Industry into Line

President George Sloan of the Cotton Textile Institute walked into the White House last week a proud and happy man. His trade association was well aware that the National Recovery Act--by which Government and business were to enter a "partnership" in fixing minimum wages, maximum hours of labor, volume of output and prices--had passed the House, headed for the Senate. Forehanded, Mr. Sloan slapped down on the President's desk a cotton textile code. President Roosevelt's criticism of the cotton business, which he singled out in his radio address last month as an industry in which regulation might be desirable, is chiefly aimed at its labor policy. The Cotton Textile Association was now agreed on a 40-hour week. To Mr. Sloan's dismay, President Roosevelt said, "Not good enough." Thirty-six hours would have to be the maximum.

While trade associations were beginning to find out just how drastically the White House expected to see their industries reformed, drug men met in Manhattan to form a Drug Institute of America. They, too, were preparing a code. Not labor and wages, but prices and competition are the sore spots of the drug business. The

Drug Institute got off to a good start by naming six manufacturers and wholesalers to its executive board of nine and by pledging itself to: 1) "end destructive competition and demoralization of price"; 2) prevent overproduction; 3) maintain fair profits for all.

Charles M. Schwab and his Iron & Steel Institute last fortnight "gladly accepted" the Roosevelt "partnership." And last week the following industries, through their trade associations, were swinging into line: Southern Pine Manufacturers, National Retail Dry Goods Association, Merchants Ladies' Garment Association, Musical Merchandise Industry, Marketing Devices Industry, National Electrical Manufacturers Association, Independent Petroleum Association of America, Anthracite Institute, American Oil Burner Association.

Meanwhile the National Recovery Bill was being so battered and banged about in the Senate Committee on Finance as to threaten the President's whole industrial program. Chairman Harrison lost control of his committee in a Democratic revolt similar to the one which last week struck down the President's economy program on the Senate floor. Democratic Senators had suddenly become alarmed about delegating enormous powers to the White House. They were resentful at the way the President had treated them on patronage. They took out their grouch on his recovery bill.

Heart of that measure was the provision whereby the President was empowered to license interstate industries and thus club recalcitrant minorities into good behavior on pain of putting them out of business altogether. On motion of Senator McAdoo the Finance Committee cut the heart clean out of the bill. The vote was 12-to-7, with Utah's King, Texas' Connally, Oklahoma's Gore, North Carolina's Bailey, Virginia's Byrd, Missouri's Clark, Democrats all, deserting their President. Final elimination of the license system would leave the Government powerless to enforce its industrial decrees, and the remainder of the law hardly more than a pious expression of policy which any concern could defy with impunity.

Other changes voted in the measure with the help of rebellious Democrats: 1) rejection of Secretary Ickes' proposal for the Government to assume control of the oil industry; 2) adoption against the President's wishes of an embargo on all imports threatening domestic recovery; 3) adoption of a three-man board to handle public works instead of a single administrator. Greatly perturbed by his runaway committee's actions, Chairman Harrison announced that he would carry these anti-Administration amendments to the Senate floor, there stage his fight in the President's behalf. President Roosevelt sent a letter to the committee asking it to restore the license clause as the only means to make the law effective. Chair-man Harrison and Budget Director Douglas battled with the committee, brought five Democrats back into line in a 12-to-6 vote to restore the license clause. However the committee limited the working of the clause to one year, instead of two as first provided.

The Finance Committee was in a mood to rewrite the House tax schedules to raise $220,000,000 to finance public works borrowings of $3,300,000,000. Harkening to the public outcry against an increase in the normal tax rates, Chairman Harrison proposed a substitute which the committee gladly accepted. The substitute: 1) a 1/10; of 1% tax on the capital worth of corporations; * 2) a 5% tax on corporate dividends withheld at the source of payment; 3) a 1/2-c- per gal. added gasoline tax. Chairman Harrison figured his tax plan would raise $7,000,000 more than the required amount.

A mighty effort was made by Senators Reed and Walsh, supporters of the general manufacturers' excise tax, to insert it into the tax program. Again it failed, out by only one vote (19-to-9).

As a substitute for the Administration's oil control plan, which a rebellious Congress had rejected, the committee voted to adopt the Connally "hot oil" amendment empowering the President to prohibit interstate transportation of oil or oil products produced in violation of any state law.

*0pponents of this Wartime tax, dropped in 1926, called it a "capital levy" because it was figured not on profits or surplus but on book value, flayed it as a check to business recovery.

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