Show Washington I lez ii y v p. p I Washington The The Department of ot Commerce has Is lately tely released its annul annual W World 0 rId 1 True E c con o n Re- Re Picture vIew ana again has painted bm- bm dally daily a picture of general condItions conditions condi condI- that I believe to be the most mosta a accurate obtainable under present chaotic c conditions I n- n might add that it Is s one of the few official analyses coming out from the government these days that is not color colored d in any anY manner manner or r form The reason this review Is so interesting interesting interesting in in- is because it points out what can be expected to happen b ba by bya a disclosure in detail of ot what has happened in iii commerce and indus indus- tr try To that extent it t delivers a rather definite body blow at some New Deal policies affecting busi busI- ness Since i it does this sort of ot thing the review is entitled to o more faith and credit than usually is accorded accorded accorded ac ac- ac- ac corded government publications whether compiled by vy the Roosevelt administration or those before it Political leaders always want to put their best t f and the New Deal under Mr Roosevelt has not failed to t. carry carryon on this tradition to the fullest possible ext extent nt T The e section of the World Economic Eco Eco- i A Review that was most interesting interesting interesting in in- to me contained this statement statement statement state state- ment Deficits of great magni magnitude ude created created cre cre- yearly during the depression to meet payments of wages salaries interest and dividends sapp sapped d the vitality of the entire business structure structure structure ture and could not have been sustained sustained sus sus- tamed indefinitely Here then is an official declaration declaration declaration declara declara- tion from that agency o o. o the government govern govern- ment most concerned with comm commerce com corn m merce and industry which says that corporations and employers of labor maintained as far as they were able the pa payrolls and interest payments payments payments pay pay- ments during the depression It sa says s 's likewise that had corporations failed Called todo this our unemployment problem would I have been much greater the Income of those those who hold se securities whether in large or small amount would not have received received re re- re- re d dividends vide ds on their stocks or interest on the bonds and as a result it is obvious thc buying power power pow- pow er of the country as a whole would have have been sharply reduced That Thatis is to say had these payments both to labor and capital been curtailed there would have been even a lower level of ot retail business than obtained obtained ob ob- ob- ob tamed during the depression It ought to be added as well that had hada a lower level leyel of business resulted the manufacturing industries from which the there the re retail ail store stores buy their supplies would have closet closeL down their plants in even greater number number number num num- ber than they did 1 As we look brick back over the last five or six years it is easy to see how I things could have hav been very mu much h worse It is easy to recognize that the the strength that comes from amassing capital in corporation form has deve developed in this country I one of the greatest shock absorbers absorb absorb- ers that any people may af have when those corporations those businesses businesses busi busi- nesses are permitted tc develop under sound man management gement and with withas as little governmental interference as the general public welfare will per permit it Now as to the reason renson why these businesses were able to accomplish the things they did The answer is simple Managements of businesses must follow the same practices in guiding the financial affairs of those businesses as you or I do in the management of our personal af at- fairs S S This brings us to a point of current current current cur cur- rent interest In preparing for the tho rainy day all Rainy Day business whether Fund great or small lays aside a certain certain tam tain percentage of its profits This is called a surplus The surplus is invested It is made nade to yield a return return return re re- re- re turn in the form of interest or divi dIvi- It is seldom touched It is treated just as you and I 1 would treat our savings accounts just accounts just as we deal with our C Christmas savings account Thus the arrival of slack times tunes dull business no profits profits- the arrival of ot the time when ve we must live on our own fa fat t so to speak does not find us without a reserve because th js what a surplus is The r records cords of of the savings bank and md of the llie life insurance companies compa- compa t nies through the l last st six sL years sh show w definitely how many hundreds of ot thousands of people had to draw on that surplus just as a's the Department of ot Commerce statement now reveals reveals reveals re- re how many corporations drew upon their in order to maintain main- main lain tain their organizations pay the workers and be honest by paying p p. the interest on their debts All of ot this sounds like a chautauqua lecture lecture lec lee ture on savings But however It may sound it links in directly to legislation that was enacted in hi the thel thelast thelast l last st session of ot Congress a law driven through under the lash of President Roosevelt lt after it was ms 1 conceived by a n bunch of radicals who constitute the majority of the c SO brain trust at Washington i J. J That law levies a new tax on corporations It does docs not touch us as individuals except Indirectly The tax applies to surplus to the savIngs savings sav say ings logs of business a savings designed to meet just such conditions as those through which we have gone and which business was able to meet because heretofore it had been permitted to pile up reserves to carry carry carry car car- ry It through the rainy day Official figures from the Department Department Depart Depart- ment of Commerce show that the payments for wages salaries interest interest interest in in- terest and dividends from 1930 to 1934 amounted to In 1935 according to incomplete figares figures fig fig- ares ures ures business paid out for these same purposes thus making making making mak mak- ing the total for five years approximately matel Now in normal times these figures figures figures fig fig- ures would not prove exciting Under Under Under Un Un- der present circumstances and those through which we have been passing they border on the sensationaL sensationaL sensa sensa- This Is true because these payments have been made not from the earnings of the businesses during the years in which they were paid but from earnings of earlier good years when a part of the profits profits prof prot- its were l laid id aside as a protection It would seem therefore that since business has performed a social service of ot this kind under its own management that it ought to be allowed allowed allowed al al- al- al lowed to continue 1 I am convinced that it is a much safer method than to have the federal government mess around through laws such as the tax on surpluses for it must be remembered that under the law which I have criticized no corporation corporation corporation corpora corpora- tion can build up again such surplus surplus surplus sur sur- plus as has happened in the th-c past pastI I might mention further that the effect of this law is going to be to prevent small corporations from ever ever ever ev ev- ev- ev er growing large I mean by that if a corporation through careful management and frugal savings was washable able to expand its plant facilities facilities facilities ties increase its production and thereby increase the number of ot workers it employs it will be unable unable unable un un- un- un able to do so It will be unable to accomplish this for the reason that the operation of this tax law prevents prevents prevents pre pre- vents it from storing its savings The law takes such a heavy toll of any up stored-up earnings that no corporation corporation corporation cor cor- can afford to store them up They must b be bi passed out in dividends during the year yea they are earned or else the government puts Its tax hand into the business treasury One might say that such a distribution distribution distribution distri distri- is helpful and undoubtedly in the cases of some owners of se securities se- se it is helpful But questions of this kind must be treated in the whole and not riot on the basis of ed cases Consequently it takes no stretch of the imagination to see how howa a business is forced to distribute i its earnings to distribute them in good times when a comparatively small number of ot its security owners owners own own- ers need the funds funds and and the result is obviously a shortage of ot reserve for that rainy day In other words a corporation Is compelled to be a spendthrift or else pay a tax that thatis is designed as a punishment S S There is another phase of these payments by businesses that deserves deserves deserves de de- de- de serves attention Show The dividend pay- pay 1 Upturn J ments in fact fad many of the earnIngs earnings earnings earn earn- ings reports of business lately have shown a decided up This circumstance circumstance circumstance cir cir- cir cir- has prompted Democratic Democrat Democrat- ic Chairman Farley and Attorney General Cummings to enthuse somewhat about business recovery Each of ot them insist hi in recent political political political cal statements that prosperity actually actually actually ac ac- ac- ac is here that It is not just around the corner as Mr Hoover once predicted while he was dent But there should be some attention attention attention atten atten- tion paid to the meaning of the dividend divi payments and increased earn earn- ings They should be analyzed It Is true that some industries like the automobile industry for example example ex ex- ample have increased production beyond the hope of any students of ot economics economies and that they have restored restored restored re re- re- re stored to their payrolls a considerable considerable considerable consid consid- erable percentage of the workers they once employed Some other industries likewise have moved forward forward forward for for- ward and promise to get on their feet again in sound fashion Yet I find a number of authorities in the business world who continue to be doubtful They fear that the foundation foundation tion is not sound These facts have not deterred Mr Farley Fancy and Mr Cummings from Crom shouting from the tops house-tops that this Is prosperity resulting from Ro Roosevelt policies Their declarations declarations declara declara- hons however are just as fallacious fallacious falla falla- cious just as political as some political political political po po- po- po pronouncements that I have heard from the Republican side to the effect that business is picking up because of prospects of ot electing Governor Landon as President All of these statements In my opinion are pure hokum for the reason that the facts generally speaking do not bear beur out any of them 45 Western Vestern Newspaper Union |