered the
biggest single proposal yet made for
the improvement of Americas eco
nomic conditions. The automobile in
dustry's experience is concrete proof
of how the Brookings theory has
worked and can be made to work
and substantial profits can be earned
besides.
For it is a matter of public knowl-
edge that the motor car companies
are making money, declaring divi-
dends, increasing pay rolls and pay
ing out bonuses to deserving en-
ployes.
The Brookings idea, in brief. is
that if money wages are forced up
too rapidly there will be an economic
breakdown because the articles sold
will have to bear an increased price.
If, however, real wages are increased
which means adding purchasing power
by reduction in the prices of ar
ticles that wages can buy-an increase
in real income is given to the con-
sumer.
Now, there is no intention in the
Brookings report to convey the i'm
preston that money wages should
not rise. On the contrary, the argu-
ment is made that they should like
wise be increased wherever possible,
but not rate that increases the cost
to the consumer faster than all the
groups Of consumers can meet those
costs out of their wages.
Raises Purchasing Power.
Obviously, it is contended, the way
TO bring prosperity is to increase the
purchasing power of as many groups
as possible at the same time, and
this can best be done in many cases
by reducing the prices of articles
bought so that the individual family
can buy other articles with the
savings.
Thus motor cars have become an
indispensable part of the budgets Of
the American family. Motor cars
would be bought nowadays even at
the 1928 prices. but those people who
would be able to afford them would
not have as much money available
for other purchases.
What the motor industry really has
done is to put S637 ,000, 900 that might
have gone into automobile purchases
into the pockets of the consumers
for purchases Of other articles. Other
producers, other sellers, other COM
panies, have had their sales increased
or the slack taken up in their previous
year of low sales because of the $685.
L. s1Ak
through the generosity but through
the engineering efficiency of the auto
mobile makers.
Efficiency the Answer.
The Brookings principle might not
apply to all industries or all busi-
nesses, but at a time when there is
q psychology about raising prices in
order to absorb higher labor charges,
the question might we'll be asked
whether greater and greater efficiency
is not, after all, going to be required
in the coming years and by efficiency
one does not mean production tech
nique so much as proper use Of SELL
, ing methods and better understand
ing of markets.
Business men will say, of course,
that it is hard enough to find econ
omies and to increase pay rolls and
TO keep prices down when the Gov
ernment comes along and puts on
more and more taxes. Doubtless the
answer to this will be the education
Of the American people about the ex-
tent to which Federal and State taxes
are hidden in the selling prices of
goods and articles bought. Maybe
that will tend to force Federal and
State taxes down.
Take gasoline, for example. Due to