Hunting Easter Eggs

“Hunting Easter Eggs”, by Knott
A Knott cartoon depicting Congress’s new tax bill taking the reserve funds of corporations.

John Knott was a prolific cartoonist who wrote cartoons for several decades in the early 1900s. His long career spanned over several historical events. One of these events, during which Knott was very active as a cartoonist, was the Great Depression, specifically when Franklin Roosevelt (FDR) was first starting the New Deal. In Knott’s political cartoon, “Hunting Easter Eggs”, published on April 9, 1936, Knott portrays the Undistributed Profits Bill, one of FDR‘s New Deal policies, as wrongly stealing reserve funds from corporations.

Knott’s cartoon, like the majority of his cartoons for the Dallas Morning News, appeared alongside an accompanying editorial, “Political Tax Bill”, where another writer for the Dallas Morning News describes in more explicit detail opposition to the tax bill. “Political Tax Bill” describes exactly what the bill entailed, that being “a levy on undivided corporation profits that otherwise might be retained as reserve funds” (“Political Tax Bill” 1). This policy would strongly discourage companies from saving their profits, since the saved profits would be subject to this levy. After the description, the editorial writer argues that such a policy would hurt businesses in the United States, since they would not be allowed to properly save their assets for troubling financial situations. This was a view shared by many government officials and business owners of the time.

Before the publication of the cartoon, the Great Depression had ravaged America. The Depression began with the crash of the stock market in 1929, and was followed by waves of bank crashes for the following three years. The subsequent complete failure of the economy happened for a variety of reasons, including falling prices in all economic sectors and people rushing to withdraw their savings, which caused even more economic contraction and further failure (Darity 368). In the wake of the ongoing crisis, FDR became president, based on a platform of promises to fix the economy. To accomplish these goals, he pushed for several new policy reforms, such as bank inspections and the establishment of the Social Security program (Darity 368-369). In addition to these and other assorted economic and public works changes, Roosevelt made several changes to the American tax system, such as the subject of Knott’s cartoon, the Undistributed Profits Tax.

Roosevelt’s Undistributed Profits Tax was a bold proposal. It changed the existing corporate taxes to levy a large tax on profits that were saved up and left undistributed to stockholders. The idea behind the change was that the undistributed corporate profits were much less beneficial to the United States economy than the taxable wealth of stockholders. In addition, some government officials considered the tax to be an effective way to force businesses to use surpluses for further economic growth through reinvestment. (Leff 966). However, the bill was received with mixed reactions from within the government, and was extremely unpopular among corporations. The corporations considered the new program far too limiting of their control over their own capital and their ability to carry out financial planning (Brownlee 58). This unfavorable corporate view of the bill can be seen in “Political Tax Bill”, where it is agreed that new taxes are necessary to reduce federal debt, but the Undistributed Profit Tax is the wrong way to go about it. The editorial claims that corporations “need to be allowed to save for a rainy day” (“Political Tax Bill” 1), in a claim that almost all businesses of the time would have agreed with. Both economists and the corporations also argued that forcing this kind of investment would actually hurt economic growth due to the control taken away from the corporations. Thanks to this outrage among businesses and the Department of the Treasury’s poor ability to argue in favor of the bill, the bill underwent several reforms after its passage, and was eventually removed completely.

The unpopularity of the bill that lead to its eventual removal is clearly illustrated in a variety of news sources from the time, in addition to Knott’s cartoon. For example, a 1936 issue of the New York Times describes initial disagreements in the Congress about the tax bill, stating that after the bill passed the House of Representatives, a majority in the Senate were opposed, with many arguments about alternative options and no action immediately being taken. (Catledge 1). However, none of the substitute plans were adopted, and eventually, as described in the preceding paragraph, the bill passed both houses of Congress in its original form and went into effect, much to the displeasure of the corporations. Some time later, a 1938 issue of the Los Angeles Times described ensuing conflicts about the bill, although at that time, the Republican attempt to completely repeal the bill actually failed, with only minor reforms going through (“Tax Measure Approved by House Commitee” 1). The bill was not fully repealed until 1939, but it faced several reforms and reductions before then, in attempts to satisfy the bill’s many detractors.

Knott’s cartoon illustrates the bill’s unpopularity, as well as the general style of the political humor of the time. To make his point, Knott uses a metaphor, portraying Congress as a farmer stealing reserve funds (portrayed as eggs) from a chicken, representing the corporations. The comparison is most useful for clearly portraying the power difference between the two entities: just like a farmer has all of the control over a chicken, the bill gives Congress all of the control over the companies and their finances. In addition, the reserve funds being represented as eggs adds another layer to the comparison, by implicitly comparing the funds to a “nest egg” that the corporations might want to “sit on” and not use. Knott uses this to cast further doubt on the bill, since the farmer and his tax bill will prevent this option. Aside from the overarching metaphor, Knott also uses some more subtle details to make his point about the bill’s negative effects, particularly, the contrasting facial expressions of the farmer and the chicken. The expressions further solidify Knott’s portrayed unfavorable opinion of the bill, with the farmer’s eager expression showing Congress as greedy for revenue (eggs) and the chicken’s mortified expression contributing to the portrayal of the corporations as victims.

“Political Tax Bill” is used to clarify the cartoon and put Knott’s message into more explicit terms. It uses its own metaphor of “the simple Pablo” (Political Tax Bill, 1) from the play “Russet Mantle”, who bemoans being told to spend all of his money instead of saving. Pablo’s plight is then shown to mirror the situation of the businesses, who are forced to spend and reinvest all of their profits by the bill instead of “saving them for a rainy day” (Political Tax Bill, 1) as reserve funds. In addition, it uses examples of large companies like AT&T using reserves to survive during the depression to show that the corporations need to be allowed to keep their reserves. While the editorial does concede that new taxes are necessary to help pay for New Deal programs, it argues that the tax bill is the wrong way to go about it. By blending this comparison with more grounded facts about the situation, the editorial writerr makes his criticisms of the Undistributed Profits Tax clear and understandable to the reader.

Knott’s cartoons all provide valuable glimpses into American history, with this particular cartoon representing an interesting look at the New Deal. What makes this cartoon particularly of note is that it shows a uniquely negative view of a New Deal policy. Currently, FDR is widely regarded as one of the greatest presidents of all time for the New Deal and his handling of World War II, and so it is interesting to realize that at the time, his actions were not always so positively regarded. Indeed, despite the overall high regard that FDR’s policies have, some were largely unsuccessful. With this unique perspective combined with the cartoon’s use as an example of general culture during the 1930s, it becomes a great source of historical information.

Works Cited

Knott, John. “Hunting Easter Eggs.” Dallas Morning News, 9 Apr. 1936.

Leff, Mark H. “Taxation.” Encyclopedia of the Great Depression, edited by Robert S. McElvaine, vol. 2, Macmillan Reference USA, 2004, pp. 963-967. Gale Virtual Reference Library, go.galegroup.com/ps/i.do?p=GVRL&sw=w&u=txshracd2598&v=2.1&it=r&id=GALE%7CCX3404500507&asid=cbba5683633e9fbba863222b15ab9ecc. Accessed 15 Oct. 2017.

Brownlee, W. Elliot. “Taxation.” Dictionary of American History, edited by Stanley I. Kutler, 3rd ed., vol. 8, Charles Scribner’s Sons, 2003, pp. 54-59. Gale Virtual Reference Library, go.galegroup.com/ps/i.do?p=GVRL&sw=w&u=txshracd2598&v=2.1&it=r&id=GALE%7CCX3401804133&asid=1ef6d1d62bdd7d685007e32813aeb40a. Accessed 15 Oct. 2017.

“Great Depression.” International Encyclopedia of the Social Sciences, edited by William A. Darity, Jr., 2nd ed., vol. 3, Macmillan Reference USA, 2008, pp. 367-371. Gale Virtual Reference Library, go.galegroup.com/ps/i.do?p=GVRL&sw=w&u=txshracd2598&v=2.1&it=r&id=GALE%7CCX3045300960&asid=7c65cb64669fe11426d99ba85b273b05. Accessed 15 Oct. 2017.

Catledge, Turner. Special to THE NEW,YORK TIMES. (1936, May 15). SENATORS FAIL TO AGREE ON A CORPORATE TAX BILL; FIGHT MAY GO TO FLOOR. New York Times (1923-Current File) Retrieved from http://ezproxy.lib.utexas.edu/login?url=https://search.proquest.com/docview/101887722?accountid=7118

TAX MEASURE APPROVED BY HOUSE COMMITTEE. (1938, Feb 27). Los Angeles Times (1923-Current File) Retrieved from http://ezproxy.lib.utexas.edu/login?url=https://search.proquest.com/docview/164860216?accountid=7118