Evening star., 1938-02-08

VI z IoL ltOOSSVSlt
told his press conference that business
should dip into it's surpluses instead of
laying off men or reducing wages.
Ever since he made that comment
labor leaders throughout the country
have been repeating 1t as they face
their thousands of discontented men,
bers who had come to believe that
when they accepted unionization they
were getting security in their jobs.
But the spreading Of the notion that
surpluses are big enough to take care
Of the growing unemployment and to
prevent wage cuts Is just another one
OF those smoke screens which tend
to keep the American people from
knowing that We are in the midst Of
cured only when statements made for
political effect and other window
dressing events are eliminated from
the serious problem of making the
system Of private capital function so
that jobs can be created
Political Alibis.
The workers are being given alibis
that are largely political. They were
misled in the first place by the asser-
ton that administrations create jobs
or bring prosperity. The President is
right in urging that there be no wage
cuts wherever possible to avoid them.
and that the recession can be aggra-
waited when businesses which can af-
ford to keep their men employed un-
dertake unnecessary economies out of
sheer apprehension about the future.
But there are companies whose Or
long continue to meet pay rolls out of
surpluses without damaging their
whole credit structure. Surpluses are
not all cash and much of what is
listed In the bookkeeping Of American
business cannot be quickly converted
into cash without causing 4 general
liquidation which in itself would cause
the book values to shrink.
1929-1935 ShrinkAge.
Some idea of the way American
business has taken it on the chin in
the depression which began back in
the Hoover administration is to be
gotten by noting that in 1929 the
official figures reveal the total sur
pluses of all manufacturing corpora
tion in the United States to have been
$21 900 100000. BY 1888, due to the
ravages Of the first years of the depres-
sion, these surpluses had been melted
away by red ink in operations so that
for all manufacturing corporations the
surplus was down to $l5,300, 900 900.
BY 1885, the surpluses had gone down
still further to $14000,000, 900. All
this happened in six years and to
break down by 33ls per cent a big
surplus shows how deep the deflation
went because the cut was not, Of
course, uniform. some companies using
up all their surpluses and more besides,
out of borrowed money.
Thus for the six-year Period from
1880 to 1886, the official figures from
the Department of Commerce on ma
tional income show that s24, ,367, ,OO0,-
600 more than their income was paid
out by all business concerns and the
Treasury figures show that for the
same period, the actual book deficit
was in excess of s35, 100000.
Under these conditions with sur
pluses already shrunken as con-
sequence Of the first years of depres-
sion under the Hoover administration,
1t raises a serious question how much
digging into surplus corporations can
do now to meet the ravages of depres-
sion under the Roosevelt administra-
ton.
Little Men" Would Succumb.
The total pay roll in manufacturing
Industries is just about s13,50O, ,OCO 900.
And since the surpluses. according to
the latest available figures Of the
Treasury, amounted to about $14,O00,-
100000 it will be seen at a glance that
II every item were converted into cash
and II values did not shrink when all
these securities were dumped on the
market. there would be enough to meet
a pay roll for one year. Meanwhile.
many individual companies would 20
into bankruptcy because their sur.
pluses are not as big as others. The
rich corporations would remain on the
scene to gobble up the orders and the
business volume Of their weaker COM
petitors.
But even II corporations were in
elined to take . chance on 4 month
or two Of maintained pay rolls, using
surplus to pay for 1t. they fear doing
tt because surplus has twice the inn
portance that 1t used to have. For
under the Roosevelt administration
INV compelling surpluses to be paid
out IN the form Of dividends, the COM
panies which need cash for expansion
ana don't want to put themselves In
tho hands Of bankers naturally feel
that the surplus they now possess Il