1938 - Commerce

Commerce

Soviet authorities review the 1931 prison sentence of economist Nikolai D. Kondratev, sentence him to death, and execute him at age 46 (approximate; date and place of execution unknown; see agriculture, 1928).

Germany's trade balance shows a deficit of 432 million marks. The country has been bankrupt since 1931 by standard capitalist accounting standards, and Reichsbank president Horace Greeley Hjalmar Schacht, 61, warns that the country's enormous armament program must be curtailed lest the catastrophic inflation of 15 years ago recur.

Economist Jan Tinbergen creates a mathematical model of the U.S. economy for the League of Nations.

Labor leader Andrew Furuseth dies at Washington, D.C., January 22 at age 83.

The Women's Bureau of the U.S. Department of Labor issues its annual report February 20 criticizing companies that replace men with women employees to save money.

The United Auto Workers (UAW) calls a strike early in the year against Federal Screw Co., a Ford Motor Company parts supplier that has demanded that its workers accept a wage cut (see Battle of the Overpass, 1937). The workers have refused, Ford dispatches strikebreakers, violence ensues on the picket lines, ambulances rush injured workers and police officers to local hospitals, but the strikers prevail and Federal Screw withdraws its demand (see 1941).

The Fair Labor Standards Act (Wages and Hours Act) signed into law by President Roosevelt June 14 limits working hours of some 12.5 million U.S. workers in the first national effort to place a floor under wages and a ceiling on hours. Sponsored by Sen. Robert F. Wagner (D. N.Y.), it applies to all industries engaged in interstate commerce. Working hours for the first year after the new law takes effect October 14 are limited to 44 per week with the limit to be reduced to 42 for the second year and 40 for every year thereafter. Longer work weeks are permitted only if overtime work is paid for at 1½ times the regular rate. The minimum wage is to be 25¢ per hour for the first year, 30¢ for the next 6 years, but farm workers are not included under the law and domestic servants will not be included until 1974; live-in maids continue typically to earn $30 per month or less plus meals and farm workers often earn even less (see Minimum Wage Act, 1949). The new law wipes out Puerto Rico's 40,000-worker needlework industry, where 25¢ has been the hourly rate for skilled workers.

The Congress of Industrial Organizations (CIO) organized on a formal basis in November succeeds the Committee for Industrial Organization formed in 1935. John L. Lewis is elected CIO president November 18 (see 1946).

Former New York Stock Exchange president Richard Whitney is indicted March 10 on embezzlement charges. Now 49, he has taken about $1 million worth of bonds from clients' accounts and pledged them as his collateral for personal bank loans. Says the New York Daily News, "Not in our time, in our fathers' time nor in our grandfathers' time has there been such a social debacle." Whitney pleads guilty, receives a 5- to 10-year prison sentence, enters Sing Sing April 12, but will be released for good behavior in August 1941 after his brother George (a partner in J. P. Morgan & Co.) pays all that Richard has borrowed or stolen. The conviction weakens NYSE resistance to reform, and the new Securities and Exchange Commission is soon able to impose new rules on the exchange.

President Roosevelt asks Congress April 14 to appropriate another $3 billion for relief to stimulate the economy as 5.8 million Americans remain unemployed (see 1937).

Congress reduces taxes on corporation profits May 27. Federal bank supervisory agencies agree in June to let banks carry high-grade bonds at amortized book value regardless of market prices.

Congress passes an Emergency Relief Appropriations Act June 21.

Copper baron-philanthropist Adolph Lewisohn dies at New York August 17 at age 89; former Canadian Bank of Commerce president Sir John Aird of a heart attack at his Toronto home November 30 at age 83.

The New York Stock Exchange halts trading in the 105-year-old pharmaceutical firm McKesson & Robbins December 2 upon hearing charges of mismanagement and falsification brought by a stockholder. Its president F. (Frank) Donald Coster is arrested December 14 for violating the Securities Exchange Act and charged in connection with $18 million apparently missing from the assets of the crude drug department, which has been under the exclusive direction of Coster and his assistant, George S. Dietrich, who is a neighbor of Coster and is also arrested. Coster and Dietrich are released on $5,000 bail each and remain at their homes in Fairfield, Conn., but an FBI investigation reveals that "Coster" is in reality former convict Frank Musica, now 61, who borrowed $1 million to buy a controlling interest in McKesson 2 years ago. When police come to arrest him again at his 18-room mansion he goes to the bathroom, puts a gun in his mouth, and pulls the trigger. It turns out that Musica and his three brothers have set up five dummy Canadian suppliers from whom they pretended to purchase crude drugs, pretended to sell them to foreign dealers, drew up false documents to support the scam, hired secretaries in Canada to receive mail and reroute it with Canadian postmarks, and thereby duped Price Waterhouse auditors to steal about $3 million over the course of 12 years.

Wall Street's Dow Jones Industrial Average closes at 131.33 August 24 but rebounds to close December 31 at 154.76, up from 120.85 at the end of 1937.