Imperial Valley press., 1938-01-27
There's S No Perpetual
Motion In Business

Inventors have been trying unsucceSs-
fully for years TO perfect perpetual mo-
ton. Science says that, until friction is
overcome, it can't be done-and probab-
ly not even then.
The same sort of thing seems to be in
the minds of two men who made speech
es this week. One is John l.. Lewis, the
CIO leader, and the other is President
Roosevelt. They both want American
business to pull out of the current reces-
sion by cutting prices and leaving pres
ent high wage levels alone.
Unless one examines the background
of the TRADE against any move to cut
wages. it is hard to disagree with the
President. If one does examine the back
ground, it is we'll nigh impossible to agree
with him. Especially is this true because
he calls upon business to charge low
prices, but not to take the price reduc-
tions out of wages, because those who
get the profits when business is good
must bear the losses when business tenn
porarily is slack"
Consider the background for mo-
ment, and you can see that the advice
passed out by President Roosevelt and
John l.. Lewis aims at some sort OF INDUS
trial perpetual motion.
A couple of years ago industry as
whole began recovering from one Of the
worst depressions in history. Some BUS
inesseS did not recover. Those which
did found that their capital reserves had
vanished. They were operating on
slender margin between survival and
ruin, and they had no more money to
finance the fight against bankruptcy
They had to pay as they went. They did.
Then the federal government, working
out new planned economy, decreed that
capital reserves were unhealthy things,
and levied tax aimed at keeping such
reserves at an absolute minimum. BuSl-
ness was penaliZed by the government II
it attempted to lay away reserves for
future depressons The tax penalty was
so stiff that many businesses got rid of
most of the reserves they had accumu-
lated in a few months, and other busl-
nesses quit trying to build up reserves.
Then a recession = and everybody
agrees that it is merely temporary
came along. Business, running close to
the wind. had to trim its sails still more.
Loss of trade again threatened oblivion
for many firms. Labor, meanwhile, had
succeeded in boosting wages to new high
marks Many business men found that
they had to do something drastic if they
were to survive All business men know
that there are two ways to meet such an
emergency. One is to increase sales, the
other to cut COSTS The first is the better
way but in this instance the recession
had made it impractical. The second
way was left.
In the face Of all this, the President
and the labor leader stand against cut
ting wages-and the President urges
lower prices (Which would mean at least
a temporary reduction of income). The
cost to business of the lower prices, the
President declares, should be taken out
of profits when business is good; that
is to say, capital reserves.
Yet the government has done all in it's
power to eliminate the very capital re-
serves it says should be used to finance
the recession.
Business generally is willing to CO.
operate in overcoming the recession, but
cooperation is impossible when only one
party takes part. The average business
man does not like to cut wages, and he
does like to cut prices and increase con-
sumption if he can, but when ne is called
upon to enter a period of economic un-
certainty without any reserve to back
him up, he is called upon to do the impos-
sible Perpetual motion is not yet pos
sible. even in business.