Evening star., 1938-01-26
Prices and Wages.


nizance of reports that wage reductions
IN some industries are being made or
will be made. In an effort to halt this
movement, the Chief Executive at a
press conference yesterday declared him.
self unalterably opposed to wage reduc-
tions-on the ground that they would
decrease purchasing power and prevent
a return to prosperity.
At the same time the President stated
philosophy of his own regarding those
who believe in the profit system. Those
who get the profits when business is
good must be ready to bear the losses
When business is bad. The implication,
OF course. is that they are better able
to bear the losses than are the workers
whom they employer whom their
money employs.
AS matter of fact, and as disclosed
widely during the depression-an the
more recent recession in business
employers Of labor have taken their
losses. Some Of them have taken very
large losses-eyen to their own exclusion
from business or to bankruptcy. Many
OF them were enabled to run their busi-
nesses at a loss and still to give en-
ployment because they had in the past
built up surpluses. With the undis-
tr1huted profits tax, designed to prevent
the accumulation of large surpluses, in
effect. 1t is doubtful that some of them
would be able to repeat such perform
ance.
1t is the Presidents contention that
the purchasing power of the people must
be maintained by keeping wages up
Undoubtedly purchasing power is of the
greatest Importance to the Nation How
ever, if wages are high and labor costs
force increases in prices to a point where
distribution of products is adversely af-
fected, the question of wages becomes a
real problem. Business cannot run at q
loss continuously--or even for an ex-
tended period. There are no taxing
resources for business to turn to-as in
the case of the Government when it is
running in the red.
An assertion that prices of steel, q
necessary commodity cannot be reduced
unless there is reduction of wages was
made last week by Benjamin F.. Fairless,
president of United States Steel, to a
Senate committee. II was to this sug-
gestion that the President was replying
when he declared his opposition to wage
reductions. The President is confident
that cuts can be made in the prices of
some products without lowering wages,
although he did not specify steel.
When he had laid down his premise
that IN order to maintain purchasing
power wages should not be cut, the Presi-
dent proceeded further. He said that
unless industry we're willing to cooperate
and to keep wages up, even though prices
had to be reduced in order to obtain a
market, the Government would consider
steps to keep up the purchasing power
OF the country. How the Government
would proceed to accomplish this end he
did not disclose. One step in this direc-
ton has already been indicated-the
passage Of wages and hours bill. The
measure relates, however, to minimum
wages and maximum hours. There has
been nothing to indicate how much
further the Government would under
take TO go. The uncertainty of business
and industry as to the plans of the
administration in this direction is one
OF the things that has bred fear and
made capital hesitant to invest
The President, in his statement, was
hitting, it may be presumed, particularly
at industries which undertake to con-
tinue high profits and at the same time
to reduce wages. Such procedure war
rants condemnation. But, after all, if
industry undertakes to operate along
those lines, it will cut it's own throat.
Unless products can be sold, it makes no
difference how cheaply they may be
produced.