Evening star., 1938-01-19

pressure Sa | e s. &$*#%S &>$#$SS$ /
man has sold au- % sBSSSa.sssa
tomobiles in too %$ ~
great q quantity. #
One shudderS to
think what would 0 A""'e"'e'
have happened to the managers of the
automobile companies if, year or 50
ago, they had said to the public,
you've got all the automobiles you
need, and we will not sell you any
more. We will now lay off our work.
ers."
Then there would have been cries
Of conspiracy" to bring on a de-
preston. Indeed. 1t so happens that
Uncle Sam started the high-pressure
selling himself, in the form of a
soldiers bonus. which did more than
any other single thing to force auto
mobile production schedules upward
to record heights in 1886 and the
early part Of 1887. If the automobile
dealers had not won some of those
soldier bonus dollars for automobiles,
the money, of course, would have gone
into other things. Under a planned
economy" even the manner of ex-
pending a soldiers bonus doubtless
would have to be controlled.
Bonus Returns in Taxes.
As matter of fact, the soldier
bonus money has come back to the
Federal Treasury in no small part
through taxation. Thus, the other
day. there was published the list of
individuals in the automobile industry
who received in excess of 5000, and
there were many executives who re-
ceived sums way in excess of that
amount. This wasn't in the form of
salary. because most companies have
plans whereby commissions or bonuses
are paid to management if the sales
increase.
Bonuses are counted as salary for
tax purposes. however, and govern
ment. meaning both Federal and State.
received somewhere between IS and
IS per cent Of the huge amounts
credited to the business executives in
the published list.
Again, one shudders to think what
would happen to the tax receipts if
some Of the big companies were today
to reduce salaries or cut down bonuses
1t would mean that the Treasury of
the United States would lose some
substantial amounts Of revenue. It
is to the interest of the Government,
therefore, to see that bigger and better
salaries are paid. Most citizens would
probably not relish an 80 per cent to
20 per cent partnership division Of
earnings with government, the smaller
end going to the citizen, but that's the
custom nowadays in the higher brack-
cts Of income.
Amount Of Income Taxed.
Many a talented executive, no doubt,
feels that he needs, let us say. $4,000
for himself and family, for insurance,
for charities, or for all the many
other things that men of means are
counted on to support in their COM
munities. To have a S50,000 net
salary, it becomes necessary for the
company in question to pay some-
where between 100000 and $150,000
in salaries or bonuses because so
much of what is paid to the execu-
tive goes in taxation. Big salaries
and bonuses are being paid in busi-
nesses where competition is keen and
selling skill is an important factor.
To say, for instance, that the auto
industry should not have sold as
many cars in given year as it did is
but another way of claiming that de-
mand and selling skill should be or
can be controlled. 1t wasn't controlled
in 1896 when the soldier bonus was
distributed. 1t will not be controlled
in other years for other reasons not
now foreseen.
The administration will never make
much progress on its planned produc-
ton" scheme by trying to regulate
the terms of sale or the salesman's
commissions. These should be as
high as possible to encourage incen-
tive. II the American people are unable
to refrain from buying something they
cannot afford, if they would prefer
an automobile to a life insurance
policy, or fancy wearing apparel to
anything else, surely no system short
Of a regimented commonwealth can
control or limit human desires.
Aim Of President.
What President Roosevelt Is aiming
at is regularized production. He is
tackling all phases, doubtless ON the
theory that industries themselves will
lind some plan for adjustment and
better balance. For the moment, how
ever, the administration is interested
in reguaarizing production largely to
bring about higher annual income
to workers.
Production, on the other hand. is
1mpeded whenever any factor is in
troduced such as high taxation, higher
than necessary labor costs, or undue
increases In the cost of raw materials.
The administration is studying plans
TO keep down the prices of raw ma
terials like steel, which, Of course, is
q big ingredient of automobile costs.
To accomplish an equilibrium, it is
the belief of some Government ad-
visers that ceiling or maximum must
be put on raw material prices. If
control is to come, it will have much
more widespread effects in getting
production lined up evenly than would
any plan to fix the terms Of Selling.
The making of easy terms is an in
centive to marketing certain types of
products. Also the Government itself
has believed so much in the theory of
tnstallment selling, for instance, that
It has adopted a plan for housing
which involves 10 to 20 years for re-
payments and allows an individual to
buy and build q house with as little
g. 10 per cent down payment.
II high-pressure selling is q national
crime, then the gullibiity of the public
= something that needs correction,
too. and that Is . pretty big order to
put into effect In . Nation Of 50,00o,-
90 families.
fHAss~~l~hk 1ooaN