"Iffy"

With all the first-hand advice he has recently received from within and without the Administration, President Roosevelt has yet to decide what to do about Recession. Last week, however, he decided what not to do about it. And what he decided was not far different from what Herbert Hoover decided eight years ago when another Depression was getting under way: he made a statement against reducing wages.

Before press conference the President arranged to have a written question submitted asking whether he agreed with U. S. Steel's Benjamin Franklin Fairless that steel prices could not be cut without cutting wages. The answer, written out, he read to reporters in the best Roosevelt manner, tossing his head from side to side, stopping once to point out how he used monosyllables so anyone could understand. Excerpts:

"... I have said so frequently--and I do not know how to say more clearly and unequivocally than I have already said--that I am opposed to wage reductions. ... If we want to restore prosperity, we must increase, not decrease, that purchasing power.

"There may be a special hourly wage situation in some building trades in some localities which so far as the total yearly earnings are concerned may call for different treatment, but even there our primary purpose is to increase and not decrease the total of the annual pay of the workers.

"Now as to prices. A mass-production industry depends on volume for profits. . . . The only way to get volume up is to produce goods for a price the public will pay. . . .

"But that does not mean that such price reductions can come out of wages. Those who believe in the profit system must recognize that those who get the profits when business is good must bear the losses when business temporarily is slack. Those who get the profits when industry gets the volume are the ones to bear the risk of such price reductions as may be necessary to stimulate and restore volume.

"Those in charge of a well-managed and solvent industry should no more consider casting the burden of a temporary business recession upon their workers than upon their bondholders. . . .

"Industrialists kill the goose which lays the golden egg when they keep prices up at the expense of employment and purchasing power. Industrialists kill the goose which lays the golden egg when they cut wages and thereby reduce purchasing power. Either policy is self-defeating and suicidal."

The President's dissociation of wages and prices was sound strategy as an appeal--sounder, if less realistic, than the way John L. Lewis linked them inseparably at his United Mine Workers' convention (see p. 11). But when reporters started to ask the President if he meant to do something about prices, he said with a wave of his long cigaret holder that the conversation was getting too "iffy."

While businessmen muttered that it was strange they should be asked to assume the burden of high wages in depression after the undistributed profits tax had been imposed to keep them from collecting surpluses, it was evident that the President agreed with at least one businessman. In espousing high wages, low prices and volume production Franklin Roosevelt had taken his stand on the very platform occupied for over 20 years by Henry Ford.

But if Henry Ford can alter wages and prices at will, Franklin Roosevelt cannot. This made the President's whole statement rather iffy. Iffiest fact of it was his concluding sentiment: "If industries reduce wages this winter and spring they will be deliberately encouraging the withholding of buying--they will be fostering a downward spiral, and they will make it necessary for their Government to consider other means of creating purchasing power." The phrase "other means of creating purchasing power" could mean only one thing--spending. Realists in Washington felt morally sure last week that unless business picked up in the spring the Administration program for dealing with depression would finally emerge as pump priming. A shot of inflation had worked once, and the needle was still in the medicine chest.

ܝn a list of tax refunds sent to Congress by the Treasury was an item: "$1,029--Franklin D. Roosevelt, Washington."

P:The President celebrated his 56th birthday one day early with a dinner for the "Cuff Link Club"--Roosevelt intimates who have been awarded gold cuff links for faithful service.* On the night of the President's Birthday Balls--to raise funds for the infantile paralysis campaign--he broadcast a personal message but attended none of the seven balls given in Washington. Up to this year the Birthday Balls have been run by old Henry L. Doherty, president of Cities Service Co., one of the most pyramided holding companies ever devised. This year the President apparently realized the paradox, for Mr. Doherty excused himself from the job on ground of ill health. To provide publicity for the balls and themselves, a battalion of major and minor Hollywood names descended on Washington in general, Eleanor Roosevelt in particular. Mrs. Roosevelt displaying what she insists is not a modified bob but merely a close side trim (see cut), introduced some of them to her husband, obliged with photographs and luncheons. Janet Gaynor, the President observed, was as "cute as a button."

*Among the Cuff Linkers are Boston's James Sullivan, stenographer on the 1920 Vice Presidential campaign train, Charles McCarthy, assistant to the late Louis McHenry Howe, White House Secretaries Steve Early and Marvin Mclntyre.

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