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No. 26 "Yesterday, Today And Tomorrow: A Review of Factual Analyses Issued by the American Liberty League and Some Discussion of the Present Legislative Situation," April 8, 1935. American Liberty League. 400dpi TIFF G4 page images Digital Library Services, University of Kentucky Libraries Lexington, Kentucky Am_Lib_Leag_26 These pages may freely searched and displayed. Permission must be received for subsequent distribution in print or electronically. No. 26 "Yesterday, Today And Tomorrow: A Review of Factual Analyses Issued by the American Liberty League and Some Discussion of the Present Legislative Situation," April 8, 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. Pamphlets Available â˜… Copies of the following pamphlets may be obtained upon application to the League's national headquarters: Why, The American Liberty League? Statement of Principles and Purposes Progress vs. Change Speech by Jouett Shouse Recovery, Relief and the Constitution Speech by Jouett Shouse American Liberty League Its Platform An Analysis of the President's Budget Message N. R. A. Its Past, and Recommendations for the Future Analysis of the $4,880,000,000 Emergency Relief Appropriation Act. Democracy or Bureaucracy? Speech by Jouett The Bonus An Analysis of Legislative Proposals The Constitution Still Stands Speech by Jouett Shouse Inflation Possibilities Involved in Existing and The Thirty Hour Week Dangers Inherent in Proposed Legislation The Pending Banking Bill A Proposal to Subject the Nation's Monetary Structure to the Exigencies of Politics The Legislative Situation Speech by Jouett The Holding Company Bill. An Analysis of Proposed Legislation "What is the Constitution Between Friends?" Speech by James M. Beck Where Are We Going? Speech by James W. Wadsworth Congress at the Crossroads Speech by Jouett Shouse Price Control An Analysis of Experiments and Recommendations for the Future AMERICAN LIBERTY LEAGUE NATIONAL PRESS BUILDING WASHINGTON, D. C. YESTERDAY, TODAY AND TOMORROW â˜… â˜… â˜… A Review of Factual Analyses Issued by the American Liberty League and Some Discussion of the Present Legislative Situation AMERICAN LIBERTY LEAGUE National Headquarters NATIONAL PRESS BUILDING WASHINGTON, D. C. Document No. 26 April, 1935 Yesterday, Today and Tomorrow â˜… The record of the present Congress during the first three months of its existence indicates two major trends which may have an important effect upon the course of national events during the next few years. These are: 1. Lack of a definite and coordinated Administration policy with respect to fundamental economic and constitutional issues. 2. Weakening of the control exercised over the Congress by the Administration since March, 1933. It is not improbable that the second development, to some extent at least, grows out of the first. Events of the past two or three months have demonstrated the need at this time for the adoption of measures designed to bring about a solution of national problems along lines in conformity with the ideals of the American people and in harmony with constitutional principles and institutions. In this connection the American Liberty League makes the following suggestions: 1. That there be a prompt and frank appraisal of the various ambitious economic and sociological experiments undertaken during the past two years, that those which have failed to bring about the results anticipated be discarded, and that those which give some promise of producing beneficial results be continued with modifications where necessary in order to bring them within the scope of authority properly exercised by the Federal Government in accordance with the Constitution. 2. That definite and unequivocal assurance be given of an intention to bring the Federal budget into balance within a reasonable time in order to allay fears of ruinous inflation and a wrecking of the Nation's monetary and credit structure. 3. That business, both small and large (meaning the combined efforts of the American people to earn a livelihood), which has supplied the funds to operate the Government and the future earnings of which form the only real basis of Government credit be relieved of unnecessary harassment, bureaucratic control and demagogic arraignment. 3 4. That essential relief activities, both those partaking of the character of an outright dole and those described as work relief, be carried on with the least possible interference with normal economic processes; that heed be given to the restrictions on the work .elief program as outlined in President Roosevelt's message at the opening of the present Congress but largely ignored in subsequent legislative proposals. 5. That there be an immediate cessation of attempts to subvert basic constitutional principles through the delegation, or attempted delegation, of legislative and judicial powers to executive officials and bureaus. Uncertainty as to the course to be pursued by the Federal Government is one of the gravest obstacles to economic recovery. Only by a forthright and definite delineation of policy by those with authority to speak and by subsequent action in conformity with such a declaration can that obstacle be removed. Legislative activity at present appears to fall into three main categories number 1, that designed to bring about economic recovery; number 2, that having the objective of reform; and number 3, that which, for lack of a better name, must be described as inquisitorial. The first result is the primary requisite. It must be accomplished if the country is to survive. No matter how worthy the objectives sought in connection with number two and number three, for the time being at least they interfere with and defeat number one. Therefore, the part of wisdom would seem to be to put aside reform and inquisition and to concentrate upon recovery. If that is not accomplished it is both futile and ridiculous to waste time and money upon well-meaning although sometimes visionary experiments looking toward an economic Utopia or to rake over the dead ashes of past abuses and mistakes. The League's Non-Partizian Record The record of the American Liberty League during the past few months has demonstrated the sincerity of its announcement at the outset that it would operate along non-partizan lines. The League has supported the position of the present Administration on several important issues. It has opposed, for example, cash pre-4 payment of World War Adjusted Service Certificates and the pending thirty-hour week legislation. It has endorsed the Administration objective in other measures where it could not agree with the methods sought to be used. At the same time the League has not hesitated to express vigorous opposition to some Administration proposals, as for example the unprecedented and exceedingly dangerous delegation of powers embodied in the $4,880,000,000 Relief Appropriation Act. In all of its pronouncements, however, the League has based its position upon factual analyses which have not been challenged nor controverted. Beginning with the issuance of a painstaking review of President Roosevelt's budget message within a few days after that document was transmitted to the Congress, the League has published a series of careful studies dealing with important legislative proposals and public questions. The purpose of this activity has been to promote the welfare of the Nation and to assist in the solution of vexing problems. This activity will continue. Budget Message The continued accumulation of Treasury deficits which on the basis of actual expenditures and official estimates will have aggregated more than $20,500,000,000 for the six year period ending June 30, 1936 is one of the most discouraging factors in any appraisal of the Nation's prospects for economic recovery. The League's analysis of the President's message pointed out that the present Administration's platform pledge for a 25 per cent reduction in governmental expenditures has been ignored despite an encouraging start in that direction with the enactment of the Economy Act of 1933. Instead of a reduction in expenditures for normal governmental activities it was pointed out that, according to the annual report of the Secretary of the Treasury, expenditures for the fiscal year 1935 will exceed those for 1934 by $835,540,-640, and that estimated expenditures for the same purposes endorsed by the President for the fiscal year 1936 show an increase of $1,297,487,600 over 1934. This is independent of the expenditures for relief and recovery which are separately classified. s Furthermore, after the President's statement in his budget message in January, 1934, which was generally construed as holding out a promise that the total public debt would not be allowed to go beyond $31,834,000,000, his latest message contemplates an increase to $34,239,000,000 and contains no intimation that even this huge total may be considered as the outside limit. The Congress has indicated a discouraging indifference to the problem of ever-mounting deficits with their almost inevitable consequence of serious inflation. Since the President's message was transmitted, the House has passed the Patman Bonus Bill proposing to pay off more than $2,000,000,000 in unmatured adjusted compensation certificates with fiat money. National Recovery Administration Early in January, in an analysis of the problem of what to do with the NRA, the League laid down several principles which should be adhered to in the determination of the future of that agency of government if it is to be continued. It was recommended that any unusual Executive authority over business such as that contained in the Recovery Act should be extended, if at all, for a limited period only. It was also recommended that the Congress should be zealous in guarding its own legislative prerogatives by refusing to delegate law-making powers to the Executive, and that due regard should be accorded to our dual form of government by insuring against encroachment upon the sovereignty of the States. Self-government in industry was held out as the goal in any recovery program and there was insistence that laws respecting the relations between employers and employees should be fair to both parties. Finally, there was a warning that legislation enacted under the guise of emergency recovery measures should not be susceptible of use for experimentation with untried economic theories. In a subsequent analysis of price control agreements, as illustrated particularly by NRA codes, the League declared its opposition to any such devices, whether by governmental edict or industrial combinations. The bill to extend the life of NRA recently introduced by Senator Harrison of Mississippi, with indications that it has the approval of the Administration, harmonizes in one respect with the League recommendations in that it specifies that the proposed extension shall be limited to two years. In the matter of delegating legislative authority to the President which in practice means re-delegating it to subordinate officials, the new bill is just as objectionable as the existing law, although there is an apparent attempt in the new measure to guard against adverse court action by laying down a number of broad subjects over which it is proposed the President may exercise authority. It must be a matter of extreme regret to all citizens interested in maintaining constitutional government that the Administration has seen fit to abandon its appeal to the Supreme Court in the so-called Belcher case. By this strategy the Executive Branch of the Government has avoided a final decision on the constitutionality of the National Industrial Recovery Act, for the present term of court at least. It has also made it impossible for the present for a coordinate branch of the Government the Judiciary to exercise its constitutional powers. Naturally this has given rise to a widespread impression that the Administration itself is extremely dubious about the validity of the Recovery Act despite the fact that it is now seeking to have that act extended in substantially its present form for two years. This situation taken in connection with persistent reports from well informed quarters to the effect that the NRA Extension Act may be passed in such form as to preclude a continuation of at least some of the court proceedings which have been begun under the existing law and which if finally carried to the Supreme Court would bring an authoritative decision puts the Administration in a position where it is subject to the suspicion that it is seeking to dodge constitutional limitations which might hamper some of its most ambitious experiments. The new bill makes a gesture toward avoidance of Federal encroachment upon the rights of the States by embodying some apparent restrictions relating to industries which are eligible for codes._ However, the definition of what constitutes interstate commerce is exactly the same in the new bill as in the present law, and, even with respect to the eligibility of industries, that determination is left finally to the discretion of the President. There is no advance in the new bill toward self-government of industry which should be a primary objective. With some minor restrictions it still permits price control devices which the League opposes. Section 7(a) relating to labor, with inconsequential changes in verbiage, is the same as in existing law. The meaning of this section has been the subject of heated discussions and disagreements among even those who have administered it and some who are reputed to have written it. There is no improvement in the new bill with respect to this section. The $4,880,000,000 Relief Bill This measure, which may be enacted into law by the time this pamphlet is printed, was the subject of a searching analysis by the League after the bill had been passed by the House of Representatives. The extraordinary delegation of power to the President embodied in the bill was described by the League as an abdication by the Congress of its proper responsibilities and as a step toward the European type of dictatorship in which the parliamentary body becomes a nonentity. A Senate amendment offers pretense of retaining some degree of congressional control over the allocation of the huge fund by specifying nine general classifications of projects for which the money may be spent and setting the totals for each category. However, these classifications are so broad that there is practically no restraint upon the President. Moreover, a proviso authorizes him to change these specified allocations up to 20 per cent of the entire total of the bill. An ominous feature of this measure is the revelation that apparently the Administration contemplates using a considerable part of the money to encourage municipalities to buy electric light plants and thus aggravate the evils already brought about through undue governmental competition with private business. This prospect developed out of the controversy precipitated when House and Senate conferees wrote into the bill an amendment specifying that at least one-third of the $900,000,000 allocated for loans and grants to States should be spent for labor. The attitude taken by Public Works Administrator Ickes and others in high Administration circles seems to indicate that they visualize this part of the $4,880,000,000 at least as a fund with which to promote governmental ownership and operation of utilities rather than a fund to provide jobs. And yet the sole object of the } appropriation is supposed to be a substitution of work-relief for the dole. The League did not question the amount of the appropriation requested, huge as it is, but did urge that the Congress exercise some degree of its proper constitutional control over the expenditure of money from the public treasury. When the bill was first transmitted to the Congress by the Administration, it contained a provision which would have authorized the President, in carrying out the broadly declared objectives of the measure, to acquire any real or personal property, either by purchase or by the exercise of the power of eminent domain. Members of the House revolted at this far-reaching proposal and the bill was amended to restrict this power to the acquisition of real property only. That was done last January. Since that time the Senate Appropriations Committee and the Senate itself have acquiesced in this restriction. It is highly disturbing to note that on March 6 the President issued an Executive Order authorizing the Federal Emergency Relief Administration to exercise the same power which in the first draft of the $4,880,000,000 Relief Bill it was proposed should be delegated to the President. This Executive Order, No. 6983, reads as follows: "By virtue of and pursuant to the authority vested in me by title II of the National Industrial Recovery Act, approved June 16, 1933 (48 Stat. 195), I hereby authorize and designate the Federal Emergency Relief Administrator, and the Director of the Land Program as he may be authorized by such Administrator, to acquire by purchase or by the exercise of the power of eminent domain any real or personal property or any interest therein, in connection with the construction or carrying on of any project or program financed by allocations, allotments, or transfers made, or to be made, to the Federal Emergency Relief Administration under the authority and in accordance with the provisions of the said National Industrial Recovery Act or acts supplementing the appropriations heretofore made therefor, and to sell any security acquired or any property so constructed or acquired or to lease any such property with or without the privilege of purchase, and to administer or to direct the administration of such property." In this connection it should be noted that the Public Works Administration, which was financed by funds appropriated under the National Industrial Recovery Act, was continued for two years through a legislative rider tacked on to the $4,880,000,000 Relief Bill in the Senate. It should be remembered that the amount of public money entrusted by this bill to the President, to be spent practically at his discretion, is greater than the total expenditures of the Federal Government for any year from 1922 to 1931. Also, it is almost as much as the aggregate farm value of all of the products of agriculture in the United States for one year. According to the "Statistical Abstract of the United States" the latter figure for the year 1933 was $5,141,500,000. Economic Security When President Roosevelt sent his special message to the Congress recommending enactment of legislation to provide for his far-reaching Economic Security program, the League promptly issued an analysis of the Wagner-Doughton bill which proposes by one legislative act to undertake this tremendous experiment. The League recommended that, inasmuch as this program contemplates permanent and vital changes in the economic structure of the Nation, it should not be rushed through Congress as other important measures have been rushed under the plea that an emergency requires quick action. It was also suggested that the bill be separated into three or four separate measures, each dealing with a specific part of the program. It was pointed out that there is considerable uncertainty as to the feasibility of some of the proposals. For example, the bill as introduced provided an appropriation of only $50,000,000 for the fiscal year 1936 and $125,000,000 for each year thereafter to finance the Federal share of the proposed State aid system of old age pensions. Contrasted with this, the report of the President's Committee on Economic Security contains an estimate that the Federal share in this proposed system would amount to $1,294,-300,000 per year by 1980. Since the Wagner-Doughton bill was intro-10 duced, the House Ways and Means Committee has given prolonged consideration to it and has done considerable redrafting. There appears to be a disposition in the Senate also to consider various parts of the bill separately. Apparently the Congress has seen the wisdom of the suggestion that this ambitious experiment be approached with deliberation. The Bonus On the question of cash pre-payment of the World War Adjusted Service Certificates, the League took a position coinciding with that expressed by President Roosevelt in his letter of December 27, 1934, to Garland R. Farmer, Commander of the Henderson, Texas, American Legion Post. The League summarized its reasons for opposing the Bonus bill as follows: 1. Bonus certificates are not due until 1945. 2. Loans already made have exceeded original basic cash values. 3. Families of veterans now are protected to the full face amount of certificates in the event of death; otherwise provision is made toward the needs of their later years. 4. The United States has been more liberal to its veterans than any other nation involved in the World War. 5. Immediate payment would mean an outright gift of $1,620,000,000, including remittance of interest on loans, in excess of the present value on an actuarial basis. 6. Actual cost of the pending proposal would be more than $2,000,000,000. 7. If borrowed, the $2,000,000,000 adds to Treasury deficits with consequent inflationary dangers; printing press currency would undermine the soundness of the monetary system. 8. Recent experience indicates that no lasting stimulus to business can be assured by this outlay of government money. 9. Wise policy calls for avoidance by the Congress either of additional burdens upon the Treasury or experimentation with fanciful monetary theories. Inflation A study of currency and credit inflation possibilities in existing laws and proposed legislation pointed out several dangerous factors in the present situation. Among these possibilities are: 11 1. The evil results which on the basis of past experience may be expected from the continuous piling up of huge Treasury deficits. 2. Demands for the use of printing press currency to finance various projects, as, for example, pre-payment of the bonus certificates. 3. Credit expansion possibilities involved in laws already on the statute books and in proposals such as the Fletcher-Steagall banking bill, which together would make possible an expansion of credit to the extent of more than 100 billions of dollars. The dangers involved in inflation were illustrated by citations from the experiences of Germany, France and Russia since the World War. It was pointed out, for example, that ten loaves of bread, which now cost $1.00 in the United States, would cost $10.00 if our currency were depreciated to the extent which prevailed in France since the World War, and that if we indulged in such fantastic depreciations as occurred in Russia and Germany the cost of the same ten loaves of bread would mount to 50 billion and 1 trillion dollars respectively. Thirty-Hour Week The League is opposed to legislative attempts to impose a compulsory thirty-hour week upon industry. The League's attitude in this respect coincides generally with that of the Administration as expressed some months ago by Secretary of Labor Perkins speaking with the approval of the President. This position is based upon the following contentions: 1. Such legislation is an unwarranted and probably unconstitutional attempt to control production, and infringes upon the rights of both employers and employees. 2. It is unworkable because it could not be enforced, even with a vastly expanded Federal bureaucracy and if it should be effectively enforced it would not produce the results for which it is designed. Instead of increasing purchasing power and stimulating industry it would retard recovery through higher prices and reduced consumption. The so-called Black bill embodying one form of the thirty-hour week plan has been reported by a Senate Committee and is now on the Senate Calendar. The Connery bill proposing to attain 12 the same objective by a different method is still before a House Committee. Proposed Banking Legislation The League is opposed to certain features of the Fletcher-Steagall bill because this measure would subject the Federal Reserve System to all the evils of a politically controlled central banking system. Moreover, it delegates to the Executive Branch unrestricted authority over the volume of currency and credit without so much as declaring a policy. Encouragement of inflationary possibilities and the destruction of existing safeguards against that evil are other dangers of the bill. Senate and House Committees have given indication of a determination to proceed slowly and carefully in the disposition of this measure despite some indications that it has Administration backing. The Holding Company Bill The Wheeler-Rayburn bill proposing the abolition of public utilities holding companies is opposed by the League in the form introduced. An analysis of this measure pointed out that its enactment would imperil investments in the hands of the public amounting to about $2,000,-000,000 in holding company securities and would also jeopardize other investments aggregating approximately $10,000,000,000 more in the securities of utility operating companies. Basically the bill appears to be designed, whether intentionally or not, to bring about eventual government ownership and operation of all utilities. It also represents an unwarranted intrusion of Federal authority into purely intrastate business. This measure has been the subject of extended hearings before a House Committee. The Senate so far has taken no step toward action on the measure. There are some indications that there is little likelihood the bill can be enacted in the form in which it was introduced. Future Activities The League has made and will continue to make every proper effort to place its viewpoint before the American public. As each of the 13 studies heretofore enumerated has been issued, copies have been distributed immediately to every member of the Senate and House. In advance of publication these studies have been supplied to the editors of every leading newspaper in the United States to facilitate timely editorial comment. The pamphlets themselves, accompanied by news releases in the nature of summaries, have been distributed to the Washington bureaus of about 350 newspapers represented in the Capital, as well as to all of the press associations. These pamphlets have been sent regularly to more than 7500 libraries in all parts of the country; they have been distributed to the League's membership and some of them have been utilized in part as the basis of radio addresses by League speakers. In addition, the League has supplied copies of many of the documents in response to requests from individuals and organizations, including several agencies of government. The League plans to continue its series of factual analyses of important legislative proposals and public policies. As has been the case with those studies heretofore made, those to be made in the future will be strictly non-partizan, in line with the League's position which has been adhered to scrupulously. 14