Evening star., 1940-08-09
Difficult Problem"

facilities and the construction of
new ones to meet the requirements
OF our Army in the present emer-
gency."
He went on to say that risks were
inherent" in any business enter
prise and that industry might be
expected to undertake normal
risks"
But the risk to industry of under
taking, at the request of the Govern
ment, to expand at its own expense
its plant capacity. and then being
left, upon sudden cessation of the
emergency with these expanded IA
cilities useless" Mr. Stimson con-
tinued, lis one that Is entitled to
special consideration.
Uncertainty a Penalty"
Under these circumstances, the
uncertainty of future taxation af-
fected by this expanded construction
not only fails to give the special con-
sideration above mentioned but
penalties the situation"
Despite the delay in awarding
June contracts, the Defense Com
mission reported that Americas ex-
panding aircraft factories were
| turning out warplanes now at the
rate of 10000 annually. Mr.. Knud-
sen said in a radio broadcast last
night that the 18,000-a-year mark
| would be passed by next January.
Mr.. Knudsen and other commits
sioners who spoke on the broad
cast described their work during
the last 10 weeks.
Deduction Rates.
Mr.. Stimson testified at the tax
hearing in connection with pend
ing excess profits legislation under
which a manufacturer who expand
ed his plant for defense purposes
could deduct the cost from taxable
profits at the rate of 20 per cent a
year. Ordinarily such amortiza-
tion would be spread over a period
of about 20 years.
For the delay in contract awards,
Mr.. Stimson blamed "the element
| O1 UllICl Odlllty dUOul 1utu1S ldA.
alton affected by expanded con-
struction and "also the uncertainty
as to the amount and character of
taxation which will be levied dur
ing the period of the contract"
Although he had singled out the
aviation industry as an example, he
said, the problem is much wider"
Manufacturers of guns for use in
planes and manufacturers making
tanks, artillery and ammunition
faced similar problem, he said.
Overtime Approved.
Sidney Hillman, labor member of
the commission, said last night that
about 10000 persons are taking
training for jobs in defense indus
tries and advised prospective train
ees to apply to their nearest State
employment office.
The shipbuilding industry, he said.
now is employing almost 10000 more
persons than at the 10-year peak
in 1887: the aircraft industry is en-
ploying $4,000 more; the machine
tool and engine industries are en-
ploying $4,000 more.
Mr.. Hillman approved yesterday
a request of Secretary Knox to per-
NIT LOG, 900 mechanics and laborers
in the Navy's shipyards and shore
stations to work more than 40 hours
a week to speed construction of the
two-ocean fleet. Overtime will be
paid at the rate of time and half
Reports by other commissioners
included:
Chester Davis, in charge of agri-
culture: mo defense program can
succeed if farm income and prices
are not maintained, at level which
will keep the farm plant healthy in
the defense front. Existing ma
chinery developed during the past
seven years is available to do this
job"
Leon Henderson, price stabiliza-
/ ton commissioner: THE President
wants to avoid the familiar price
spiral-like he saw in the last war
where wages, the cost of living and
prices skyrocketed up and left the
country with a postwar headache" !"
Edward r. Stettinius, jr., in charge
of raw materials, said railroad in
Brazil would have to be rebuilt to
obtain needed supplies of high-grade
manganese necessary alloy for
the manufacture of steel.
Money for New Plane Plants.
Karl w. Fischer, assistant to
Ralph Budd, in charge of transpor-
tation, said that steps already are
being taken to strengthen 1000
bridges in the country's 80,000-mile
network of strategic highways so
that they will carry the heaviest
military equipment.
On another national defense front
it was disclosed that the Reconstruc-
ton Finance Corp. had agreed 'in-
formally but definitely" to provide
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