Evening star., 1938-12-06
incentive Tax
Is Opposed
By Edse| Ford
fovors High Wages
As Best Profit
Sharing Plan
BY the Associated Press.

Edsel Ford told the Senate Profit.
Sharing Committee today that
reduction in Federal taxation would
be "as good an incentive" to busi-
ness as anything the Government
could do.
The slender son of Henry Ford
testified he believed incentive tax
alton to encourage plant expansion,
purchase OF equipment and regular
lzation Of employment might lead
TO consequences difficult to handle"
You feel, then" said Senator
Vandenberg, Republican, of Michi-
gan, that incentive taxation might
create more problems than we could
solve by it?'
Il feel that is right" Mr.. Ford
replied quietly.
High Wages Favored.
He said the Ford Motor Co. be-
heved in profit sharing through
high wages. He added that he be-
heved the high wage scale had pre-
vented any serious" labor troubles
in Ford plants.
We try to be more than fair to
our employees" Mr.. Ford said. I'VE
try to pay just as high wages as we
can and produce at as low cost as
possible. thus creating volume pro-
duction"
Mr.. Ford said his company had
paid $77,565 900 in profit sharing, in
excess of the established wage scale
Tor the motor industry. from 1914 to
1919, inclusive. In 1920. he ex-
planned, the company changed to
system of cash bonuses. paving out
S6,750,000 in bonuses for 1919 and
1920.
The company instituted a s6-a-
day wage scale in 1920.
The Ford Co. now maintains, Mr..
Ford said, an investment plan by
which all employees may deposit a
percentage of their wages. They re-
celve a guaranteed interest of Az
per cent, plus special returns paid
semi-annually. These special re-
turns, the witness said, have reached
as high as 10 per cent.
Since 1920 employees have received
from this source total of S27,80O.-
OO0 of which sl5,50O.O00 was in
guaranteed interest and s12,3OO,0O0
in special returns, Mr.. Ford re-
lated.
Believed Less Paternalistic.
He said he believed the company's
system of sharing profits through
high wages was more simplified.
more workable and less paternalistic
than other profit-sharing plans.
I'VE have paid our men as well
as We could and have felt that
they were more able to take care
of their own needs than we were
under some sort of. pat~rnalistic
SYSTEM" Mr.. Ford said in explain-
ing why the company had estab-
lished no disqualification plan such
as put into effect in other industries.
He said the company began pay
ing its employees wages in excess
OF the going rate in the motor in
dustry when it instituted a S5-a-
day minimum in 1914 He said the
going rate of "a cents an hour was
raised an additional 1872 cents an
hour to make the scale IS for an
eight-hour day.
In 1920. he said, the Ford COM
pany advanced its minimum wage
to Sc day, where it has remained
most of the time since. except that
it was reduced to 81 in the depths
of the business depression.
Willard H. Dow, president of the
Dow Chemical Co.. Midland. Mich.
also opposed incentive taxation to
encourage profit-sharing.
1--WE would hate to see that become
the beginning of a Government
trend of telling business how to de-.
velop bonus or profit-sharing sys-
tenn" Mr.. Dow said. Each of these
proflt-sharing plans must fit the in
dustry it serves. I don't know that
I understand how Government could
put in broad form of incentive
taxation without debating the form
ula to be conformed to-"
Declared Psychological Handicap"
L. M. Giannini. San Francisco
banker, testified yesterday that he
believed present Government tax
policies were offering psychology
ical handicap" to business expan-
sion. The president of the Bank Of
America National Trust & Savings
Association urged their revision.
Mr.. Giannini and other members
of the powerful San Francisco
banking family have supported most
New Deal policies.
Talking to reporters after his tes-
timony, Mr.. Giannini said he saw
little chance of any reduction in
taxes in the near future.
We've got to have enough taxes
to balance the budget" he declared.
Il believe that it can be done under
present rates when the national in
come reaches $85 900, ,000, 900 or $780,
600, ,000, 900 year. There is no use
talking about reducing taxes with
the present problems of Govern
ment financing confronting U.s."
Mr.. Giannini said he believed
some tax credit should be given to
business firms which share their
profits with employees or set aside a
portion of them for plant expan-
sion. This might be done by giving
credit on the amount set aside, he
said.
Declaring he did not want to ap-
pear to be unduly critical of ad-
miniStration policies, the banker SAID
he felt present high tax rates killed
individual initiative in business, par
ticularly in the high income brackets.