New Textbook Disapproved Sept. 29 State-Inspired Document on Relations July 1947 of Industry and Labor Protested To THE EDITOR OF THE New YORK TIMES: On Sept. 23 you presented a very complete coverage of the new textbook The New York Times on labor-industry relations inspired by the Ives Committee on Industrial and Labor Conditions and sponsored for school use by the State of New York. ECONOMICS AND FINANCE Your account said, "Careful study of the Ives committee textbook leads to Government, and the Double Budget the conclusion that, without 'pussyfoot- ing,' it has produced an educational By EDWARD H. COLLINS course which should be free from criticism from all but the extreme right This is in the nature of a sequel to a two 10,000 with an annual budget of or the extreme left of economic ly the of weeks with piece ago. which That peacetime appeared piece dealt deficits here chief- nance $300,000. $1,000,000 on For pay-as-you-go town basis to fi- such a thought." a a the Thirties and with the Govern- airport would mean more Relying wholly on THE TIMES' ade- ment's attempts to rationalize than trebling its tax rate. Capital quate report of this book, since no copy them by invoking one new budget- investments present no such prob- is at hand, may I suggest that there lem to the Federal Government. ary doctrine or technique after an- The Bureau of the Budget, in its may be many citizens, neither ex- other. newest study, referred to earlier. tremely right nor left in their thinking, Among the fiscal expedients with which the Administration finds that of the 1948 budget of who will view the State's initial en- philandered in these years was the $37,500,000,000, capital expendi- trance into the field of educational so-called "double budget," and the tures account for only $7,300,000,- 000, or between 19 and 20 per cent. propaganda with dread and misgivings. present essay is concerned specifi- But/most of the items treated by For a textbook on the organized labor cally with that device. The essay the bureau as "capital" items are movement-at this time-does not is the product of two circum- not capital items at all in the cor- stances. One is that the Bureau spring from demands of the people, al- of the Budget published last week porate meaning of the term, "self- the results of its first attempt to liquidating." It is doubtful if more though it is copyrighted "in the name than $2,000,000,000 would fall in of the People of the State of New break the budget down into "oper- ating costs," on the one hand, and this category. Perhaps the best York." The status of organized, mili- "capital expenditures" on the commentary on the bureau's tabu- tant labor in this country today is con- lation, which includes such items other. The other is that, judging as "International Affairs" and troversial, to say the least. Its debat- from the writer's correspondence, "National Defense" is what it has able gains and privileges have been won there are more than a few gen- uinely disinterested persons who to say about the last-named item. politically, in a short decade, and have have been persuaded that adoption Although National Defense expen- not been subjected to the will and in- by the Federal Government of the ditures are not "wealth produc- capital budget would represent ing," it notes, they are "wealth tention of the people in recent years, protecting}' particularly since war began. "the constructive application of business accounting methods to Your account reads: The book, pre- the field of Government finance." That is the negative side of the pared under the direction of William * case. The positive side is more ob- B. Groat Jr., counsel to the investigat- It is alleged, by those who ad- vious. The reason that corporations vocate capital budgeting by the can be trusted to use the double ing committee, heads toward its objec- Federal Government, that this is budget is that they function under tive by accepting as facts and present- standard practice in the case of the closest safeguards. They are ing to the students as such the right private and public corporations. under constant pressure to keep of collective bargaining, the right of When a corporation builds a new their finances in order-from their plant, it is pointed out, for exam- stockholders, from the banks from strike, labor racketeering the blacklist ple, it does not usually include the whom they must borrow, from the and yellow-dog contracts, and other entire expenditure in a single capital market and from the Se- features of American industrial rela- year's income statement. If the curities and Exchange Commission. tions, past and present, operating with- funds for the plant are raised Municipalities, for their part, may through a bond issue, as is fre- in a free capitalism." And your writer borrow only for those limited pur- quently the case, the only charges poses specifically prescribed in goes on to say that such discussions, against income account are those their charters, and even then only including "abuses by union labor lead- representing service on the bonds up to a conservative percentage of ers, dictatorship within unions (interest and amortization). When the value of their real property. is handled in a clear, informative fash- a public corporation, such as a And they can't borrow at all, of municipality, decides to build an course, unless the investment mar- ion, without criticism of past errors, airport, a school house or a new ket considers their credit sound. but with explanation of plans for the town hall it handles the operation By contrast, a sovereign govern- future." in the same manner. ment is by nature constitutionally But is it because, under one or disposed toward spending. It is Indeed, that "explanation of plans for another popular definition, all of subject to no external checks other the future" lets the frantic cat out of these expenditures have in them than public opinion, and it is not the bag. Because labor's deliberate something of the element of at the mercy of money lenders, excesses have directly and indirectly "capital" investment that they are since within broad limits it can not separately treated in the budget? affected the well-being of everyone, and only borrow from itself, but set its Not at all. A large corporation in own interest rate. In sum, as we time after time have endangered and the course of a year buys (invests saw recently when Congress sought slowed up the war effort, its partisans in) literally hundreds of items to pare President Truman's 1948 well know such conditions will not be such as shovels, trucks, pumps and budget, where the Federal Govern- tolerated forever. For this reason, im- new machinery which by any ment is concerned the burden of standard definition are strictly proof always lies with the oppo- pressionable young folk must be taken capital goods, but which it would nent of spending. In the circum- in hand in the classroom at once and never think of including in a "capi- stances suggestions that the Gov- taught that these anti-democratic ways tal budget." What, then, distin- ernment should adopt the capital are traditional ways and entirely mat- guishes the new plant from such budget in order to put its finances 1 items? Usually, two things: (1) on a "business basis," are pure ter of course. For otherwise the one- the fact that it calls for an ex- humbug. What interested advo- way laws and minority rights which penditure too large to be financed cates of the Federal double budget unionism has infringed so stupidly will out of current earnings, and (2) really want is to be able to enjoy surely be revoke 1 by the long-suffering, the fact that it is a capital invest- the best features of both - to be ment in the narrow, practical permitted to employ the more lib- half-impotent citizens of New York and sense that it is an earning, or self- eral accounting methods of busi- the nation. liquidating, investment. ness while continuing to be exempt When the "country's leading State In the case of a municipality, from the numerous limitations stoops to officially-proselyt in behalf size is likely to be the determining which alone justify such methods consideration. Take a town of on the part of business. of one productive unit whose social- istic aims and demands often directly conflict with "the maintenance of in- dividual rights' the real interests of the people of that State are not being served, today or in the future. I sug- gest that the Board of Regents recon- sider its tentative approval of the Ives committee textbook. For the material with which it deals would seem to be presented politically instead of impar- tially for student use. HELEN S. K. WILLCOX. North Norwich: N. Y. Sept. 25, 1943.