Evening Star Newspaper, December 1, 1936, Page 13

Smaller Firms Embarrassed By Bonuses Leverage, Plus Pay Roll Taxes, May Wreck Struggling Companies. BY DAVID LAWRENCE. MPHASIS has been given re- cently to the fact that many companies are paying out big bonuses to their employes, large dividends to their stockholders and also substantial wage increases. Little information, however, is avail- able as to what is happening gen- erally throughout § the country to the §o-called mar- § ginal 3 of the Nation— af the many thou- i are not money, but must now face the ©om petition of the strong com- 3 panies with higher wage scales. Whenever wages are increased in a given field. the chances are that employes in the companies not quite | 80 prosperous want increases, too, and the management then faces the prospect of losing valuable workers or finding additional funds for similar increases. The plight of the small company that has been fighting the depression and now is just about turning the corner is the one most generally over- looked. Such & company, for in- stance, may have lost money for four years and had a break-even year in 19036. It has drained its capital and Jooks forward to 1937 as.a year in which to begin to pay back money borrowed so as to re-establish its bank credit. Pay Roll Taxes, Too. But the prospect of paying higher wages when it cannot afford to in- crease its production or operating ex- penses is not the only thing that lies ahead. Taxes on the total pay roll, to be paid under the social security law, take a substantial amount, which must be borrowed or else taken out of the first lean earnings. In the case of a company which expects to make a’slight marzin next year, the pay roll tax may wipe | out the profit altogether or absorb | &0 much of it as to leave very little | for wage increases to meet the com- | petition of the better entrenched com- panies. The larger companies are not dis- turbed over this. From their vie: point it would be better if these | smaller concerns were strangled by the new taxes and the wage increases In the old days, the way to stifle com- petition was to cut prices under cos ‘Today it can be accomplished by pa. ing 8 higher wage scale, which throws | the smali marginal and high cost pro- ducer into the dangerous waters that border on possible bankruptcy. Employment at Stake. The theory of the monopolists has always been that the small marginal producers have no right to live any- way, and that the volume of business they control should be passed on to the larger producers. But to accept | this is to throw out of employment many millions of persons in companies whose pay rolis are kept intact be- cause the management has persisted and tries to win the race against bank- ruptey. It's bad enough to meet the | ordinary hazards of competition, but the interjection of governmental in- fluences that break down the marginal producer is something rather novel, | especially in an era in which the fash- : fon is to champion the cause of the | underprivileged. Congress was besought to give con- | sideration to debt-ridden corporations | with respect to the tax on undivided | surpluses, but scant relief was given. Nor was there much attention paid to | the effect on competitive situations | arising out of the effort of large com- | panies to escape the tax by paying out bonuses and by sudden increases David Lawrence. NG STAR, WASHINGTO News Behind the News President Reported Seeking Strong Neutrality Law. Trade Treaty Powers to Be Renewed. BY PAUL MALLON. MOST important matter to be handled in the coming Congress is likely to be one not yet mentioned officially. Before President Roosevelt caught the boat for South America he permitted some of his counselors to understand that he thought the greatest pending question is neutrality. He pined for & real law, in place of the existing weak compromise forced on him by Congress. This he considered to be more important even than the establishment of minimum wages and maximum hours. Without peace, social reforms are worthless. The exact nature of the proposal he has in mind will be deter- mined, no doubt, by the potency of the treaty to be negotiated in the next few weeks at Buenos Aires. But the subject is certain to furnish a dominant theme for his message to Congress, and perhaps, also, his second inaugural. * %k % It has been decided officially (although announcement has not yet been made) that the President will seek continuance of his reciprocal trade treaty-making powers, which expire June 12. The existing law probebly will be renewed without change, after a scrap over the right of the President to act without open hearings. Congress will continue without question the Reconstruction Pi- nance Corp. set-up as well as the President’s monetary devaluation authority. But there will be trouble about renewing public works ex- penditures. Mr. Roosevelt has been preparing to cut P. W. tions sharply. However, this is one fight with Congress almost certain to lose. * % x ‘The President and his advisers have not made up their minds on tax legislation. Congressional leaders plan to pass nothing except a routine bill renewing all but two or three of the nuisance taxes which expire in June. They do not even intend to modify the corporation tax law in any important particular, although they are talking as if they would. However, the Treasury is secretly at work on several general administrative tax revisions, one of which would increase the capital gains tax to discourage investors from holding on to stock gains. The Treasury will assert it needs the revenue, but other administration authorities fear its effect on the stock market. Another draft of a capital gains amendment has been prepared confidentially by the congressional tax drafter, Mr. Parker. The President probably will end the dispute by deciding not to shift any tax gears at all on the uphill climb in prospect for 1937, * % x x A lobby campaign for crop insurance already is being organized. Great Plains farmers are now assembling here bent on showing that at least some farmers want it. The meeting is being promoted almost entirely by M. W. Thatcher, Washingion representative of the Farmers’ National Grain Corp., a very large wheat farm co-op, subsidized by the Farm Credit Administration. This organization may have more than an objective interest in insurance, as it seems to be the logical one to handle —for a commission—the 50 or 100 million bushels of wheat the Government will have to keep as insurance reserves. A crop insurance program for wheat unquestionably will be recommended to Congress by the President, and probably will be passed along near the end of the session. The moderate Wallace farm tenant program will be passed. A general reorganization of the soil conservation set-up will be recom= mended and probably passed in a form which will permit the A. A. A. to continue benefit payments and eflect production conmtrol, al- though this has not yet been definitely decided. * x ¥ x The legislation which will emerge finally from the current wage and hours debate cannot vet be discerned. Everything will depend on two Supreme Court decisions, expected to be handed down before the session is over, (1) the Wagner Labor Board cases, and (2) the holding companies test suit. The Black 30-hour week bill will not be passed. Neither will the revised O'Mahoney bill proposing a system of Federal charters for all corporations. No constitutional amendment will be presented by the President, and none will be seriously considered, unless unexpected develop- ments change the existing situation entirely. The senatorial investigation of civil liberties will be renewed for the purpose (among others) of helping John Lewis to organize the steel industry. A few administrative changes will be made in social security, but the tax will not be altered. * x x % Much ado will be made over governmental reorganization, but it will not amount to much in dollar savings. k% » The budget will show approxi- mately a paper balance, but it will not include a definite relief fig- ure. Mr. Roosevelt will delay his relief estimate, as customary, until late in the session. * x % ¥ Funds probably will be appropri- ated to continue the A. T. & T. investigation, which will shortly reopers with a bang. * x % % The Wheeler railroad financing investigation will reopen, without a * % The threatened investigation of * % * * Father Coughlin will be called off. * % Several housing bills are to be considered. but Mr. Roosevelt is not yet behind any of them, which means none now seems likely to pass. * % * ® The pure food and drug bill undoubtedly will be smothered with- out serious consideration. * % * x This is an extremely young Congress, and the top-heavy Demo- cratic majorities are destined to split into factions, but will be too much under the Rocsevelt spell to be unruly. * % * % The leaders will promise a short session, as usual, but they will run on to June or later. (Copyright, 19386.) ©of the wage scale. It may be argued that the persons who receive the higher wage benefits will spend their money and add to the general purchasing power. But in the meantime, the losses of capital during the transition period when the small businesses get poorer and the large ones grow richer is not conducive to a solution of the unemployment prob- lem. Challenge to Thought. | Some means of deferring pay roll taxes until growing businesses are financially able to meet such increased | expenses might solve the difficulty in part, but it would not meet the pow- erful leverage which the large com- panies now have over their weaker competitors in deliberatly forcing wage scales up beyond the point where the | smaller concerns can afford to stay in business. | The use of governmental power to | effect a ‘“controlled economy” is| rather new in American economic life, ' but this does not make it any less, pecessary to draw attention to the in- equities which are being produced by & tax system based on the assumption ! that all businesses are prosperous, when, as a matter of fact, almost half | the corporations of the country are | in the red and are living on borrowed funds. 'How long capital is going to | be available for small enterprises that face obstacles such as those inter- posed by the Government today may well be one of the challenges offered | BR'TE TRIAL DELAYED to the New Deal in its effort to save capitalism from the drastic laws of a | governmentally controlled or Fascist program. (Copyright. 1936,) J. W. McGUIRE RETIRES | FROM GEODETIC SURVEY | | Cartographer Ends 36 Years of Service—Associates Present Typewriter. James W. McGuire, a cartographer in the Coast and Geodetic Survey, retired yesterday after 36 years' serve ice. McGuire, who lives at 251 Eleventh | street southeast, is the author of several scientific articles and is a frequent contributor to magazines. His associates presented him with & | typewriter yesterday. | He was born in Nashville, Ark., in | 1866 and educated at the Dardanelle Seminary in his home State. He has been active here in church, Ma- | sonic and civic affairs and is a mem- ber of several scientific associations. | He also is & member of George Wash- ington Post, No. 1, American Legion. SAY, THAT'S REALLY NEws/ CANADA DRY “THE CHAMPAGNE OF GINGER ALES* NOW AT LOWEST PRICES IN HISTORY ¢ 10¢ I8¢ | The trial of John and Coke Y:REKA, Calif., December 1 (#).— Brite, brothers, on a charge of slaying three men was postponed yesterday until next Monday because of the illness | of Horace W. Fry, their attorney. The brothers are charged with kill- ing Deputy Sheriff Martin Lange, Constable Joseph Clark and Fred Seaborn, retired naval officer, in re- sisting arrest August I PER WEEK | wants to give it or not. THE opinions of the writers on this page are their own, not . necessarily The Star’s. Such opinions are presented in Th’_e Star’s effort to give all sides of questions of interest to its readers, although such opinions may be contradictory among themselves and directly opposed to The Star’s. Compulsion and Security States Have Chance to Help Remove “Regimentation” Angle From Social Program, Observer Says. BY MARK SULLIVAN. T THIS moment, several States are taking steps to adopt legislation for old-age insur- ance, in conformity with the social security Federal system. Practi- cally all the States that have not already done so will take up sucl statutes when 4. " their Legislatures § s S meet in January " %, 5 or later. Up to the present, 15 States and the District of Co- lumbia have act- ed. It is confi- dently expected that within a short time every State vill have adoptea legisla- tion of this type. ‘The acts adopt- ed by the States do not need to be | identical. The whole system begins with the Federal Government. The eral Government will control the system. The Federal act anticipates, | however, that each State will pass its | own act, and that the Federal Govern- ment will co-operate with the States. The Federal act requires that the acts passed by the States conform,| in a general way, to the Federal act. But the Federal act permits some latitude in the State acts. The latitude thus permitted to the States may give to one or more States | the opportunity to do an important service to the country. The service would consist of omitting from its old-age insurance act the one feature of the Federal act which. it seems to | me, is fundamentally objectionable. Let us admit, as nearly everybody does admit, that old-age insurance is desirable, either by a Government system or by private ones. Admit, as most persons do, that it is desirable for the Government to provide this insurance to those who want the Government to do it. Admit, as most Mark Sullivan, l'act is a good ground work and begin- ning (though, as a member of the Federal Social Security Board, Mr. Vincent M. Miles, says, the act is not perfect and “may be changed as experience dictates.”) Finally, Jet us admit, merely for the purpose of | argument, that the details of the present Federal act are as they should i be—with one exception. The exception is this: The law compels workers to take the insur- ance which the act provides. The law compels every worker to whom it applies to take the insurance whether he wants it or not, whether he needs it or not, whether he would prefer pri- vate insurance or not. The law com- pels each one to surrender 1 cent out | of every dollar of his pay check (rising | later to 3 cents). “Objectionable Compulsion.” me objectionable. The objection is not alone the compulsion that takes money from the worker whether he It is likely that practically all workers will want the Government insurance. It is likely there is much public good in requiring every person to be insured against old age. Those who are not | thus insured, and thereby become public dependents. are a charge on the rest of us. Hence the rest of us have some right to insist that each individual be insured. for the good of all as well as for the good of the individual. Since many persons are | inclined to neglect insurance unless it is pressed upon them, there is much public good in making the pressure strong. Yet the pressure ought to stop short of absolute and universal compulsion. There are many who provide their| own old-age insurance in their own | way. There are many who have long | had insurance through pension sys- tems set up by private employers, or benevolent or trade associations.| | There are many who have means and do not need the insurance. For these there should be immunity from | of which had schools persons do, that the present Federal | {the is a violation of the very basis of the American conception of society. It is a new extension of the power of the State to put compulsion upon the in- dividual. And every American tra- dition calls out to us to resist such extension. Every sound American in- stinct tells us such extension is dangerous. I hesitate to use the “entering wedge” argument; but if we now sub- mit to taking an insurance we do want, our submission may become a precedent from which later we may find ourselves required to take a religion we do not want, a form of education we do not want, a peace- time military service we do not want, a surrender of habeas corpus, of freedom of speech. If this seems fantastic, if it seems to look too far ahead and too far afield, recall something that happened in America in the very recent past. In 1923, about the time the Ku Klux Klan was at its height, the State of Oregon passed a law compelling every citizen, under penalty of im- prisonment, to send his children to | State public schools. He had to take the education the State provided ‘whether he preferred some other form of education or not. He would go to jail if he sent his children to the parochial schools of the Catholic or Lutheran or Episcopal church, all in Oregon. He would go to jail if he sent his children to any ordinary non-sec- tarian private school of the familiar type, of which there were some in Oregon. The law was later held un- constitutional by the Supreme Court. Rise of Dictator Theory. ‘The most conspicuous fact in the world today is the rapid spread of | two conceptions of society and govern- ment, in both of which the funda- | mental characteristic is compulsion | of the individual to submit to the goveryment—dictation by the govern- ment in every area of life in which | government chooses to assert auto- cratic power. In both fascism and | communism, the fundamental rule | is that the individual has no free- dom of choice. no rights which the | government need respect. The aim is “authoritarian state.” the| “totalitarian state.” The ideal is uni- | formity—uniformity and therefore conformity. | ‘The most solemn duty of Americans is to safeguard our own country from infection by this rapidly spreading conception of society and government. This infection, like th of disease, gets its foothold insidiously, and be- comes & contagion before the victims are aware. .The time to stop it is at the first invasion. That “the price of liberty is eternal vigilance” is an American axiom. One member of the Pederal Social | Security Board, Mr. Miles, says the law will need change, and that “we approach the problem with an open It is this compulsion that seems to mind; our sole purpose * * * is to| F. Williams of the university promo- make America a better place in which | to live.” Will America be a better place if the totalitarian conception of society gets a foothold here? The law alrea permits many exemptions and Ilati tudes; it exempts farm workers, do- mestic workers, employes of colleges: it exempts workers in establishments | having less than eight employes. ' Why not extend the exemptions to all who can show that their own old- | age insurance is arranged for in any | satisfactory way. That would take from the law most of the sinister ele- ment of compulsion. It may be that ' only 1 man in 10.000 would want the exemption. But to exempt that one man is to save an important American principle | (Copyright, 1936,) ORCHESTRA ON TOUR | Kindler Takes 80 of Symphony Orchestra to New England. | Hans Kindler, conductor, and the ! 80 members of the National Symphony | compulsion. But the argument against compul- | sion goes deeper than mere justice or | convenience to the individuals who | {do not happen to need that which they are compelled to take. The ob- jection is one of principle. To compel a man to take and pay for insurance whether he wants to or Orchestra left Washington yesterday for New England, where they will begin a two-week concert tour, their first of the season. The orchestra will play at Smith College, Northampton, Mass.: Man- chester. N. H.: Hartford, Conn.; Troy | and White Plains, N. Y.. Norwalk, Conn., and Scranton, Wilkes-Barre [ not and whether he needs it or not’ ON MONTHLY Esso Marketers Oil Heating Division Standard Oil Company of Ne '*a.c“"“'““ Ave. N.W.. Washin| NA. 9032—After 5 P.M., Call Jersey ., D. G A. 1359 Annapolis Utilities, Incorporated 136 West 8t., Annapells, Md. Phone Annapolis 123 and Williamsport, Pa. | | | BUDGET PLAN D. C, TUESDAY, DECEMBER 1, 1936. We, the People German-Japanese Alliance Hints Weakness in War on Communism. BY JAY FRANKLIN. E alliance of Hitler's Germany and the Mikado’s Japan in an agree- ment to combat the communism of the Third International is the first public admission of internal weakness which either of these two well-regimented nations has shown. Just before Japan went frolicking in Manchuria there was widespread radical sentiment in Japan—in the universities, among the white-collar classes, in Korea and even in the sacred general staff. One of the short- term by-products of the Japanese invasion of Eastern Asia was to quench this communistic internal combustion with a flood of unquestioning patriotism. When Hitler came into power in Germany, a little over a year later, there was a numerically strong German Communist party. After the Reichstag fre and the Leipzig trial, the German Com- munist went into hiding, while the secret police tried to eradicate them from the Third Reich, with apparent ease and success. TUntil recently, then, the world had no reason to believe otherwise than that these two highly policed nations had rooted out communism so thoroughly that there was no threat to the authoritarians from the organized Marxist jehad preached at Moscow. Indeed, Stalin's recent barbecue of the Trotzkyites in Russia was interpreted as a move to put the world revolution in moth balls in order to stand on the general de- fensive against the spread of fascism. The action of Commu- nists in Prance and Spain, who formed “Popular Front" governments with the much-despised Socialists and “Bourgeois” Republicans, added to the general belief that Karl Marx was being taken for a buggy ride and that European nationalism had scored its third major victory over an Asiatic philosophy. * ok kX The course of events in Spain and China even suggested that the Fascists and the Japanese had borrowed some of the old revolutionary tricks of the Kremlin and were themselves using spies, agents provocateurs, propaganda and filibusters to replace existing governments with regimes which would be more sympathetic to the authoritarian policies. Now it seems that Hitler and his Japanese friends are really worried over the Communist megace. ; In part, this is because communism jorms an obstacle to their immediate diplomatic aims. A communistic Spain would not be fertile ground for fascism and Red China is not an easy morsel for the Japanese to assimilate. Despite their wide divergence of aims in Austria—which is now an- nexed to Germany in all but name—Italy and Germany seem able to get along together without much friction at the present time. On the other hand, radical agitation against “fascism” in England, France and America—not to mention Soviet Russia—is complicating German and Italian diplomacy. In the second place, nerves must be wearing pretty thin in the countries subject to the Fascist drive for a place in the sun. Urged on and on to a program of indefinite and drastic action by their economic necessities, the “have-nots” have tightened their belts to nearly the last hole. They still have point ahead, but, the strain is ever present and ever growing. Deprived of access to markets, investment capital and raw ma- terials, and without outlets for their growing population, they live in & state of siege and are developing the psychoses of & beleaguered city. PR Signs of social “war-weariness” must have become very dis- turbing to the super policemen who direct these great human eflorts to win bread and peace for the German, Italian and Japanese peo- ples, when it is necessary to set up a treaty system with which to combat a politically powerless communism. People don't set up quarantine stations unless they fear an epidemic. The handwriting on the wall is now clearer. Some of the letters are still blurred, but the meaning of this German-Japanese treaty seems unescapable: The “water-tight compartment” system of these new holy alliances feels itself powerless to check the march of communism across the Bastern Hemisphere. The great problem is now to divorce communism {rom its present Soviet patent-monopoly; to find—if possible—a new name for it; and to decide, without undue bloodshed. who shall be the Commissars. (Copsright, 1936.) - COMMUNISM = ALUMNI TO MEET ‘ CHURCH AIDS MISSION University of M Be Discussed. Washington alumni of the Uni- versity of Missouri will meet at the Cosmos Club tomorrow at 12:30 p.m. . for luncheon and to hear Col. John Nightly Sessions. tion department speak on recent ac- | ouri Activity to Rev. A. R. Bird Is Heard at ‘The Church of the Pilgrims, on the Parkway at Twenty-second and P streets, is co-operating with the Natiopal Preaching Mission by hold- tivities of the school. Those wishing to attend the lunch- | ing services every night this week, | except Saturday. Headline Folk and What They Do Sam H. Harris Has High Rating as Broad- way Hit Picker. BY LEMUEL F. PARTON. AM H. HARRIS broke into the theater, so to speak, selling towel racks. He now resumes with George M. Cohan the most sentimental partnerskip of Broadway after a break of 15 years. He is, per- haps, the theater's greatest hit picker, | with mighty few flops among the 175 plays—pretty close to that—he has produced. The partnership is tradi- tionally a winning combination and to be noted with the historic breaks and reunions of Kolb and Dill, famous old-time coast defenders, and Weber and Fields in these precints. He left school at 14, delivered hats for a Grand street firm, worked as a messenger boy for the Mutual Tele- graph Co., got a peek backstage with his towel racks, remained as a stage hand, and later rode a cyclone to riches and eminence. The cyclone | was Terry McGovern, the prize fighter. | Sam H. Harris managed him and put him in & play, “The Gay Morning Glories.” Producing melodramas. he gathered $100.000 and 12 race horses. Squared away with George M. Cohan, for a producing venture, in 1904, he dis- covered the bank roll and race horses had somehow been whisked away. He told Mr. Cohan he was going o look up a friend. Three days llter{’e was back with $25.000 in $20 and $50 bills. “Where did you get that?” asked Cohan. “In Philadelphia.” “The next time try Newark—less traveling overhead.” They put on “Little Johnny Jones." their first and greatest money-maker. Along came “Forty-five Minutes From Broadway,” “Get-Rich-Quick Wal- lingford,” “The Talk of New York.” “Seven Kevs to Baldpate” and & long string of musical and dramatic plays which left a deep impress on that particular theatrical epoch. ‘They split over the Actors’ Equity strike of 1921. Mr. Harris admitted he was beaten. Mr. Cohan didn't. They maintained their friendship, and. for the last six years, there have been rumors of the reunion which now comes off with their joint production of & new play. Mr. Harris, modest and accessible. seasoned to Broadway wind and weather, lives unpretentiously, pla a little golf in Florida, and, roundinz 80, takes an even firmer stance at his favorite crossroads. The only thing which bothers him is a rainy dar. which always sends him out for a bowl of chop suey, his favorite aro- | dyne. Broadway hails them both <= |- couple of square shooters, (Copsrisht, 1936, ’ LAUDS SKUNK TEA GRAND PRAIRIE, Alta, Decembe- 1 (®) —Louis Callious, veteran trap- per, today attributed his excellent health and vigor at 90 to skunk tea and fat. He said they kept him young. He said he drinks the tea, which he Rev. A. R. Bird, pastor, will preach | brews after trapping the animals, at eon are requested to notify the alumni secretary. Preston Richards, at Dis- trict 6350, extension 2238. on the general topic “Rejoicing Christ.” in every meal the Good News of God in Jesus He deciared he uses the lard for frying. and it is his medicinal ! standby as well. “Pardon me, Miss Smythe—but may I have another cup of Wilkins Co{fee. =