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No. 83 "A Program For Congress: Some Suggestions and Recommendations Designed to Encourage the Legislative Branch of the Government to Reassert Its Constitutional Prerogatives and Put the Nation's House in Order," December 26, 1935.
No. 83 "A Program For Congress: Some Suggestions and Recommendations Designed to Encourage the Legislative Branch of the Government to Reassert Its Constitutional Prerogatives and Put the Nation's House in Order," December 26, 1935. American Liberty League. 400dpi TIFF G4 page images Digital Library Services, University of Kentucky Libraries Lexington, Kentucky Am_Lib_Leag_83 These pages may freely searched and displayed. Permission must be received for subsequent distribution in print or electronically. No. 83 "A Program For Congress: Some Suggestions and Recommendations Designed to Encourage the Legislative Branch of the Government to Reassert Its Constitutional Prerogatives and Put the Nation's House in Order," December 26, 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 and other League literature may be obtained upon application to the League's national headquarters: Statement of Principles and Purposes American Liberty League Its Platform An Analysis of the President's Budget Message The Bonus Inflation The Thirty Hour Week Bill The Holding Company Bill Price Control The Labor Relations Bill The Farmers' Home Bill The TV A Amendments I. The Supreme Court and the New Deal The Revised AAA Amendments The President's Tax Program Expanding Bureaucracy Lawmaking by Executive Order New Deal Laws in Federal Courts Consumers and the AAA Budget Prospects Dangerous Experimentation Economic Planning Mistaken But Not New "Work Relief The AAA and Our Form of Government Alternatives to the American Form of Government The National Labor Relations Act Summary oj Conclusions jrorn report oj the National Lawyers Committee Straws Which Tell How to Meet the Issue Speech by W. E. Borah The American Bar The Trustee of American Institutions Speech by Albert C. Ritchie The People's Money Speech by Dr. W. E. Spahr Legislation By Coercion or Constitution Speech by Jouett Shouse The Imperilment of Democracy Speech by Fitzgerald Hall The Test of Citizenship Speech by Dean Carl W. Ackerman "Breathing Spells" Speech by Jouett Shouse The Duty of the Lawyer in the Present Crisis Speech by James M. Beck The Constitution and the Supreme Court Speech by Borden Burr The Economic Necessity in the Southern States for a Return to the Constitution Speech by Forney Johnston The National Lawyers Committee of the American Liberty League Speech by Ethan E. H. Shepley Our Growing National Debt and Inflation Speech by Dr. E. W. Kemmerer Inflation is Bad Business Speech by Dr. Neil Car others The Real Significance of the Constitutional Issue Speech by R. E. Desvernine â˜… AMERICAN LIBERTY LEAGUE NATIONAL PRESS BUILDING WASHINGTON, D. C. â˜… â˜… A PROGRAM FOR CONGRESS â˜… â˜… â˜… Some Suggestions and Recommendations Designed to Encourage the Legislative Branch of the Government to Reassert Its Constitutional Prerogatives and Put the Nation's House in Order AMERICAN LIBERTY LEAGUE T^ational Headquarters NATIONAL PRESS BUILDING WASHINGTON, D. C. Document No. 83 December, 1935 A Program for Congress â˜… During the past year the American Liberty League has published from time to time factual analyses of important legislative proposals before the Congress as well as discussions of policies of the present administration. The trend of the administration's legislative program was such that in many instances the League was forced to oppose it and to point out that it overstepped either the letter or the spirit of the Constitution and was out of harmony with tested theories of government under which this country has grown and developed and prospered. The criticism offered was not based on partisan interest in legislation or elective officials. The purpose of the League, kept constantly in view, is to uphold and preserve the fundamentals of the Constitution and to oppose departures from the sound principles upon which our Government is based. Defenders of the administration on repeated occasions have held that criticism from the League, or from any other source, is intended to be purely destructive, and that no alternative constructive program has been offered. Herewith the League presents an outline of recommendations for legislation during the second and final session of the Seventy-fourth Congress. The measures and principles suggested not only conform to fundamental rights and liberties of states and of individuals but make a further valuable contribution toward sound recovery. In formulating these recommendations the League emphatically rejects the demagogical theory that legislation provides cures for all ills. It dissents from the doctrine that rigid regulation, even when given the sugar-coated title of "economic planning," has merits superior to the American system of private enterprise. It believes that without freedom of individual initiative the nation could not have achieved its present eminence. It holds that the enactment 2 of legislation should be a deliberative process tempered by the checks and balances of our system of government. It does not think that action necessarily means progress. It is profoundly of the opinion that ill-considered and unsound laws obstruct the normal course of recovery and even defeat intended social objectives. The United States has had a saturnalia of lawmaking. Much of it has been in conflict both with the Constitution and with sound economic principles. The overturning of traditional policies and uncertainties as to the effects of new and proposed laws have been highly disturbing to business. The nation needs not only a "breathing spell" but permanent relief from legislation of this character. The purpose of the Congress during the new session should be to put the Government's house in order. The Congress should reassert its rights and prerogatives under the Constitution in such positive fashion as definitely to check the trend toward dictatorship. It should resist all proposals which tend to break down our form of government. It should take stock of what has occurred through an undue delegation of power to the Executive. Above all, it should make the Government's financial and monetary structure impregnable. The following specific suggestions are offered for consideration: 1. The Budget. Appropriations are the most important matter of the coming session and bear vitally upon the preservation of American institutions. Treasury deficits should be brought to an abrupt end by reducing expenditures to the level of receipts. 2. Belief. A moderate appropriation properly may be made for direct relief for a limited period with provision thereafter for loans to such states as are unable to assume their full responsibilities for the care of the needy. 3. Public Works. Expenditure of Government funds for boondoggling and for local improvements under the guise of work relief should be halted. Provision wisely may be made for a 3 program of productive public works on a greatly reduced but somewhat more extensive scale than in former years. The test of each project should be, first, is it of a character which makes private undertaking impossible and, second, is it worth the cost? 4. Taxation. Revision of revenue laws should be undertaken with a view to the elimination of inequities. Provisions of the 1935 act in which the taxing power is used to accomplish social objectives rather than to raise revenue should be repealed. The purpose of the Congress should be to ease rather than to increase the tax burden upon business, upon the home and upon the individual. 5. Monetary and Banking Policies. In anticipation of the expiration in January, 1937, of three-year emergency powers granted to the President in connection with the adjustment of the gold content of the dollar and the use of a gold stabilization fund, the Congress should plan for a revision of monetary laws along sound lines. Demonstrated interest in this subject by the Congress would tend strongly to inspire public confidence. Inflationary currency proposals and measures extending political control over the banking system should be rejected. 6. Government and Business. Statistical evidence indicates that recovery was stimulated by the Supreme Court decision invalidating the NRA. The emasculated, useless and expensive National Industrial Recovery Act should be allowed to lapse at its expiration on April 1, 1936, and no further public money should be spent for the maintenance of the machinery created under this act. The American system of private enterprise should not be handicapped by restrictive and coercive legislation. Bills which are part of a program of "economic planning" should be defeated. Regulatory laws such as the Labor Relations Act and the Bituminous Coal Act should be given further consideration with a view to amendment or repeal. Such legislation as may be necessary to withdraw the Government from competition with private business should be enacted. 4 7. Public Utilities. The "death sentence" provision applying to public utility holding companies in the act of the 1935 session should be repealed. Public utility corporations have been harassed with consequent injury to thousands of investors. The activities of the Tennessee Valley Authority should be curbed insofar as they encroach upon the field of private industry or advance Socialistic doctrine. 8. Social Security. Further study should be made of provisions of the new Social Security Act which places upon the Federal Government responsibility for unemployment and old-age I insurance which the 1932 Democratic platform ' declared should be dealt with entirely under state laws. The objectives of the law will be U frustrated unless many amendments are made. 9. Agriculture. In the view of many lawyers competent to express an opinion the AAA is patently unconstitutional. No attempt is here made to anticipate the decision of the Supreme Court. But, regardless of the decision on the particular points involved, the Agricultural Adjustment Act and other laws relating to agriculture should be completely revised with a view to the elimination of methods in conflict with the Constitution. Through policies in keeping with American traditions it should be possible to expand domestic consumption of farm products as well as to regain the foreign trade lost by reason of the present restrictive program. The theory of scarcity as applied in the AAA program rapidly is disrupting our agricultural system and causing a new set of difficulties. Secretary of Agriculture Wallace concedes in his annual report that "eventually the reduction program defeats itself." 1 10. Reciprocal Tariffs. The Canadian trade agreement, affecting vitally many important groups of industries, illustrates strikingly the j extent of the legislative power which has been delegated by the Congress to the Executive. Whether this or other agreements be good or bad, the Congress should regain a veto power over treaties with foreign nations which was made mandatory under the Constitution. 11. Executive Usurpation. The entire field of 5 executive usurpation of legislative power should be reviewed by the Congress. The vast bureaucracy created by Executive order without specific authority of law should be overhauled. The new agencies and their functions should be investigated by appropriate standing or special committees. The corporations created and operated under the laws of the State of Delaware for the purpose of evading responsibility to the Congress should be examined and perhaps abolished. 12. Preservation of the Constitution. The elected representatives of the people in the Congress have a definite responsibility for the preservation of our form of government under the Constitution. A method is provided for the consideration of amendments to the Constitution which are in harmony with its fundamental principles. Amendments which would overthrow the dual form of government or break down the division of authority among the executive, legislative and judicial branches are outside this category. They would make possible substitution of dictatorship for democracy. Attacks on Constitution The New Deal measures, taken as a whole, involve a decided change in the form of government prescribed by the Constitution. It is not strange that with scarcely an exception the laws have been carried to the courts on constitutional grounds. The effect of the laws is to centralize power in the executive branch of the Government in such fashion as to infringe upon the authority of both the states and the Congress. Although retaining the framework of democracy the new system goes a long way toward dictatorship. The new laws do violence to the Constitution along three general lines. Some seek to break down the dual form of government under which the states retain control over local activities, including manufacture, production and trade. As part of the movement toward centralized control it has even been attempted through some of the emergency agencies to assume Federal authority over educational matters. Other laws through undue delegation of power to the Executive are in conflict with the separation of powers of the Federal Government among three coordinate branches. Many of the laws are in violation of both of these fundamental bases of the Constitution and furthermore curtail liberties guaranteed under the Bill of Rights. The course of legislation was threatened in the President's inaugural message on March 4, 1933, when he said: "It is to be hoped that the normal balance of executive and legislative authority may be wholly adequate to meet the unprecedented task before us. But it may be that an unprecedented demand and need for undelayed action may call for temporary departure from that normal balance of public procedure. "I am prepared under my constitutional duty to recommend the measures that a stricken nation in the midst of a stricken world may require. These measures, or such other measures as the Congress may build out of its experience and wisdom, I shall seek, within my constitutional authority, to bring to speedy adoption. "But in the event that the Congress shall fail to take one of these courses and in the event that the national emergency is still critical, I shall not evade the clear course of duty that will then confront me. I shall ask the Congress for the one remaining instrument to meet the crisis broad executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe." Laws granting unusual powers to the Executive and assuming for the Federal Government prerogatives properly belonging to the states were enacted by the Congress under the plea of emergency. In recent months, as in the case of the Agricultural Adjustment Act, it has been admitted that the intention from the start was to make the new methods permanent rather than to continue them only for an emergency period. Except for the adverse decision of the Supreme Court, an attempt would have been made in the spring of 1935 to give a permanent legal status to the NRA. In the session of 1936 the League expects to oppose, as it did in 1935, all measures which contribute toward the overthrow of our form of government, whether through the pretense of emergency powers or otherwise. The Budget If American institutions are to be preserved, the Treasury's finances must be kept on a sound basis. Continued deficits will lead to the destruction of Government credit and to inflation. Out of the consequent chaos might come a dictatorship comparable in all respects to that in European countries. Spending policies, necessitating the borrowing of large sums by issuance of securities which are choking the portfolios of banks, form the most menacing feature of present conditions. The current fiscal year, 1936, is the sixth in succession in which the Treasury has shown a deficit. In the early years of the period the shrinkage of revenues due to the depression resulted, in the absence of increased taxes, in deficits. By reason of a tremendous increase in taxes, collections of the Government now are back at a level as high as before the depression. In fact, even with processing taxes excluded, revenues are likely to be greater in the fiscal year 1937 than in any fiscal year since 1921, the last year in which the war taxes applied. It is obvious, therefore, that if expenditures could be reduced to the pre-depression level, the budget would be in complete balance in 1937. When official estimates of receipts and expenditures become available in the budget for 1937, it will be possible to offer more specific suggestions with respect to fiscal policies. Enough is known to make it evident that the budget need not be far out of balance in the fiscal year 1937, even if as much as $1,000,000,000 is included for emergency purposes. It cannot be balanced if the Government continues to spend between seven and eight billions of dollars annually as in the fiscal years 1934, 1935 and 1936 a sum which is about twice the average total between 1922 and 1930. Increased expenditure totals cannot be attributed entirely to appropriations for emergency purposes. While changes in classification in Treasury figures make exact comparisons difficult, expenditures of regular departments and boards have been rapidly mounting. Under the classification in use in the Daily Treasury Statement up to July 1, 1935, expenditures for "general" purposes increased from about $3,100,-000,000 in the fiscal year 1934 to more than $3,700,000,000 in 1935 and are likely to reach $4,400,000,000 in 1936. The Government now is spending for "general" purposes far more than it was at the time of the 1932 election. The way to balance the budget is to reduce expenditures to the level of receipts. It can be accomplished if the administration will eliminate expenditures proved by experience of the past two years to be futile as stimulants to recovery. Not only should needless and unsound emergency expenditures be abandoned but extravagance and waste should be rooted out of both the regular departments and emergency agencies. The present budget contains a challenge to constitutional requirements through the appropriation of the huge sum of $4,880,000,000 for use by the President as he pleases, theoretically for direct relief or work relief, but actually for almost any conceivable purpose. Section IX, Clause 7, of Article I of the Constitution provides that "no money shall be drawn from the Treasury but in consequence of appropriations made by law." Under the broad legislative authority delegated to the President he has at his disposal for specific allotment a larger gum than was spent by the Government in any year between 1922 and 1931, inclusive. In those years the Congress spent months in the consideration of the specific items of the annual appropriation bills. Relief and Public Works The decision which must be reached by the Congress with respect to relief policies has an importance extending beyond the immediate future. Whatever is done at this time, both with respect to the division of responsibilities between the Federal Government and the states and as between direct relief and work relief, may become the basis for permanent policy. Under the present administration the Federal Government has assumed a large measure of responsibility for the relief of victims of the depression. The financial situation of the states, counties and municipalities, with which the primary responsibility for relief rests, has been such as to make it difficult for them adequately to meet the situation. At the earliest possible time the burden should be returned to the subdivisions of government where it belongs. A further appropriation for direct relief may be necessary although it should be borne in mind that any unexpended balance from the present grant of $4,880,000,000 to the President can be carried over to the fiscal year 1937. Unless there is a continuance of gigantic waste, a considerable sum should be available. States which lack sufficient resources to care for relief needs can be tided over by loans from the Federal Government until demands are less great or their financial status improves. In its 1932 platform the Democratic Party advocated "the extension of Federal credit to the states to provide unemployment relief wherever the diminishing resources of the states make it impossible for them to provide for the needy." It would be a grave mistake to allow a Federal dole to become a part of our permanent governmental system. Always there will be unemployment. After the liberality of recent years the number of those who would take advantage of Government relief if it were available will be greater than before. A permanent Federal dole would sap the morale of the people, relieve industry of an incentive for the absorption of the unemployed and be more subject to abuse than a relief system financed with state or local funds. 10 The work-relief program has proved a gigantic failure. The character of the projects has been such as to offer little, if any, moral stimulus to relief recipients. It has cost two or three times as much to provide employment for each person as it would under a program of direct relief. The taxpayers of the entire nation have been forced to underwrite the cost of local improvements which are of no value to the country as a whole. A debt is being incurred out of all proportion to possible benefits. The expenditures by the Government for non-productive projects accomplish nothing beyond the creation of temporary jobs. The use of the same amount for the production of goods and services in private enterprise would give genuine momentum to the industrial mechanism. The policy of reckless expenditure acts as a brake on the natural forces of recovery by adding to uncertainties confronting industry. While continuance of the work-relief program cannot be justified, it will be proper to provide a limited amount of funds for the construction of public works of a useful character. The Democratic platform in 1932 proposed "expansion of the Federal program of necessary and useful construction affected with a public interest such as adequate flood control and waterways." Projects which are self-liquidating, or which promise economic or social advantage without excessive cost, can play a useful part in recovery. A public works program of a somewhat more extensive character than was customary in former years is desirable. This does not mean the continued appropriation of billions annually. It should be borne in mind that only by the production of goods and services is employment self-perpetuating. Government projects do not often result in new goods and services. Furthermore, the Government must depend for its revenues upon taxation of private enterprise. The expenditure of public money for construction intended to compete with or destroy private enterprise adds to the tax burden and the cost of living, whereas, on the other hand, new private industrial activity would tend to lighten both. 11 Taxation In its 1935 session the Congress at the instance of the administration enacted a revenue law which was at variance with sound principles of taxation. Because of political influences the power of taxation was used to accomplish social objectives. Two purposes were sought first, to promote a redistribution of wealth, and, second, to check the growth of big business. High rates on large incomes and estates were not expected to yield much revenue but rather were written into law on the demagogic theory that they would force a redistribution of wealth. No secret was made of the intent to win the favor of elements attracted to the share-the-wealth plan of the late Senator from Louisiana. A new graduated tax on corporation earnings bore most heavily on large corporations. While not penalizing big business to the extent proposed by the administration, the Congress at least accepted the principle of a graduated tax. The Revenue Act of 1935, like other parts of the administration program, restricts and is antagonistic to private enterprise as carried on in the United States over a long period of years. It fits into the pattern of regimentation of business. At the earliest opportunity the Congress should revise the revenue laws with a view to the adoption of policies giving encouragement to all forms of private enterprise. The additional amount to be raised under the Revenue Act of 1935, about $250,000,000, is insignificant in proportion to present expenditures. At the present rate of spending it would finance this administration for a period of about 13 days. An equal sum can easily be obtained through taxes which do not disrupt our industrial system. The present base of taxation is not as broad as it should be, the tendency for political reasons being to raise exemptions and lower rates at the bottom of the scale. Interest in good government would be heightened if a larger number of persons were required to pay some tax. Statistics of income for 1934 recently made 12 public are enlightening as to the effect of present tax rates. On $7,500,000,000 of individual net income of persons with earnings under $5,000 a tax of only $32,500,000 was paid, or 43/100 of 1 per cent. On $3,500,000,000 of persons between $5,000 and $25,000 the tax was $126,400,-000, or 3.6 per cent. On $1,100,000,000 of persons between $25,000 and $100,000 the tax was $169,-000,000, or about 15 per cent. On $416,000,000 of persons over $100,000 the tax was $178,500,-000, or about 43 per cent. It is evident from these figures that if more revenue is to be obtained from income taxes, it must be from ^ incomes in the lower brackets. On the other hand, an increase in the aggre- ^ gate of taxation is undesirable. The present * tax burden is heavier in proportion to incomes and wealth than it has ever been before, even in wartime. The revenues have mounted to a level almost as high as in wartime even though taxable business profits have been much less. It would be unjust to the taxpayers to balance the budget by increasing taxation. From the standpoint of the welfare of the taxpayers and the maintenance of Government credit, it is necessary to reduce expenditures to the level of receipts. The Government must return to an outlay that permits the lowering of taxes. This can be accomplished at once if the administration will put into effect the promises of the Democratic platform of 1932 upon which it was elected. In that platform the party pledged itself to bring about "an immediate and drastic reduction of governmental expenditures by abolishing useless commissions and offices, consolidating departments and bureaus, and eliminating i extravagance" and to accomplish "a saving of not less than 25 per cent in the cost of Federal | Government." Money and Banking The Congress soon must take up the question of future monetary policies. The Gold Reserve Act of 1934 gave for three years authority to the President to adjust the gold content of the dollar and to use a two-billion-dollar gold stats bilization fund. That authority will expire on January 30, 1937. Presumably the administration has in mind the enactment of additional legislation to govern policies after that date. The weight of expert opinion points to the desirability of a permanent monetary system based on an unchangeable dollar redeemable in gold. The development of a sound monetary system requires amendments to present silver provisions which form a disgraceful chapter of recent legislative history. The administration's experimentation with a managed currency has contributed to record-breaking excess banking reserves which afford a potential basis for a devastating inflation. If it be inexpedient to enact new monetary legislation during the 1936 session, the Congress should provide for a study of the operation of present laws to facilitate an intelligent consideration of the entire question in 1937. The study should be directed toward the ascertainment of the opinions of recognized authorities rather than employed as a method of promoting pet theories of monetary cranks. In the light of the enactment of comprehensive banking laws in 1933 and 1935, it should be unnecessary to make amendments of a substantial character at this time. Proposals to strengthen political power over the banking system should be resisted as also should various schemes involving an inflation of currency or credit. Government and Business The most prosperous periods always have coincided with an increase in industrial production. The more goods and services produced the greater the purchasing power of those who have a part in the process. The American system of private enterprise has virtually unlimited opportunities for expansion of production. The Brookings Institution in a recent series of notable books found, first, that in the period of the greatest economic achievement just prior to the depression our productive facilities were utilized to only about 80 per cent of capacity; second, that vast potential demands alike for basic commodities and for conventional necessities exist in the unfilled wants of the masses of the people; and, third, that the United States has not reached a stage of economic development in which it is possible to produce more than its people as a whole would like to consume. The basic defect in the economic system, according to this research organization, lies not in the technical processes of production but in the distribution of income. After rejecting share-the-wealth and other methods of curing this defect, the Brookings Institution reached the conclusion that the solution is most likely to be found in a gradual but persistent lowering of prices so as to pass on the benefits of technological progress and rising productivity to all the population in their role of consumers. By a progressive reduction in prices, the volume of sales would be expanded, unit costs would be reduced and workers would be given more employment at better wages. The Brookings Institution theory is an economy of abundance as distinguished from the theory of scarcity upon which the administration's recovery program has rested. The ill-fated NRA was predicated upon the fallacious idea that because of technological progress there is not enough work to go around. The increase in unit costs through a reduction in hours of work and higher hourly wages retarded recovery, just as might have been expected. The higher prices necessitated by greater costs narrowed the market for goods at a time when expansion was urgently needed. The regulation imposed upon industry under the NRA was not only unconstitutional but interfered with the automatic operation of the American industrial system. The pick-up in business which has taken place since the NRA was held to be invalid furnishes the best possible proof that further legislation of this character is undesirable. The Federal Reserve Board's index of industrial production showed successive declines in the first five months of 1935 but following the court decision on May 27 advanced from 84 in June to 94 in October on 14 a basis of 100 for 1923-25. Statistics for the early months of the operation of the NRA show its hampering effects. The Federal Reserve Board index of industrial production stood at 93 in June, 1933, the month of the enactment of the National Industrial Recovery Act, and soared to 101 in July but as codes commenced to become effective dropped to 91 in August, 84 in September, 76 in October and 71 in November. Recovery will go forward to the best advantage if what is left of the National Industrial Recovery Act is allowed to lapse on April 1, 1936. The 30-hour week bill is based on the same fallacious theory of scarcity as the NRA and should be defeated. The Labor Relations Act and the Bituminous Coal Act, both of which attempt to extend the power of the Federal Government over industry, await decisions as to their validity in the courts. In advance of such decisions, which may be delayed for a year or more, the Congress should consider these laws with a view to amendment or repeal. The Government has become increasingly a competitor of private industry. It is time to restrict sharply its activities in this field. The Democratic platform of 1932 urged "the removal of Government from all fields of private enterprise except where necessary to develop public works and natural resources in the common interest." Public Utilities The public utility corporations have been made a political football by the present administration. The death sentence provision applying to public utility holding companies in the 1935 act has been injurious to thousands of investors. The carrying out of the terms of the law will cause heavy losses. The adoption of a policy of opposition to all public utility holding companies, whether good or bad, occasions a feeling of uncertainty with respect to holding companies in other lines of business. Abuses in the public utility field can be eliminated by proper regula-16 tion. The death sentence provision should be repealed. Socialistic influences have been responsible for unfair competition by the Government with the private utility industry through the Tennessee Valley Authority and other agencies. Legislation should be enacted to curtail or prevent these activities. The only effect has been to subsidize to a small degree consumers in certain favored areas at the great expense of all the taxpayers and to add to the financial difficulties of the companies. Social Security In the Social Security Act of 1935 the Congress at the insistence of the administration attempted to say the final word on problems which have perplexed not only the United States but other nations for many years. The experience in Europe as well as the more limited tests of unemployment insurance and old-age pensions in this country were such as to sound a warning against precipitate action. Nevertheless, the Congress enacted a measure which imposes a heavy financial burden upon industry, introduces bureaucratic regulation necessitating the hiring of several thousand new Government employees, applies coercion to the states as well as to private industry, infringes upon Constitutional limitations, and inaugurates a system in which the total sum involved will in the course of years reach staggering proportions. Chief responsibility under the system is placed upon the Federal Government although the Democratic platform of 1932 advocated unemployment and old-age insurance only under state laws. Already it is evident that administrative difficulties will be very great and that many amendments to the law will be necessary if it is to be even workable. The unwieldy and inequitable character of the statute threatens to defeat its objectives for protection of old age and the unemployed with which all sympathize. While the law was rushed through as part of the emergency program, its provisions largely apply to the future rather than to the imme-17 diate present. The best interests of future beneficiaries will be served if the effective dates of taxes for unemployment insurance and old-age pensions are postponed while a further study is being made. Agriculture Decisions in cases involving agricultural laws which are before the Supreme Court should furnish guidance for a revision of the program respecting agriculture along lines in harmony with the Constitution and American traditions. Through subsidies from the Federal Treasury, farmers have been given temporary aid. Higher prices received by them for their products have been due more to natural causes than to control programs. Consumers have been charged higher prices, reflecting not only a natural advance but also an extra charge due to processing taxes and AAA control. The AAA reduction programs and the pegging of prices by loans have injected new difficulties into the agricultural situation as serious as those originally existing. The nation's agricultural system has been disrupted and normal relationships among commodities thrown out of balance. Foreign markets for farm products have been lost by reason of the maintenance of prices above world levels. Because of curtailment of production as well as high prices for American crops, expansion of agricultural acreage in other countries has been stimulated. The regimentation of agriculture has made it impossible for farmers to exercise their individual judgments. The whole trend is toward higher costs, which discourage consumer purchases, rather than toward more efficient methods making possible lower prices and wider markets. Thousands of persons associated with agriculture and with processing and distributing industries have been forced on relief rolls by reason of restrictive policies and destruction of export trade. The theory of scarcity upon which policies have been predicated is contrary to sound economics. An economy of abundance, based on 18 an increased home consumption of farm products, the restoration of foreign trade, the fullest utilization of more efficient methods of production and distribution, and reliance upon individual intelligence and energy, gives greater promise of an eventual solution of the problem. The farmers are facing certain disappointment if they depend upon present policies as a panacea for their troubles. Some significant admissions as to dangers in policies thus far pursued are contained in the annual report of Secretary of Agriculture Wallace, made public on December 11. Secretary Wallace asserts that parity prices are not a sufficient test of what constitutes a permanently good rural-urban balance and that it may seem necessary to find some other basis for determining agriculture's share of the national income. Fundamentally, Secretary Wallace concedes, the problem is to give agriculture its due share of the national income through an approach to abundance rather than through an approach to scarcity which means, he says, that there must be an increase in both farm production and factory production. Industry must agree, Secretary Wallace says, that "parity income for agriculture should come about, not on an extremely high price level through competitive scarcity but on a lower level consistent with increased production and consumption." Admitting that net income may be lost by sacrificing volume to price, Secretary Wallace states flatly that "eventually the reduction program defeats itself" and that "besides impoverishing the community, it injures the producers, because the resulting rise of prices fails to compensate for the loss of trade." He concludes, in complete contradiction of policies upon which both AAA and NRA were launched, that "larger output at lower unit prices, with industry leading the way, is essential to safe progress toward parity prices and a fair share of the national income for agriculture." Repeal of the Potato Control Act should be one of the first actions in this session of Congress. A considerable part of all the laws relat-19 ing to agriculture enacted since 1933 should be scrapped. Reciprocal Tariffs The Canadian trade agreement has been approved in many quarters. Certain groups which are affected by it have voiced their dissent. Although there is widespread interest, no opportunity has been or will be given for a determination of the issues involved. The Congress in the act of June 12, 1934, vested in the President for a period of three years power to enter into foreign trade agreements. The agreements do not require ratification either by the Senate, as is customary with ordinary treaties, or by both houses of the Congress, as has been true heretofore with agreements involving changes in customs duties. The delegation of the taxing power in the law is much broader than has heretofore been sustained in the courts. Although the language of the Reciprocal Tariff Act was modeled after the Flexible Tariff Act, the constitutionality of which was upheld by the Supreme Court, there is a marked difference between the two. The authority of the President under the Flexible Tariff Act is narrowly limited by a formula which permits an adjustment of duties to equalize differences in costs of production of a domestic article and a similar foreign article. Each commodity stands by itself without relation to policies with respect to the encouragement of trade with other countries. Under the Reciprocal Tariff Act the President may proclaim modifications of existing duties and other import restrictions and may impose new limitations whenever he finds that those of the United States or any foreign country "are unduly burdening and restricting to foreign trade of the United States." The law says nothing about an equalization of costs of production of competitive articles and fails to prescribe any sort of precise formula for determining individual duties. The only restrictions are a limitation of increases or decreases by 50 per cent and a prohibition against transfers between 20 the dutiable and free lists, which also appear in the Flexible Tariff Act. Under the foreign trade agreements contemplated by the Reciprocal Tariff Act the United States exchanges concessions with respect to the importation of a miscellaneous assortment of commodities for concessions granted by another country. The President takes into account what he believes to be the relative economic justification for the existence of particular industries in this country. If he chooses to reduce the protection accorded an industry which he thinks never should have been developed, the industry in question can make no appeal from his decision. The power thus vested exclusively in the Executive has tremendous implications with respect to the possible reshaping of our entire economic structure. The Reciprocal Tariff Act in its present form fits into the pattern of centralized authority under legislation in this administration. It would be more in keeping with the American form of government if the law were amended to require congressional ratification of trade agreements negotiated by the President. Such a change in the law would not interfere with the freedom of the Executive in negotiating agreements but would make possible a full discussion of advantages and disadvantages before an agreement became effective. It would not open the specific items of the reciprocal treaty to the log-rolling which would take place if the agreement were subject to change, item by item, without the consent of the other nation. Insistence upon a veto power by the Congress with respect to foreign agreements negotiated by the President does not imply disapproval either of the Canadian trade agreement or of a policy of reciprocal tariff bargaining. Executive Powers An amazing expansion of governmental machinery and functions has taken place since 1933 under general powers delegated to the President by the Congress. Not only is specific authority lacking in law for the creation of many 21 present agencies and for activities in which they are engaged, but most of them have remained immune from the annual scrutiny to which the regular departments and boards are subject at the time of the passage of annual appropriation bills. Administrative costs of most of the so-called alphabetical agencies have been met by executive allotments. More than 50 new agencies and additional branches of existing agencies and departments have been created by Executive order. Civil employees in the executive branch of the Government have increased by more than 230,000. Upwards of 1500 Executive orders and many thousands of administrative orders, all with the force of law, have been issued. The records of administrative law are so voluminous as to bewilder lawyers as well as other citizens. Besides the agencies within the framework of the Government, half a dozen or more corporations organized under the laws of the State of Delaware are in operation. These corporations, of which Government officials are incorporators but for which no authority can be found in law, have power under their charters to engage in almost every conceivable socialistic activity. The Congress has no more urgent duty than to reassert its proper responsibilities and prerogatives in connection with supervision of the executive branch of the Government. Under the Constitution the executive branch administers laws enacted by the Congress and engages in activities only as authorized and under appropriations granted by the Congress. The executive branch has usurped legislative authority. The entire executive establishment should be subjected to a rigid investigation by appropriate congressional committees. Preserving the Constitution A final important duty of the Congress is to preserve the fundamental principles of the Constitution. An attack is threatened along two general lines first, an amendment to give the Federal Government power with respect to matters over which the states are now sovereign, and, 22 second, an amendment to take from the Supreme Court the power to declare laws unconstitutional. Either of these steps represents such a shift in fundamental principles as to constitute a virtual change in our form of government. The proposal to broaden the powers of the Federal Government to permit complete regimentation of industry and agriculture involves a breaking down of an essential element in our dual form of government. The denial of the right of the courts to pass upon the validity of legislation removes one of the important links in the system of checks and balances surrounding the division of powers among three coordinate branches of the Federal Government. Without the restraining influence of the courts the Congress might pass laws placing complete power in the hands of the Executive and suspending its own operations for a period of years as the German Reichstag did. An unhampered dictatorship could thus be created. The 1936 Election The imminence of the 1936 primaries and elections makes the approaching session of the Congress of special importance. Issues which are developing bear on the preservation of the essential characteristics of the American form of government. The members of the Congress will be judged by the extent to which they join in the movement toward a centralization of power in a dictatorial government or remain steadfast for the principles of the Constitution. The movement for centralized government turns its back upon the American system of free enterprise and is grounded on the absurd demagogic pretense that democracy has failed. The Congress can be of the greatest service to the nation by asserting its rights and obligations and by insistence upon conformity with Constitutional requirements. The lack of confidence felt by business will vanish if the Congress pledges anew its allegiance to basic principles of democracy. Around adherence to the Constitution will center the vital issues of the campaign. 23