1808 CONGRESSIONAL RECORD-HOUSE JANUARY ~2 Howard C.-Walter, Arnolds Park. Lennie L. Hoffman, Vail. George L. Beeler, Bellevue. Frank Kirscher, jr., Van Meter. Lloyd Lock, Castana. Layton E. Brown, Victor. Hellen B. Randolph, Chapin. Clarence A. Knaack, Walcott. William H. Beacom, Clayton. Lindley L. Birkett, West Liberty. Omar H. Brooks, Cleghorn. Robert L. Parry, Williamsburg. William M. Crosier, Coggon. · James A. Smiley, Winfield. Earl F. McClelland, Corning. Letha Doughten, Woolstock. Frank M. Williams, Council Bluffs. Earl A. Rhinehart, Dallas Center. Ressie E. Scheib, Delmar. HOUSE OF REPRESENTATIVES Adam F. Deadrick, Dike . TUESDAY, JANUARY 12, 1932 . Ralph R. Ray, Doon. Howard C. Snyder, Earlville. The House met at 12 o'clock noon. Charles A. Clark, Fort Des Moines. The Chaplain, Rev. James Shera Montgomery, D. D., William L. McLaughlin, Glidden. offered the following prayer: Charles F. Christians, Grafton. Almighty and everlasting God, by searching we can not Robert D. Adey, Granger. find Thee out nor understa:nd Thee to perfection. We ap­ Howard L. Nickerson, Grundy Center. proach toward the light,_but its compass, its going forth, its William F. Wolf, Hawarden. source and glory no man can understand. We are pleased John C. Foster, Hedrick. that Thou art beyond our comprehension. Thou art more Alexander M. Donnan, Hudson. loving, gentle, and kind than we know. Thou dost in­ John G. Devine, Humboldt. finitely transcend the best things that we can bring to our Alfred G. Rigby, Independence. conception. When the great day dawns we shall behold Thy Charles W. Woodward, Kellogg. glory and grandeur! Then, our Father, our souls shall break Dora M. Schenken, Keystone. forth and join the melody of the universe in ascribing all Frank E. Gibbs, Klemme. honor, dominion, and power unto Him who sitteth upon the Maurice L. Curtis, Knoxville. throne and unto the Lamb forever and ever. Until then, Edwin E. Starr, Lake Park. keep us humble, faithful, true, and upright as public servants James J. Pruitt, Larchwood. and as private citizens. Amen. Roland A. Walter, Lenox. Fred A. Okell, Lewis. The Journal of the proceedings of yesterday was read and Harold H. Phillips, Luverne. approved. Frank L. Ratliff, Lynnville. MESSAGE FROM THE SENATE William D. Lorenzen, McCallsburg. A message from the Senate by ·Mr. Craven, its principal Irven L. Donner, Malvern. clerk, announced that the Senate had passed a bill of the Gus E. Holmberg, Manning. following title, in which the concurrence of the House is Thomas V'. Welch, Marathon. requested. Hope C. Niemann, Marcus. S.l. An act to provide emergency financing facilities for Harland J. Maurer, Mechanicsville. banks and other financial institutions, and for other pur­ Milton G. Irwin, Merrill. poses. William E. Males, Milo. HEARST'S SALES-TAX TRIP TO CANADA George Guyan, Monticello. Charles S. Rogers, Mount Pleasant. Mr. PRALL. Mr. Speaker, I ask unanimous consent to William S. McKee, Muscatine. extend my own remarks and the remarks of other Members of James M. Crawford, New London. the House on the occasion of the recent trip to Canada Roy H. Bailey, Newton. - to study the sales tax. Alexander J. Irwin, New Virginia. The SPEAKER. Is there objection to the request of the Lanah A. Lawler, North English. gentleman from New York [Mr. PRALL]? Carl A. Wissler, Oakdale. There was no objection. · Christopher C. Morris, Oakland. Mr. PRALL. Mr. Speaker, you will recall that a number John B. Balkema, Orange City. of Senators and Representatives in Congress went to Canada Louis F. Bousquet, Pella. last November as the guests of the Hon. William Randolph Maude E. Barkley, Pierson. Hearst to study the sales-tax system in operation in the Silas L. Mcintire, Pocahontas. Dominion. Edward Oldis, Preston. About 50 Members of this body and 4 Senators made the J o G. Milligan, Pulaski. trip. With Congress having under consideration many pro­ Lola Thomas, ~_tandolph. posal for additional taxation to balance the National Budget, Regina W. Spiegelberg, Rembrandt. much interest has been manifested in the journey of these AnnaN. Dixon, Rock Valley. members to Canada. The sales tax has been recommended H. Peter Hendricksen, Royal. for adoption by Congress. Lloyd R. Hughes, Sac City. Many Members of this body who were unable to make the Gabriel L. Archer, Saint Charles. trip having expressed interest in what was learned of the Lucille Brouillette, Salix. Canadian sales-tax system, it was decided to submit this re­ Warren W. Fulton, Selma. port to you. Hiram K. Evans, jr., Seymour. Herewith is a complete record of the proceedings of a William H. Needham, Sigourney. meeting we held at Ottawa with high officials of the Cana­ Walter E. Witten, Sloan. dian national revenue department. There also is presented Edward R. Bender, Spencer. the invitation which Mr. Hearst sent to every Member of Eunice M. Miller, Stanhope. Congress to make the trip. George W. Sisler, Stanwood. At the conclusion of the journey there was a meeting of John A. Schmitz, Storm Lake. our party, at which many expressions of thanks were given John D. Herriott, Stuart. to Mr. Hearst for making the trip possible. A committee Nellie~. Solleder, Thurman. consisting of Mr. PRALL, of New York, chairman; Senator Dwight C. Kessler, University Park. KING, of Utah; Senator GoRE, of Oklahoma; Mr. FREE, of Tabitha Yelsma, Ute. California; and Mr. HoWARD, of Nebraska, was appointed 1932 CONGRESSIONAL RECORD-HOUSE 1809 to send to him a letter conveying these sentiments. That ttonal revenue. It 1s not an easy task, particularly in a period of depression, to find new sources of revenue and to enact just and letter also is presented herewith. sound measures to replenish depleted treasuries. The congressional party left Washington November 14 by As a former Member of Congress and a.s a publisher and student special train and returned to the Capital November 20, after of governmental affairs, you appreciate the heavy responsibilities resting upon the present Congress and the serious problem with visiting Montreal, Ottawa, and Quebec. which lt 1s called to deal in providing adequate revenues for the While the expedition was primarily for the purpose of Government. studying the sales tax, we had an opportunity to discuss As we are advised, you believed that a study of the revenue other questions of mutual interest to the United States and laws and the fiscal system of Canada, with special reference to the sales tax, might be of advantage to those charged with the Canada. We were received by our Canadian neighbors with duty of enacting laws to meet the needs of our National Gov­ much cordiality, and we endeavored to return good wishes ernment. Accordingly, you afforded the Members of the two on behalf of our country. Houses of Congress an opportunity as your guests to visit the In Dominion of Canada in order that they might obtain first-hand Montreal we were tendered a dinner by Sir Henry information concerning its revenue laws and fiscal policies, and Thornton, chairman and president of the Canadian National particularly the workings of the sales tax and its eflicacy as a. Railways. While in Ottawa the Governor General of the revenue producer. Several Members of the Senate and a large Dominion and Countess Bess borough received the party. number of the Members of the House of Representatives availed themselves of the opportunity, and on the 15th of November last Acting Prime Minister Sir George Perley was a speaker at a proceeded by special train to Canada., where several days were dinner given to the party by the Government of Canada. spent visiting important places, including the cities of Montreal, Ranking officials of the Canadian Government, including Ottawa, and Quebec. Conferences were held with leading Gov­ Hon. E. B. Ryckman, Minister or" National Revenue, honored ernment oflicials, bankers, business men, and persons in various walks of life concerning Canada's system of taxation and sources us by their presence at the dinner. They were also most of revenue, particularly the provisions and workings of the sales eager to assist us in gathering information on the sales tax. tax and the attitude of the people toward the same. At Quebec we were received in the halls of the legislative While the primary purpose of the visit to Canada was to study the sales-tax system and to obtain information as to its avail­ assembly by Hon. L.A. Taschereau, premier of Quebec. Hon. ability and eflicacy in meeting revenue needs of our National H. G. Carroll, Lieutenant Governor of the Province of Que­ Government, opportunities were afforded of learning of the prog­ bec, also received us. ress and development of our neighboring country, its almost limit­ During our stay in Canada the American minister to that less resources, and its fine and progressive people. During our sojourn in Canada a hearty and cordial welcome was country, Col. J. Hanford MacNider, and Mrs. MacNider re­ extended to us by a.ll whom we met, and there were unmistakable ceived us. evidences of the sincere good wm of the Canadian people toward Our party was impressed not only by the cordiality of the our Government and the American people. It was a pleasure for governmental officials and the unmistakable evidence of the the members of our party to reciprocate the expressions of friend­ ship and good will with which we were favored. sincere good will of the Canadian people, Dominion and local, We are not unaware of your efforts to promote friendly relations but by the enthusiasm of private boards of trade and busi­ between these two countries, separated only by an invisible line ness men. From members of the Montreal Board of Trade 3,000 miles in length; and we express the conviction that the future will find these two great democracies, in a spirit of fra­ we obtained information on the sales tax and other subjects. ternity and concord, working together for the happiness and wel­ All elements in the community in Quebec joined hands to fare of their respective peoples. make our stay there pleasant and profitable. The board of In conclusion, we express our appreciation of the public spirit trade and Kiwanis Club joined the city in tendering a lunch­ which impelled you to extend to us an invitation to visit Canada eon at which members of our party as well as Canadians and for the opportunity which was afforded us to obtain informa­ tion concerning matters of importance, with some of which we made addresses in which expressions of friendship and good wlll soon be compelled to deal. will between the United States and Canada was the keynote. At the end of our journey we met and adopted a resolution From business interests and contacts with retailers and thanking you for the opportunity afforded us of visiting our neigh­ boring friends and of obtaining information which we believe wlll consumers we had opportunity to inquire as to the working be of value to us in meeting the responsibilities before us. At of the sales tax, and from those directly in charge of this 'meeting the undersigned were appointed a committee to enforcing the tax we obtained official first-hand information. present this communication to you. Following is the invitation which Mr. Hearst extended to Cordially' and sincerely yours, ANNING S. PRALL, Chairman. every Member of Congress: A.M. FREE. The United States Treasury has announced that a limited sales EDGAR HowARD. tax is being considered as a possible means toward helping curtail THOMAS P. GORE. the Government's probable deficit. WILLIAM N. KING. In view of the importance of this subject and the value first­ And here follows a complete report of perhaps the most im­ hand information on its operation would be to Members of Con­ portant meeting held during the trip, and which will, I am sure, gress during its discussion at the coming session, I should appre­ prove most interesting to those Members of Congress who were ciate your joining with other Representatives and Senators in an unable to make the journey. educational tour of the Dominion of Canada where a. sales tax PROCEEDINGS OF MEETING OF DELEGATION OF UNITED STATES S :.i;NA­ has been in force for many years. TORS AND REPRESENTATIVES WITH OFFICIALS OF DEPARTMENT OP Special trains wll1 leave Washington Saturday, November 14, NATIONAL REVENUE, CANADA, WITH - RESPECT TO OPERATION . OF and will pick up Members at New York and other convenient CANADIAN SALES TAX, HELD AT THE CHATEAU LAURIER, OTTAWA. places en route to Montreal, where we wm visit for two days. It CANADA, NOVEMBER 18, 1931 1s also planned to take a short side trip to Ottawa, the capital of the Dominion of Canada, and then go to Quebec. Present: Representing the department administering the sales In each of these places every facility wm be offered you to study tax- individually the operation of the tax in all of its phases. Bon. E. B. Ryckman, minister of national revenue; George W. No effort will be made to propagandize Members for or against Taylor, commissioner of excise; George W. Jones, special excise tax: this tax plan nor will such visit be construed in any way as com­ auditor; V. C. Nauman, controller of excise. mitting you to the advocacy of either side of this subject. Members of United States delegation: The purpose is merely to provide an educational opportunity Senators: W. R. Austin, Vermont; T. P. Gore, Oklahoma; W. H. for Members of the House and Senate to examine the operation King, Utah; E. Thomas, Oklahoma. of this tax plan in the Dominion. Representatives: C. L. Abernethy, North Carolina; A. H. Andre­ Suitable hotel accommodations and entertainment will be pro­ sen, Minnesota; S. 8. Arentz, Nevada; C. G. Bachmann, West vided. Special trains will return to Washington Monday, Novem­ Virginia; P. J. Boland, Pennsylvania; H. C. Canfield, Indiana; ber 23, via New York. All expenses will be defrayed by the sponsor F. Clague, Minnesota; W. P. Cole, jr., Maryland; J. J . Connolly, of the expedition. Pennsylvania; J. J. Delaney, New York; S. Dickstein, New York; An early telegraphic answer to this invitation to Room 602, J. J. Douglass, Massachusetts; W. Doxey, Mississippi; H. A. Estep, 729 Fifteenth Street, Washington, D. C., would be much appreciated. Pennsylvania; A. M. Free, California; M. C. Garber, Oklahoma; WILLIAM RANDOLPH liEARsT. A. H. Greenwood, Indiana; A. J. GritH.n, New York; H. W. Hall, Illl- . nois; F. W. Hancock, jr., North Carolina; R. G. Houston, Delaware; _ And the following is a copy of our letter of thanks to Mr. , E. Howard, Nebraska; J. Johnson, Oklahoma; R. C. Johnson, South Hearst: Dakota; E. A. Kelly, Illinois; W. C. Lankford, Georgia; N. Lichten­ WASHINGTON, D. C., January 12, 1932. walner, Pennsylvania; A. J. May, Kentucky; J. V. McClintic, Okla­ DEAR MR. HEARsT: The diminishing revenues and increasing ex­ homa; T. S. McMillan, South Carolina; C. D. Millard, New York; penditures of the Federal Government have sharply challenged J. W. Moore, Kentucky; William I. Nolan, Minnesota; Mary T. Nor­ the attention of the American people to the imperative necessity­ ton, New Jersey; J. J. O'Connor, New York; v. L. Palmisano, Mary­ if the Federal Budget is to be balanced-{)! obtaining additional land; S. H. Person, Michigan; A. S. Prall. New York; W. I. Sirovich. revenue. Various plans have been suggested to obtain such ad.di- New York; J. L. Smith. West Virginia; Henry B. Steagall, Ala- 1810 CONGRESSIONAli RECORD-_ HOUSE JANUARY 12 bama; M. L. Sweeney, Ohio; W. M. White, Ohio; C. Williams, ness adversely? As regards the first, statistics are available which Missouri. show that the sales tax has been a very large revenue producer. Col. Hanford MacNider, United States minister to Canada. At. one time it represented about 24 per cent of the total revenue The meeting opened at 10.30 a.m., Hon. E. B. Ryckman, Minister of the country; that was when it was not 1 per cent but 4¥2 per of National Revenue for Canada, in the chair. . cent and later 5 per cent. So that from the point of view of Mr. RYCKMAN. I am told that I am to be temporary boss of this revenue its operation has been eminently satisfactory. As to eco­ meeting, but I would be much better satisfied if you would name nomical and efficient administration, exact statistics have not your own chairman. I think you had better consider. that. been and probably could not be compiled, but it is reasonable to Senator KING (Utah). We have come here for the purpose of assume that at no time has the cost of collection exceeded 5 per obtaining Information. From your admirable address of last eve­ cent, and I think you will agree that a tax the collection of which ning we feel sure you understand what information we are seeking, requires only 5 cents out of every dollar received is a reasonably and it seems to me that the matter should be left in your handS. economical one to have in operation. As to the question of its We should be glad to have you and your associates explain to us affecting business adversely, the answer is found in the fact that the working of the sales tax, its incidence, its administrative fea­ the sales tax has been in operation in Canada for over 11 years. tures, and so on; then I have no doubt many of my collea~es Of course there are uifferences of opinion with regard to its here would be very glad to have the opportunity of asking merits. You may talk with one business man who will give you questions. all his objections to it, whereas the next one you meet is very much :Mr. RYCKMAN. If that is your wish, I shall be glad to contribute in favor of it. But taking it by and large, our experience and the anything I can. Now, how do you wish us to proceed? Do you information gained by uontact with business men all over the want a statement from us first, or would you prefer to start right country enables us to say that the manufacturers and business tn and ask questions and deal with the matter in that way? men generally of Canada recognize that the sales tax does not SEVERAL DELEGATES. A statement first. affect business any more adversely than any other form of taxa­ Mr. RYCKMAN. Then Mr. Jones will make a general statement. tion; in fact it could be proved that it does so to a much lesser Mr. GEORGE w. JoNES (special excise tax auditor, Department of degree. National Revenue, Canada). Mr. Chairman and gentlemen. when Furthermore, as I have indicated, no government would have the Canadian Government decided to introduce the sales tax in continued such a form of taxation for a period of 11 years 1f it 1920, it was not an entirely new thing. I_t had been in operation had been found to affect business adversely. As against any objec­ as a method of taxation in other countries, as you are probably tions that have been offered by individual manufacturers, the aware, particularly throughout Europe; in France and in Germany Retail Merchants Association of Canada, a national organization, they had had it for some time, and it had been used in the has placed itself on record as being heartily in favor of the reten­ Philippines, a ·part of your own country. Therefore there was tion of the sales tax. So that the sales tax has been found to com­ experience to go upon; so that in 1920 when Canada was faced ply satisfactorily with the requirements of the three tests I have with decreasing revenues and new methods of taxation had to be mentioned, and therefore it has been retained. found, it was decided to-try out the sales tax. It was introduced I shall be glad to try to give any more detailed information that in May of that year and has been in operation ever since. In may be required. 1924, however, a new principle was put into effect whereby as far Representative McCLINTIC (Oklru\:toma). I would like to have an a.S possible the sales tax should apply once and once only, and explanation of the list of exemptions. that upon the finished merchandise at the time that it passes from Senator KING. Just before Mr. Jones answers that question may the manufacturer to the retailer, so that there should not be any I ask what the comment of the labor organizations has been upon duplication of taxation. The method previously in operation had this question? Do th~y contend that the incidence of the tax falls resulted in some pyramiding of the tax, and that was found to be too heavily upon labor . and upon the ultimate consumer-I am a disadvantage; consequently in January, 1924, the tax was made speaking generally of those who come within the category of labor to apply, as far as possible, only once, and that is the method in as against the professional men. operation at the present time. Mr. JoNEs. So far as we know, there has been no definite organ­ You no doubt have copies of the statutes relating to sales tax ized protest voiced by the labor organizations; you may have com­ in Canada, and you are familiar w!th the fact that the rate which plaints by individuals here and there. As regards the burden upon at first was 6 per cent, gradually came down to 1 per cent, and the ultimate consumer, take the example of a pair of working­ that in June of this year it became necessary, on account of the men's boots that sell at retail for $4. The general rate of sales prevailing conditions, that the rate be changed, so that to-day it tax is 4 per cent, but on boots and shoes it is 2 per cent, and that stands at 4 per cent. is applied as between the manufacturer and the retailer, so that It might be asked why Canada decided to try out this form of the 2 per cent is on less than the retail price of ·$4; it may be on sales tax when it had already in operation an income tax, and $3-say 25 per cent of the selling price at retail, because the during the war years had had also a business-profits tax from retailer has to get something. So that when you apply that 2 per which a considerable amount of revenue was derived. Of neces­ cent on the sell1ng price from the manufacturer to the retailer, sity the business-profits tax, which was imposed as a result of the exact amount of the tax upon a pair of shoes is not very much. the necessities of war, would decrease and eventually entirely Similarly a pair of workingmen's socks can, I suppose, be bought disappear. So far as income tax is concerned, it is good in its at the retail stores in Ottawa for about 50 cents, possibly less; way but necessarily there is a point beyond which you can not the exact amount of tax paid by the manufacturer on his selling tax 'capital without running the risk of doing grave harm to the price to the retailer is very small indeed. You will see that every­ economic and commercial stability of the country. So the sales body 1s considered in proportion to his buying power; on individ­ tax was considered as a new form, having certain advantages over ual purchases the amount is very small, but on the aggregate the the income tax, some of which I shall briefly enumerate. Pur­ total tax contributed is considerable. chases have to be made in good times and in bad; sales are con­ Representative ARENTz (Nevada). How does the tax apply on stantly going on; buying power, even though ·at times it is con­ repair parts for machines? siderably diminished, is always present in certain degree; conse­ Mr. JoNES. Under the Canadian sales tax act we tax the finished quently in thE> sales made there is a basis of taxation. Under the article as far as possible. You will recognize that what 1s the income tax you may have, we wlll say, a bad year following a finished product of one mu.nufa.cturer is the raw material of very good year, and you are therefore required to pay your tax at another. Take the example of gears to be used 1n the repair or a time when business is not so good and when you would much rehabilitation of an automobile. They would be the finished prefer to use your capital in your business rather than pay it out product of the manufacturer of gears; they would be sent to the by· way of income tax. repair man, whom we do not consider to be a manufacturer; There is another respect in which the sales tax has an advan­ therefore the tax would apply as between the manufacturer of tage over the income tax. Suppose you have _two companies en­ the gears and that repair man and would cover the material used gaged in the same line of business. One is efficiently managed in the repair of that automobile. In a word, the tax would be and therefore makes a profit, and at the end of the year has to paid by the manufacturer on the individual parts supplied for pay income tax; the State receives a certain amount by way of repairs. income tax for the services rendered through the commercial and Representative GARBER (Oklahoma). What administrative officers other bureaus maintained for the encouragement and assistance determine where the tax shall apply? of business. The other company, through incompetent manage­ Mr. JoNES. By direction of the minister the department has ment, makes no profits and has no income tax to pay; conse­ drawn up regulations which, under the authority conferred upon quently the State receives no revenue for the services given by it. the minister by the act, have the effect of law. From time to But sales· are made by the incompetent as well as the competent, time, of course, questions arise whether particular transactions and under a sales tax act· those sales form ~ basis of taxation in should be subject to tax; representations are made by the par­ both cases, thus providing a revenue for the Government and at ticular individuals or companies and are considered by the com- . the same time placing both companies on an equality in so far missioner of excise and his assistant, the comptroller of excise; as that phase of taxation is concerned. Our sales-tax experience in Canada extends over a period of 11 the matter is studied in conjunction with the departmental so­ years. In its various manifestations we have come in contact licitors, and 1f necessary my colleagues and myself make investi­ with certain difficulties. In framing legislation "having to do with gations at the place of business of the manufacturer. After all taxation it is not possible, as you know quite well, to anticipate the facts have been thus obtained, a decision is rendered. every contingency and to avoid running contrary to some people's Representative ANDRESEN (Minnesota). What amount of rev­ ideas. But the experience in Canada justifies the Government 1n enue per capita was produced by the sales tax for the last com­ considering that it is a method of taxation that should be contin­ plete year as compared with the amount expected under the new ued even under the present conditions. rate? It is generally considered by taxation and economic experts that Mr. JoNES. The figures have not been worked out on a per there are three tests to be applied to any form of ta.'tation legis­ capita basis, although that could be done. The exact amount of lation. First, will it produce revenue; second, can it be admin­ revenue produced by the sales tax for the fiscal year ending the istered economically and efficiently, and third, will it affect busi- 31st o! December, 1929, was $51,44.5,000. For nine months !rom 1932 CONGRESSIONAL RECORD-HOUSE 1811 January 1 to September 30 of this year the. ·amount received has farmer. Lumber, for Instance, Is taxable, but the instruments been $20,122,653. Of course, during part ·or that time the rate and tools used in the production of lumber are, as far as possible;· was 1 per cent; it has been 4 per cent since June. The figures exempt. could be worked on a per capita basis if you particularly wished to Representative HowARD (Nebraska). As a matter of fact, does the have them. - - manufacturer really pay any tax which does not come back to Mr. RYCKMAN. Divide the amount by 10,000,000. him? Is it not added to the price of his manufactured articles? Mr. JoNES. It would be about $2 per capita, based on the recent IVa. JoNEs. As a rule that is so. The manufacturer is made census. responsible for the tax. He has the privilege of including it in Senator KING (Utah). Have you the figur.es for the calendar his selling price or of showing it as a separate item on his in­ year 1930? voice; consequently it is something that returns to him. He is Mr. JoNES. From the 1st of January to the 31st of December, really paying to the Government that which he has received 1930, $29,503,495. That was under the 1 per cent rate. himself. Representative HowARD (Nebraska}. How would the tax apply in Representative HowARD. He would not be penalized if he did reference to the newspaper business, as to subscriptions and not add that item of sales tax to his inv.oice? advertising? Mr. JoNEs. It is his privilege to add it or otherwise, but he 1s Mr. JoNEs. Newspaper producers as such are exempt. We do not responsible for the payment. classify them as manufacturers. Representative· McCLINTIC (Oklahoma). Sugar and flour have Representative HowARD. It is very gratifying to be informed that been enumerated as necessities of life, which are exempt. Are newspapers and newspaper advertising are exempt. there any others? Representative DICKSTEIN (New York). As I understand it, when Mr. JoNES. There is a very long list of exemptions, as you the manufacturer pays his tax he loses nothing, because he gets it will see by reference to Schedule III of the special war revenue from the retailer to whom he sells the goods. Has the retailer act. Additional copies of the act are available here for any who who distributes the goods to the consuming public been known may not have already received a copy. The list includes, for to take advantage of the tax by adding it to the selling price of example, bread, flour, fresh meats, and poultry; milk, fresh, his goods? evaporated, condensed, and powdered; cattle, poultry feed; farm: Mr. JoNEs. We do not think so. We can not, of course, govern produce sold by the individual farmer; fuel of all kinds; articles, the price at which the retailer sells the goods to the public, but the product of the forest, when produced by settlers or farmers. no cases have been brought to our attention which indicate that There is quite a list of them here; it would take considerable the retailer has increased his selling price to the consumer, at any time to read them all. rate to any material extent, as a result of the operation of the Representative ANDRESEN. Are dairy products exempt? sales tax. Mr. JoNES. Yes. Representative SmovicH (New York). You have stated that the Representative STEAGALL. What about clothing, wearing apparel? revenue from sales-tax collections during the calendar year 1930 Mr. JoNEs. Clothing and wearing apparel are not exempt, but was almost $30,000,000. Could you indicate the different sources on boots and shoes the rate has been reduced 50 per cent, so that from which this revenue came-how much from beer, how much it is only 2 per cent instead of 4. from clothing, how much from building materials. and so on? . Representative STEAGALL. Your rate, then, is not uniform on all Mr. JoNES. I am afraid the exact details of that are not on file. classes of goods? We keep our records as from the various points at which the tax Mr. JoNEs. No. Generally speaking, it is 4 per cent, but there is collected. are certain special .lines upon which only 50 per cent of the tax Representative SmoVICH. I understood from statements made in is imposed; in other words, 2 per cent. The goods to which the Montreal that they considered the largest amount of money raised 2 per cent rate applies are shown in Schedule IV of the act. The was from the sale of beer, then came clothing, then building list includes also rubber footwear, crecsoted railway ties, biscuits, materials, and so on. · and a number of other articles. Mr. JoNEs. That might be so in that city, but conditions are Representative STEAGALL. We were told yesterday, I think, that different elsewhere. To give you the exact figures would require the rate was uniform on all articles. more details than we have available at the present time. Mr. JoNES. As a broad statement, that is reasonably correct, but Senator KING (Utah). Have you any approximations as to the there are these special exemptions. source from which the greatest amount of sales-tax revenue is Senator GoRE. Your rate was the same in 1929 as in 1930? derived? Mr. JoNES. Practically the same, although for about four months Mr. JoNES. Such details have not been made. It would not be in the early part of 1929 it was 2 per cent. very difficult to get them, but heretofore it has not been con­ Representative McMILLAN (South Carolina). I would like to sidered advisable to keep records of that kind, and guesses are not ask as to the cost of administration, the number of persons em­ good things to make when statistics are concerned. ployed by your department, and the number of field employees. Representative ADERNETHY (North Carolina). Have any of the We people in the United States are often confronted with the Provinces imposed sales taxes? question of additional commissions and bureaus; we have our Mr. JoNES. Under the British North America act, taxation of share of them, and I was wondering whether the law as in opera­ this character is reserved to the Federal Government. A tax of tion in your country can be administered by some existing agency this nature has not been imposed by any of the Provinces. of your Government. Representative .ABERNETHY. There is no Provincial sales tax and Mr. JoNES. When the sales tax was first introduced in Canada can not be under the law? we were rather fortunately situated, in that it was possible to Mr. JoNEs. That is correct. arrange ror the administration of the tax through the customs Senator KING {Utah). We have in the United States, as you houses which are scattered all along the international boundary may know, a corporation tax; we have the Federal income tax, line and at the Atlantic and Pacific ports. The collectors of cus­ and some of the States have income taxes. A sales tax in our toins, with their officers, were made collectors of sale., tax, so country would be an additional burden upon the manufacturers, that you had there the nucleus of an administrative organiza­ who, of course, as most of them are corporations, pay the corpora­ tion. Additional clerical help was given in the larger centers, tion tax, and then when distributfon is made on dividends they such as Montreal, Toronto, Winnipeg, Vancouver, and Halifax. pay income tax. Do you think that to adopt in the United States The greater addition to the staff was in connection with field such a system of sales tax as you have here in Canada would not auditors, who make periodic examination of the books of manu­ result in some pyramiding of taxation? facturers and ascertain whether the requirements of the law are Mr. JoNES. We have similar taxes here-Federal income tax, mu­ being complied with. Figures have never been obtained to show nicipal taxes of various kinds, business taxes imposed by various the exact cost of the administration of the sales tax act. Quite municipalities; particularly in Ottawa there is also a civic income a number of our officers perform duties in connection with cus­ tax. So that in Canada we have taxes comparable to those you toms work; part of the day they may be at that, and the rest of refer to as applicable in the United States, and we have in addi­ the day assisting in the collection of the sales tax. Similarly tion the sales tax. The income tax and the sales tax are not by with the comlnissioner of excise here in Ottawa; at times he is any means the only ta..~es the manufacturer has to contend with dealing with sales-tax questions; at other times he is dealing with here. questions of excise. So that no definite figures have been com­ Representative GREENWOOD {Indiana). I would like to know piled on the basis of which your question could be answered as upon what basis the exemptions provided for .in the law are made, to exactly what the cost of the administration of the act has and what in general the exemptions are. I realize that is rather been. But the fact that we have been able to a very large extent a large question, but it is rather important. to utilize an already existing Government organization has en­ Mr. JoNES. The very scope of the question makes it evident abled the administration of the act to be carried out very eco­ that only a limited answer can be given. Generally speaking. nomically and, I think the consensus of opinion would be, ve;y however, the implements of production have been exempt in what efficiently. we might call the primary industries, such as agriculture, mining, Representative DICKSTEIN (New York). What about luxury tax; fishing, and lumbering. We have endeavored to free those indus­ is there any special or higher tax on expensive merchandise? tries from taxation as far as possible. Then the actual necessities Mr. JONES. There is no special luxury tax at the present time, of life are very largely exempt, such as wheat, flour, bread, sugar, although we did have one for a short time in 1920. The sales and so forth. tax is a general tax applicable to all goods which are not specifi­ Representative GREENWOOD. Apparently the exemptions are cally exempt. largely on the products of agriculture, mining, fishing, and lum­ Representative BACHMANN (West Virginia). Would this ta~ bering. Are there certain exemptions of commodities needed by apply to electric power? these industries in order to pursue their particular lines? Mr. JoNEs. You mean transmission lines--that has not been Mr. JoNES. Yes; to a very large extent agricultural implements considered as taxable. are exempt, so that there shall not be any undue burden upon the Representative BACHMANN .. How about. oil and gas-gasoline? . LXXV--115 1812 CONGREBSIONAL RECQR_D-HOUSE JANUARY 12 Mr. JoNES. on and gasoline are subject to sales tax, but elec­ Representative"'MAY. Pardon me for one other question. I made trical energy generated and transmitted for power purposes is some purchases for the purpose of getting practical information exempt. as to the tax. I bought imported Irish linens in Montreal yester­ Representative LANKFoRD (Georgia). How about theaters? day at what I regarded as a far more favorable price than that Mr. JoNES. That is not a matter of Federal taxation. at which they could be obtained anywhere in my own country. Representative LANKFORD. Would the manufacturer in some At the same time I understand that some of my colleagues bought eases add something to his price for the inconvenience he may cigarettes at a price probably three times in excess of the cost in think he has suffered by reason of the imposition of the sales the United States. Is that difference due to import t ariffs or is it tax and his responsibility in connection therewith? - due to sales tax entireTy, so far as tobacco is concerned? Mr. JoNEs. Instances of that kind have not come to our atten­ Mr. JoNES. It would be the excise tax on tobacco that would tion; it is hardly possible that it has been done. All the manu­ make the large difference in price· there. On the linens there facturer would do for his own protection would be to add the would be really only the duty plus the excise tax of 1 per cent, amount of sales tax to hts price to the ·retailer. Competition is and sales tax of 4 per cent upon importation. You exercised better keen in every line of business to-day, and any manufacturer who judgment in buying the linens than . they did in buying the attempted to raise his price unduly would find that he was not tobacco. getting the business. · · Representative LANKFoRD (Georgia). Do you feel that the oper­ Representative LANKFORD. DOes he not, then, pass on all the tax ation of the sales tax retards the purchase of particular articles? which he pays himself? · · Mr. JoNES. If people are anxious to get them, they will usually Mr. JoNES. It is his privilege to pass on the actual amount of make their purchases. There has been nothing in any shape or the tax payable by htm, and that is all that is done. form to indicate that the sales tax has retarded the purchase of Representative LANKFORD. Is there anything to prevent the re­ any particular article. tailer from adding to his price a few cents, if he wishes, on ac­ Representative GREENWOOD (Indiana). From which tax is the count of anything he may feel he has suffered. or because he largest amount of money derived wtth reference to intoxicating might think he would make fewer sales at the higher price than liquors, the excise tax or the sales tax? he would have made at the lower price without the tax? Mr. JoNEs. There, again, if you definitely require that informa­ Mr. JoNES. You will recognize how impossible it would be to tion, I would have to obtain it for you. The figures are not attempt to control retail prices. The law of competition is the available now. best governing factor. It is very doubtful indeed whether any Representative GREENWOOD. The retailer pays a tax to the retailer could possible increase his price to any appreciable extent. wholesaler. In the practical administration of the law has there Representative LANKFORD. The tax ·is passed on from the whole­ been any appreciable increase in the retail prices of commodities, _ sale man to the retail man, and in all probability from the retail or has the price level been maintained by the theory of compe­ man to the ultimate consumer, so that the only person who can tition? not pass it on is the man who bUys the goods. Mr. JoNEs. Generally speaking, competition has tended to a Mr. JoNES. In that way he becomes a contributor to the upkeep leveling out of prices. The cost-of-living index shows that the of the State. general cost has come down. Representative LANKFoRD. In other words, the sales tax is paid Representative GREENWOOD. From a practical point of view, then, entirely by the ultimate consumer? no increase in retail prices has been observed? Mr. JoNES. Theoretically, undoubtedly. Mr. JoNEs. Certainly not as a direct result of the sales tax. Representative MARY T. NoRTON {New Jersey). While in Montreal Representative SmoVIcf! (New York). You penalize the manu­ I was given to understand that the greatest amount of revenue facturer who does not meet his obligation in respect of the sales derived from sales tax was on intoxicating beverages. The ques­ tax to the extent of two-thirds of 1 per cent per month, which tion was asked this morning, and I was wondering if it would be amounts to about 8 per cent a year, besides subjecting him to a possible to get some sort of idea with regard to the amount of sales fine. What percentage of the 18,000 manufacturers that pay this tax collected from that source. sales tax do not meet their obltgations in respeet to it? Mr. JoNES. Exact figures are not available. Undoubtedly a large Mr. JoNEs. Only a very small percentage, and to give you the amount is derived from that source. In addition to sales tax an figures would be making a distinction betweep. the sheep and the excise tax of 12 ~ cents per gallon is payable on beer. The large goats. But those penalties are very necessary. Bear in mind the amount collected ·by way of gallonage tax on beer has, perhaps, fact that when the manufacturer adds the tax, either as a separate given rise to a rather erroneous impression as to the amount col­ item on his invoice or as a part of his selling price to the retailer, lected from beer by way of the sales tax. the amount comes back to him; therefore if he delays indefinitely Representative MARY T. NoRTON. That tax applies only on beer, the payment of that amount he ts retaining Government funds, then? · and something has to be done to bring along those who are tardy Mr. JoNEs. Yes; but there is also a gallonage and sales tax on and induce them to pay more promptly. wines and spirituous liquors. Representative SmoVICH. If a manufacturer in respect to a cer­ Representative MARY T. NoRTON. You have no way of checking tain sale of goods remits the sales tax to the Government and the intoxicating liquor-that is, hard liquor? within 30 or 60 days the retailer returns the goods to him, has he Mr. JoNES. Hard liquor comes from the distilleries, and the ex­ a right to a refund from the Government later? cise tax is payable when goods come out of excise bond. In addi­ Mr. JoNES. Oh, yes. Arrangements are made whereby he may tion to that, there is a sales tax on the selling price of the whisky take a deduction on his sales-tax returns in respect of that trans- plus the excise tax. For example, there is the price of the whisky, action if it takes place within 60 days. - plus excise tax of $9 a gallon, plus sales tax on the whisky ·and the Representative DICKSTEIN (New York). I notice tha~ the title excise tax. of the act is "An act to amend the special war revenue act." You Representative MARY T. NoRTON. I am particularly interested in still retain the word " war.'' · the sales tax, of course. Is there any possible way of getting the Mr. JoNEs. That was the original title and tt has not been figures of that particular sales tax? · - deemed expedient to change it. Mr. JoNEs. We would probably be able to obtain some figures for Representative GREENWOOD (Indiana). Do you exempt all sales you, Madam, that would show you just what sales tax has been paid for export? . on these particular commodities, such as beer, wine, and spirits. Mr. JoNES. Yes; and imported articles that enter into the man­ Representative MARY T. NoRTON. I shall be very grateful for that ufacture of taxable articles in Canada are exempt from sales tax. information. One other question: Would tt be possible for us to Representative GREENWooD. The tax will be figured on the ulti­ receive a copy of the proceedings this morning? I would like very mate value of the finished article? much to have a copy of the questions and answers that have been Mr. JoNES. Exactly. given here to-day. Representative CLAGUE. Is there a tax on building material, Mr. JoNES. I think that can be arranged. lumber, shingles? If a man wants to butld a house is there a tax Representative MAY (Kentucky). You have referred to the three on it? tests which should be applied to any proposed revenue law: First, Mr. JoNEs. New lUmber and other new materials entering into will it provide the revenue; second, is it susceptible of economical the construction or repair of buildings are taxable, and the tax administration; and third, wtll tt retard the business development L.c; paid when. the materials are bought by the .contractor and not of the country. With regard to the third proposition, I under­ upon his price for constructing or repairing the building. · stand that you have exempted your major industries, such as farm­ Representative CLAGUE. I notice t hat you h ave stores like the ing, mining, lumbering, and the fisheries, from the operation of Atlantic & Pactfic grocery stores. Would there be a sales tax on this act. Is it the judgment of the administrative ofilcials of the butter and eggs, for instance, as sold in the ordinary grocery Government that were the tax applied to these major industries store? it would largely interfere with the development of the country and Mr. JoNES. No. the increase of commercial business? Representative CLAGUE. What about grains and breakfast foods? ·senator GoRE. Or result in the loss of many votes. Mr. JoNEs. You will notice that these are exempt by the act. Mr. JoNES. Of course, one hesitates to make any reply which Retail stores l;l.l'e not taxed; we tax only manufacturers, the idea would take us into the realm of politics. But apart from any being that the tax is collected on the article when the manufac­ political situation the paramount interests of the primary indus­ turer sells it either to the retailer or the wholesaler. tries of the country should be given every possible consideration, Representative GREENWOOD (Indiana). Are there any progressive and an endeavor has been made by the Government to do that. features in the act whereby if. the manufacturer's volw:ne runs up Furthermore, there is the question of the cost of collection of the the rate is changed, or is it uniform throughout? tax. If you put a tax upon people who conduct busin~ in out­ Mr. JoNEs. It is uniform, and we endeavor to maintain that of-the-way places, you might find it so difilcult to collect the tax feature as far as possible. that you would be spending $1.05 to collect •L You have to look Representative CANFIELD (Indiana). You have no turnover tax. at it from that point of view as well. then; tt is strictly a sales tax? 1932 CONGRESSIONAL RECORD-HOUSE 1813 Mr. JoNES. Based upon the total sales. It 1s therefore referred Representative JoHNSON (Oklahoma). Have you discussed that? to as a sales tax. Mr. JoNEs. No; because that did not necessarily pertain to the Representative CANFIELD. Did you ever have a turnover tax? purpose of this meeting. But we most decidedly have an income Mr. JoNES. I do not know exactly what you mea.n by turnover tax. Sales tax does not take the place of income tax; it 1s merely tax. an additional form of tax. Representative CANFIELD. Every sale would be taxed. Representative JoHNSON (Oklahoma}. What about inheritance Mr. JoNEs. Our first act a.s introduced in 1920 was somewhat taxes? similar to that; every time a definite article changed hands it was Mr. JoNES. The various Provinces enact inheritance tax laws, taxed. But strictly speaking we considered that a sales tax, and quite the same as in your respective States. what we have now is a sales tax. Representative SmoVICH (New York). I do not know what the Representative CANFIELD. Then you believe your present tax to distribution of the Canadian population of 10,000,000 is in rela­ be a better form of taxation than the turnover tax? tion to agriculture and industry, but I will assume, for the sake Mr. JoNEs. Considering the revenue produced since 1924, we of argument, that you have a greater agricultural than industrial regard this method as better than the one that .preceded 1t. population. You have lifted the burden of this sales tax off Representative ARENTZ (Nevada). Is the tile put in the ground agriculture, lumbering, fishing, and the natural resources, and for drainage subject to tax? you have placed it upon the manufacturing element only. Now, Mr. JoNES. Tile for agricultural purposes is specially exempt. is it not a fact that the largest proportion of your xnanufacturing Representative ARENTZ. What about tile for bathroom and hotel element in Canada is made up of subsidiaries of American indus­ use? · tries and that you have put the burden of the sales tax directly Mr. JoNEs. They are not !or agricultural purposes so that they upon them? are taxed. Mr. JoNES. There are undoubtedly in Canada quite a number Representative McCLINTIC (Oklahoma). Do you have a grad­ of subsidiaries of United States industries, but I do not think the uated tax in respect to any feature of this legislation-say inference suggested would at all be a proper one to draw from automobiles; would the cheaper cars carry a smaller tax than that fact. Bear in mind that the tax 1s actually in the last the high-priced cars? analysis paid by the Canadian people, so that we are merely mak­ Mr. JoNEs. We have what is known as the excise tax under ing your subsidiaries collecting agents so far as the sales tax is which exemption is granted on automobiles up to a certain concerned. Representative MAY (Kentucky). I notice from the memo~ value. That is excise as distinct from sales tax. randum furnished us that for the year 1920-21 the income from Representative McCLINTIC. In other words this tax is uniform sales tax was $38,000,000 in round . figures; in 1923-24 it was up­ right straight through on every class of articles? wards of $100,000,000, and 1n 1930--31 it drops down again to Mr. JoNES. ·Just with the exemptions I have mentioned. On· $20,000,000. Are these variations in the amount collected due to boots and shoes the rate has been made 50 per cent less, but the legislative enactments of the Canadian Parliament, or rather to general rate is 4 per cent, and 1t is substantially uniform all econoinic conditions? • through. Mr. JoNES. You referred, I believe, to the figures for 1920-21? Representative BACHMANN (West Virginia). Is the tax as you Representative MAY. Yes; and 1923-24. have it here practically the same as the gross sales tax such as they Mr. JoNES. Up to the 31st of December, 1923, the tax was pyra­ have in some of the States? mided in that every time a taxable article changed hands as be­ Mr. JoNES. It has a very great similarity in that it is taken on tween manufacturer and retailer the tax applied, so that when the total sales and the tax is collected monthly. · you started, say, with the hide off a steer's back it carried all Representative BACHMANN. It differs only in the method of col­ the way down to the finished pair of boots. lection; isn't that true? Representative MAY. In other words, by experience you found Mr. JoNEs. Probably. that changes were needed from time· to time in the revenue laws, Representative BACHMANN. In West Virginia we have a ·gross and as you made those changes the differences in collections were sales tax. Every man is taxed, with certain exemptions, on the produced? amount of business that he does. Mr. JoNES. Quite so. Mr. JoNES. They compute it on the total business for the year. Representative ABERNETHY (North Carolina). I appreciate your Representative BACHMANN. You do the same thing, only it is explanation as to the exemption of the products of agriculture, collected every month. mining, and fishing, but what is the theory upon which the power Mr. JoNES. Yes. companies are exempt from this tax? Representative BACHMANN. So that in fact the gross sales tax is Mr. JoNES. You are thinking of electrical power such as is de­ the same thing? veloped, for instance, at Niagara Falls, and is sent by transmission lines to different parts of the country? Mr. JoNEs. Very much-it differs only in the time of payment. Representative ABERNETHY. Yes. Representative HousToN (Delaware). What are the principal Mr. JoNEs. First of all, a considerable amount of the electric arguments of those who object to the tax? power so produced is exported and would necessarily be exempt. Mr. JoNEs. I would not say there is a principal argument. There Secondly, electric power is a primary factor in the driving of the is a variety of objections. based on the point of view of the business machinery. We do not want to xnake the tax too heavy individual. upon the things that are used to produce taxable articles. Then Representative HousToN (Delaware). What are a number of the generating of electric power is an industry varied in its those objections? ramifications and affecting the life of the people in many different Mr. JoNES. I have occasionally heard some xnanufacturer say ways, and if you applied this tax to it you Inight materially in­ that the tax makes it a little more ditficult for him to get his crease the cost of living. There are also factors in connection with customers to accept the goods. There is not, however, what you the collection of the tax that would xnake it rather ditficult to might call any general objection; ~ou have a variety of expressions apply it to that particular form of industry. of opinion. Senator KING. Moreover· the Government owns some of your Representative JoHNSON (Oklahoma). I have heard objection power. taken by some people in that you have in fact a turnover tax. I Mr. RYCKMAN. That 1s right. understand that every time an article changes hands it is taxed; Representative ABERNETHY. Is that the real reason? is that CQrrect? Mr. JoNEs. It is one of the reasons. Mr. JoNEs. Oh, no, sir. Senator AusTIN. I would like to ask how you take up the slack Representative JoHNSON (Oklahoma). Every time a transaction between the manufactured article which is produced in Canada is xnade there is a tax? and that which 1s produced abroad when they come in compe­ Mr. JoNES. The tax is applied when the manufacturer sells to tition. the retailer or wholesaler. Mr. JoNES. First of all there is the custolllS duty at the time of Reprsentative JoHNSON (Oklahoma). You do not have a turnover importation; and then, assuming it is a finished article and not tax at all. one which 1s intended to enter into the production of a manu­ Mr. JoNES. No; one tax-a sales tax. factured article in Canada, there would be a sales tax on importa­ Representative JoHNSON (Oklahoxna). And as a matter of fact tion of 4 per cent, plus excise tax on importation of 1 per cent, the consumer pays the bill? making a total of 5 per cent. Mr. JoNES. It 1s fairly distributed now, but the individual Senator KING. Plus your custolllS duties? amount paid by the consumer himself is necessarily very sxnall. Mr. JoNES. Exactly. Bear in mind that the sales tax of 4 per Representative JoHNSON (Oklahoma). It is not in fact a tax on cent and the excise tax of 1 per cent, making ·§ per cent, is com­ the poor man, putting the burden on the shoulders of the people puted upon the duty-paid value, which is the cost of the merchan­ who are least able to bear the burden of government? dise plus the amount of duty paid upon it. So that you have a Mr. JoNES. I would hardly think it can be expressed in that reasonably high value. way. It is rather giving everybody an opportunity to contribute Senator AusTIN. Has it come to your notice that the foreign to the necessary expenses of running his country. product in competition with your domestic product enjoys an Representative JoHNSON (Oklahoma). It occurred to me that it advantage as a result of the burden which your domestic product is just a way of allowing the rich to escape their just burden of bears by way of sales tax? taxation. Mr. JoNES. That would not necessarily come direct to the atten­ Mr. JoNEs. The income tax 1s still in operation, and under that tion of the taxation officers, but so far as we are aware there has the wealthier man contributes. So far as sales tax is concerned, been no serious case of that kind. the buying power of the wealthier man 1s greater, a.nd it 1s Representative GREENWOOD. You do not merely take the sales simply distributing the tax burden. tax on the intrinsic value of the article imported; you add the Representative JoHNSON (Oklahoma.). There is a graduated in­ customs duty and then compute the sales tax on the two values? come tax? Mr. JoNES. Yes. Mr. JoNES. Oh, yes; decidedly. Senator KING. And the excise, too. 1814 CONGRESSIONAL RECORD-HOUSE JANUARY 12 ' Representative GREENWOOD. In that sense the sales tax ·on an · · Senator KINa. You attempt to· ascertain the cost abroad? · imported article will be higher than on an article produced at Mr. JoNES. Oh, yes; in connection with. the customs services home. Not only is the duty in favor of the local manufacturer, there are those who make a special study of the production cost but the sales tax is pyramided in favor of the local manufacturer of imported manufactured articles. in that it is figured on both items. · Senator KING. And your customs duties are based upon the Mr. JoNEs. It is not correct to say _that the value would neces­ foreign cost? - sarily be higher upon the imported article, because that might Mr. JoNES. To a large extent they are taken into consideration. depend upon the rate of duty; the value of the imported article Senator KING. And the sales tax is based upon the cost thus might be much the same or even 'less than that of the domestic ascertained, plus the tartif which has been paid, plus excise? prod~ct. You are rather assuming that the intention is to pe­ 1\l!r. JONES. Exactly. nalize importation and consequently benefit the local manufac­ Representative ANDERSEN (Minnesota). You have a. system of turer. licensing under this sales tax? Representative GREENWOOD. I was not assuming that, but I was Mr. JoNES. Yes; that is our method of control. Every manu­ assuming that when the tariff duty was paid the resulting value facturer 1s required under the act to become licensed. That is would be high enough to make the imported article pay sales tax what gives us our knowledge of where he is and ::hat his business o_n a higher basis than the domestically produced article. is; then, having become licensed, he is liable to payment of the Mr. JoNES. There might be a little more revenue derived, but tax. The name of each manufacturer is on our records, and any it does not necessarily mean that the ultimate value to the con­ aefault in payment is immediately known. sumer is going to be higher. Representative ANDERSEN. Is there a charge for the license? Representative GREENwooD. That would depend upon the tar:UI Mr. JoNES. Two dollars per year. Wholesalers may become rate. licensed if they so desire, especially if they are selling raw mate­ Mr. JoNES. To a very large extent. rials for use by manUfacturers. That enables them to buy from Representative CoLE (Maryland). Is there any definite allocation the manufacturers the material required without payment of of the revenue from this tax, for instance, to good roads, schools, sales tax and pass it on. It simplifies the admtnistration and and the like, or does it go into the general receipts? assists in the maintenance of the idea of the payment of only Mr. JoNES. It goes into the general revenues of the country. one tax. Representative WHITE (Ohio). In the case of articles that pass Representative MAY (Kentucky). Gentlemen, the representa­ through several processes of manufacture, such as steel products, I take it from what has been said that pig iron production is not tives of the Canadian Government have been both patient and taxed; that would be converted into steel, then into something in kind, and ·the gentleman who has answered our questions has the form of steel products, and then finally placed in a piece of given us the information so promptly that I think perhaps we machinery. Where would the tax be applied? have taken up enough of his time in the matter particularly in Mr. JoNES. When the material becomes an integral part of the view of the fact that we have been furnished with copies of the finished machine act. I would suggest that the meeting adjourn, Representative WHITE. In establishing the basis for taxation, is Representative DouGLAss (Massachusetts). From whom directly it upon the machine as finally produced, or upon the added in­ is the sales tax on beer, wine~ and spirits collected? cpme that accrues to the manufacturer after the pig-iron stage? Mr. JoNEs. That 1s paid by, the producers thereof. The brewers Mr. JoNES. If the pig iron has been used to make the machine and distillers make returns · each month. which the maker of that machine will sell, there you have the Representative DouGLASs. Take the case of soft drinks sold at sales value on which the tax applies. the soda fountain; is the tax levied on the ingredients that go into Representative WHITE. _The tax applies on the manufactured such a beverage? - ~ price to the wholesaler? Mr. JoNES. Where the drink is sold as prepared by the manufac­ Mr. JoNES. Yes; his selling price-sales tax upon sales price. turer, the tax would be on the product of the manufacturer as Senator KING. And if the machine is used in agriculture there sold by him. . is no tax? Representative DouGLASS. What would be the procedure where Mr. JoNES. Of course, that is on the presumption that the the soft drinks are mixed and sold at the soda· fountain? article is exempt. Mr. JoNES. The tax would be applied on the ingredients when Representative WHITE. You referred to the services of the exist­ they are bought for the purposes of the soda fountain. ing custQJD.S officers in connection with the collection of the tax. Representative LANKFoRD (Georgia). The tax is paid, then, on Are these customs officers apopintees of the Crown,_permanent the ingredients out of which the cool drink is made? appointments, or are they appointees of the administration and Mr. JoNEs. Yes. changing with changes in the administration? Representative LANKFORD. The tax is not paid at the soda foun- Mr. JoNEs. They are permanent employees appointed through tain? . the Civil Service Commission. Mr. JoNES. No; the manufacturer of the soft drinks pays the tax. Representative GREENWOOD (Indiana). Did you give us the num­ Senator KING (Utah). There would be no tax upon the output of ber of taxpayers under this system say for the last fiscal year? a smelter, for instance? Mr. JoNES. If you would definitely like to have those figures it Mr. JoNES. It depends on the conditions. If the material is 1n might be possible to furnish them. a semlfinished condition and becomes the raw material for other · Representative GREENWOOD. Has that number been increased manufactures, there is then no sales tax. under the administration of the tax through the years, or has it Representative GREENWoOD (Indiana). As I understand it, you diminished? do exempt all farm products or foodstuffs produced on the farm? Mr. JoNEs. It would be about the same since 1924. Some busi­ Mr. JoNES. Yes. · nesses go out and new ones are .established. Representative GREENWOOD. Is there not a sales tax on the foods Representative DICKSTEIN (New York). Is there a tax on the used in hotels and restaurants? purchase of stockS and shares? · Mr. JONES. Oh, no; we would not attempt to look upon hotels Mr. JoNES. Yes; that is a special form of tax. as manufacturers and require them to be licensed and subject to Representative DICKSTEIN. Is that included in the sales tax, 1f a the tax. Perhaps you are thinking of the hospital tax which ap­ man buys, say, 100 shares of stock? plies in Montreal only. Mr. JoNES. Sales of stocks are taxed every time a sale takes place Representative LANKFORD (Georgia). Perhaps I may refer again after their issue. to the question of soft drinks. Where soft drinks are produced Representative DICKSTEIN. Suppose a certain stock is transferred in bottle form, selling at 5 or 10 cents in the retail st"ores, the 5 or 10 times during one day, is each transfer taxable? manufacturer pays when he sells the goods, but as I understand Mr. JoNES. Yes; that is a special tax upon stocks. it, if the soda fountain buys the ingredients and manufactures Representative GREENWOOD. That is a straight ·excise tax rather Coca-Cola or other cool, soft drinks, the tax is payable on the than a sales tax? ingredients and not on the finished drink? Mr. RYCKMAN. It is a transfer tax. Mr. JONES. That is right. Mr. JoNEs. And is distinct from sales tax. Representative LANKFORD. Could you give us some idea of the Representative DouGLASS of Massachusetts. How many employees entire cost of Canadian Government administration and the vari­ does it take to administer this law? ous subdivisions of that cost, so much derived from sales tax and Mr. JoNEs. There are quite a number of regular customs em­ so much from other sources? ployees, of course; it is difficult to give the number. Mr. JoNES. I am afraid that is a very big question, and one Representative McMILLAN. Is it admillistered by a separate which I could not answer offhand. Possibly, however, the figures bureau of your government? could be obtained if you are most anxious to have them. Mr. JoNES. It is merely a part of the Department of National Mr. RYCKMAN. May I say that 1f any member of the delegation Revenue, under the minister and his commissioners. wishes to obtain any information which has not been furnished Senator KING. Do you derive any revenue from the transactions here we shall be glad if he will let us have the question and his on the grain exchanges? name and address to give the information desired in as short a Mr. JoNEs. No. time as possible. Senator KING. Or the stock exchanges? Representative ABERNETHY (North Carolina). I want our delega­ Mr. JoNES. There is the transfer tax on the stock exchanges, _tion to give you gentlemen a rising vote of thanks for your but not on the grain exchange. · courtesy. · Senator KrnG. If a question arises as to determining the cost of (The delegation rose as a body.) a foreign article which is imported, how do you arrive at the tax Mr. RYCKMAN. Gentlemen. I am_sure it is very acceptable to to be levied--on what basis? . receive your approbation in this way. We are sorry that we have Mr. JoNES. If it is a matter of customs, the customs officers and not been able to give you all the information you want, but i_n appraisers tnake a special study of. that. 'If it is a matter of sale~? that respect I wish simply to emphasize what I said a moment tax, examiners make examinations into the matter and report to ago. And may I add this: Please do not confuse the sales tax the minister. with our excise tax on liquor. The latter is very heavy, so heavy 1932 CONGRESSIONAL RECORD-HOUSE 1815 that it blankets the sales tax, which passes entirely out of the prevent men from directly addressing each other and thus picture. invite a breach of decorum. Senator GoRE (Oklahoma). Do you know what it aggregates in a year? For that reason, and hoping that I have not unduly taken Mr. RYCKMAN. No; we have not the figures, but we shall be glad the time of the House in calling attention to this matter, I to get them for you. Then, in the next place, reference has been ask unanimous consent that the words " ladies and gentle­ made to electric power. As you may know, the Hydroelectric Power men" be stricken from the report of my speech. [Applause.] Commission Q.t Ontario is an enterprise carried on under public ownership, s.nd we think it is very emcient. Electric power is of The SPEAKER. The Chair is in entire sympathy with such great use in our manufacturing industries, which we wish to the remarks made by the gentleman from Massachusetts encourage, that we are not directly taxing it. At the same time [Mr. LucEl. It is supposed to be a slight upon the Chair, the Crown in the right of the Dominion is not taxing the Crown in the right of the Province. according to the expressions of former Speakers of the House, · Whereupon the meeting was adjourned. when Members address the Chairman of the Committee of PROPOSED AMENDMENTS the Whole or the Speaker and then address the Members on the floor en masse. The Speaker represents the House of Mr. LAGUARDIA. Mr. Speaker, I ask unanimous consent Representatives in its organization, and by addressing the to insert in the RECORD notice of three amendments which Chair gentlemen address the entire membership of the I expect to offer when the present bill comes before· the com­ House. mittee for consideration. They are very short amendments, Is there objection to the request of the gentleman from and this is simply to give notice to the membership. Massachusetts? The SPEAKER. Without objection, the matter will be Mr. BANKHEAD. Mr. Speaker, reserving the right to ob­ inserted in the RECORD. ject, and I shall not object, but I desire to call the attention There was no objection. of the gentleman from Massachusetts to the fact that in The amendments referred to are as follows: making the objection the gentleman himself transgressed the On page 7, line 16, reduce the 10 per cent of the capital stock rules of the House. In appealing to the Speaker the gentle­ and outstanding bonds the corporation is empowered to loan to any one borrower to 5 per cent. man said, " I can not read your mind." 2. To provide that loans to railroads must be secured by first­ Mr. LUCE. Mr. Speaker, the gentleman is absolutely mortgage bonds or first mortgages on the physical property of the correct. roads. The SPEAKER. Is there objection to the request of the 3. An amendment, if a rule may be obtained making same in order, providing for the establishment of a deposit guaranty fund gentleman from Massachusetts? jn all national banks and banks members of Federal reserve sys­ Mr. HOWARD. Reserving the right to object, I will say tem, thereby insuring and securing depositors. to my friend from Massachusetts, with the permission of PRIVILEGES OF THE HOUSE the Chair, that h;:~d he been observing the attitude of one Mr. LUCE. Mr. Speaker, I rise to a question of privilege. prairie Congressman for the past 10 years he would have The SPEAKER. The gentleman will state it. known just how to address the House. Mr. LUCE. Possibly it should be a question of the priv­ The SPEAKER. Is there objection? ileges of the House which would require me to present a There was no objection. resolution. I will follow that course if anybody desires it. L.IMITATION OF ARMAMENT CONFERENCE There is presented to me this morning an opportunity to Mr. POU. Mr. Speaker, I present a privileged resolution call to the attention of the House a matter that has dis­ from the Committee on Rules. turbed me for some time. This is my first convenient chance The SPEAKER. The gentleman from North Carolina to lay it before the House. I find in the RECORD this morn­ presents a privileged resolution from the Committee on ing that a few remarks I made yesterday are printed as Rules, which the Clerk will report. follows: The Clerk read as follows: Mr. Speaker, ladles, and gentlemen. House Resolution 101 Not since I have been a Member have I thus broken par­ Resolved, That upon the adoption of this resolution it shall be liamentary law. Of course, I desire not to go on record as in order to move that the House resolve itself into the Committee of the Whole House on the state of the Union for the considera­ supporting a practice which is obnoxious to me. tion of H. J. Res. 163, to provide an appropriation for expenses Df When I came here 12 years ago, nobody, so far as I can participation by the United States in a general disarmament con­ recollect, ever deviated from the parliamentary rule that ference to be held in Geneva in 1932. That after general debate, which shall be confined to the joint resolution, and shall continue salutation should be confined to the occupant of the chair, not to exceed two hours, to be equally divided and controlled by either "Mr. Speaker" or "Mr. Chairman." Within a very the chairman and ranking minority member of the Committee on few years the practice has grown up of addressing the House Foreign Affairs, the joint resolution shall be read for amendment en masse by some form of preliminary language. This is under the 5-minute rule. At the conclusion of the reading of the joint resolution for amendment the committee shall rise and re­ contrary to the parliamentary precedent of several hundred port the joint resolution to the House with such amendments as years. may have been adopted, and the previous question shall be con­ I would read to you a statement by Sir Thomas Smith sidered as ordered on the joint resolution and the amendments who described the practice of the Parliament of Queen thereto to final passage without intervening motion except one Elizabeth's time. He said: motion to recommit. Though one do praise the law, the other dissuade it. For every The SPEAKER. Referred to the House Calendar and man speaketh as to the Speaker, not as one to another, for that ordered printed. is against the order of the house. AMENDMENTS TO RECONSTRUCTION FINANCE BILL Jefferson's Manual, which is the law of the House when Mr. KELLER. Mr. Speaker, I ask unanimous consent to it has no rule to the contrary, says that" when any Member print in the RECORD two amendments to the pending recon­ means to speak • • • he is • • • to address him­ struction finance bill. self not to the House, nor to any particular Member, but to The SPEAKER. Without objection, the amendments will the Speaker," and so forth. Notice that he is to address be printed in the RECORD for the information of the House. himself not to the House, but to the Speaker of the House. There was no objection. I called this matter to the attention of Speaker Longworth, and he was even more severe than I would be in criticizing The amendments referred to follow: the practice and in expressing the hope that some means Amendment to H. R. 7630, introduced by Mr. KELLER: Page 3, line 8, strike out the word "five" and insert in lieu thereof "one might be found to call it to the attention of the House. Pos­ year, two years, three years, and four years, respectively." sibly the present Speaker has the same feeling in the mat­ "Provided, however, That none of the provisions of this act shall ter, although I am not authorized to read his mind in that apply to any bank which owns, operates, or controls, or which has case, but I am quite sure that the reason for the rule has any interest in any subsidiary or affiliate through interlocking directors, stock ownership, or otherwise, or to any of the said always persisted and will continue to persist, because it is, subsidiaries or affiliates unless and until all of said subsidiaries or as the writers say, to avoid altercations. Its purpose is to affiliates shall have severed any and all connection with said banks 1816 CONGRESSIONAL RECORD-HOUSE JANUARY 12 and with another and shall have given proper assurances to the Treasury. Why? Because if you will look through the the directors of the reconstruction finance corporation that sepa­ rateness shall be maintained." bill you will find that practically everything they do must be subject to the control of the Secretary of the Treasury. . RECONSTRUCTION FINANCE BILL " With the approval of the Secretary of the Treasury " is Mr. STEAGALL. Mr. Speaker, I move that the House re­ written all over the bill. solve itself into the Committee of the Whole House on the Mr. TUCKER. Nine times. state of the Union for the further consideration of the bill Mr. STEVENSON. I do not know how many times, bnt (H. R. 7360) to provide emergency financing facilities for I know that the Secretary of the Treasury controls every financial institutions, to aid in financing agriculture, com­ major movement, except merely the loaning of money. merce, and industry, and for other purposes. That is an. The Secretary of the Treasury is the stock­ The motion was agreed to. holder. The stock is taken and paid for out of the Treas­ Accordingly the House resolved itself into the Committee ury of the United States and is issued to the Secretary of of the Whole House ·on the state of the Union for the fur­ the Treasury, who holds and controls it. The control of ther consideration of the bill H. R. 7360, with Mr. WARREN the stock which the Government owns in the corporation in the chair. gives it the control of the corporation, and that is the exer­ The CHAIRMAN. The House is in Committee of the cise of sovereignty which the Government makes with regard . Whole House on the state of the Union for the further con­ to that. sideration of the bill H. R. 7360, which the Clerk will report Now, let us see about the case which my friend cited yes­ by title. terday, the Philippine case; and what was it? It was a case The Clerk read the title of the bill. in which there were some 10 corporations organized and the Mr. STEAGALL. Mr. Chairman, I yield 40 minutes to the majority of the stock was owned by the Philippine govern­ gentleman from South Carolina [Mr. STEVENSON]. ment under legislative enactment. These corporations were Mr. STEVENSON. Mr. Chairman, the present measure controlled by the majority stock, and the question in that is one of remarkable powers and remarkable breadth. It is case was whether the speaker of the house and the presi­ one inspired by a very desperate business condition that dent of the senate could take away from the Governor Gen­ exists all over the United States. So far as I am concerned eral the right to vote that stock and vote it themselves. I desire at the outset to disclaim any expectation that it will This was the whole thing. immediately restore prosperity. The United States is in Let us for a minute look at what happened. The legisla­ what you might term a case of typhoid fever. We are ture in both branches was antagonistic to the Governor Gen­ putting an ice pack to the back of its neck to attempt to eral. The Governor General, the president of the senate, reduce the temperature, and that is about all we can do. and the speaker of the house were constituted by law a The disease has to run its course. It was bred by improper, board of control to vote the stock of all these corporations unbusinesslike, and unstatesmanlike conduct on the part of that the government owned in them. Of course, two out­ many people who control the finances of this country, and voted one, and the result was that the speaker of the house we can not cure it by any one bill or any one appropriation, and the president of the senate proceeded to vote the stock but in so far as it is possible we have endeavored to frame a of the corporation and thereby to dominate. bill which will make at least a step in the direction of the We have not made any such provision as that here, and restoration of normal business conditions. . ~ call your attention to the fact that it was more or less Mr. WRIGHT. Will the gentleman yield? of a political opinion anyway. · This is what the court says: Mr. STEVENSON. Yes. And the suggestion of the Solicitor General that this indicates Mr. WRIGHT. Is it not practically a revival of the War a systematic plan on t.he part of the legislature to take over, through its- presiding officers, the direct- control generally or na- · Finance Corporation, which was of Democratic origin? tlonally organized or controlled stock corporations would seem to Mr. STEVENSON. This is merely the revival of the be warranted. powers of that organization. In other words, the Philippine government had stock in Mr. WRIGHT. And that was of Democratic origin? 10 or 12 corporations and by their legislation they provided ­ Mr. STEVENSON. Yes. That was originally prepared by a board of control of these three men, two of whom went Mr. McAdoo, then Secretary of the Treasury. It was subse­ together, the speaker of the house and the president of quently amended and revived later and used to good effect in the senate; and they voted this stock, and it was a ques­ the depression which grew up in 1921. tion of who should vote the stock, and the Supreme Court Mr. PARSONS. Is it not a fact that certain Members on finds that they were thereby dominating, to the exclusion this side of the aisle have been trying during the past two of the executive of the government, these corporations­ years to bring that to the attention of the administration that is all that was decided-and that it was improper in order to bring about some measure of relief'2 to do so. Mr. STEVENSON. I understand there have been various Now, who controls the stock of this corporation? The efforts made in that direction and especially by the gentle­ Secretary of the Treasury, under this bill, and the Secretary man from Illinois [Mr. SABATH]. of the Treasury dictates~ pari passu, everything that is done In enacting this law we recogni_ze that the main depend­ from start to finish. ence that can be placed upon it will grow ont of the effi­ The man who wrote this opinion, Mr. Justice Sutherland, ciency of the management of the institution. It is not pos­ did go on to say a lot about the Constitution of the United sible to take and throw together a body of men, who do not States, but this is all obiter dicta, as I will show you, be­ understand the critical condition in all parts of the country cause they had nothing to do with anything except the and who have no capacity for business, and expect them to question of whether the speaker of the house and the presi­ take the $2,000,000,000 which we have provided in this bill dent of the senate could, by legislation, organize a board that and make the matter go successfully. The primary consid­ would turn to them the property of the United States and eration is the matter of the management of the corporation. vote the stock of the United States in all these corporations. For that rea.Son we have inserted in the. bill the proposed That is all it was. legislation which has caused the constitutional lawyers to Now, Mr. Justice McReynolds, in a concurrent opinion, rea.r up on their hind legs and express holy horror. I am very clearly shows that this was merely obiter dicta as to all going to discuss that question for a few minutes. the balance of the opinion. He says: The question is as to the appointment of two of the seven The organic act is careful to provide-- directors who are to be the managers of this corporation,_ subject to the orders of the Secretary of the Treasury, who Note the language- is the stockholder. The Secretary of the Treasury holds that all executive functions of the govermnent must be directly under the Governor General or within one of the executive de­ the stock. There is no exercise of sovereignty by theso. partments under the supervision and control of the Governor directors. unless it is under the control of the Secretary of General. 1932 CONGRESSIONAL RECORD-HOUSE 1817 · This is the language of the act they were ·construing, and Mr. STEVENSON. Yes; to a large extent, and I will these fellows undertook, and did, according to the finding of give you in a minute all it has and. all it does. The little the Supreme Court, control millions and millions of dollars original donation was a mere bagatelle. , of property by this legislative enactment, and the only If gentlemen will look on page 352 of the Congressional thing that is binding that this court decided in that decision Directory, they will see just what it does. was that under the organic act they could not do it. Mr. PARSONS. Will the gentleman yield? Judge McReynolds continues: Mr. STEVENSON. I yield. A good reason lies behind this limitation which does not apply Mr. PARSONS. This is a corporation? to our Federal or State Governments. From the language em­ Mr. STEVENSON. Yes. Now, let me show you what it ployed, read in the light of all the circumstances, perhaps, it 1s does. It owns the National Museum, into which the Gov­ possible to spell out enough to overthrow the challenged legisla­ tion. Beyond that it is unnecessary to go. ernment has put a great deal of money, millions of dollars: It owns the National Art Gallery, with which I am not so . So that there was absolutely no necessity for bringing all familiar. It owns the Bureau of American Ethnology. It of this in about the Constitution of the United States. It is owns the international exchanges. It owns the National obiter dicta and is not binding on the Congress or on the Zoological Park, down among the monkeys, the bears, the court itself when it comes to a decision of the question. deer, and the wolves, for which millions of dollars have Mr. YATES. Will the gentleman give the volume? been expended. It owns the Astrophysical Observatory. It Mr. STEVENSON. Two hundred and seventy-seventh owns the Division of Radiation and Organisms. All these United States Reports, at page 212. are managed by that board. It exercises greater functions Now, Mr. Justice Holmes and Mr. Justice Brandeis vigor­ than this bill .will in the long run, and my friend from ously dissented from the whole business, and Mr. Justice Massachusetts [Mr. LucEJ sits on the board by appointment Holmes said: of the Speaker of the House. At an early date It was held Congress could delegate to the Mr. LUCE. If the gentleman will yield, if he will put it courts the power to regulate process, which certainly is law­ in the past tense it will be more accurate. making so far as it goes. With regard to the executive, Congress has delegated to it or to some branch of it the power to enforce Mr. STEVENSON. I find his name on the board in the penalties, to make conclusive determination of dutiable values, to Congressional Directory. The gentleman did not think it establish standards for imports, to make regulations as to forest was unconstitutional, and I think he is eminently fit for the reserves, and other powers not needed to be stated further in detail. Congress has authorized the President to suspend the position. I assume that his duties and activities on that operation of a statute, even one suspending commercial inter­ board were very valuable to the country. The question course with another country, and very recently it has been de­ that is raised-and I shall not devote much more time to cided that the President might be given power to change the it-is the question of whether this is a corporation or is the tariff. · United States Government. If it is a corporation, then the Mr. Justice Holmes says that the line between the two, agents who handle it may be appointed as Congress may legislative and executive, is not clear-cut, but is in penum­ direct. If it is the United States Government, then they bra, and from time to time the exigencies of the case require can not. My friend from Iowa [Mr. RAMSEYER] yesterday that one shade over into the other. referred to the case of Ex parte Meyers, or Meyers against And the gentlemen on that side of the House, including United States, Two hundred and seventy-second United the gentleman who raised the question yesterday, stood up states Reports, page 52. I call attention to what that case for the right of the President and the Tariff Commission to was and read the syllabus: raise or lower the tariff rates, which is absolutely an illus­ - Section 6 of the act of July 12, 1876, providing that postmasters tration of what may be done. of the first, second, and third class shall be appointed and may be A parallel case before us occurred long ago in the estab­ removed by the President, by and with the advice and consent of the Senate, and shall hold their om.ce for four years unless sooner lishment of the Smithsonian Institution, to question which removed or suspended, according to law, is unconstitutional in an would be, according to Judge Holmes, to lay hands on the attempt to make the President's power of removal dependent upon ark of the covenant. I desire to call the attention of the the consent of the Senate. gentleman from Massachusetts [Mr. LucEl to this. That is all that the great case of Meyers decides. That is a similar exercise of power hitherto unquestioned. The President is empowered by the Constitution to remo~e any To come down to the proposition that the thing to be executiv·e officers appointed ·by him by and with the advice and con­ decided here under the Philippine statute was the right sent of the Senate, and this power is not subject in its exercise of these two legislative officers to assume an executive to ·the assent of the Senate, nor can it be made so by act of function, the right under their authority to vote the stock Congress. of the Government in these variouS corporations, and they That is all it decides. What was it? Mr. Wilson, when refused that right. President of the United States, removed a Republican post­ Now, how are the Regents of the Smithsonian Institution master in Seattle for reasons sufficient to himself. The Sen­ appointed? ate did not consent. The postmaster treated himself nicely The Board of Regents shall be appointed as follows: and did not take anything, did not accept any other ·work. Three members of the Senate by the President thereof, 3 mem­ When his term was out for which he had been appointed, he bers of the House of Representatives by the Speaker thereof, and came into the Court of Claims and sued the Government 6 other persons by joint resolution of the Senate and House of for the salary during the time for which he was removed Representatives. upon the ground the Senate not having consented, the Presi­ Those are six private persons appointed by joint resolu- dent did not have the right to remove him and appoint an­ tion of the House and the Senate. other in his place. He was kicked out of court. That de­ Mr. CHINDBLOM. Will the gentleman yield? cided that where a President appointed with the consent of Mr. STEVENSON. I yield. the Senate, he can remove without the consent of anybody, Mr. CHINDBLOM. Was not the Smithsonian Institution and the Congress can not control that; but in that decision established under a donation and trust by Mr. Smithson? they say that if he appoints in any other way, if Congress, Mr. STEVENSON. It was established under a will which in other words, directs him to appoint an officer who does gave the property of that gentleman for certain purposes not have to be confirmed by the Senate, then the Congress in his will well· defined. But the will made no provision can provide how he can be removed. But they can not for the method of government, and if it had Congress do it, if it is one who is appointed by the consent of the would not have been bound by it, because it would not have Senate. That is all that the Meyers case decided. accepted it. W~ have a very interesting sidelight on that, and it shows Mr. CHINDBLOM. Does not the gentleman think that the you gentlemen who are not familiar with the cry of uncon­ establishment of that institution under that will was a stitutionality how people are not always supposed · to be ·Government function? accurate when they get up and say a thing is constitutional 1818 CONGRESSIONAL RECORD-HOUSE JANUARY 12 or unconstitutional. The cry of unconstitutionality is fre­ aside like a cloak; and it is not protected by all those protec­ quently merely a bluff to keep from passing something they tions that are placed around sovereignty. It is like the do not want to pass. State of South Carolina placed in its constitution a method While the case of Meyers was pending, the House of Rep­ of handling the liquor business, and went into it as a whole­ resentatives, then controlled by the Republican Party, passed sale liquor dealer, and did it for yearS until it was almost a Budget bill. They provided that the Comptroller General debauched. A question arose whether they were liable to of the United States should be appointed by the President, pay United States internal revenue tax. The Supreme Court with the consent of the Senate, and that he could only be of the United States said when a State government under­ removed by the Congress. Practically that is what it was. takes to engage in business it lays aside its sovereignty and Mr. Wilson vetoed that bill upon the ground that you could is subject to all the pains and penalties of the ordinary cor­ not restrict his right to remove, if you gave him the right to poration or citizen, and therefore is liable to pay taxes which appoint. There was a long debate upon it here in the House. it has not paid. That is not the question here at all, but I just want to show I want to cite another case, Sloan Ship Yards v. United you how these gentlemen get all fussed up about the Consti­ States Fleet Corporation (254 U. S. 493). tution. If you go on and do the fair thing, the court will sus­ The corporation was owried absolutely and controlled by tain it. Mr. Good, of Iowa, in that debate said: the Government: Now, Mr. Speaker, let us look at that question just a moment The Emergency Fleet Corporation, as originally created, had the from the practical aspects. Every decision of the Supreme Court powers of corporations under the laws of the District of Columbia that I have been able to find or to read leads me to believe that when it was incorporated, and was liable to be sued there and the incidental right of the President to remove can be taken from elsewhere upon its contracts and upon its torts, notwithstanding him and vested in the Congress of the United States. the fact that it was a Federal agency and that its stock was taken entirely by the United States. That was his proposition then. I think there is no question about that. That being the case, we They held that it is a corporation that is separate and have simply done what the Supreme Court has indicated Congress distinct, and it has absolutely shed the attributes of sov­ has an undisputed right to do. ereignty and can not rely upon them. And they went ahead, and every Republican on that side In the case of United States against Strang I will read of the House who was here voted to override the veto and the syllabus: sustain the view that Congress had the right to come in and A person empjoyed as an inspector by the Emergency Fleet Cor­ remove an officer who had been appointed by the President poration is not an agent of the United States. The Emergency Fleet Corporation, though all its stock is oWn.ed by and with the consent of the Senate and exclude the by the United States, is a separate entity. General agents of a President from doing so. That simply shows how much faith corporation are not agents for the stockholders and can not con­ you can put in a contest about constitutionality on the floor tract for them. of this House. Take this proposition. The question is, Is it That is the syllabus. This defendant had embezzled a fair? In the first place, is it the United States or is it a large sum of money from the Fleet Corporation, which was corporation? Just let me give you two or three brief owned by the United States and ·manned by the United citations. States in every respect. He was indicted and convicted, and Mr. COX. Will the gentleman yield there for the purpose the court said: of answering a question which tests the validity of the gen­ The corporation was controlled and managed by its own offi­ tleman's argument? cers and appointed its own servants and agents, who became Mr. STEVENSON. Yes. directly responsible to it. Notwithstanding all its stock was owned Mr. This by the UJlited States, it must be regarded as a separate entity. COX. bill does not provide for the filling of Its inspectors were not appointed by the President nor by any vacancies? • officer designated by Congress; they were subject to removal by Mr. STEVENSON. That does not invalidate an appoint­ the corporation only, and could contract only for it. In such ment. This bill has to go through conference; and if this circumstances we think they were not agents of the United States matter stays in the bill, it will be in shape when it comes out within the true intendment of section 41. of conference. That is a case where the United States owned the whole Mr. COX. The gentleman states that the power to remove business, was running shipyards here, there, and everyWhere, is inherent in the power to appoint?. and the man who embezzled from it was held not to be the Mr. STEVENSON. The power to remove is incident to agent of the United States, and it was held that the cor­ the power to appoint· in the President of the United States poration was separate and distinct from it. when the appointment is made with the consent of the So I say that we have a good deal of reason to suppose Senate. that the mere personnel which controls the action of this Mr. COX. It is inherent in all appointing power, as I organization, subject to the direction of the Secretary of the understand? Treasury, are not officers of the United States. They are Mr. STEVENSON. Unless limited by Congress. not exercising the sovereignty of the United States, and they Mr. COX. In the case of the members appointed by the can be appointed any way Congress sees fit to designate. Speaker, who would have the power to remove? Gentlemen will say, "You can not limit the power of the Mr. STEVENSON. We will meet that question when we President in making appointment. He must appoint every­ come to it. We do not conceive that the Speaker is going to one who handles anything for the United States." appoint a man wh-om you are going to want to remove right Now, let us look at that· a moment. What have we ii). away. As I say, this bill has yet to go through conference. the bill sent over here by the other House? There is a Now, is this the United States or is it a corporation? As provision in that biU that there shall be four appointments, far back as 1824 we find the United States Bank in a law­ and two of them must be of a different political party than suit. Justice Holmes cites all of those cases in the Springer the political party of the President. We have been doing case. In that case it was stated: that for years. If you can say that the President can not The United States was not a party to suits brought by or appoint but two from one party, and therefore he must· against the bank, in the sense of the Constitution. So with re­ appoint two from another party, how can it be said that he spect to the present bank. Suits brought by or against it are can not appoint two South Carolinians and must appoint not understood to be brought by or against the United States. The Government by becommg a corporation lays down its sov­ one North Carolinian and one South Carolinian and one ereignty, so far as respects the transactions of the corporation, Virginian and one New Yorker? Yet we have done it for and exercises no power or privilege which is not derived from the years. In the Federal reserve act, which is an act abso­ charter. lutely controlled by the United States, it is provided that That is in Ninth Wheaton, page 906. two members of the board can not be appointed from the So when the United States constitutes this corporation, same State. We limited the power of the President there. gives it power to sue and be sued, to do various things not Who has been heard to question the efficiency of that governmental, it has severed its sovereignty, it has laid it legislation? 1932 CONGRESSIONAL RECORD-HOUSE 1819 Mr. Wll..&LIAMSON. Will the gentleman yield? come from the other end of the Capitol, would have sense Mr. STEVENSON. I yield. enough to fix it if there was any question about it. Mr. WTI.LIAMSON. Will the gentleman say whether the Mr. DYER. The gentleman, of course, is acquainted with President can not dismiss the two directors should they be the veto of President Wilson in connection with the Budget appointed by the Speaker and with the advice of the bill. That was on June 4, 1920, and he vetoed that bill be­ Senate? cause of the provision in it that the Comptroller General Mr. STEVENSON. No; I do not say that. That is a field and his assistant could be removed only by a concurrent we have not gone into. Whenever it gets to that condition resolution. · where we have to take them and submit to whatever is done, Mr. STEVENSON. If the gentleman will wait, I will read we will find out what can be done. that provision. Now, just one other matter. The farm loan act was cre­ [Here the gavel fell.] ated by the Congress of the United States, and it provided Mr. GOLDSBOROUGH. Mr. Chairman, I yield the gen­ that the Federal Government should take the original tleman 20 additional minutes. $9,000,000 worth of stock. It provided that the directors Mr. STEVENSON. This is the language: of that institution could be elected by the farmer stockhold­ The Comptroller General and the Assistant Comptroller Gen­ ers-a majority of them. Until that money was paid back eral shall hold office during good behavior, but may be removed at any time by concurrent resolution of Congress after notice the Federal Farm Board retained control, but as soon as it and hearing, when, in their judgment, the Comptroller General was paid back, then we passed an act that the directors of or Assistant Comptroller General is incapacitated, or inefficient, the farm-loan banks should be elected-four by the farm­ or has been guilty of neglect of duty, or of malfeasance in office, loan associations and three of them appointed by the Fed­ or of any felony or conduct involving moral turpitude, and for eral Farm Loan Board. no other cause and in no other manner except by impeachment. The other day, without a dissenting vote I believe, we That was the language which the Republican side of this passed a bill directing the Government to subscribe for House sustained when it voted unanimously to override the $100,000,000 worth of that stock, controlled in the corpora­ veto of President Wilson, and at that time the Meyers case tion by people who are elected by the farm associations all had not been decided. over the country. Nobody raised any question about it. If Mr. LUCE. Will the gentleman yield? the argument of the gentleman is sound that the Speaker of Mr. STEVENSON. Yes. this House, when Congress directs, can not appoint two of Mr. LUCE. Does the gentleman from South Carolina the directors of this corporation in which the stock is held recall any case where power intrusted to the Speaker of the for the Government by the Secretary of the Treasury, it is House has been limited by the advice and consent of the unconstitutional for the farm-loan associations all over the Senate? country to elect four of the seven directors who will control Mr. STEVENSON. Frankly, I do not. I will frankly say that $100,000,000, which has now been increased by the com­ to the gentleman that I did not care for that language to be mittee of the Senate to $125,000,000. in the bill, but a good many members of the committee Mr. COLE of Iowa. Will the gentleman yield? thought it would look better to have them all confirmed, Mr. STEVENSON. Yes. and the Senate of the United States, I am sure, would deal Mr. COLE of Iowa. Does the gentleman anticipate that leniently with the actions of the Speaker of the House. I any leoo>al contest might delay the carrying out of this act? will also say to -the gentleman from Massachusetts that the Mr. STEVENSON. Now, I will come to that. Is this thing fact that it has never been done is no reason why it should fair, and will it result in a contest? The gentleman will not be done, because what we are attempting to do in this notice that it is different from the Filipino case. This ap­ legislation has never been done before, never. This is an pointment would not put in the control of this House all of unheard-of proceeding, and novel proceedings, as the the members or a majority of them. Suppose somebody speaker of the House of Representatives of South Caro­ should raise the question that we did not have the right to lina once said, are in order. appoint these two? In that event we would have five more Mr. LUCE. Does the gentleman think it would be wise who could act, so that such a contest would not delay matters to establish a precedent that so little comported with the a moment. dignity of the House of Representatives as to expose its Now, let us look at it from this angle: The administra­ presiding officer to investigations on the part of another tion sent us a bill providing for three ex-officio members of branch as to the breakfast foods his appointees used, as to this board and two to be appointed by the President, by and the schools they had attended, as to the professors to whom with the advice and consent of the Senate. Now, what did they had listened, and as to the line of their political we do? Did we subtract anything from him? No. We just thought? added "and two to be appointed by the Speaker of the Mr. STEVENSON. That is a very interesting catalogue, House." In other words, we ask that this great organization, but I do not need all of it. I understand what is in the in which the Democratic Party is called upon to submerge gentleman's mind, and . this is my answer to that: The many of its views in order to put it through and save the Speaker of the House of Representatives is second only in situation in this country, and in which many of us sacrificed dignity to the Presidency of the United States. He is not any our ideas of the principles of government in order to save more immune from investigation as to his breakfast food or the situation and put out the fire-we insisted and insist his underwear than Mr. Hoover, the President of the United that the House of Representatives, the branch which raises States. the revenue to carry this on, should have representation Mr. FIESINGER. Will the gentleman yield? upon the board that is going to administer it, and it is noth­ Mr. STEVENSON. Yes. ing but fair that we should have such representation. And Mr. FIESINGER. Suppose the bill provided that the when you only do the fair thing you will find the courts will Speaker were to appoint four of these members and the find no way of upsetting it. court should declare that provision was unconstitutional, · Mr. DYER. Will the gentleman yield? could the board then function? Mr. STEVENSON. Yes. Mr. STEVENSON. I doubt if the board could function Mr. DYER. Suppose we should pass the bill with this without a majority. provision in it, how would the men appointed by the Speaker Mr. LOZIER. Will the gentleman yield? be removed from office, if necessary? Mr. STEVENSON. Yes. Mr. STEVENSON. Well, if it is necessary for words to Mr. LOZIER. Of course, the distinguished gentleman that effect to be put in, this side of the House has not gone from South Carolina is familiar with the act creating the daffy and it can put such words in the bill. There would be George Washington Bicentennial Commission, approved De~ no difficulty about that, and certainly in conference the con­ cember 2, 1924? The act creates a governing board, or com .. ferees, in view of the fact that all wisdom is supposed to mission, consisting of the President, President pro tempors 1820 CONGRESSIONAL RECORn--· HoUSE JANUARY 12 of the Senate, Speaker of the House, and 16 additional mem­ our amendments in· hete, and the gentleman ·can see that bers, 8 of whom are appointed by the President, 4 -by the it is cut considerably. When we finished it the committee President pro tempore of the Senate, and 4 by the Speaker unanimously reported it and unanimously directed the chair­ of the House. By the amendatory act of March 4, 1931, man of the Committee on Banking and Cin:rency to introduce vacancies in the membership of the board appointed by the the bill as amended and with his name on it, or at least that President pro tempore of the Senate shall be filled by such was implied. This was done, and now the gentleman from officer, and vacancies in the membership of the board ap­ Alabama ·will· do his own sponsoring. If he claims to be the pointed by the Speaker shall in like manner be filled by the sire, it is all right. It does not make any difference to me. Speaker. This commission not only has charge of the George This is what happened, and nobody is going to dispute it. Washington Bicentennial celebration but, by the act of May Mr. LAGUARDIA. But the gentleman is whole-heartedly 23, 1928, was authorized to construct the Arlington Memo­ back of the bill? rial Bridge over the Potomac River, the estimated cost of Mr. STEVENSON. Of course, we are all whole-heartedly which was approximately $15,000,000. ·so it is no new thing behind the bill. for Congress to create boards and commissions and provide I may say that I have no pride of opinion about any of in the act that certain persons shall be members of boards the things that are in here. I have argued this legal ques­ and commissions created under such acts. The present bill tion because it was very positively announced that it was follows this practice and makes the Secretary of the Treas­ absolutely unconstitutional. I have been acquainted with ury, the Secretary of Agriculture, and the governor of the the Constitution as a lawyer for 46 years, and I thought I Federal Reserve Board members of the board of directors of knew something about it, and I do not propose for the thing this corporation. Of the four other members, two were to be to be blown away, at least without an argument. appointed by the Persident and two by the Speaker. The Mr. BLANTON. Will the gentleman yield for one ques­ agricultural marketing act in like manner made the Secre­ tion? tary of Agriculture ex officio member of the Farm Board. If, Mr. STEVENSON. Yes. therefore, the provision in the pending bill· authorizing the Mr. BLANTON. I was wondering whether or not the bill Speaker of the House to appoint two members of the board introduced by the gentleman from Kansas [Mr. STRONG] is unconstitutional, then, by the same token, the provision was prepared by a Government department or bureau for therein which makes the Secretary of the Treasury, Secre­ him. That is the way they usually come to the Congress. tary of ·Agriculture, and governor of the Federal Reserve Mr. STEVENSON. The answer I have to make to that Board members of the board of directors of this corporation is that the gentleman from Kansas [Mr. STRONG] stated is in like manner unconstitutional I consider this objection yesterday that it was a bill he introduced, amended and unreasonably technical. No one who is interested in the metamorphosed, and the gentleman will have to ask the rehabilitation of American agriculture, industry, and busi­ gentleman from Kansas [Mr. STRONG] about that. ness will go into court to challenge the constitutionality of Mr. BLANTON. It has the earmarks of the department the provision. A more able, level-headed, and patriotic per­ on it. son can not be -found to have a part in designating those Mr. STEVENSON. I have very strong circumstantial charged with the administration of this act. evidence as to where it came from; but that is yours and · In other words, we are discussing an academic proposi­ Mr. STRONG's business. We are not concerned with it. tion here, because Congress in numerous acts has designated What we are concerned with is the fact that the fire is on, persons to serve on boards created by congressional acts. the conflagration is melting down the financial institutions This is a congressional appointment of a member of the of this country day by day, that want and distress are being board of a business corporation, and we find 15 or 20 similar spread all over the United States, that it starts in Maine acts where the personnel of similar boards is prescribed by and Massachusetts and goes to the lower corner of Cali­ the substantive law. If these board members are officers of fornia, and that we are not here endeavoring to quibble the Federal Government, then the appointive power is vested about who is the author of the bill. Anyone who can write in the President. If they are not Federal officers within the a bill that will help to alleviate this situation will have my true meaning of that term, but officers of a business corpora­ support and my cordial association. [Applause.] tion created by Congress, then Congress can designate who Mr. BLANTON. Will the gentleman yield for a further shall constitute the directory of this corporation. The question? · President will not dare challenge the action of Congress in Mr. STEVENSON. Yes. the instant case because of the great emergency that now Mr. BLANTON. There is no doubt that this is going to confronts the American people, and no one will question the take up ·some railway securities that are not now cashable, validity of the appointments of these two members by the it is going to take , up some bad securities that insurance Speaker. I am sorry that the committee in charge of this companies hold, and it is going to take up some securities bill agreed to strike out the provision giving the Speaker handled by high finance that will in effect unfreeze their authority to appoint two of the directors of this $2,000,000,- foreign securities, if you please- 000 corporation. . ~ Mr. LAGUARDIA. No. Mr. STEVENSON. The gentleman has stated what I was Mr. BLANTON. The Senate bill passed yesterday, which will replace the House bill, allows banks holding foreign coming to, but has stated it much better than I could have securities to borrow on their plain notes. I am· wondering done. how it is going to help the people in the gentleman's State Mr. LAGUARDIA. Will the gentleman yield? as well as the people in my own State. Mr. STEVENSON. I yield to the gentleman from New Mr. STEVENSON. When we come to· consideration of York, although I want to get away from this particular the bill under the 5-minute rule we will undertake to eluci­ question now. date that to a certain extent. It is not going to help as Mr. LAGUARDIA. I am not going to inquire about that. much as we hoped for, I will tell the· gentleman that. I I want to get something for my own guidance. have already said this is simply an ice pack at the back of Mr. STEVENSON. I want to discuss the bill itself now the neck of the patient with typhoid fever. It is not going for a few minutes. I yield to the gentleman. to cure everything and we are going to be disappointed Mr. LAGUARDIA. My soul is rather restless. I find a in what we get out of it; but the country at large is going tendency on the part of distinguished Members of the House to be disappointed because we can not step in and take care to avoid paternity of this ugly, little child. I would like to of everything that is going to disaster, and I am here to know if the gentleman and his colleague from Alabama tell you that I am in favor of doing something and doing it sponsor this bill. quickly in order that something may be done. Mr. STEVENSON. I may state to the gentleman that the Mr. BURTNESS. Will the gentleman yield for a question egg out of which this bill hatched was introduced by the with reference to the legislative situation in the interest of gentleman from Kansas [Mr. STRONG]. We took it and speed, to which the gentleman has referred? amended it in most drastic particulars. We have pasted Mr. STEVENSON. Yes. 1932 CONGRESSIONAL RECORD-HOUSE - 1821 Mr. BURTNESS. The Senate passed a bill on this sub­ Mr. SNELL. Has the gentleman any assurance that the ject last night and that bill is here. Do~s the gentleman's President_ would appoint only Republicans on the board? committee propose to substitute, parliamentarily, the Senate Mr. STEVENSON. I have never known him to appoint bill for the House bill, and then treat. this as an amendment a Democrat when a Republican would do. If I were in his of the Senate bill? place, I would not. That is a frank statement. That is Mr. STEVENSON. We have that matter under advisement human nature. and we will take the most expeditious ways to get the meas­ Mr. SNELL. And the gentleman has no assurance that ure through and get it to conference. It will have to go to the Speaker of the House would appoint only Democrats? · conference. Mr. STEVENSON. I have no assurance; but from my Mr. BURTNESS. I hope the gentleman will handle the knowledge of him I do not believe he would appoint a matter so that it may go direct to conference. Republican when the President was to select five. .If I Mr. STEVENSON. There is no disposition on the part of thought he would. I would move to strike out that provision anybody to delay the matter a moment that we can avoid. of the bill. Mr. SABATH. Will the gentleman yield? Mr. BURTNESS. Mr. Chairman, will the gentleman yield? Mr. STEVENSON. Yes. Mr. STEVENSON. Yes. Mr. SABATH. Does not the committee have in mind that Mr. BURTNESS. Surely the fact that the organization - this bill should give as much relief to the people in the gen­ of the House is controlled by the Democratic Party had tleman's own State as to the people of Texas or any other nothing to do with this provision in the bill? Was it not State, and was it not for that reason that they have decided written into the bill upon the theory that it was a wise pro­ to give the Speaker the right to name two of the directors, vision, regardless of how the House is controlled? so that they would proceed and provide relief that would be Mr. STEVENSON. Entirely so; and it is a wise provision. general and not alone for the benefit of the banks and the Mr. BURTNESS. I feared from the gentleman's argument railroads? lately that what controlled was the fact that the Demo­ Mr. STEVENSON. That is exactly what actuated us. crats control the organization of the House. There is this about it, this board is to deal with the people Mr. STEVENSON. No. Instead of putting in the old all over the United States. We see in the papers statements provision that he must appoint two Democrats and two as to who is to control it. I want to say that I am not parti­ Republicans, and having the President chasing around to san. I am for good results. We revived the War Finance find a Democrat who was not a Democrat on election day, Corporation and kept it in existence some years. It did a so that we would draw a blank, we thought we better not great service, especially in the South with reference to the say anything about parties and let the Speaker appoint slump of cotton in 1920. The Federal reserve governor is whom he pleases and the President do the same; and if the on here, Mr. Meyer, and I think he is eminently the man President is the same kind of a man that I am-and he was capable of handling this situation. He did it with the War born in this country and grew up under the same surround­ Finance Corporation, and it afforded great relief. I expect, ings-he will appoint Republicans. as far as I am concerned, to indorse him as the head of the Mr. PARSONS. In that case, if the Speaker of the House. corporation. and the President happen to be of the same party, then Mr. PARSONS. Will the gentleman yield? there would be no representation of any other party on the Mr. STEVENSON. Yes. board. Mr. PARSONS. The board of directors under this bill is Mr. STEVENSON. That is true, but this proposition is to be composed of seven members. fair, so far as that is concerned. Mr. STEVENSON. Yes. Mr. COLTON. Mr. Chairman, will the gentleman yield? Mr. PARSONS. Three ex officio and four to be appointed. Mr. STEVENSON. Yes. In order to be fair politically in every way, would it not be Mr. COLTON. Does the gentleman know of any other fair to have four directors of the majority party, or the ad­ precedent where the Speaker of the House ever sent to the ministration party, and three of the minority party? Senate appointees to be confirmed? Mr. STEVENSON. That would be fair, but we have not Mr. STEVENSON. No; but I don't think that invalidates asked for it to go that far. We may do it. We made this it. I know that he has appointed Regents of the Smith­ provision in order to escape the necessity of the President's sonian Institution, and nobody has ever questioned it, and hunting for two Democrats to be appointed, because we feel as Associate Justice Holmes says, to lay a hand on that sure that there would not be any Republican appointed by irreverently is like laying an unsanctified hand on the Ark the gentleman who sits in the Speaker's chair, and we are of the Covenant. equally sure that Mr. Hoover would undoubtedly appoint Re­ publicans. To save the embarrassing situation for theRe­ Mr. COLTON. Those appointments were not confirmed publican President looking out for a Democrat, we made this by the Senate. provision. Mr. STEVENSON. To be sure not, because they were Mr. PARSONS. The gentleman does not assume that the made by the President of the Senate and the Speaker of Democrats are scarce who would be competent to go on to the House, each making three, and six were elected by a this board? ' joint resolution of the two Houses. Mr. STEVENSON. No; but this is not a partisan case. Mr. RAMSEYER. Mr. Chairman, will the gentleman When there was a Democratic President in the chair he yield? had to look for Republicans, and he looked usually for Mr. STEVENSON. Yes. Republicans who were Republicans except on election day. Mr. RAMSEYER. I discussed this matter yesterday. Mr. SHALLENBERGER. Will the gentleman yield? Mr. BTEVENSON. Yes. Mr. STEVENSON. I yield. Mr. RAMSEYER. Has the gentleman since yesterday Mr. SH..J\LLENBERGER. The gentleman mentioned the had time to read the case of Springer against the Philip­ work of the War Finance Corporation, and I agree with him pines? that they did great service. I would like to ask how that Mr. STEVENSON. I have read it very carefully. resulted with reference to loss to the Federal Treasury? Mr. RAMSEYER. I called attention to the fact that the Mr. STEVENSON. There was practically no loss. They court there discussed the Smithsonian Institution and dis­ had some losses, but they made profits enough to cover tinguished a set-up like that from the corporations estab­ them. lished by the Philippine Legislature. Mr. SHALLENBERGER. Does the gentleman believe that Mr. STEVENSON. Mr. Justice Sutherland discussed it to this corporation can be conducted with the same results? his own satisfaction, but all that was obiter dictum. The Mr. STEVENSON. If they find the right men. decision was whether under the organic act these men could Mr. SNELL. Will the gentleman yield? come in and become a board to vote the stock of the cor­ Mr. STEVENSON. I yield. poration. 1822" CONGRESSIONAL- RECORD-- .HOUSE JANUARY 12 Mr. RAMSEYER. · They had authority to vote the stock cause except either by impeachment or a. concurrent resolution of Congress. It has, I .think, always been the accepted construction and to manage both. One was a board of control and the of the Constitution that the power to appoint offi.cers of this kind other was a committee. carries with it, as an incident, the power to remove. I am con­ Mr. STEVENSON. Yes. It all amounted to the same vinced that the Congress is without constitutional power to 11m1t thing. the appointing power and its incident, the power of removal derived from the Constitution. Mr. RAMSEYER. They were corporate bodies. The section referred to not only forbids the Executive to remove Mr. STEVENSON. It all amounted to the same thing, these offi.cers but undertakes to empower the Congress by a con­ and it turned on the statute upon which the court was pass­ current resolution to remove an officer appointed by the President ing. If the gentleman will look at the opinion o:f Mr. with the advice and consent of the Senate. I can find in the Con­ stitution no warrant for the exercise of this power by the Congress. Justice McReynol~ There is certainly no express authority conferred, and I am unable Mr. RAMSEYER. I have read the minority opinion. to see that authority for the exercise of this power is implied in . There is one minority opinion by Mr. Justice Holmes, which any express grant of power. On the contrary, I think its exercise is clearly negatived by section 2 of Article II. That section. after was concurred in by Mr. Justice Brandeis. providing that certain enumerated officers and all offi.cers whose Mr. STEVENSON. Yes. appointments are not otherwise provided for shall be appointed by Mr. RAMSEYER. Reading -the few lines of Mr. Justice the President with the advice and consent of the Senate, provides McReynolds, it is not clear that he takes direct issue with that the Congress may by law vest the appointment of such inferior officers as they think proper in the President alone, in the the majority opinion. He does intimate that the majority courts uf law, or in the heads of departments. It would have been opinion goes farther than necessary. within the constitutional power of the Congress, in creating these Mr. STEVENSON. Yes. There is no question but that offices, to have vested the power of appointment in the President alone, 1n the President with the advice and consent of the Senate, it went farther than necessary, and whenever it' does go or even in the head of a department. Regarding as I do the power farther than necessary it becomes obiter dictum. of removal from office as an essential incident to the appointing Mr. RAMSEYER. Only one justice said so and six jus­ power, I can not escape the conclusion that . the vesting of this tices concurred in the opinion. power of removal in the Congress 1s unconstitutional and there­ fore I am unable to approve the bill. Mr. STEVENSON. The gentleman is a good reasoner; and I am returning the bill at the earliest possible moment wtth the if he will sit down and consider the case, he will say so also. hope that the Congress may find time before adjournment to Mr. RAMSEYER. I have read it over twice and have remedy this defect. WOODROW WILSON. been given no reason to change my views expressed to the THE WHITE HOUSE, June 4, 1920. House yesterday. The CHAffiMAN. The time of the gentleman from South Mr. McFADDEN. Mr. Chair~an, I yield 10 minutes to Carolina has expired. the gentleman from Ohio [Mr. SEmERLING l. Mr. McFADDEN. Mr. Chairman, I yield one minute to Mr. SEffiERLING. Mr. Chairman, as a member of the the gentleman frorri Missouri [Mr. DYER]. Committee on Banking and Currency, I take this occasion to Mr. DYER. Mr. Chairman, I ask unanimous consent to say a few words with reference to this bill. insert in the RECORD as a .part of my remarks the veto mes­ I have heard a great deal said with reference to the causes sage of President Wilson on June 4, 1920, of the Budget bill. of this depression. Some parties before our committee . The CHAIRMAN. Is there objection? seemed to think that some individual was responsible for the There was no objection. depression. I heard. an eminent Democrat from Ohio de­ Mr. STEVENSON. Mr. Chairmallt will the gentleman liver an address one hour in length discussing the causes of yield? this depression and the economic changes. He is a man who Mr. DYER. Yes. is being considered for the nomination for President of the United States on the Democratic ticket. He never intimated Mr: STEVENSON. I would be glad also if the gentleman would insert the vote of the House on overriding it, showing in any manner that any individual in the United States~ no that all of the Republicans voted to override the veto mes­ matter what position he held, was in the slightest degree sage of the President. responsible for the depression. This depression was caused by the World War. It is un­ Mr. DYER. No matter how the House may have voted precedented and so disastrous that unless something is done on the veto, there is no question, Mr. Chairman, but that the the country will be ruined. Presidents of the United States~ regardless of their politics, This bill provides for a method of financing which is a have maintained most jealously their rights to make ap­ much. better method than the methods proposed by many pointments to office and to dismiss said appointees from bills introduced here. Those bills provide for the issuance of office when the facts warrant it under the Constitution of bonds directly by the Government and the use of the pro­ the United States, and which this legislation attempts to ceeds of the bonds in employing labor to erect public works encroach upon the executive branch of the Government. of various kinds. In cases of financing of that character Apparently the majority side is very anxious to facilitate the the taxpayer eventual.ly must pay the money to redeem the enactment of this legislation into law. They have shown bonds, and the assistance temporarily given to labor is again every indication of it, and they are entitled to great praise put upon labor when it comes to'redeem the bonds. Financ­ and credit for the splendid way in which they have gone ing of the character in this bill is different. The Treasury about the legislation which has been recommended by the puts in $500,000,000. The corporation is authorized to sell President and that the country needs and desires. I hope a billion and a half dollars of bonds. The money received they will not delay the enactment of this legislation into from those two transactions is used in the process of a re­ law by insisting upon a provision going into it which under volving fund to take care of financial institutions, railroads, the Constitution of the United States the President must banks that are solvent and insolvent or in the hands of re­ veto. ceivers, to take care of agricultural finance corporations, and VETO MESSAGE-THE BUDGET BILL To the House of Representatives: so on; but in each case where the money is furnished by the I am returning Without my signature H. R. 9783, "An act to pro­ corporation good security is secured by the corporation, and vide a national budget system, an independent audit of Govern­ the debts of the corporation are liquidated by the collection ment accounts, and for other purposes." I do this with the great­ of those frozen assets which must be carried for a period of est regret. I am in entire sympathy with the objects of this bili and would gladly approve it but for the fact that I regard one of time, so that eventually there is no .burden on the taxpayer: the provisions contained in section 303 as unconstitutional. This at all. 1s the provision to the effect that the Comptroller General and the Mr. DIES. Will .the gentleman yield at that point? Assistant Comptroller Gen~ral, who are to be appointed by the Mr. SEIBERLING. I yield. President with the advice and consent of the Senate, may be removed at any time by a concurrent resolution of Congress· a.ftel· Mr. DIES. There is no burden on the taxpayer unless we notice and hearing, when, in their judgment, the Comptroller Gen­ repeat former experiences and instead of administering the eral or Assistant Comptroller Generalls incapacitated or inefficient, act wisely, end up with the usual indebtedness. Then there or has bee~ guilty of neglect of duty, or malfeasance in offi.ce, or is a burden. of any felony or conduct involving moral turpitude, and for no otber cause and in no other manner except by impeachment. ·The Mr. SEffiERLING. I am assuming that this·corporation eft'ect of this is to prevent the removal of these omcers !or any will be properly managed, with able directors, and that they 1932 CONGRESSIONAL RECORD-HOUSE 1823 will examine the securities which they accept. Not only will might be provided for the larger corporations, thereby sav­ all the money be reutrned from the frozen assets but, in ad­ ing a sufficient amount to go to the banks, say, having a dition, there will be suftlcient money made to pay the ex­ capital of $100,000 or less. penses of the corporation. Mr. SEffiERLING. In my judgment, there should be no Mr. DIES. Did not Congress believe that when they limitation in this bill at all as to the amount which these passed the Farm Board act? What has been the result of directors may loan. One of the weaknesses of the bill is that experience? the fear on the part of the people that the directors will Mr. SEffiERLING. This is entirely different. This bill not be able to protect the interests of all who should be provides that when money is loaned the loan shall be ade­ provided for. quately secured. It was said on the floor yesterday that Mr. PARSONS. Is not the experience we have had re­ this bill would be of no benefit to the small manufacturer cently, for instance, during the last two years, suftlcient to or the small business man. That is incorrect. By helping indicate that this will be used largely for the purpose of the railroads, by helping the Agricultural Finance Corpora­ helping those who in some degree are able to help them­ tions, by helping. the banks this bill will release the pres­ selves, and will not help those who need help to a very great sure upon the borrowers, will enable the banks to make degree? additional loans, will enable those loans that can not be Mr. SEffiERLING. I do not think that is the situation at paid to be carried by this corporation until they can be all. If you help the railroads you help the insurance com­ liquidated, and will provide the currency which i& abso­ panies. Millions of people are interested in life insurance. lutely necessary to continue the business of the country. Hundreds of thousands are interested in railroads; hun­ The cause of this depression is that the people are with­ dreds of thousands own bonds and stocks, and life-insurance drawing their money from the banks and hoarding. it. companies are of vital importance to the whole population Something must be done to revive confidence and faith in of this country; also millions of depositors will be protected the future, so that the people will return that money from · by this bill. their strong boxes to the banks, so that the banks can Mr. BLANTON. Will the gentleman yield? continue to make loans and continue to provide money so Mr. SEffiERLING. Yes. that labor may be employed. Mr. BLANTON. The depositors who have lost in over Mr. McCORMACK. Will the gentleman yield? 2,000 banks which have gone broke have lost their money. Mr. SEffiERLING. I yield. It is gone. Practically every railroad in the United States, Mr. McCORMACK. Has the gentleman during the hear­ except a few trunk lines, is busted to-day. They are broke. ings before his committee noticed any evidence of a con­ Look at the trains and Pullman cars as they go along the traction of credit on the part of banks? railroads. They are practically empty. Now, you are fixing, Mr. SEffiERLING. The credit of the banks is contracting through this bill, to take $2,000,000,000 of the people's money all the time, and there is nothing in the world that will that could be loaned by this board to the railroads alone and accelerate that more than the· discussions that have taken put life into their dead securities. Is the gentleman in favor place on the floor of this House yesterday and to-day and of that? Why should the people pay these losses? which will take place to-morrow. If such discussions as [Here the gavel fell.] we have been hearing on this floor are continued, it will Mr. McFADDEN. Mr. Chairman, I yield the gentleman tend further to destroy the confidence of the depositors in two additional minutes. the banks of this country. Mr. SEffiERLING. In answer to the gentleman, I will Mr. LANKFORD of Virginia. Will the gentleman yield? say this: In the first place, I do not believe that all of these Mr. SEffiERLING. I yield. railroads are broke. Their securities are at a very low price, Mr. LANKFORD of Virginia. The gentleman has struck a but that is because there are no operations in the market, most important thing-the fear of banks to loan money and and that is because there is no money available to purchase If the fear of depositors to put money in the banks. As a securities. Now, I would like to ask this question: any member of the committee, does the gentleman think this Member of this House owed some money to a bank and the bill will relieve the banks of the fear of loaning that money loan was called, how would you meet that call unless you and will insure depositors of safety when they put their owned some collateral which you could sell? If you did that, money in the bank? you would have to sell at the market price, which is as far below the actual value in many cases as the price of stocks Mr. SEffiERLING. Yes. There is great fear overhanging was above their actual value in October, 1929. the country that some great disaster is going to befall the Mr. BLANTON. Will the gentleman yield for one further country; that some great bank is going to fail or some great question? railroad is going to fail. People are hoarding their money Mr. SEffiERLING. Yes. for fear that some disaster is about to come. When they Mr. BLANTON. What railroads are making money now? know that there is a great corporation with resources to Why, most of them are being operated at a loss and their protect a situation of that kind, it will revive confidence and tremendous expenses are not met by the little income they many people will return their money to the banks. have. Mr. LANKFORD of Virginia. There is no reason for a Mr. SEffiERLING. The reason is that there is no freight. properly conducted bank to fear to make loans? Mr. BLA..~TON. And there is not going to be any freight. Mr. SEffiERLING. That is correct. The depositors The freight vans are taking that away, and the busses are should have no fear where there is a corporation of this taking their passenger service away. Are we going to re­ kind ready to act, even though adequate security is taken for habilitate all of their losses with $2,000,000,000 of the people's the loans. money? For one, I am not willing to do it. Mr. PARSONS. Will the gentleman yield? Mr. SEIBERLING. We are going to employ people; we Mr. SEffiERLING. I yield. are going to have freight and reestablish the railroads. We Mr. PARSONS. While this places at the disposal of the are going to make them all good before we get through, corporation $2,000,000,000, does the gentleman believe that because this is a great country and we have faith in it. the 5,000 banks, trust companies, building and loan associa­ Mr. DIES. Will the gentleman yield? tions which have failed or are on the border line of failing Mr. SEIBERLING. Yes. will be able to secure from this corporation the same con­ Mr. DIES. Of course, we are all deeply in sympathy with sideration that the insurance companies and railroads will any effort made to support legitimate credit, but does the secure from their loans? gentleman think there would be any danger of this money Mr. SEffiERLING. I am very certain of it. being used to bolster up these watered stocks and securities Mr. PARSONS. Would it not be better to have in this bill and foreign securities? in order that we may know its benefits will go out to th~ Mr. SEIBERLING. I do not think so. We have espe­ States, s.n amendment which would limit the amount that cially provided that no foreign securities shall be taken, and 1824 CONGRESSIONAL RECORD-HOUSE JANUARY 12 the stocks you mention will not be considered at all. [Ap­ Mr. SABATH. Has the President act~d upon the sugges­ plause.] tions of that letter? [Here the gavel fell.] . Mr. EATON of New Jersey. Yes; I had a letter from him Mr. McFADDEN. Mr. Chairman, I yield 15 minutes to the next day in which he stated that this exact point had the gentleman from New Jersey [Mr. EATONJ. been remedied. The comptroller has since maqe newspaper Mr. EATON of New Jersey. Mr. Chairman, in com.mon announcement to that effect, and I have had communications with the entire membership of this House, I feel profoundly from a number of national bankers to the effect that the in­ the importance and _urgency of this legislation. In 1931 we trinsic value of their securities is now permitted to be pre­ had 2,290 bank failures, with deposits of $1,759,000,000, of sented in their reports rather than the absurd and panicky which 410 were national banks. Tnat one item alone raises distress prices which now obtain in the markets. a danger signal that ought to attract the attention and sober .Mr. Chairman, we had in 1929 a tremendous inflation. the thinking of every citizen of this country. ·We had in 1931 an equal deflation. What we are in now is a - Over a year ago, in frequent consultation with representa· period of ;readjustment. tives of banks, both. State and national, I found the be· The member banks of the Federal reserve system reported ginning of an attitude in the minds of bankers that was in the last 12 weeks of 1931 a shrinkage in deposits of very disturbing. In an interview given to the newspapers $2,315,000,000, or 11 per cent, and no doubt the condition of at that time I made the statement that the next major unreasoning fear on the part of the public was mainly re­ calamity which was due in America could be described as a sponsible for this tremendous withdrawal of deposits and bankers' panic, in which the responsible banker would be hoarding in stockings and under mattresses and in safety caught in the flood of fear and mob mentality that is the vaults-a course of. action which places the individual banker curse of our civilization to-day, while at the same time he in the community under conditions where it is "impossible for was beg4ming to be harried, distressed, and driven to des· him to function. peration by the very governmental machineries that were . The local banker has become the keystone in the economic devised for the purpose of guiding, controlling, and safe·· arch of his community. He is the man who has to start the guarding him in his business. young man in business, who has to help the old fellows to I discussed this question with· the Comptroller of the. Cur­ carry on, who looks after the widows and orphans and the rency, one of the ablest, most devoted, and responsible gen· school children, who encourages thrift ~nd encourages build­ tlemen we have in our public service. I even took down a ing. He has accepted this responsibility and has been func­ group of able and experienced bankers, and they presented tioning nobly in it. He deserves and needs the best support their views; but there was nothing done, because up to that and the best backing that the Congress can give him at this time no one was willing to admit that we were in a world present time. crisis; that our economic, social, and political structure was Mr. CHIPERFIELD. Will the gentleman yield? under antagonistic scrutiny and there was danger of the Mr. EATON of New Jersey. Yes. collapse of civilization the world over. Mr. CHIPERFIELD. And he is willing to go on and do it After a while I wrote to the President of the United­ to-day, provided the Comptroller of the Currency will let States, and in that communication I made the following him do it. statements: · Ml·. :b!ATON of New Jersey. That is right. I told the The particular aspect of the banking situation, which I am con.. comptroller, and I have no hesitation in making the public fident is retarding our eco~omic recovery, has to do with thEl rela· tion between the banker, himself, and the governmental author! .. statement, that his inspectors were not functioning properly ties, Federal and State. I understand that it is the practice of under present abnormal conditions, because they were ap­ the national bank examiners to demand that the banks charge off proaching their problems too much in the attitude of mere each six months one-quarter of the difference between the cost of the bank's securities and the present distress market prices. It bookkeepers. They saw only the figures in the books and this practice is continued there is no doubt that it will finally the statute law under whose authority they function. Under result in destroying the banks' usefulness in the community and their compulsion the banks were compelled to write off half 1n placing a great hardship upon individuals. their real estate, 25 per cent of their securities, many, if not To meet this requirement, if the bank has to sell its securities at any price, it helps to establish distress prices for all securities. all, the debts that were perfectly good, except the men could By cutting down its surplus and undivided profits to meet this not pay just now. The result of all this is now equally rule, the public is led to believe that a loss has been incurred obvious and equally dangerous. When a bank makes the where there is really no loss. This creates a danger of a run on the bank in the community where it is placed, reduces the value statement at the first of the year that it has $500,000 of of the bank's shares, and adds to the difficulties of local business. reserves and surplus and capital and another statement the Many banks are carrying perfectly good obligations upon whi-ch 1st of July that it has $200,000, this weakens or destroys the intt::rest is regularly paid and which will be liquidated in full as confidence of the community. It is just as good a bank (Jll ·soon as conditions become normaL If under governmental pres­ sure these notes are forced to be written off as bad debts, or if the 1st of July as it was on the 1st of January, but this kind legal pressure is brought to bear upon the makers of the notes, of statement seems to prove the exact opposite. the result is a deepening of the depression, weakening of confi­ Mr. McCORMACK. Will the gentleman yield? dence,_and in many cases increased unemployment and loss. · By this extravagant write-off of the banks' securities the com­ Mr. EATON of New Jersey. Yes. panies who have issued the securities are prevented from securing Mr. McCORMACK. In other words, most of these so­ more capital and are hampered in giving employment. called frozen debts are absolutely good under any kind of Apart from the general principles which must govern all sound banking, a great transformation has come in recent years in the normal conditions? relation between the bank and the community in which ·it is Mr. EATON of New Jersey. Certainly. placed. The majority of American bankers to-day constitute Mr. CHIPERFIELD. But they can not be collected to­ possibly. the greatest single constructive force for the economic upbuilding of their various communities. By placing these men morrow. under unnecessary governmental pressure they must inevitably Mr. EATON of New Jersey. No; and if this irrational become disturbed in mind, lose their perspective and courage, . pressure continues they can never be collected. The banker and eventually become panic-stricken. In fact, in my judgment, one of the worst conditions now confronting the American people knows that and is willing to go along, but the bureaucratic is this condition of panic in the banker's mind. So far as I administration of State and National Governments has can see, governmental agencies are largely responsible for this been in too many cases slow to realize what is going on in condition of mind. · the world and in the country. In the long period of infla­ Mr. SABATH. Will the gentleman yield for just a short tion they naturally lost the human touch and the human question? responsibility which gives to every money tok~n its real value Mr. EATON of New Jersey. I would like to finish my and meaning. statement first. Then I will be very happy to yield. Mr. DIES. Will the gentleman yield? Mr. SABATH. When was that letter written? Mr. EATON of New Jersey. Yes. Mr. EATON of New Jersey. September 1. Mr. DIES. Does not the gentleman think this is another Mr. SABATH. What year? step toward bureaucracy of a magnitude unparalleled in the Mr. EATON of New Jersey. 1931. history of this country? 1932 CONGRESSIONAL RECORD-HOUSE 1825 Mr. EATON of New Jersey. I do not get the drift of the dition of the unemployed and dependent fu a shorter time gentleman's remarks, but I do not think it is. I am not .than if we were to appropriate a large amount of money to interested in bureaucracy or any "cracy" except saving the be handed out as a dole. structure of our American civilization from an imminent What we are trying to do is to create a condition in which collapse, and if this legislation will help in that direction I all our people shall once again find permanent and complete am for it 100 per cent. prosperity and happiness. We have heard a lot here to-day and yesterday about this [Here the gavel fell.] being helpful to the railroads, as if that were a fault in Mr. McFADDEN. I yield the gentlP.man five minutes this proposed legislation. Here are a few facts about the more. railroads which I would like to present. Mr. EATON of New Jersey. We feel that this legislation Seventy per cent of all railroad bonds and notes are held is only a temporary expedient. The fact is that in this by banking, insurance, and other institutions. There were Nation, if we are to preserve self-government and equal $10,703,000,000 total railroad securities outstanding on De­ opportunity for all, we have got to summon to the considera­ cember 31, .1930. Life-insurance companies held $3,000,- tion of our entire social, political, and economic structure. 000,000, or 28 per cent of these securities. For whom and and its reorganization, the entire mental and moral resources for what were these billions of railroad securities held? of all our people. For the protection of over 50,000,000 policyholders, repre­ Mr. ABERNETHY . . Will the gentleman yield? senting all grades and classes and sections of the country. Mr. EATON of New Jersey. I yield. Mutual savings banks, with 13,000,000 depositors, held Mr. ABERNETHY. I am in sympathy W..th what the gen­ $1,700,000,000 of these securities. Member banks of the tleman is saying about relieving the banks and the rail­ Federal reserve system held $987,000,000 of these securities, roads, but I am wondering if we relieve the banks-and or almost a billion dollars. Nonmember banks held $300,- we started to do something for them some time ago by set­ 000,000. Banks and trust companies in a fiduciary capacity, ting up a $500,000,000 fund-does the gentleman understand fire and casualty insurance companies, universities, hospi­ that the attitude of the banks is that they want to make tals, religious, and charitable institutions held one billion everything liquid? I would like the gentleman to address and a half of these securities. The solvency of our entire himself along that line, for I am wondering how it is railroad system of this country is at stake, and its solvency going to be operated and by whom, and whether or not they affects directly the economic security of practically every are going to help the fellow that we all want to help back man, woman, and child in this Nation. down home who is threatened with mortgage foreclosure, If there is any institution in this Nation that reaches and the banks forcing him to pay his notes, on the theory into every fireside and affects the prosperity and happiness that they must make things liquid. and security of every family, it is the railroad. In 1930 Mr. EATON of New Jersey. Of course, the essence of there were similar loans to these made to the railroads of .good banking is supposed to be liquidity. around $351,000,000. Three hundred and seventeen million Mr. ABERNETHY. But the help we are giving now dollars of this has been repaid. More than one-third of the from the Government Treasury is not the essence of good employees of the railroads are now out of work, and more banking. It is for the purpose of relieving the situation in than one-third of the capital of the railroads is out of work. the country, and I am wondering, when we give these banks · In 1930 the Interstate and Foreign Commerce Committee all this money, what they are going to do with it. of this House published a report on the regulation of stock Mr. EATON of New Jersey. A few months ago, when they ownership of railroads. had gotten the money, I would say that under the guidance In this report it is stated that 160 class 1 railroads in the ·of the principles then obtaining they would have used it to United States with a gross capitalization of twenty-three liquidize and strengthen their banks, without much refer­ billion have over 840,000 names of stockholders on their ence to universal conditions, but to-day the banks are like books. all the rest of us, scared to death, and they will be mighty The Pennsylvania Railroad, one of the most popularly glad to get any help they can, not only to save themselves owned in the country, in 1931 had 243,361 stockholders. but to save society from collapse. They do not want to The largest stockholder had thirty-four one-hundredths of oppress people, they do not want to foreclose mortgages, but ·1 per cent of the total stock, and 30 largest shareholders had they are being forced to on the one h~nd by governmental 4.56 per cent of the total stock. interposition, which has now been modified, and on the I will not weary you with the figures except to say that other hand by continuous waves of fear and lack of confi­ the par value of 46 listed railroad companies in February, dence among the people. 1930, was $5,673,000,000, and in December; 1931, the market Mr. McGUGIN. Mr. Chairman, will the gentlemanyield? value of these shares had gone down to $1,100,000,000, a Mr. EATON of New Jersey. If the gentleman will get me shrinkage of 76 per cent. That is to say, the investor, in­ more time. I have some gems of thought here that I wish stead of having a 100-cent dollar, finds himself with a to get rid of before I sit down. 19-cent dollar. One hundred and eighty-two thousand and Mr. McGUGIN. I am wondering whether they quit that seventy-three shareholders of 17 railroads had a 100 per cent interference because the big banks got into trouble and did cut in dividends in 1931. Three hundred and fifty-four not quit when the little bal1ks got into trouble. thousand nine hundred and fourty-five shareholders in Mr. EATON of New Jersey. When we get through this eight leading roads had reduced dividends. At the begin­ present situation we will have to establish a new foundation ·ning of ·1931, of 31 common stocks paying dividends the for our entire banking structure. As a citizen of the United average rate was 7.2S per cent per $100 share. At the end of States I am ashamed that we have had over 6,000 bank 1931 the average rate was 2.81 per cent, a cut of 61 per cent. failures in the last 10 years. Every bank failure to-day is Now, we must recognize without any reserve the human a disgrace to our Government, to our social system, and element in this terrific depression, both as it appears in idle to our economic leadership, but we keep right on having men and idle money. Every citizen must realize it. I give them, with all their bad results. Bye and bye we will have place to no man or woman in this Nation in my sympathy to find some way of unscrambling the banks. There are, for the suffering and the weak. And I refuse to accept the as we all know, three kinds of banks-first, the commercial idea that in considering remedial economic legislation affect­ bank; second, the savings bank; and, third, the trust com­ ing our banks, our railroads, and our general industrial pany-and under our system or lack of system the banks in structure we are not seeking to alleviate human ·distress he interest of making money have been permitted to con­ ·and serve the individual who is in need. solidate all three of these functions under one management, I am convinced that if we can put our railroads upon the and in addition to that they have tied themselves up with pathway to successful operation, and if we can relieve our a hodgepodge ·Of affiliates and have gone into the· market banks and bankers from the wear and. tear of private and -and speculated, with the result that a great deal of this official fear, we will go further toward alleviating the con- tremendous dissipation of our money throughout the na- 1826 .CONGRESSIONAL RECORD-HOUSE JANUARY 12 tions of the world has been done by the big banks in New securities which 'they themselves had purchased and which York and elsewhere, when they ought not to have touched were not liquid. What transpired? We are not on a gold it with a thousand-foot pole. I do not believe it is in the basis except theoretically. We are on a credit basis. Our best interests of our people to concentrate banking power currency is a credit currency, and therefore, in order to and res·ources in only one center. I am in favor of having increase our currency, our credit has to expand, and when at least 12 centers of banking in this country, 12 centers of our credit structure contracts our currency contracts. What financial resource, instead of 1 on Manhattan Island. was the mental operation of the individual banker? He All our people ought to be placed within easy reach of realized that he had loans that were not liquid on notes of financial support. Some day we will effect a national or­ his customers secured by speculative securities. He knew ganization which will put behind every bank all of the banks, that the securities which he had in his portfolio were not so that there will be no necessity for any guaranty by the liquid, and he became fearful. He said, "Now, what I will ­ Government of the United States, because we will be able do is to try to collect all that I can from my customers and to move from one point to another~ as it is needed, the sup­ loan as little as possible," and each institution was in that port of the entire financial resources of the Nation. There frame of mind. So that the smaller banks could not borrow will then be no need for bank failures, and the credit re­ from their reserves, and the reserves themselves were afraid sources of the whole Nation will flow freely wherever needed to extend loans, were urging their borrowers to pay, and, to carry the business of all the people. therefore, this credit currency that we have went down and Mr: McFADDEN. Mr. Chairman, will the gentleman down and down, and commodity prices of all ldnds collapsed. yield? A collapse as colossal as this had never occurred before Mr. EATON of New Jersey. Yes. in the history of the Republic. Nobody really knew what Mr. McFADDEN. Is the gentleman overlooking · the fact was the matter. The morale of the bankers collapsed. I that we have a Federal reserve system now with 12 separate will give you an illustration. A few days ago a man whom reservoirs? I know went to a large bank. He carried his statement with Mr. EATON of New Jersey. When we started out with him, and he had one which on the present values of se­ the Federal reserve system, which was the second great curities showed he was worth $515,000. He wanted to give forward step made since the Civil War, it was supposed to a note signed by himself and his wife for $20,000. The be organized to safeguard our economic structure, but I bank said," We will loan you $20,000, but you have not only do not believe the most violent champion of that system will got to give us this note but you have got to give us $40,000 assert that it has been an unqualified success under the worth of securities." That is what he had to do in order to terrific conditions of the past two years. For some reason get the money. That has been the mental condition of the it has not been deemed to be big enough. [Applause.] Nor bankers all over the country. has it prevented a concentration of the banking resources of Early this fall it looked as though we would have a finan­ the country which has now reached the point where one­ cial collapse, a destruction of all values except the prob­ half our total banking resources are concentrated in 1 per lematical value of land and natural resources. In that sit­ cent of our banks. uation the President of the United States called together When we return once more to sanity and life becomes some men on the 6th of October. I am not at liberty to go normal again it will be the duty of our National and State into the details of the discussion at that meeting. I am at Governments to see that governmental control takes on some liberty, in view of the fact that I am supporting this legis­ more efficient form than merely closing banks. Prevention lation, to say that I made the following statement. I said: of the creation of weak and unnecessary banks and of un­ I do not know from day to day when any bank in Maryland 1s sound conditions in existing banks, rather than serving as going to fail. I believe that the creation of a corporation such as official undertakers, ought to be the function of Government is mentioned in this bill will restore confidence. I believe 1f we leave this gathering to-night and go down on the portico of the officials. White House and tell the reporters there that we met to-night While we are confronted with failures and, in some cases, and were utterly unable to ofi'er any solution of this credit situa­ panic and weakness we must face the facts with courage and tion, no bank in the United States will to-morrow be free from confidence. Our banking structure as a whole is sound and the danger of a run. We simply must do something to-night, and has back of it the greatest resources of any system the world as far as I am concerned I defer all criticism of the administration. ever knew. These are hard times, but our banks have at this Then I suggested that the President make the statement moment more than seventy billions of resources, the owner­ which he did make, and which included the creation of this ship of which is scattered among more than half of our very corporation which we are considering by this bill. · population directly, and practically our whole population Now, you will probably ask, "Is this the best legislation indirectly. Our bankers have the character, experience, and that could be put together to correct the situation we now capacity to meet the situation if we will give them a fair have?" Do you want to put the Government into business chance and they can be induced to confine their activities and create a situation where the Government will control to banking alone. [Applause.] the banks and the. railroads and other industries of the The CHAIRMAN. The time of the gentleman from New country? I will say," No; I do not want to do that." I say Jersey has expired. that at this time this is the best legislation we can get. Mr. GOLDSBOROUGH. Mr. Chairman, the people of Why do I say so? Mr. Chairman, we are living in a mechan­ this Republic have been through the most trying years in its ized age. We are living in an age when we are worshipping history. At the beginning of 1931 we were confronted with the god of production. The time, God willing, will soon come this situation. On account of our foreign policy, on account when we will recognize the fact that the problem of pro­ of our almost prohibitive tariff, because of the necessity that duction in this country has been solved; that with our labor­ foreign countries were driven to of paying their loans to us saving devices we have sufficient power to produce in this in gold rather than in commodities, Europe had become country enough to furnish all of our people, men, women, deflated, our foreign trade, which largely takes care of our and children of every age and of every class, sufficient to surplus, had been destroyed. Owing to the stock-market keep them not only in comfort but in substantial luxury. inflation in 1927, 1928, and 1929, the liquidity of the banks When that time arrives and if such an emergency as this of this country bad been destroyed. occurs, this is not the sort of legislation which will be offered . Purely commercial institutions, not investment bankers to the people of the country by the Congress of the United but commercial bankers, had gone into the investment States. But at this time the country is controlled very field and filled their portfolios not only with bonds but witb. largely · by the great interests, the great banking interests, speculative stocks. They had loaned on their customers' the great public-utility interests, the great railroad inter­ notes with collateral security of these speculative stocks, ests. I can not help that. There is no way that I can and so when the crash in the stock market came in 1929 change that. We are in an emergency. Something must be the banks of the country were not only loaded up with dis­ done to prevent the destruction of the credit machinery of counted paper which was not good but were loaded with the country, and, in my judgment, this is the best thing we 1932 CONGRESSIONAL RECORD-HOUSE 1827 can get at this time, and for that reason I am heartily in a normal basi5 and the Federal reserve system is function­ favor of the legislation. ing in a normal way these credit situations can be taken When the $500,000,000 credit corporation was agreed to be care of, but when you are out on the ocean, my friends, set up by the bankers of New York and bankers throughout and your ship is sinking, and you have women and children the country, you will remember it somewhat allayed fear to take care of, your lifeboat or your raft may not be safe. for a considerable period of time. By the end of October but" you take it because it is the best thing for 10u at that bank failures had almost ceased. But the moral effect of time. the formation of that corporation expired, for during the If we had this inflation, none of this emergency legisla­ last part of November and the early part of December I tion would be necessary, and practically no tax legislation have never seen a time when those who felt the financial would be necessary, because with the resumption of the nor­ and•credit responsibility of their communities were so de­ mal functions of business the income of the Government pressed and so concerned. would be resun:ed. Mr. GARBER. Will the gentleman yield? Now, of course, you can very readily see that the bill we Mr. GOLDSBOROUGH. I yield. are considering is not the kind of proposed legislation that Mr. GARBER. The total loans of the credit corporation appeals to me spiritually at aU. But I have been in business did not exceed $10,000,000? for 30 years, and I know that in statecraft as well as in Mr. GOLDSBOROUGH. I think that is entirely correct. everything else you have to make compromises; you have I did not know that they had actually loaned that much. to do the best you can, and those who have the power, those Mr. GARBER. So its inadequacy to meet the present cur­ who have the influence, and those who can mold public rent conditions throughout the country is clearly apparent. opinion of the country, have suggested this bill. If we had Mr. GOLDSBOROUGH. It is not only inadequate to meet not gotten it, in my judgment, conditions would have been present current conditions, but its moral effect has expired. much more serious, because there probably would have It no longer has the ability to allay fear, which is really one been a complete collapse of all sorts of credit and our of the major things which must be taken care of. people left destitute. So, as I said before, I am in favor of Now, llere is a corporation with a potential capital stock the bill. of $2,000,000,000. By virtue of its rediscount powers and by Mr. BOYLAN. Will the gentleman yield? virtue of the. fact that it can be used in credit several times, Mr. GOLDSBOROUGH. Yes. that may be expanded many times. In addition to that, it Mr. BOYLAN. Does not the gentleman think that in furnishes to the country assurance that the Government of addition to the provisions already in the bill another one the United States-that is, the people as a whole-will see should be inserted permitting this corporation to loan to to it that the country is not destroyed. I personally have municipalities which are suffering greatly at this time by noticed an entire change in the feeling of thoughtful people reason of the high rates of interest charged on short-term in the last two weeks, especially since it became known that loans? the passage of this legislation was assured. Mr. GOLDSBOROUGH. Well, I sympathize most heart­ What would be the ideal legislation for us to pass? Of ily with the situation described by my distinguished col­ course that is a matter which would be resolved differently league from New York, but I do not feel that that sort of a by different minds. This matter of credit and the flow of provision is legitimately within the purview of this particu­ credit is something I have been studying for at least 30 lar bill. I do feel that if we could pass some legitimate legis­ years, ever since I was old enough to give matters of this lation that would raise the price level and the general com­ kind any serious . consideration. As far as I am concerned, modity level which would allow the factories to open and the great problem that confronts the country, not only of the great masses of the people to get employment and buy­ r~onstruction but of justice, is to raise the price level so ing power that then the conditions in the municipalities that these debts can be made liquid and so that people can. which the gentleman has in mind would very rapidly dis­ pay their debts with money worth approximately the same appear. as it was when they contracted these debts. But that in­ Mr. ROMJUE. Will the gentleman yield? volves an advance in our mental attitude. As far as I am Mr. GOLDSBOROUGH. Gladly. concerned, as far as emergency legislation is concerned, I Mr. ROMJUE. I wish the gentleman would explain this would advocate giving the Secretary of the Treasury a leg­ to me: On page 7 of the bill there appears this sentence in islative direction to issue paper money and buy Government regard to railroads: securities of all kinds to the extent of $3,000,00Q,OOO in the Or aid in the temporary financing of railroads and railways. next 30 days. What would that do? Immediately aU of the bankers of the country would have their confidence Beginning at the end of page 6 the bill reads as follows: restored, every single one of them. An electric current of Within the foregoing limitations of this· section, the corpora­ confidence and optimism would go through the country. tion may also, upon the recommendation and approval of the Inter­ state Commerce Commission, make loans to or aid in the tempo- Those who did not own Government securities would imme­ rary financing of railroads and railways. • diately seek them, knowing the Govftrnment was going to buy them. The proceeds of Government securities would go It seems to me that should not be in the bill, or if it into the banks. The owners of that money in the banks should be in the bill I do not understand the purport of it, would immediately invest it in low-priced securities of all because it is discussing loans and it seems to me there kinds. That would cause the market to rise; that would might be some difference in making a loan or otherwise aid­ cause the unliquid assets of banks to become liquid; the ing in financing. unliquid loans to become liquid; and that, of course, would Mr. GOLDSBOROUGH. It was not intended for tlie inevitably result in the resumption of business and the res­ language to be too broad and I do not think the committee toration of confidence to such an extent that within 30 would have any objection to that language being stricken days everybody would be in a happy frame of mind. In out. That language was in the original bill as it was given less than six months the normal business of the country to us and the purpose was to give the directors of the cor­ would be resumed, and the Secretary of the Treasury could poration a free hand in what was done for the r~oads. feed those securities back into the market and retire this Mr. ROMJUE. I know; but we will appropriate a vast money. That is the sort of emergency legislation you want. amount of money and extend a great amount of credit if That is the thing you want when people are unemployed, this bill becomes a law; and in view of the condition of the walking the streets and starving. But this legislation is the Treasury at the present time, when we come to the financmg best we can get now, with power enough behind it to pass of great industries like the railroads of the country-and it, because the powers that be would not be in favor of the we aU have sympathy for them in their present condition­ kind of legislation I have in mind. ! think we should be very careful, because the proper admin­ Do not misunderstand me. I do not advocate the above istration of this law is going to depend, in my judgment, proposal as permanent legislation, because when we are on very largely upon the board itself, and we ought not to take LXXV--116 1828 CONGRESSIONAL RECORD-HOUSE JANUARY 12 any chances on making mistakes in the legislation and we ment the gentleman just made with reference to positive should not make it possible to dispose of the money in any and direct relief that may come to a small institution in way in which it should not be disposed of. · my own community where, for instance, a loan of $100,000 Mr. GOLDSBOROUGH. I quite agree with the gentle­ or $150,000 or $200,000 would be a very material considera­ man. I call the gentleman's attention to the fact that be­ tion. Does the gentleman believe that in the set-up of this ginning with line 13, on page 7, there is a limitation on the corporation institutions of that sort will come withi.D. Its percentage that can be loaned to any corporation, which purview? was not in the bill ~hen we received it. Mr. GOLDSBOROUGH. I absolutely do. I am sure I am not stating anything I should not divulge Mr. KETCHAM. And there will be some actual assistance when I say that I made a motion to make the loan limitation given in such cases? 5 per cent of the capital instead of 10 per cent; it seemed to Mr. GOLDSBOROUGH. I do. If that is not done, then me that under any circumstances $100,000,000 is all that those that are going to control it will have to break faith should be lent to one corporation, but the motion was lost. with Members of the· House who have consulted them, and If an amendment is offered reducing that percentage · from I have not the slightest idea that they will break faith. 10 to 5 I shall be very happy to support it. Mr. KETCHAM. Following that comment with another . Mr. MAPES. Will the gentleman yield? one along the same line, it is not the purpose of this bill Mr. GOLDSBOROUGH. I yield to the gentleman with that the benefits that are going to come to our individual pleasure. communities shall simply be the indirect effects that are ·. Mr. MAPES. I have enjoyed the gentleman's speech very going to come through the assistance to be given the rail­ much. It has been a very able discussion of the present roads and the very large financial corporations . . situation. The gentleman said that the material effect of Mr. GOLDSBOROUGH. No. the Credit Corporation was little and that the moral effect Mr. KETCHAM. Stich corporations are going to receive did not last very long. I would like t~ have the gentleman's aid, and that is going to be reflected; but we are going to judgment as to how long he thinks the moral effect of this have positive and distinct aid in the form of definite sums · Reconstruction Finance Corporation will last and whether of money allocated to these small institutions, provided they he thinks the set-up here with a $2,000,000,000 corporation, can produce anything that is worthy of being received as with the possible expansion as the gentleman has indicated, credit. will be sufficient to be of real, material help to the credit situation of the country. I would like to have the gentle­ Mr. GOLDSBOROUGH. Speaking as one member of the man's judgment on that. committee, after discussion with those who will . have ma­ Mr. GOLDSBOROUGH. I will say to my distinguished jority control, at least, of t.he corporation, I have no doubt colleague that in so far as this particular measure is con­ about it whatever. cerned, in my judgment it is going to be very ably adminis­ Mr. KETCHA..l\1:. I thank the gentleman. tered. It will not be the measure that would have been my Mr. SIROVICH. Will the distinguished gentleman yield choice, but I believe it is going to be very ably administered, for a question? and by men who will be ambitious in this great national Mr. GOLDSBOROUGH. I yield to my friend from New emergency to be of as much service as they possibly can. York. I am not one of those who think that this legislation is Mr. SIROVICH. The gentleman has made a most inter­ going to be administered in this instance in favor of any esting address, which I appreciate very keenly, and for the particular interest, such as the railroads. I do not believe pw·pose of information one of the gentlemen called atten­ that. I believe in this great national emergency that those tion to page 7,' line 13, in which there is this statement: administering the law, knowing that the eyes of the whole In no case shall the aggregate amount of advances made under country are on them, will do their level best for everybody this section to any one corporation and its subsidiary or afilliated so as to relieve the country from the dreadful situation it organizations exceed at any one time 10 per cent of (1) the authorized capital stock of the corporation plus (2) the aggre­ is now in. gate amount of bonds of the corporation authorized to be out­ Mr. MAPES. I 'do not know that the gentleman caught standing when the capital stock is fully paid in. my point or that I made myself clear. I am interested in getting the gentleman's opinion as to whether he thinks the The gentleman stated that he would be in favor of reduc­ set-up of this corporation is such that there can be any com­ ing that to 5 per cent. parison of the actual, material relief to be afforded by it with Mr. GOLDSBOROUGH. Yes. that afforded by the so-called credit corporation which the Mr. SIROVICH. Let me call the gentleman's attention to bankers established. the fact that in every national bank and State bank the Mr. GOLDSBOROUGH. I do not think so. There was laws permit these institutions to loan 10 per cent of their never any very serious effort made to put that organization capital and surplus to any individual or corporation. There­ into action. As I conceived it at the time, and as I con­ fore it may be very necessary in some bank of the country ceive it now, it was more or less of a gesture preliminary that has a billion dollars of frozen assets to have this pro- to the convening of the Congress and the passage of the vision. . bill we are now considering. I do not know whether I Mr. GOLDSBOROUGH. I personally do not think that ought to make that statement or not, but that is the way any one corporation should have more than $100,000,000. it occurred to me at the time and that is the way it occurs Mr. SIROVICH. Even banks. to me now. It never functioned to any extent. This cor­ Mrt GOLDSBOROUGH. Even banks. The institutions poration is going to have the funds to loan. There is not that the gentleman speaks of are banks of deposit. They any doubt about that. If a bank in your town or in my have other resources than the capital stock. town goes to this corporation with anything that is fit at all Mr. SIROVICH. I said capital and surplus. as security, it can get some money and get it quickly. Mr. GOLDSBOROUGH. They have deposits and can loan · Mr. MAPES. So that in the gentleman's opinion there them. This corporation has nothing to loan except its cap­ can not be any comparison of what is to be accomplished by ital and what it may obtain by rediscounting in the· Federal this corporation with what has been accomplished by the reserve banks. credit corporation. Mr. WILLIAM E. HULL. Will the gentleman yield? Mr. GOLDSBOROUGH. None whatever, in my judg­ Mr. GOLDSBOROUGH. Yes. ment. Mr. WILLIAM E. HULL. I have been trying to study the Mr. KETCHAM. Will th~ gentleman yield? question in a way that nobody. seems to have brought out. Mr. GOLDSBOROUGH. I yield to the gentleman with We are to loan to different banks and railroads this money pleasure. on securities which they will produce, and suppose, for ex­ Mr. KETCHAM. Looking toward the institutions in our ample, the securities do not pan out, what is going to home communities, I ·am particularly interested in a com- happen? 1932 CONGRESSIONAL RECORD~HOUSE 1829 Mr. GOLDSBOROUGH. What would happen would be active control and _ direction of this corporation-and I that the . Government would lose the .money-there is no have in mind especially Eugene Meyer-realize the extent question about that. of the national emergency, realize the extent of the respon­ Mr. WILLIAM E. HULL. That is what I wanted to get sibility which will be placed upon them. I have great con­ at. The Government loses the money in that case. After fidence in the ability of these men. I have great confidence the Government has lost tha money, in your judgment­ in their capacity to . rise greatly at this time. My opinion which I regard very highly-what is the Government going is that when this act is administered it will be administered to do after the money has gone to pot? in a patriotic and American way. [Applause.] Mr. GOLDSBOROUGH. This proposed legislation is to Mr. McFADDEN. Mr. Chairman, I yield 10 minutes to afford positive relief, and is also to tell the people that the the gentleman from Indiana [Mr. HoccJ. Government does not propose to let the credit structure of Mr. HOGG of Indiana. Mr. Chairman, Congress is at­ the country go to pieces, and it is to be administered by men tempting to remedy a situation caused in a large measure · of wide and proven financial experience. That is all I can by greed for profits of too many big corporations. No one say and all that anybody can say. denies the right to an honest profit. America's present de­ Mr. WILLIAM E. HULL. What I am figuring on is how pression has resulted from the ruinous course of certain you are going to get the money out. If you sell a man goods profit seekers who rate labor as a. commodity and whose and he gives you a note, and when the note matures he can course has been directed more in the interest of corporation not pay and you renew it, after a while he has to pay the profits than of the welfare of the American wage earner and note or it is a loss. That is what I want to bring out. If farmer. you loan the money to the banks or the railroads on securi­ OUr economist development and high standard of living, ties that will never be paid, I am not sure where we are fostered by the protective tariff, is the product of education, going. I want to say that I am going to vote for the bill. training, and character of the American people, aided by the Mr. COLE of Iowa. It is not the purpose of the board to wonderful resources of nature accumulated over millions of loan money unless there is a good prospect of the securities years. being paid. A few corporations and individuals occupying strategic · Mr. WILLIAM E. HULL. Oh, that is begging the case. positions in our economic life have been able to collect most What you are expected to do is to take the present assets of the dividends on the effort and enlightenment of this age. and loan money on them with the understanding that they They have exacted from the public "what traffic will bear." will be paid. They have, in the words of the old proverb," killed the goose Mr. COLE of Iowa. The present assets are good, only not which lays the golden egg," in that they have deprived labor liquid. and the farmer of their just purchasing power. Greed can Mr. GARBER. Will the gentleman yield? not be changed by law. The countless statutes of" the United Mr. GOLDSBOROUGH. Yes. States Code attempting to regulate corporate action show Mr. GARBER. Did the committee have any financial how long this problem has existed and how intense it is. experts appear l;>efore it who stated what would probably Let us examine a few specific facts. Since the war pro­ be the peak of these loans? ductivity per person engaged in industry has increased 53¥2 Mr. GOLDSBOROUGH. No; and if we had, I will say to per cent, although the workingman has shorter hours in my distinguished colleague, we would probably have consid­ normal times. During this period wholesale prices declined ered their opinion of very problematical value. slightly while the cost of living very slightly increased. Mr. GARBER. I did not know but that the committee might be disposed, in the exercise of business prudence, to From 1923 to 1927 the average ·annual rate of increase in put a limit on the outstanding loans that might be made at profits of all industrial corporations was 9 per cent. any one time as a safeguard to the Government. Inasmuch While the immense increase of profit came to corporations, as the Government holds the sack and guarantees all the wages on an average increased very little, if at all. Wages transactions, it might be a reasonable provision, it seems is buying power. ·With the huge profits that corporations to me, to put a limit upon the total amount of loans at any were piling up bank deposits were increased, business was one time. unduly expanded, and securities of other corporations pur­ Mr. GOLDSBOROUGH. The provisions of this bill are chased. Stock::-exchange speculations borrowed the money. much more liberal than any permanent legislation would Stock speculations alone cost $12,000,000,000, equal almost justify. This loaning power runs only for one year, with to half the wealth of the New England States. an extension for one year at the discretion of the President. During this time foreign loans to the extent of $15,000,- After that they can not loan any money. It is emergency 000,000 were urged and sold by international bankers of legislation, and we feel it is necessary to rely largely on America for the sake of high profit which the bankers re­ the ability and experience, patriotism, and courage and ceived. To foreign nations and to stock speculation went energy of the men who are going to administer it. much of the profits ot American industry. Mr. SABA TH. Mr. Chairman, will the gentleman yield? The great body of American people is and will ever re­ Mr. GOLDSBOROUGH. Yes. main the one reliable market for American indastry. If Mr. SABA TH. In line 3 of page 6 there is a provision big corporations had been fair enough to divide with the that all loans made shall be fully and adequately secured. wage earners and with the public in the form of lower Mr. GOLDSBOROUGH. Yes; they shall be fully and prices the benefits of the greater productive powers of labor, adequately secured. much of our present economic disturbance would not exist. . Mr. GARBER. The gentleman says that the loans are Wages and prices remaining the same, productive corpora­ to be only made for a period of one year? tions specialized on payment plan,.. installment methods, and Mr. GOLDSBOROUGH. Oh, no; I said that the corpora­ usually exacted a finance fee in a final effort to increase tion can not do business in the shape of mak~g loans after sales. the first year They have to shut down as far as loaning This merely postponed payment and prolonged the day money is concerned after the first year and the possible of retribution. On this unjust basis most farmers were year's extension. . producing at a loss. Farmers· and home ownets were pay­ Mr. GARBER. But during the next few years they are ing the ever-increasing local and State taxes, while bond authorized to renew loans. and security holders often failed to list their property. Mr. GOLDSBOROUGH. Yes. Mr. Chairman, I don't Billions of nontaxed securities are in our land to-day, .and know that there is any reason why I should take up any the nontaxable bond system is a national evil. more time of the committee.. As I indicated or attempted In establishing a Reconstruction Finance Corporation to indicate in the body of my remarks, we are now in the Congress is undertaking in a very practical way to loosen greatest national emergency that the Republic has ever the frozen assets of the banks throug:tiout the Nation. It known. My judgment is that the men who will have the is a proper thing to do, and will help everyone. 1830 CONGRESSIONAL RECORD-HOUSE JANUARY 12 We must not overlook the fact that even in this bill we H. R. 6662 amended the tariff act of 1930 and was the first are treating a symptom and not the cause of the disease. legislative expression of the Democratic majority in the This bill should help the victims and not those who are House upon this subject. responsible for the situation. Greedy manipulators of great It will be recalled that the international bankers led the wealth must learn that consideration for welfare of the labor, fight against the enactment of the tariff act of June 17, the farmer, and the public is greater and above the con­ 1930. They were supported .bY the active opposition of sideration of unjust profits. American capitalists who had invested in factories abroad Capital is entitled to its fair share of profits. Labor is to make big profits out of cheap labor and sell their products human. Upon prices and relative wages paid to labor de­ in our market. pends the economic condition of the United States. It is Following. such leadership, the Democratic Party opposed an easy thing to be generous. It is difficult to be just. and voted against the act, representing to the country that Taxes and bond issues take working capital away from the its rates were iniquitous, unconscionable, and prohibitive. people . In fact, the propaganda from the three sources of opposi­ . England's expenditures rose to one-third of her national tion prejudiced the bill to the country and such misrepresen­ income and her financial system tottered. While local and tations continued up until the time our Democratic friends State expenditures have been running wild, our national assumed control in the House, where all the tariff bills must expenditrires have remained somewhat stationary, but at originate. too high a figure. Up to such time it was an agressive Democracy, bent upon Whenever an item of dubious merit is attacked we hear it slaying the" robber tariff.'' Through her most distinguished said that it is " only a drop in the bucket." But it is Representative from Uvalde, Tex., leading the fight against " drops " which fill the bucket, and countless items should the act, on this floor she told with minuteness of detail how be eliminated. the farmer arose in the morning with a razor blade in one Government bureaus must be. consolidated. The number hand and a cigarette in the other and at every step he took of Government employees in Washington must be dimin­ in his daily rounds the" robber tariff" at his elbow laid ever ished by a substantial percentage. Larger Federal salaries an additional burden until his collapse, when he was hauled must be cut. Many expensive activities of the Government to the house in a hearse while his wife and children, shiv­ must be curtailed. The only way known to man to reduce ering with fright, fled in terror to their hiding place under taxes is to spend less. We must not overlook the fact that the bed. Now, then, gentlemen, since you have obtained two-thirds of our national expenditures go to pay the cost control and have passed a tariff bill, shall we tiptoe and tell of war and national defense. them to come out from under? Shall we tell them that the The Government must meet its responsibility in less ex­ coast is clear? That you have severed the arm that piled penditures and less taxes. Big business must meet its re­ the burden? That you have slain the "robber tariff"? sponsibility by an equitable consideration for the public. That you have repealed the exorbitant, iniquitous, prohibi­ The protective tariff has been unjustly blamed for all our tive rates, that you have removed the main contributing woes. When the Democratic majority last week passed the cause of this depression? new tariff bill in the House it did not change a single rate. No! You have not reduced a single rate. You have not The Reconstruction Finance Corporation is a practical repealed a single rate. The unconscionable, iniquitous, pro­ step to meet an emergency but does not attempt to meet hibitive rates still remain. You have permitted what you the real problem. [Applause.] said was the main contributing cause of tbis depression to Mr. McFADDEN. Mr. Chairman, I yield now to the gen­ remain. The rates on lumber, sugar, cement, and shoes have tleman from Oklahoma [Mr. GARBER]. not been disturbed and they still remain intact in the law. Mr. GARBER. Mr. Chairman, I ask unanimous consent Why this failure to act? Why this sudden silence about · to extend my remarks in the RECORD by incorporating exorbitant rates and tax burdens? Is it because, since the therein certain tables prepared by the Bureau of Economics disclosures before the Senate investigating committee, you in the Department of Agriculture. have concluded to discontinue the leadership of the inter­ The CHAIRMAN. Is there objection? national bankers who are now revealed as free traders for . · There was no objection. the collection of their foreign loans, as, in fact, Gauls who · Mr. GARBER. Mr. Chairman and ·members of the com­ have wrecked the credit of this country through their high­ mittee, the bill under consideration is an emergency meas­ powered salesmanship of foreign bonds to our domestic peo­ ure. It is a part of the credit rehabilitation program of ple that they might reap millions of profits in high commis­ President Hoover, and it is gratifying to see it supported by sions? Is it because you refused to continue your associa­ Members of both parties. With constructive amendments tion with the Benedict Arnold factories which deserted it will become a measure of substantial relief in this emer­ American labor for the cheap labor of foreign countries and gency. Its main virtue will be the restoration of confidence are now demanding open markets here to sell their products? and the consequent influences upon the trade and commerce Gentlemen, you now have your chance. · You have a ma­ of the Nation. - jority of the membership in the House Ways and Means As a safeguard to an equitable distribution of its benefits, Committee. You have a majority in the House. Why did I shall support an amendment insuring more direct benefits you not bring in a bill reducing or repealing .the rates which to the small banks of the country and especially throughout you have been denouncing to the American people as the the agricultural States. The real seat of our trouble is the main contributing cause of the existing depression? . Are low purchasing power of labor and farm products, but in you afraid to go before the country with reduced rates as an emergency like this, time is the essence of the relief to your remedy for unemployment? Are you afraid to an­ be extended, and the bill will do that, as so ably stated by nounce to the people that you propose to give jobs to the the gentleman from Maryland [Mr. GoLDSBOROUGH]. He unemployed at home by purchasing the products of cheap has made an able argument in its support. I am in accord labor abroad? Or is it because the clutch of Raskob with- with many things he has said, but with his inclusion of the holds your inclination? ,. existing tariff law as one of the main contributing factors of Instead of reducing the rates, instead of repealing pro­ the depression I can not agree. hibitive rates, instead of removing the Jtlain contributory The remedy for our unemployment is certainly not the cause of this depression, you soft-pedal and soothingly say purchase of goods from abroad, in patronizing the cheap to the people of this country, ·.. We did not have time to labor of foreign countries, with their lower standard of liv­ give you reduced rates or repeal prohibitive rates, but we ing in preference to giving jobs to our home labor. give you a consumer's counsel! We give you an economic If the rates in the existing law were too high and a con­ international conference! We .did not have time to go into tributing factor to the existing depression, the Democratic the question of rates. Besides, the President would have tariff bill recently reported and passed in this House did not vetoed a reduction or repeal of rates, but in lieu of that we say so. It did not reduce or repeal a single rate. authorize the President to initiate a movement for an in- 1932 CONGRESSIONAL RECORD--HOUSE 1831 ternational economic conference~ with a view to lowering change the rates, and the failure of any proposal in the the excessive tariff rates. So, you see, we have given due bill to reduce or repeal such iniquitous rates will be suffi­ consideration to this phase of the question. Really, now, cient evidence to an impartial public that they did not we have taken care of the question in this broad and states- exist, that the changed conditions in foreign countries have manlike way! " _ · · intensified the necessity of higher rates to protect our own If the bill had any value whatever, it was in the way of a farmers and laboring men in our own market. confession of the Democatic majority that the rule of :fixing Section 3 of the bill created the office of consumers' the tariff rate, namely, the difference between the cost of counsel of the United States Tari::ff Commission, at a salary production at home and abroad, was a practical and equi­ of $10,000 per year, with authority to appoint and fix table one. This rule was embodied in paragraph A of the the salaries of assistants and clerks necessary for the per­ bill. It was the first legislative approval of this rule by formance of the duties vested in them. This creates the the Democratic Party in all its history. In other words, it egg that will finally hatch out another expensive bureau to is a confession of the imperative necessity of this rule to be supported by the tax moneys of the people. It was adequately protect American labor with its standard of liv­ made the duty of the consumers' counsel in all hearings ing from the cheap labor and lower standards abroad, credit before the Tariff Commission to represent the consumers. for the Democratic adoption and legislative recommendation He becomes the special representative of the corisUID.ing of this rule belonging largely to the leadership of John J. classes of the country in fighting the rates before the Raskob, the influential agent for campaign funds of the commission. Democratic Party and the present national chairman of the The district I represent is composed of both consumers Democratic National Committee. · and producers, consumers of steel products in the oil fields, - It will be recalled that during the last national campaign of refinery equipment, but they are producers as well. Who the Democratic nominee for President and the chairman of will represent the independent producers of oil when the the national committee, wo:fking in conjunction, secured the consumers' counsel, representing the big importers; fight telegraphic pledges of a majority of the Democratic Mem­ any proposition for an adequate tariff duty on oil? bers of Congress, assuring the public that the election of We have the producers of a diversified agriculture, pro­ their candidate to the Presidency would not disturb the then ducing poultry, eggs, dairy products, butter, milk, cheese, existing business conditions by any changes in the tariff~ wheat, cotton, com, hogs, cattle. When the consuming cen­ A history of the Democratic Party upon this question ters, through their consumers' leagues, which will be formed, exhibits a changing attitude and policy. It has been for appear before the Tariff Commission with their special free trade, for a tariff for revenue only, and for a competi­ consumers' counsel demanding a reduction of rates on these tive tariff, but then for the first time, we had a definite legis­ farm products, who will be there to represent the unor­ lative proposal to adopt the rule of rate making which has ganized farmers throughout the vast regions of this country? been followed and enforced for a number of years and in the This consumers' counsel will suggest at once the organiza­ fiXing of rates in the tariff act of June 17, 1930. tion of consumers' leagues in all the consuming centers of It will be recalled that such act contained the fiexible pro­ the country which will demand a reduction of their cost of vision, embodied in section 336, authorizing the Tariff Com­ living. They want cheaper butter, cheaper milk, cheaper mission, upon the complaint of any interested party, to make meats, not knowing that the farmers are not getting the cost investigations and determine the difference between the cost of production from such products at the present time and of production at home and abroad upon any article of com­ that their demands should be made from the intermediate merce upon wh.7,ch a rate ·had been laid. The activities of agencies handling such products. the Tariff Commission under the :flexible provision of the act There is just as much need for a producers' counsel before of 1930 may be summarized as follows: the Tariff Commission to protect the rates as there is for a . UNITED STATES TARIFF COMMISSION, consumers' counsel to whittle them down. Washington, Janw.ry 7, 1932. At the present time we have the highest rates protecting SECTION 332 all agricultural products ever given to agriculture and they Investigations instituted------10 are not too high. They are absolutely necessary to keep the Investigations conapleted------7 cheap farm products produced ·from the cheap lands and Investigations pending ______2 cheap labor in foreign countries under lower standards of Investigations dismissed ------1 living out of this market. Without such rates this country 4 would be :flooded with eggs and poultry from China anq Surveys publ~ed------Japan, with milk, butter, and cheese from Switzerland and SECTioN 336 Application: Denmark, with lamb, mutton, and wool from Australia, and Total number of applications received______131 with the cheap cattle and beef from South America, and all the products of the farm. They are at the present time over­ Number of applications in response to which investi- flowing the wall in many instances. The representatives of gations have been instituted______56 Nunaber of applications withdrawn______7 their interests will see that necessary consumers' league<> are Number of applications dismissed______32 organized in this country to compel action by the consumers' Number of applications pend1ng______36 counsel. Those representatives will work in cooperation and conjunction with the consumers' counsel against our own Investigations: farm producers. The consumers' counsel is simply an Total number of investigations instituted______66 agency to keep up a continual fight and controversy over Number of investigations conapleted______39 rates and obstruct" the orderly procedure of the commission Number of investigations disnaissed______9 for the prompt transaction of meritorious business brought Number of investigations pend1ng______18 before it. It is simply a sop thrown to the public, sugar coated with an intriguing name. Having proposed nothing, SECTION 337 Total number of conaplaints received ______absolutely nothing, in reference to rates, it is assumed that 3 it became necessary to propose something of some kind to Number of conaplaints dismissed ______2 offer in the next campaign. Number of investigations instituted ______1 Section 4 is equally as destructive of existing rates as SECTION 340 section 3. It requests and authorizes the President to initi­ Work on the investigation concerning donaestic values-conver­ ate a movement for an international economic conference sion of rates has been in progress for about a year and field work with a view to lowering excessive tariff duties. Here is the is nearing conapletion. very latest evidence of the natural tendency of the Demo­ The records of the commission disclose that since the cratic Party to jeopardize American interests by conferences enactment of the . Hawley-Smoot bill but two Democratic abroad. Supposing such movement was initiated and con­ Members of Congress have requested an investigation to ference called and the representative of the United States 1832 CONGRESSIONAL RECORD-HOUSE JANUARY 12

appeared at such conference, could he hope to cope against UNITED STATES DEPARTMENT OF AGRICULTURE, the nations of Europe, each and all bent upon securing mar­ BUREAU OF AGRICULTURAL ECONOMICS, kets here for their products? Under the language of the bill Washington, D. C. he would be authorized to deterriline what rates in our tariff ITALIAN IMPORT DUTY ON WHEAT, 1915-1931 were excessive and then to trade the reduction of such rates (1) January ·31, 1915, to July 24, 1925: Free. Duty suspended for the reduction of rates in foreign countries. during this period. (2) July 24, 1925: Rate of 7.50 gold lire per 100 kilograms (39.4 It has been generally charged that the Hawley-Smoot bill cents per bushel): was the initiative cause in increased foreign rates for re­ (3) September '13, 1928: Rate of duty increased to 11 gold lire prisal, that such rates especially cost the wheat farmers per 100 kilograms (57 .78 cents per bushel) . their foreign market. - It was, and has been ever since the (4) May 24, 1929: Rate of duty increased to 14 gold lire per 100 enactment of the tariff act, charged throughout the country kilograms (73.54 cents per bushel). (5) June 5, 1930: Rate of duty increased to 16.50 gold lire per that foreign markets for American wheat were lost by reason 100 kilograms (86.67 cents per bushel). of the high tariff rates in the Hawley-Smoot bill, and such (6) August 19, 1931: Rate of duty increased to 75 paper lire per is the general impression which prevails throughout the 100 kilos (107.37 cents per bushel). -country to-day; but such is not the truth. Before the enact­ (Compiled from information furnished by the Division of For­ ment of the 1930 act wheat-consuming countries, as a part eign Tariffs, Bureau of Foreign and Domestic Commerce.) of their postwar program, placed high tariffs on wheat, t-o UNITED STATES DEPARTMENT OF AGRICULTURE, lure the population from the congested districts and stimu­ BUREAU OF AGRICULTURAL ECONOMICS, late a return to the producing sections, to encourage their Washington, D. C., September 1, 1930. own farmers to produce. French import duty on wheat, 1910-1930 The general charge that by reason of the rates in the Equivalent tariff act we have lost foreign trade which has caused the rate in depression is equally false. If we lost our entire foreign Rate per I 00 United Year and date effective kllonams States trade, it would only be 9 per cent of our domestic trade; but (220.46 currency 1 the fact is we have only lost in foreign trade in a peTcentage pounds) (per bushel of60 not greater than the loss of domestic trade in the countries pounds) importing our products. We have not lost trade because of rates so much as we have lost trade by reason of countries Francs Cents losing their buying power. Curtailed purchasing power has 191Q-A. pr. 1-----__ ------_----- _------____ ------7.00 36.80 1921-July 4------14.00 30.52 affected both our foreign and- domestic trade. It is not 1926-Apr_ 6... ______---~---- ______18.20 17.24 reprisal and retaliation; it is the loss of purchasing power 1926: Oct. 18-Jan. 1, 1927, on soft wheat 2 ______10.20 8.08 1927- · and iD.ability to buy. The world depression has affected the Jan. L __ ------18. 20 19.56 United States less than it has other countries, although its Sept. 3.------____ ------___ _ 25. ()() 26.67 Nov. 18.------35.00 37.44 ravages here are almost to the point of destruction. 1929--May 24. _------50.00 53.34 The following table of import duties on wheat from 1913 193Q-May 22.------80.00 85.35 to 1931 from the chief wheat-producing countries of Europe I Conversions made on the basis of par or the rates of exchange prevailing on the was especially prepared by the Bureau of Agricultural Eco­ dates when changes in rates became effective. The equivalent of the average rates for nomics in the United States Department of Agriculture, an any given month or year will vary according to the prevailing rates of exchange. t Special decree authorizing reimbursement to millers of 8 francs per 100 kilograms examination of which will disclose that at a time when our of the duty on soft wheat. rate was 42 cents per bushel the import duty on wheat in Rates obtained from or verified by the division of foreign tariffs, Bureau of Foreign Italy was 73.54 cents; Germany, 42.14 cents; France, 53.34 and Domestic Co!fimerce. cents; Japan, 33.88 cents; Greece, 39.53 cents; Spain, 73.54 Import duties on United States wheat in principal importing cents; Poland, 33.59 cents; Finland, 51.38 cents; Estonia, countries, January 2, 1930, January 2, 1931, and December 52.53 cents. 2, 1931 UNITED STATES DEPARTMENT OF AGRICULTURE, Equivalent in United States BUREAU OF AGRICULTURAL ECONOMICS, currency I Washington, D. C. Countries German import duties on wheat, 1913-1931 Jan. 2, Jan. 2, Dec. 2, 1930 1931 1931 In reichsmarks per 100 Cents per bushel (60 kilos pounds) Cents per Cents per Ce·r.ts per bushel bushel bushel General iReduced C~mven- General Reduced C~nven - United Kingdom______Free. Free. Free. general twnall general tional 1 Italy------73.54 86.75 107.37 ------1----1------GermanY------42.14 2162.07 2 a 162. fJl BelgiumFrance.------______------. Free.53.34 Free.85.35 Free.85.35 1913-Jan. 1-Dec. 31______7.50 5. 50 48. 62 ------35.66 Netherlands______Free. Free. Free. 1914--Jan. 1-Aug. 3 ______7. 50 6.50 48. 62 ------35.66 Aug. 4-Dec. 3L ______Free. Brazil._------• 12. 13 4 12. 91 410. 37 1915 to_l924 ______Free. Japan·------33.88 33.88 33.88 1925-Jan. 1-Aug. 3L ______Free. China_------Free. Free. Free. Sept. 1-Dec. 3L ____ _ Czechoslovakia______24. 17 44. 31 44. 31 7.50 3. 50 48.62 22.09 Austria______1L 03 11.03 55.14 1926-Jan. 1-July 3L ______7.50 3. 60 48.62 22.69 Aug. 1-Dec. 3L ______7. 50 5.00 '6.60 48.62 - 32. 41 2 42. 14 Switzerland. __ ------a 31. 5 6 3. 15 a 3.15 1927-Jan. 1-Dec. 3L ______Greece______e 39.53 e 55.15 155.15 7.60 5. 00 2 6. 50 48. 62 32. 41 2 42. 14 Irish Free Stat-e______Free. Free. Free. 1928-Jan. I-Dee. 3L ______7. 50 6. 00 2 6. 50 48. 62 32. 41 1 4.2. 14 1929-Jan. 1-July 9 ______7.50 5. 00 2 6. 50 48. 62 32. 41 2 42. 14 Sweden·------26.99 2/i. 99 26.99 July Io-Dec. 3L ____ _ a 42.14 Egypt___ ------~------112. 11 7 40.01 7 !24.01-6t68 7.50 16.50 4S. 62 Denmark______J<'ree. Free. Free. 193Q-Jan. 1-Jan. 19.------7. 60 a 6. 50 4.8. G2 2 42. 14 Jan. 2Q-Feb. 10 ______9. 50 6. 50 61.59 42.14 Poland_------33. 59 53.44 76. 34 Feb. 11-Mar. 26 ______9. 50 ------Gl. 59 Union of South Africa.------38.91 38.94 (11) Mar. 27-Apr. 24 ______12.00 ------77. 79 1 Conversions mado at par unless otherwise specified. Apr. 25--Sept. 27------15. ()() 2 ------97. 24 Duty on Durum wheat for manufacture of semolina· and starch1 $0.73 per bushel. Sept. 28-0ct. 25 ______18.50 ------119.93 • Wheat imported under the so-called wheat exchange plan which went into effect Oct. 26------25.00 ------4 1G2. 07 on August 14, 1931, is admitted, until July 31, 1932, at 20 reichsmarks per metric ton (13 cents a bushel). 1 Imports from the United States dutiable at conventional rate; where no con­ • Includes 2 per cent in gold of official valuation, port tax. Conversions made on ventional rate is in effect "reduced general" or "general" rates apply. basis of rate of exchange prevailing on above dates. 1 For imports by registered dealers under customs control: Other imports are 2 Conventional rate not applied since "reduced general" rate was lower. • Conventional rate went actually into effect on July 10, 1929, since' 'reduced gen­ subject to a surtax of $1.05 per bushel. Imports of wheat for seed purposes are subject eral" rate was canceled. to special regulations. • Duty on durum wheat Cor manufacture of semolina and starch, 73 cents per e Includes surtax of 75 per cent of duty. bushel. 7 Plus quay tax of one-tenth of duty. a Duties are on a sliding-scala basis and are assessed in accordance with the price of NorE.-Wheat imported under the so-called wheat exchange plan which went Australian wheat on the London market. - into effect on Aug. 14, 1931, is admitted, until July 31, 1932, at 20 reichsmarks per ' Includes suspended duty of 6d. per 100 pounds (7.3 cents per bushel), applicable metric ton, equivalent to 13 cents per bushel. at anytime. Compiled from information furnished by the Division of Foreign Tarills,-Bureau of 1o Special duty which is equal to the difference between the landed cost and Us. 3d. Foreign and Domestic Commerce. per 100 pounds ($1.64 per bushel.) • 19_32 CONGRESSIONAL_ RECORD-HOUSE 1833 Import duties on United States wheat in principal importing at the present time finds itself unable to mobilize so that it countries, January 2, 1930,- January 2, 1931, and December can take care of the situation that confronts industry and 2, 1931-Continued business. We must now turn to the national·credit and look to it to do that gigantic task that private capital is unable Equivalent in United States currency or unwilling to undertake. This bill simply does this one Countries thing, and outside of that thing most of the provisions of Jan. 2, Jan. 2, Dec. 2, the bill are nothing but the machinery putting into effect 1930 1931 1931 this one provision. That provision is this: We are se::,aregat 4 ing and setting aside $2,000,000,000 of the national credit to Cents per Cfflts per Ceflta per the use of- farmers, industry, and business, with the hope bushel bushel bushel that it will put new life and new blood into business and Spain ___ ------11 73. 54 11 73. M 1173.54 Norway_------Free. Free. Free. industry of this country. If we say we are not going to set C'u ba _____ ------_ 8. 71 8. 71 8. 71 apart the national credit to that extent in an experiment to Finland __ __------51.38 68.58 12 85.73 New Zealand. ____ ------11 30. 42 11 30. 42 u 30.42 try, if we may, to revive confidence in business and in Syria and Lebanon------(H) (16) (16) credit, what other alternative have we to offer? Slowly, in Latvia______---_------_____ ..._------Free. 11 36. 77 17 36.77 1121.34 Indo-China... ___ -----·------18 21. 34 18 21. 34 individual cases, of course, we are resolving ourselves into a Estonia______------••• ------52.53 78.79 80.23 condition of general bankruptcy in this country, because every mortgage that is foreclosed, every bank that fails, u Includes surtax of $0.37 per bushel. u Rate in eiiect until the end of 1931. every receivership that is launched is but another bank­ u Basi.c rate when the current value at port of export ~ ~- 6~. ($1.34) per bushel, ruptcy in that instance. So if we are not going to enact with increases or decreases in duty to counterbalance venations m values. tt 11 per cent ad valorem. this legislation, what other thing are we going to do? Are u 30 per cent ad valorem. we going to justly merit the criticism that has been aimed at 1e 40 per cent ad valorem. 11 Under Government monopoly. the Congress by sitting idly by and trying to do nothing? u Surtax on imports of 2 per cent ad valorem. I do not believe this Congress will do that. I hear criti­ Compiled from information furnished by the Division of Foreign Tariffs, Bureau of Foreign and Domestic Commerce. cism on every hand with regard to the provisions of this bill. i have heard some Members say that its benefits would I am utterly opposed to the submission of our tariff rates have to trickle down from the top to the bottom. That is for adjustment to any international economic conference. the general complaint, and I do not doubt, when another We should not submit our American policy of protection to campaign comes on, but that we will hear some candidates such a conference, especially when it must necessarily be going out demagoguing on this bill. But I dare that same composed of representatives of countries ever seeking our man to come back to this House, when we are all sacrificing market for their goods. The American system of protection legislative principles in order to secure even this kind of is for America and not for foreign countries. We have been legislation, and tell this House he was elected because he liberal purchasers from them. Our purchasing capacity has demagogued on this bill. The membership of this House is been so high as to enable us in the past to purchase liberally making a sacrifice with the hope of helping all. They would of all the luxuries of foreign countri~ilks, satins, the not have any respect for a man who is unfair to them and latest models in dresses, hats, and shoes, diamonds, jewelry, who will not share the burden in times like these. watches, tea, coffee, rubber. Now, I take it there is no dispute as to what is the cause Duty to our own people requires us to buy at home that of our desperate financial, commercial, and industrial con­ which we can produce. Our restoration to prosperity is not dition. I feel certain that overindustrial inflation brought so much dependent upon the expansion of foreign trade as about by the activities of security affiliates of tbe large met­ it is upon the development and expansion of domestic trade, ropolitan banking and financial institutions, combined into on restoring the purchasing power of farm and labor prod­ underwriting syndicates for the purpose of sponsoring new ucts, on getting money into actual circulation. We can not flotations of stocks and bonds to pass out to t~ public,­ do this by intermeddling in foreign affairs or following the along with those that they have brought from other coun­ leadership of international bankers or the Benedict Arnold tries and sold to the public, all of which were sold far capitalists having foreign factories. We should stay at beyond their power of bringing a legitimate return to the home and tend to our own business and let foreign nations investor, have been the cause of our present -collapse, which settle their own controversies. Their antipathy toward us we are trying to cure by this legislation. But that is all has not been caused by tariff rates but by our refusal water over the dam. We can not help that situation now. to cancel their indebtedness. The international bankers We are discovering it now forcefully, but that is not the have ever encouraged them that they would finally effect thing we are trying to deal with in this legislation. such result. They are cancellationists, as well as free trad .. The gentleman from Oklahoma voiced my sentiment when ers, for the collection of their loans. he said the only thing that will bring us back is inflation I voted against such bill because it affords no relief in a of commodity prices, so that we will, with our commodities, period of depression when every consideration should be stand more nearly on a parity with the products we raise given to relieving our prese11t condition. on the farm, with the obligations, contracts, and bonds we With our markets flooded with foreign oils and gasoline, have issued and contracted to pay. and our independent producers being crushed out by the Mr. GARBER. Will the gentleman yield? major companies importing the cheap oils from foreign Mr. BUSBY. I yield. countries, and 200,000 American oil workers out of employ­ Mr. GARBER. I did not say" inflation." I said" restora­ ment, there is no duty placed upon this American product tion of values." for the protection of a truly American industry. Your tariff Mr. BUSBY. Well, I say "inflation." I apologize to the bill, gentlemen, was a confession that your representations gentleman for putting the same thing in different words. It were untrue and that the "iniquitous" rates do not exist. must be inflation or restoration of commodity values back [Applause.] to something near what they were when we made the con­ Mr. STEVENSON. Mr. Chairman, I yield 30 minutes to tracts that we are now trying to meet by the sale of those the gentleman from Mississippi [Mr. BusBY]. commodities. It must be somewhat nearer the price that Mr. BUSBY. Mr. Chairman, I believe we can only in­ commodities were when we issued the bonds we are trying terpret history in the light of conditions as they exist when to pay now by the sale of those commodities. the incident transpires. I believe we can only interpret the Five years ago if I had sold 10 bales of cotton in my sec­ necessities for this legislation and the reason why this Con­ tion, I would have gotten a hundred dollars a bale, or a gress is willing to enact this kind of legislation in the light thousand dollars for the 10 bales. If I had invested that of conditions as we find them in the country to-day. The as a loan on a piece of land, the man who borrowed it crisis has reached such a point where public confidence can would have to sell 50 bales of cotton to-day to repay what only be stabilized by a very gigantic move. Private capital I loaned him as the proceeds of that 10 bales of cotton. 1834 CONGRESSIONAL RECORD-HOUSE JANUARY 12 You wbeat farmers know what I am talking about. Every in taking care of the smaller institutions-banks with frozen other man who produces anything on a farm knows what I assets, the banks with good securities, but such securities as am talking about. Undoubtedly that is the seat of our we now term frozen assets. trouble to-day. Another thing specifically mentioned in this bill is the Mr. BANKHEAD. Will the gentleman yield? railroads. If you will examine the provisions of the bill Mr. BUSBY. I will be very glad to yield to the gentleman. with regard to the railroads, you will find that the Interstate :M:r. BANKHEAD. I generally agree with the gentleman Commerce Commission must first authorize the loan, and from Mississippi in his opinion. I think the gentleman is the most careful scrutiny of the security for a loan to any laying his hand at the root of our real trouble to-day. I railroad or to the receiver of any railroad is provided. We think the gentleman's committee can not more profitably can not go farther because language will not permit. Yet engage itself during the remainder of this session than to some have suggested that this is a bill for the railroads. work out some solution of that proposition. Will it divert We are told that about $150,000,000 of bonds of the railroads the gentleman from his argument if he will give us in a few will mature within the next five or six months. To whom words some idea about the practical way of bringing about will they go to borrow that money in refunding these bonds? inflation of commodity prices? There is no banking instituti,on or banking syndicate that Mr. BUSBY. I will say to the gentleman that it would will lend that amount of money to them. If def-ault is made divert me from the discussion I had expected to make here, on the bonds issued by any railroad, that railroad is des­ but I will say to the House, if you will have the patience to tined to go into the hands of a receiver, to the detriment listen to me for about 30 minutes, some few days from now of all of the people of the country who are interested finan­ I will be glad to go into that subject fully. cially in that railroad, the owners of any of these bonds. To my mind, if a procedure which is not radical or unrea­ Others who will suffer are a million employees of the rail­ sonable were adopted, it would cure the situation to which roads, and on them and their dependents will fall a part you refer and which I am trying to discuss. I can point to of the catastrophe if the railroads are junked and placed a number of allies who hold that belief, the gentleman from in the hands of receivers. Maryland [Mr. GoLDSBOROUGH], the gentleman from North Mr. GA-B.BER. Will the gentleman yield in regard to the Dakota [Mr. BuRTNEss], the gentleman from Iowa [Mr. phraseology of the section? RAMSEYER], the gentleman from Kansas [Mr. STRONG], and a Mr. BUSBY. I do not care to discuss that. number of other Members. In a few words it amounts to Mr. GARBER. It is very liberal language which I thought this: You have got to make gold the basis of our currency in might have escaped the gentleman's attention. such a way that the gold will serve as a measure in the light Mr. BUSBY. We can correct that when we read the bill of commodity prices instead of making commodity prices for amendment. On January 1, 1931, all of the railroad depend on the price of gold. [Applause.] I hope that a bonds outstanding amounted to $10,703,000,000. Seventy per little later on I may have some time, say, 30 or 40 minutes, cent of these bonds were owned by insurance companies, in which to go fully into two propositions. One is the stabi­ banks, trust companies, universities, and other institutions lization of gold as a money basis in the light of commodity that were trying to provide a reserve in the form of an en­ index prices and the other, commodity prices the basis for dowment or otherwise against times when they would need the measure of the supply. and value of our currency. I am a secured supply of money. Twenty-eight per cent of that using my time along a line I did not intend to discuss just amount, or $3,000,000,000, was owned by insurance . com­ now. panies, or indirectly by the 50,000,000 policyholders of those The bill we are now dealing with recites that it is for the insurance companies; $1,700,000,000 of the amount was purpose of restoring industry, helping banking, the railroads, owned by savings banks as security for the savings, small and other institutions that find themselves face to face with and great, of 13,000,000 people who had savings accounts a situation where they must have money to meet pressing in those banks; $1,500,000,000 of these bonds were owned by obligations, which institutions can not find this money in religious and charitable institutions and universities as sav­ priv .a te banking circles. ings· reserves, and so forth; and $1,287,000,000 of these bonds First, agriculture. I have alluded to that. I have told were owned by banks and other institutions of that type. you somewhat of the desperate situation in which we find I never owned a dollar's worth of bank stock in my life. ourselves in the agricultural section of the country from I never owned a share of railroad stock in my life. I am which I come. The farmers are losing their homes. They not arguing for any institution in which I am interested borrowed from the land banks thinking that they could except, indirectly, as I am interested in the public. But I repay their loans with the same price commodities that they can see a great calamity in going out here and criticizing had when they .received the loans. But they find things and having nothing to offer but criticism and a whine and have changed. They find that these amortized payments proposing nothing, but being against everything. Nobody are like a great monster using up the substance of their in this House, I take it, stands squarely behind this bill on lands and then showing no improvement ·after they have principle. There is no " demagogic vote " to be cast on this consumed the substance. So that is one element which bill, my friends. If you vote for it, it is because you are under this bill we are hoping to help. dissatisfied and feel it is a necessity to remedy very dis­ The Senate has proposed and adopted an amendment tressing conditions. It is because you feel that the times which specifically sets apart to agriculture a definite amount and conditions under which we are laboring and which - of the money provided for in this bill. I very much favor face us are driving us to this as an experiment, hoping for that for the simple reason that agriculture is intended to be good to come out of it. On the other hand, if you vote included. It is always argued and contended that agricul­ against the legislation, you will feel that you have not done ture is not well taken care of in an omnibus proposition the best that you could to again try to relieve the country of this kind, and with a great deal of justice, I fear. So the from this very unsatisfactory financial situation. better plan would be, as the Senate has done, to set apart I call your attention to the provision in the bill to help a definite and reasonable amount of the money provided business generally. The gentleman from Texas [Mr. BRIGGS] in this bill specifically for agriculture. suggested that some one had suggested to him that there Another proposition is the banks. The gentleman from ought to be a way for dealing with the funds provided in this New York [Mr. LAGuARDIA] argued yesterday about the big bill so that the individual would have a direct contact in banks. The big banks have taken care of themselves to the borrowing money from this fund. I do not know how we extent that they have siphoned practically all of the assets could arrange for that kind of situation. out from under the little banks throughout the country, and It was largely in the mind of the committee to provide a the little banks are collapsing as a result of that condition. piece of legislation, in cooperation with the best representa­ However skeptical we may be and however doubting we may tions and the best ideas we could get from the hearings and be with .regard to the administration of this measure, we from the witnesses, so as to bring relief to conditions that are writing into this law all of the provisions we can to help are now existing. It is not the purpose to set up an institu- / )

1932 CONGRESSIONAL RECORD-HOUSE 1835 tion to carry on new businesses and to work out new projects the year just ended 2,290 banks have failed. We know that and to evolve new situations so as to set up new business thousands of banks to-day, including some of the largest in enterprises but to try to relieve from present pressing condi­ the Nation, are in little, if any, better condition than were tions so that the institutions could pass on, as they might these 2,290 banks which failed within the last year. be able to do, the benefit to others interested in them and I am friendly to this bill because in section 5 it promises to others interested in the welfare of such institutions. relief to any bank or trust company, building and loan as­ This is very much like the old War Finance Corporation, sociation, livestock credit corporation, and any agricultural and I call your attention to the railroads in connection with or farm association incorporated under the laws of any the War Finance Corporation. State, or any other bona fide financial institution in the - The War Finance Corporation lent the railroads $351,000,- United States, and because it provides for making advance­ 000. Three hundred and seventeen million dollars of that ments upon the deposits in failed banks. However, these amount was repaid to the War Finance Corporation by the provisions, to take care of these small institutions, are only railroads. Thirty-four million dollars of these loans is still so much bait to catch the congressional vote from the dis­ outstanding. This is a concrete instance of what happened tricts of small business unless this bill is amended to pro­ under a very similar piece of legislation. vide that a certain per cent of the assets of the Finance Cor­ We do not know what .will be the workings of this legisla­ poration are used or kept available for small loans. Under tion. We do not know-how it will be administered. I have the provisions of this bill, the board administering this act · heard remarks by Members which would indicate that they could lend the entire $2,000,000,000 to 10 concerns, then · had already executed the defendant in the case before· the other concerns who need money would be left holding _the trial was fairly under way. Of course, if we are going into sack. I am not going to vote for legislation leaving such this with the understanding that nobody is going to be unbridled authority in the hands of a governmental bureau; honest, that everybody is going to be dishonest, that every­ therefore, at the proper time, I expect to offer an amend­ body is going to be unfaithful, that everybody is going to be ment providing that 25 per cent of the assets of the Finance selfish, of course we have failed before we get the legisla­ Corporation must be used for loans of $50,000 or less to tion on foot. However, I do not believe this. It is always institutions whose total borrowings from the corporation presumed in the law that the right is going to be done, and do not exceed $50,000. If some such an amendment can not I am presuming that here to-day. be secured, then for my part let the liquidation go on. This Whatever may be the future of this legislation, whatever bill in its present form is a raid on the Public Treasury and may be the outcome of our recovery, I believe the American a dole for concentrated wealth. If it can not be written into Nation will recover and get back on its feet in a financial this law that small institutions borrowing $50,000 and less way because we have tremendous natural resources. We are guaranteed their fair share, then let big business bear · have the finest and the most productive lands. We have its cross of bankruptcy as individual business for 10 years everything to look forward to when we become disentangled has trod its weary way to the courthouse steps for sale. In from the rules of the game that we have met at the hands of the light of the conduct of governmental bureaus during the banks that have sold us spurious and worthless securi­ the last 10 years, we have no right to leave to a bureau the ties for our savings. discretionary power of lending all of this money to a mini­ We are going to work out of this situation. Our face is mum number of 10 companies. always forward, and we are not going to turn back on this I do not believe that small business has received justice occasion. We may not see the light plainly, but we are from the Government and from American finance. The gong to keep plodding on and driving forward, and the spirit Banking and Currency Committee informs us that 2,290 of the American people is ever a command to face forward banks have failed during the last year. From 1925 to 1930 and drive on, and that is what we are going to do on this the bank deposits of this country increased from $62,000,- occasion. It is what we are going to do in this crisis, and 000,000 to $74,000,000,000, while 5,000 local banks went regardless of the weak-kneed and doubting Thomases, we broke. Since 1925 there have been approximately 8,000 local are going to have enough brave men, enough men with a banks which have been forced to close their doors. Thinking splendid vision and faith in the future, to not let the situa­ of these local bank failures, I here and now place my curse tion discourage them. We are going to continue to drive on upon the national banking department and the rules which until we reach the goal and relieve ourselves of this awful it has followed in the examining of country banks. The · financial condition. [Applause.] most of these closed banks were technically insolvent rather · , Mr. PATI'ERSON. Will the gentleman yield? than actually insolvent. A goodly number of these banks · Mr. BUSBY. I yield to the gentleman. were no more insolvent than are many of the large banks - Mr. PATTERSON. I would like to ask the gentleman from of the country to-day. The note and bond cases of present Mississippi if he regards this measure as a test of this going metropolitan banks are less liquid than the note cases of forward and looking forward to the great glory that the many of these 8,000 closed banks at the time a bank ex- ­ gentleman speaks of? . aminer closed them. Mr. BUSBY. I regard it as a try, and that is a lot better The national banking department sent its examiners out than somebody who sits back and simply grumbles. [Ap­ through the country invading these local banks and enforc­ plause.] ing rules which were an outrage against private credit and Mr. McFADDEN. Mr. Chairman, I yield 15 minutes to the credit for small corporations. These rules completely de­ gentleman from Kansas [Mr. McGuarNL stroyed individual credit. They in turn forced the closing Mr. McGUGIN. Mr. Chairman, I wish to address my of many local banks. These bank examiners went into local remarks to the bill which is before us, commonly known as banks with the demand that paper which was not liqui­ the bill to create a Reconstruction Finance Corporation. If dated at frequent intervals must either be collected at once there are some amendments placed in this bill which will or charged off by the local banke1·. These bank examiners insure a fair. part of the assets of this corporation being used were petty governmental bureaucrats who knew nothing for the benefit of small business as well as big business, I about the value of livestock or a stock of merchandise. am going to vote for it; not because I think it is sound gov­ When they enforced these rules upon the local banks the ernment but because I can not bear to· view the human local banker finally found that the only security which he . wreckage and suffering on the part of millions of innocent could have in his bank. which would be acceptable to the people which is going to follow in the wake of a breakdown national banking department was a note with a certificate in our financial structure at this time. · of stock pinned to it, which certificate of stock was a part · It is not exaggerating the situation to say plainly and of the capital of some corporation that was large enough frankly that the financial structure of the Nation needs only and monopolistic enough to be listed on some gambling a gust of ill wind to cause it to topple and break into a thou­ board of trade. These bank examiners were exceptionally · sand pieces. The report of the committee shows that during bright men. They could tell the value of such corporation 1836 CONGRESSIONAL RECORD-HOUSE JANUARY 12 stock. All that they needed to do was to look in the morn­ into it to justify its enactment with the great body of people ing newspaper and see what it sold for the day before on of this country. the board of trade. The railroads are in distress, and they have brought much This condition robbed agriculture and individual btfsiness of their distress unto themselves. They have had no regard of credit and gave all of the credit facilities of the Nation for the economic law and no sense of fair play or decency over to the large corporations. This easy credit for the stock with their customers, the shippers. They have boldly and in these corporations, which stock was listed on the board defiantly insisted upon receiving as much for hauling a of trade, inflated the values of stock on the board of trade. bushel of wheat for which the farmers receive 40 cents as Millions of people were buying stock because they could they got for hauling a bushel of wheat when the farmers obtain easy credit for that purpose. This naturally inflated received $1.50 a bushel. The railroad management and even the stock market. If I were to lay the principal blame for the Supreme Court of the United States may . decree that the stock-market debacle of 1929 upon any one source, I commodity prices have nothing to do with freight rates, . should lay it upon the national banking department of the but the economic law comes along .and shows its contempt Government of the United States, which enforced these rules for such fallacy. Railroads, endeavoring to receive the same that destroyed the credit of individuals and gave all of the rates for hauling commodities selling at distressed prices credit of the Nation over to gambling. As gambling received as was received when commodities were selling at a much all the credit, gambling was inflated. As legitimate business higher price have destroyed their volume of business. was denied its share of credit, it was deflated. I know of one instance in my district where there are The banking structure would be better to-day if the notes ordinarily 100 carloads of hay shipped from one shipping . held by the banks of America carried with them the obliga­ point every year. This year there was one carload shipped. tions of millions of individual farrpers and business men The rest of the hay was left in the fields. The railroads instead of the stock and bonds of corporations. Now, in the would have received far more revenue if they had cut their . fullness of time, we have found out that the listed stocks and rates half and received more business. Custom mills are bonds are not so liquid as they apparently were during the springing up in my section of the country. They are grind­ great orgy of speculation. If the banks of this country were ing wheat and selling the flour, which has never been car­ holding individual notes by the millions, there would be the ried on a railroad train in any form, to the consumer. moral character of these millions of people behind these Local packing plants are springing up over the country and . notes as well as their financial reliability. That was the old dodging the freight rates. The railroads can never right banking system in this country. This new scheme has not their own house until they bring down their freight rates in worked so well. One of the reasons why it has not worked keeping with commodity prices. If no one were involved so well is because there is no moral character involved in this matter except the management of railroads, I could in it. stand here and watch them go into bankruptcy without Now, to save the wreckage which is the result of this batting an eye. The trouble is that there are millions of greedy, selfish concentration of wealth and robbery of indi­ innocent people who are the victims of the greedy, near­ vidual credit, we find that the Government of the United sighted policy of the railroad management which has no States is called upon to underwrite tlie banking structure of regard for the shippers of the country. Railroad transpor­ the country. If we had stuck to the old-fashioned decen­ tation can not fail without our civilization failing. Every tralized banking system of this country, which operated so civilization which has grown to be the foremost civilization well for 150 years, I do not believe that we would be in this qf its time enjoyed the foremost transportation facilities situation to-day. We can pass this bill and underwrite the of its time. The railroads constitute our principal trans­ present structure; and if the banking system of the country portation facilities and we can not permit them to go down does not abandon the policy which it has followed since the in ruin. )llar, then in the near future big business will be back before Life-insurance companies have their_money invested in Congress, begging for more dole. the securities of railroad companies. If these railroad com­ When the national banking department took on these panies fail, the life-insurance companies will default. If rules, State banking departments followed suit. They could they do not default with their policyholders, they will be scarcely help themselves. We could scarcely find a policy forced to liquidate on their other securities, which are chiefly more permeated with greed and fallacy than the policy farm mortgages; therefore farmers by the hundreds of thou­ which the Government has followed since the war. This is sands represent the innocent victims of this situation. If not so much an indictment against the political party in no one were involved but the management of the life-insur­ power as it is against the people of the United States when ance companies, I should stand by and permit their secur­ they permitted themselves to worship the god of concen­ ities to vanish without the blinking of an eye. The life­ trated wealth and thereby permitted such rule in a democ­ insurance companies have been unduly avaricious. They racy. This same psychology has been controlling both have maintained high rates .upon mortality tables based on political parties. an average span of life of 10 or 15 years less than the In 1920 the Democrats nominated that reactionary, James average life to-day. Cox, of Ohio. In 1924 the Democrats nominated John W. The railroads are the victims of one situation in which Davis, a Wall Street lawyer. In 1928 the Democrats nomi­ Government is to blame; I refer to excessive taxation. I nated AI Smith, the handy man of John J. Raskob, one of do not believe that they are being taxed. more than their the foremost concentrationists of the Nation. Does anyone share of the tax burden, but they in common with all are tl'link for a moment that with any one of these three candi­ being taxed to death by National, State, and local govern­ dates in the White House there would have been a champion ments. of decentralized business at the head of the Government of Government has particularly robbed the railroads when the United States? it taxed them to assist in the building of public highways This principal of concentration has not only taken over which are immediately used by free, unlimited, and unregu­ the banking system of the country but it has furnished the lated commercial busses and trucks that are operating in credit for chain merchandising. To-day we find upon the competitiot;l to the railroads. main streets of every town and hamlet in the United States We can pass this legislation, take money from the Federal instrumentalities, in the form of chain stores, which are Treasury, and bolster up the banking and transportation sucking the financial sustenance out of all of the local com­ structures of this country, and we have only given them a munities. The chain-store scheme is part and parcel of heart stimulant which will keep them alive for but a short this entire program of concentration of wealth and credit. time, if they continue with their present course. The justi- Everyone knows that the principal part of this bill is to . fication for this bill is that we hope against hope, vain bolster up the railroads. Very largely the relief that was though it may be, that we shall reverse our policy of credit tossed into this bill for local and small institutions was put and. we shall reestablish local credit and banking in this · 1932 CONGRESSIONAL RECORD-HOUSE 1837 country, that the railroads will come to their senses, regain some relief to the people of the country, some relief valuable their l-ost volume of business by regulating their transporta­ to them, how can we support it? Because the President has tion charges so as to have a fair regard for commodity prices, asked for it? Because in the sudden hurry of the White that the Government will also protect the railroads from House after we meet in December, a hurry which we have the unfair competition of those parasites of the highways, not heard of until during the last six months? What is it commercial busses and trucks, and that the Government, about the administration of the White House in the last six Federal and State, will quit bleeding business, from the months that would give us confidence in such a hurry? foremost to the smallest, by excessive taxation. I know the.railroads are in a bad shape. They have been In this bill we are appropriating $500,000,000 to start o:ff ~shing to headlong ruin for the last few years. Congress this finance corporation. That is, of course, only a starter. has helped them somewhat. They have had the highest­ We expect to obtain the ·money by this corporation going paid employees of any business institution in the land. They out to the people and selling bonds. The public is going to have had these high-paid .employees who have dictated the invest in these bonds upon the theory that the faith and policy of the railroads. They have dictated daily the man­ credit of the United States is back of it. If individual busi­ ner in which the roads shall be run. Through threats they ness and credit is not reestablished in this country, the rail­ made Mr. . McAdoo give them a raise in salaries of $764,- roads do not regain their lost volume of business, and we do 000,000. Through threats they made Director Hines give not cease following the policy of centralizing the wealth of them an additional raise of $67,000,000. the country these institutions in a few years will be default­ Because I warnecl them in years gone by that their con­ ing on their loans from this corporation, as they are now tinued demands on the railroads would bankrupt railways defaulting on the bonds which are outstanding. Some fu­ and eventuate in making them lose their jobs and put the ture Congress is very likely to be in the position of being railroads out of business; because I so warned them they called upon to maintain the honor and integrity of the accused me of being opposed to labor, when, in fact, I was Federal Government by making good the bonds which are their friend trying to help them. going to be sold by this finance corporation in order to ob­ I knew what was going to be the result; many of their tain sufficient funds to reestablish a financial and trans­ trains have been discontinued, as expenses have overtopped portation structure in this country which has been destroyed earnings, and thousands of railroad men have lost their by the greedy, selfish, avaricious hand of concentrated jobs. This was inevitable. wealth commonly known as monopoly. Take the great Texas & Pacific Railway Co., which runs I do not wish anyone to think that I have any sympathy across my State for a distance of 900 miles and through for this bill because I think there is any permanent relief in my home city. It has discontinued station after station. it. If amended, I will vote for it. He who votes for it can It has discontinued its Western Union operator. It has dis­ do so only in the vain hope that maybe the so-called brains continued its agent here and there and closed up its depot of the country in finance, transportation, and Government in numerous towns along its route, and requires the people will come to their senses and profit by the mistakes of the to go some distance in order to take their fast trains. last 10 years. [Applause.] I rode up here not long ago on their fast train from Texas Mr. SffiOVICH. Now, if the gentleman will yield, I want over the Texas & Pacific and the Iron Mountain to st. Louis, the House to feel that the gentleman is fair and square in and then on the Pennsylvania's crack American to Wash­ his statement. I want to call his attention to the fact that ington. I watched the trains along the way. Most of them out of six banks that have failed, five have been State banks had not enough passengers to pay the crews, much less the and only one has been a national bank. He is crucifying operating expenses. On the highways in sight of the train the national banking system for the benefit of the State I could see a continuous line of freight vans, which have banking system. . taken much of the business from railroads in all parts of Mr. McGUGIN. If the gentleman followed my statement, the United States. The day ·coaches were practically empty. he will remember I said that the State banking depart­ Passengers who formerly rode in day coaches could be seen ments followed the rules of examination forced by the na­ on the highways in their Fords and Chevrolets. There was tional banking department. a bunch of Pullmans, about three people in a Pullman. How Mr. SffiOVICH. There should be one system of banking, long will that be kept up? I went down to Texas for the and that is the national banking system. National banks Christmas holidays. There was a little more traveling then, can not force any rules of examination upon State banks. because people were going home for the holidays, but the State banks are independent of national banks and operate Pullman cars were not full. Some of the lower berths wer& under the supervision of their State banking department. taken, but practically all of the upper berths were vacant. That condition has prevailed here in the United States for Mr. McGUGIN. Will the gentleman dare advocate that quite a while. The railroads have all lost money. Their the national banking department go into his city-New York securities have gone down and down. Who would want to City-and invoke the same banking rules that were invoked own railroad securities now? With their watered stock, in­ upon the· country banks all over the country by the national flations, and high salaries and expenses, their securities are banking examiners? not being bought, and there are a lot of banks that have [Here the gavel fell.] been holding their securities that want to get out from Mr. McFADDEN. Mr. Chairman, I yield 30 minutes to under, and they want the Government to furnish the money. the gentleman from Texas [Mr. BLANTON]. They want the American people to stand this loss. I am not Mr. BLANTON. Mr. Chairman, it is admitted that this going to do it; I am not going to be one who will vote for bill is the bill of our friend from Kansas [Mr. STRONG] with a this bill. There were several things that were admitted .by few minor changes. It was admitted by the gentleman from the chairman of this committee yesterday that confirmed my Kansas [Mr. STRONG] when he spoke yesterday that the bill is opposition to this bill. One admission was that this finance an administration measure, sent him by the administration. corporation could take not only the $500,000,000 of initial If you will examine the bill, Senate No. 1, that was passed stock that the Government pays out of the Treasury Depart­ yesterday afternoon by the United States Senate, and which ment, but it can take also the other autho1·ized $1,500,000,- is now on the Speaker's desk, and which is to be substituted 000-the whole $2,000,000,000, if you please-and loan it to for this present bill when we come to pass it, you will see the railroads alone, and that one admission has lost my vote that it is the Strong administration bill almost identical, for this bill. I am not going to vote for such a measure. I with a few amendments. am not going to pay railroad losses with the people's tax There are a number ·of features about this bill that cause money. If I voted for a measure like that any politician me to oppose it, and with these in the bill I can not support in my district could justly hound me to death before the it. This is a $2,000,000,000 measure. How much money is people in the next primary. I could not justify my vote $2,000,000,000? Is it a small debt to be placed upon the before them. people of this Government when the Treasury has· a deficit Mr. Wn.LIAM E. HULL. And that is the reason the· gen­ of over a. thousand million dollars? Unless it will bring tleman is not going to vote for it? 1838 CONGRESSIONAL RECORD-HOUSE· JANUARY 12 · Mr. BLANTON. I am not going to vote for it because I taxes, both Federal and State, and makes this corporation know the people in my district would not uphold me in that a depositary of public moneys, and permits it to receive vote. Using $2,000,000,000 of the people's money to pay the deposits from individuals, and makes its bonds and obliga­ losses of depreciated, watered stocks of railroads will in no tions lawful investments and otherwise interferes with pri­ way benefit my constituents. vate business, and furnishes a new means to the hundred­ . Mr. STRONG of Kansas. Mr. Chairman, will the gentle­ million-dollar tax dodgers of the United States to evade man yield? paying all taxes to the Government, regardless of tremen­ Mr. BLANTON. I yield to the daddy of the administra­ dous incomes. tion bill. The gentleman has got a similar foster child over No statement is truer than that made yesterday by my in the Senate, just like this child here. c<;>lleague frqm Texas [Mr. RAYBURN] that this board is going · Mr. STRONG of Kansas. The gentleman does not seri­ to be just as good and strong and valuable as the board ously think for a moment that the board of directors would members are themselves. lend all of the money out to the railroads and have nothing Mr. WILLIAM E. HULL. Mr. Chairman, will the gentle­ else for the rest of the country? man yield? . Mr. BLANTON. I do not know. This bill gives them the Mr. BLANTON. I am sorry, but I can not. I had to yield power to do it. I remember things just as foolish and inex­ to the author of the bill [Mr. STRONG of Kansas] because cusable done by other boards. they just used him to get their bill into the basket. I have . Mr. STRONG of Kansas. Well, the gentleman does not the engrossed copy of the Senate bill here, Senate bill No. think so? 1, which I got from the Senate enrolling clerk a moment Mr. BLANTON. Oh, this is the President's bill. The ago. It was just passed last night. It is now on the Speak­ President has already appointed three members of the er's table. It does not provide that the Speaker of the board of directors. The leading one has been dominating House name anybody. It provides that the President of the White House through three different administrations. the United States shall name this entire board, and that The President will appoint the other directors. Do not fool will prevail whenever the bill becomes a law. So the board yourself into thinking that our Speaker is going to name is going to be named by the President. two of these directors. Who is willing to believe that for one Mr. WILLIAM E. HULL. Mr. Chairman, will the gentle­ minute? If our Speaker could name a controlling vote on man yield now? that board of directors I would vote for the bill, because then we would have a board with sympathy toward all the Mr. BLANTON. In a moment. What does our friend people, and one that would grant some relief to all the from Indiana, say about giving such authority to Mr. Hoover. people. I want to tell you what he says about it. The Senate bill, being Senate bill No. 1, which will be Mr. SffiOVICH. Which friend from Indiana? substituted for our House bill whenever we pass it, author­ Mr. BLANTON. The man who runs the Republican Party. izes this supercorporation " to select, employ, and fix the I read from what Mr. WILL WooD, your great Republican compensation of such officers, employees, attorneys, and chairman said. Is there anybody here who denies his au­ agents as shall be necessary for the transaction of the thority? Is there anybody here who denies that WILL WooD business of the corporation." Why should we delegate to it is the dominating Republican chairman for the Republican this tremendous power of Congress? The only limitation Party in this country?. we put on it is that it shall not pay its army of employees Mr. LAGUARDIA. ·Oh, that covers too much territory. more than $10,000 salaries. When we fix the maximum Mr. BLANTON. He speaks with authority here in Re­ salary at $10,COO we at the same time fix the minimum publican United States. He does not control the gentleman salary, for through past experience we have learned that from New York [Mr. LAGUARDIA], but he is the only one of these boards fix the salaries just as high as Congress will the gang he does not control. [Laughter.] Here is what let them. Mr. WooD said about the man who is going to name your We remember the tremendous salaries our United States board. I read from the CONGRESSIONAL RECORD of January Shipping Board paid its army of employees, some ranging 13, 1919: up almost in the President's class. We remember the tre­ Who is at the head of that organization? Mr. Hoover. It is Mr. Hoover that is asking for this appropriation. Now, then, gen­ mendous salaries our Emergency Fleet Corporation paid its tlemen may differ with me with reference to Mr. Hoover. I think army of employees. We remember that cooperatives, han­ he is the most expensive luxury that was ever fastened upon this dling business for farmers, have paid a salary of $75,000 per country. year. We remember the extravagant, inexcusably high sal­ Listen. This is coming from your great Republican chair­ aries paid by the Federal Reserve Board to its army of em­ man, who is still in ·charge of things here [Mr. WooD of ployees. We remember the army of high-priced attorneys Indiana]. Why, if we Democrats had not wrested the au­ that were employed by our various departments, including . ( thority of this House fr~;>m you, he would now be the chair­ the Department of Justice, . before we placed some limita­ man of your great Committee on Appropriations. Here is tions upon them. what Mr. Woon says: You are going to find that this finance corporation is I think he is the most expensive luxury that was ever fastened going to put another great army of employees on the pay upon this country. I think he will continue to be the most ex­ roll of the Government that we will never be able to get off. pensive luxury with which we have had to do if we continue to Who knows how many? Not a member of the committee give him unlimited power. • • • He is an expatriated former citizen of the United States, and he has never found it necessary can tell, because the bill does not limit the number. It to become repatriated. could put 1,000 or 2,000 or 10,0_00 or 20,000 and fix all of their salaries at $10,000 each per annum and we would have That is from Mr. WooD of lndiana. Has Mr. Woon ever to pay it. And when they do that, each one of us here will be retracted that statement? No; he has not. responsible, because it is our duty to put proper limitations Mr. SCHAFER. One question? in this bill. It does not contain proper limitations. And it Mr. BLANTON. Oh, there is no prohibition in this. will be impossible to amend it to put in proper limitations. [Laughter.] Has Mr. WooD of Indiana ever retracted that? While this bill provides that loans can not be made upon No. He still believes it down in his heart. foreign securities as collateral, it further provides, "Such Mr. WILLIAM E. HULL. Mr. Chairman. will the gentle- loans may be made directly upon promissory notes of such man yield? financial institutions," which permits this supercorporation Mr. BLANTON. Not now. to loan this $2,000,000,000 of the people's money to banking Mr. WILLIAM E. HULL. Why not? institutions on their promissory notes, when they are or Mr. BLANTON. In a minute. That was not an impulsive may be the ones with these frozen, worthless foreign securi­ statement made by Mr. WooD of Indiana. You gentlemen ties on hand. have not taken his patronage away from him. He still This bill makes the Government responsible foc this names the postmasters down in Indiana, unless they buy $2,000,000,000 and exempts all of this $2,000,000,000 from their way in through some other source.. You have not CONGRESSIONAL RECORD--HOUSE 1839

sought to punish him for criticizing your Presiifent. ·You magnate-come· swishi.Dg· in ·there ln her silks· and satms-; and have not brought out any women candidates against him, she walked up and said: have you? I do not believe in trying to punish the Repre­ " I want yott to send me a sack o_f flour, and I am not going sentatives of the people for speaking their honest senti­ to bliy any- more substitutes." He said, "I am sorry, but ments. If I can get you one vote~ one. Republican vote, I. obey the law. You have tu buy substitutes or I can not Mr. McFADDEN,_ in your district, ~ou send for me and I will sell you fluur." She said, " I want you to come up to my speak for you. [Laughter and applause.] house and look in my pantry: I have it piled up with They should not be permitted to browbeat you and intimi­ substitutes." date you and cow you. Your stock has risen., in my esti­ Was that carrying out the law? She was wasting the food mation, a hundred per cent when you stan4 up here and power of thi:s Nation under Mr. Hoover's class rules and :fight f01: what you. think is right. [Applause.] regulations. Some of you Republicans are trying to spank my friend When your distinguished former chairmen of the Com­ from Kansas [Mr. McGucrNJ because he is butting. in here­ mittee on Appropriations, Mr. Madden, and Mr. WILL Woon once: in a while. You just keep on butting in. You have a the gentleman from Indiana, got after the Food Adminis­ right to do it. You draw just as much salary as the rest­ trator about leasing this Gordon Hotel down on Sixteenth of the Members. You have just as many perquisites, or at Street and said he paid several thousand dollars more than least you will have if you stay here long enough. You jump the present occupant had paid and allowed the owner to in whenever you want to, and after a while you will be' take out most of the furniture and furnished it with the appreciated. finest furniture from basement to garret, I wanted to defend Now, Wn.L. WooD did not say that spasmodically about Mr. him. I did not like you RepubUcans to be criticizing some­ Hoover. He did. not say it impulsively. He did not say it body who had been appointed by my Democratic President, in the heat of debate. He said it deliberately and premedi­ and I wrote to Mr. Hoover and called his attention to the tatedly. I will show you that he waited a year and then said criticism, and I said, "Mr. Hoover, I know this can not be something else. This was in January, 1919. He waited until so, and if you will give me the facts I will get up on the June 1, 1920, one year and five months, and then Mr. WILL floor and defend you against it." WooD, your great Republican chairman of the great Republi­ I was a young shaver, just like my friend from Kansas, can Party, the gentleman from Indiana, said: but I was butting in even then. I have Mr. Hoover's letter Mr. Chairman, when Mr. Herbert Hoover, expatriated American, in my files, in which he not only admitted the justice of the condescended to come back from the home of his adoption to the criticism but he showed that he had paid nearly twice as \and o! his birth,. he brought back a great number of patent much for that lease as had been paid theretofore, and then catchy phrases. He came here. as you remember, as the pur­ tried to justify it. chasing agent of the Allies. He remained purchasing agent of the Allies until the close of the war, notwithstanding- the fact I have· dUck-hunted with WILL WooD and, aside from being that during all of the time after we entered. the war he was a. Republican. he is one of the finest men I ever saw in a food conservator of the United States. Amongst other things camp. I think a great deal of him. He has very good judg­ during the- war he said that we should save more in order that we might help teed the Allies. After the war was over he said we ment. I tell you he- never spoke truer words in his life than should. save more to help feed starving Europe. As a result of the words" he- spoke in that RECORD. · this propaganda.. we find this spectacle presented at this time that And not one of you ever dared to strike it out of the there are millions and millions and millions of pounds of bacon REcoRD; not one, because you know it was true. and ham and frozen meat taken away from the United States from those who need it here, for the purpose of feeding people Now, here is what is going to happen: You are going across the other side of the sea. to have another expensive board here, and the only limita­ I _quote it from the tion you have placed as to their employees is that they shall Mr. Woo.D o! Indiana said that. not pay themselves more than $10,000 a year and shall not RECORD. pay their employees more than $10,000 a year. When you Do you think I am going to swallow every two-billion-dollar fix that as the- maximum you have fixed the minimum, and , bill that Mr. Hoover sends me in this time of distress and in most of their employees will draw $10,000 a year. I have this- time of depression? I am going to analyze it, and if it investigated these bureaus enough to know that. I have does not appeal to me as it does-to my friend from New York, hardly found· a bureau but what, in additi

Travel Steam- Per Subsist- Station Name Rank Period expenses Railroad Pullman ship diem ence Total ------Baltimore, Md ______$18.60 $13.40 $5.25 $390. ()() $198.75 $53.46 ~679. 46 New York City ______g~: ~!a ~~n~~~~~-~===== -~~~To-~~=====::: .:~~~~~~-~·-~~~~~~~~ 18. 53 ------390. 00 198.75 38. 53 645. 81 Washington, D. C ...... Miss Katharine Lenroot______Chairman.••.••• June 19-July 27, 1931. 37.88 16.28 3. 76 390.00 243.75 33.40 725.(11 Minneapolis, Minn. ___ _ Dr. Herbert E. Chamberlain.. Delegate ______June 17-July 27,1931. 65.78 92.70 22.88 390.00 235.25 74.06 880.67 Washington, D. C •••... Bess Goodykoontz ______do ..••.••.••• June 20-July 14, 1931. 13.10 8.14 3. 75 206.25 225.00 ll. 74 467.98 New York, N. Y ------Dr. Clara E. Hayes ...... _____ do ______.•...do ...... •••...... 21.98 ------390.00 243.75 41.00 696.73 Washington, D. C ______Miss Kathryn Sellers .. _------____ .do______do ______24.80 16.28 3. 76 390.00 243.75 44.30 722.89 Chicago, ffi ______Dr. Sophonisba P. Brecken- .....do ______June 18-July 28, 1931. 29.90 73.54 16.35 390.00 243.75 59.43 812.97 ridge. Cle>eland, Ohio...... Rev. C. H. LeBlond..•.....•.. _____ do•.••.••.••• June 18-July 29, 1931. 22.80 31.05 5.63 390.00 243.75 47.75 740.98 Washington, D. C ••.... Dr. E. Blanche Sterling______.....do .....•••... June 19-July 25, 1931. 22.95 16.28 3. 76 390.00 243.75 19.00 695.74 Do ••• ------Miss .Ana Maria Sherwell ..... Interpreter- June 19-July 27, 193L 31.95 16.28 1.88 39o.oo 195.00 39.45 674.56 . translator. Do •••.••••••••••••• Miss Cecelia R. Mailloux .•.•...... do ...•...... June 19-July 25, 193L 38.59 16.28 5.63 390.00 195.00 39.75 685.25 DO------Gregorio Marquez______do ______June 19-July 27, 1931. 37.48 16.28 3. 76 390.00 195.00 57.09 699.61 Total.______------·····-- 384.34 316. 51 !76.il 4, 886.25 2, 905.25 558.96 9, 127.72

NoTE.-Per diem allowance at Lima only. .Actual subsistence allowance while traveling, in accordance with travel regulations. , Per diem while at Lima: Dr. J. H. Mason Knox, jr.. ------~------.. $15 Dr. Neva R. Deardorff ... __ ----•••• ------••. ------•• ------.------.•.•••••.••• ------. 15 Miss Katherine Lenroot. ____ ...... __ .. _... _. __ •..•...... •• --•••.•• _..•...... __ ...... _..•. _.... __ .... --.. _.•..•.. __ .•. ---.. ---_..••. --.. •• . •• •• 15 Dr. llerbert E. Chamberlain.------15 Bess Goodykoon tz .... ____ .....•••••• _... __ ..•.....•..... -.--.--••...... -----...•.. --...... ----...... -.• ----•...... --•...• ----•. --.--_••••... -· .• 15 Dr. Clara E. Hayes. __ . _____ •.• ------.------•. ------...... 15 Miss Kathryn Sellers ..... ___ . __ ------___ ------.••••• ---.------....: ...... • ------.•.• ------...... 15 Dr. Sopbonisba P. Breckenridge •• ------•. ------.• ------.------.------· ----••••.•••• ------15 Rev. C. H. LeBlond ___ .. ____ ------...... ------...... -----....• ------.------15 Dr. E. Blanche Sterling __ ------·------.. --.------__ .•.• ------·· 15 Miss .Ana Maria Sherwell. _.. ------______••.. ------.... ------...... ------___ ------12 Miss Cecelia R. Mailloux ... ------.• ------...... ------.. ------.. ------12 Gregorio Marquez ...... •.....•.•. _.• _••.••.•.•. _••.•.... --.-•••• --.•..•. --•.. --... ---•..••.•.•.. --.. --... --.••...... -.--.••.••.•. ---••••.• -----•.... _.. _._.- 12 Mr. BLANTON. Mr. Chairman here is another conference we had last year that cost $6,700:

Sixth International Congru! of Militarv Medicine and Pharmacv, The Hague, Netherland&

Travel Railroad Pullman Steam- Per diem Total Station Name Rank Period expenses ship

Portland, Qreg ______Col. Ralph A. Fenton ______Delegate ______Apr. 8-July 5, 1931.._ $44.82 $256.86 $69.17 $427.50 $298.50 $1,096.85 Carlisle, Pa______Col. Charles R. Reynolds _____ .....do ...... June 1-June 29, 1931.. 24.80 35. ()() 284.19 397.25 741.24 Baltimore, Md____ ------Col. F. H. Vinup __ ------_____ do______June 2-July 18, 1931.. 42.05 51.40 5. 25 276.75 406. ()() 781.45 Washington, D. C______R. C. Williams, Assistant Sur- _____ do .. ------June 2-July 17, 193L_ 41.90 51.08 5.63 286.50 325.25 710.36 geon General. Annapolis, Md... ______Capt. James C. Pryor...... •... do ______June 2-Aug. 7, 1931. .. 88.66 70.15 3.00 292. 75 328. ()() 782.56 Boston, Mass______Edgar E. Hume (major) ______do ______Apr. 30-0ct. 24, 1931. 175.65 143.02 29.25 427.50 647.00 1,422. 42 New York City ______WilliamS. Bainbridge (com- _____ do ______May 27-Sept. 3, 1931. 94.68 34. ()() 576.50 460.50 1, 165.68 mander). -·----·-1------lr-----~------1 ------11------Total______------512. 56 641. 51 112. 30 1 2. 571. 69 2, 862.50 6, 700.56 I Per diem $6 in United States, $5 aboard ship, $7 while traveling in Europe, and $15 per diem while at The Hague. (Pu}}lic, No. 869, 71st Gong., p, 31, approved Mar. 4, 1931.) Mr. BiaANTON. Mr. Chairman, here is another conference last year that cost $13,796: International Technical C011.8Ulting Committee on Radio Communication, Copenhagen, Denmark

Station Name Travel Railroad Fullman Steam- Per diem Total · Rank Period expenses ship ------l------~------1------1------l·------~------~------Washington, D. 0 ...... Chas. G. Mcllwraith ______Technical assist- May 12-Jnne 8, 193L $61.93 $51.56 $7.50 $336.60 $388.75 $846.34 ant. Maj. Kenneth B. Warner 1____ ------· ______------Do______Vinton Chapin______Secretaey______May 11-Aug. 18, 1931 67.47 77.11 11. 12 343.85 335.00 834.55 Do______F. L. J. Dumont------~------Translator-inter- May 11-June 27, 1931 59.52 73.68 16.22 350.85 396.25 896. 52 London, England ______preter. ' H. R. TurkeL_ ••••••••••••••• ____ .do ___ ------May 21-June 27, 1931. 9.58 85.25 180.00 274.83 Washington, D. C ______A. L. LebeL------·---- Interpreter...... May 12-June 27, 1931. 50.65 -·-·n:oo· ----2-ios· 245.85 302.75 693.96 Do...•••••• ____ • ______• __ Marion E. Carter ______Stenographer____ ..•.•do ______43.96 28.78 3. 76 350.85 292.75 720.10 Do ..."! . ___ •••• ____ --~----- ___ _ Mrs. Fina M. Howell ______do ______May 11-June 18, 1931. 60.05 38.78 3. 76 345.85 275.25 723.69 Do ... ____ .•....••••••• ------. Alyre J. Gallant ______do ______May 12-June 'l:l, 1931. 47.94 72.66 22.05 34{). 85 324.25 BfJl. 75 Do.. ______..•. ------••.•.. Wallace H. White, jr______Chairman...... May 11-June 26, 1931. 59.23 46.90 3. 76 345.85 551.25 1, 006.99 Do ______...••• _•••• __ • ______John H. Dellinger______Delegate •...... May 12-June 27, 1931. 36.07 51.55 7. 50 346.35 530. ()() 971.47 Do .. _._._. ____ .• ______.• ______Do._. ______...•• ______• ___ _ Charles Byron Jolliffe ______.....do ...... May 12-June 2-6, 1931. 55.05 liL 56 5. 63 355.85 506.25 97(.34 Irvin Stewart. •••••••••••••• __ Technical as- Apr. 29-June 26, 1931. 38.92 ll4. 7o as. 86 318.10 526.25 1,033.83 sistant. I No account received. 1842 CONGRESSIONAL RECORD-HOUSE JANUARY 12 Intemational Technical Conmlting Committee

Station Name Rank Period Travel Steam- expenses Railroad Pullman ship Per diem Total ------Washington, D. 0------Gerald Connop Gross______Technical as- May 12-June 27, 193L $43.98 $57.07 $20.58 $350.85 $386.25 $853.73 sistant Do ______------____ ---- Lieut. Commander E. Mount _____ do •• ------May 11-July 12, 193L 57.00 51.56 3. 76 343.60 390.00 845.92 Webster. Do ______------___ _ Lieut. Commander Joseph R. _____ do______May 1G-June 26, 193L 51.62 ~42 • 75 346.35 390.00 832.14 • Do ______Redman. Lieut. Wesley T. Guest ______do __ :______May 9-June 9, 193L_ 56.11 51.56 3. 75 350.85 376.25 838.52 Paris, France.------Lieut. Thomas H. Maddocks. _____ do ______May 2~June 11, 193L 11.88 63.06 14.98 44.10 237.50 371.52 Do.------Rene X. Devaux CharbonneL Translator-inter- _____ do.------26.12 95.87 27.51 115.50 265.00 preter.

Total._-----______------__ ------__ ------___ ------~----- 837.08 1, 042.48 210.54 5,201. 85 6,504.25 13,796.20

Vinton Chapin: Per diem of 10 while away from Washington, except while at London en route to Copenhagen, $15; aboard ship $5 per diem. A. L. Lebel: Per diem of $8 while away from Washington, $5 aboard ship, and $12 while at London en route to Copenhagen. Rene X. D . Charbonnel: Per diem of $6 while away from Paris. Irvin Stewart: Per diem of $15 while away from Washington, $5 aboard ship, and $10 while at Copenhagen. Mrs. F. M . Howell: Per diem of $8 while away from Washington, $5 aboard ship, and $12 while at London en route to Copenhagen. Alyre J. Gallant: Per diem of $8 while away from Washington, $5 aboard ship, and $12 while at London en route to Copenhagen. Marion E. Carter: Per diem of $8while away from Washington, $5 aboard ship, and $12 at London en route to Copenhagen. C. B. Jolliffe: Per diem of $15 while away from Washington, $5 aboard ship, and 20 at London en route to Copenhagen. J. H. Dellinger: Per diem of $15 while away from Washington, $5 aboard ship and $20 at London en route to Copenhagen. Lieut. T. H. Maddocks: Per diem of $10 while away from Washington, $5 aboard ship, and $15 at London en route to Copenhagen. Lieut. W. T. Guest: Per diem of $10 while away from Washington, $5 aboard ship, $15 at London en route to Copenhagen. Lieut. Commander E. M. Webster: Per diem of $10 while away from Washington, ~5 aboard ship, $15 at London en route to Copenhagen. C. G. Mcllwraith: Per diem of $1 0 while away from Washington, $5 aboard ship, $15 at London en route to Copenhagen. Gerald C. Gross: Per diem of $10 while away from Washington, $5 aboard ship, $15 at London en route to Copenhagen. Lieut. Commander J. R. Redman: Per diem of $10 while away from Washington, $5 aboard ship, $15 at London en route to Copenhagen. F. L. J. Dumont: Per diem of $10 while away from Washington, $5 aboard ship, $15 at London en route to Copenhagen. H. R. Turkel: Per diem of $8 while away from London, $5 while aboard ship. W. H. White, jr.: Per diem of $15 while away from Washington, $5 aboard ship, $20 while at London en route to Copenhagen. (Public, No. 612, 7lst Cong., p. 10, approved Feb. 6, 1931.) Mr. BLANTON. Mr. Chairman, here is another that cost $10,764: Fourth World'& P

Travel Railroad Pullman Sshi~p • Per diem_ Subsist- Total Station Name , Rank Period expenses ence ------l------l------1------·1------1---·+---' Milwaukie, Oreg ------F. H. CockelL.______Delegate ______July 3-Sept. 20, 193L.. $7. 55 $170. 26 $61. 51 $270.00 $250.75 $31.55 $791.62 Syracuse.z~· Y ------W. A. Schleit. ______do ______July 1(}-Aug. 9, 193L... 44.91 20.79 5. 31 192.75 12.75 276.51 Omaha, Nebr ______E. F. Howe ______do ______July 8-0ct. 16, 193L___ 12.70 99.99 26. 63 600. 00 101. 75 17. 10 858. . 17 Washington, D. C ______R. R. Slocum ______do ______July 8-Sept. 20, 1931.... 19.68 28.78 3. 76 447.50 249.50 4. 65 753. h7 Do------~------Dr. John R. Mohler ______do ______July 8-Sept. 3, 193L___ ------12.50 447.50 ------460. 00 Deltsvill~ Md______Dr. Morley A. Jull ______do______do_------16. 41 28.78 7. 50 447. 50 194.00 3. 75 697.94 Eeattle, wash ______S.D. Sanders ______do.------~-- June 20-Aug. 30, 193L. 40.89 106.93 61.27 300.00 206.25 48.95 764.29 Chicago, TIL ______W. F. Priebe ______do ______July 6-Aug. 17, 193L.. 3. 75 77.90 18.00 447.50 169.50 6. 90 723.55 Cincinnati, Ohio ______Carl Holmes~------·------Springfield, Ohio ______George Cugley ------Delegate ______July 1(}-Sept. 6, 1931.. .. ------50.54 16.37 615.13 193.00 1. 50 876.54 Greenwich, R. !______Harry R. Lewis ______do ______July 8-Sept. 3, 1931..... 84.00 ------84.00 Silver Lake, lnd______C. I. Bashore ___ ------_____ do ______July 8-Sept. 4, 1931_____ 3. 75 76.09 8. 25 447.50 249.50 8."05- 793.14 Enid, Okla______Mrs. Lucy Garber __ ------_____ do ______July 4-Sept. 6, 193L___ 35.84 135.99 19.13 «7. 50 248. 25 27.25 913.96 St. Paul, Minn______Harold A. Nourse ______.•...do. ______July 7-Aug. 19, 193L... 6. 50 120.08 25.50 447.50 239.50 13.05 852.13 Urbana, ill ______Dr. Leslie E. Card ______do ______July 7-Bept. 7, 1931..... 30.63 87.70 ·18. 23 447.50 247.00 17.95 849.01 Cornwall, N. Y ------D. Lincoln Orr ______do ______July 8-Sept. 4, 1931..... 5. 18 18.52 . 75 447.50 252. 50 7. 55 732.00 Manhattan, Kans ______Arthur 1\1. Peine ______do ______July 7-Sept. 5, 1931..... 9. 95 103.47 27.38 189.75 7. 65 338.20

Total ______------321. 74 1, 138.32 299. 59 5, 812. 63 2, 984.. 00 208. 65 1 10, 764. 93

t No account received. Actual and necessary travel and subsistence expenses in accordance with the provisions of the Standardized Government Travel Regulations, while in the United States; $5 per day aboard ship, and $7 per day while in Europa. (Public, No. 78, 71st Cong., p. 29, approved Mar. 26, 1930.) Mr. BLANTON. Mr. Chairman, here is another that cost $10,764: International Conference on the Limitation of the Manufacture o! Narcotic Drugs, Geneva, Switzerland

'!'ravel _Steam- Subsist- Station Name Rank Period expenses Railroad Pullman ship Per diem ence Total ------Washington, D. C ______John K. CaldwelL ______Chairman ______May 8-Aug. 2, 1931... $60.77 $80.84 $27.96 $604. ()() $1,013.75 $53.90 $1,841.22 Berne, Switzerland..... Winthrop S. Greene______Secretary------May 25-July 18, 193L 15.13 23.25 ------497. ()() ~82 545.20 Washington, D. C ______Harry J. A.nslinger______Delegate ______May 11-Aug. 8, 193L. 36.68 20.65 455.00 962.50 1,474. 83 Do ______Walter L. Treadway ______do. ______May 13-July 31, 193L 42.89 54.71 5. 63 455.00 940.00 1,498. 23 Los Gatos, Calif ______·Sanborn Young ______do ______Apr. 3(}-0ct. 2, 193L. 34.63 244.62 78.01 465.00 1, 215.00 2, 037.26 Charlotteville, Va ______Lyndon F. Small.-----~----- _____ do ______May 12-Aug.19, 193L 39.69 67.67 9. 68 455.00 558. 75" ------1,130. 79 New York City ______John D. Farnham______Technical ad- May 13-July 31, 193L 33.60 51.36 19.84 455.00 741.25 1, 301.05 viser. Do ______Lawrence B. Dunham ______do ______Apr. 27-Aug. 17, 1931. 45.46 51.58 8. 93 455.00 603.75 1, 164.72 Washington, D._c ______Marcia Eberlein ______Stenographer____ May 12-Aug. 28, 1931. 57.14 51.36 10.81 455.00 669.50 1, 243.81 Do._------Viola Ratcliffe __------_____ do______May 12-July 29, 193L 40.01 51.83 14.55 455.00 493.00 1, 054.39 Do ______Edna M. Frank______do ______May 12-Sept. 8, 1931. 61.43 31.36 12.68 455.()9 589.50 1, 169.97 Berne, Switzerland _____ Nathan Medofsky __ ------Clerk.------May 26-May 27, 1931. .68 8.97 ------1.95 11.60 TotaL ______------__ ----____ ------______------______------_ 468.11 758.20 188. 0914, 709. 00 8, 28~oo· 65.67 14,473.07

Harry J. Anslinger: $15 per diem while away from Washington, $5 aboard ship. Sanborn Young: $15 per diem while away from Washington, $5 aboard ship. John K. Cal jwell: $15 per diem while away from Washington, $5 aboard ship. Walter L. 'I'readway: $15 per diem wbJle away from Washington, 5 aboard ship. Winthrop S. Greene: $10 per diem while away from Berne. Lyndon F. Small: $10 per diem while away from Washington, $5 aboard ship. John D. Farnham: $10 per diem while away from Washington, $5 aboard slup. Lawrence B. Dunham: $10 per diem whlle away from Washrngton, $5 aboard ship. Viola Ratcliffe: $8 per diem while away from Washington, $5 aboard ship. Edna M. Frank: $8 per diem while away from Washington, $5 aboard ship. Marcia Eberlein: $8 per diem while away from Washington, $5 aboard ship. (Public Resolution No. 135, 7lst Cong., approved Mar. 4, 1931.) 1932 CONGRESSIONAL RECORD-HOUSE 1843 Mr. BLANTON. Mr. Chairman, here is the big C. Bascom Slemp delegation and conference last year that cost $23,190: International Exposition of ColoniaL and Ooerseas Countries, Paris, France

Travel R ilr d Pullman Per diem Station Name Rank Period expenses a oa Ste~m-ship Total ------·1------1------11------J------Washington, D. o ____ _ C. Bascom Slemp______Commissioner general_____ Aug. 29, 193Q-Oct. 3, 193L $51. 40 $110. 33 $15. 03 $1, 528. 75 $1, 891. 25 $3, 596. 76 Do ______------Charles H. Burke______Commissioner------Aug. 29, 193(}-0ct. 30, 193L 52. 27 34.42 7. 51 605. 63 I1, 925. 25 2, 62.5. 03 New York City ______Miss Tucksie Amis ______Assistant hostess ______Apr. 7, 1931-July 25, 193L 88.40 17. 25 ------24.3. 65 441. 25 790. 55 Do ______------Do------~~ ~:;g~ccoDiien- ::::::::::::::::::::::::::: -~~-~o~~~~~~~~--=-::::: :::::::::: :::::::::: :::::::::: :::::::::: :::::::::: :::::::::: Borah. Miss Clara Brent A. ------_____ do ______------DO---- ~ ------Bowen. Richmond, VY,------Charles K. Bryant ______Architect ______Jan. 5, 193L------10. 00 ------21l4. 57 ------30!. 57 Do ______------Percy Jewett BurrelL _____ ------No account received------New York City______Thomas Claffey______Custodian------.----- Mar. 17-Sept. 10, 193L___ 29. 37 28.14 ------286.13 ------343.64 Washington, D. c ____ _ Miss Margaret Cramton __ Assistant hostess ______July 21-Nov. 23, 193L____ 59.88 ------240. 00 91. 00 390.88 Do ______---- Miss Rabel Davies______do_------July 29-Sept. 30, 193L__ __ 33. 45 ------240. 00 431. 00 704.45 Do_------Do ______Thomas Davis ______------No account received------Gladys Dee ______------_____ do ______------Do __ ------Ron. S. Wallace Dempsey_------_____ do ______------Do _____ ------Mrs. Wallace Dempsey ___ ------_____ do._------__ ------"-----____ ------New Haven, ColliL ___ _ Andre DevoL ______Translator------Juno 24-Sept. 11, 193L__ _ 30.25 9. 51 ------125.15 323. 50 488.41 Washington, D. c ____ _ Col. Harrison Dodge______Representative Mount Ver- Mar. 18-Sept. 30, 193L____ 24. 31 46. 28 5. 64 303. 2-5 242. 50 626. 98 non Association. Do_ _------­ Wade H. Ellis ______------No account received ______------Do.------­ H. M. Gillman, jr______Contact officer ______Mar. 4-June 11, 193L ---- 18.32 24.24 1. b8 397.13 707.25 1, 148.82 Do__ ------Mrs. Ann Baker Golf_ ____ ------No account received ______------Do _____ ------Miss Nita Goodloe ______------_____ do ______------DoDo._------______Miss Catherine Harrison__ Assistant hostess ______July 28-0ct. 17, 193L_____ 49.87 ------253.00 471. 00 778.87 Charles L. Hofman ______------__ No account received. _____ ------Do______------Gen. Wm. E. Horton_---- Special assistant to com- May 2-Aug. 18, 193L_____ 1!s3. 51 26. 28 . 5. 63 196. 00 279. 50 690.92 Do ______sioner general. . Do ______1'liss Adele Jahncke______------No account received ______------1'lrs. E. C. Jameson ______------_____ do ______------Do ______Winant Johnston ______Assistant to commissioner Apr. 1(}-Aug. 6, 193L.____ 2o.19 16.28 3. 75 348. 50 76. 00 472.72 general. Do _____ ------Mrs. Gertrude Klemm ____ Assistant hostess______May 3, 193L ______------8.14 1.88 228.13 ------238.15 New Orleans, La______Andre LaFargue ______Assistant to commissioner July 1-Nov. 16, 193L------40.75 102.56 13.88 540.00 697.19 general. Do __ ------­ 1'lrs. Elizabeth Lambert •• ------No account received ______------Do__ ------Wilton J. Lambert ______·------____ do ______------Washington, D. o ____ _ Miss Edith McD. Levy__ Assistant to secretary to Mar. 11-Nov. 19, 193L____ 27.92 22.14 3. 75 428.78 39.00 521.59 Do______commissioner. Wm. Mather Lewis ______------No account received ______------Baltimore, M d ______Mrs. J. Charles Linthicum. Assistant hostess______July 27-0ct.l6,193L______32. 12 20.00 245. 50 161. 25 458.87 Detroit, Mich.. ______H. D. Martin ______Technical engineering ad- Mar.27-May28,193L •••• 51.60 82.82 15.16 410.00 219.50 779.08 viser. Washington, D. C ____ _ Miss Catherine Mcintire. Stenographer ______May 2-May 15, 193L_____ 21.60 8.14 3. 75 196. 00 52.50 281.99 Do __ ------­ Mrs. Janie S. Newman ____ ------No account received ______------Do. __ ------John W. Newman. __ ------_____ do ______------______------Do_ ____ ------Miss Dorothy Nicholson __ Assistant hostess------Aug. 26-0ct. 16, 193L_____ 23.85 ------258.00 272.00 553.85 New York City ______Inman Payne ______Special assistant------Apr. to-June 3, 193L ______------396.65 ------396.65 Paducah, Ky _ ------Mrs. Henry Rudy------Assistant hostess ______May 2-Bept. 14, 193L_____ 15.49 18.14 ------316.88 78.00 428.51 Do _____ ------E. Paul Saunders ______------No account received_------Washington, D. C ____ _ Loyall F. Sewall.------Special assistant to com- Oct. 21-Sept. 9, 1931______59. 92 69. 92 7. 50 436. 90 1, 975. 25 2, 549. 49 Do______missioner general. Richard Southgate.• ------No account received_------Do__ ------Mrs. Lulie Hall Swanson_ Assistant hostess ______May 9-Sept. 3, 193L______16.25 36.28 3. 75 605.00 28li. 25 946.53 Do______Richard A. Walker_------No account received_------____ ------Do _____ ------Miss Anne Madison Hostess_------­ May 16-0ct. 2, 193L______51. 77 23. 78 5. 63 ------78. 50 159.68 Do______Washington. Do ______J. 0. Watson______··------No account received ______------Miss Mary Moss Well- Assistant to Secretary_____ Dec.l, 193o-Nov. 26, 193L_ ------6. 90 117.13 230.00 354.03 born. Detroit, Mich ______Miss Frances E. Wolfe ____ Special assistant to com- Mar. 7-Aug. 2, 193L ______47.59 71.94 12.76 324.63 623.25 1, 080.17 missioner general. Washington, D. C ____ _ W. B. Yeager------_____ do_------July 21-Nov. 6, 1931______46: 07 39.28 3. 75 245.50 87.00 421.60 Garrison on the Hud­ Susan Frazier------Assistant to commissioner Aug. 1-Aug. 15, 193L _____ ------217.00 217.00 sont...!'l· Y. general. New rork City ______Harold Black ______Technical director ______June 2-June 30, 193L ______------203. 00 203.00 Washington, D. C_____ Mrs. Robert Ash ______Assistant to commissioner Sept. 1-0ct. 15, 193L ______------315.00 315.00 general.

Total.------1, 062. 16 825.52 111. 25 9, 159. 96 12, 031. 75 23, 190. 64

Miss Tncksie Amis: Per diem $6 while in United States, $.5 aboard ship, and $7 while in France. Charles H. Burke: Per diem $6 while in United States, t5 aboard ship, and $7 while in France. Miss Margaret Cramton: Per diem $6 while in United States, $5 aboard ship. Miss Rabel Davies: Per diem $6 while in United States, $5 aboard ship, and $7 while in France. Andre Devot: Per diem $6 while in United States, $5 aboard ship, and $4 while in France. Col. Harrison Dodge: Per diem $6 while in United Etates, $5 aboard ship, and 12 while in France. H. M. Gillman, jr.: Per diem ~6 while in United States, $5 aboard ship, and $7 while in France. Miss Catherine Harrison: Per diem $6 while in United States, $5 aboard ship, and $7 while in France.. Gen. Wm. E. Horton: Per diem $6 while in United. Statrs, $5 aboard ship, and $7 while in France. Winant Johnston: Per diem $6 while in United States, $5 aboard ship. Andre LaFargue: Per diem $6 while in United States, $5 aboarcfship, and $1 while in France. Miss Edith McD. Levy: Per diem $6 while in United States, $5 aboard ship. Mrs. J. C. Linthicum: Per. diem $6 while in United States, $5 aboard ship, and $1 while in France. H. D. Martin: Per diem $6 while in United States, $5 aboard ship, and $7 while in France. Miss Catherine Mcintire: Per diem $6 while in United States, $5 aboard ship. Miss Dorothy Nicholson: Per diem $6 while in United States, $5 aboard ship, and $7 while in France. Mrs. Henry Rudy: Per diem $6 while in united States, $5 aboard ship. Loyall F. Sewall: Per diem $6 while in United States, $5 aboard ship, and $7 while in France. Mrs. Lulie H. Swanson: Per diem $6 while in Umted States, $5 aboard ship, and $7 while in France. C. Bascom Slemp: Per diem $6 while in United States, $5 aboard ship, and $15 while in France. Miss Anne Madison Washington: Per diem $6 while in United States, $5 aboard ship. Miss Mary Moss Wellborn: Per diem $6 while in United States, $5 aboard ship. Miss Frances E. Wolfe: Per diem $6 while in United States, $5 aboard ship, and $7 while in France. W. B. Yeager: Per diem $6 while in United States, $5 aboard ship. Susan Frazier: Per diem $7 while in Paris. Harold Black: Per diem $7 while in Paris. Mrs. Robert Ash: Per diem $7 while in Paris. (Public, No. 519, 7lst Cong., p. 33, approved July 3, 1930; Public Resolution No. 95, 71st Cong., approved June 24, 1930J L.XXV-117- 1844 CONGRESSIONAL RECO~D-HOUSE JANUARY 12 Mr. BLAJ.'ITON. Mr. Chairman, I will show one more by way of illustration that cost last year $11,267: Twemg-si:Lth Conferenu of 111terparliamt11iarv Union, .Lomloo, :&l4land

Travel Railroad Pullman 8~- Per diem Subsist- Station Name · Rank Period expenses sh1p ence Total ------1------1-----1------1----1----'------Washington, D. C ______Andrew J. Montague______Delegate ______July 4-Aug. 16, 193L $17.00 $24.48 $5.62 $M5. 00 $91.00 $15.75 ${;98.85 Do __ ------Fiorello H. LaGu.

1 In lieu or subsistence and travel expenses. Actual and necessary travel and subsistence expenses, in accordance with the Standardized Government Travel Regulations, while iri the United States; statutory tips aboard ship, and a per diem allowance of $7 while in Europe. (Public, No. 519, 71st Cong., p. 31. approved July 3, 1930.) . Mr. STEAGALL. Mr. Chairman, I yield 15 minutes to the place five hundred million to two billion dollars of American gentleman from Connecticut [Mr. TIERNEY]. _ Treasury cash or credit in the hands of this corporation to Mr. TIERNEY. Mr. Chairman~ I desire to make a few loan mainly to banks and other financial interests. of the observations in support of the Reconstruction Finance Cor­ country now in need or who m.ay face needs of deposits. It poration bill now reported out of my Committee ·on Banking is an emergency fund, a revolving fund, intended to aid as and Currency under the new title of a bill tcr provide financ­ many institutions as possible, as quickly as possible. It is ing facilities for financial institutions to aid in financing hoped this measure will pass in the next few days and be­ agriculture, commerce, and industry, and for other purposes. come· a law with the President's signature. I sincerely hope As far as I can learn, this measure is probably the most it does important financial bill before Congress during the last 18 It may take some weeks for the machinery to be set up years, second -only to the great Federal reserve act which for this corporation to begin its loaning. But its mere crea­ safeguards and built up the great banking system of the tion, in incompleted state, ought to have a psychological country, and on a par with that other great Wilson piece of effect on the banks and other financial institutions and on financial legislation, the War Finance Corporation, after the morale of the country. This act is primarilY designed which it is fashioned and copiedr to help American industry. At the time the war finance measure was put into effect OUr trouble lies in many instances in the fact that these in 1918 we were at war. It-was intended to aid our agricul­ banking institutions have had to dispose of their so-called ture and commerce, and through that purpose, our banks quick assets, their so-called prime securities, easily negoti­ under stress and peril due to war conditions. ated bank reserves and securities at a forced low market to This corporation loaned approximately $300,000,000 to over meet the demands of depositors. Often when these demands 4,000 American banks though it had authority to loan much are made they find themselves with good but slow-moving more. It saved and protected these banks, and in the report securities they can not quickly dispose of, and they have of the United States Treasury Department 10 years later, in to close their doors. 1928, the United States Treasury had recovered every dollar Many of these banks, at least in my section, will ulti­ it had loaned out for this purpose. mately pay 100 per cent on the dollar. Fortunately no bank We have reached a condition to-day in this country paral­ in my district is riow in receivership. One of the large leling that of President Wilson's war days. While not at objects of th,is great government loaning body is to protect war, our financial institutions are under a like pressure and just such banks by taking over their good but slow assets peril. In effect, we are at war. and substituting therefor cash. Never before in the history of our country, and I include The trouble now is that the securities of the country-! the perilous days of the Civil War and of the late World mean the real, good, old-time American first-class bonds War, has our country suffered such depression, has there and sound properties-have a so-called market value that is been so much acute poverty, so much distress in every walk far lO"wer than their intrinsic value. A frightened public, a - of life, and such serious strain on the banking institutions hoarding public, in some sections a stock-market crazed and and financial system of the Nation. badly fooled public, has been sacrificing its holdings for More than 2,000 banks failed and closed their doors in cash; and this cash, in many instances, is now in the safe­ 1931. Close to $2,000,000,000 in funds of trusting depositors, deposit box, in between the mattresses, where it does no one money deposited in good faith in the banks of America's any good, for it is out of circulation. Nearly one-fifth of the great banking system, was taken away from them without five billionS of our currency is now out of ckculation; we fault-on their part. Small business men, merchants, work­ need more circulation of money; more for expansion of trade men, widows, and orphans have lost; municipal funds, sav­ and work -for our people. ings of a lifetime, big and little man's money all wiped out, There are two features of this bill I am keenly interested to the great paralysis of business, happiness, and peace of in. One is, this is a bill I trust for the aid of the people of mind and the prosperity and success of our people. this United States only. It is my hope, and I urged it in The last six months ending January 1 show far the worst committee, that in aiding our financial institutions by lend­ record. The January 1 financial statements of the banks ing them money on their securities this Reconstruction showed the extent of the depreciation in the market value Finance Corporation will refrain from taking over any form of the securities held by the banks. The gentleman from of European securities, trade acceptances or other contracts Massachusetts [Mr. McCoRMACK] yesterday quoted figures of evidences of foreign indebtedness as collateral. I consider showing over 300 bank failures in December last and over 1t highly important that the reputation, the doubtful repu­ $300,000,000 involved. tation we now enjoy of being the creditor nation to ungrate- To meet this crisis, to protect us from further failures, to 1ul nonpaying countries across the water be not further stop the downward run, the committee of which I am a ~accentuated by the accretion of more European bonds and member has presented you with this bill. It is a · bill to foreign complications. [Applause.] 1932 CONGRESSIONAL RECORD-HOUSE 1845 The second feature is this: The bill calls for the appoint­ keep America down for long. This bill may start the upturn. ment of four directors, in addition to the Secretary of the This bill is needed to safeguard our banks. It should sub­ Treasury, Secretary of Agriculture, and governor of the stantially aid unemployment and restore business. [Ap­ Federal Reserve Board. These directors should be as they plause.] were in President Wilson's War Finance Corporation, men Mr. McFADDEN. Mr. Chairman, I yield five minutes to of different political parties, of high ability, and imbued with the gentleman from Wisconsin [Mr. Bon.EAU]. feeling for the smaller man. Mr. BOILEAU. Mr. Chairman, I have thus far succeeded I think in the bill offered by the gentleman from Illinois in suppressing my desire to make my first speech on the [Mr. SABATH], a bill of much merit and similar import, it floor of the House, and possibly after I get through speak­ was suggested two such men as an ex -Governor of New ing I shall wish that I had persisted in my resolution and York State and an ex-President of the United States should had not spoken until I had become more familiar with be selected. Much depends on the type of men selected as proceedings of the House, and until I had something more to whether the smaller town and country bank, and the beneficial to give to the Members of the House. lesser but also hard-pressed financial institutions throughout It seems to me that in this session of Congress we should the country, get their measure of aid. be giving more time to real bills that may effect some sub­ On account of the pressing needs of many of our best stantial relief to the six or seven million people of the railroads, whose first issues of bonds and stocks are held by country who are unemployed and unable to obtain suste­ our savings banks, insurance companies, and other banks nance for themselves and family. and fiduciaries as investments or reserves, it is sought in We have been giving a good deal of consideration to finan­ this bill to give aid to them. A breakdown of our railroads cial measures, just as if to give relief to financial institutions would thus affect the small savings of our thrifty people of of $5,000,000,000 is of more importance than to give relief moderate means with deposits in the savings banks, and to those persons unable to go to the bank and get relief. perhaps affect the security of the holder of modest insurance We have had under consideration a bill to give aid to policies. agriculture under the form of an appropriation of $100,- I think it was either Mr. Ecker, president of the Metro­ 000,000 to the Federal land banks. I voted for the bill and politan Life Iv..surance Co., or Mr. Morgan Brainerd, presi­ am glad to have done so, but I doubt very much whether dent of the lEtna Insurance Co. of Hartford, supported by agriculture itself will get any real substantial benefit from it. some railroad statistics, who testified in the Senate hear­ To-day, under the guise of a relief measure, we are con­ ings that the insurance companies need no direct aid but sidering a bill providing for $2,000,000,000 to give relief to indirectly seek substantial aid to one or two of our leading railroads, insurance companies, and banks. I do not believe railroads in the form of loans to meet maturing obligations the citizen who is absolutely in need of immediate relief will in the spring. These loans, in conjunction with a 15 per cent get any benefit from it whatsoever. The reason I rise to­ rate increase recently allowed, the so-called four-system day is to say that I fear we are building up such tremendous consolidation and hoped for bus regulation of an interstate appropriations that when measures do come before this character, are likely to be a forward step to more prosperous House some time in the near future affording some direct railroad conditions and strengthening of securities, though relief to the American people some of the men who have been I regret the 10 per cent cut in wages of railroad employees. sponsoring this bill will rise and say that we have already There are amendments to this bill that have more direct appropriated too much money and that we can not afford bearing on the farming institutions and the farming finan­ to appropriate any more, and that will prejudice the right cial wants which I am familiar with. For these farming of the American people to have some direct relief in the interests I have a strong sympathy and a strong desire to see form of appropriations for public buildings or any other this most important group of our people helped. measure that will help the person who is unemployed and I look upon this as a necessary constructive measure and unable to provide for himself and family. It is all right regret the delay in its presentation. This bill is not a to go ahead and make these appropriations, I believe, but I cure-all panacea. It may not be the best bill, but it ought am afraid when we get up so high that the cry will go out to accomplish much. that we have already appropriated more money than we can If some degree of confidence can be restored to business possibly hope to raise in taxation, and that that argument and credit, we may commence to put back to work the will be used to scale down the amount of money to be appro­ 7,000,000 idle men and double the number of part-time priated for direct relief and for appropriations to construct workers who are in distress. · public buildings. If such result does not follow, I can not but feel that the Mr. LANKFORD of Georgia.. Mr. Chairman, will the gen­ host of unemployed men and women willing and anxious to tleman yield ? work in a land of plenty and untold wealth, but which will or Mr. BOILEAU. Yes. can not give them work, will rise up and demand in noun­ Mr. LANKFORD of Georgia. The bill is already labeled certain terms of their representatives that a bond issue of that it iS to provide help for agriculture, and I am afraid it millions and perhaps billions be passed by the Government will all be charged up to agriculture and the farmer. to afford work so they may earn the bare necessities of life Mr. BOILEAU. I agree with the gentleman. I doubt if for themselves and their families. the farmer will get any direct relief from it. The American workingman does not seek a dole, he does Mr. LAGUARDIA. And the sad feature is that the rep­ not want a dole. He demands only to be given an oppor­ resentatives of the farmer will fall for it and swallow it line, tunity to work, and from the proceeds thereof to main­ hook, and sinker, as they have on all previous occasions when tain himself and his family according to the American anything has been labeled for the farmer. standard of living. This is his right by every decent stand­ Mr. SCHAFER. Does not the gentleman believe that if we ard of economics; it is his right by every good theory of extend relief to the railroads it will bring direct relief from government. If these measures for financial aid to our .the unemployment standpoint, when we consider that al­ institutions, intended to afford indirect aid to our unem­ most every great railroad in the Nation to-day is practically ployed, do not in a reasonable time, before the adjournment bankrupt and that they have been forced to cut off many of Congress, result in substantial betterment in the condi­ thousands of employees from their pay rolls? I received a tions of unemployment, I now give notice that I will support letter to-day from one of my brotherhood lodge members a measure or measures for more direct aid to our unem­ who has 28 years' running rights on a railroad, and he is ployed. now back firing a switch engine. Many thousands of rail­ I sincerely trust the success of this bill will render such road employees who have over 20 years' rights can not even action unnecessary. I trust that this country of ours which hold a job on the extra list. is ultimately ruled by Mr. Average Man along common sense, Mr. BOILEAU. I believe this will have a good effect. I sane standards will very soon have come to its senses in an am also going to vote for- several amendments that will be upward tw·n in business, farming, and trade. You can n.ot proposed that will make this more equitable. I want to t84n CONGRESSIONAL RECORD-- HOUSE JANUARY 12 make my position clear in the RECORD, and to say fol' one that 'I .do not . credit the . mathematic accuracy of this state­ ! am very: much disappointed that we have spent over a ment, but the principle involved is universally recogmzed. month's time of Congress, goi:ng no.w into the miudle. of win- It is a part of the law of supply an.d demand, being the ter, and have not appropriated one cent to give direct relief expression of that law with · relat1on to the price of gold • to. those millionS of our people who are· more in need of and its substitutes in money. The supply and demand for relief than are the financial institutions of our country. money, or gold, is as much a determining factor in the fix­ [Applause.J ing of prices as is the supply and demand of the consumable Mr. McFADDEN. Mr. Chairman, r yielcf 10 minutes to ore useful goods sought~ Basically we have·not given up the the gentleman from Ohio [Mr. WHITE]. principle of barter, all our money being an interchangeable Mr. WHITE. Mr. Chairman, some figures have come · to substitute for gold bartered in exchange for other goods. my attention, which I belie::ve will interest the committee, To double the money in circulation might quadruple or especially in the light of some of the remarks which have quintuple the. prices of goods or increase them one-fourth or been made upon this bill. one-half, depending upon the state of the public mind. The There seems to be an impression in some quarters that wide publicity given the plan we are now engaged upon this is legislation of a new and untried nature. It. is not. It will make it much more useful than if its operation, trust­ is so thoroughly like the provisions of the War Finance Cor- ing it does go into operation, were unknown except to those poration that one must examine that plan's basic legislation who expected to call for loans. The public unquestionably carefully to find the differences. will react optimistically to such a demonstration of govern- It is because of the great similarity between these two mental interest in general welfare. pieces of legislation that I brinR to you the latest reports. This reaction can not but bring about a relaxation of upon that. corporation's operations, and the status of its credit, a freeing of hoarded bank and private assets and a books~ general feeling of confidence and some advance in prices. It lent, in all, $690,431,100~ Improvement in prices will encourage merchants to restock Of this, $306,742,153.96 was: lent under the war powers- their shelves, whereas they are now emptied to thwart the of the corporation; $46.,347,654.27 . was lent for export pur- loss on depreciating invoices. It will thus encourage pro­ poses between the time ot the creation of the act, April 5.. duction and the employment of labo:r will be stimulated. 1918, and January, 1921, when the corporation resmned These operations are not without·their dangers. If infia­ operations; $38,653,539.82 was lent for export purposes- after tion were carried too far we could only expect to find our­ reswnption of operations, and $256,598,074.92 was lent for selves on the brink' of another precipice with a crash inev­ agricultural purposes after resumption of operations in the ·itably ahead of us. depression of 1921 and 1922 Miscellaneous. loans, made up. Can we trust ourselves to so manage the money market the other $32,000.,00(l of our coUIJ.try? We do manage it We manage it by the Mr. LANKFORD of Georgia. Mr. Chairman, will the gen.- issue of Federal-reserve currency; by the issue of national- tleman yield? bank currency, by coinage, and by banking and credit facilt• Mr. WHITE. Yes_ ties in general, including use of checks, and other credit Mr. LANKFORD of Georgia. Has the gentleman read of forms. We do so on the very principles involved in this the work o:f the War Finance Corporation? The loans au- measure~ 1t is done and can and ought to be better done. thorized by that act were ·made to specific banks, which It is charged it will help bankers ~ It willr and it will made the loans ta the farmers for agricultural purposes,. help the little depositor, whose funds are in the bank and while this partrcular measure authorizes them to loan to any are or may be frozen there if some such action as this is person whom they may wish to help. · not taken. It will help the depositor of the ciosed bank Mr. WIDTE Yes; I notice that. Against the predic- whose assets are good but tied in a financial knot and can be tions that this money would not be repaid, we learn. that on freed only by-some such measure as this. In that degree this January 4, 1921, $241,943,794.07, all from the loans for war is a. protection of deposits. It is a protection of deposits in purposes and for export pmposes, had been returned to the. that it will bolster the prices oi assets, which are the sole corporation, no others having been made at that time. Be- present security for deposits. tween that date and November 30', 1921, $30,.554,414.3Q was . It will help the farmer b:y bolstering his values and repaid, and that in the ensuing year $199,473,U3.25.. was making available credit to be advanced against those values; paid back, leaving an outstanding balance of $185,370,101.35. it will,. help the merchant by bettering his market and This was the last separate report of the corporation, 1 un- making available capital for replenishing his stocks and derstanct From that time the:: reports of the corporation justifying with confidence such a project; it will help the have been incorporated in the reports of the Secretary of little urban home owner by improving the value of his home, the Treasury. possibly lifting it a little above the margin of the mortgage · The 31st, December, 1931, found the corporation with which has or threatens to devour it. It will save the bank $114,347.14 in cash in the United States Treasury; $222,- from calling that mortgage or going insolvent itself because 358.25 outstanding in principal; and $6,4'Z4.82 outstanding the value of the home, farm, or factory falls below the in accrued interest, assets of a total of $343., 180.74. amount of the mortgage. Depreciations below the margin Of the original $500,000,000 capital of the corporation all thought by everyone to be safe two years ago are the tragedy has been canceled, or retired at par, except $10,000, and the of this era. This measure can stop them. venture has paid the Government a profit, exclusive of the Let us remove all question of its validity under the Con­ assets reported above, of $84,531,271.70. This sum is earn- stitution and pass it, in the interest of this whole Nation. ings with almost exactly one-third of a million to be added It is too important to take a chance upon some enemy or to it. light and goodness coming upon it unawares and destroying This is a spectacular picture. This corporation did untold its blessings through court action. None of us question that service to business and through it to labor and all other the Speaker: of this House would name the highest of char­ economic elements during the depression of 192I-22 acter and the greatest of ability to help administer its pro­ and can do immeasurable service at this time. This cor- visions; but why take a chance upon so important a measure · poration had out a maXimum of about $300,000,000 at any when it can be so easily avoided? one time. It unquestionably had much to do with relieving There are so many influences in · the price equation, so the depression of 1921-22. The present plan suggests a total much that is not commonly considered in what we speak of of $2,000,000,000 be made available for such purposes. as the law of supply and demand, that to enter into the This seems to me to be almost equivalent to placing in realm of prophecy or to venture upon the ground of ca'stiga­ circulation that amount of currency. John stuart Mill said: tion of any individual for his misfortunes as he is trod upon If the whole money in circulation was doubled, the prices would in the high road of price movements in such a time as this double. If it was only increased one-fourth, prices would rise is fraught with many hazards. It particularly risks great one-fourth. injustice to many who have acted in perfectly good faith in 1932 CONGRESSIONAL RECORD-HOUSE 1847

encouraging marketing of propertL~s. goods, or securities. ates a banking corporation through which this vast sum is The person who in 1929 or even 1930 would have conceded to be loaned to the financial institutions to be benefited. the possibility of United States Steel common stock falling This is an administration measure. It is one of the group below $40 per share would have been branded stark mad. of measures recommended by the President for the relief of The public man who dared such a thing probably would the present situation. We have passed the first of his pro­ have been ostracized. posals, which applies $125,000,000 to the farm-loan banks, Please do not gather the impression that I defend the the chief effect of which will be to increase the value of their men of the big-business world. I credit them neither with outstanding bonds. The next bill on the program after the the foresight nor the power or intelligence with which they present is the home discount bank bill, making further large are pictured in the rather fictitious glamor in which they Federal grants for the relief of banks holding frozen real­ are seen as colossuses of intellect and power. The leader of estate credits. Next we are to grant a vast sum for the a great corporation who two years ago advised the purchase liquidation of busted banks. Just how much this program by one of his satellites of a security unquestionably suf­ for the use of the taxpayers' money for the relief of dis­ fered a twinge of pride, if not conscience, when he was tressed business will eventually cost, no man can possibly forced to save his own hide by withdrawing his own safety foresee. from that satellite's dependence upon the value of that ARE OUR SUFFERINGS TO BE IN VAIN? stock or bond. He might not have had an insincere thought. Perhaps the most pitiable feature of the situation is that He merely proved the exaggeration of the satellite's confi­ apparently the sufferings of the American people are to be dence in him. He, on the other hand, might have been a in vain. Apparently nothing has been learned from the commission hog selling whatever he could foist off on the depression. The President's program includes palliatives world which trusted him. only. None of his measures even pretend to be curative. It is impossible to segregate the various elements of the They are designed merely to deaden our pains. We are business world and help one part without helping all or expected to recover without any real medication, and then almost all the others. To extend a helping hand at this only after the fever has run its devastating course. time to the city worker would be of the greatest assistance Apparently the President and his advisors think that to the farmer by improving the city market for his goods, everything is all right-that the depression had no real the market upon which he must depend for his prosperity. causes--that we merely accidentally stumbled into it-that To give the farmer the means of further expanding pro .. it is not the consequence of wrongful practices. Apparently duction will help the urban population by tending to cheapen they think that the situation is inherent in our economic his livmg expenses. system, and contemplate that those who are able to survive All the economic elements of this Nation are so tied into the siege are to go on under previous conditions. After each other and interrelated that they can not be separated recovery we are to stumble on in our blind way for a brief for isolated treatment. Help one and you help all. This spell, when a similar depression will again overtake us. bill goes to the very heart of the situation and advances help · The President seems to hold that the period of false pros­ to all except the man who is hoarding his money for more perity which reached its peak in 1927 was ideal-that it had advantageous buying in the future. I believe the rest of no faults nor imperfections, that nothing wrong has been society has suffered enough in his interest and to his done, and that our aim ought to be to get on as best we can advantage. through our present woes in order to return, as in a dream, There is, in my opinion, not the slightest tinge of class to the orgy of the boom years. legislation in this bill. It helps every class, as I have The President has offered nothing fundamental, nothing pointed out above. This is the legitimate plan for the Gov­ as a remedy. His program is merely of palliatives. He gives ernment to help everybody. Let me comment here that I no call to any sounder footing or any more sensible economic would support an appropriation to prevent suffering in any practices than those which have brought us to the ills we specific instance in which I felt great calamity had struck now endure. Apparently he has made no analysis of the a community. In the present case great calamity has struck causes of the depression and no attempt to understand why the entire Nation and every class in it and this bill will be a we are afflicted. If he or any of those who speak for him blessing to all of them unless other forces and influences have any plans to correct the evils of our syst-em, they re­ are so great that they will counteract its tendencies. main undisclosed. They do not propose to lower the trade barriers which have destroyed our foreign commerce. No I am as devoutly interested in the welfare and benefits of effort is to be made to place our competitive system upon a poor men as any other man in this House, but I do not feel basis of re9,l competition, so that some fair opportunity his real interests lie in this Government venturing into the would be afforded for the exercise of private initiative. field of private business. Provisions of this bill are distinctly No remedy is offered for the vast spread between what a function of the collective interests of the people of this the producer receives and what the consumer is required to Nation and of Government. pay. These poles are to be brought no nearer together. This is a bill to deflate the consequences of too much con­ None of the waste, extravagance, and inefficiency in our sys­ fidence in too many things and especially in the visions and tem of distribution are to be eliminated. The producer of powers of the business baron. I have some opinions how raw material is to be left to his below the pre-war price, yet that -evil can be remedied, and that without abandoning the he must pay for his supplies and all things he would buy system of individuality and private property. I would, I upon a much higher basis. believe, strengthen that system. We are to-day suffering THE PRESIDENT'S APP.\RENT IDE..~L from too great dependence upon so-called business leaders. Apparently the President has no plans to produce real I would deflate the influence of those leaders and the con­ competition in business, no aims to destroy monopolies nor sequent degree of their mistakes and bad guesses. I shall not impose my thoughts on this subject upon you at this time, to relieve the consumer of the extortions which they prac­ tice. We l)re to continue to foster the vast concentrations except to add that I believe in individualism and private property and hope to see them preserved as a principle in of wealth, which have seized for their own exclusive use the this Nation. · natural resources of a great continent. No effort is to be made to restore to the people these rich resources created Let us pass this bill and in such form that there shall be by the Almighty for the benefit of all, btft which are being no question of its validity or immediate operation. exploited for the advantage of the few. Nothing is to be I thank you. [Applause.] done in any wise to hamper vast corporations in enjoying Mr. McFADDEN. Mr. Chairman, I yield 20 minutes to the perpetual existence and practically unlimited powers. gentleman from Alabama [Mr. HuDDLESTON]. In short, no effort is to be made by those in authority to Mr. H'UDDLESTON. Mr. Chairman, this bill grants restore to our cltizens the fair equality of opportunity with­ $2,000,000,000 of the Federal funds and credit to a corpora­ out which the system of individualism is a sham and a fraud. tion for use in aid of distressed banks and railroads. It ere- We are to continue after this depression under the previous 1848 CONGRESSIONAL RECORD-. HOUSE JANUARY 12 conditions, in which the multitude is denied opportunity ·benefit to the farmers .of this country. What he needs is a and in a state of practically economic servitude. We are to fair fight with the right to buy in an open market at a fair go on with the wealth of the Nation being collected into the 1price fixed by the law of supply and demand, even as he hands of the few, while the great mass of our people are must sell in such a market. reduced to a state of poverty and despair. ' And now we have _come . to . the . pass where American. If I am correct in my visualization of the President's ideal, industry has been developea at the expense of other inter· and if indeed that ideal is to be realized, then truly will 1ests until it is an overgrown, swollen, and helpless infant, our sufferings have been in vain. If, indeed, we are to go 'old and grayheaded, though yet an infant, and helpless forward to such a fate, learning no lesson from that which and unable to stand alone. At last the time ·comes when the we have endured, then must it be said that our people have pap of special favor upon which it has been feeding for been the victims of a fiendish irony. generations is no longer effective. The domestic market THE NEED FOR REAL STATESMANSHIP no longer suffices for industry. Real statesmanship ih this time would seek to understand The agricultural and other classes whom you have been the causes for our economic troubles and take steps to see bleeding throughout the generations, are at last exhausted that these causes are removed. The fault is not in our eco­ and impoverished and can not longer furnish a market for nomic system. It is not inherent in individualism. To the your protected industries. So that at last you are forced to contrary, the chief factors which have brought about the turn your eyes across the seas to world trade, and there you depression have been the result of abuses of individualism. find yourselves hamstrung and destroyed by your cost-plus They are excrescences, cankers, and sores upon individual­ system of production, the Frankenstein which you have ism and the real remedy is to cut them out and cure them. created. You built a dam and the water has filled behind it Th~ real remedy is to return to a state of purer individual­ until the tide now sweeps all before it. You have tried to ism freed from the cancers of the false collectivism which thwart economic law~ You have defied the laws of supply hav~ infected our economic system. and demand. You have created a certain special favored I have in my mind a program to bring us to economic lib­ class, and now that class is being destroyed by the favors erty. It would carry us back to the principles of real indi­ which they have received. [Applause.] vidualism and to some fair equality of opportunity, when " THE BANKERS' DOLE " there would be no longer ruthless exploitation of the con­ In a recent speech in behalf of my bill for direct Federal sumer and of the average citizen. But from the present aid for citizens in want, I pointed out that our Government administration who could expect that such a program would was responsible in large part as having contributed to the receive countenance? causes for the depression. In a sense, the depression roots PSEUDO-SOCIALISM, SPURIOUS COLLECTIVISM back to the war, which was our Nation's war, and not the war of any community or locality. The war was the cfu·ect . · This bill well becomes the administration source in which cause of the immense burden of Federal taxation. It also it originates. It belongs to a system of collectivism, the caused enormous economic destruction, and maladjustments spurious collectivism, the pseudo-socialism which is so typi­ of many kinds, of far-reaching consequences. cal of the Republican Party and of the present administra­ I also argued against the injustice of allowing absentee tion. As I said the other day, the collectivism of the owners of businesses and industries to evade responsibility Republican Party and the collectivism of Karl Marx have for caring for the poor of the communities from which they their chief difference in the fact that the socialism of Karl draw their profits, and for their distressed former employees Marx was -for the benefit of the people as a whole, whereas whom they had let out of their jobs. I insisted that the only . the socialism of the Republican Party is for the benefit of way to get at these absentee owners, who could not be privileged classes-the special powerful few, to whom the reached by the pressure of local sentiment, was through a party looks and expects to return it to power at the next system of Federal taxation taking a part of their surplus to election. feed those whom they had exploited. I also pointed out the This is a socialistic measure. I will not affront the true injustice of placing the burden on the poorer and unorgan­ socialist and follower of Karl Marx by hanging it upon his ized communities of caring for their own many distressed, philosophy. It is a socialistic measure of the peculiar type and leaving to the richer communities the much lighter task characteristic of Republican philosophy, which holds that of merely feeding their few who are in need. it is proper to confer a special favor upon a privileged class The only attempted answers to my speech were made by if only it may be argued that eventually a small part of the certain Republican Members from New England, who merely benefit may trickle down to some of the people. · It is the shouted "Dole, dole," without any effort to meet my argu­ kind of socialism that puts the masses in the position of ments. Now we are treated to the spectacle of those same Lazarus at the rich man's table, to remain content with a Members and others of their way of thinking, clamoring few crumbs that may fall from the banquet. for the ~assage of this bill which, even under the Presi­ In line with that philosophy the protective system is dent's eccentric definition, must in fairness be called a founded; upon that argument is based the doctrine that a "dole." The difference seems to be that my bill is objection­ protective tariff is legal and justifiable; on that theory the able because it is to feed the starving, while this bill is all Republican Party has granted benefits and special advan­ right because it is to rescue distressed bankers. It is a tages to favored classes, always with the fine discrimina­ tion which leads to preferring those who enjoy large political " bankers' dole." . This measure can not be defended upon any sound prin­ power and are able to respond at the next election. ciple of our governmental or economic system. Let no Subsidies have been given here, there, and everywhere. Member who may support it ever hereafter refuse, upon Even the voting power of the farmers was recognized when grounds of principle, to vote for any grant, gift, loan, or $500,000,000 of the people's money was cast away iD: ~he subsidy of Federal funds or credit to any individual or fruitless-and foolish farm marketing act. Instead of stnkmg corporation or for any purpose whatever. He may refuse down the special favors which you had conferred upon other for policy's sake, but he is forever foreclosed on principle. classes as the result of which the farmers were impoverished, It is within range of possibility that' this-bill will be bene­ you undertook by this special favor to elevate the farmer ficial in some ways and to some interests. It is certain that into their class-the farmer whom you have bled for gene:r­ in -the long run it will be harmful to the general welfare. ations by forcing him to sell his products in the open Already, with the promise of its passage, Federal bonds are markets of the world, while forcing him to spend his mone~ in a closed market, buying at an arbitrary. and false price descending. None of them sell at pa~. Very likely the first result will be that the public credit will be impaired. This under your protective system. measure with the others to follow, may make it difficult to THE FARMER WANTS ONLY A SQUARE DEAL sell our 'bonds at a reasonable rate. Before the depression The farmer has never asked anything but a ·square deal. is over it may yet transpire that we will have an important He has never wanted anything but a square deal Let me need for the public credit, and will regret that we were not say that nothing. but a square deal can ever be of any real more zealous in preserving it. 1932 CONGRESSIONAL RECORD-HOUSE 1849 I can not vote for this bill, violative as it is of all sound LEAVE OF ABSENCE principle and promising only doubtful benefits, balanced by By unanimous consent, leave of absence was granted to evils which are certain and inescapable. At best it is an Mr. KLEBERG (at the request of Mr. WILLIAMS of Texas), effort to save property. Instead of voting to save property, I indefinitely, on account of sickness. prefer to vote first to save human lives. [Applause.] Mr. GRANATA, indefini~ely, on account of illness. Mr. STEAGALL. Mr. Chairman, I move that the com­ mittee do now rise. THE MORATORIUM The motion was agreed to. Mr. HALL of Mississippi. Mr. Speaker, I ask unanimous Accordingly the committee rose; and the Speaker having consent to extend my own remarks in the RECORD on the resumed the chair, Mr. WARREN, Chairman of the Committee moratorium. of the Whole House on the state of the Union, reported that · The SPEAKER. Is there objection to the request of the that committee had had under consideration the bill CH. R. gentleman from Mississippi? 7360) to provide emergency financing facilities for financial There was no objection. institutions, to aid in financing agriculture, commerce, and Mr. HALL of Mississippi. Mr. Speaker and my colleagues industry, and for other purposes, and had come to no resolu- in the House, before stating my reasons for opposing ·the tion thereon. · President's 1-year intergovernmental debt moratorium, or ORDER OF BUSr.NESS postponement, as it pleases him for us to call it, I want to Mr. STEAGALL. Mr. Speaker, I ask unanimous consent say that I am perfectly willing to cooperate with the admin­ that general debate on the bill H. R. 7360 may continue istration in furthering any constructive plan for dissipating throughout the day to-morrow, with the understanding that the prevailing economic depression and relieving our dis· the bill will be taken up on Thursday for amendment under tressed farmers and unemployed industrial workers. the 5-minute rule. The debate to be divided as it has been In my opinion, the moratorium was not only inopportune up to this time between the two sides. but superfluous. Our agreement with the debtor nations The SPEAKER. May the Chair suggest to the gentleman specifically provides for just such an emergency as the from Alabama that the gentleman ask unanimous consent moratorium was designed to meet; consequently, each could before that request is submitted that Calendar Wednesday have deferred its debt installments for three years by invok· business in order to-morrow be dispensed with? ing that provision. Mr. STEAGALL. Mr. Speaker, I was going to make such Undoubtedly the United States already has been overly a request to-morrow, because I thought that was the custom. indulgent with European countries in connection with their However, I make the request now. war debts. We have canceled nearly half of the principal I ask unanimous consent that Calendar Wednesday busi­ or upward of $7,000,000,000, and spread the balance out ness in order to-morrow be dispensed with. over a period of sixty-odd years, with a ridicuously low rate Mr. LAGUARDIA. Mr. Speaker, reserving the right to of interest. In clamoring for cancellation of their outstand· object-! shall not object this time-but, as I stated on the ing obligations, the allied powers in effect are saying to the first Wednesday, as soon as we get the committees going United States: "Thanks for winning the war, but will you and the bills are on the calendar any request to dispense not also be good enough to foot the bill." with Calendar Wednesday business will be resisted. I shall With the United States Treasury in the "red" more than not object to this request owing to the urgency of the $2,000,000,000; with a substantial tax increase virtually pending bill. inevitable; with farm mortgages galore being foreclosed; \\'ith Mr. HOWARD. Mr. Speaker, reserving the right· to ob­ other thousands of mortgage payments delinquent; with ject, may I ask the gentleman from Alabama [Mr. STEAGALL] 7,000,000 Americans not only jobless but utterly dependent if he has spoken with the chairman of the committee that upon charity for "hand-outs" for barely keeping soul and would be on ~all to-morrow? body together, the $250,000,000 postponed by the moratorium Mr. STEAGALL. I have not taken up the matter with is a sizable sum. Yet our big-hearted President, who went anybody and did not expect to make the request until the out of his way to relieve Europeans, has set his foot down House met at noon to-morrow, but I am assured by the firmly on Federal aid for distressed Americans because it leaders that there will not be objection to the request. would constitute a " dole." Mr. SNELL. Mr. Speaker, I reserve the right to object to Even the administration objects to the measure for set­ ask the gentleman a question. If we conclude general de­ ting aside $25,000,000 for enabling the Federal land banks bate to-morrow night does the gentleman think it possible to grant a moratorium on delinquent farm-mortgage install­ to bring this bill to a vote Thursday night before we ments during the depression. Notwithstanding, it favors adjourn? wholeheartedly the proposal authorizing the Treasury to pour $100,000,000 into the capital of the land banks for Mr. STEAGALL. I hesitate to say that we can finish the protecting the value of farm-loan bonds, many of which are bill under the 5-minute rule on Thursday. being held by wealthy individuals and big financial insti· Mr. SNELL. We have had such prolonged debate I was tutions. hopeful that could be done. Admittedly our farmers are considerably worse off to-day Mr. STEAGALL. I feel sure we can finish the bill before than before the World War. Everybody thought .they were Friday night. I hope we may be able to do that by Thurs­ in a bad fix in 1929, but farm prices have since declined day night, but I would not like to so state now. about 50 per cent; therefore farmers are now paying back, Mr. SNELL. I did not mean to exact a promise from the at the ratio of 2 to 1, money borrowed from the land banks gentleman, but I thought if the gentleman could do it, it two years ago. During the past decade farm values have would be very satisfactory. shrunk about $30,000,000,000, and, at the same time, farm The SPEAKER. Is there objection to the request of the taxes have soared to unreasonable heights. Our farm· gentleman from Alabama to dispense with Calendar Wed­ ers are helping to carry the burden assumed by the Gov· nesday business to-morrow? ernment when it forgave Europe $7,000,000,000 of war debts. There was no objection. While the big interests were gleaning billions of dollars in The SPEAKER. The gentleman from Alabama asks profits during the war, the Government held the price of unanimous consent that general debate on the bill H. R. farm products down to a minimum through the Food Con· 7360 be extended to include the entire session to-morrow, to trol Administration, which was headed by the present White be equally divided and controlled by the gentleman from House incumbent. Farm production at the instance of the Alabama and the gentleman ·from Pennsylvania. Is there Government was boosted far beyond nonnal requirements, objection? · and then the farmers were left holding the surplus bag There was no objection. when the European demand for their products abated. 1850 . . CONGRESSIONAL RECOR.D-HOUSE JANUARY 12 What has the administration wronghi in connection with The SPEAKER. Is there objection to the request of the getting the farmers back to normalcy? It has. created the gentleman from Virgfuia? Federal Farm Board and .given it $500,000,000 of the tax­ There was no objection. pay.ers• ·money for engaging in a profitless price-fixing Mr. LANKFORD of Virginia. Mr. Speaker, under the scheme up to date. I have supported ·the Farm Board and leave to extend my remarks in the RECORD I include the am not now willing to vote for repeal of the act: yet I regret following: . to admit it has not benefited the man between the plow PETITION OF INTERVENTION AND PROTEST AGAINST 'tHE PROPOSED PLAN handles one red ·cent. I am hopeful of a brighter future. OF CONSOLIDATION OF CERTAIN RAILROADS ON BEHALF OF THE STATE I admit also it was a clear-cut instance of governmental CORPORATION CoMMISSION OF VIRGINIA meddling into business. For example, Muscle Shoals, to Comes now your petitioner, the State Corporation Commission of whose development the American taxpayers have contrib­ Virginia, and respectfully represents that it has an interest in the matters in controversy in the above-entitled proceeding, and desires uted $50,000,000 or more, has stood for three years, and to file this, its petition of intervention, and a statement of its objec­ still is standing, as a white elephant on the hands of the tions to, and protests against, the plan of consolidation of certain Government because the administration opposes its opera­ railroads, and changes and modifications thereof, as set out in the said application of the Baltimore & Ohio Railroad Co. and others, tion by the Government; notwithstanding that its operation dated October 1, 1931, and for leave to introduce evidence in sup­ would furnish employment for hundreds of men and that port of its said objections and protests, and for grounds of the profits accruing from the sale of electric current would proposed intervention says: help get the Treasury out of the "red." Who was it that I observed, "Consistency, thou art a jewel"? Your petitioner is a commission created under the laws of the Furthermore, I oppose the moratorium because it un­ State of Virginia and the governmental agency of the State of Virginia_ charged with the duty of supervising, regulating, and mistakably anticipates eventual cancellation of outstand­ controllmg all transportation companies doing business in Vir­ ing debts, which are estimated at the staggering sum of ginia in all matters pertaining to the performance of their public $12,000,000,000. This much was clearly implied in both the duties, and of prosecuting before the Interstate Commerce Com­ President's message and Secretary Mellon's qualifying state­ mission issues with reference to railroad transportation matters ment. Anyone that knows anything at all knows good and which affect the publlc welfare of the State of Virginia. well .that none of the debtor nations wants to revise its II THE SYSTEMS PllOPOSED UNDER THE PLAN 00 SUGGESTED MODIFICA­ obligation upward; but all want to revise them downward. TIONS THEREOF ARE SO GIGANTIC IN SIZE AND OF SUCH A NATURE AS This being the status quo, why did the PreSident recommend TO BE IN VIOLATION OF A SOUND PUBLIC POLICY AND IN VIOLATION reviving the War Debts Commission? The answer is obvious. OF THE SPIRIT OF THE TRANSPORTATION ACT; AND SUCH PLAN IS NOT Getting down to brass tacks, are those debtor nations in IN THE PUBLIC INTEREST fact unable to ·meet their obligations? I say most em­ While the act of Congress under which these proceedings are being conducted requires the commission to formulate a plan for phatically, they are. The selfsame countries for which we the consolidation of the railroads of the United States into a postponed debt payments in the amount of $250,000,000 ex­ Umited number of systems, there is no requirement that such sys­ pended last year more than $2,000,000,000 on their armies tems should assume the tremendous proportions suggested even by the plan of the commission. much less in the application of and navies; consequently their contention of inability to pay the railroads here under consideration. is rank perfidy. The centralization of such great power in so few persons imme­ Who is primarily responsible for the preposterous wave of diately suggests the imminent threat of injury to the entire propaganda urging abrogation of intergovernmental debts? country which might ensue from an abuse of such powers. These lines reach out into every community of considerable size 1n the The international bankers of Wall Street, who, violating most populous section of the United States. In each community every sane principle of sound banking, have lent billions of the railroad is represented by lnfiuential officials or agents and has dollars in Europe and, besides, have peddled billions of dol­ many employees. The widespread lnfiuence which the heads of lars of foreign securities to our credulous American people. these systems would be empowered there by to exert in the selec­ tion of public officials and legislative and congressional Repre­ Now they have the gall to ask Uncle Sam to cancel the debts sentatives becomes at once apparent. Such a condition is en­ owed him, so that they may get their own money back. To tirely contrary to the principles of our form of go-wrnment and this I am absolutely opposed. constitutes a most vital objection to such centralization of power According to a pertinent proverb, " Charity should begin and control. , The Commonwealth of Virginia has heretofore enjoyed the active at home," and by that token I demand that our own dis­ aid and cooperation of its railroads in the commercial -and indus­ tressed people be taken ·care of before we engage in any more trial development of the territory served by their lines. European philanthropy. Most emphatically do I demand Railroad mergers on such an extensive scale entirely destroy the that our farmers be given a square deal! local competitive railroad activities, which have contributed so much to the industrial development of this Nation. The incentive PROPOSED AMENDMENT to the de~elopment of Virginia (or any other State), which now moves the independent lines to activity in th.is direction, is for­ Mr. HOGG of West Virginia. Mr. Speaker, I ask unani­ ever gone when the line has lost its identity. It then becomes mous consent to extend my remarks in the RECORD at this obviously adverse to the interests of the syste.m to promote an point by printing an amendment which I propose to offer at industry tn one State 1f its freight revenues would be enhanced by locating it elsewhere on its lines. While the commission has the the proper time in connection with the measure which the rate-making power, yet it can not be. disputed that the railroads Committee of the Whole now has under consideration~ have a great influence in initiating and determining these rates, The SPEAKER. Is there objection to the request of the and that through this means industries in one locality may be placed at a great disadvantage against their competitors. gentleman from West Virginia? Such great centralization of power, therefore, may become an There was no objection. instrumentality not only for controlling the location and develop­ The matter referred to follows: ment of industries but· even for the destruction of those now Proposed amendment of Mr. HoGG of West Virginia: Strike out existing. The Commonwealth of Virginia would suffer great in­ lines 21 , 22, 23 , and 24 on page 5 and lines 1 and 2 on page 6 and jury through the removal of the incentive to develop this State should the proposed consolidation be permitted. insert in lieu the~eof the following: "savings bank, trust com­ pany, or building and loan association that is closed, insolvent, The proposed consolidation of th e more important Virginia rail­ or in process of liquidation to aid in the reorganization or liquida­ roads would inure further to the great detriment of this Com­ tion of such banks, savings banks, trust companies, and building monwealth in that its people now enjoy the opportunity and and loan associations, upon application of the receiver or liquidat­ privilege of transacting their impol"tant business with the heads ing agent of such bank, savings bank, trust company, or building of these roads-that is, the officials with ultimate authority-who, and loan association, and any receiver of any national bank is through personal contacts and knowledge of the situation, are hereby authorized to contract for such loans and to pledge any able ~to dispat ch their business promptly. In the event of the proposed merger the final authority will reside without the State, assets of the bank for securing the same." be di1licult to approach, and with little or no personal underst and­ CONSOLIDATION OF RAILROADS ing of the problems presented. The necessary result will be the transaction of such business, through subordinates, a thoroughly ~u. LANKFORD of Virginia. Mr. Speaker, I ask unani­ unsatisfactory and undesirable situation, resulting in delays and mous consent to extend my remarks in the RECORD by in­ lack of understanding. The Commonwealt h of Virginia would suffer further injury in cluding therein a statement from the State Corporation that the lines of railway involved now receive the close personal Commission of Virginia with reference to the consolidation supervision of their managing heads and are operated with per­ of railroads? · haps the highest degree of efficiency of any railroad lines in the 1932 CONGRESSIONAL RECORD-HOUSE 1851 United States. To disturb such a satisfactory situation and in­ roads of tbe good wm and tnt1mate Interest of the c1t1zens of VIr­ volve the management of these lines in a top-heavy, complicated, ginia and members of its legislature which personal contacts be­ and cumbersome organization of such great size, with the conse­ tween the people ~nd the executives residing in the State have quent " red tape" procedure, lost motion, and long-distance au­ fostered, and which will change into resentment with absentee thority, will undoubtedly cripple the efficiency of their operation. control and removal of State activities; (11) it will consolidate The Commonwealth of Virginia would sufi'er further injury in only the strong and prosperous lines of railroads in Virginia, which, that the excellent rolling stock, locomotives and cars with which instead of being benefited thereby, will be injured, and will remove its lines of railway are equipped and which they have acquired the competition now existing between these independent lines; through the traffic and business of the territory served by them, (12) and last, but not least, it will create an enormous centraliza­ and the use of which now inures to the benefit of the people of tion o! power and influence, social, financial, and poUtil"al, in a Virginia, will become the property of gigantic systems and in all few individuals, which 1s contrary to the public policy of this probability transferred to other lines. This will result in the loss Nation. of efficiency in the operation of the said Virginia lines. The Commonwealth o! Virginia protests, therefore, that the Many cities and large communities of Virginia have been built entire plan proposed by the said railroads is not in the public upon the faith of and as a result of the location there of extensive interest and should be disapproved by the commission. rallroad construction and repair shops and office forces. Large m and highly trained and efficient organizations of employees, both in shops and offices, have purchased homes in these cities and com­ THE COMMONWEALTH OF VIRGINIA PROTESTS AGAINST THE INCLUSION munities. Experience in the past shows that railway consolida­ OF THE NORFOLK & WESTERN, THE CHESAPEAKE & OIDO, AND 'l'HB tions almost invariably result in changes in the locations of ter­ VIRGINIAN SYSTEMS IN THE PROPOSED PLAN OF CONSOLIDATION AS minals and division headquarters and other activities. Office em­ NOT BEING IN THE PUELIC INTEREST ployees are either discharged or moved to the head office. Such The State Corporation Commission o! Virginia has heretofore changes disrupt the organizations and frequently either abolish (March, 1925) filed in this matter a petition of protest against or remove them, and, at best, inject an atmosphere of uncertainty the plan of consolidation then under consideration by the com­ into the permanence of the local arrangements. It 1s not to the mission. In so far as the Virginian, Chesapeake & Ohio and Norfolk best interests of this State, nor of the Nation, to allow, much less & Western are concerned that plan was very similar to the plan to encourage, a movement to draw the people who make up these now proposed in the petition of the railroads. The former plan organizations and carry on the railway operations of the entire contemplated the consolidation of the Virginian Railway with the country, into the great centers of population, to the detriment of Norfolk & Western, and the latter in turn with the Pennsylvania. thriving and prosperous smaller cities and communities. These It was also contemplated at that time that the Chesapeake & latter contribute through their shipments and travel their fair Ohio would consolidate with the Erie. Both o! these steps were share of the revenue which enables the railroad systems to oper­ strenuously resisted by the Commonwealth o! Virginia in its peti­ ate and they are entitled to receive their just proportion of the tion of March, 1925. The reasons then advanced in opposition railroad's business activities which result therefrom. Such a dis­ to these consolidations are still applicable and the commission is tribution of railroad activities promotes a much-better balanced respectfully requested to treat the former petition as a continulng industrial growth throughout the country, and creates a wider objection to the plan now proposed for a similar consolidation of and more intimate public interest in the prosperity and welfare the Chesapeake & Ohio with the Erie and the Virginian with the of the railroads. This is of particular importance at this time Pennsylvania and Chesapeake & Ohio Jointly, and for the consoli­ when all State legislative bodies are considering and acting upon dation of the Norfolk & Western with the Pennsylvania. questions involving the relative degrees of taxation and regulation For reasons set out in the said former petition, it is apparent of rail and motor carriers. that the consolidation o! the Norfolk & Western with the Penn­ The Commonwealth of Virginia protests against a consolidation sylvania, the Chesapeake & Ohio with the Erie and other roads, of the nature proposed in the petition here under consideration and the Virginian jointly with the Pennsylvania and Nickel Plate as being grossly in violation of the spirit of the act of Congress systems will be greatly detrimental to the public interests, and authorizing railroad consolidations. It is conceded by all that the particularly in the State of Virginia. The incentive to promote purpose of this act was to save the short-line and weak railroads the de.velopment of the port of Hampton Roads, as well as local through consolidation with the strong. There is nothing in the industries along the lines o! these railways in Virginia, will be act to justify the merger of powerful and prosperous lines. The almost completely removed. The large systems into which it is general public policy of the United States, as provided in the proposed to merge these Virginia railways would have their pri­ Sherman Act, is to prohibit powerful combinations of this nature. mary interests in the development of industries in other States, The consolidation act constitutes an exception which, as the especially New York, Pennsylvania, Maryland, and Ohio, and the congressional debates and reports shew, was justified on the port of New York. The proper developmellt of the port of Hamp­ theory that short-line and weak railroads could be continued in ton Roads, which is a most valuable asset, not only to the State the operating service of the public only by being brought into of Virginia but to the United States as a whole, is dependent upon strong and prosperous systems able to carry the burden of their the active cooperation and assistance of the railroads leading into operation. The proposal now before the commission does not it. This would be entirely lacking under the plan here proposed. come within the exception intended by the act. On the contrary, Subsection 4: of section 5 of_the transportation act provides as it would for the most part constitute a consolidation o! strong and !allows: prosperous lines with a centralization of power inimical to the "In the division of such railways into such systems under such public interests. Few, 1f any, weak lines are included in the plan. plan, competition shall be preserved as fully as possible, and The Commonwealth of Virginia further protests that while the wherever practicable the existing routes and channels of trade proposed consolidation will greatly reduce the efficiency of the and commerce shall be maintained." service of said lines of railway in this State, due to long-distance There are four large and important ports within the territory control and lack o! personal supervision by those in authority, embraced in the consolidation proposals here made by the rail­ there is no reasonable hope of any corresponding compensation in roads--New York, Philadelphia, Baltimore, and Hampton Roads. freight-rate reductions. Most of the leading railway authorities The proper development of all of these ports is not only of para­ agree that no material economies are to be expected as a result of mount importance to the trade and commerce of the entire United such large and unwieldy consolidations as here proposed. Mr. States, but is extremely essential to the national defense in the Daniel Willard, president of the Baltimore & Ohio system, one of event of war. the petitioners. testifying at the hearing of S. 1175 before the Sen­ It has been manifest for many years that the New York banking ate committee, admitted that few economies could be effected and other interests which control the Pennsylvania, New York thereby and 80 per cent o! these would be through reduction in Central, Baltimore & Ohio, and Erie systems have uniformly the number of employees, thus adding to the unemployment prob­ exerted their influence toward the direction of foreign traffic and lem. This is not in the public interest. commerce through the port o! New York. It is essential, there­ In conclusion, and by way of summary on this first point, the fore, to the development of the other ports that the systems which Commonwealth of Virginia protests against the plan of consolida­ primarily serve them be so constituted that their interests w111 lie tion proposed in the petition, because: (1) Said plan will not solely in promoting the interests of one or the other of the three effect any material econolnies; (2) it wlll not result tn any reduc­ remaining ports. The allegiance of the Baltimore & Ohio system tion in freight rates; (3) it will deplive this Commonwealth of the should be confined to the port of Baltimore, while that of the active cooperation of the managing heads in the development o! three Virginia roadB named should be centered on Hampton Roads. the industries o! this State and the port o! Hampton Roads.; (4) No other plan w111 conform to the natural geographical layout of it will confuse and disrupt labor conditions in the State and these roads and the purpose for which they were originally con­ enhance unemployment; (5) it will deprive this State of its just structed and to which they are best adapted. To permit the union share of railroad activities and cause much disturbance, unrest, of the Chesapeake & Ohio and the Erie will have a strong and and injury to cities and prosperous communities in Virginia and obvious tendency to divert traffic rightfully destined through the elsewhere, in which the present railroad offices, shops, and other port of Hampton Roads and send it over the Erie through the port activities are a vital part of their industrial life; (6) it will not of New York. save short lines and weak roads as the spirit of the act of Congress The proposal of the railroads here under consideration com­ requires; (7) it will necessitate the citizens o! Virginia transacting pletely divests the port of Hampton Roads o! any strong railway their business affairs through subordinates and under conditions having a primary interest in its development. · where the persons in authority do not have a close personal Upon analysis, this entire plan, in so far as these ports are con­ interest in, or understanding of, the problems presented; (8) it cerned, would appear to have been conceived for the benefit of will deprive this Commonwealth of that efficiency of service which the New York bankers and other interests who profit most from is obtainable only where the system is not too large to permit per­ foreign shipments through the New York port. The interests of sonal contact between the executives and the men in their employ; the Nation require that other sections of the country also sho-ald (9) it will subject the industries located on the Virginia lines to be given fair and proper consideration. the danger of discrimination in favor of competing industries on In addition to the effect the proposed consolidation, if consum­ other lines o! the proposed system; (10) it will deprive the ra.U- mated, would have upon the port of Hampton Roads, a similar 1852 CONGRESSIONAL RECORD-HOUSE JANUARY 12 situation. exists with respect to the coal-mining lndu.strles of Vir­ parallel and competing. • • • Section S857 of the Code of ginia and West Virginia. While these industries have been built Virginia, 1919, as amended by the acts of 1920, authorizes one ran­ up largely through the aid and cooperation of the Virginian, road corporation to purchase or lease the properties of another, Chesapeake & Ohio, and Norfolk & Western Railways, at the same but with the limitation that 'nothing in this chapter shall au­ time a community of interest has grown up between the Pennsyl­ thorize or be construed to permit the purchase, lease, sale, con­ vania system and the coal fields of Pennsylvania, the interests of solidation or merger of the works, property, or franchises of ran­ which the latter system has. been active in promoting. As pointed roads competitive between points both of which are within this out in our former petition. the stock ownership by the Pennsyl­ State, or lines between the same terminal points both of which vania Railroad Co. in the Norfolk & Western has already affected are within this State.' The N. & W. contends that the proposed auversely the interests of the port of Hampton Roads, and the lease is not affected by the limitations of this statute because the clisastrous effects of an actual merger of these lines become at competition between the two railroads is unsubstantial; and the once apparent. The question of relative coal freight rates to the · two lines are not between the same terminal points, both of which Great Lakes and tidewater from the Pennsylvania fields over the are in VIrginia. The record clearly establishes that the two lines Pennsylvania lines, on the one hand, and from the Virginia and are in direct competition between Virginia points. The charters West Virginia fields over the Chesapeake & Ohio, Virginian, and of the Virginian and the N. & W. do not specifically authorize Norfolk & Western, on the other, for years has been the subject of those companies to enter into the proposed lease, and the attorney constant controversy before this commission. The proposed merg­ general of Virginia cites a number of decisions of the United ers would undoubtedly place within the management of the con­ States Supreme Court to the effect that a railroad corporation solidated systems the power utterly to destroy these industries 1n can not lease its properties to another company unless specificall1 Virginia and West Virginia. The Commonwealth of Virginia in­ authorized by its charter, or aided by some other legislative action. sists that these industries are entitled to be served by lines whose Even granting that Congress has the power to authorize the leas­ primary interest it is to promote, not destroy, thei:r welfare. ing or consolidation of competing carriers, the State claims that IV theN. & W. and the Virginian can not be permitted to assert such right in derogation of their contract with the Commonwealth of THE PROPOSALS OF THE RAILROADS ARE IN CLEAR AND DISTINCT VIOLA­ Virginia, which created them. The legislature of West Virginia, TION OF THE PROVISION OF THE TRANSPORTATION ACT, WHICH RE­ on March 30, 1925, passed an act forbidding a railroad corpora­ QUIRE THAT, IN ORDER FOR A PLAN TO BE ACCEPTABLE, "COMPETJ;­ tion from acquiring control by lease or otherwise of any parallel TION SHALL BE PRESERVED AS FULLY AS POSSIBLE," AND ARE ALSO or competing line... VIOLATIVE OF COMMISSION DECISIONS What is there said as to the Virginian and Norfolk & Western In the face of this provision, the plan proposed by the carriers applies with equal force to the Virginian and Chesapeake & Ohlo. _ nevertheless provides for the consolidation of numerous lines which this commission has already decided, after full investiga­ VI tion, is in violation of said requirement. THE PROPOSED CONSOLIDATION WILL NECESSITATE A COMPLETE REVISION The commission has already held in Proposed Acquisition of OF THE RAILROAD TAX LAWS OF VIRGINIA (AND PROBABLY OF OTHER Control of Virginian Ry. by Norfolk & Western R1', decided Octo­ STATES) ber 11, 1926, 117 I. C. C. 67, that the Norfolk & Western and VIr­ The system of taxation of railroads employed by the Common­ ginian are competing lines, and that the leasin ~ by the former wealth of Virginia takes the form of a percentage franchise tax of the latter was not in the public interest. Yet the proposed measured by the company's earnings. Where the lines are only plan, in effect, calls for their consolidation. partly in Virginia, the tax is based upon the relative proportion of Completely ignoring the fact that the commission, on January the company's total earnings which the VIrginia mileage bears to 13, 1930 (160 I. C. C. 785), ordered the Baltimore & Ohio to dis­ the total mileage. If these lines should become but parts of the pose of its holdings of stock ln the Western Maryland, because enormous systems as proposed, the effect of such a revolutionary there was substantial competition between these lines, the rail­ change in the allocation of earnings would doubtless be completely roads nevertheless insist on assigning the Western Maryland to to demoralize the present tax system and necessitate the adoption the Baltimore & Ohio. of a distinctly different plan of taxation of these lines. Another palpable violation of the holdings of the commission appears in the case of the Wabash, which the railroads propose VII shall be turned over to the Pennsylvania, in spite of the commis­ TO SUCCESSFULLY EFFECT THE CONSOLIDATION AS PROPOSED WOULD sion's decision of December 2, 1930 (169 I. C. C. 618), that the NECESSITATE NEW FINANCIAL PLANS AND THE MARKETING OF MANY ownership of Wabash stock by a subsidiary of the Pennsylvania NEW AND EXTENSIVE ISSUES OF STOCKS, BONDS, AND SECURITIES AT was in violation of the Clayton Act, due to the substantial com­ TREMENDOUS COST. THIS COST WOULD HAVE TO BE ADDED TO THE petition between the Wabash and Pennsylvania, which such own~ PRESENT VALUES OF THE PROPERTIES ON WHICH EARNINGS HAVE '1'0 ership of stock would tend to suppress. BE ALLOWED AT THE EXPENSE OF THE SHIPPING PUBLIC Then again the railroads parcel out the Wheeling & Lake Erie The refinancing of these ·enormous projects, involving, as has to the Chesapeake & Ohio-Nickel Plate, although the commission, been estimated, about $10,000,000,000 of capitalization, would un­ on March 11, 1929 (152 I. C. C. 721), directed the Nickel Plate to doubtedly impose a tremendous cost and burden upon the rail­ clivest itself of its stock ownership in said company as in viola­ ways, the stockholders, and the shipping public. The commission tion of the Clayton Act. has already bad frequent occasion to consider this question, On May 8, 1928 ( 138 I. C. C. 517), this commission denied the notably in the Missouri Pacific-Gulf Coast case (94 I. C. C. 191}. Chesapeake & Ohio's application to acquire control of the Erie, This presents a .very serious objection to the proposals here under but the railroads have overruled the commission and persist in consideration. assigning the Erie to the Chesapeake & Ohio. With respect to VIII the relationship of the Chesapeake & Ohio and the Erie, the com­ WHAT DISPOSITION SHOULD BE MADE OF THE CHESAPEAKE & OmO, mission specifically found at page 529 of its decision, as follows: NORFOLK & Wi:STERN, AND VIRGlNIAN? "We do not consider that the relationship of the Chesapeake & Ohio and the Erie is complementary or supplementary." Not only would the proposed consolidations of these lines not be In numerous other respects, including the consolidation of the in the public interest, but their affiliation eithe_r with each other Norfolk & Western with the Pennsylvania, the proposed plan of or with systems serving northern coal fields or ports north of the interested carriers contravenes the commission's plan as out­ Hampton Roads would be contrary to public interest. They should lined in its report of December 9, 1929 (159 I. C. C. 522). be left free "to interchange traffic on equal terms with all of the It would seem obvious from the spirit demonstrated by the lead­ east-and-west eastern systems"; and to this end the Norfolk & ing railroad powers in parceling out and dividing the eastern rail­ western should be prled loose from the Pennsylvania and the ways in the manner proposed and in violation of this commission's Chesapeake & Ohio divorced from its "entangling alliances" with previous rulings, that their chief purpose is to create monopolies the Erie. and to abolish the competition which the act requires shall be PRAYER preserved. With the considerable number of independent lines Wherefore your petitioner prays that it may be granted leave to now serving this territory in active competition with one another, file this its petition of intervention in these proceedings and its •• working arrangements " to suppress and stifi.e such competition statement herein of its objections to and protests against the said are extremely difficult of consummation, if not impossible. But application of the railroads, as well as such other proper and per­ 1f these independent lines should be merged or submerged into tinent objections and protests and proposals as may !rom time the four enormous systems as proposed, it would be but a simple to time appear or develop during the conduct of these proceedings, matter to divide their spheres of activity among them to suit and that your petitioner may be permitted to introduce such evi­ themselves and all competition will be gone. dence as may be deemed necessary to protect the interests of Vir­ v ginia herein, and that your petitioner may be accorded full oppor­ tunity to be heard in the hearing of this matter. CERTAIN OF THE PROPOSED CONSOLIDATIONS UNLAWFUL UNDER THE Respectfully submitted. LAWS OF VIRGINIA AND WEST VIRGINIA STATE CORPORATION CoMMISSION OF VIKGINIA; This issue was raised in Proposed Acquisition of Control of By H. LEsTER HooKER, Chairman, Virginian Ry. by Norfolk & Western Ry. Co., supra, though not GEORGE C. PEERY, Commissioner, decided in view of the fact that the lease of the Virginian by WM. MEADE FLETCHER, Commissioner, the Norfolk & Western cad not been shown to be in the public H. E. KETNER, Commerce Counsel. interest. In discussing this matter, the commission said: Dated at Richmond, Va., December 30, 1931. "The Commonwealth of · Virginia and its State Corporation Commission insist that the proposed lease is ultra vires the SENATE BILL REFERRED charters of both the N. & W. and the Virginian, and that both A bill of the Senate of the following title was taken from companies are prohibited from e~tering into the lease by the constitution and statutes of Virglnia, because their ra.il.roads are the Speaker's table and, under the rule, referred as follows: 1932 . ·. CONGRESSIO~AL RECORD-HOUSE 1853

S.l. An act to provide emergency financing facilities for By Mr. LEA: A bill (H. R. 7498) .. to amend Act No. 4 banks and other financial institutions, and for other pur­ of the Isthmian Canal Commission entitled "An act to pro­ poses; to the Committee on Banking and Currency. hibit gambling in the Canal Zone, Isthmus of Panama, and ADJOURNMENT to provide for the punishment of violations thereof, and for other purposes," enacted August 22, 1904; to the Com- · Mr. RAINEY. Mr. Speaker, I move that the House do mittee on Interstate and Foreign Commerce. now adjourn. Also, a bill to amend the Code of Criminal the sums herein authorized and of sums heretofore appro­ Procedure for the Canal Zone; to the Committee on Inter­ priated, in conformity with the act of June 7, 1924, for the state and Foreign Commerce. purchase of needed lands and water rights and the creation Also, a bill to provide a new code of civil of other permanent economic improvements as contemplated procedure for the Canal Zone and to repeal the existing Code by said act; to direct the issuance of a patent to the pueblo of Civil Procedure; to the Committee on Interstate and of Taos for certain lands described herein; and for other Foreign Commerce. · purposes; to the Committee on Indian Mairs. Also, a bill CH. R. 7522) to provide a new civil code for the By Mr. KELLY of Pennsylvania: A bill (H. R. 7536) to reg­ Canal Zone and to repeal the existing Civil Code; to the ulate interstate and foreign commerce in bituminous coal; Committee on Interstate and Foreign Commerce. ·provide for consolidations, mergers, and cooperative market­ Also, a bill CH. R. 7523) to amend-sections 7, 8~ and 9 of ing; require the licensing of corporations producing and the Panama Canal act, as amended; to the Committee on shipping coal in interstate commerce; and to create a bitumi­ Interstate and Foreign Commerce. nous coal commission; and for other purposes; to the Com­ By Mr. SINCLAIR: A bill (H. Rr 7524) to liquidate and mittee on Interstate and Foreign Commerce. refinance agricultural indebtedness and to. encourage and By Mr. LAGUARDIA: A bill CH. R. 7537) to amend th~ promote agriculture, commerce, and industry by establish­ Criminal Code so as to prohibit the importation and the in­ ing an efficient credit system through which the unjust and terstate transmission of gambling devices; to the Committee unequal burdens placed upon agriculture during the period on the Judiciary. . of price fixing and deflation may be lightened by providing By·Mr. TINKHAM: A bill (H. R. 7538) for improvement for the liquidation and refinancing of farm mortgages and of Weymouth Fore River, in Massachusetts, from Hingham farm indebtedness at a reduced rate .of interest through the Bay to Weymouth Fore River bridge; to the Committee on F~eral farm -loan system ~ the Federal reserve banking sys­ Rivers and Harbors. tem, and the Postal Savings Depository System, and creating By Mr. CLANCY: A bill (H. R. 7539) to amend the World a Board of Agriculture to supervise the same; to the Com- War veterans' act,-1924; to the Committee on World War mittee on Banking and Currency. · Veterans' Legislation. By Mr. BANKHEAD: A bill CH. R. 7525) to provide that By Mr. RANKIN: A bill

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