To Create Employment

Because Roosevelt Recovery, from both Depression I and Depression II, stimulated consumer industries (liquor, shoes, automobiles, etc.) but left heavy industry (steel, coal, railroads, etc.) in the lurch, no genuine U. S. prosperity has resulted. Last week one grandiose cure-all and one specific remedy were expounded before a Senate sub-committee considering incentive taxation as a spur to industrial adoption of profit-sharing plans (TIME, Dec. 5).

Cure-All. Clarence William Hazelett is a taciturn man with a small metal works and a large mission. His Hazelett Metals Co. of Greenwich, Conn. licenses a process and sells machinery for making molten metal directly into sheets (instead of rolling sheets from ingots). His mission is promoting the doctrine that all the nation's economic ills can be cured by incentive taxation.*

Last week the Senate committee heard Mr. Hazelett's views, which are extremely simple: "Only way to prevent depressions, balance the budget, insure maximum employment and raise the standard of living is to increase the nation's production of wealth; therefore, taxes should be graduated to penalize companies which do not operate at full capacity, banks which do not employ their funds, landowners who do not use their land."

Such a program, according to Mr. Hazelett, would not result in overproduction, provided prices and wages were not fixed but were allowed to reach the highest possible levels "consistent with maximum production." He believes that putting all the nation's productive facilities to work would automatically create enough demand to consume the increased output. In short, he agrees with the famed Brookings Institution concept that real prosperity is a result of increasing production and lowering prices, and he suggests taxation as a method of putting the theory into effect.

Tending to support Mr. Hazelett's ideas last week was a survey made by the Tax Research Institute of America at the request of the Senate committee. Sample findings: 82 1/2% of firms questioned would expand if tax laws provided deductions or credits for expansion; such expansion would cause 74% of these firms to increase employment.

Specific. The man who heads the biggest company in the biggest U. S. industry, Chairman Alfred P. Sloan Jr. of General Motors Corp., also appeared before the Senate committee last week, also espoused the Brookings concept. Said he:

"I believe that the specific application of the tax incentive principle that offers the broadest opportunity for accomplishment ... is a plan to stimulate the substitution of new instruments of production for the old, thus creating employment in the capital-goods industries which are vital in any continuing prosperity. . . . Speaking generally, it is a fact today that America's production plant is obsolete, as measured by today's technology. The true way to enlarge present pay envelopes and provide more pay envelopes for more workers is to do those things that mean lower prices." Such price reduction, said Mr. Sloan, "can only be accomplished by increased productivity"--i.e., modernizing U. S. production.

The obsolescent state of the U. S. production plant has long been on record. In 1937 the American Machinist found that 61% of the machinery in the metal-working industries was over ten years old, age at which engineers consider most machinery technologically obsolete. In 1935 the Machinery & Allied Products Institute made a survey of what industry would spend for up-to-date machinery if good times returned: it came to $18,574,600,000 --enough to keep 4,000,000 men busy for two years.

* In 1936, after some 15 years of study, Mr. Hazelett published his theory in a terse, dogmatic book called Incentive Taxation.

This file is automatically generated by a robot program, so reader's discretion is required.