Evening star., 1937-01-01
BRINGS
,|DEND SHOWER
Increases and Bonuses
IntifuI-BusineSs Fits
Self to Situation.
z FREDERICK GARDNER.

Associated Press FINANCIAL WrlteT.
8EW YORK, January 1.-Business
1886 steered a course marked by
lr-reaching Federal laws touching
rade and industrial policies.
Washington's legislative mill slowed
ydown after three years of momentous
activity for reform and control OF the
money machinery, the securities busi-
ness and large sectors of industry. But
out Of the last session Of Congress
came, notably. tax measure-the
corporate surplus levy-which helped
produce a spectacular year-end dis
tribution Of dollars to shareholders and
workers.
Get Adjusted to New Laws.
Besides dipping into larger earn
ings to disburse hundreds of millions
Of dollars in extra dividends and
bonuses for workers, business sought
TO adjust itself to the Robinson-P
man law against price discrimination
tn distribution of goods and the social
securities program, passed in the pre-
,vious session.
At the same time helmsmen of busi-
ness had to keep an eye on the Su-
preme Court as New Deal measures
underwent the constitutional test.
Anticipating further efforts to write
NRA principles into law, some indus
tries sought under scrutiny of the
Federal Trade Commission to work
out voluntary agreements for self
discipline.
See New Philosophy.
Many tax authorities saw in the
sieeply graded levy on undistrlbnted
corporate earnings. passed over loud
opposition from industry. an express
sion of social and economic philosophy
more important in the long run than
immediate revenue-p producing effects.
They linked it with heavy Federal
spending, public works and high in
come taxes on the upper extremes OF
wealth as an avenue for sluicing money
into consumption channels to raise
purchasing power of the masses and
speed full employment of the Nations
productive machinery.
What long-range influence this
would have upon expansion Of indus
trial plants and industries supplying
tools of the machine age was topic
of controversy.
Purchasing Power Climbs.
At any rate, record breaking year.
end downpour of extra and special
dividends accompanied the rush to
reduce tax liabilities under the law.
Wage increases and Christmas
bonuses for workers swelled the Ma
tons stream of purchasing power
substantially at a time when rising
prices threatened to lift living costs
further.
Many companies stated candidly
they were paying out funds which
ordinarily would have gone into re-
serves for contingencies or expansion.
Wholesale revamping of dividend
policies was evident.
Another important effect of the tax
law was increased pressure for sim
plification of corporate structures by
lower exemptions on inter-company
dividends. Coupled with previous
legislation, including the 1885 utility
holding company act, the tax measure
appeared to have hastened elimina-
ton of subsidiary units to avoid pen
slties on complicated holding setups.
Pensions Problem.
The Robinson -Patman law. inter-
preted generally as aimed to put inde-
pendent retailers on better competi-
tive footing with great chain store or
sanizations. precipitated much discus
sion as to meaning of some of its pro-
visions Trade sources reported. how
ever, that it was moving manufactur-
ers to revise selling contracts.
With the per cent pay roll tax for
sld-age pension reserves slated to take
effect at the outset of the new year,
many corporations pondered what to
do with their own pension plans and
how the pay roll levy would affect op-
Grating costs. Most larger industrial
units having private plans were dis
posed to continue them. with some
notifications, pending clearer insight
into the future of the Federal pro-
gram.