Evening star., 1939-01-29
By NC. X.

4ll 1l$zA PCA NAo66DAAS GA SNPOSS
of the workings of the Social Sc
curity Act by John T. Flynn, called
1.-THE Social Security Reserve
Swindle" and a discussion Of the
current labor war by Edward Levin
son, called "Labor's Two Houses"
In the Atlantic Monthly defense
of the Federal housing program by
Nathan Straus, written in answer
to Charles Stevenson's articles at
tacking the program which ap-
peared in the two preceding issues
of the magazine, and piece by the
eminent psychiatrist, Karl A. Men
ninger, called Men, Women and
Hate" discussing the phenomenon
of unhappy marriage in terms OF sex
antagonism.
In the Commentator a statement
by Gretta Palmer Of the aims OF the
new Jewish organization, the Ameri-
can Jewish Federation to Combat
Communism and Fascism; piece
by Logan Clendenning, M. D., pre-
senting the physicians side OF the
socialized medical question, and a
lively article by Ray Tucker on the
unhappy state of the Progressives
who have believed in the New Deal
as an idealistic program, called
"The Plight of the Progressives."
In the American Mercury a COM
plant by a Mexican, Roberto Pima
against the failure Of the land ex-
preparation scheme Of his country
to achieve its promised benefits, and
an intelligent essay on history by
Harvey S. Ford called "Why War
Is So Popular"
More than these four periodicals
the reviewer has not been able to
read this past week, but there Is in
them a sufficient amount Of thought
provoking material, she estimates
for almost any one
X u X
Mr.. Flynn's piece on the Social
Security reserve" fund is particu-
larly interesting in that its claims
were made somewhat earlier by
former Secretary Of the Treasury
the late Ogden Mills, in an article
written shortly before his death and
published posthumously in the
American Mercury. The basis OF
these claims is simply that the "re-
serve" fund is a myth, existent on
paper only, and that as the benefit
payments promised under the act
become due more and more taxes
will have to be levied to meet them
the reserve" having been Squan-
dered on current Government ex-
penses just about as fast as collected
The reviewer is no economist and
can be lost as easily as the proverbial
needle IN any even slightly involved
economic argument She was, there
fore, pleased to find Mr.. Flynn
simplifying his statement to the level
of personal accounting, and, for the
benefit of those who are as limited
mathematically as herself, she will
quote his simplification. 1t seems
to put the whole matter very nicely
He says, Now suppose you handle
your savings in the following man
ner: You put $40 week in the
tin box marked reserve. In a year
it amounts to $500. From time to
time you need money. Instead OF
borrowing from a bank or friend
you decide to borrow it from your re-
serve. You take out 500 and put irl
your I. o. U. as man may do in his
petty cash drawer. You continue
faithfully saving the $40 week TO,
10 years. You continue at intervals
to borrow what you have saved. You
put in I. o. US and bind yourself
to return the money with interest
at 6 per cent to the box. You are
very faithful with your I. o. US anc
your bookkeeping. At the end o1
10 years you have in the tin box
your own promissory notes to the
amount of nearly $4,000. You may
say that you have saved $4,000. But
what you have is $4,000 in claims
upon yourself (the last two words
here being in italics). If they were
claims upon your friend they woulc
be paid to you out of your friends
earnings. But being claims on your
self they must be paid back out o1
your Gtalics again) earnings. 1t Is
not necessary to press this seemingly
simple transaction any further. Fol
it is very obvious that you have nc
savings, that you have nothing. The
reserve you nave created is pure
fiction. The dollars in your little
tin box are phantom dollars
And that, says Mr.. Flynn, is the
kind of dollars which will make ur
the social security reserve" and, ir
about the year 1870, taxpayers will
perhaps wake up to the fact, fol-
they are going to have to replace
those phantom dollars with real
ones.
He is not opposed to the idea be-
hind the social security legislation
however. He says that it is per-
fectly possible to arrange for old
age pensions through payments by
employees and employers to a Gov
ernment fund, and limits his present
criticism to pointing out that the
Roosevelt administration is not going
about the business in feasible OF
honest way. If the New Dealers
would but take a leaf from private
business, he suggests, and conduct
their security scheme on "pay-as-
you-go" plan, as do insurance COM
panies, they would not only assure
the aged book reviewer, retiring In
her dotage, of SIT the month beyond
any possibility of failure or Of addi-
tional taxation, but could do so at
greatly decreased rate of payment
both to her and to her employer
But will they? It has been a good
many months now since Mr.. Mills
pointed out these identical facts.
X X X X
Mr.. Levinson's article on "Labor's
Two Houses" is no more than COM
parison of the two major organiza-
tions-the American Federation OF
Labor and the Committee of In
dustrial Organization" based on
membership, finances, political aims
and future possibilities. 1t Is highly
nformative-and a bit dry. It alb