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193 Annals Am. Acad. Pol. & Soc. Sci. xv (1937)

handle is hein.cow/anamacp0193 and id is 1 raw text is: FOREWORD THIs sketch of industry in depression and recovery embraces the fortunes of the unprofitable segment of American industry. Business is carried on for profit; but many corporations and many industries carry on for many, many years with no profits. During a depression they share their misfor- tunes with a great host of corporate sufferers. In revival and recovery, many of their brothers in struggle cast aside their financial crutches and enter upon new periods of financial growth and prosperity. Others, however, remain sick and never recover their former earning power, while still others progress hesi- tantly and pay scattered dividends from time to time. This descent of an industry into the land of no-profit is never accepted without a severe battle. Heart-searching and self-criticism abound. Re- ports on the industry, particularly by outsiders, flourish. Occasionally they are made by business men; usually, by political bodies. The reduction in wages and employment which the emergency of a no-profit status produces, leads to political pressure and industrial investigations on a grand scale. Trade associations and institutes, business engineers, economists, and others, present their solutions. In the last analysis, the remedy is found in the policies adopted by the man- agement of particular companies in particular industries. The outside agencies may give counsel; some is good and some is bad. No good thing is thoroughly so. And even if it be assumed that advice by outsiders to man- agement is presumptively sound, it must be conceded that even the best ad- visers may make mistakes. So, some of the remedies suggested in the following sketches must not be accepted too literally. The first industry, that of sugar refining, is characterized not so much by a sweeping decline as by a stability of profits on a low basis, unaccompanied by any vigorous expansion. This is due in part to a new form of Government sub- sidy to competitors of the American industry. It is to this development that the author devotes his attention. This is followed by the description of two other industries, the phonograph and kraft paper, whose persistent growth has attracted the attention of the financial world. It points to the real touchstone of success. Rapidly expand- ing demand is the basis for ultimate revival of decadent earning power. With it, much can be accomplished at all times; and under favoring conditions, truly remarkable feats in earning recovery can be effected. Without expansion of demand, the goal of profit recovery is rarely attained. The status of low profit and low dividends has been successfully attained by the other industries whose attempts at recovery are described in the following pages. In their recovery efforts, some industries have done more than others; some have adopted one method and others have adopted another. But in no case has any achieved the gain in profits and dividends of such industries as chemicals, automobiles, refined petroleum, cigarettes, rayon, business machines, Diesel engines, nickel, and variety chains, to mention only a few. An inquiry into these high-profit industries might prove helpful to the low-profit indus- tries presented in this number of THE ANNALS. A final contribution examines the help the no-profit industry may expect from a revival of an old form of legislative aid-price fixing. The Federal Gov- xv

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