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No. 91 "Professors And The New Deal: A Compendium of Quotations Demonstrating That a Great Majority of the Nation's Educators Believe in Sound Principles of Economics and Constitutional Theories of Government," January 20, 1936.
No. 91 "Professors And The New Deal: A Compendium of Quotations Demonstrating That a Great Majority of the Nation's Educators Believe in Sound Principles of Economics and Constitutional Theories of Government," January 20, 1936. American Liberty League. 400dpi TIFF G4 page images Digital Library Services, University of Kentucky Libraries Lexington, Kentucky Am_Lib_Leag_91 These pages may freely searched and displayed. Permission must be received for subsequent distribution in print or electronically. No. 91 "Professors And The New Deal: A Compendium of Quotations Demonstrating That a Great Majority of the Nation's Educators Believe in Sound Principles of Economics and Constitutional Theories of Government," January 20, 1936. American Liberty League. American Liberty League. Washington, D.C. 1936. This electronic text file was created by Optical Character Recognition (OCR). 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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 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 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 Dangerous Experimentation Economic Planning Mistaken But Not New Work Relief The AAA and Our Form of Government Alternatives to the American Form of Government A Program for Congress The 1937 Budget The National Labor Relations Act Summary oj Conclusions from report of 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 "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 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 Arousing Class Prejudices Speech by Jouett Shouse The Fallacies and Dangers of the Townsend Plan Speech by Dr. W. E. Spahr What of 1936? Speech by James P. Warburg Americanism at the Crossroads Speech by R. E. Desvernine The Constitution and the New Deal Speech by James M. Carson The American Constitution Whose Heritage? Speech by Frederick H. Stinchfield â˜… AMERICAN LIBERTY LEAGUE NATIONAL PRESS BUILDING WASHINGTON, D. C. PROFESSORS AND THE NEW DEAL â˜… â˜… â˜… A Compendium of Quotations Demonstrating That a Great Majority of the Nation's Educators Believe in Sound Principles of Economics and Constitutional Theories of Government AMERICAN LIBERTY LEAGUE 7\[ational Headquarters NATIONAL PRESS BUILDING WASHINGTON, D. C. Document No. 91 January, 1936 Professors and the New Deal â˜… How do the professors stand on New Deal policies? Despite the connection of certain of their number with the administration "brain trust," many scores of them have voiced criticism. Herewith are quotations from a considerable number of professors who have expressed views in harmony with the position taken on various issues by the American Liberty League. It is not meant to imply that those quoted have specifically referred to declarations by the League or that they necessarily are in agreement with the League on all points of policy. Their comments are cited because of their importance as an influence upon the thought of the country. A composite of the opinions shows the following : 1. New Deal measures threaten the integrity of the Constitution. 2. Centralization of power tends toward tyranny. 3. The present regime typifies coercion as against voluntary cooperation. 4. Visionary schemes launched in the name of economic planning are cruelly deceptive to the people. 5. Control of industry under the NRA was based on false economic theories. 6. Emphasis on reform has impeded recovery. 7. Regimentation of agriculture under the AAA has caused a new set of difficulties and maladjustments. 8. The people of the entire nation are being taxed to provide cheaper electricity for those in the Tennessee Valley area. 9. Tax policies are in violation of the President's asserted principle of producing ample revenue without discouraging private enterprise. 10. Failure to balance the budget offers a menacing threat of disastrous inflation. 11. Banking policies are designed to give political control of a despotic character and to facilitate the absorption of Treasury deficits. 12. Monetary changes have created a distrust in the Government's good faith and injected unsound elements into the currency structure. The Constitution Many warnings have been sounded against encroachment upon fundamental principles of the Constitution. President Robert C. Clothier of Rutgers University at the opening convocation, September 21, 1935, told students that their first responsibility was the defense of the Constitution against encroachment or usurpation. He said: "Forces have been unleashed which threaten the integrity of our American Constitution. In a period of economic and social distress we have relaxed our vigilance in the hope that certain maneuvers, doubtless conceived in honesty of purpose, would bring back employment and sufficiency to our people. "Certain of these experiments have violated the principles set forth in our American tradition. We need that type of social conscience which will not blink at the facts, which will stand fast by the principles of Americanism which we know to be sound." President William M. Lewis of Lafayette College at the annual convention of the Savings Banks Association of the State of New York on September 27, 1935, said: "The world is allowing to slip from its hands the most precious possession of civilization, liberty. "In the political, social and economic fields the trend is toward autocracy and dictatorship, which spells chaos if persisted in. The depressing experiences of the last few years have made cowards of the majority of the people, so they turn for solace and protection to an ultimate authority. "Regimentation grows apace, as ridicule and suspicion are heaped upon individualism. The pioneers m the United States had not learned the modem method of mortgaging the future for today's luxuries with the assurance that a benign government would care for them in future days, and so they had real freedom politically and economically. "If those pioneers were to return today they would find it difficult to discover any place where one may escape the multitudinous tentacles' of autocracy. They would discover the people have surrendered their political rights and obligations to those who demanded it. "So it comes about that the present hope is not that the people will overthrow the autocrats but that the autocrats will defeat themselves as they have done since history began." President Glenn Frank of the University of Wisconsin, in addressing a forum on current problems in New York City, rejected the view that the Constitution is too antiquated to cope with present problems and held it to be the only safeguard against tyranny. He said: "The centralization of power has invariably ended in tyranny. Even when the centralization has been effected with democratic consent and 3 designed to serve emergency ends, centralized power has moved relentlessly in the direction of self-perpetuation. And, once intrenched, with a presumption of permanence, centralized power has grown domineering. It has become less rather than more concerned with the common good. It has become the victim of whim and caprice. And a revolt of the governed has proved the only road to progress." Coercion vs. Voluntarism Thomas Nixon Carver, Professor of Political Economy, emeritus, Harvard University, described present trends in "A Report on the Problem 'What Must We Do to Save Our Economic System?'" in May, 1935. Professor Carver said: "The alternative to a voluntary system is a coercive system. There is no middle ground. A mixture of the two can not be permanent. The extension of government authority, so long as it enlarges the field of voluntary agreement among free citizens, by suppressing all violence and fraud and balancing the labor market, insures the permanency of the voluntary system. Any further extension of government authority prevents the expansion of industry, throws the labor market out of balance, increases unemployment, plays into the hands of coercionists, gives them excuses for more and more repressive legislation, causing still more unemployment, until the whole market economy breaks down. The next stage is coercive regimentation on a militaristic basis, with commissariats and rations. "Voluntarism is the goal of all liberal movements. . . . "Nowadays, however, some of those who are advocating a reversion to the older and more brutal method of authority are trying to steal the word 'liberal' and apply it to themselves, like the man who 'stole the livery of the Court of Heaven to serve the devil in.' They must not be allowed to steal the word 'liberal' which was made popular by real liberals, who always stood out against every attempt to revert to the method of authority." Economic Planning Many professors have questioned the practicability and soundness of regulatory schemes imposed in the guise of economic planning. Neil Carothers, Professor of Economics and Director of the College of Business Administration, Lehigh University, in an address at the Institute of Public Affairs at the University of Virginia on July 9, 1935, said: "From the beginning the Government admitted that it was experimenting, and it promised that if its experiments should fail it would desist. But in the face of two years of complete failure it has never once admitted error. On the contrary is has through its spokesmen venomously attacked impartial and honest critics of their policies even while the policies themselves were being abandoned in humiliation and rout. "And finally, these policies have led to cruel deception of the people. It has encouraged millions to embrace the absurd doctrines that government can create and distribute wealth and comfort without work, that all economic hardship is due to exploitation and unjust distribution. And we see the consequences here in social bitterness, visionary and ludicrous economic schemes, and the rise of sinister and dangerous demagogues." Dean Wallace B. Donham of the Graduate School of Business Administration, Harvard University, in an address at a dinner of the alumni of the school on June 16, 1934, asserted that the only practical kind of national planning for America was one which emphasized recovery rather than reform. He said: "The President started with a sound concept of planning, but both the job and the organization are so large that much of what actually goes on in Washington is better described as a combination of social theories, wishful thinking and good resolutions little tempered by hard-headed thinking." Dean Donham in an article on "Regimentation or Muddling Through" in the Annals of the American Academy of Political and Social Science, November, 1934, said: "The Government has preserved ability to act, but has lost all general coordination. Specific programs are based on conflicting social and economic theories. Much is done without reference to either logical or practical limitations on human capacities and accomplishments. Emotions control. Wishful thinking and good resolutions spawn feverish activity, and action is esteemed evidence of accomplishment. Sweeping regulations are little tempered by realism. Even when objections are hard-headed, discipline and coordination are lacking. . . . "Now, high-minded, wishful thinking and good resolutions are no less dangerous a basis for important policies and administrative action than are selfish motives. . . . "To do nothing is better than to take drastic action based on wishful thinking, on the emotional urge to punish as a vicarious expiation of our own sins, or solely for the sake of acting. . . ." Josef A. Schumpeter, Professor of Economics, Harvard University, in an Addendum to a Report on Economic Reconstruction by a Commission of Columbia University, February 4, 1934, said that in discussing the advantages of planning "we must look at its probable results in the same realistic spirit in which we look at the shortcomings of the existing system." He continued: "It then becomes of ominous importance that the attempts at planning of which we have empirical knowledge are in some cases indeed adequately described by the felicitous phrase of this report as trying to solve the great paradox of poverty in the midst of plenty by removing the plenty, while the results in other cases, especially in the case of the Russian experiment, are obviously far below what even a most backward and largely pre-capitalist system would by this time have done for the welfare of the masses. "Moreover, if planning is to be undertaken on a large scale within the framework of present society, very difficult questions of organization will arise, about which people will differ according to the degree of confidence they have in the working of the political institutions of their countries, but which must be more satisfactorily settled than they now are. "Failing this, planned economy, however correct theoretically its design may be, is in danger of combining all the worst features of the present system and of Socialism, without any of their redeeming points." Playing Politics Dean Howard Lee McBain of the Graduate Faculties of Columbia University at a luncheon meeting of the American Association of Labor Legislation in New York City, December 27, 1935, said: "To my mind the most serious of all charges that may be brought against President Roosevelt is that in the midst of a national crisis giving him opportunities for reform never before possessed by a President he has chosen for personal and party interests to play the usual game of putrid party politics." President Ethelbert D. Warfield of Wilson College, Pennsylvania, in answering on October 15, 1935, President Roosevelt's letter to clergymen regarding conditions in their communities, said: "This community, Franklin County, Pennsylvania, is the heart of the Cumberland Valley, a fruitful and productive section populated by sober, Godfearing and upright people. . . . "It is hard to find, even within the bounds of these United States, a people so industrious and so accustomed to make a moderate but adequate living. "It now labors under a misgovernment not very much less than that which drove the ancestors of this population from their native lands. Nothing could have been more unfortunate than the operation of the various devices, including the New Deal, the NRA, the AAA, the depreciation of the dollar, . . . and government through laws which have withdrawn from this people the right of self-government so dear to the American people, and the anxiety which possesses them lest the Constitution of the United States should be radically altered to the disadvantage of the people and of their just govern- ment. This is my conception of the situation in this county." Recovery Policies Seven economists of Harvard University joined in a book entitled The Economics of the Recovery Program, published in 1934. In the book these professors asserted that the New Deal, especially the monetary program and the NRA plans for an artificial control of hours, wages and other factors of industry, was holding back recovery rather than stimulating it. The seven contributors to the volume were Seymour E. Harris, Assistant Professor of Economics as well as Professor of International Trade at Harvard, Tufts, and the Fletcher School of Law and Diplomacy; Edward Cham-berlin, Assistant Professor of Economics; Josef A. Schumpeter, Professor of Economics; Edward S. Mason, Assistant Professor of Economics; Douglas E. Brown, Medical Economist at the Harvard Medical School; Wassily W. Leontief, Assistant Professor of Economics; Overton H. Taylor, Instructor in Economics. The New York Times in its issue of January 2, 1934, summarized the book as follows: "They assert that sound recovery must come largely of itself, instead of through Government action. . . "Professor Harris calls the Government's money policy a 'threat of inflation,' 'unfriendly toward capital,' and 'tinkering with the monetary machine.' The net result, he says, has been the undermining of confidence in the business world. If actual inflation is used to raise prices, he looks for another crisis followed by serious maladjustments. He regards the administration's gold-buying moves as having failed to accomplish its objectives controlling the value of gold. " 'An early stabilization and a return to gold may reestablish confidence,' Professor Harris states, adding that 'even a moderate devaluation of 25 to 33 per cent might be advisable if it can be demonstrated that such devaluation is essential to an independent monetary policy that will result in the greatest volume of employment in the United States.' "'Any revival which is merely due to artificial stimulus,' says Professor Schumpeter, 'leaves part of the work of depressions undone and adds, to an undigested remnant of maladjustment, new maladjustment of its own which has to be liquidated in turn, thus threatening business with a crisis ahead/ ". . . Professor Chamberlin cites objections to the methods of the Government in artificially increasing money incomes of farmers and industrial workers. He insists that too much stress is put by the _ Government on spending by the consumer as against expenditures arising out of investments. 7 ". . . Professor Mason argues that the recovery act represents a long step toward the recognition and condemnation of unfair and uneconomic practices, but contends that 'elimination of unfair competition is not likely to' constitute an important step toward recovery/ He insists that certain code provisions constitute a distinct menace, not only to recovery but to reform. "Professor Brown . . . says, 'In general it seems likely that the sharing of work tends mildly toward an increase in costs and to that extent may be an impediment to recovery. It cannot, however, for that reason be condemned! . . . " 'Public works provide no panacea for recovery. Properly carried out in timely fashion they may at once provide much-needed relief, a measure of results valuable in themselves and a stimulus to an economic mechanism ripe for recovery. At the other extreme, they may be merely a political football and a drain upon harassed treasuries.' " Ralph Robey of the School of Business, Columbia University, in a book entitled Roosevelt versus Recovery, published in 1934, asserted that continued support of the artificial structure built up under the New Deal could lead only to national bankruptcy. He said: "If we are to prevent such a national disaster, we must turn back to the tenets of liberal capitalism. If we are to prosper as a nation, we must restore the requisites of a sound economic system. Our choice is between fighting tuberculosis in its early stages and fighting it after hemorrhages begin. It is a choice between the New Deal and sound prosperity. It is Roosevelt versus Recovery." Industrial Policies The theories upon which the NRA was based were questioned from the start by economists of recognized standing. The administration's program with respect to unemployment relief, including work relief and public works, also met with criticism from those competent to judge the permanent effect. Garfield V. Cox, Professor of Finance, University of Chicago, at the annual meeting of the American Economic Association, New York City, December 26, 1935, said: "The four months drop in industrial production which followed the introduction of the NRA has been equalled only by the panic collapses of 1893 and 1907. The advance which has followed the Schechter decision against NRA is the broadest and best sustained rise of recovery to date." Professor Cox said that the continued dependence of business upon emergency spending of the Government is "a unique and disturbing feature of the economic recovery." J. W. Angell, Professor of Economics, Colum-S bia University, in an address before the same association at an earlier meeting questioned the soundness of the public works policy of "priming the pump." Ultimately the policy could be successful, he said, only so far as private business was thereby induced to increase its own activity. He said: "But the rising public debt and governmental inflation, which the process of pump priming almost inevitably carries with it, are precisely the factors best calculated to destroy private confidence and to discourage private business recovery. "Until the administration gives some assurance that it will keep the currency substantially stable over a time, that it will really endeavor to keep the total budget balanced, except insofar as genuine relief needs necessitate further borrowing, I do not see how substantial and sustained recovery of general business can be reasonably hoped for." Some of the critics of the NRA had actual experience in that organization. Among these was A. J. Hettinger, Jr., former Professor in the Harvard Graduate School of Business Administration. In an article in the Chicago Journal of Commerce, September, 1934, he said: "On every clear-cut test the NRA has wobbled. It has no price policy other than opportunism. In theory, having burned its fingers and those of the country, it is against price fixing save possibly in the fields of wasting natural resources and natural monopolies. But it doesn't know how to undo what it has done. Its vacillation on price policy alone during recent months would be sufficient to condemn it. "It has no labor policy other than opportunism. There have been as many labor policies in NRA as there have been labor crises, and their number is legion. "On net balance, NRA probably questions the contribution to the President's 'more abundant life' of a series of provisions limiting machine hours and tending to retard new capital investment in plant and equipment. No nation ever increased or can increase the real income of its people, the 'comforts and conveniences of life,' as Adam Smith used to term it, by such methods. * * * * "It is my sincere belief, after having observed the actual mechanics, that aspects of the public interest have been essentially tossed into the discard." The NRA was criticized in a report of a Commission of Columbia University on Economic Reconstruction, February 4, 1934. In referring to control of production the Commission's report said: "The concomitant illusion that a deliberate limitation of output because it raises prices helps toward recovery is a still more dangerous fallacy. It is more dangerous because the limitation of output of an individual commodity may be for the 9 advantage of its producers if they can thereby control its price. "The abnormal situation of agriculture may justify special and temporary measures along such lines, but it should be fully recognized that they involve a tax on the rest of the community, and above all that an all-round application of this policy would make for general impoverishment and would solve the problem of 'poverty in the midst of plenty' by removing the plenty." The professors signing the report were: Robert M. Maclver, Barnard College; James W. Angell, Columbia University; Joseph W. Barker, Columbia University; John M. Clark, Columbia University; Arthur D. Gayer, Barnard College; Alvin H. Hansen, University of Minnesota ; Alvin Johnson, New School for Social Research; Wesley C. Mitchell, Columbia University; Harlow S. Person, Taylor Society; Josef A. Schumpeter, Harvard University; and George H. Soule, National Bureau of Economic Research. Sumner H. Slichter, Professor of Business Economics at the Graduate School of Business Administration, Harvard University, in a book entitled Toward Stability, published in 1934, asserted that the NRA had impeded recovery by "fostering monopoly and thus delaying the transmission of savings produced by technological changes to consumers in the form of lower prices and thus preventing purchasing power from growing as fast as productive capacity." Walter E. Spahr, Professor of Economics, New York University, in an address before the Women's National Republican Club, New York City, on April 5, 1935, said: "All the evidence I have seen regarding the wisdom of attempting to induce business recovery and solve the unemployment problem by engaging in a program of public construction would seem to show that the program is a failure and constitutes a real danger to recovery." Severe criticisms of NRA policies are contained in publications of the Brookings Institution. The economists who collaborated in books on the NRA published by this research organization include Leverett S. Lyon, Paul T. Homan, Lewis L. Lorwin, George Terborgh, Charles L. Dearing and Leon C. Marshall. In the concluding chapter of the Brookings Institution book on The National Recovery Administration, an Analysis and an Appraisal, the following statement is made: "In trying to raise the real purchasing power of the nation by boosting costs and prices the NRA 10 put the cart before the horse. Raising the prices either of labor or of goods is not the way to get a larger volume purchased. Instead the NRA should have sought the maximum enlargement of spending with the minimum increase in costs and prices, thus securing with the augmented expenditure the greatest gain in the number of units of labor and goods taken off the market. Thus increase in spending could have been sought by (1) the removal of the deterrents to the free and prompt utilization of the existing money of the country, and (2) monetary expansion. The NRA accomplished neither of these objectives. "The conclusion indicated by this resume is that the NRA on the whole retarded recovery. To what extent it was detrimental no one can say with much assurance." Control of Agriculture Many professors have disagreed from the beginning with the theory of the regimentation of agriculture under the AAA which' was recently outlawed as to its production control activities by the Supreme Court. James E. Boyle, Professor of Rural Economics, Cornell University, in a speech at the 28th annual convention of the International Association of Milk Dealers, St. Louis, on October 19, 1935, said: "The AAA philosophy, restriction of production, may be sugar-coated with all sorts of beautiful and high sounding names. But the fact remains that it is an ugly and a dangerous thing. Clearly, a general organization of scarcity, whether imposed by processing taxes, contracts, licenses, marketing agreements, Federal orders or otherwise, would simply make the depression worse. In fact, it would make the depression permanent, for recoveiy can come only through an expansion of production. "One step leads to another, as Secretary Wallace said. Every crop controlled by the AAA has upset some other crop, leading to the control of that crop. There is no stopping place short of complete Socialism. We are getting our Socialism by installments, and under some other name." Karl T. Compton, President of the American Association for the Advancement of Science, President of the Massachusetts Institute of Technology and Chairman of the Science Advisory Board appointed by President Roosevelt to make a two-year study of the Government's scientific bureaus, was critical of AAA policies, in a speech before the association at the annual meeting in St. Louis, December 30, 1935. He declared that attempts to protect agriculture by crop restriction were only an invitation to other nations to invade our markets, and that the protection of industry by tariff, sub-11 sidies and the like spurred other nations to new technical triumph while giving our own industries an unjustified and false sense of security. He offered a program based on taking full advantage of scientific and technical developments of new and improved products and processes. G. W. Dyer, Professor of Economics, Vander-bilt University, in a radio address on May 5, 1935, said: "The unusual conditions created by the present depression made it easy for radicals, quacks and superficial ignorant reformers to capitalize the supposed hopeless farm mortgage indebtedness. The theory was broadcast throughout the nation that the farmer was in a desperate, helpless, hopeless condition, that this condition was brought about by conditions beyond the farmer's control. As a result of the brilliant analysis of the situation, the conclusion was reached that the American system of freedom in agriculture had proven a miserable failure and must be repudiated, that the farmers of the nation must be regimented and placed under centralized control from Washington with Mr. Wallace from Iowa as dictator. As a result Congress at once repudiated constitutional freedom for the farmers and gave the dictator full power and authority to regiment American farmers and direct their lives and activities as he pleased. "The Little Dictator is not satisfied with the power that has been given him. He wants more power. Dictators always want more power. He has succeeded in regimenting the farmer. Now he is asking Congress to give him the power to regiment and bring under his control and direction the manufacturers of farm products." Two professors whose names have been identified with the administration's monetary program have disagreed with its agricultural policies. George F. Warren, Professor of Farm Management, Cornell University, in a speech before the American Farm Economic Association, New York City, December, 1935, said: "My personal opinion is that we need not fear the effects of a negative decision as to the constitutionality of the processing taxes and production control. I believe that the prices of hogs would rise decidedly, and cotton and wheat would rise appreciably, without being responsible for an increase in prices to the consumer; and that agriculture would receive a stimulus similar to that which industry received by the invalidation of the similar theory represented by the NRA." Irving Fisher, Professor of Economics, Yale University, in a speech at a Chicago meeting of economic societies on December 28, 1934, classed the New Deal as "full of contradictions." He said: 12 "We may raise prices by making goods scarce or by making money abundant. The first way is followed when cotton fields are plowed up, wheat acreage limited, pigs slaughtered to reduce the food to be made of them, business paid to induce people not to produce. All of these and like measures reduce the national income, for that income consists of these very goods, bread from wheat, pork from hogs, clothes from cotton, and so on. Our income is our 'daily bread' our 'bread and butter' and we cannot get more of this real income by producing less of the elements of which it consists. "Such a New Deal is a raw deal, however good the intentions and however it may relieve certain classes at the expense of other classes." The Brookings Institution in several books has criticized various phases of operations under the AAA. The economists taking part in these studies include Edwin G. Nourse, Joseph S. Davis, Harold B. Rowe, John D. Black, D. A. FitzGerald and Henry I. Richards. In the Brookings Institution book on Wheat and the AAA, Joseph Stancliffe Davis, who is associated with the Food Research Institute of Stanford University, said: "Control of wheat production through voluntary contracts, . . . has not yet been a demonstrated success. One goal of the wheat program the elimination of our carry-over surplus has virtually been attained; but to this result the expensive and extremely laborious procedure has contributed very little. Had nature chosen to smile instead of to frown in 1933 and 1934, I do not believe that the wheat adjustment efforts would have led to important reductions in the 1935 carry-over from what it was on July 1, 1933. More probably, shrinkage of exports would have largely or wholly offset crop curtailment by the AAA, and the carry-over might even have increased." TVA The Tennessee Valley Authority has not escaped criticism from professors. Dean E. A. Holbrook of the Schools of Engineering and Mines, University of Pittsburgh, in an address on "The Coal Industry and the Government's Hydro-Electric Plants," at a meeting in Pittsburgh, December, 1934, of the Coal Mining Institute of America, said: "Recently the TVA bought out the Tennessee Public Service Company franchise and plant at Knoxville, under conditions that some lawyers have described as under duress. The citizens eagerly voted for the cheaper Government power. I note, however, that the PWA had previously approved a grant and a loan to Knoxville of $2,600,000 to build a new municipal electrical distributing system. Is it right to destroy a public utility that pays taxes to give away cheaper electricity on which the taxes and interest to support the high investment are 13 paid for by us all? In other words, the people of the whole country will pay for the Tennessee Valley cheap electricity and with a total cost greater than coal-generated power there." Control of Education George Drayton Strayer, Professor of Education, Columbia University, in an address before the New York State Teachers' Association, October 25, 1935, asserted that the National Youth Administration provides a set-up that might be used to control public opinion. He said: "In each of the states and in localities within the states, the national director has power to appoint state and local directors without reference to their competence in the field of education. "This duplication of organization already established invites waste and inefficiency It also provides a form of organization for those who would control public opinion from a national center." Willard E. Givens, Executive Secretary of the National Education Association, in its official publication, September, 1935, said: "The National Education Association believes in Federal aid to education without Federal control. It asks that financial assistance be given to already-established schools. It believes that in the preparation of young people for the duties of citizenship, reading, writing, and arithmetic should take precedence over harmonica blowing, lariat throwing, and boondoggling. It would keep education in the hands of educators and form educational opportunity in the schools. It is unalterably opposed to politics in education. The experience of certain foreign countries shows plainly that political domination of the schools and political administration of youth are inimical to democracy. They are dangerous steps to be taken by a people devoted to popular government." J. 0. Guleke, member of the Texas State Board of Education, in an address on October 14, 1935, said: "As Dr. John J. Tigert, President of the University of Florida and past United States Commissioner of Education, has pointed out, there is no constitutional authority for Federal participation in education, and such participation 'can be done only under a very specious appeal to the general welfare clause in the preamble.' Yet there has been a gradual intrusion of Federal power into this field. . . . This administration, acting under the guise of relief, is making educational proposals which are clearly those of indoctrination and subversion." President George Barton Cutten of Colgate University at the 117th convocation of the University on September 25, 1935, denounced the tendency toward social legislation of an extreme, paternalistic character. He said: 14 "Nothing could threaten the race as seriously as this. It is begging the unfit to be more unfit and inviting the fit to join the ranks of the unfit. Even such a measure as old-age insurance, which I am sure must touch the sympathies of every one, especially if he has the intelligence to think the thing through, removes one of the points of pressure which has kept many persons up to the strife and struggle of life." Fiscal Policies Policies with respect to taxation and expenditures have been severely scored .by many professors. Harley L. Lutz, Professor of Public Finance, Princeton University, at the annual meeting of the American Economic Association, December 28, 1935, said that the President's tax program to force a redistribution of wealth is impractical and illusory. On general tax policies he said: "It is apparent that the Federal law taxes business as such too heavily and personal incomes, on the whole too lightly, despite the latest increases in the surtax rates. This policy tends to defeat rather than promote the purpose set by the President for the prudent government which is to 'produce ample revenue without discouraging enterprise.' " F. Cyril James, Associate Professor of Finance, University of Pennsylvania, in the Annals of the American Academy of Political and Social Science, November, 1934, said: "On the whole, then, it seems that the cost of the New Deal renders inevitable an increase in the general level of taxation, even though some confiscation of wealth occurs as a result of monetary policies. To the extent to which the present governmental policies do not lead to an increase in the aggregate national income, the ideals of the New Deal can be attained only at the expense of sacrifices imposed arbitrarily upon certain groups in the community. It is the wealth of these groups that the Government is offering to those that benefit from its policies, and even though the whole community may benefit in the long run from wise policies regarding the redistribution of income on some more equitable basis two serious problems must be continuously considered if the ideals of the New Deal are to be safely attained. "In the first place, it must be remembered that every benefit conferred on one party involves the imposition of a sacrifice on another, so that the extent of the sacrifice must be considered in appraising the social value of the benefit. In the second place, a sincere effort must be made to distribute the sacrifice as equitably as possible over all those groups that are competent to make it. Unless due weight is given to these considerations, the path of the idealists may prove to be more unpleasant than that of Bunyan's Christian, and less definite in the destination to which it leads." 15 W. D. Ennis, Professor of Economics of Engineering at Stevens Institute of Technology, said on August 12, 1934: "Uncle Sam has become incomparably the biggest lender in all history, and the source of the funds is confiscation. Whatever the Government does for anybody must be paid for by somebody." Many warnings of inflation due to continued governmental deficits have been sounded by professors of high standing. Edwin W. Kemmerer, Walker Professor of International Finance, Princeton University, and Honorary Chairman, Economists' National Committee on Monetary Policy, in a radio address, November, 1935, said: "The really dangerous part of the situation, however, is not so much the present size of our national debt as bad as that is but the rate at which that debt is growing, the uneconomical and in many cases the wealth and character-destroying uses for which the money borrowed and collected in taxes is being expended, and the fact that the forces that usually curb excessive Government expenditures are at present comparatively ineffective." Ray Bert Westerfield, Professor of Political Economy, Yale University, in a radio address on April 18, 1935, said: "It appears, therefore, that unless some unforeseen preventives are originated, we are faced with an inflation that will exceed anything our country ever experienced. If it is allowed to run its course and merely controlled when it reaches the maximum expansion possible within the existing legal reserve limitations, the inflation will apparently approach that of France in the post-war period. In default of such control, the experience of Germany will be more comparable to what we may expect." Banking Policies Economists specializing in the field of banking were critical of the Eccles banking bill presented to the Congress by the administration and which was the original basis of the much less objectionable Banking Act of 1935. H. Parker Willis, Professor of Banking, Columbia University, and former Secretary of the Federal Reserve Board, emphasized the political nature of the bill in an address before the New York State Bankers' Association, June 10, 1935. This was while the bill was pending before the Congress. Professor Willis said: "It is a bill whose purpose it is, first of all, to compel state banks so far as possible to become members of the Federal Reserve system; to vest in the President despotic and uncontrolled power over the banking mechanism of the United States; 16 to establish a dependent and incompetent board at Washington, which shall be authorized to interfere with all details of Federal Reserve Bank operations and with the power to enforce mandates upon the bankers of the country, practically under penalty of having to go out of business should such bankers fail or refuse to do as directed. "I think the Eccles bill gives to the Federal Reserve Board, which means to the Treasury and to the President, the power to compel the banks to absorb as much of the Government deficit as they see fit. It authorizes the Board to alter reserve requirements when and as it may be desired to do so, not only as to the percentages of the reserves, but as to the composition of the reserve itself and as to the place where such reserves will be kept. It would thus make possible an order from the Board to the banks to carry 100 per cent of their demand deposits in the form of balances with the Reserve banks or of Government bonds in their own vaults, and some such order will be the almost inevitable result of the enactment of the measure." At a more recent date some months after the enactment of the Banking Act of 1935, Professor Willis in an address at a meeting of bankers at Urbana, Illinois, said: "The banks are being asked to put up what is needed to bring about complete communization of finance in the United States. "Our banking system today rests entirely upon Government bonds as a foundation . . . distributed throughout the entire body of banks the country over. "Ability to pay obligations rests upon ability to liquidate Government bonds. As there is no market for Government bonds except the banks themselves or the agencies of the Government, we now have an exceedingly delicate and top-heavy structure of finance. "The Government is far too much dependent upon the banks for its own good, and they are far too closely influenced by the price of public bonds for their good. A much broader base ... is necessary." Benjamin Haggott Beckhart, Associate Professor of Banking, Columbia University, writing in the New York Herald-Tribune on March 16, 1935, referred to inflationary dangers under the present banking situation. He said: "Such inflation as we have experienced in the United States, and such as we will have in the future, will be credit inflation credit expanded on the basis of the excess reserves of member banks. . . . "As is well known, member bank reserves are now in excess of legal requirements by some $2,300,000-000. This is an unprecedented total, and, correspondingly, a source of great danger to the credit system. Judging from past experience, it will be only a question of time before this excess will be fully utilized in credit expansion." 17 Since the date of Professor Beckhart's comments excess reserves have increased to more than $3,000,000,000. Even Irving Fisher, Yale Professor, who has been sympathetic with New Deal monetary policies, criticized the original draft of the Ec-cles bill. In a statement on February 11, 1935, he said: "It is true that, rightly administered, the new bill could save us from future booms and depressions. But, wrongly administered, it could make them worse than ever. And obviously it ought to be so amended as to make sure that it will do as much good and as little harm as possible, whoever may be in charge of its administration. "The new bill gives the Federal Reserve Board more power at the expense of the banks and gives the President more power at the expense of the Board. It comes nearer to making the President an economic dictator than all previous legislation put together." Monetary Policies In no phase of administration policy has the weight of opinion among outstanding economists been so unanimous in opposition as in the case of the monetary system. Much attention was centered by the administration on this subject during its early months and many professors in leading colleges and universities took a public position in the latter months of 1933 and the early part of 1934 adverse to measures proposed relating to gold and silver. The Economists' National Committee on Monetary Policy, composed of about 90 outstanding economists, was formed in the fall of 1933 and since that time has carried on an active campaign of criticism of the administration program. This Committee has stated its purposes as follows: "To combat unsound monetary programs such as those of the inflationists, devaluationists, and commodity dollar advocates. "To educate the public as to the desirability of an early return to a gold standard. "To make it clear to the country that much of the monetary advice given to the President is not representative of the opinions held by the great majority of the leading monetary authorities of this and other countries." Officers of the Committee have been Edwin W. Kemmerer, Princeton University, Honorary Chairman; Ray B. Westerfield, Yale University, President; and Walter E. Spahr, New York University, Secretary-Treasurer. Other members of the Committee who are professors in colleges or universities follow: 18 James W. Angell, Columbia University; James W. Bell, Northwestern University; Neil Carothers, Lehigh University; George W. Dow-rie, Stanford University; J. Franklin Ebersole, Harvard University; John T. Holdsworth, University of Miami; David Kinley, University of Illinois; Ernest Minor Patterson, University of Pennsylvania; Harold L. Reed, Cornell University; William A. Scott, University of Wisconsin; Oliver M. W. Sprague, Harvard University; H. Parker Willis, Columbia University; John Parke Young, Occidental College. Eugene E. Agger, Rutgers University; Charles C. Arbuthnot, Western Reserve University; George E. Barnett, Johns Hopkins University; Don C. Barrett, Haverford College; B. Haggott Beckhart, Columbia University; Ernest L. Bo-gart, University of Illinois; Jules I. Bogen, New York University; Frederick A. Bradford, Lehigh University; R. P. Brooks, University of Georgia; William A. Brown, Jr., Brown University; Charles J. Bullock, Harvard University; J. Ray Cable, Washington University; Wilbur P. Calhoun, University of Cincinnati; William J. Carson, University of Pennsylvania; Alzada Corn-stock, Mount Holyoke College; Garfield V. Cox, University of Chicago. Charles A. Dice, Ohio State University; Eleanor Lansing Dulles, University of Pennsylvania; William E. Dnnkman, University of Rochester; William D. Ennis, Stevens Institute of Technology; Clarence W. Fackler, New York University; Fred R. Fairchild, Yale University; J. Anderson Fitzgerald, University of Texas; Herbert F. Fraser, Swarthmore College; Henry B. Gardner, Brown University; Roy L. Garis. Van-derbilt University; Harry D. Gideonse, University of Chicago; Lewis H. Haney, New York University; Hudson B. Hastings, Yale University; Frederick C. Hicks, University of Cincinnati; Jacob H. Hollander, Johns Hopkins University; F. Cj'ril James, University of Pennsylvania; William H. Kiekhofer, University of Wisconsin; Elbert A. Kincaid, University of Virginia; Frederick E. Lee, University of Illinois; Ray V. Leflier, Dartmouth College; J. L. Leonard, University of Southern California; Esther Lowen-thal, Smith College; James D. Magee, New York University; Arthur Marget, University of Minnesota; A. Wilfred May, Columbia University; Mark C. Millis, Indiana University; Margaret Myers, Vassar College; Melchior Palyi, University of Chicago; Clyde W. Phelps, Chattanooga University. Howard H. Preston, University of Washing-19 ton; William A. Rawles, Indiana University; Ralph Robey, Columbia University; R. G. Rod-key, University of Michigan; Olin Glenn Saxon, Yale University; Josef A. Schumpeter, Harvard University; James G. Smith, Princeton University; William H. Steiner, Brooklyn College; Frank W. Taussig, Harvard University; Charles S. Tippetts, University of Pittsburgh; Alvin S. Tostlebe, College of Wooster; James B. Trant, Louisiana State University; Leonard L. Watkins, University of Michigan; Russell Weisman, Western Reserve University; William O. Wey-forth, Johns Hopkins University; Max Winkler, College of the City of New York; Ivan Wright, University of Illinois; Ralph A. Young, University of Pennsylvania. On December 15, 1933, 15 Yale professors joined in a protest against the administration's monetary policy. In this statement they said in part: "We believe that the recent monetary policies of the Government have already awakened distrust of the good faith and credit of the United States. The continuation of such policies, in connection with the heavy borrowing which the extraordinary expenditures of the Government are now necessitating, is likely to have disastrous effects upon the finances of the national government and to force the nation into crude paper money inflation of all forms most harmful and least susceptible to control." The statement was signed by Andrew Barr, Jr., N. S. Buck, W. M. Daniels, Clive Day, R. L. Dixon, Fred R. Fairchild, H. B. Hastings, Kent Healy, R. C. Jones, J. E. McDonough, 0. G. Saxon, E. D. Smith, F. P. Smith, W. W. Werntz and R. B. Westerfield. Seven professors of Cornell University, colleagues of Professor George F. Warren, chief sponsor of the administration's gold policy, joined in a statement on November 28, 1933, in criticism of his theories. In the statement they said in part: "We do not deny that the dollar price of gold is _ a factor in the determination of commodity prices, but we believe that the connection between the dollar's gold value and the dollar's goods value is by no means uniform amid differing sets of circumstances. For this reason we fear that the administration's gold-buying policy either will be ineffective or will operate through processes that will be so difficult to control that harmful consequences may ensue." The statement was signed by Professors Harold L. Reed, Paul M. O'Leary, E. A. J. Johnson, Royal E. Montgomery, F. A. Southard, Jr., Paul T. Homan and Donald English. 20 On November 27, 1933, 38 members of the Economics and Business Faculties of Columbia University joined in a statement pointing out the dangers of various inflationary measures favored by the administration. In the statement they said in part: "We strongly urge that all artificial efforts to depreciate the external value of the dollar through purchases of domestic and foreign gold cease. "Whatever the technical value of such operations as a method of raising prices, there is strong probability that this policy will lead to trade restrictions and retaliations on the part of other nations and to competitive currency depreciations. In blunt but accurate words, it is a form of economic warfare." Those who signed the statement were: James W. Angell, Ralph S. Alexander, B. H. Beckhart, Ralph Thomas Bickell, Paul F. Brissenden, Thomas W. Byrnes, Robert E. Chaddock, John M. Chapman, John M. Clark, Reavis Cox, David L. Dodd, James L. Dohr, James C. Egbert, Michael T. Florinsky, Robert Murray Haig, Harold Hotelling, H. A. Inghram, Roy B. Kester, Howard Lee McBain, Roswell C. McCrea, Nina Miller, Wesley C. Mitchell, 0. S. Morgan, A. K. Nixon, Paul H. Nystrom, John E. Orchard, William Harvey Reeves, Ralph W. Robey, Leland R. Robinson, Edwin R. A. Seligman, Carl Shoup, J. R. Smith, Archibald H. Stockder, Horace Taylor, T. W. VanMetre, H. Parker Willis, L. A. Wolfanger, Leo Wolman. Ralph A. Young of the Wharton School of Finance and Commerce, University of Pennsylvania, in a book entitled The New Monetary Systems of the United States, published by the National Industrial Conference Board, August, 1934, summarized the potentialities of the new managed currency as follows: "The future of the American monetary supply rests very largely with the Executive. Currency management, therefore, is a political matter and is subject to all the political forces, international as well as national, though predominantly the latter, to which Executive policy must give heed. For the time being, this can mean only one thing; that is extreme monetary nationalism. Definite commitment to such a course by so important a country internationally as the United States must necessarily result in reciprocal monetary nationalism by other countries, reinforced by higher tariff barriers and more rigid trade quotas. It must also result in extended international currency instability and the disruption of international capital flows and of debtor-creditor relationships. Over the long run, it means a drying up of international trade and an impetus to international political friction." 0. M. W. Sprague, Professor of Banking and 21 Finance, Harvard University, following his resignation as Treasury adviser in monetary matters, disagreed with those who at that time were insistent that the depression could be cured by monetary means. Professor Sprague, writing in the New York Times, November 29, 1933, said: "I do not believe that the depression is primarily due to monetary policy, and ... no monetary policy, however wisely formulated, is sufficient to bring about a trade recovery." Frank D. Graham, Professor of Money and â– Banking, Princeton University, in a letter to the editor of the New York Times, October 28, 1933, objected to the administration's gold policy. He said: "The price of gold cannot materially raise the price level unless it increases the volume or rapidity of turnover of money or reduces the volume of trading transactions involving the use of dollars. . . . "The present policy, however, will have no effect at all on the general price level unless it leads to a flight from the currency. The latter is by no means improbable." Ray Leffler, Professor of Economics, Dartmouth College, in a book entitled Money and Credit, published in 1935, criticized the silver part of the monetary program as follows: "In conclusion, the United States was not in need of an enlarged metallic basis for credit expansion in 1934 when the Silver Purchase Act was passed. Possibly it was in need of a higher price level. But there already existed a very large metallic reserve of gold which was unused at the time. Besides, there were large member banks' reserves awaiting investment. The potential supply of the media of exchange was quite adequate. An increased metallic reserve would not guarantee an actual increase in the total media of exchange. Nor could an increased supply of media guarantee an increased price level by itself." Frederick Edward Lee, Professor of Economics, University of Illinois, criticized the administration silver policy in an article in the Chicago Journal of Commerce, November 13, 1935. He said: "The silver program and policy of the present administration are already having repercussions little dreamed of, and probably still unrecognized by most of the advocates of such a program. "In the light of these facts and conditions, has the time not come for the reestablishment of a free and open market for silver, and the stoppage, by repeal of most of the silver legislation in the United States since December, 1933, of these uncalled-for price-lifting methods pursued by the day-to-day 'policy,' if any real policy can be said to 22 exist, of the Treasury Department? The answer to these questions lies with the American people and the next session of Congress." Professors vs. Professors The notable list of names above shows without question that professors of the highest standing believe that New Deal policies lack sound basis in economic theory. The school of thought with which New Deal professors are identified forms only a small minority. Its doctrines do not find acceptance with the overwhelming majority of the academic profession. The use of the term "brain trust" in connection with the activities of the administration has given a false impression of the actual situation respecting the attitude of the professors as a whole. In short, there are professors and professors. Evidence is plain that the professors whose judgment is most widely accepted do not countenance the theories upon which the New Deal is predicated.