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No. 99 "The Townsend Utopia" Speech of Dr. Ray Bert Westerfield, Professor of Political Economy, Yale University, February 15, 1936. American Liberty League. 400dpi TIFF G4 page images Digital Library Services, University of Kentucky Libraries Lexington, Kentucky Am_Lib_Leag_99 These pages may freely searched and displayed. Permission must be received for subsequent distribution in print or electronically. No. 99 "The Townsend Utopia" Speech of Dr. Ray Bert Westerfield, Professor of Political Economy, Yale University, February 15, 1936. American Liberty League. American Liberty League. Washington, D.C. 1936. 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. AN INVITATION TO JOIN THE AMERICAN LIBERTY LEAGUE We extend to every American citizen who believes in the fundamental principles which gave birth to the Constitution of the United States an invitation to become a member of the American Liberty League. You may indicate your acceptance of this invitation by filling in the necessary information as to your name and address on the enrollment blank below and mailing it to American Liberty League, National Press Building, Washington, D. C. There are no fees or dues. If you are willing and able to give monetary help for the League's support your contribution will be appreciated, as our activities are supported entirely by the voluntary gifts of our members. ENROLLMENT BLANK Date_ I favor the principles and purposes of the American Liberty League and request that I be enrolled as a | reÂ«ula/ ) member. I * contributing J Signatu Name (Mr. MrB. Miss) â€¢As a contributing member I deBire to give $_ to help support the activities of the League: Cash herewith.__. Installments as follows: _ The Towusend Utopia â˜… â˜… â˜… Speech of DR. RAY BERT WESTERFIELD Professor of Political Economy, Yale University, and Member, National Advisory Council of the American Liberty League over the Blue Network of the National Broadcasting Company February 15, 1936 AMERICAN LIBERTY LEAGUE National Headquarters NATIONAL PRESS BUILDING WASHINGTON, D. C. Document No. 99 The Townsend Utopia * ^ToU MAY number among your friends two types of people who Bimply will not be convinced of the futility of a pet idea. I refer to him who spends his time inventing a machine of perpetual motion and to him who spins utapias. These two are zealous, dogged, stub- \ born and persistent in the pursuit of their idea. What matters the sneer of friends, the logic of trained students, the repeated experience of the ages? they go on inventing inventing machines that somehow do stop and Utopias that somehow do fail. cannot but admire their courage and ingenuity, their optimistic spirit and devotion to an idea, however compassionate we may be for the futility of it all. But we cannot stop at this. Unfortunately the Utopian is likely to be a dangerous citizen. The maker of the perpetual motion machine is individualistic, he works by himself, and is quite content in the contemplated personal glory and pecuniary fortune his machine wiU bring him. He can try out the machine in his workshop and quietly suffer the ignominy of failure and take all the loss involved. The creator of a Utopian scheme, on the contrary, straightway tries to convince the world of its feasibility and desirability. He becomes a messiah of a new order; he appeals to the unfortunate, the gullible, the discontented and reformist elements. By propaganda and subsidized effort he builds a national or- I ganization to foster a program for the transformation of our social and economic life along the lines of his dream. It is a never-failing characteristic of trie Utopian that he fails to fathom the remarkable complexity of our social and economic system. His formula for transforming the system is therefore naively simple. For instance, the Single Taxer would lift the world to a new heaven merely by appropriating the rent of land; the Communist merely by the public ownership of the means of social production; and endless others by the mere creation or abolition of money. This evening I am to discuss the plan of a living American Utopian who has become a public menace. I refer to Dr. Francis E. Town-send, a gray-haired, 68-year-old, retired California physician, who, after a useful life in the municipal health service caring for indigents of his city, Long Beach, invented the so-called "Townsend Old Age Revolving Pension Plan." By it he claims we can have "the sunset of life colored like a rainbow with individual pots of gold for everybody," we can relieve humanity forever "from the fear of destitution and want," and we can restore economic prosperity in a jiffy by enforcing increased spending. His formula is indeed simple. The plan provides for the appropriation of $2 billions by the Federal Government to set up a fund from which the first month's installment of old age pensions may be paid. It proposes that the government pay a monthly pension of $200 to every citizen of 60 years of age or more, with the requirement that the pensioner agree under oath that he will spend the money, within the confines of the United States, during the next 30 days or return the unspent balance to the government. The maximum amount he is to give to charity, church or fraternal organization is fifteen per cent of his $200. Non-compliance with this spending requirement is automatically to shut off his pension. The $2 billion fund is to be a revolving fund, being replenished each month by a Federal "transactions" tax, levied on the gross dollar amount of every transaction in business, industry, commerce and finance occurring in our country. The tax is to be paid monthly, and it is assumed that the Federal income from the tax will suffice to pay the pensions due. The initial tax rate is to be two per cent, and the President is authorized to raise it as high as three per cent or to lower it to one per cent, as he may deem it necessary in order to maintain this balance of income and outgo. The collection of the tax is to be facilitated by a universal system of licensing every seller of "commercial things of value" is to procure a Federal license, at a fee fixed by the Secretary of the Treasury. A bill, with these and other provisions, has been before Congress the past year, having been sponsored by Representative John Steven Mc-Groarty, also of California. If enacted into law it wiU be administered by local pension boards, one in each county, composed of three pensioners appointed by the Secretary of the Treasury and serving without compensation other than their pensions. The bUl has undergone some modifications that are significant of trend: to the basic "transactions tax" a supplementary tax of two per cent on all inheritances and gifts in excess of $500 has been added, and the present Federal income tax rates are to be jumped one-tenth of one per cent. Some doubts, moreover, seem to have crept into the sponsors' heads as to the adequacy of taxing provisions, for the McGroarty bill, readopted at a Townsendite caucus of the Seventy-fourth Congress as the movement's official measure, provides for allotting the two per cent transactions tax to old-age pensions "not to exceed $200 a month," and Mr. McGroarty himself has declared that if the tax only yielded $50 or $75 a month in individual pensions at the beginning, "it would be a good starter." Except for the extravagant claims of Dr. Townsend as to the efficacy and benefits of his scheme, the most amazing fact in connection with it is the tremendous number of our people who have joined him in his Utopian crusade. I have no late figures; there are no conclusive or tested figures, but according to his own estimates he has between eight and twelve million followers, about seven million of whom are 4 organized in Townsend Clubs well scattered over the country. Several million signatures have been attached to a petition to Congress in furtherance of the McGroarty biU. The campaign purports to be financed by the sale of explanatory booklets at twenty-five cents [ each. Purchasers of these booklets, in the ma- jority of cases, are elderly persons, for the promotion of whose welfare the plan is especially designed. They display a missionary zeal which has resulted in large colonies of elderly retired persons in southern California communicating with friends in the home states to the east on behalf of the plan. These addresses have become the nuclei of new Townsend Clubs and propaganda. Whereas most revolutionary and Utopian reforms are devised, incited and engineered by youthful persons, this Townsend idea and campaign is distinctly of the middle-age and elderly people. THE MOVEMENT enjoys other big lines of support. Prompted by the mandate of the plan, which would require that the pension be spent each month, some business men have lent support to the campaign, in the fond hope that the increased circulation of money would make an end to the depression and bring speedy recovery; and the unemployed have, for a similar reason, been susceptible to Townsend propaganda. Moreover, since the Townsend cohorts have attained such sizable numbers, the politicians, with an election in the offing, have not failed to note that the Townsendites, following (| the New Deal lead, "have, in the laudable en- terprise of caring for the unfortunate victims of the depression, demonstrated the vote-getting power of a sweeping state subsidy to anybody and everybody in straitened circumstances." Aspirants for political office have courted, through fear or love, this potent group of active millions of voters. In promises Townsend's plan outdoes the New Deal in caring for the "Forgotten man": What does it matter that the promises are visionary, utterly impossible of 5 achievement, if thereby an "itching palm" can be persuaded to sign a ballot for a politician mad for election? A.ND so this gigantic Utopian campaign has developed based on the natural sympathy for the old and indigent poor, on the desperate spirit of the depressed business man and the unemployed worker, and on the culpable support of selfish politicians and fanned to fever heat by the shrewd but unscrupulous use of religion and family sentiments, and of the cupidity that can easily be evoked in the heart of the less fortunate members of society. But the explanation of why the Townsend plan has attained such prominence does not in the least justify any expectation whatsoever that the plan is feasible and practicable, or that it is not fraught with devastating dangers to one and aU. This is not the first hoax that has attained a multitudinous foUowing. Dr. Town-send is not the first messiah who envisioned a "new heaven and a new earth" and sold the idea to a guUible public. History is strewn with the wrecks of Utopias even more plausible than TOARP. History records the collapse of one Utopia after another, but the aftermath of disillusionment, of financial loss, of pain and misery remains unwritten except in the broken hearts of the generation. let us examine the Doctor's prescription. On the basis of the 1930 Census the acting chairman of the United States Central Statistical Board, recently estimated the total number of persons in the United States in 1934 who were sixty years of age or over at 11,449,000. The total pensions of these persons at $200 a month would amount to $27,468 millions. For sake of argument let us assume that the plan can stay in operation for a generation. As the years went by the amount required for pensions would grow in size, for several reasons: first, on the basis of calculated trends the total population is forecast to expand until about 1960; second, whereas the people of sixty years or more now constitute about nine per cent of the population, by 1960 they will make up about seventeen per cent; third, whereas Dr. Town-send urges that his plan is voluntary and estimates that not more than 8,000,000 of the eligibles wiU embrace the opportunity to become pensioners, the others having private incomes of more than $2400 a year or, for sentimental reasons, refusing to become pensioners of the state; the proportion of pensioners to eligibles will increase, because the motive for thrift will be stifled and fewer will provide funds for old age and because the stigma of the dole will fade rapidly when almost every old person is receiving it; and fourth, the probable inflation that will accompany the operation of the plan will make larger pensions necessary, that is, if the pensioners are to maintain their standard of living. In summary, as the years roll on, the burden of pensions will become larger in absolute amount and relative to the total population. The 1934 basis will, therefore, be conservative and understate the burden. The United States Bureau of Foreign and Domestic Commerce in cooperation with the National Bureau of Economic Research estimates the national income paid out in 1934 at $50,189 millions. Of this sum the pensioners, who constituted about nine per cent of the population would be receiving fifty-five per cent. If the $27,468 millions going to pensioners are deducted from the total income, there are left for the non-pensioned population $22,721 millions. Dividing this sum among the estimated number of persons under sixty years of age (namely, 114,797,000) in 1934 allows $197 per year for the non-pensioned, as against the $2400 a year for the pensioned, or about one-twelfth as much. But even this $197 amount would not be realized by the non-pensioned because the pensioners may under the scheme continue to receive income from other sources than the pensions, which means that the non-pensioners' share of the national income would be reduced by that amount. THE UTTER absurdity of such a setup is surely apparent. Can anyone be so stupid as to imagine our young men and women wiU work for and live on an average annual income of less than $197, in order that the old folks above sixty may squander $2400 a year! Maybe there are some sons and daughters whose filial devotion will persuade them to support such an egregious project, but they are surely rare. But there are millions of other sons and daughters whose parents are deceased, deserted or what not and who think of themselves largely and who cannot be persuaded that the old folks should be the ones to spend the money and enjoy life in idle squander, while the younger generations worked and lived on a twelfth as much income for the first sixty years of their doubtful existence. The Communists and others berate and threaten our present economic order because, as they hold, there is an unfair distribution of national income; they demand that the workers receive more of the product of farm, factory and mine. But the Townsend Plan is the very antithesis of this, for it would accord to the idle old a dozen times the income going to those who work and produce. H communism is a menace to our social order, the Townsend scheme would be many times more menacing. In fact, if a serious effort were made by the state to institute and enforce the scheme, it would shortly end in chaos or parricidal civil war. In ALL probability it would be chaos rather than war; it would be a complete breakdown, preceded by a scramble for bigger pensions and for pensions to lower age groups. Does not the record of war veteran pensions and bonuses indicate what would happen? Civil War pensions commenced immediately after war for war disabled veterans only; between 1890 and 1907 the principle adopted was to pension all vet-8 erans not in good health whether their complaint was from war service or not; in 1907 was begun the practice of pensioning all old soldiers who had served at least ninety days in the Civil War. A regular pension racket developed after 1890, and historians describe what went on in â€ž Washington as "pension scandals." In 1917 the J Secretary of the Treasury devised a system of * insurance and compensation for the soldiers ! wounded and disabled and of allotments for their dependents; the system was to be in his words, "a substitute for the pension system as applied to the present war, and ought to make impossible, as it certainly will make unnecessary, further pension legislation with aU its inequalities and favoritism." You are too well acquainted with what has happened during the "last seventeen years a huge bonus, a vast system of disability allowances for men whose disabilities were not related in any way to wartime service, hospitalization for ex-soldiers suffering from diseases in nowise traceable to their war service, civil service preferences in Federal and State employment" you are, I say, too well acquainted with this record to fail to grasp what might be expected under the Townsend Plan. Few veterans of the World War are sixty years old; most of them are in the very prime of life, yet they have seen fit selfishly to extort bigger and bigger benefits from the state! If, as under the Townsend plan, it is deemed best for society to keep idle from nine to seventeen per cent of our population, however able and willing to work most of them may be, and to force them to spend riotously the produce of the younger generation, if this principle of (enforced idleness and squander is adopted as the basis of our economy, what defect of logic is there to the people between 50 and 60 years of age taking up a similar life of idleness and squander, or even of asking bigger pensions than $200 a month? Will not the more idleness and the more spending make for greater national prosperity? And would not a vote-conscious Congress soon be prompted to heighten the "prosperity" by including the bereaved 9 widows and widowers of deceased pensioners, including the "group of comparatively young persons who would have wed senescent but susceptible pensioners because of their attractive incomes"? IjET US strike a balance between reason and sentimentality. Everyone concedes that old age is a terrible period of life, especially so for those destitute of the means of comfortable existence. As one watches his tottering parents and comes face to face with the stern reality of old age, he shudders and his heart bleeds in sympathy and he is moved to do even the impossible for them. Let us acknowledge the fact that many millions are less prepared to face old age than heretofore, their small fortunes having been swept away or used up during the depression; that mechanized industry has less and less use for the older workers, who join the unemployed and unemployable class at earlier and earlier ages; that there are thousands of people above the age of sixty who are dependent upon either private or public charity to keep them from starvation; and that the old age allowances in most States, and even the pensions under the new Social Security Act, are too low, making it quite impossible to live on them with any degree of decency or comfort, at least in a large city. Let us concede that there is some justice in the outcry of the poor against the rich, "against concentrated wealth which is blamed for the suffering of the old as well as the young." These ARE facts, sorry facts, that awaken altruistic sentiments, and if there is any practicable solution of the problems involved, it should be sought and employed. But such noble sentiments should not arouse us to espouse utterly absurd proposals for treating the patient, even though the proposal come from an experienced physician whose motives, so far as I know, no one questions. The fuller realization of the dire circumstances of the indigent poor and of the necessity of doing some-10 thing to ease and brighten their final years should make us think soberly and soundly along possible remedial lines and not to plunge headlong into "a scheme so cruelly mischievous, so crassly unworkable, so filled with possibilities of wreckage as the good Dr. Townsend and his assisting high pressure promoters are seeking to foist on this country." WHEN ONE turns from the pension side of the Townsend Plan to the taxing side, that is, from the outgo side of the Revolving Fund to the income side, he finds the Plan even more impossible of operation and more fraught with devastating danger to our economic system. The Fund is to be replenished monthly by a tax of two per cent, more or less, on aU transactions involving the sale of "commercial things of value." The learned researches of Dr. Woy-tinsky indicate that the total volume of transactions subject to the proposed tax would have been about $105 billions in 1934. Since it would have been necessary to raise $27,468 millions for pensions due that year, the necessary tax rate would have been twenty-six per cent instead of two per cent as proposed by Dr. Townsend. This calculation ignores the cost of administering the tax and the payment of pensions. One of the primary and generally accepted principles of taxation is that the expense involved in the collection of taxes of small amounts from small taxpayers is likely to constitute too high a per cent of the yield and that the collection process must be too inquisitorial and the taxgatherers too numerous to be tolerated by the people. The proposed system of licensing aU sellers of "commercial things of value," in addition to the scheme of administering the pensions through county boards, would mean the establishment of a bureaucracy of mastodonic size and ravage the personal liberty which has been the most precious American jewel. Do you realize what a twenty-six per cent tax on every transaction would mean? In the year of peak prosperity, 1929, most corporations would have found it impossible to pay even the two per cent Townsend tax out of profits, either because they had no net income or because net income was less than two per cent of gross transactions. A tax that cannot be paid out of income or profits must be paid "by losing capital or by reducing costs of production or by increasing prices. Payment of the tax out of capital means bankruptcy. Reduction of costs would have to take place largely at the expense of labor, which would be politically and economically impossible. The only remaining method of paying the tax is to pass it on to the purchaser in the form of higher prices." (National Industrial Conference Board.) THE burden of financing the Townsend Plan would paralyze the country's production, trade and finance. All banks, stock exchanges, factories, insurance companies and business institutions of every nature would be forced to close immediately the Townsend Plan was put into effect. The value of securities would drop precipitately. Panic would reign supreme. There are outcries now against the existing tax burden. The howl that arose when some States recently imposed a general sales tax of one or two per cent was loud enough. Fancy, if you can, the addition of a tax absorbing twenty-six per cent of gross sales. The Townsend tax is not in lieu of any other tax, except perhaps the present cost of support of the indigent old. With our mounting national debt and budget deficits, with the trend toward greater government expenditures for new social objectives, with the imposition of payroll taxes to provide for the new Social Security system, the prospect is already for overwhelming taxation and inflation, without the Townsend Tax. THE Townsend Tax is a tax on transactions; if at all possible, it will be added by the seller to the price of the commodity or service sold; to the degree it is added, it raises the price, and the next seller computes his tax on the accumu-12 lated amount; the tax is thus compounded at every turnover, a tax on a tax on a tax. The final consumer will have to bear the aggregate tax passed on. The cost of living is bound to rise. The $2400 pension will be in large part consumed in paying these indirect taxes. A sales tax bears most heavily on the smaU consumers. It is not a tax on the so-called "rich." In fact the pensions required under the Plan are so large that they could not be obtained from the rich; they must come, if at all, from the millions of wage-earners, salaried employees, farmers, and owners of smaU businesses, the great majority of whom have annual incomes of far less than $2400. If the taxes are not collected, the Treasury would no doubt replete the Fund by the issue of paper money. The consequent inflation would be an even more unjust system of taxing the poor. Dr. Townsend rejoins that the forced spending of the pensions would revive business and increase national income. The Brookings Institution and other researchers have computed, after extensive investigation, that, on the 1929 price level and with the 1929 capital equipment fully employed, the national income could have been increased about 20 per cent only. The Townsend Tax on such an increase of national income would fall far short of meeting the pensions. Moreover, if the efforts of the past few years to prime the industrial pump by creation of consumer purchasing power have taught the world anything, it is that consumer spending will not bring recovery. Unless care is taken to preserve and increase industrial profits, all efforts at forcing recovery will similarly fail. The Townsend Plan is the most devastating attack on industrial profits conceivable. After a short run of mad buying by old men and women of consumer's necessities and foibles, the whole structure would coUapse, for the very capital of producers would have been consumed and not replaced. THE Townsend Plan embraces about every economic absurdity that has had a vogue during 13 the current depression. The Doctor would bring prosperity and a new social order by means of political action and legislation. He would curtail output by putting from nine to seventeen per cent of the people out of active production. He would pay one class extravagantly to refrain from production. He would make the people richer by having them work less and spend more. He condemns all warnings that his scheme involves a devastating inflation of the price level. He would put $27,468 millions or more into the hands of foolish spenders, forced to spend for consumptive purposes. He would compel a rapid turnover of money and credit by threat of the disappearing value thereof. He is interested in the Forgotten Man. He would redistribute wealth and income. He would end thrift, making it a mockery, and brand the accumulation of capital as unsocial. He would assail industrial profits by inordinate diversion of product to the less worthy or unfortunate consumers. He would promote social security by taxing unconscionably that group of upper and middle class people who have the virtues of thrift, industry, prudence and independence and provide for themselves. Bedazzled by imagined glimpses of the Promised Land, he disdains the argumentation of contrary-minded economists, the curt dictum of the local banker that the thing won't work, and the opinion of the jurist that it is unconstitutional and contrary to the principles upon which our country and our progress are founded. In all these respects he is a true child of the New Deal spree in Utopian fairyland. Isn't it about time for the American people to come back to a realistic world and to quit chasing fairies in the Land of Make-believe? 14 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 TVA Amendments The Supreme Court and the New Deal 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 Govern- A Program for Congress The 1937 Budget Professors and the New Deal Wealth and Income The President Wants More Power (leaflet) The Townsend Nightmare (leaflet) "Breathing Spells" Speech by Jouett Shouse The Duty of the Lawyer in the Present Crisis Speech by James M. Beck Our Growing National Debt and Inflation Speech by Dr. E. W. Kemmerer Inflation is Bad Business Speech by Dr. Neil Carothers Arousing Class Prejudices Speech by Jouett Shouse The Fallacies and Dangers of the Townsend Plan Speech by Dr. W. E. Spahr What of 1936?^Speecft by James P. Warburg Americanism at the Crossroads Speech by R. E. Desvernine The Constitution and the New Deal Speech by James M. Carson t The American Constitution Whose Heritage? Speech by Frederick H. Stincl.field The American Form of Government Let Us Preserve It Speech by Albert C. Ritchie jj The Redistribution of Power Speech by John W. Davis Time to Stop Speech by Dr. Neil Carothers The President Has Made the Issue Speech by Charles I. Dawson The Facts In the Case Speech by Alfred E. Smith â˜… AMERICAN LIBERTY LEAGUE NATIONAL PRESS BUILDING WASHINGTON, D. C. of them not having an important legislative character. Nearly six times as many Executive Orders have been issued during this period of 15 months as during the period 1862-1900, and 10 per cent of the total since 1862." I do not have complete figures as to the Executive Orders issued during the remaining six months of 1934 but it can be stated authoritatively that the number is not less than 180. What are these Orders? For the most part they are not perfunctory or unimportant documents. In many instances they are decrees having the force of law. In certain cases failure to obey them invokes severe penalty. Further illustrating the extent to which law making by Executive decree has supplanted normal methods of legislation, the same report declares: "To June 16, 1934, the Administrator for Industrial Recovery has issued 2,998 administrative orders, approving or modifying codes, providing for exceptions and exemptions therefrom, and covering a multitude of other activities of a legislative nature. Countless 'interpretations' of codes have been issued by the NRA and the many code authorities, of which there is no real record or indexing, or even any trustworthy source of information. Finally, and perhaps most astounding of all, the NRA has adopted numerous regulations and sets of regulations which are to be found scattered among 5,991 press releases issued up to June 22, 1934, and the NRA staff itself has not segregated such press releases having a legislative effect from those of an informational or news character." The same Committee estimated that the total "legislative" output from the NRA alone during the period covered by its report would exceed 10,000 pages of "law." The Committee commented aptly: "Under these circumstances not only citizens but even lawyers are helpless in any effort to ascertain the law applicable to a given state of facts. The presumption of knowledge of the law becomes, to term it mildly, more than violent." The dispassionate report of the Committee of the American Bar Association tells only part of the story, but it serves to illustrate the fact that 16 the National Recovery Administration immediately became and has continued a vast law-making organization. As an inescapable piece of the picture it must be pointed out that in frequent instances, perhaps in a large majority, subordinate officials, some of them with little experience and others with little qualification, not only write the laws but also enforce them. When the President has approved a code there is no appeal. Besides all of the administrative orders and directions from innumerable boards interpreting and enforcing provisions of the Act, the NRA has created code authorities which themselves issue rules and regulations having the force of law and necessarily affecting the daily lives and conduct of millions of our citizens. Can such procedure be squared with the liberties granted and maintained under provisions of the Constitution? The Emergency Relief Bill Striking as is this illustration, there is a very recent one which, to my mind at least, represents the most flagrant attempt yet witnessed to concentrate power in the Executive. I refer to the Emergency Relief Appropriation Bill in the form in which it was transmitted to the Congress by the President and in the form in which it passed the House of Representatives. That bill appropriates $4,880,000,000 of the money of the taxpayers of the United States. It merely writes a blank check to the President to expend this money in any way that he may see fit and for any purpose that he may desire, without let or hindrance, as long as it is used "to protect and to promote the general welfare by providing relief from hardships attributable to unemployment, by relieving economic maladjustments, by alleviating distress and by improving living and working conditions." The specific powers granted under the bill as passed by the House place in the hands of the President the opportunity to carry out practically any scheme which the wit of man could devise. I am not opposing the objective of the bill. Clearly, the Federal Government must spend 17 proved, prescribed or issued under Title I shall contain tie collective bargaining formula which is as follows: "(1) That employees shall have the right to organize and bargain collectively through representatives of their own choosing, and shall be free from the interference, restraint, or coercion of employers of labor, or their agents, in the designation of such representatives or in self-organization or in other concerted activities for the purpose of collective bargaining or other mutual aid or protection; (2) that no employee and no one seeking employment shall be required as a condition of employment to join any company union or to refrain from joining, organizing, or assisting a labor organization of his own choosing; and (3) that employers shall comply with the maximum hours of labor, minimum rates of pay, and other conditions of employment, approved or prescribed by the President." Section 7(b) provides that the President shall afford opportunity to employers and employees to agree as to maximum hours of labor, minimum rates of pay and other conditions of employment, and the standards when established and approved by the President shall have the same effect as a code. Where no mutual agreement has been reached, the President may investigate and after hearings prescribe a compulsory limited code fixing maximum hours, minimum rates of pay and other conditions of employment. President Roosevelt, in signing the Act on June 16, 1933, announced the appointment of General Hugh S. Johnson as Administrator of Title I and the creation of a special Industrial Recovery Board under the chairmanship of the Secretary of Commerce. Various other advisory boards were set up in the following months. While many changes were made in the character of the organization, it continued to be headed by a single Administrator until October IS, 1934, when a new National Industrial Recovery Board composed of five members took over General Johnson's administrative duties. Advisory duties were assumed by a new Industrial Policy Committee composed of high administration officials. The first code of fair competition, which was that for the Cotton Textile Industry, was approved by the President on July 9, 1933, a little more than three weeks after passage of the Act. Pending the completion of codes for industry generally, the President's reemployment agreement, popularly known as the Blanket Code, was made effective. It gave an opportunity for employers to subscribe to an agreement with the President. The agreement included maximum hours of labor, minimum wages and a promise not to increase prices beyond actual increases in cost. Such compulsion as existed in the agreement was applied through the force of public opinion. Those who signed the agreement were entitled to display a Blue Eagle. The President's reemployment agreement was effective in the first instance until December 31, 1933, and was extended until April 30, 1934. It was in effect thereafter for industries without codes.  At the beginning of January, 193S, about 540 basic codes and about 180 supplemental codes had been applied. The principal controversies in connection with codes have centered around the following features: (1) Labor Provisions. (2) Control of Prices. (3) Control of Production. (4) Trade Practices. LABOR PROVISIONS Maximum Hours The opinion of competent authorities, such as the Brookings Institution, is that the present provisions of codes relating to maximum hours of employment should not be made more restrictive. Any changes should be in the direction of a greater flexibility. All codes establish a maximum number of hours per week for employees. These maximum weekly hours range from 27 to 60 per week. A forty-hour week is the most common. For the most part the provisions as to hours apply to employees engaged directly in production. Separate rules are provided for other classes of employees, such as maintenance, service, shipping, delivery and clerical workers and watchmen. In some codes the number of hours that certain employees may work over the maximum is expressed as a percentage over the general maximum. Many codes specify that employees when engaged in emergency maintenance and repair work, involving breakdown or danger to life or property, shall be exempt from the maximum hour limitations. Still other codes specify that certain employees are entirely exempt from the maximum hour provisions. These exemptions include executives getting $35 or more per week, outside salesmen, repair crews, watchmen, etc. In some of the codes the maximum number of hours stipulated is an absolute limitation to be rigidly observed. In many other codes provision is made for averaging the maximum hours over a period of time. Wide variations in the periods in which an average maximum number of hours may be worked exist in the codes. Further variations are established for certain classes of employees. Sometimes provision is made for extra hours to be worked to take care of peak periods or seasonal demands on the industry. The number of hours and the duration of the exemption are specified in each code. Other provisions relating to hours specify that employers who personally perform manual labor or engage in mechanical operations shall not exceed the maximum hours established in the codes. In some codes a reclassification of employees to avoid the maximum hour provisions is prohibited. Limitations are often made in regard to maximum daily hours, number of working days per week and prohibition of evening work for women.  Codes for the following trades and industries contain provisions establishing the basic weekly maximum hours of labor either below or above 40 hours per week: 27 Hours per Week Cast Iron Soil Pipe. 32 Hours per Week Bituminous road material distributing and Shipbuilding (Government building). 35 Hours per Week Blouse and Skirt, Coat and Suit, Dress Manufacturing, Envelope, Fire Extinguishing, Fur Dressing, Fur Manufacturing, Motor Fire Apparatus, Pipe Nipple Manufacturing, Pleating and Hand Embroidery, Print Roller and Print Block, and Theatrical (attendants, etc.). 36 Hours per Week Cast Iron Pressure Pipe, Cotton Textile, Electrical Manufacturing (processing), Laundry Machinery, Men's Clothing, Men's Neckwear, Merchant and Custom Tailoring, Oil Burner, Pasted Shoe Stock, Processed or Refined Fish Oil, Public Seating Industry, Rolling Steel Doors, Rubber Tire, Shipbuilding (merchant building and repair), Shoulder Pad Manufacturing, Structural Clay, Upward-Acting Door and Wholesale Confectioners. 31 Hours per Week Covered Button Industry, Undergarment and Negligee and Millinery. 44 Hours per Week Motor Vehicle Retailing, Wholesale Automotive and Wholesale Food. 45 Hours per Week Merchandise Warehousing Trade. 48 Hours per Week Cinder, Ashes and Scavenger, Domestic Freight Forwarding, Motor Bus, Petroleum (retail), Restaurant (female), Retail Food, Refrigerated Warehousing, Shoe Rebuilding, and Southern Rice Milling. 54 Hours per Week Hotel, Motor Vehicle Storage, and Restaurant (male). 56 Hours per Week Retail Drug. 60 Hours per Week Petroleum in Puerto Rico (filling and service stations). Under the President's reemployment agreement, factory and mechanical workers were limited to 35 hours per week and eight hours per day except that a 40-hour week was permitted for any six weeks' period within the life of the agreement. The maximum for accounting, clerical, office and store employees was 40 hours. Minimum Wages The minimum wage provisions have been accepted by most of the large industries with comparatively little complaint. The protests have come chiefly from small employers upon whom the wage requirements have often proved an excessive burden. Wide publicity was given the case of Fred C. Perkins, storage battery manufacturer of York, Pennsylvania, who was fined $1,500 by a United States District Judge upon conviction for paying wages ranging from 16 to 25 cents an hour. The Wet Battery Code provided for a minimum of 40 cents an hour. At the time of his original arrest Mr. Perkins spent 18 days in jail because he could not furnish a $5,000 bond. All the codes specify minimum wages by either an hourly or weekly rate, which, as a general rule, applies [ 12 ] only to the lowest paid workers. The most common hourly minimum is 40 cents while the weekly minimum ordinarily ranges from $12 to $16. In the President's reemployment agreement the minimum hourly rate was 30 cents and the minimum weekly rates $12, $14, $14.50 and $15 in cities of different sizes. Several bases for differentials in minimum wage rates appear in the codes. A very common one is the varying scale for regional or geographical locations of the units of the industry. Usually the hourly and weekly rates for plants located in the South are lower than for those located in the Northern states. Sometimes different rates apply for the Western and Pacific states. The states are often individually listed when these wage differentials occur. In many instances the minimum wage rate established for women is lower than that provided for men. This variation also is found within regional differences. When no differential is provided for female workers the code usually states that women shall be paid the same rate as men for the same work. Another variance in the minimum wage rates is based on population. In small towns the rate is less than in larger places. The minimum wage scale for learners or apprentices is usually stated in terms of a per cent of the basic minimum. The period of apprenticeship is given and the number of apprentices permitted is sometimes stated as a percentage of the total number of employees. In a like manner wage rates and the proportionate number of substandard employees is provided for. This type of employee is usually classified as aged or physically handicapped. Many codes contain the requirement that the payment of wages must be in cash or in negotiable checks at certain fixed intervals and free from involuntary payments or rebates. A common clause provides that the minimum wage is guaranteed whether the employee is working on a piecework or hourly rate basis. Prohibitions are sometimes established against reductions in the basic wage for shorter hours. Reclassification of employees and discharges in order to reemploy at a lower rate are forbidden. Certain codes specify some types of employees that are exempt from the minimum wage provisions. These include bona fide apprentices, outside workers and outside salesmen. Child Labor The National Industrial Recovery Act contains no mention of child labor. It refers to requirements in codes for maximum hours, minimum rates of pay and "other conditions of employment." Child labor was prohibited in the first code adopted, which was that of the Cotton Textile Industry. A similar prohibition has been included in other codes. In most cases the minimum age is 16. [ 13]