Evening star., 1938-11-21
Profit-Sharing Plan
Must Be Extra 10
Wages, Senate Told
Prevailing Pay Is Busis
Of Ideo, Proctor &
Gamble Head Says
By JOHN c. HENRY.

BuSSS WV
BY JOHN c. HENRY.
Successful operation of profit
sharing plans in industry must COM
prehend payment Of prevailing
wages as the basis with the profit
participation being an extra In
crement, a special Senate committee
was told today by Richard r. Deu-
pree, president of Proctor & Gamble
Co.
Head of a company which has
been one OF the pioneers in the
field of profit distribution and sta
bilized employment, Mr.. Deupree
emphasized that such plans must
not be used as an instrument for
driving down wage scales.
"Our plan is based on payment OF
the ruling wage of the community"
Mr.. Deupree said. The profit shar-
ing must be a plus quantity. 1t
would be a grave mistake to lower
wages below the community level" ;"
Much of the criticism heretofore
directed at the so-called profit
sharing plans has been that some
have been accounted as wages with
resulting fluctuation Of worker
income.
Views on Standard Formula.
Acknowledging the variations in
the many plans now in operation,
Mr.. Deupree declared it would be
impossible to impose, standard
formula" on industry.
I'm not sure tax relief will mean
many people will attempt plans OF
this Sort" he continued.
But if you can offer some in
ducement to get employers started,
and then let the inducement peter
out in a few years, then you would
have done a tremendous job
Such incentive, he said, might take
the form of tax concessions or Of a
sharing of cost by Government.
Briefly, the Proctor & Gamble
plan calls for employe purchase of
company stock over a six-year pc
riod by deposit of per cent of their
income. To this deposit is added
an employer COIlIIlDullOll.
At the end of six years. with the
employer contribution increasing
gradually to point where it amounts
to Is per cent of the employe wage.
After Is years of service, the worker
starts receiving this extra share OF
profits, semi-annually in cash.
Sharing Held Imperative.
Widespread sharing of industrial
income with industry's employees
was termed imperative as fortl-
f1cation of capitalism" by Donald
Despair. director of the committee S
survey, in preliminary statement
outlining the ground to be covered.
IF the profit system is to be con-
sidered the heart of the American
plan,'" Mr.. Despair said, there are
no logical grounds on which it can
be confined to few
Application of a properly devised
system of profit-sharing, he said,
would be the most effective of labor
relations policies and would stand
as an unbeatable defense OF the
capitalistic system"
During operation of the Proctor q
Gamble plan, DR.. Deupree testified
the company had been free of any
major labor difficulties and has re-
ceived no complaints from labor
organizations against the workings
of the system. Nearly SO per cent
of about 10000 eligible employees
voluntarily are participating in the
plan, he said. the line of eligibility
being drawn to exclude those earn
ing more than $4,000 yearly.
In addition to this plan, the COM
pany has a guaranteed yearly wage
system by which employees are
assured of at least 48 weeks of in
come each year.
From their review of some 200
plans now in operation throughout
the country, the Senate group hoped
to shape recommendations for tax
legislation which would give incen-
tive to other corporations to set up
similar systems.
Closer Relations Sought.
In addition. sponsors of the in
quiry expressed the hope that wider
application of such plans may lead
to more harmonious relationships
between management and labor.
Senator Herring, Democrat, of
Iowa is chairman of the committee
and Senator Johnson, Democrat, of
Colorado is a member.
1T is for the testimony to demon
strate," Senator Vandenberg. Re-
publican, of Michigan, sponsor of
the inquiry, said, whether some
system by which industry shares its
profits with labor can bring about
improved labor conditions"
Besides Mr.. Deupree, M. B. Fol-
som, treasurer of the Eastman
Kodak Co.. and Robert E. Wood,
president of Sears, Roebuck & Co.,
were on the list of today's witnesses.
Senator Vandenberg said the
question of industrial labor relations
would be examined thoroughly when
William Green, president of the
American Federation of Labor, tes-
tined WEDNESDAY.
Critics Are Invited.
The committee said in a formal
announcement that critics of profit
sharing would be welcomed along
with advocates, because the sole pur-
pose of this committee is to present
an impartial record for the ultimate
benefit of American employers who
are interested in seeking voluntarily
to apply theories of profit sharing
to their own institutions"
Senator Vandenberg said the
committee would obtain testimony
In an effort to find out whether it
would be practicable to provide for
tax exemptions and rewards to en-
courage social-minded practices in
commerce and industry instead of
always, as heretofore, using the tax
ing power to punish, prohibit or re-
strain .