Swope Plan

In times of economic stress--particularly if they verge on a national election-- the fancy of thoughtful tycoons and ambitious politicians alike gravely turns to philosophizing about the relationship of Government to Big Business. One school of thought leans toward the old individualistic, laissez-faire policy, does not believe that Government and business should even be kissing cousins. The other, paternal, faintly socialistic, feels that the Government and industry should at least take up with one another, if not actually marry. Last week each school had a potent spokesman.

Don't Cripple It! Governor Albert Cabell Ritchie of Maryland went to Atlantic City to address the utilities section of the American Bar Association. He took Power as his text, but delivered a general industrial sermon: "The Power Question--Let Us Not Go Revolutionary." Excerpts:

"It is true that the manufacture of political issues has become something of a national industry, but I am as strong for politics--in a partisan sense--keeping out of the utilities as I am for utilities keeping out of politics. I have more confidence of a beneficial outcome under enlightened business leadership, with a minimum of governmental interference, than I have of getting very far by making this the football of politics and politicians. And without meaning to question anybody's sincerity, I may be permitted to wonder whether gentlemen who discourse so extravagantly and so passionately on the subject are not really laying down a barrage or smoke screen with which they hope to hide other issues--such, for example, as Prohibition--about which they may not think it politically wise to speak so boldly.*

"Our political ideal has always been to encourage private enterprise, to bestow upon it the earned rewards of brains and labor, and to keep open the door of opportunity. Here, I believe, is the key to material success. Here is a political ideal worth guarding and fighting for. . .

"The national policy, it seems to me, must not be Government ownership. The capitalistic system has its defects of course--periods of enforced unemployment are perhaps the worst--but it has centuries of evolutionary growth back of it, and under it we have come to lead the nations of the world in every form of progress. I do not believe in crippling it!"

Not without political significance was the Ritchie speech. Outstanding aspirant to date for the Democratic presidential nomination next year is Governor Franklin Delano Roosevelt of New York. The Roosevelt Power creed, inherited in part from Alfred Emanuel Smith, looks favorably upon State construction of power plants whose current would either be retailed by private individuals or, if necessary, by the State.

Swope Plan. When a man gets to be head of a $494,000,000 corporation which employs 78,380 people he is likely to cogitate deeply on the social and economic responsibilities of industry. From this eminence, President Gerard Swope of General Electric Co. has evidently done a great deal of this sort of thinking. Last week, at the annual dinner of the National Electric Manufacturers' Association in Manhattan, he outlined an ambitious industrial plan for the U. S. Far from fearing Government intervention in business, as did Governor Ritchie, President Swope courted it. His scheme proposed a national organization of modified cartels in which competition would be limited, overproduction governed, workers and investors vigorously protected. Overseer, referee and adviser of the program would be the Federal Trade Commission or "a bureau of the Department of Commerce or some Federal supervisory body specially constituted. . . . There is nothing new or original in what I am proposing," admitted President Swope. "I am merely bringing together well-considered propositions that have found support, including some that have been put into actual practice. . . . Legislation will be required to make such a plan possible, including the probable modification of some existing laws," notably the Sherman anti-trust law.

The Plan:

1) "All industrial and commercial companies (including subsidiaries) with 50 or more employes, and doing an interstate business, may form a trade association. . . . These trade associations may outline trade practices, business ethics, methods of standard accounting and cost practice, standard forms of balance sheet and earnings statement, etc., and may collect and distribute information ... on simplification and standardization of products, stabilization of prices. . . .

2) "All companies with participants or stockholders numbering 25 or more, and living in more "than one State, shall send to its participants or stockholders and to the supervisory body at least once each quarter a statement of their business and earnings in the prescribed form. . . .

3) "All of the companies . . . may immediately adopt the provisions of this plan, but shall be required to do so within three years unless the time is extended by the Federal supervisory body. Similar companies formed after the plan becomes effective may come in at once but shall be required to come in before the expiration of three years from the date of their organization unless the time is extended by the Federal supervisory body.

4) "For the protection of employes the following plans shall be adopted by all of these companies: a) A workmen's compensation act . . . modeled after the best features of the laws which have been enacted by the several States, b) All employes . . . may, after two years of service . . . and before the expiration of five years of service, be covered by life and disability insurance." Cost of the policy would be shared equally by the employe and the company or companies for which he worked, even if he changed industries. The employer would not share the premium of a policy over $5,000. c) Old age pensions, to be effective when the worker reaches 70, would be worked out along the same lines, with the companies putting by a fund dollar-for-dollar with the employe as long as the company's share would not exceed $50 a year, d) A similar provision would be provided for unemployment insurance.

In the nature of an attractive afterthought, President Swope included in his plan "a provision ... to place domestic corporations of the sort described on a parity with foreign competition." Companies exporting might deduct from their Federal income tax the equivalent of X percent of its export sales, "this X percent deemed to be the equivalent in selling price of the various provisions for the benefit of employes which the company must make under this plan and from which some foreign companies which the domestic companies have to meet in competition are free."

Observers found in the Swope Plan many an idea already in practical application. For the dissemination of association advertising, mutual information and in some cases propaganda, there have long been trade associations (among florists, bottlers, copper and brass pipe manufacturers, tailors, lumbermen, etc. etc.). Most States (44) have workmen's compensation acts. Seventeen States have adopted a form of old age insurance. The Carnegie Foundation provides (through its member colleges) 9,430 teachers with pensions much in the manner President Swope suggested. And last year (TIME, July 28, 1930), President Swope announced an unemployment insurance program for General Electric in which the company shares with the worker a fund which guarantees him $20 a week for ten weeks if he is idle.

Comment on the plan was guarded and not plentiful. Many a businessman and educator was for it: President Silas Hardy Strawn of the U. S. Chamber of Commerce, who said the Chamber would have a similar scheme to announce this week; President William Wallace Atterbury of Pennsylvania R. R.; President Robert Isham Randolph of the Chicago Association of Commerce; President Nicholas Murray Butler of Columbia University; President Karl Taylor Compton of M. I. T. (of which President Swope is a graduate and trustee). An exception was Samuel Matthew Vauclain, board chairman of Baldwin Locomotive Works. "I don't care to comment on it," said he, "because I don't believe in it." In official circles the Swope Plan was viewed "with caution."

Author. Gerard Swope is 58 years old. He is an engineer and a salesman. He started working for General Electric during a vacation from M. I. T. because he wanted to see what they were doing with electric lights at the Chicago Columbian Exposition. In 1919, after getting a D. S. M. for War work, he returned to General Electric, surprised everyone when he was made president of the company in 1922. His daughter Henrietta is as studious as her father was. She works in the Harvard Astronomical Observatory. His brother Herbert Bayard never was particularly studious. Nine years younger than Gerard, Herbert went to Harvard, returned to his hometown, St. Louis, to work for the Post-Dispatch. The family, which still owns one of the biggest shoe stores in town, objected to his newspaper career, were finally reconciled when he became executive editor of the now defunct New York World.

Significance. There was also a political significance to the Swope speech last week. His good friend and superior is Owen D. Young, also a Democratic presidential possibility. Board Chairman Young was highly enthusiastic about the plan, immediately associated himself with it. Were the plan sufficiently publicized, Chairman Young might make himself popular with Labor. He knows that the possibility of his candidacy is overshadowed in the public mind with the awesome shades of colossally Big Business. But he did not sound like a very confirmed capitalist last week when he said: "We can retain in this country unorganized, individual planning and operation, but, if we do, its action will be at times necessarily chaotic, and we shall, as a result, pay the economic penalty of that disorder, such as we are paying now."

*Senator George William Norris of Nebraska, Governors Gifford Pinchot of Pennsylvania and Roosevelt of New York, to whom dripping Wet Governor Ritchie may have referred, are all stanch proponents of Government-owned or Government-regulated Power. The first two are Drys, the third a muted Wet.

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