Toledo union journal. [volume] (Toledo, Ohio) 1942-current, 1949-07-22
Conversation About Economics

power and help keep factories producing
Mr. Jacobs is Representative AndretD
Jacobs of Indiana, Democratic Congress
man tDho t0dS elected lDith the support OF
the UAW-PAC in Indianapolis.
Mr.. King is Willford King, Professor OF
Economics Emeritus retired that Isl OF
NetD York University He appeared be-
fore the House Committee on Education
and Labor in opposition to Minimum
Wage LdU tDhich tDould raise the mini
mum ,Ddqe from 40 cents an hour to rs
cents an hour Mr. King represented the
Committee for Constitutional Govern
ment, redctiondry organization Of rich
Scre,Dbdlls
Mr.. King is bncktracking and Mr.
jacobs is making him back up. The lesson
in economics is as useful for ordinary
people as it Is for retired professors OF
economics. The conversation took place
in February 1949.
MR. JACOBS. If the employer pays
out $1,000 in wages he does contribute,
then, ST 900 into the stream of purchasing
power to the people; is that correct?
MR. KING. That is correct
MR.. JACOBS. Theoretically, there is
$1,000 worth of goods that has been pro-
duced as result of that transaction; is
that correct?
MR. KING That is right.
MR.. JACOBS. That is your theory.
MR. KING Probably
MR.. JACOBS. And it pretty nearly
checks out, does it not?
Mr.. KING. Yes.
MR.. JACOBS agree with you that
the employer has reduced his own pur-
chasing power $1,000, we will say, less
whatever profit he is going to make on
this $1,000 worth of goods when he sells
it; is that not right?
MR.. KING. Yes.
MR. JACOBS. Take, for example, die
taphones | am taking specific example
because | use lot of dictaphones in my
office. | bought them from the factory out
let, and the machines cost me $4,000
apiece, but a factory representative adj
mitted to me they could be built for about
$50.
Now, let us take a case where a man
pays out 1000, but when he sells those
machines he takes in almost 81 000 He has
not reduced his purchasing power much
there, has he?
MR.. KING. II would seem that he was
making terrifically wide margin of prof
II, If that statement is true.
MR.. JACOBS. am taking their word
for it. They are the people to whom gave
the check when | bought the machines,
and it was the representative who told me
that
Let us follow that little further Let
us say, for example, that they were re-
frigerators, and not something that law
yers and Congressman and professors will
use, but something probably every family
in the country would like to have. The
mark-up is not that high, of course, but it
is quite high. Suppose, instead of paying
these employees 81, 900, he paid them $500.
Now, then, he takes that extra $500-that
is his, is it not-I mean he pays himself
$500; is that not right?
MR.. KING. Right
MR. JACOBS So he could 60 out to
the edge of Indianapolis is where
live-and buy a 40-acre farm on which
people have been growing corn. We grow
a lot of corn in Indiana-it is a different
kind of corn from what we get here-and
he seeds it in grass. 1t makes a good es-
tate, but il does not produce anything?
does it?
Mr.. KING. II produces something, yes;
it produces satisfaction for the owner of
the farm.
Mr.. JACOBS Does il produce any
more, though, than any house downtown,
There was farmhouse on that land that
! mentioned, and it has been converted
into something of a modern house II is
place to live, is it not?
MR.. KING. That is right
MR.. JACOBS. Subsequently, he goes
TO the employment agency, and says, Il
have mansion up here, and my wife cam
not take care of it" - and probably she
could not under those circumstances. II
want 35 servants"
Now, they had been working in the
overalls factory in Kentucky, so they say
We will quit making overalls"; is that
not right?
MR.. KING. That is right
MR.. JACOBS. Now, they have 40 acres
OF land out of production, and 35 overalls
workers out of the factory, but suppose
the people in his factory are living in the
slums. Some people do; you will grant
that, will you not?
MR.. KING. Yes