Early in the year the Administration's domestic policy occupied the spotlight. 'The press was filled with the new efforts which were to be made to bring about "business appeasement" as the first step in promoting, lasting recovery. 'There were to be no new experiments, business was told. Any mea~ sures which' had proved by experience to be a drag upon business recovery were to be examined and modified, The talk was of "national unity" in the face of a troubled world. Business was no longer to be scolded and dragooned. The Government wished to be Its true friend, and hoped for a similar conciliatory spirit from the big business ex-
Then for a time the domestic issue was forgotten, and the attention of the country was concentrated on the Administration's foreign policy. But the domestic programme had not been dropped, or even suspended.
continued to develop. One might compare it to a subterranean stream which had disappeared out of sight, but had not vanished. After a time it would reappear. When the domestic policy emerged it was soon dis~ covered that while it had been out of sight it had undergone far-reaching changes. There are still one of two officials who are attempting to promote harmony among all economic sections of the country as before, bhut the general tendency is to abandon business appeasement and return to the old New Deal attitude of regarding business as hostile, It must be admitted that this is partly the fault of the more conservative big business~ men, They were inclined to boast early in the year that "they had the President on the yun." This play directly into the hands of the Lott-wing advisers of the President, who had never liked the "business appeasement policy, and had refused to take any part in It (with the exception of Harry Hopkins whom they privately accused of having turtled traitor when he entered the Cabinet as Secretary of Commerce). Businessmen also did little to make ce-operation easy for the President by trying to meet him halfway. They were far more likely to take the attitude that in 1940 there would be a change of regime, the New Deal would be rejected at the polls,'and they would have an Administation fundamentally disposed to be friendly instead of one which only adopted a friendly attitude as an expedient, The controversy over tax revision became 4 symbol of the struggle for a time. Early in the year the Secretary of the Treasury and his aides, with it was understood the approval of the President, announced that they were surveying the taxation struct in order to remove any taxes which were acting as business deterrents. The treasury made its survey, but the President refused to endorse the changes suggested. Speaking in very veneral terms, the Treasury takes the view that the only object of taxation is to obtain funds. The left-wing advisers of the President believe that, in addition, taxation should be used as a weapon to bring about desirable economic changes in the business structure. They wish, for example, to make it more dificult to establish big business cor-parations by penalty taxes on the net carn= Ings of such corporations, quite irrespective of the relationship of those earnings to th amount of capital invested. A small firm which makes a 20 per cent. profit on the capital invested would be taxed less than a large firm which made a 3 per cent. profit, Anybody: with money to invest would thus think twice before he placed it in a large corporation, At the same time big companies would be prevented from building up reserves for expanding their activities by a penalty tax on undistributed profits. Taxes such as these, businessmen insist, make it impossible for business to i more workers, and 1 unemployment problem, which after six years still seems ax far from solution as ever.
The President's Left-wing advisers, for their part, speak of a sit-down strike on the part of hi business and big finance. They accuse businessmen of deliberately sabotaxig the Administration's efforts to promote recovery, and suggest that they are perfect! happy with the present low state of economi activity because it enables them to criticize the New Deal and prepare the ground for its overthrow in the next general election. The probable outcome will be a modification of the taxes which business considers deterrents, but much of the psychological value of Such a step has been lost by the wrangling which preceded it, The economic situation in the United States might be summed up as follows. The 1940 elections are coming nearer and nearer. If the New Deal is to continue there must be better business conditions, or the voters it, Business conditions at the moment are improving, but only very slowly, not enough to have any appreciable effect on public op Therefore if busi ness won't, - (depending upon the
Text read from the printed page and cleaned; old type leaves the occasional error.