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No. 12 "$4,880,000,000: An Analysis of the Emergency Relief Appropriation Act of 1935 as Approved by the House" January 28, 1935. American Liberty League. 400dpi TIFF G4 page images Digital Library Services, University of Kentucky Libraries Lexington, Kentucky Am_Lib_Leag_12 These pages may freely searched and displayed. Permission must be received for subsequent distribution in print or electronically. No. 12 "$4,880,000,000: An Analysis of the Emergency Relief Appropriation Act of 1935 as Approved by the House" January 28, 1935. American Liberty League. American Liberty League. Washington, D.C. 1935. This electronic text file was created by Optical Character Recognition (OCR). No corrections have been made to the OCR-ed text and no editing has been done to the content of the original document. Encoding has been done through an automated process using the recommendations for Level 1 of the TEI in Libraries Guidelines. Digital page images are linked to the text file. Total Obligations Incurred for Relief and Administration (Federal, State and Local Governments) January $60,827,161 January $53,880,834 February 67,375,424 February 57,668,213 March 81,205,631 March 69,794,803 April 73,010,801 April 133,134,287* May 70,806,338 66,339,207 May 129,222,771* June June 125,198,650Â« July 60,155,874 July 130,953,215* August 61,470,496 August 149,424,555* September 59,346,338 September 143,227,846* October 64,888,913 October 156,807,070f November 70,810,514 November 175,789,742f December 56.526,330 * Includes obligations incurred for materials and other expenses incident to work program substituted for CWA. T Preliminary figures. Obligations incurred by the Federal, state, and local governments are shown separately in the following table for the 21 months for which final figures are available: Relief Obligations Incurred, January, 1933-September, 1934 Federal Funds Per 1933 Amount Cent Quarter 1st $122,380,457 58.4 2nd 136,701,140 65.0 3rd 113,553,348 62.8 4th 107,966,838 56.2 State Funds Per Amount Cent Local Funds Per Amount Cent $18,405,682 8.8 $68,622,076 32.8 20,589,838 9.8 52,865,367 25.2 26,854,596 14.8 40,564,764 22.4 46,508,186 24.2 37,750,785 19.6 Tl. $480,601,783 60.6 $112,358,252 14.2 $199,802,992 25.2 1934 1st $88,169,309 48.7 $59,306,742 32.7 $33,771,251 18.6 2nd 271,217,442 73.8 40,883,586 11.1 55,454,679 15.1 3rd 317,147,560 74.9 36,658,190 8.6 69,799,867 16.5 4th Tl. $676,534,311 69.6 $136,848,518 14.1 $159,025,797 16.3 The entire relief problem is one which the Congress should not shirk. The American Liberty League, as indicated by the excerpt from its statement of principles quoted on the title page of this pamphlet, believes that ample funds should be provided for relief. It has not been the purpose here to discuss relief needs but rather the manner in which it is proposed to shift the determination of policies from the legislative to the executive branch of the government. The powers conferred under the joint resolution are not only unrestricted as to the manner of expenditure of funds but might be used to make a very material change in our form of government. The Congress should not countenance a step which tends toward nullification of the division of authority under the Constitution among the three coordinate branches of government. $4,880,000,000 An Analysis of the Emergency Relief Appropriation Act of 1935 as Approved by the House "The American Liberty League thoroughly recognizes the obligation of our government to come to the relief of the men and women who are in distress because of unemployment through no fault of their own, or are suffering from affliction over which they could have no control. And this we firmly believe can be done without violation of our Constitution or of American traditions." AMERICAN LIBERTY LEAGUE Rational Headquarters NATIONAL PRESS BUILDING WASHINGTON, D. C. Document No. 11 January i8, 1935 Relief Appropriations â˜… THE "Emergency Relief Appropriation Act of 1935" as approved by the House of Representatives marks a new extreme in broad grants of power to the Executive. In substance it means: 1. An abdication by the Congress of its proper responsibilities in an almost limitless field of legislation. 2. Complete control by the President of the expenditure of an amount of money greater than total annual costs of the government in the period just prior to the depression. 3. No legislative guidance whatever in the determination of policies which ordinarily engage the close attention of a half dozen or more standing committees in each branch of the Congress. 4. A step toward the European type of dictatorship in which the parliamentary body becomes a nonentity. 5. Authority to the Executive to make rules and regulations for violation of which fines may be imposed. 6. The creation of a vast new bureaucracy free from Civil Service laws and not answerable to the Congress. 7. Broad power to the President to reorganize the governmental machinery. 8. Continuance of uncertainties which tend to destroy confidence and retard recovery. Restrictions Desirable The joint resolution appropriating $4,880,000,-000 for work relief and direct relief was rushed through the House with undue haste. Before it is acted upon in the Senate careful consideration should be given to the desirability of amendments which will establish principles to govern the expenditure of the money and restrict more specifically the purposes for which it can be used. It is proper that there should be flexibility in the use of the funds and that the President rather than the Congress should make actual allotments within specified classes. Nothing quite like this measure has ever been known before in the history of our government. The 14,880,000,000 is not only a much larger total than the amount of the public works fund 2 created in the National Industrial Recovery Act, but there are fewer restrictions on the manner in which it can be expended. The four purposes for which the money may be allotted are so general in character as to embrace almost any money-spending scheme ever devised by the brain of man. These are: " (1) Providing relief from the hardships attributable to widespread unemployment and conditions resulting therefrom, (2) relieving economic maladjustment, (3) alleviating distress, and/or (4) improving living and working conditions." All that is necessary for a project to come within the scope of the measure is to hold that it "shall be adapted to the accomplishment of any one or more of the objectives." The money must be used "in the discretion and under the direction of the President." To make it clear that it is not intended that he shall be restricted in any manner, it is stated that specific powers vested in him "shall not be construed as limiting the general powers and discretion." Specific Powers The specific powers which are vested in the President go beyond the mere spending of money. He may establish and prescribe the duties and functions of governmental agencies, including public corporations, which are even less subject to control by the Congress. Also, he may utilize and prescribe the duties and functions of any existing governmental agency. He may consolidate, redistribute, abolish or transfer the functions or duties and transfer the property and personnel of any emergency agency. He may delegate the powers conferred upon him to any governmental agency or public corporation. The powers of the President with respect to the appointment of government officials and employees and the fixing of their salaries are unlimited. He may make their appointments without regard to Civil Service laws and may prescribe their duties and tenure of office. He may fix the compensation of officers and employees without regard to the Classification Act. There is no maximum for salaries nor is there any provision for confirmation by the Senate of the more responsible appointed officials under whose immediate direction the immense program will be carried out. When it is realized that there has been an increase of considerably more than 100,000 employees in the government service under the emergency program heretofore in effect, the pos-3 sibilities for the creation of a new and powerful bureaucracy become alarming. Among the other powers specifically conferred upon the President are authority "to guarantee loans to, or payments of, needy individuals; to make grants, loans and contracts," to purchase or by the power of eminent domain to acquire real property, and to improve, develop, maintain, grant, sell or lease it. The President may make law by executive order, violation of which may lead to fines. He is authorized "to prescribe such rules and regulations as may be necessary to carry out this joint resolution, and any willful violation of any such rule or regulation shall be punishable by fine of not to exceed $5,000." Virtually the only limitation in the joint resolution is in the period in which the $4,880,-000,000 remains available. This period extends through the next two fiscal years until June 30, 1937, which is nearly six months beyond the end of the term of the present administration. No Declaration of Policy In his annual message to the Congress on January 4, President Roosevelt prescribed seven principles which should govern the administration of the work-relief program. These were that all work undertaken should be useful, that compensation on any emergency public projects should not be so large as to compete with private employment, that projects should be undertaken on which a large percentage of direct labor can be used, that preference should be given to self-liquidating projects, that the projects should be so selected and planned as to compete as little as possible with private enterprise, that the projects should be so planned as to assure work to persons now on relief and that projects should be located where they will best serve to absorb the present unemployment. Unfortunately, there is no suggestion of these principles in the terms of the joint resolution. It would seem to be proper that the Congress should go at least that far in establishing a policy. The Congress also should designate specifically the classes of projects for which funds may be used. It is not necessary nor desirable that the Congress should actually allocate the money among particular projects or areas. Many questions of public policy which under our Constitutional system should be decided by the Congress are certain to arise. It will be re-4 called that fundamental issues in both Muscle Shoals and Boulder Dam legislation occasioned acute controversies which kept those measures before the Congress over a period of several years. Similarly the Mississippi Flood Control Act involved points of policy which made it a major item of legislation. The same type of questions of public policy affecting relations between the Federal government and the citizens and between the government and private industry will arise in connection with the new work-relief program. The rules of the House of Representatives provide for the consideration of general legislation by standing committees other than the Appropriations Committee. Authorizations for new types of expenditures come under the jurisdiction of these committees, only the actual appropriation of the money being handled through the Appropriations Committee. The present legislation was considered in the House only by the Appropriations Committee. The several committees which ordinarily handle such matters as reclamation, river and harbor improvements, public highways, the generation of electrical power, reforestation and other public works of various kinds were ignored. Other committees should have been consulted on provisions for credit and for the acquisition of property by the power of eminent domain. The unusual procedure tends to emphasize the failure of the House of Representatives to assume its proper responsibilities. The House Appropriations subcommittee, which held a single hearing of less than one day behind closed doors, failed to give the legislation the careful consideration which its importance warrants. The administration supplied no exact information as to what is contemplated. It is impossible, therefore, to discuss the merits of any particular form of work relief. In the light of the experience with the present public works fund the Congress should move slowly in granting further authority for expenditures of this character. Direct Relief The joint resolution does not differentiate between the purposes for which the $4,000,000,000 intended for work relief and the $880,000,000 for other relief needs may be used. Both are available for any of the general purposes as stated. The House Appropriations Committee was told that of the $880,000,000 the sum of $750,000,000 is needed for direct relief from February to June 30, while $130,000,000 will be used for the 5 Civilian Conservation Corps between March 31 and June 30. While the states and local communities should bear as much of the relief burden as possible, it is unavoidable that the Federal government should continue to carry a large part of the load. If $750,000,000 is used for direct relief, it will bring Federal expenditures for this purpose during the current fiscal year of 1935 to about $1,900,000,000. The appropriation of $880,000,000 from various unexpended balances of emergency funds means that the entire amount may not appear in the Treasury statements of expenditures and deficits. The use of $500,000,000 from funds of the Reconstruction Finance Corporation, for example, will appear in the Treasury statements only to the extent that it is necessary for the Corporation to obtain funds in excess of repayments on loans. How this operates may be seen in the Daily Treasury statement. The Federal Emergency Relief Administration has been using funds diverted from the Reconstruction Finance Corporation under authority of a deficiency act in the last session of the Congress. The latest Daily Treasury statement shows expenditures of only about $530,000,000 by the Relief Administration during the current fiscal year. A footnote explains that the Reconstruction Finance Corporation has expended nearly $420,000,000 for the Relief Administration during the year. The Reconstruction Finance Corporation item in the Daily Treasury statement, however, shows that it has obtained from the Treasury during the year for all purposes less than $285,000,000. In the long run it makes no difference to the taxpayers whether relief funds are appropriated directly from the Treasury or from a revolving loan fund such as that of the Reconstruction Finance Corporation. The effect of the latter course is to take money which otherwise would eventually be returned to the Treasury for use in a reduction of the public debt. The current Treasury deficit is made to appear somewhat less. There can be no ground for any suggestion that the Congress up to this time has been laggard in making provision for relief. The figures show a generous outlay of funds for this purpose since the beginning of the present administration. Relief Expenditures of the Federal Government Expenditures to January 1, 1935, of the agencies established by the present administra- tion for direct relief of economic distress totaled $2,990,629,404, or $24.36 per capita. The gross public debt of the United States rose from $22,538,672,560.15 on June 30, 1933, to $28,478,663,924.70 on December 31, 1934. Relief expenditures have accounted for half (50.3 per cent) of the increase in the public debt during this period. Expenditures of Federal Relief Agencies from commencement of operations in May, 1933, to January 1, 1935, are as follows: Federal Emergency Relief Administration $1,488,915,461 Federal Surplus Relief Corporation...... 85.313.002 Civil Works Administration............. 815,236,705 1 Civilian Conservation Corps............ 531,533.506 Department of Agriculture (drought relief) 69,600,730 $2,990,629,404 At the beginning of 1935 the Civilian Conservation Corps had an unexpended balance of $228,318,438. Its expenditures during the preceding six months were $199,594,655. The Federal Emergency Relief Administration (including the Federal Surplus Relief Corporation) had an unexpended balance on January 1 of $321,769,564. The total expenditures for relief from May, 1933, to January 1, 1935, were $2,990,629,404. The unexpended balances on January 1 were $550,088,002. Add to this the $880,000,000 intended for immediate use, and you have $4,420,-717,406. All of this will have been expended by June 30, 1935. It amounts to $36.01 per capita. This $4,420,717,406 added to the $4,000,000,000 asked by the President for the work-relief program makes a total of $8,420,717,406. Relief expenditures between May, 1933, and June 30, 1937, the date to which the fund remains available, will amount to $68.51 per capita. Inasmuch as the President stated in his message to the Congress transmitting reports of the National Resources Board that the $4,000,000,000 is desired for use during the coming 18 months, it is obvious that additional appropriations will be sought a year hence. Cost of Relief Obligations incurred for relief by Federal, state and local governments are reported by the Federal Emergency Relief Administration to have totaled $156,807,070 in October, 1934, and $175,789,742 in November (preliminary figures). These sums are more than twice as large as the relief obligations incurred during the corresponding months of 1933, just prior to the institution of the Civil Works Administration. A tabulation follows: