Evening star., 1940-03-05

L . dL eduy 'A" ~" "AShee
available from the various Govern
ment departments, the answer has
not been given to the all-important
question of why small businesses
cannot create jobs to absorb the idle
and why small businesses cannot get
capital to compete with larger units.
The unemployed today number
between 100000 and 100000. The
usual answer given is that the pop
ulation has increased and that the
idle would be larger in quantity
were it not for jobs already ere
ated. The truth is that every
regime here has had to face an in
creasing population, that youth has
always been coming of age as vet
Grams have passed into the period of
relative disability.
Several Questions Raised.
But why are jobs not now being
created? Who is stopping the eco
nomic system? What forces are
preventing new capital from being
introduced into industry and busi-
ness? And why is it that small
businesses are failing to create the
employment which normally took
up the slack in America?
The committees of Congress have
avoided the deeper implications of
these questions. though any of sew
eral committees could easily have
tackled the subject. The possibility
that an inquiring committee would
have come into head-on collision
with some of the so-called reform
measures and reform methods is one
reason why nothing has been done
about it. Another reason is that it
would have been found that politi-
cal extravaganza in Federal, State
and city governments has caused
such an enlargement of budgets as
to make taxes rise to a saturation
point.
Business today cannot pay the
taxes it is asked to pay and support
itself on basis that gives a fair
return to the owners of funds A
small business which could find a
means of borrowing say 100000 at
4 per cent interest rate with 10
years in which to pay it off-very
attractive and unusual terms-Would
have to be able to earn not merely
enough to pay off the debt, but
enough to pay taxes of all kinds.
ff1including in these days an inequi-
table tax on pay rolls which has no
relation to income at all. If the
man who plans to go into business
with 100000 debt finds that he
has to work 10 years paying virtually
all the earnings to debt retirement
and taxes, he will ask himself why
he should take such a risk, especially
in these uncertain times, for the
privilege of possibly having some
small share Of the earnings at the
end of 10 years.
Equity Money Dormant.
Businessmen do not take risks for
slender gains or in businesses which
over 10-year period might have
to meet serious turns in the cycle
OF depression and prosperity. AS
for so-called equity money-the in
Vestors who are supposed to buy
common stock in small businesses
1t is rare indeed nowadays. In the
old days, the man of means in a
community had surpluses with which
to help small businesses. He diversi-
fed his risks in a number of small
enterprises. But today the tax COL
lector takes so big a share of such
incomes that wealthy men prefer
tax-exempts or even stagnation of
their funds to the risk of loss. For
the Government in some instances
takes 80 per cent of the gains,
whereas, if there are losses, the
Government does not furnish a cent
Of reimbursement. Any partnership
wherein one partner takes 80 per
cent of the gains and none of the
risk of loss does not build business
incentive in America.
These circumstances have been
explained dozens of times to the
Treasury Department and the men,
bers of Congress in the last seven
years, but to no avail. Congress
has not done single constructive
thing in seven years to stimulate
the normal expansion of small busi-
nesses except now and then to re-
lieve small business of hastily i'm
posed burden which should never
have been imposed in the first in
stance.
Small businesses today cannot
compete successfully with big units.
The larger businesses, of course,
have had to pay higher and higher
taxes, too, but because OF their i'm
mense volume of transactions and
large-scale operations and their
large aggregations of capital they
achieve. in some respects, a virtually
monopolistic position. The absence
OF capital financing, aided and
abetted by the present tax laws and
by the Securities and Exchange Act,
which penalties small businesses
that want to float capital issues, has
had a deadening effect on the nor
NAL process of job creation In
America.
Will Congress Act?
Will the United States gradually
drift into a system of cartels, such
as Germany has had, as small busi-
nesses, one by one, 90 down under
the impact of New Deal laws? Or
will there be a Congress elected
some day that will concern itself
with the problems of small business
men in America who, though not
employing many persons in any one
plant or enterprise, can give en-
ployment in the aggregate to many
millions of persons now idle?
It's the failure to allow jobs to be
created which is the outstanding
mistake of the present administra-
ton from an economic standpoint
and, as has often been said, the un-
employed cannot eat reforms-they
need jobs in private employment
and not in W. P. A. The political
orators will gloat over the seven
years Of New Deal rule or attack it.
but the reason why neither the
Republicans nor Democrats have