To the public generally, a Senate investigation means a scandal hunt. Last week, however, in the Senate Office Building in Washington began an investigation which seemed to have no particular scandal in mind: The subject was unemployment and the master of ceremonies was South Carolina's amiable Senator James F. Byrnes. Said he: "It is not the purpose of this committee to endeavor to show that either labor or capital deliberately brought about the present recession in business." As evidence of good intentions, Jimmy Byrnes pointed out that his committee had been appointed six months ago, before eco-nomic astrologers foresaw a major eclipse of prosperity.
Though there thus was no chance of vituperative cross-questioning, the unemployment investigation promised to remain on the front page. For Jimmy Byrnes & Co. last week sat back under the cut-glass chandeliers of the Senate caucus room to listen not to fusty professors or census takers but to the opinions of some of the biggest shots in U. S. industry on a subject which every small businessman loves to discuss.
Eccles. After Commissioner of Labor Statistics Isador Lubin had described the 1,550,000 drop in employment in November and December as "sharper than any which had occurred in this country in recent years,"* Marriner S. Eccles, thin-lipped chairman of the Federal Reserve System, took the stand. Marriner Eccles was one of the first New Deal officials to come out for balancing the budget. Last week he announced that he still favored a balanced budget but that it could be obtained now only by increased taxes, which would be deflationary; so would any cut in Government expenditures; so, too, would be repeal of the undistributed profits tax which now obliges corporations to declare most of their profits in dividends.
The slump he charged primarily to the payment of the soldiers' bonus in 1936, which accentuated inflationary sentiment that got out of bounds in the spring of 1937, drove prices and inventories too> high. As contributory factors he mentioned strikes, increased operating costs of railroads, lack of expansion by utilities and, finally, the attempt of the Govern-ment to reduce its contribution to consumer spending power. Said he: "Monopolistically controlled prices and wages which are now too high must be lowered and prices and wages which are too low, in relation to consumer purchasing power, must be raised."
Knudsen, A production man who worked up from a bench to the presidency of General Motors is big-boned, slow-spoken William S. Kaudsen. Last week his summons to the Senate quiz was particularly pointed because he had just laid off 30,000 men.
President Knudsen began by reading a statement which revealed that GM's 1937 inventory of $290,000,000 was a new high, that costs rose 13½% per car in 1937, that GM waited until October before raising prices only 87%. He gave a brief history of this year's business: