Evening star., 1938-08-09
FINANCIAL WORLD
LEARNS SACRIFICE
Capital, Labor. Heads OF
Business Study Ways to
Keep Balance.
BY CHARLES F. SPEARE.
peciai Dispatch to The Star,

BY CHARLES F. SPEARE.
Special Dispatch to The Star.
NEW YORK, Aug. 9.-Necessity Is
the compeller Of concession. If you
don't believe 1t, stud the growing rec
ord Of workers who, after long rejec-
ton Of the proposal, are making VOL
untary reduction in their wages, Of
creditors accepting lower interest rates
to preserve the solvency Of their prop
critics, Of landlords reducing their
rents and giving increased service to
retain their tenants and Of States re-
mitting taxes to bankrupt railroads.
The business news of today contains
many illustrations of concession and
compromise, between employer and
employe, debtor and creditor, arrived
at after long deliberation and under
protest. but found to be the only
means by which credit could be main
tanned and employment sustained.
Thus. the workers in the plant Of
the Empire Sheet & Tin Plate Co. at
Mansfield, Ohio are taking a Is per
cent cut, to be repaid at the end Of
three months. in order to permit
operations to continue The organized
forces Of the Rutland Railroad have
agreed to reductions in pay ranging
from 10 to 80 per cent as the alterna-
tive to abandonment Of the road and
loss of jobs for 1900 men.
b. T. o. Holders Face Cut.
The bondholders OF the Baltimore
IL Ohio are to be urged to accept not
only smaller rate OF interest on some
OF their bonds. but the substitution of
a contingent for fixed payment on a
portion OF their income from this
company. 1t is hoped that this plan
which follows that of roads now in
reorganization, will avoid the nee
essity for treatment under the bank
ruptcy Act The proposed extension
OF certain LehiRh Valley Railroad
bonds and payment of only 25 per cent
interest on others for a period of five
years is another effort to cultivate the
concession method as means OF
avoiding corporation bankruptcy.
For several years owners OF corpo-
ration bonds have been making con-
cessions to the abnormal supply OF
money by accepting new securities for
old. and, at the same time, relinquish-
ing their right TO receive ger cent
and taking from 81. to 3a4 per cent
They are in the position of the man
who is willing to work for we'll under
the normal wage scale because tn,
market for labor is, at the time
glutted. Capitalists have difIiculty in
finding employment for their money
in the usual places Of hire" so they
buy Federal or State short-term paper
on which the return scarcely pays for
the trouble Of turning it over. Lat
terly, large corporations such as Gen.
eral Motors. which had about s243.-
000. 900 cash on June 80 and on which
1t earned practically nothing, have
been buying United States Treasury
bills. This is to relieve their banks
from paying the liz OF l per cen,
assessment required under the Fed
eral Deposit Insurance Act. In 1929
when money rates were high. Genera
Motors could have placed half Of it.
present cash 'on CALI and earned
enough to pay the dividend on It.
preferred stock twice over.
Change in Earning Power.
Which illustrates the change in the
earning power Of money in the pas,
nine years. In 1928-29 the person
who inherited sl000 could have in.
vested it to yield him $4,000 per an.
mum. 1t may be assumed that he
would have diversified his investments
buying hieh-grade per cent public
utility bonds and some S. 6 and 7 per