WAGE REDUCTIONS

Evening Post, Volume CXII, Issue 8, 9 July 1931, Page 8

WAGE REDUCTIONS

(To the Editor.)

Sir,—Your correspondent, "Justice For 4.11" alleges that I have confirmed his statement of the true position' regarding banks and wage reductions. Had he read my letter carefully he would have been unable to arrive at so comforting a conclusion. ' , , , He is apparently obsessed by the word "bonus," but it does not matter a rap what a man's income is called, whether "wages" or '/salary and bonus. What matters is the total amount received, and on this basis, and bearing in mind the nature of his work, the bank man in receipt of a salary and bonus compared unfavourably with others in receipt ot "wages" or a "salary" during the years of high prices. If an institution is in the habit of paying its employees by a salary plus a regular bonus ot, say, iv per cent., when this bonus is abolished it constitutes a very real cut in total income (9.1 p.c to be exact). The fact that suck bonus is payable after the close of the financial year to which it refers does not make it any the less applicable to that year, and it will be perfectly clear to any thinking man that a reduction of the regular bonus in respect of the year Ist April, 1930-31 st March, 1931, is a "cut' in the total income received for that year. And yet "Justice Por All" would cheerfully wipe out that so-called bonus and still maintain that he is not sponsoring a retrospective cut._- As regards the corrent financial yearl (Ist April, 1931-31 st March, 1932), I would strongly advise "Justice Por All" to wait and see before making any further protests, as bonuses for the current year will be conspicuous by their absence. Just as there are two .broad classes ot investment, viz., high yield plus risk and low yield plus (alleged) security, so there are, broadly speaking, two kinds of jobs, the one giving a high income in good times but with uncertainty of tenure, and the other a low, steady income with security of tenure. Bearing in mind the standard of education and efficiency required, nobody with any knowledge of the situation would place the bank employee in any but the second class. The type of mind which would single out this section of the community for a retrospective cut is of the type which requires a reduction in the interest rates of Government bondholders (who are chiefly small investors desiring security) oblivious to the hardships suffered by these people a few years ago, when their fixed incomes were totally inadequate to cope with inflated prices. There is as much "justice" in the one proposal as the other. With reference to my statement that the banks continue to pay a dividend in prosperous seasons) of' 12-14 per cent., while other concerns are giving much higher returns, your correspondent makes the most unwarranted and fantastic inference that the difference between the industrial and the bank dividend represents an amount carried to reserve by the bank. The statement that an industrial or commercial venture 'may pay a dividend of 30-40 per cent, has ho bearing on.the net profits of the banks, which, from the published balance-sheets of the last few years,' are shown to be about 1 per cent, in excess of the declared dividends. Furthermore, on the strength of his own inference, "Justice Por AH" makes mc responsible for the assertion that 26 per cent, is a fair amount to carry to reserves after paying dividend, etc. Once more I would ask him to do mc the "justice" of reading my letter carefully. I note that he avoids my point that, j reckoned on capital plus reserves and undivided profits (i.e., funds accumulated over a period of. yotrs and properly belonging to shareholders) the dividends of the banks here have not exceeded 7 per cent., and are in some cases'.less. t No reasonable person would consider this an excessive return on invested capital. I must apologise for the, (to my' mind) unnecessary length of this* letter, for on re-perusing my original effort I cannot understand how "Justice For All" has drawn such "inferences" therefrom. If I have still failed to make my. meaning clear, I must give up the task, since j neither my time nor, I imagine, your patience, win permit of further discussion on this subject.—l. am, etc., ft TRUTH AND EQUITY. [Sufficient space has been given to both sides for this discussion, which is now