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Title: Looking Forward
Author: Roosevelt, Franklin Delano (1882-1945)
Photographer: Anonymous
Date of first publication: March 1933
Edition used as base for this ebook:
   London: William Heinemann, 1933
Date first posted: 24 November 2012
Date last updated: 24 November 2012
Project Gutenberg Canada ebook #1014

This ebook was produced by:
Barbara Watson, Pat McCoy, Mark Akrigg
& the Online Distributed Proofreading Canada Team
at http://www.pgdpcanada.net






  LOOKING FORWARD




  [Illustration: FRANKLIN D. ROOSEVELT

  _President of the U.S.A._]




  LOOKING
  FORWARD

  _BY_
  _FRANKLIN D. ROOSEVELT_


  WILLIAM HEINEMANN LTD.
  _London_




  FIRST PUBLISHED 1933


  PRINTED IN GREAT BRITAIN
  AT THE WINDMILL PRESS, KINGSWOOD, SURREY




CONTENTS


        INTRODUCTION                                   7

     I  _Reappraisal of Values_                       17

    II  _Need for Economic Planning_                  39

   III  _State Planning for Land Utilisation_         55

    IV  _Reorganisation of Government_                71

     V  _Expenditure and Taxation_                    91

    VI  _Shall We Really Progress?_                  109

   VII  _What About Agriculture?_                    125

  VIII  _The Power Issue_                            139

    IX  _The Railways_                               157

     X  _The Tariff_                                 177

    XI  _Judicial Reform_                            193

   XII  _Crime and Criminals_                        205

  XIII  _Banking and Speculation_                    217

   XIV  _Holding Companies_                          231

    XV  _National and International Unity_           241

   XVI  _Inaugural Address_                          261

        INDEX                                        273




INTRODUCTION


This is essentially a compilation from many articles written and
speeches made prior to March 1, 1933. I have added parts which bind the
material together as a whole.

In the comments to follow I speak not of politics, but of government;
not of parties, but of universal principles. They are not political
except in that large sense in which a great American once expressed a
definition of politics--that nothing in all human life is foreign to the
science of politics.

The quality of national politics, viewed as a science which is capable
of affecting for the better the lives of the average man and woman in
America, is the concern of national leadership--particularly in such
years as these, when the hand of discouragement has fallen upon us, when
it seems that things are in a rut, fixed, settled, that the world has
grown old and tired and very much out of joint. That is the mood of
depression, of dire and weary depression which, if the quality of our
political leadership is right, should vanish so utterly that it will be
difficult to reconstruct the mood.

Everything tells us that such a philosophy of futility is wrong. America
is new. It is in the process of change and development. It has the great
potentialities of youth. But youth can batter itself to death against
the stone wall of political and governmental ineptitude.

That our government has been created by ourselves, that its policies and
therefore many of its detailed acts have been ordered by us, is obvious.
It is just as true that our interest in government is a self-interest,
though it cannot be called selfish, for when we secure an act of
government which is helpful to ourselves it should be helpful to all
men. Until we look about us we are likely to forget how hard people have
worked for the privilege of government.

Good government should maintain the balance where every individual may
have a place if he will take it, where every individual may find safety
if he wishes it, where every individual may attain such power as his
ability permits, consistent with his assuming the accompanying
responsibility.

The achievement of good government is therefore a long, slow task.
Nothing is more striking than the simple innocence of the men who
insist, whenever an objective is present, on the prompt production of a
patent scheme guaranteed to produce a result.

Human endeavour is not so simple as that. Government includes the art of
formulating policies and using the political technique to attain so much
of them as will receive general support; persuading, leading,
sacrificing, teaching always, because perhaps the greatest duty of
statesmanship is to educate.

We must build toward the time when a major depression cannot occur
again; and if this means sacrificing the easy profits of inflationist
booms, then let them go--and good riddance.

Our recent experiences with speculation have distorted the perspective
of many minds. A whole generation had gone mad over that word
co-operation; there had been many conferences of this and of that
industry, trade papers, codes of ethics, red-fire and "pep talks"--all
aimed to build up sales and more production. What had been lacking was
the kind of planning which would prevent and not stimulate
overproduction. It is natural that in the minds of many, first one plan
of action and then another seemed of paramount importance. It is natural
that the scrapping of industries, and even institutions which seemed the
bulwarks of our strength, bewildered even those who had heretofore been
able to find in past history practical suggestions for present action.
It would be natural, when such experience seemed to contribute nothing,
that the great social phenomenon of this depression would produce
disorderly manifestations. Yet wild radicalism has made few converts,
and the greatest tribute I can pay my countrymen is that in these days
of crushing want, there persists an orderly and hopeful spirit on the
part of the millions of our people who have suffered so much. To fail to
offer them a new chance is not only to betray their hopes but to
misunderstand their patience.

To meet by reaction that danger of radicalism is to invite disaster. It
is a challenge, a provocation. The way to meet that danger is to offer a
workable programme of reconstruction. This, and this only, is a proper
protection against blind reaction on the one hand and improvised
hit-or-miss, irresponsible opportunism on the other.

My party is neither new nor untried. My national leadership of it is new
to the extent that within the party it legally dates, if that term may
be used, from the moment its delegates, in convention assembled,
nominated me for the Presidency. But a new man in that leadership should
not mean an untried concept of policies; they must be firmly rooted in
the governmental experience of the past.

Federalism, as Woodrow Wilson so wisely put it, was a group "possessed
of unity and informed by a conscious solidarity of interest." It was
Jefferson's purpose to teach the country that the solidarity of
Federalism was only a partial one, that it represented only a minority
of the people and that to build a great nation the interests of all
groups in every part must be considered. He has been called a politician
because he devoted years to the building of a political party. But his
labour was in itself a definite and practical contribution to the
unification of all parts of the country in support of common principles.
When people carelessly or snobbishly deride political parties, they
overlook the fact that the party system of government is one of the
greatest methods of unification and of teaching people to think in
common terms of our civilisation.

We have in our own history three men who chiefly stand out for the
universality of their interest and of their knowledge--Benjamin
Franklin, Thomas Jefferson and Theodore Roosevelt. All three knew at
first hand every cross-current of national and of international life.
All three were possessed of a profound culture in the best sense of the
word, and yet all three understood the yearnings and the lack of
opportunity--the hopes and fears of millions of their fellow-beings. All
true culture finally comes down to an appreciation of just that.

And of the three, I think that Jefferson was in many ways the deepest
student--the one with the most inquiring and diversified intellect and,
above all, the one who at all times looked the farthest into the future,
examining the ultimate effects on humanity of the actions of the
present.

Jefferson's methods were usually illustrative of government based upon a
universality of interest. I can picture the weeks on horseback when he
was travelling into the different states of the Union, slowly and
laboriously accumulating an understanding of the people of his country.
He was not only drinking in the needs of the people in every walk of
life, but he was also giving to them an understanding of the essential
principles of self-government.

Jefferson was so big in mind and spirit that he knew the average man
would understand when he said, "I shall often go wrong through defective
judgment. And when right, I shall be thought wrong by those whose
positions will not command a view of the whole ground. I ask your
support against the errors of others who may condemn what they would
not, if seen in all the parts."

I shall not speak of an economic life completely planned and regulated.
That is as impossible as it is undesirable. I shall speak of the
necessity, wherever it is imperative that government interfere to adjust
parts of the economic structure of the nation, that there be a real
community of interest--not only among the sections of this great
country, but among the economic units and the various groups in these
units; that there be a common participation in the work of remedial
figures, planned on the basis of a shared common life, the low as well
as the high. On much of our present plans there is too much disposition
to mistake the part for the whole, the head for the body, the captain
for the company, the general for the army. I plead not for a class
control, but for a true concert of interests.

The plans we make during the present emergency, if we plan wisely and
rest our structure upon a base sufficiently broad, may show the way to a
more permanent safeguarding of our social and economic life, to the end
that we may in a large measure avoid the terrible cycle of prosperity
crumbling into depression. In this sense I favour economic planning, not
for this period alone, but for our needs for a long time to come.

If Jefferson could return to our councils he would find that while
economic changes of a century have changed the necessary methods of
government action, the principles of that action are still wholly his
own. He laboured for a widespread concert of thought, capable of concert
of action, based on a fair and just concert of interests. He laboured
to bring the scattered farmers, the workers, the business men into a
participation in national affairs. This was his purpose and this is the
principle upon which the party he founded was based. It should now
present itself as an agency of national unity.

Faith in America, faith in our tradition of our personal responsibility,
faith in our institutions, faith in ourselves, demands that we recognise
the new terms of the old social contract. In this comment I outline my
basic conception of these terms, with the confidence that you will
follow the action of your new national administration, understanding
that its aims and objects are yours and that our responsibility is
mutual.

  FRANKLIN D. ROOSEVELT.

  _March 1, 1933._




  REAPPRAISAL OF VALUES




  CHAPTER ONE


The issue of government has always been whether individual men and women
will have to serve some system of government or economics, or whether a
system of government and economics exists to serve individual men and
women.

This question has persistently dominated the discussions of government
for many generations. On questions relating to these things men have
differed, and from time immemorial it is probable that honest men will
continue to differ.

The final word belongs to no man; yet we can still believe in change and
progress. Democracy, as Meredith Nicholson has called it, is a quest, a
never-ending seeking for these things and striving for them. There are
many roads to follow. If we take their course we find there are only two
general directions in which they lead. The first is toward government
for the benefit of the few, the second is toward government for the
benefit of the many.

The growth of the national governments of Europe was a struggle for the
development of a centralised force in the nation, strong enough to
impose peace upon ruling barons. In many instances the victory of the
central government, the creation of a strong central government, was a
haven of refuge to the individual. The people preferred the great master
far away to the exploitation and cruelty of the smaller master near at
hand.

But the creators of national government were perforce ruthless men. They
were often cruel in their methods, though they did strive steadily
toward something that society needed and very much wanted--a strong
central State, able to keep the peace, to stamp out civil war, to put
the unruly nobleman in his place and to permit the bulk of individuals
to live safely.

The man of ruthless force had his place in developing a pioneer country,
just as he did in fixing the power of the central government in the
development of the nations. Society paid him well for his services
toward its development. When the development among the nations of
Europe, however, had been completed, ambition and ruthlessness, having
served its term, tended to overstep the mark.

There now came a growing feeling that government was conducted for the
benefit of the few who thrived unduly at the expense of all. The people
sought a balancing--a limiting force. Gradually there came through town
councils, trade guilds, national parliaments, by constitutions and
popular participation and control, limitations on arbitrary power.
Another factor that tended to limit the power of those who ruled was the
rise of the ethical conception that a ruler bore a responsibility for
the welfare of his subjects. The American colonies were born during this
struggle. The American Revolution was a turning point in it. After the
Revolution the struggle continued and shaped itself into the public life
of this country.

There were those who, because they had seen the confusion which attended
the years of war for American independence, surrendered to the belief
that popular government was essentially dangerous and essentially
unworkable. These thinkers were, generally, honest and we cannot deny
that their experience had warranted some measure of fear.

The most brilliant, honest and able exponent of this point of view was
Hamilton. He was too impatient of slow-moving methods. Fundamentally, he
believed that the safety of the Republic lay in the autocratic strength
of its government, that the destiny of individuals was to serve that
government and that a great and strong group of central institutions,
guided by a small group of able and public-spirited citizens, could best
direct all government.

But Jefferson, in the summer of 1776, after drafting the Declaration of
Independence, turned his mind to the same problem and took a different
view. He did not deceive himself with outward forms. Government with him
was a means to an end, not an end in itself; it might be either a refuge
and a help or a threat and a danger, depending on the circumstances. We
find him carefully analysing the society for which he was to organise a
government:

"We have no paupers--the great mass of our population is of labourers,
our rich who cannot live without labour, either manual or professional,
being few and of moderate wealth. Most of the labouring class possess
property, cultivate their own lands, have families and from the demands
for their labour are enabled to extract from the rich and the competent
such prices as enable them to feed abundantly, clothes above mere
decency, to labour moderately and raise their families."

These people, he considered, had two sets of rights, those of "personal
competency" and those involved in acquiring and possessing property. By
"personal competency" he meant the right of free thinking, freedom of
forming and expressing opinions and freedom of personal living, each
man according to his own lights.

To ensure the first set of rights a government must so order its
functions as not to interfere with the individual. But even Jefferson
realised that the exercise of the property rights must so interfere with
the rights of the individual that the government, without whose
assistance the property rights could not exist, must intervene, not to
destroy individualism, but to protect it.

We are familiar with the great political duel which followed; and how
Hamilton and his friends, building toward a dominant, centralised power,
were at length defeated in the great election of 1800 by Jefferson's
party. Out of that duel came the two parties, Republican and Democratic,
as we know them to-day.

So began, in American political life, the new day, the day of the
individual against the system, the day in which individualism was made
the great watchword in American life. The happiest of economic
conditions made that day long and splendid. On the Western frontier land
was substantially free. No one who did not shirk the task of earning a
living was entirely without opportunity to do so. Depressions could, and
did, come and go; but they could not alter the fundamental fact that
most of the people lived partly by selling their labour and partly by
extracting their livelihood from the soil, so that starvation and
dislocation were practically impossible. At the very worst there was
always the possibility of climbing into a covered wagon and moving West,
where the untilled prairies afforded a haven for men to whom the East
did not provide a place.

So great were our natural resources that we could offer this relief not
only to our own people, but to the distressed of all the world. We could
invite immigration from Europe and welcome it with open arms.

When a depression came a new section of land was opened in the West.
This became our tradition. So even our temporary misfortune served our
manifest destiny.

But a new force was released and a new dream created in the middle of
the nineteenth century. The force was what is called the industrial
revolution, the advance of steam and machinery and the rise of the
forerunners of the modern industrial plant. The dream was that of an
economic machine, able to raise the standard of living for everyone; to
bring luxury within the reach of the humblest; to annihilate distance by
steam power and later by electricity, and to release everyone from the
drudgery of the heaviest manual toil.

It was to be expected that the force and the dream would necessarily
affect government. Heretofore, government had merely been called upon to
produce conditions within which people could live happily, labour
peacefully and rest secure. Now it was called upon to aid in the
consummation of this new dream. There was, however, a shadow over it. To
make the dream real required use of the talents of men of tremendous
will and tremendous ambition, since in no other way could the problems
of financing and engineering and new development be met.

So manifest were the advantages of the machine age, however, that the
United States fearlessly, cheerfully and, I think, rightly accepted the
bitter with the sweet. It was thought that no price was too high for the
advantages which we could draw from a finished industrial system.

The history of the last half-century is accordingly in large measure a
history of financial titans, whose methods were not scrutinised with too
much care and who were honoured in proportion as they produced the
results, irrespective of the means they used. The financiers who pushed
the railways to the Pacific, for example, were always ruthless, often
wasteful and frequently corrupt, but they did build railways and we have
them to-day. It has been estimated that the American investor paid for
the American railway system more than three times over in the process,
but despite this fact the net advantage was to the United States.

As long as we had free land, as long as population was growing by leaps
and bounds, as long as our industrial plants were insufficient to supply
our own needs, society chose to give the ambitious man free play and
unlimited reward, provided only that he produced the economic plant so
much desired.

During the period of expansion there was equal economic opportunity for
all, and the business of government was not to interfere but to assist
in the development of industry. This was done at the request of the
business men themselves. The tariff was originally imposed for the
purpose of "fostering our infant industry," a phrase which the older
among our readers will remember as a political issue not so long ago.

The railways were subsidised, sometimes by grants of money, oftener by
grants of land. Some of the most valuable oil lands in the United States
were granted to assist the financing of the railway which pushed through
the South-west. A nascent merchant marine was assisted by grants of
money or by mail subsidies, so that our steam shipping might ply the
seven seas. . . .

We do not want the government in business. But we must realise the
implications of the past. For while it has been American doctrine that
the government must not go into business in competition with private
enterprises, still it has been traditional for business to urgently ask
the government to put at private disposal all kinds of government
assistance.

The same man who says he does not want to see the government interfere
in business--and he means it and has plenty of good reasons for saying
so--is the first to go to Washington to ask the government for a
prohibitory tariff on his product. When things get just bad enough--as
they did in 1930--he will go with equal speed to the United States
Government and ask for a loan. And the Reconstruction Finance
Corporation is the outcome of that.

Each group has sought protection from the government for its own special
interests without realising that the function of government must be to
favour no small group at the expense of its duty to protect the rights
of personal freedom and of private property of all its citizens.

In retrospect we can see now that the turn of the tide came with the
turn of the century. We were reaching our last frontier then; there was
no more free land and our industrial combinations had become great
uncontrolled and irresponsible units of power within the State.

Clear-sighted men saw with fear the danger that opportunity would no
longer be equal; that the growing corporation, like the feudal baron of
old, might threaten the economic freedom of individuals to earn a
living. In that hour our anti-trust laws were born.

The cry was raised against the great corporations. Theodore Roosevelt,
the first great Republican Progressive, fought a Presidential campaign
on the issues of "trust-busting" and talked freely about malefactors of
great wealth. If the government had a policy it was rather to turn the
clock back, to destroy the large combinations and to return to the time
when every man owned his individual small business. This was impossible.
Theodore Roosevelt, abandoning his idea of "trust-busting," was forced
to work out a difference between "good" trusts and "bad" trusts. The
Supreme Court set forth the famous "rule of reason" by which it seems to
have meant that a concentration of industrial power was permissible if
the method by which it got its power and the use it made of that power
were reasonable.

The situation was seen more clearly by Woodrow Wilson, elected in 1912.
Where Jefferson had feared the encroachment of political power on the
lives of individuals, Wilson knew that the new power was financial. He
saw, in the highly centralised economic system, the despot of the
twentieth century, on whom great masses of individuals relied for their
safety and their livelihood, and whose irresponsibility and greed (if it
were not controlled) would reduce them to starvation and penury.

The concentration of financial power had not proceeded as far in 1912 as
it has to-day, but it had grown far enough for Wilson to realise fully
its implications. It is interesting now to read his speeches. What is
called "radical" to-day (and I have reason to know whereof I speak) is
mild compared to Wilson's Presidential campaign.

"No man can deny," he said, "that the lines of endeavour have more and
more narrowed and stiffened; no man who knows anything about the
development of industry in this country can have failed to observe that
larger kinds of credit are more and more difficult to obtain unless you
obtain them upon terms of uniting your efforts with those who already
control the industry of the country, and nobody can fail to observe that
every man who tries to set himself up in competition with any process of
manufacture which has taken place under the control of large
combinations of capital will presently find himself either squeezed out
or obliged to sell and allow himself to be absorbed."

Had there been no World War--had Wilson been able to devote eight years
to domestic instead of international affairs--we might have had a wholly
different situation at the present time. However, the then distant roar
of European cannon, growing ever louder, forced him to abandon the study
of this issue. The problem he saw so clearly is left with us as a
legacy; and no one of us of whatever political party can deny that it is
a matter of grave concern to the government.

Even a glance at the situation to-day only too clearly indicates that
equality of opportunity as we have known it no longer exists. Our
industrial plant is built. That hardly requires more proof than we see
about us constantly. Nevertheless, let us look at the recent history and
the simple economics, the kind of economics that you and I and the
average man and woman talk.

In the years before 1929 we know that this country had completed a vast
cycle of building and inflation; for ten years we expanded on the theory
of repairing the wastes of the war, but actually expanded far beyond
that, and also far beyond our natural and normal growth. During that
time the cold figures of finance prove there was little or no drop in
the prices the consumer had to pay, although those same figures prove
that the cost of production fell very greatly; corporate profit
resulting from this period was enormous; at the same time little of the
profit was devoted to the reduction of prices. The consumer was
forgotten. Little went into increased wages; the worker was forgotten,
and by no means an adequate proportion was paid out in dividends--the
stockholder was forgotten.

Incidentally, very little was taken by taxation to the beneficent
government of those days.

What was the result? Enormous corporate surpluses piled up--the most
stupendous in history. These surpluses went chiefly in two directions:
first, into new and unnecessary plants, which now stand stark and idle;
second, into the call money market of Wall Street, either directly by
the corporations or indirectly through the banks.

Then came the crash. Surpluses invested in unnecessary plants became
idle. Men lost their jobs; purchasing power dried up; banks became
frightened and started calling loans. Those who had money were afraid to
part with it. Credit contracted. Industry stopped. Commerce declined,
and unemployment mounted.

Translate that within your own knowledge into human terms. See how the
events of the past three years have come home to specific groups of
people. First, the group dependent upon industry; second, the group
dependent upon agriculture; third, that group made up in large part of
members of the first two--the "small investors and depositors."
Remember that the strongest possible tie between the first two groups,
agriculture and industry, is the fact that the savings and to a degree
the security of both are tied together in that third group--the credit
structure of the nation. We know what has happened to that.

But go back again to the main fact before us to-day--that equality of
opportunity, as we have known it, no longer exists. Pick up the next
tragically obvious economic question--where is opportunity? We must
dismiss that historic one which has heretofore been our salvation.

Our last frontier has long since been reached, and there is practically
no more free land. More than half our people do not live on farms or on
lands and cannot derive a living by cultivating their own property.
There is no safety valve in the form of Western prairie to which those
thrown out of work by the economic machines can go for a new start. We
are not able to invite the immigrants from Europe to share our endless
plenty. We are now providing a drab living for our own people.

Our system of constantly rising tariffs has at last reacted against us
to the point of closing our Canadian frontier on the north, our European
markets on the east, many of our Latin-American markets to the south
and a large proportion of our Pacific markets on the west, through the
retaliatory tariffs of these countries. It has forced many of our great
industrial institutions, who exported their surplus production to such
countries, to establish plants in those countries, within the tariff
walls. This has resulted in the reduction of the operation of their
American plants and of opportunity for employment.

Opportunity in business has further narrowed since Wilson's time, just
as freedom to farm has ceased. It is still true that men can start small
enterprises, trusting to their native shrewdness and ability to keep
abreast of competitors; but area after area has been pre-empted
altogether by the great corporations, and even in the fields which still
have no great concerns the small man starts under a handicap. The
unfeeling statistics of the past three decades show that the independent
business man is running a losing race. Perhaps he is forced to the wall;
perhaps he cannot command credit; perhaps he is "squeezed out," in
Wilson's words, by highly organised corporate competitors, as your
corner grocery man can tell you.

Recently a careful study was made of the concentration of business in
the United States. It showed that our economic life was dominated by
some six hundred-odd corporations, who controlled two-thirds of
American industry. Ten million small business men divided the other
third.

More striking still, it appeared that, if the process of concentration
goes on at the same rate, at the end of another century we shall have
all American industry controlled by a dozen corporations and run by
perhaps a hundred men. Put plainly, we are steering a steady course
toward economic oligarchy, if we are not there already.

Clearly all this calls for a reappraisal of values. A mere builder of
more industrial plants, a creator of more railway systems, an organiser
of more corporations, is as likely to be a danger as a help. The day of
the great promoter or the financial titan, to whom we granted everything
if only he would build or develop, is over.

Our task now is not discovery or exploitation of natural resources or
necessarily of producing more goods. It is the soberer, less dramatic
business of administering resources and plants already in hand, of
seeking to re-establish foreign markets for our surplus production, of
meeting the problem of under-consumption, or adjusting production to
consumption, of distributing wealth and products more equitably, of
adapting existing economic organisation to the service of the people.

Just as in older times the central government was first a haven of
refuge and then a threat, so now, in a closer economic system the
central and ambitious financial unit is no longer a servant of national
desire, but a danger. I would draw the parallel one step further. We do
not think, because national government became a threat in the eighteenth
century, that therefore we should abandon the principle of national
government.

Nor to-day should we abandon the principle of strong economic units
called corporations merely because their power is susceptible to easy
abuse. In other times we dealt with the problem of an unduly ambitious
central government by modifying it gradually into a constitutional
democratic government. So to-day we are modifying and controlling our
economic units.

As I see it, the task of government in its relation to business is to
assist the development of an economic declaration of rights, an economic
constitutional order. This is the common task of statesmen and business
men. It is the minimum requirement of a more permanently safe order of
society. Happily, the times indicate that to create such an order is not
only the proper policy of government, but is the only line of safety for
our economic structure as well.

We know now that these economic units cannot exist unless prosperity is
uniform--that is, unless purchasing power is well distributed
throughout every group in the nation. That is why even the most selfish
of corporations, for its own interest, would be glad to see wages
restored and unemployment aided, and to bring the farmer back to his
accustomed level of prosperity, and to assure a permanent safety for
both groups. That is why some enlightened industries endeavour to limit
the freedom of action of each man and business group within the industry
in the common interest of all. That is why business men everywhere are
asking for a form of organisation which will bring the scheme of things
into balance, even though it may in some measure qualify the freedom of
action of individual units within the business.

I think that everyone who has actually entered the economic
struggle--which means everyone who was not born to safe wealth--knows in
his own experience and his own life that we now have to apply the
earlier concepts of American government to the conditions of to-day. The
Declaration of Independence discusses the problem of government in terms
of a contract. Government is a relation of give and take--a contract,
perforce, if we would follow the thinking out of which it grew. Under
such a contract rulers were accorded power, and the people consented to
that power on consideration that they be accorded certain rights. The
task of statesmanship has always been the re-definition of these rights
in terms of a changing and growing social order. New conditions impose
new requirements upon government and those who conduct government.

The terms of the contract are as old as the Republic and as new as the
new economic order. Every man has a right to life, and this means that
he has also a right to make a comfortable living. He may by sloth or
crime decline to exercise that right, but it must not be denied him. Our
government, formal and informal, political and economic, owes to every
man an avenue to possess himself of sufficient for his needs through his
own work. Every man has a right to his own property, which means a right
to be assured to the fullest extent attainable, in the safety of his
earnings. By no other means can men carry the burdens of those parts of
life which in the nature of things afford no change of labour--childhood,
sickness, old age. In all thought of property, this right is paramount;
all other property rights must yield to it. If, in accordance with this
principle, we must restrict the operations of the speculator, the
manipulator, even the financier, I believe we must accept the
restriction as needful, not to hamper individualism, but to protect it.

The final term of the high contract was for liberty and the pursuit of
happiness. We have learned a great deal of both in the past century. We
know that individual liberty and individual happiness mean nothing
unless both are ordered in the sense that one man's meat is not another
man's poison. We know that the old "rights of personal competency"--the
right to read, to think, to speak, to choose and live a mode of
life--must be respected at all hazards. We know that liberty to do
anything which deprives others of those elemental rights is outside the
protection of any compact, and that government in this regard is the
maintenance of the balance of justice for all.

We shall fulfil our present-day governmental obligations, as we
fulfilled the obligations of the apparent Utopia which Jefferson
imagined for us in 1776 and which Jefferson, Theodore Roosevelt and
Wilson sought to bring to realisation. We must do so lest a rising tide
of misery, engendered by our common failure, engulf us all.




  NEED FOR ECONOMIC PLANNING




  CHAPTER TWO


The evidences of change in our social order are so numerous, so tragic
in some of their consequences, and so surely indicative of the necessity
of sanity in all our planning for the future that there can be no
argument with regard to the patriotic and self-sacrificing attitude all
men should take who have been given the duty of governing, of
legislating and of administering the business of the people.

Our present condition can be expressed, in every industry and
profession, by statistics, by charts, by graphic reports. Our hopes for
the future may be shown in the same way. While these methods are
necessary, I prefer in this discussion to express our problems in
planning from the more human and essentially as accurate a point of
view.

This view is perhaps sharpest in the eyes of the men and women who are
as keenly interested in happiness as any who are at the full tide of
their ambition, their health and their youth. I refer to those who have
just finished their appointed courses of study and who are ready to
prove the value of the most elaborate system of education, not
forgetting the cultivation of character, that perhaps the world has ever
seen.

In speaking of them I think I best express the youthful attitude which
all of us concerned with national planning must maintain if our plans
are to be of any use to ourselves, as well as to the generations to
follow.

Four years ago, if they had heard and believed in the tidings of the
times, they could expect to take their place in a society well supplied
with material things and could look forward to the not too distant time
when they would be living in their own homes, each (if they believed the
politicians) with a two-car garage, and without great effort would be
providing themselves and their families with all the necessities and
amenities of life, and perhaps, in addition, assure by their savings
their security in the future.

Indeed, if they were observant, they would have seen that many of their
elders had discovered a still easier road to material success--had found
that once they had accumulated a few dollars they needed only to put
them in the proper place and then sit back and read in comfort the
hieroglyphics called stock quotations which proclaimed that their
wealth was mounting miraculously without any work or effort on their
part. Many who were called and who are still pleased to call themselves
the leaders of finance celebrated and assured us of an eternal future
for this easy-chair mode of living. And to the stimulation of belief in
this dazzling chimera were lent not only the voices of some of our
public men in high office, but their influence and the material aid of
the very instruments of government which they controlled.

How sadly different is the picture which we see around us to-day! If
only the mirage had vanished, we should not complain, for we should all
be better off. But with it have vanished, not only the easy gains of
speculation, but much of the savings of thrifty and prudent men and
women, put by for their old age and for the education of their children.
With these savings has gone, among millions of our fellow-citizens, that
sense of security to which they have rightfully felt they were entitled
in a land abundantly endowed with natural resources and with productive
facilities to convert them into the necessities of life for all our
population. More calamitous still, there has vanished with the
expectancy of future security the certainty of to-day's bread, clothing
and shelter.

Most of the youth of this country, fit and ready for the work of the
world, are either unable to fit into a productive society or gravely
concerned over the future, if any, in that place where they have been
fortunate enough to find any gainful occupation.

Of course they are hopeful. Much has been written about the hope of
youth, but I prefer to emphasise another quality. I hope that a great
many have been trained to pursue truths relentlessly and to look at them
courageously. I hope that they will face the unfortunate state of the
world about them with a greater clarity of vision than many of their
elders.

As they have viewed this world of which they are about to become a more
active part, I have no doubt that they have been impressed by its chaos,
its lack of plan. This failure to measure true values and to look ahead
is true of almost every industry, every profession, every walk of life.
Take, for example, the vocation of higher education itself.

If they had been intending to enter the profession of teaching, they
should have found that the universities, the colleges, the normal
schools of our country were turning out annually far more trained
teachers than the schools of the country could possibly use or absorb.
The number of teachers needed in the nation is a relatively stable
figure, little affected by the depression and capable of fairly accurate
estimate in advance, with due consideration for our increase in
population. And yet, we have continued to add teaching courses, to
accept every young man or woman in those courses without any thought or
regard for the law of supply and demand. In the State of New York alone,
for example, there are at least seven thousand qualified teachers who
are out of work--unable to earn a livelihood in their chosen profession,
because nobody had the wit or the forethought to tell them in their
younger days that the profession of teaching was gravely over-supplied.

Take, again, the profession of the law. Our common sense tells us that
we have too many lawyers and that thousands of them, thoroughly trained,
are either eking out a bare existence or being compelled to work with
their hands, or are turning to some other business in order to keep
themselves from becoming objects of charity. The universities, the bar,
the courts themselves have done little to bring this situation to the
knowledge of young men who are considering entering any one of the
multitude of law schools. Here, again, foresight and planning have been
notable for their complete absence.

In the same way we cannot review carefully the history of our industrial
advance without being struck by its haphazardness, with the gigantic
waste with which it has been accomplished--with the superfluous
duplication of productive facilities, the continual scrapping of still
useful equipment, the tremendous mortality in industrial and commercial
undertakings, the thousands of dead-end trails in which enterprise has
been lured, the profligate waste of natural resources.

Much of this waste is the inevitable by-product of progress in a society
which values individual endeavour and which is susceptible to the
changing tastes and customs of the people of which it is composed. But
much of it, I believe, could have been prevented by greater foresight
and by a larger measure of social planning.

Such controlling and directive forces as have been developed in recent
years reside to a dangerous degree in groups having special interests in
our economic order, interests which do not coincide with the interests
of the nation as a whole. I believe that the recent course of our
history has demonstrated that, while we may utilise their expert
knowledge of certain problems and the special facilities with which they
are familiar, we cannot allow our economic life to be controlled by that
small group of men whose chief outlook upon the social welfare is
tinctured by the fact that they can make huge profits from the lending
of money and the marketing of securities--an outlook which deserves the
adjectives "selfish" and "opportunist."

There is a tragic irony in our economic situation to-day. We have not
been brought to our present state by any natural calamity--by drought or
floods or earthquakes, or by the destruction of our productive machine
or our man-power. We have a superabundance of raw materials, of
equipment for manufacturing these materials into the goods which we
need, and transportation and commercial facilities for making them
available to all who need them. A great portion of our machinery and our
facilities stand idle, while millions of able-bodied and intelligent men
and women, in dire need, are clamouring for the opportunity to work. Our
power to operate the economic machine which we have created is
challenged.

We are presented with a multitude of views as to how we may again set
into motion that economic machine. Some hold to the theory that the
periodic slowing down of the machine is one of its inherent
peculiarities, a peculiarity which we must grin about and bear, because
if we attempt to tamper with it we shall cause even worse trouble.
According to this theory, as I see it, if we grin and bear long enough,
the economic machine will eventually begin to pick up speed and in the
course of an indefinite number of years will again attain the maximum
number of revolutions signifying what we have been wont to miscall
prosperity--but which, alas, is but a last ostentatious twirl of the
economic machine before it again succumbs to that mysterious impulse to
slow down again.

This attitude toward our economic machine requires not only greater
stoicism but greater faith in immutable economic law and less faith in
the ability of man to control what he has created than I, for one, have.
Whatever elements of truth lie in it, it is an invitation to sit back
and do nothing; and all of us are suffering to-day, I believe, because
this comfortable theory was too thoroughly implanted in the minds of
some of our leaders, both in finance and in public affairs.

Other students of economics trace our present difficulties to the
ravages of the World War and its bequest of unsolved political and
economic and financial problems. Still others trace our difficulties to
defects in the world's monetary systems.

Whether it be an original cause, an accentuating cause, or an effect, the
drastic change in the value of our monetary unit in terms of the
commodities it will buy is a problem which we must meet straightforwardly.
It is self-evident that we must either restore commodities to a level
approximating their dollar value of several years ago or else that we
must continue the destructive process of reducing, through defaults or
through deliberate writing down, obligations assumed at a higher price
level.

Possibly because of the urgency and complexity of this problem some of
our economic thinkers have been occupied with it to the exclusion of
other phases of as great importance.

Of these other phases, that one which seems most important to me in the
long run is the problem of controlling, by adequate planning, the
creation and the distribution of those products which our vast economic
machine is capable of yielding.

I do not mean to curtail the use of capital. I do not mean to curtail
new enterprise. But think carefully of the vast sums of capital or
credit which in the past decade have been devoted to unjust
enterprises--to the development of unessentials and to the
multiplication of many products far beyond the capacity of the nation to
absorb. It has been the same story as the thoughtless turning out of too
many school-teachers and too many lawyers.

In the field of industry and business many of those whose primary
solicitude is confined to the welfare of what they call capital have
failed to read the lessons of the past few years and have been moved
less by calm analysis of the needs of the nation as a whole than by a
blind determination to preserve their own special stakes in the
economic order.

I do not mean to intimate that we have come to the end of the period of
expansion. We shall continue to need capital for the production of
newly-invented devices, for the replacement of equipment worn out or
rendered obsolete by our technical progress. A great deal will have to
be done to make us decent, healthy, and as happy as our several natures
will permit. We need better housing in most of our cities. Many parts of
our country still need more and better roads. There is urgent necessity
for canals, parks and other physical improvements.

But it seems to me that our physical economic plant will not expand in
the future at the same rate at which it has been expanded in the past.
We may build more factories, but the fact remains that we have enough to
supply all of our domestic needs, and more, if they are used. With these
factories we can now make more shoes, more textiles, more steel, more
radios, more automobiles, more of almost everything that we can use.

Our basic trouble was not an insufficiency of capital. It was an
insufficient distribution of buying power, coupled with an
over-sufficient speculation in production. While wages rose in many of
our industries, they did not as a whole rise proportionately to the
reward to capital, and at the same time the purchasing power of other
great groups of our population was permitted to shrink. We accumulated
such a superabundance of capital that our great bankers were vying with
each other, some of them employing questionable methods, in their
efforts to lend this capital at home and abroad.

I believe that we are at the threshold of a fundamental change in our
economic thought. I believe that in the future we are going to think
less about the producer and more about the consumer. Do what we may to
inject health into our ailing economic order, we cannot make it endure
for long unless we can bring about a wiser, more equitable distribution
of the national income.

It is well within the inventive capacity of man, who has built up this
great social and economic machine capable of satisfying the wants of
all, to ensure that all who are willing and able to work receive from it
at least the necessities of life. In such a system, the reward for a
day's work will have to be greater, on the average, than it has been,
and the reward to capital, especially capital which is speculative, will
have to be less.

But I believe that after the experience of the last three years, the
average citizen would rather receive a smaller return upon his savings
in return for greater security for the principal, than to experience
for a moment the thrill or the prospect of being a millionaire, only to
find the next moment that his fortune, actual or expected, has withered
in his hand, because the economic machine has again broken down.

It is toward stability that we must move if we are to profit by our
recent experience. Few will disagree that the goal is desirable. Yet
many of faint heart, fearful of change, sitting tightly to the roof-tops
in the flood, will sternly resist striking out for this objective lest
they fail to attain it. Even among those who are willing to attempt the
journey there will be violent differences of opinion as to how it should
be made. So complex, so widely distributed over our whole country are
the problems which confront us that men and women of common aim do not
agree upon the method of attacking them. Such disagreement leads to
doing nothing, to drifting. Agreement may come too late.

Let us not confuse objectives with methods. Too many so-called leaders
of the nation fail to see the forest because of the trees. Too many of
them fail to recognise the necessity of planning for definite
objectives. True leadership calls for the setting forth of the
objectives and the rallying of public opinion in support of these
objectives.

When the nation becomes substantially united in favour of planning the
broad objectives of civilisation, then true leadership must unite
thought behind definite methods.

The country needs and, unless I mistake its temper, the country demands
bold persistent experimentation. It is common sense to take a method and
try it; if it fails, admit it frankly and try another. But above all,
try something. The millions who are in want will not stand by silently
for ever while the things to satisfy their needs are within easy reach.

We need enthusiasm, imagination and ability to face facts, even
unpleasant ones, bravely. We need to correct, by drastic means if
necessary, the faults in our economic system from which we now suffer.
We need the courage of the young.




  STATE PLANNING FOR
  LAND UTILISATION




  CHAPTER THREE


I wish to cite the example of an economic plan which has been put into
effect and which is still in its experimental stages, yet is not only
without detriment to any class of citizen or interest, but is certainly
and positively proving itself more and more valuable to a very
considerable mass of the population in this country. Thirteen million
men and women are involved in it and I feel sure great many millions
more will be in the future. I refer to the state planning of the use of
land for industry and agriculture in the State of New York, a plan which
I confidently feel will prove practicable to the nation as a whole.

The problem arises out of the dislocation of a proper balance between
urban and rural life. A phrase that covers all its aspects is "Land
Utilisation and State Planning."

Land utilisation involves more than a mere determining of what each and
every acre of land can be used for, or what crops it can best grow.
That is the first step; but having made that determination, we arrive at
once at the larger problem of getting men, women and children--in other
words, population--to go along with a programme and carry it out.

It is not enough to pass resolutions that land must, or should, be used
for some specific purpose. Government itself must take steps with the
approval of the governed to see that plans become realities.

This, it is true, involves such mighty factors as the supply and not the
over-supply of agricultural products; it involves making farm life far
more attractive, both socially and economically than it is to-day; it
involves the possibilities of creating a new classification of our
population.

We know from figures of a century ago that seventy-five per cent of the
population lived on farms and twenty-five per cent in cities. To-day the
figures are exactly reversed. A generation ago there was much talk of a
back-to-the-farm movement. It is my thought that this slogan is outworn.
Hitherto, we have spoken of two types of living, and only two--urban and
rural. I believe we can look forward to three rather than two types in
the future, for there is a definite place or an intermediate type
between the urban and the rural--namely, a rural-industrial group.

I can best illustrate the beginnings of the working out of the problem
by reviewing briefly what has been begun in the State of New York during
the past three years toward planning for a better use of our
agricultural, industrial and human resources.

The State of New York has definitely undertaken this as a governmental
responsibility. Realising that the maladjustment of the relationship
between rural and city life had reached alarming proportions, the State
Administration undertook a study of the agricultural situation with the
immediate purpose of relieving impossible and unfair economic conditions
on the farms of the State. The broader ultimate purpose was to formulate
a well-thought-out and scientific plan for developing a permanent
agriculture.

The immediate situation was met by the enactment of several types of
laws that resulted in the relief of farms from an uneven tax burden and
made a net saving to agriculture of approximately twenty-four million
dollars a year.

First, the State developed additional State aid for rural education,
especially in the communities which are so sparsely settled that
one-room schools predominate. This State aid gave the smaller rural
schools the same advantages already enjoyed by the schools in the larger
communities.

Second, a fair equalisation of State aid to towns for the maintenance of
dirt roads was accomplished by putting it on the basis of mileage rather
than of assessed valuation.

Third, through a petrol tax, additional aid was given to the counties
for the development of a definite system of farm-to-market roads.

Fourth, the State embarked on a definite programme of securing cheaper
electricity for the agricultural communities. It proposes to harness the
St. Lawrence River as part of this programme, and the electricity
developed is by the new law intended primarily for the farmer, the
household user, and the small industrialist or store-keeper rather than
for large industrial plants.

This was the programme to relieve immediate needs.

In all this work, it is worth recording that not only the immediate
programme but also the long-time planning was worked out in a wholly
non-partisan manner. It received the benefits of study by the
Legislature and legislative commissions. Much of the programme was
worked out by the Governor's Agricultural Advisory Commission. This
Commission consisted of representatives of great farm organisations such
as the Grange, the Farm and Home Bureau, Master Farmers, the Dairymen's
League, the G.F.L., members of the Legislature, representatives of State
Colleges and various departments of the State government. It received
the hearty co-operation of the Mayors' Conference and that of business
men who were willing to give thought to the future of the State and the
nation.

The programme for the future was worked out upon that common-sense basis
which must be the core of every economic plan that will come up for
consideration. Details cannot be brushed aside, for they all dovetail
into the larger ultimate picture.

We knew that out of the thirty million acres in the State, three million
were in cities, villages, residential areas; five million were in
mountains and forests, and, by the way, of this five million the State
itself had about two million acres in the great Catskill and Adirondack
preserves; four million acres were once farmed, but now abandoned,
leaving a total of eighteen million acres for agriculture, divided into
one hundred and sixty thousand farms.

The first definite step was to start a survey of the entire State. This
involved a study of all the physical factors both above and below the
surface of the soil, and a study of economic and social factors. The
study was divided into six important sections. The soil was analysed.
The climate was determined--that is, the length of growing season
between killing frosts, and the amount of annual rainfall. The present
use of the land was surveyed--whether forest, swamp or improved, in
pasture, in hay or in annual crops, and what crops. Those who lived on
this land were investigated--who owned it and how he used it--that is,
whether to make his livelihood out of it or to occupy it only as a house
while working away from the farm in the city or elsewhere. A more
specific census of those who lived on this land was made; whether they
were old people who had always been there, or new people who had
recently come; whether Americans or foreigners; whether the young people
were staying on the land or leaving it; whether the cultivation of the
farm was supporting the farmer in accordance with an American standard
of living. Finally, the measure of the contribution that each farm was
making to the food supply of the nation was gauged.

It seemed most desirable to make this survey so detailed that it would
give separate data for each ten-acre square. Already one county has thus
been surveyed, and we expect to cover the entire eighteen million acres
within the next ten years or less.

The survey is being made on the assumption that good economics require
the use of good materials. For example, fifty years ago, the State of
New York every year mined thousands of tons of iron ore and turned it
into iron and steel. The discovery and the development of the vast
fields of a more economical grade of iron ore in Minnesota and the other
sections of the country forced the closing of the New York State iron
mines. The raw materials did not meet the economic standard. By the same
token it may have been profitable when land was first cleared to farm
this land, but to-day, with the tremendous competition of good land in
this country and in other parts of the world, it has become uneconomical
to use land which does not produce good crops.

Therefore, we proposed to find out what every part of the State is
capable of producing.

From the survey already made we have come to the belief that a certain
percentage of the farm land in the State now under cultivation ought to
be abandoned for agricultural purposes. It is possible that the
percentage will run as high as somewhere between twenty and twenty-five
per cent.

We are faced with a situation of farmers attempting to farm under
conditions where it is impossible to maintain an American standard of
living. They are slowly breaking their hearts, their health and their
pocket-books against a stone wall of impossibilities, and yet they
produce enough farm products to add to the national surplus;
furthermore, their products are of such low quality that they injure the
reputation and usefulness of the better class of farm products of the
State which are produced, packed, and shipped along modern economic
lines.

If this is true in the State of New York, it is, I am convinced, equally
true of practically every other state east of the Mississippi and of at
least some of the states west of the Mississippi.

What, then, are we to do with this sub-marginal land that exists in
every state, which ought to be withdrawn from agriculture? Here we have
a definite programme. First, we are finding out what it can best be used
for. At the present time it seems clear that the greater part of it can
be put into a different type of crop--one which will take many years to
harvest, but one which, as the years go by, will, without question, be
profitable, and at the same time economically necessary--the growing of
crops of trees.

This we are starting by a new law providing for the purchase and
reafforestation of these lands in a manner approved by the State, part
of the cost being borne by the county and part by the State.
Furthermore, a Constitutional Amendment was voted by the people of the
State, providing for appropriations of twenty million dollars over an
eleven-year period to make possible the purchase and reafforestation of
over one million acres of land, which is better suited for forestry than
for agriculture.

We visualised also the very definite fact that the use of this
sub-marginal agricultural land for forestry will, in the long run, pay
for itself (we will get that twenty million dollars back many times
over) and will, from the very start, begin to yield dividends in the
form of savings from waste.

For instance, the farms to be abandoned will eliminate the necessity of
maintaining thousands of miles of dirt roads leading to these farms, the
maintenance cost of which averages one hundred dollars a mile a year.
The reafforestation of these farms eliminated the need of providing
thousands of miles of electric light and telephone lines reaching out
into uneconomical territory. The reafforestation of these farms will
eliminate the upkeep of many small scattered one-room schools which cost
approximately fourteen hundred dollars each per year to the State
government.

This is why we are confident that over a period of years this State
planning will more than pay for itself in a financial saving to the
population as a whole.

Modern society moves at such an intense pace that greater recreation
periods are necessary, and at the same time our efficiency, state and
national, in production is such that more time can be used for
recreation. That is increasingly evident this particular year. By
reafforestation the land can be turned into a great State resource which
will yield dividends at once. As one small detail of this plan, the
Conservation Commissioner was able to throw open for hunting and fishing
the twenty-five thousand acres recently purchased. He will do the same
with additional reafforestation areas when they are purchased.

These reafforested areas are largely at the higher elevations at the
head-waters of streams. Reafforestation will regulate stream-flow, aid
in preventing floods and provide a more even supply of pure water for
villages and cities.

What will be done for the population now residing on these sub-marginal
lands? First, most of the comparatively small number of people on these
farms which are to be abandoned will be absorbed into the better farming
areas of the State. Second, we are continuing the idea of the State-wide
plan by studying the whole future population trend; here is where there
is a definite connection between the rural dweller and the population
engaged in industry, between the rural dweller and the city dweller,
between the farmer and the people engaged in industry.

Experiments have already been made in some states looking to a closer
relationship between industry and agriculture. These take two
forms--first, what may be called the bringing of rural life to industry;
second, the bringing of industry to agriculture by the establishment of
small industrial plants in areas which are now wholly given over to
farming.

In this particular connection the State of Vermont, through a splendid
commission, seems to be taking the lead in seeking to bring industry to
the agricultural regions.

For example, in a valley in Vermont a wood-turning factory for the
making of knobs for the lids of kettles has already been so successful
that the trend of the rural population to the city has been definitely
stopped and the population of the valley finds that it can profitably
engage in agriculture during the summer with a definite wage-earning
capacity in the local factory during the winter months.

Another example is that of one of the larger shoe manufacturers
established in a New York village. Many of the workers live in this
village and many others live in the open country within a radius of ten
miles or more.

As a nation we have only begun to scratch the surface along these lines
and the possibility of diversifying our industrial life by sending a
fair proportion of it into the rural districts. Cheap electric power,
good roads and automobiles make such a rural-industrial development
possible. Without question there are many industries which can succeed
just as well, if not better, by bringing them to rural communities. At
the same time these communities will be given higher annual income
capacity. We will be restoring the balance.

Through such state planning as I have just out-lined many of the
problems of transportation, of overcrowded cities, of high cost of
living, of better health for the race, of a better balance for the
population as a whole, can be solved by the states themselves during the
coming generation.

These experiments should, and will, be worked out in accordance with
conditions which vary greatly in different sections of the country. I
have said "by the states themselves" because some of the state methods
of approaching the problem may not be economically sound in the light of
future experiences, whereas others may point the way toward a definite
national solution of the problems.

I remember that many years ago when James Bryce was Ambassador from
England in Washington, he said: "The American form of government will
go on and live long after most of the other forms of government have
fallen or been changed, and the reason is this: In other nations of the
world when a new problem comes up it must be tested in a national
laboratory, and a solution of the problem must be worked out, and when
it is worked out that solution must be applied to the nation as a whole.
Sometimes it may be the correct solution and other times it may be the
wrong solution. But you in the United States have forty-eight
laboratories, and when new problems arise you can work out forty-eight
different solutions to meet the problem. Out of these forty-eight
experimental laboratories, some of the solutions may not prove sound or
acceptable, but out of this experimentation history shows you have found
at least some remedies which can be made so successful that they will
become national in their application."

In state economic planning the state needs the sympathetic co-operation
of the national government, if as only an information-gathering body.
The national government can, and should, act as a clearing-house for all
the Governors to work through. I am very confident that during the next
few years state after state will realise, as has New York, that it is a
definite responsibility of government to reach out for new solutions for
the new problems. In the long run, state and national planning is an
essential to the future prosperity, happiness and the very existence of
the American people.




  REORGANISATION OF
  GOVERNMENT




  CHAPTER FOUR


The urgent necessity for economic planning by those at the head of
affairs makes essential the clearest possible thinking. When lines of
action are established the whole-hearted co-operation is required of all
concerned--and this means the support and the action of the intelligent
and locally controlling groups of our citizens.

Simple honesty in the carrying out of plans is not enough; a greater
efficiency than we have heretofore seen is urgent. As far as the
government is concerned with economic plans, their success can be
imperilled if we do not put our governmental organisation in order for
this duty.

My efforts to bring about the reorganisation and the consolidation of
departments of the national administration, for economy and efficiency
in this duty, will constitute a chapter to be written in action. I hope
thus to reduce the cost of the regular operations of the Federal
Government by no less than twenty-five per cent.

But the Federal Government, with its very great responsibilities to the
individual citizen, is not, however, all of the government in this
country. I will not attempt to define here the Federal and States'
rights and responsibilities. It is sufficient to say that the local
government is the point of contact with the average citizen, and
whatever the Federal Government may or may not do to intelligently
assist his life and his future, the action of his local government is
what most closely and most quickly affects him.

Local government is the instrument by which very essential action in the
next few years will succeed or fail. Indifference to it is stupid, if it
is not criminally negligent. Let us examine local government in this
country.

The cost of government in this country, particularly that of local
government, is causing considerable concern. The aggregate expenditure
of federal, state and local government is approximately twelve or
thirteen billion dollars annually. Of this sum the Federal Government
spends approximately one-third, state governments about thirteen per
cent, leaving considerably more than one-half as the cost of local
government.

Notwithstanding the influence of the World War on Federal governmental
expenditures, the ratios have existed with slight variations since 1890.
It is manifest that, inasmuch as the cost of local government
constitutes the major portion of our aggregate tax bill, we must, if we
hope for lower taxes or less rapid increase in taxes, analyse local
government and see if its workings may not be simplified and made less
expensive for the taxpayer.

The form of local, county and town government, as we know it in most of
our states, dates back to the Duke of York's Laws, enacted about 1670.
The design was to meet conditions as they existed at that time. They
were continued by the American states after the Revolutionary War. It is
astonishing how few changes have been made in their form since the
formation of the nation. We may assume that at the time of their
adoption they were suited for the conditions of the period.

There were no steamboats, railways, telephones, telegraphs, motor
vehicles or good roads in existence. Means of transportation and
communication were meagre. The swiftest means of travel and of
communication were the saddle-horse, the stage-coach and the canal.
Sometimes we hear the past referred to as the "horse and buggy age."
Perhaps it would be more accurate to describe the time of the
organisation of our local governments as the "ox-cart age." We had no
urban centres--only a few overgrown villages. Our population was almost
exclusively rural. In those days at least eight out of ten workers
obtained a living by tilling the soil. The people lived in small
territorial groups and led local community lives. They subsisted almost
entirely on the things which they produced or which were produced by
others in their own locality. A town form of government was the natural
form. It suited the conditions of the times.

Moreover, the need for governmental service was not extensive. Trails
met the needs of the limited inter-community travel where expensive
motor-routes are now necessary. There might be a village pump, but
otherwise each citizen took care of his own water-supply, and drainage
and garbage disposal were family concerns. At first, police and
fire-protection were not considered municipal functions. Every community
made provisions for its own poor. An education in the three Rs was
deemed sufficient for the average child.

It is not necessary to draw the comparison between those times and
to-day, but there is a particular instability apparent to-day which
renders the old forms of local government more obsolete than they
self-evidently are. This is the fact that our population has become, in
greater and greater part, transient. We follow the call of industry, of
ambition and of whim from community to community and from state to
state. It is not only in the newer regions of America that the old
resident may find himself in the minority. The personnel and even the
character of the population in any village in any one of our older
states may change within a few years of rapidly shifting groups whose
members are units in a national economic and social scheme rather than
fixed residents of any community.

Matters which were originally of local or community concern are now of
much wider interest. This applies to such things as roads, schools,
public health, the care of the socially dependent and virtually every
activity of local government. Yet we have continued to use the machine,
designed under radically different conditions, as the major instrument
through which to sell governmental service in this age of bewildering
movement.

As the machinery of local government exists to-day, we have, very
probably, five hundred thousand units of governments. They range from
the Federal Government down to the smallest school or special district.
Take my own State of New York as an instance. We have sixty-two counties
and sixty cities. But this is a mere beginning; we have nine hundred and
thirty-two towns and, according to the last count, five hundred and
twenty-five villages, nine thousand six hundred school districts and two
thousand three hundred and sixty-five fire, water, lighting, sewer and
pavement districts, a grand total of thirteen thousand five hundred and
forty-four separate, independent, governmental units.

Carrying the analysis a step further: In a small densely populated
suburban county adjacent to New York City we have three towns and two
cities. Again, that is only a start in the complexity of local
government; in this same small area we have forty villages, forty-four
school districts and one hundred and fifty-six special districts. In
this one small county there is a total of two hundred and forty-six
governmental units.

We need a simple, smooth-running and efficient governmental organisation
for it to achieve our first necessity--economy of operation.

But with our present complexity the expenditures of local government
have increased at an astonishing rate. In 1890 local government in the
entire nation cost $487,000,000. In 1927, the last year for which
complete figures are available, the government of lesser units within
states cost $6,454,000,000. It increased from a _per capita_ of $7.73 in
1890 to $54.41 in 1927.

In the small suburban unit to which I referred, all local taxes in 1900
amounted to $337,000 and in 1929, in round figures, $22,000,000. In
that space of time the valuation of taxable property increased
thirty-five times, but the taxes increased sixty-five times, while
population multiplied only five and one-half times. In another case,
that of a rural, agricultural county, local taxes amounted to $158,000
in 1900 and to $1,150,000 in 1929. In this case taxes were multiplied
seven times, tax valuations slightly more than twice, while the
population of the county actually decreased five per cent. In the
suburban county _per capita_ local taxes in 1900 were $6 and in the
rural county $4.30, but in 1929 they were $90 and $52.

Later I shall discuss taxation and the financing of governmental units.
Here, I wish to stress the matter of the organisation of these units.
Though various measures have gone far toward equalising the tax load
throughout New York State, the fact remains that we are still supporting
a complicated machine of local government which seems to me to be
unreasonable, expensive, wasteful and inefficient. In our efforts so far
we have succeeded in reducing somewhat in the aggregate the cost of this
elaborate machine. This same condition exists in every state of the
Union. I use the State of New York as an example merely because as
Governor of that State for two terms I am intimately familiar with the
details of the problem there.

If we look the facts in the face we see an amazing situation. No citizen
of the State of New York can live under less than four
governments--federal, state, county and city. If he lives in a town
outside of a village, he is under five layers of government--federal,
state, county, town and school. If he lives in an incorporated village,
another layer is added. If he lives in a town outside of a village, he
may be in a fire, water, sewer, lighting and pavement district, in which
case there are ten layers of government.

A citizen so situated has too much governmental machinery to watch. It
is too complicated for him to understand. He may not realise that ten
sets of officials are appropriating public funds, levying taxes and
issuing bonds. His attention is not usually centred on local government,
for seldom, if ever, does he know what sums are being appropriated, what
taxes are being levied or what bonds issued. Means for gaining
information concerning these things are altogether inadequate. Even the
editors of the local newspapers do not know what is the governmental
action about them, unless there is some particular case which draws
attention to details.

There is no real need for so many overlapping units of government.

There is excuse but no necessity for the vast army of useless officials
we are carrying upon our backs. Let me give a few simple facts.

In county and town governments alone in New York State, leaving out
incorporated cities and villages altogether, there are about fifteen
thousand officials, most of whom are elective and have constitutional
status. These include in the counties chiefly county judges, sheriffs,
surrogates, county clerks, registrars, district attorneys, coroners,
county attorneys, and commissioners of welfare; and in the towns,
supervisors, town clerks, justices of the peace, assessors, town
collectors, highway superintendents, constables, and welfare officers.
These paid officers, with minor exceptions, are found in all counties
and towns. They constitute what may be called the regular Army of
Occupation. But besides this army of occupation there is an even greater
corps of what I would call the Home Guards, paid and unpaid, part and
whole time, elective and appointive, representing the police, light,
fire, sewer, pavement, water, and other local improvement districts and
the school districts with their boards, superintendents, clerks, and
teachers.

To illustrate, take just one case. Leaving out of the picture the five
counties within the City of New York, and the wholly suburban counties
of Westchester and Nassau, and looking at the other fifty-five counties
of the State, there are in the neighbourhood of eleven thousand
tax-collectors! These eleven thousand tax-collectors represent nine
hundred and eleven towns, four hundred and sixty-one villages and over
nine thousand school districts--an average density of tax-collectors
alone of about twelve per town. It is interesting to note that these
eleven thousand tax-collectors form a greater army than that which won
the battle of Marathon. Note, too, that this huge force is actually
responsible for the collection of only about one-sixth of the property
tax levied for all purposes within the State. The remaining five-sixths
is collected by less than two hundred city, county, town and village
officers.

The great majority of the county and town officials I have mentioned are
salaried officers, but fees of unknown amount are still allowed to many
of them. We have been trying to get away from the ancient fee system,
but it still remains firmly entrenched in town and county government.
This fee system should be abolished without any question, but this is
contingent to a considerable degree on the consolidation of local
government units and a readjustment of their relations to the county and
to the State.

Let me at this point make it clear that this distressful and wasteful
condition affecting local government is not that of New York alone. All
over the country the mounting burden of taxation is compelling public
officials and citizens to direct their attention to reconstruction.

In Pennsylvania, New Jersey, Minnesota, California, Missouri, Michigan,
and many other states, corrective measures are now under way. In North
Carolina the State has taken over maintenance and repair of all roads,
including what we would call town roads. In Virginia, while county lines
remain, many county functions have been consolidated into districts
comprising several counties. In Minnesota a forest area county sparsely
settled has been allowed, after a referendum, to abolish township
government. In California a commission has recommended radical changes
in the State Constitution to set up the county as the responsible agency
for the administration of local government. Let me sum up the situation
by saying that the movement to improve local government is active
everywhere and spreading all over the United States.

The conclusion reached in all the surveys made is that a radical
reorganisation of local government is needed. It is generally understood
that county government is obsolete and that the county as a unit of
administration may well be eliminated. It is conceded that it will take
time to secure majority support for that proposal, and in the meantime
it is urged that counties be consolidated and that a greatly simplified
form of county government be set up to replace present cumbersome forms
and many officials.

The excessive cost of local government can most effectively be reduced
by simplifying the local governmental organisation and structure and
reallocating the responsibility for performing various services,
according to a logical analysis rather than by accident or by tradition.
We must consider each service and decide what administrative unit and
what size unit can most effectively and economically perform that
service. The smaller units of rural government are so unequal in wealth
that some are unable to maintain satisfactory roads and schools even
with excessively high tax rates, while others with low rates are able to
spend generously and even extravagantly.

All overlapping of local jurisdictions should be abolished. One or two
layers of local government subordinate to the sovereignty of the state
is adequate, and we ought seriously to undertake the radical
reorganisation and reallocation of functions necessary to accomplish the
elimination of others.

There is an immediate remedy for the excessive cost of local
governments. It is not as effective as reorganisation, but it is a step
in the right direction that should be taken without delay if local
government is to be as effective as it must be in the near future. This
is the controlling of local expenditures by state or district authority.
It is familiarly referred to as the "Indiana plan."

In that State ten or more taxpayers in a tax district may appeal, to the
state tax commission, from the local budget or from a proposed bond
issue. After a hearing, the state tax commission may reduce the proposed
appropriation or the amount for which bonds may be issued, or eliminate
the item altogether.

This is a clear-cut and effective method of controlling local
expenditures. It has passed beyond the experimental stage, and the
information before me indicates that it is supported by public
sentiment. Colorado and New Mexico have modified forms of the Indiana
plan. Ohio, Oklahoma and Oregon have adopted the idea, but the control
is exercised through district boards. This general method of controlling
the cost of local government is worthy of the immediate consideration by
the authorities of every state.

The reorganisation of local government has been much too long delayed,
and this fact has cost many an unnecessary dollar, and at the same time
deprived the people of improvements and services in the way of the
better protection of life and property and of better facilities for
orderly, happy living that might have been purchased with the same--or
less--expenditure.

We all of us recognise, I think, that much of the increase in the
aggregate of governmental expense has been inevitable and necessary. The
limited summary I have given here in the matter of organisation has been
sufficient to show that government has been quite properly called upon
to assume responsibilities that once belonged to the individual and to
the family. In the same way the larger units of government have been
properly and logically forced to assume functions that once belonged to
the lesser units. The demands of a different sort of civilisation and a
different sort of national economy have forced us to redistribute the
burdens which the public service imposes.

Roads, for instance, are no longer merely local facilities. We face the
question of education and find a mandate from the state as sovereign
that the children of all shall be given opportunities to learn. We are
beginning to recognise that public health is more than a local
responsibility. Crime ceased to be a local matter when the criminal
adopted a state-wide and a national range.

As to all these matters, I expect and hope soon to see an increased
measure of assumption of functions and responsibilities by the state,
through one means or another.

An effort to equalise the tax burden usually makes the state holder of
the purse-strings for a large proportion of the local expenditures. This
creates a responsibility for wise expenditure that can hardly be avoided
by the state, in justice to those who have been taxed on a state-wide
basis to replenish the state's treasury. This responsibility, it seems
to me, is fairly certain to result in much closer and more authoritative
supervision of all local expenditures. This inevitably means a closer
integration of local authority with some competent state authority,
based on the fact that, as to many functions, some competent authority,
with expert staffs and state-wide information, will possess both an
advisory and a veto power over the use of funds for local expenditure.

It also seems logical that local authority must consolidate, eliminating
many of the local governmental layers, in order to retain any
appropriate measure of home rule over local affairs.

Too many of us have been lazy-minded in this matter of government. We
like to talk in large terms about the comparative advantages and
disadvantages of democracy and autocracy; we like patriotically to
admire the work of our forefathers in devising our forms of government
or to criticise them as too slavish imitators, but we are dilatory in
following our forefathers' example by seeking to plan and devise for our
own immediate needs and for the future. Particularly, we hate the
details of government. We talk about Russia's five-year and ten-year
plans and the excellence or iniquity of Mussolini's system, in
preference to giving consideration of the question whether a town
supervision is good for anything or inquiring what a village health
officer does to earn his pay. This may be because it is easier to form a
judgment on matters that are more remote. I hate to think that it is
because we prefer to have somebody else form our judgments for us.

This suggests to me that those who hold public office should not be
content merely to take the duties of their jobs as they find them and to
carry them out according to precedent. Those who have had experience in
operating the machine should be able to tell of its defects. I once
heard of a public official who recommended that his job be abolished as
useless. It would be a heartening and refreshing thing if there were a
lot more like him.

We heard a great deal during the Great War about the challenge to
democracy and I think it was a good thing for our complacency to learn
that democracy was being challenged. But democracy is being challenged
to-day just as forcibly if not as clamorously. The challenge is from
all who complain about the inefficiency, the stupidity and the expense
of government. It may be read in the statistics of crime and in the
ugliness of many of our communities. It is expressed in all the
newspaper accounts of official graft and blundering. It is written in
our tax rules and even in the patriotic-seeming text-books that our
children study in the schools. It looms large on election day when
voters see before them long lists of names of men and women of whom they
have never heard to be voted upon as candidates for salaried offices of
whose duties and functions the voter has but the haziest impression.

The men who addressed themselves to the task of laying the framework of
our national government after freedom had been won, wrote down in
enduring words that their aim was to form "a more perfect union." In
writing that ideal into the preamble of the Constitution of the United
States, I think they set a task for us as well as for themselves.

They were forming a new government suited, as they believed, to the
conditions of their day, but they were wise enough to look into the
future and to recognise that the conditions of life and the demands upon
government were bound to change as they had been changing through ages
past, and so the plan of government that they had prepared was made, not
rigid but flexible--adapted to change and progress.

We cannot call ourselves either wise or patriotic if we seek to escape
the responsibility of remoulding government to make it more serviceable
to all the people and more responsive to modern needs.




  EXPENDITURE AND TAXATION




  CHAPTER FIVE


It is obvious that the problem of taxation is one of the greatest before
us. Here, again, it is possible to reach a solution if the methods of
sane economic planning are brought into play. But it must be remembered
that if we are going to do anything about the reduction of taxes and
about the readjustment of their burden, at the same time we must work
out the solution of other governmental problems with which it is meshed
and have the courage to apply these solutions. Nearly half our total tax
bill is local.

Taxes take us back again into a consideration of the functions of
government, and any consideration of them must weave a pattern of
finance from beginning to end. That is why in most cases it is
impossible to isolate a detail of government, whether a detail of
actuality or of hope, from its cost.

The modern state is going into business, whether it likes it or not. We
are being forced into business by modern civilisation. In the old days,
for example, we would put up a building, and the unfortunate insane in
our midst were placed in that building. They were then and thereafter
forgotten by the people of the state.

We did not even cover all the insane in the state. There were thousands
of them, scattered about in the various communities, hidden away in back
rooms and attics. There were mentally deficient children all over the
state, for whom the state did nothing in those days. There were prisons
in those days that had been built sixty or seventy years before, with
cells in them that were six feet six inches long, thirty inches wide,
with seven feet of head-room--and even twenty years ago we thought that
was right. We still have these accommodations in use. I am using this as
an illustration because it has only been in the last ten years that
there has been a growing feeling on the part of modern civilisation that
we have not been handling the wards of the state rightly.

In 1930 in the State of New York we had somewhere around sixty or
seventy thousand wards of the state. That does not include the wards of
the various counties and cities and other communities. Modern
civilisation has made us revise our whole plan of handling them.

We are now, in the case of the insane, for example, constantly making
new improvements in the study of psychiatry. We are curing people who
even twenty years ago would have been pronounced incurable. In fact, the
ratio of improvement has constantly risen, so that in 1930 we were
curing somewhere between twenty and twenty-two per cent of these
unfortunates. To refer again to prisons, we are looking toward the ideal
day when of the ninety-four per cent of the prisoners who come back
again into our hands, the very great majority of them will go straight
all the rest of their lives. We already have a better system worked out
under which this is more than possible.

Of necessity, the state has gone into things that did not exist twenty
years ago as State problems--highways, for instance. At that time we had
a plan, a magnificent plan it seemed, to cost ten or fifteen million
dollars, to build main highways from New York to Buffalo, from Albany to
Montreal, and there was no such reason to go to Montreal as there is
to-day. To-day it is not just the main highways that are concrete. The
farmer on every back road is asking for concrete past his door.

There is another reason why the expenditures of the states have gone up.
The educational standards are higher. In 1920 the State of New York was
extending state aid for education at a cost of ten million dollars; it
is now extending it at the cost of more than one hundred million. Nearly
one-third of all the expenditures of the state government are going as
aids to education. Perhaps this is not the right policy, but it seems to
be in line with modern thought, and I do not believe there is anybody
who can suggest any alternative that would not be reactionary.

There are real reasons for the increase in the cost of government
besides the growing inefficiencies in its organisation that I have
pointed out in a previous chapter.

I do not wish to set up too detailed a picture of the difficulties. But
a clear understanding of the problem requires that examples be used to
illustrate the trends of state government. These trends are so important
that, as Governor of the State of New York, I sought again and again to
bring them to the attention of the public. Familiarity with them brings
agreement upon the kind of action that will have to be taken to reduce
taxation.

Take at random the expenditure conditions within several of the
essential departments of the state government, as illustrated in New
York.

Look at the Departments of Correction and Social Welfare. Perhaps no two
state departments illustrate better than do these the fact that public
services are created and enlarged from time to time in response to
public opinion. At the same time, they also illustrate that alteration
of the essential scheme and services of government can be made only when
changing public opinion leads to changes in the laws which control the
scope and cost of government.

The Department of Correction operates seven state prisons, two
reformatories, two hospitals for the criminal insane, two institutions
for defective delinquents and one school for juvenile delinquents. In
1931 this department spent eight and a half million dollars,
seventy-eight per cent more than ten years previously. The number of
inmates of these institutions was about thirteen thousand, fifty per
cent more than in 1922. The prison population is growing. Here is a
department with a cost increase of some three million seven hundred
thousand dollars in ten years. The factors of the increase are easy to
trace, but let us look at the increase in its broader, more significant
outlines.

The central fact is that the number of prisoners has increased. If, in
ten years, we made no change in the food, clothing, housing and
treatment of prisoners, our penal institutions in this one state would
be costing one million three hundred and twenty-five thousand dollars
more a year than they did in 1922. This is nearly half of the ten-year
increase. It is the result of the Baumes laws and other amendments of
the criminal code by which sentences were made more severe, time
allowances for good behaviour were reduced, and the granting of paroles
was restricted. The trend is unchangeable as long as present laws
covering the commitment and detention of prisoners are in force. The
other half of the increased cost since 1922 came because we have
provided better prison facilities. I need not detail these; there is
good and sufficient reason for them on the grounds of decency alone.
Reducing prison costs is a question of administration in an only
negligible degree. It is in the largest sense a question of social and
public policy. It comes to the questions: How much imprisonment of men
and women convicted of crime do you wish to buy? How much are you
willing to pay for?

Public opinion has had an even more unmistakable effect on the costs of
the Department of Social Welfare. The appropriation for this department
was two hundred and ninety thousand dollars in 1922. It remained at
about that level for years. But in 1932 it shot up to nine million one
hundred thousand, almost solely on account of old-age security
legislation which placed new responsibilities on the state.

Does the state wish to save more than eight millions of dollars annually
by repealing the provisions for its contribution to old-age pensions,
turning the full responsibility for the care of the aged poor back to
cities and counties, and returning to the standards of 1922 in this
field?

Take the State Department of Labour. The workmen know that it is the
agency through which they may be able to get jobs. Even in 1931 it
placed more than one hundred thousand in jobs. The merchant or the
manufacturer in the State of New York knows that it is the agency which
adjusts differences between him and his employees, and tells him
specific improvements which he should or must make in order to protect
the health and safety of his workers. Agents of this Department in 1931
made more than eight hundred and fifty thousand inspections of the
establishments of manufacturers and merchants.

This is the state agency which is striving day in and day out to prevent
the exploitation of labour, to enforce child labour laws, to safeguard
women in industry, to keep the disabled worker from becoming a charge
upon the community, to reduce the risks of further catastrophes such as
the Triangle Fire of 1911, in which one hundred and forty-seven lives
were lost. This is the intensely human realm which we have to look at
from a strictly cost standpoint.

The Department cost three million three hundred thousand dollars to
operate in 1931. That was one million seven hundred thousand dollars
more than it cost ten years before, or more than twice as much. What
caused the increase? Was it wise? Should the policies which caused it be
reversed in order that taxes might be lower?

In a large sense, the answer depends upon the point of view. The
nineteenth-century philosophers placed little or no store in the idea of
government recognising or discharging broad social obligations. If you
share this narrow view, you might regard this Department of Labour as an
improper activity of the state, however socially useful its services
might be.

On the other hand, perhaps you share the concept of government so ably
stated by Sean T. O'Kelly, the Irish Free State's delegate at the
Imperial Economic Congress at Ottawa recently. He described the aim of
the modern state as being "to provide such economic conditions as will
allow the greatest possible number of people to live in peace and
comfort." If that is your view, you might easily believe that this
Department of Labour, instead of spending too much, may perhaps not be
spending enough.

One particular item of eighty thousand dollars is in the overhead,
administrative and statistical work of this Department. Whether all of
this expenditure is justifiable may be debatable, but it is significant
that New York has been almost the only state in the country with
sufficient statistical knowledge of unemployment to permit it to build
its remedies along practical lines consistent with actual conditions. If
major services of the Department were to be cut to earlier levels,
overhead costs automatically would tend to return to their former
amounts. Should we return to 1922 standards of administrative direction
and statistical control of this work in order to save eighty thousand
dollars?

Look at the Department of Agriculture and Markets. Ten years ago, we
bought from the Department twenty specific services for the people at a
cost, in round figures, of one million nine hundred thousand dollars. In
1932 we bought thirty-four separate services at a cost of five million
seven hundred thousand. How intimately associated is this Department
with the lives of the people? Is it necessary or just an expensive
luxury? It supervises milk plants; enforces the pure-food laws. It
safeguards the food supply of the state, beginning in the process before
the seeds of the future food crop are deposited in the ground and
continuing until the food is delivered to the door of the consumer. To
help the farmer in his work it administers state funds for fairs,
disseminates information concerning farm conditions, inspects feed for
live stock, examines fertilisers, publishes food-production statistics,
endeavours to obtain fair rates for the transportation of good products.
The Department does not work to suppress bovine tuberculosis because it
wants to; it does so because laws have been passed saying that it must.

The cost of the work to eradicate tuberculosis in cattle was by far the
largest item. In 1931 it was four million three hundred and ninety-five
thousand as compared with seven hundred and ninety-six thousand ten
years ago. Do we want to continue to buy this same tuberculosis
eradication? Ten years ago the number of accredited herds (those which
are freed of infection and certified for the production of milk) was six
hundred and eighty-five. At the end of 1931 the number of herds had
increased to seventy-five thousand. The work of supervision under the
tuberculin test, the slaughtering of infected animals, and the payment
of indemnities to owners, all seem essential. The work of eradicating
tuberculosis is about two-thirds done.

Since we are upon the subject of health, I will detail a little of the
work of the Department of Health and rest the case there. Its cost is
not a large part of the total cost of the state government, but it has
been increasing rapidly as its services have been extended and as its
contacts with the daily life of the people have been enlarged.

There is little possibility of argument over the idea that a healthy
people is the most valuable asset a state can have. It transcends in
importance all material wealth. But the enlargement of service is a
potent influence upon the cost figures. Aside from a
three-hundred-thousand-dollar purchase of radium, the state spent for
health activities about three million two hundred thousand, more than
twice as much as in 1922. Excluding institutional cost, the Department
proper cost nine hundred and sixty-five thousand more in 1931 than it
did ten years earlier.

Generally, that increase represents developments which have taken place
since the time, not many years ago, when we decided that public health
was purchasable. By spending certain sums of money we know that we can
purchase for the whole population a larger degree of freedom from
particular diseases, such as malaria, yellow fever, typhoid fever and
even tuberculosis.

In the work to reduce infant mortality and to promote child hygiene, ten
years ago the cost was twenty-three thousand dollars. In 1931 it was
seven times greater. During that period there has been a spectacular
decline in infant mortality, at least partly attributable to this work.
In 1915, of every thousand babies born, one hundred died before they
were a year old. On the same basis only seventy died in 1922 and but
fifty-nine in 1930. If the 1915 infant death-rate had prevailed, nine
thousand more babies under the age of one year would have died in 1930.
Should the state save one hundred and forty-four thousand dollars by
restricting the maternity, infancy and child hygiene work to the scope
of 1922?

No man in public office to-day can fail to realise the demand and the
need for lower taxes. He knows that business, industry and agriculture
are straining under a tax load heavier than they can safely bear. He
knows that high taxes are one of the contributive causes of
unemployment.

While recognising these things, the man in public office also knows the
facts of government. Taxes grow out of expenditures; expenditures spring
from services; services result from the commands of the people, in the
form of laws passed by the legislature directing and instructing the
administrative branch of the government what to do. If taxes are to be
reduced, services must be curtailed or eliminated. That is plain. It is
also clear that services can be eliminated or curtailed--not by
passionate oratory or by resolutions--but only by new instructions from
the people through the legislatures in the form of new laws or the
repeal of old laws. Under our plan of government those new instructions
are the direct product of public opinion.

That is one side of taxation. The other side is even more amazing. There
is practically no basic American principle applying to taxes, which of
necessity affects every citizen and every corporation. We find, for
instance, that there is no line of demarcation between Federal taxes and
state taxes. In many cases there is a definite duplication of taxes by
the Federal Government and by the state, as, for example, in the case of
the income tax. Also we find that there is duplication and overlapping
between state taxes and local taxes, with the result that far too often
we have subjected ourselves to a double tax on exactly the same property
or the same right. Furthermore, we find that the actual burden of
taxation is in a very large number of instances unequal.

It seems to me that the time has come for every state to co-operate with
every other state in laying down certain lines or programmes of taxation
which will be sound and at the same time can be understood by the
average citizen. The first step is, of course, for the Federal
Government to recognise a definite and clear-cut classification of taxes
which it wishes reserved to it and for the states to concur. The Federal
Government should be limited to this classification, except in time of
war or great national emergency. All other methods of taxation would
thereby automatically be reserved to the states themselves. This, it
seems to me, would carry out the whole spirit and purpose of the Federal
Constitution.

With the reserving of all other taxes to the states, the states will
then have an opportunity to work out for themselves a second
classification of taxes, dividing those taxes into those which the state
itself will levy on the one hand, and those which will be reserved for
local tax purposes--counties, cities, school districts, and so forth--on
the other hand.

When legislators, administrators and voters are able to bring about an
orderly dividing of the methods of taxation between the national
government, the state governments and the local governmental units--the
organisation of which, as I have pointed out, must be sharply
simplified--then, and only then, can we as a nation take up the equally
important task of putting some kind of a limit on the total of our taxes
and on the total of the government debts which we are so eagerly
increasing at the present time.

Not only must government income meet prospective expenditures, but this
income must be secured on the principle of ability to pay. This is a
declaration in favour of graduated income, inheritance and profits
taxes, and against taxes on food and clothing, whose burden is actually
shifted to the consumers of these necessities of life on a _per capita_
basis rather than on the basis of the relative size of personal incomes.

Something more is needed than a domestic balanced budget and a just
revenue system. Muddled government finance creates a general uncertainty
concerning the value of national currencies; this uncertainty has a way
of spreading from country to country. The United States could well
afford to take the lead in asking for a general conference to establish
less changeable fiscal relationships and to determine what can be done
to restore the purchasing power of that half of the world's inhabitants
who are on a silver basis, and to exchange views regarding governmental
finance. It is obvious that sound money is an international necessity,
not a domestic consideration for one nation alone. Nothing is more
needed than such exchanges of opinion; nothing could do more to create a
stable condition in which trade could once more be resumed.

If it be considered radical to suggest that government can be made more
practical, more efficient and more business-like, then this is radical
doctrine. I am thinking, and all good Americans are thinking, I hope,
not just in terms of ourselves and our lifetime. We are thinking, I
trust, in terms of the children and the grandchildren who will come
after us. It is our sacred obligation to hand over to them cities,
villages, counties, states and a nation which will not be a series of
millstones about their necks.




  SHALL WE REALLY PROGRESS?




  CHAPTER SIX


Our growing alarm over the rising cost of government is because the
burden of taxation appears to be so rapidly growing in weight that many
think it may become intolerable even within our own lifetime. Already
this burden is radically affecting our lives. But apart from
extravagance, inefficiency and waste we cannot deny that the rising cost
is in a considerable measure due to the new concept of government which
envisions the greater happiness and security of all the people.

There has been a marked increase of state services available to the
average man and woman. These services do not ordinarily come to the
attention of those most liable to complain of the very grave social
injustices of the times; they demand more service--not being familiar
with those already existing. This often brings about duplication.

The real question before us is whether or not we shall allow our
economic difficulties and our organisation inefficiency to frustrate the
wholesome and essential development of our civilisation. As I see it,
our social aims should spur our attack upon these problems.

Two particular plans for social welfare just coming to the fore vitally
affect the whole range of our present and future American civilisation.
The lives of ninety per cent of our citizens--all those who have to work
and do not live on investments--are concerned with the possibilities of
unemployment (even if they are fortunately now employed) and the
possibility of needing outside assistance in their old age. Up to the
present the public has not concerned itself greatly with finding a
solution, first because as a young nation untouched resources have been
open to us; and second, because the social sciences are still in their
infancy, and until recently poverty and hunger and want, to a great
extent, have been treated as necessary and inevitable evils.

It is necessary briefly to review existing conditions in order to put
down in black and white what we seek to remedy. We can, and must, think
nationally, for every state and every region face the same facts and are
affected by conditions in every other state and region. A good
illustration is an occurrence of 1929. When the automobile industry in
Detroit laid off several hundred thousand workers in local plants, forty
thousand of these came to the State of New York looking for jobs--a mass
movement nearly a third of the way across the continent. To-day, because
the nation is so greatly industrialised, the closing down of ten per
cent of industry is felt very definitely in every community.

The absurdity is now obvious of the new economic theory which was
foisted upon the nation in 1928 and 1929 that, contrary to all teachings
of history, constant work would continue indefinitely on a rising scale
just as long as high wages continued, combined with a high-pressure
selling campaign to dispose of the output. It was all to be bought and
paid for if everybody was employed and earning good wages. Thus if every
family in the United States owned one automobile and one radio set in
1930, by 1940 every family would need two cars and two radios, by 1950
every family would need three--the older theory of a saturation point
having been wholly abandoned. Failure to recognise the old law of supply
and demand was criminal enough; but to this was added the spectacle of
officials of government and leading financiers juggling with figures in
order deliberately to distort facts. When between twelve and fifteen
workers out of every hundred are out of a job in very many industries it
is neither truthful nor useful to tell them that employment is
practically back to normal, no matter what purely psychological reasons
may stand in the way of output.

The truth of the matter is that we are in the midst of another turn of
the wheel in the economic cycle and that production in most instances
has outrun consumption. To this domestic crisis has been added a
tremendous falling off in our exports. To go into the reason for this
would be out of place here.

Next we must consider the effect of the latest manufacturing and selling
processes. The result of so-called efficiency methods is that the top
age of employment usefulness is no longer from sixty-five to seventy
years of age, but has dropped to from forty-five to fifty years of age.
Though the practice is happily not universal, a growing number of large
employers have been hiring only young men and women, and in times of
reduction the older employees have been the first to go. This means that
the old-age problem, which only a few years ago was by common consent
set at the seventy-year mark, is to-day advanced to include thousands of
people in their first fifties and sixties. How much of this change is
due to the last disastrous years may never be known, but this does not
alter the probability that the change will further continue.

To sum up the existing situation, we have a highly complex problem
here--one in which unemployment and old-age want are becoming more and
more interwoven, where the remedy of one must take cognisance of the
other, where government aid must be thought out along scientific
economic lines and not be tossed out as charity or as a result of
political hysteria.

Judging by the past and by the present, unemployment always will be with
us as a nation, varying with the economic cycles. Certain trends and
steps are being worked out in various sections and in various industries
for the purpose of flattening out, at least partially, the peaks and
valleys. For example, the trend is distinctly toward the five-day week.
This means the employment of more people, or, at least, the laying off
of fewer people, as does also the movement toward shorter hours of work
per day.

Then we have the movement toward the better planning of work, the
so-called Cincinnati system, which guarantees to the worker a definite
period of work, say forty-eight weeks out of the year, for which he or
she is hired; with this planning go the staggering of work, the
co-operation between different lines of industry and the acceleration
of public and private construction in times of depression.

It is a fine thing that practically every state government has
recognised the emergency and taken definite action. For instance, in
1930 the Legislature of the State of New York gave me, as Governor, an
appropriation of ninety million dollars for public work, an increase of
twenty million dollars over the previous year. So, also, the
municipalities and counties of the state increased this total fourfold.
These, however, are emergency measures and cannot necessarily be counted
on in future periods of unemployment, because the debts of local
governments have increased to an alarming and perhaps dangerous extent.

More permanent remedies have been undertaken in various parts of the
country. For instance, in New York, a committee appointed by me,
composed of four business men, a labour leader and the State Industrial
Commissioner, consulted with larger industrial concerns and established
the principle of giving steadier work by careful planning within the
industries themselves. All these studies and plans, however, are
confronted with a definite lack of statistics and facts; for instance,
it was known fairly accurately how many people were employed, but very
inaccurately how many people were unemployed. Here is an immediate need
for governmental and private organising in order that we may have the
whole truth about the unemployment situation. Announcements from the
high officials in Washington have been discredited--though it is obvious
that the true facts are the people's right.

Furthermore, industrial planning, while excellent in the case of larger
employers who in some cases can make their output programmes for a year
or more in advance during normal times, is not so possible for the
smaller employer or for the man who in his business handles only one
line of goods.

The conclusions, again, are obvious. Careful planning, shorter hours,
more complete facts, public works and a dozen other palliatives will in
the future reduce unemployment, especially in times of industrial
depression, but all of these put together will not eliminate
unemployment. There may, indeed, be periods in our future history when,
for economic or political reasons, we may have to go through several
years of hardship, one right on top of another. We shall have in these
periods new "accidents" of employment, such as we have had in the past;
for instance, changes in style, such as the replacement of cotton goods
by artificial silk; or the depression in the spoken drama with the
advent of motion pictures and the talkies. So also we shall have new
inventions which will be compared to the advent of the automobile and
we may have further losses of foreign markets. Some of these changes are
predictable, others are not. Against them some form of insurance seems
to be the only answer.

We shall come to unemployment insurance in this country just as
certainly as we have come to workmen's compensation for industrial
injury, just as certainly as we are to-day in the midst of insuring
against old-age want.

Ninety per cent of unemployment is wholly without the fault of the
worker. Other nations and governments have undertaken various systems
which insure their workers when unemployment comes. Why should we, in
the forty-eight states of our Union, fear to undertake the task?

It is, of course, necessary for us to guard against two grave dangers.
Insurance against unemployment must not, by any chance or loophole,
become a mere dole which encourages idleness and defeats its own
purpose. It should be possible in developing a system of unemployment
insurance to draw a hard-and-fast line against any man or woman who
declines to accept an offered position, and it should be possible so to
alternate employment that no individual will be unable to find a job for
more than two or three months at a time. The other danger is that there
will be a natural tendency to pay the cost of unemployment insurance
out of current revenues of government. It is clear that unemployment
insurance must be placed upon an actuarial basis, and that contributions
must be made by the workers themselves. Ideally, a carefully-worked-out
system of unemployment insurance should be self-supporting and a close
and intelligent study of the facts and of the law of averages can make
this wholly possible.

The suggestions made by the Interstate Commission on Unemployment
Insurance in its report early in 1931 to the Governors' conference on
unemployment called by me deserves action to follow. This commission was
composed of representatives of six of the seven Eastern industrial
states--New York, Ohio, Pennsylvania, New Jersey, Massachusetts and
Connecticut.

The plan they worked out is sound and carefully safeguarded. It would
make provision for the irregularity of industrial operation, give
incentives for the regularisation of industry and maintain the morale
and self-respect of the worker, so essential to the citizens of a
democracy. It contains a radical departure from all European plans in
that it definitely avoids the commingling of reserve and relief funds,
recommending that the payments of each employer constitute his reserves,
which are not to be turned into a common pool.

The payment by each employer is to be a contribution amounting to two
per cent of his pay-roll and to be reduced to one per cent when the
accumulated reserve per employee shall have exceeded fifty dollars. The
maximum benefit is to be ten dollars a week or fifty per cent of an
employee's wage, whichever is lower, and the maximum period of benefit
to be ten weeks of any twelve months. The payment by each employer is to
constitute the employment reserve of his firm and not to be added to the
common pool. The creation of an Unemployment Administration of three
members is suggested, one representing labour, one industry and one the
general public.

The suggestion is made that the states take prompt steps to extend their
public employment service, since no system of unemployment insurance can
accomplish its purpose without a properly organised and efficiently
operated system of employment exchanges.

The Unemployment Commission is to encourage co-operative action between
firms and industries, since the most effective measures for achieving
greater stabilisation cannot be accomplished by a single firm.

The report names two reasons for recommending contributions to the fund
by employers: first, "the employee should not in our judgment be
required to reduce his earnings further by the payment of contributions
into reserves"; second, "the employer's financial liability under the
plan would operate as a continuous incentive to prevent unemployment as
far as practicable."

By the recommendation that the payments by each employer constitute the
unemployment reserve of his firm and be not added to the common pool,
the report hopes to avoid what "has been widely recognised even by
sympathetic critics of European practice as having had unfortunate
results." When the pooling system is used, according to the report, "the
irregular industries enabled to draw benefits for their unemployed
workmen from the common pool may thus be tempted to shift responsibility
and the cost of their own unemployment to the more stable and profitable
industries. In so far, then, as an unemployment is due to careless or
indifferent management, or to the failure to take proper precautions for
the future, the pooling of reserves may have the effect of perpetuating
such uneconomic practice, and may, in consequence, fail to offer the
incentives to regularisation for which many of the advocates of
unemployment insurance had hoped."

I feel that these suggestions are practical, as simple as the nature of
such action can be, and should be seriously taken up.

With plans for old-age security already taking form in the State of New
York, becoming law and getting into operation, despite the financial
difficulties of the times, it seems to me to be sure that we are going
to continue to progress along lines of social welfare. It is amazing
what a revolution has taken place in men's minds in a comparatively
short space of time--for twenty years ago there would have been nothing
but public laughter or apprehension at the way some of us are viewing
the duties of government.

To-day, there is no need for a long argument to prove that old-age
security logically and inevitably ties in with the whole problem of the
unemployed and that something can actually be done about it. Everyone
knows that when old men and women are no longer able to support
themselves by working, they come into the ranks of the unemployed, just
as much as if they were stood off because of industrial slackness. The
only difference is that their dismissal is permanent rather than
temporary.

It is, of course, inevitable that these problems be worked out in a
piecemeal manner. For example, the passage of the old-age security law
in the State of New York in 1930 took only one short step toward the
larger problem. The new law applies only to men and women seventy years
old and over, but it is based on the correct theory that it is in the
long run cheaper and better for the beneficiaries to live in their own
homes during their declining years than for them to become inmates of
institutions.

The New York law has failed to go to the real roots of old-age want. It
has set up no machinery for the building up of what in time must become
an insurance fund to which the state and the workers, and possibly the
employers, will contribute. The cost of the present law is to be borne
half by the state and half by the counties of the state. That may be
very well as a stop-gap to meet the emergency of those who are to-day in
want, but the law must be made broader in its application, doing away
definitely with state and county aid, and establishing an insurance
system by which the worker will become an actual part as an individual,
the very first day that he or she starts to become a wage-earner in the
community.

These social situations must be met with no haphazard answers. The
principles of insurance can be made to meet the basic problems of
unemployment and old-age want. This is a sound business proposal. It
would be far more radical to suggest that local and state governments
should, in the days to come, grant pensions or doles to those who are in
need.

It is essential that the various states seek to work out these problems.
It is probable that they will attack them in ways which differ in
method. Yet this is one of the great advantages of our system of
forty-eight separate and distinct sovereignties. Some states will,
without doubt, be more successful than others. But we can learn by
comparisons and the interchange of ideas. So far there has been very
little interchange; there must be an active and intelligent interchange
from now on.




  WHAT ABOUT AGRICULTURE?




  CHAPTER SEVEN


Social welfare has always been associated with the work to be done with
the humanities in the crowded industrial centres. Plans for a
restoration of the economic balance have also, in the past, been set,
all out of proportion to the facts, in these same surroundings. An
industrial civilisation, the brilliance of a mechanised progress, has
made it difficult to remember that one-third of our population in the
United States is dependent upon wheat and cotton, for example, for their
livelihood and purchasing power.

We all recognise that there is no single factor that will, by itself,
bring immediate prosperity to the agricultural population of all parts
of the country. I know this personally, for four reasons. I lived on a
farm in the State of New York for fifty years; I ran a farm in the State
of Georgia for eight years; ever since I have been in public life I have
made it a point to travel over the country, and in so doing I have
maintained a practical interest in the farm problems of the various
parts of the country at first hand; finally, as Governor of the State of
New York, the farm products of which now rank fifth or sixth among the
states, I have in four years devoted myself to building a farm
programme.

At the risk of repeating some details which have been mentioned in
previous chapters I must cite examples to illustrate the building up of
this programme. Existing tax obligations of local communities were
lightened to the extent of twenty-four millions a year. State aid for
roads was redistributed on a mileage basis instead of on an assessment
basis, so that the rural communities could enjoy exactly the same
privileges in the improvement of their dirt roads as that given to the
richer suburban communities. The same principles of aid were applied to
rural schools. The state assumed the entire cost of constructing and
reconstructing the roads on a rural highway system. The state paid all
except a small fraction of the grade crossing elimination, so that
safety might be afforded to the less as well as the more fortunate
districts. Appropriations for the safeguarding of rural health were
increased. The soil survey was started--as detailed in my comment upon
land utilisation. In addition, the laws relating to co-operative
corporations and traffic in farm produce were revised more in the
interest of the farmer. Legislation was enacted to create a new system
of rural credit organisations to meet the emergency created by the
collapse of rural banks.

While most of these are emergency measures which can be taken within the
several states, they should be considered merely as contributive to the
success of much broader action, which must be taken by the Federal
Government.

I see no occasion for discussing in detail the acute distress in which
the farmers of America find themselves. They receive prices as low as or
lower than at any time in the history of the United States. The economic
turn means nothing less than the shadow of peasantry over six and a half
million farm families. These families represent twenty-two per cent of
the population of the United States. In 1920 they received fifteen per
cent of the national income, in 1925 eleven per cent, in 1928 about nine
per cent, and in some of the recent estimates based on figures of the
United States Department of Agriculture the farm income has dropped to
about seven per cent.

Fifty million men, women and children immediately within our borders are
directly concerned with the present and the future of agriculture.
Another fifty or sixty million people who are engaged in business and
industry in our large and small civic communities are at last coming to
understand the simple fact that their lives and their futures are also
profoundly concerned with the prosperity of agriculture. They realise
more and more that there will be no outlet for their products unless
their fifty million fellow Americans who are directly concerned with
agriculture are given the buying power to buy city products.

Our economic life to-day is a seamless web. Whatever our vocation, we
are forced to recognise that while we have enough factories and enough
machines in the United States to supply all our needs, these factories
will be closed part of the time and the machines will lie idle if the
buying power of fifty million people remains restricted or dead.

If we get back to the root of the difficulty, we will find that it is
the present lack of equality for agriculture. Farming has not had an
even break in our economic system. The necessities that our farmers buy
cost nine per cent more than they did before 1914. The things they sell
bring them forty-three per cent less than they did then. These figures,
as of August 1, 1932, authenticated by the Department of Agriculture,
mean that the farm dollar of that date was worth less than half of what
it represented before the World War.

This means finding a cure for a condition that compels the farmer to
trade in 1932 two wagon loads for the things for which in 1914 he
traded one wagon load.

There are two undeniable facts during these past twelve years. First,
the three last national administrations failed utterly to understand the
farm problem as a national whole, or to plan for its relief; and second,
they destroyed the foreign markets for our exportable surplus, beginning
with the Fordney-McCumber tariff and ending with the Grundy tariff, thus
violating the simple principles of international trade and forcing the
retaliation of the other nations of the world.

I cannot forbear at this point from expressing my amazement that in the
face of this retaliation--inevitable from the day that the Grundy tariff
became a law and predicted by every competent observer at home and
abroad--not one effective step to deal with it or to alleviate its
consequences was taken or even proposed by the national administration.
Of the steps now to be taken I shall be explicit. But here let us pause
for a moment to consider permanent farm relief in its longer
perspective. I am coming to the shorter perspective later on. I suggest
the following permanent measures:

First, reorganisation of the Department of Agriculture is necessary with
the purpose of building up a programme of national agricultural
planning. The Department has done many good things, but I know enough
of the ways of government to know that the growth of a department is
often irregular and haphazard. It is always easy to add to a department,
for additions mean more jobs. Particularly with the Department of
Agriculture, to cut away unnecessary functions, to eliminate useless
jobs, and to redirect routine activities toward more fruitful purposes
is a task that must and shall be undertaken.

Second, to put into effect a definite policy toward the planned use of
land.

Third, to reduce farm taxation and to more equitably distribute their
burden.

These three objectives are the sort that will require slow-moving
development. They constitute a necessary building for the future.

In meeting the immediate problems of distress it is necessary to adopt
quick-acting remedies. There is the immediate necessity for the better
financing of farm mortgages in order to relieve the burden of excessive
interest changes and the grim threat of foreclosure. Much work was done
in the last Congress to extend and liquefy and pass on to the Federal
Government a portion of the debts of railways, of banks, of utilities
and industry in general. Something in the nature of a gesture was made
in the financing of urban and suburban homes. But practically nothing
was done toward removing the menace of debt from farm homes.

It is my purpose to direct all the energies of which I am capable to
definite projects to relieve that distress, and specifically I am
prepared to insist that Federal credit be extended to banks, insurance
companies, loan companies or corporations that hold farm mortgages among
their assets; but that these credits be made on the condition that every
reasonable assistance be given to the mortgagers where the loans are
sound, for the purpose of preventing foreclosure. And those conditions
must be enforced. Lower interest rates and an extension of principal
payments will save thousands of farms for their owners. And hand in hand
with that we must give those who have lost the title to their
farms--titles now held by institutions now seeking credit from
governmental agencies--the preferred opportunity of getting their
property back.

As a further immediate aid to agriculture we should repeal those
provisions of law that compel the Federal Government to go into the
market to purchase, to sell, to speculate in farm products, in a futile
attempt to reduce farm surpluses. We should have such a planning of farm
production as would reduce the surplus and make it unnecessary in later
years to depend on dumping those surpluses abroad in order to support
domestic prices. That result has been accomplished in other nations; why
not in America?

Another immediate necessity is to provide a means of bringing about,
through government effort, a substantial reduction in the difference
between the prices of things the farmer sells and the things the farmer
buys. One way of correcting that disparity is by restoring international
trade through tariff readjustments.

This tariff policy consists in large measure in negotiating agreements
with individual countries, permitting them to sell goods to us, in
return for which they will let us sell to them goods and crops which we
produce. The effective application of that principle will restore the
flow of international trade and the first result of that flow will be to
assist substantially the American farmer in disposing of his surplus.
But it is recognised that to tide over until international trade is
completely restored--and that may mean some time, for we cannot put
through a new tariff negotiation in a few years--we must devise means to
provide for the farmer a benefit that will give him in the shortest
possible time the equivalent of what the protected manufacturer gets
from the tariff. Farmers put this in a single phrase: "We must make the
tariff effective."

In the last few years many plans have been devised for achieving that
object. None has been given a trial. Circumstances are so complex that
no man can say, with definite assurance, that one plan is applicable to
all crops, or even that one plan is better than another in relation to
an individual crop. One fact I want to make clear with all possible
emphasis. There is no reason to despair merely because defects have been
found by some people in all these plans, or because some of them have
been discarded by responsible leaders in favour of new plans. The fact
that so much study and earnest investigation of this problem have been
made from so many angles and by so many men is, in my opinion, ground
for assurance rather than despair. Such a wealth of information has been
accumulated, so many possibilities explored, so many able minds
enlisted, and, more important still, so much education on the subject
provided for and by farmers themselves, that the time has come when able
and thoughtful leaders who have followed this development from the
beginning are now focusing on the basic elements of the problem, the
practical nature of its solution, and are ready to put the thing
through.

Within the past year, many of our industrialists have come to the
conclusion that since the great decline of our export trade, the chief
hope of industrial rehabilitation lies in a workable and important
method of dealing with farm surpluses. Support for the trial of some
plan to put the tariff into effect seems to be found everywhere now.

It will be my purpose to compose the conflicting elements of these
various plans, to gather the benefit of the long study and consideration
of them, to co-ordinate efforts to the end that agreement may be reached
upon the details of a distinct policy to restore agriculture to economic
equality with other industry.

The purpose is clear. The requirement is obvious; it is to give that
portion of the crop consumed in the United States a benefit equivalent
to a tariff sufficient to give the farmers an adequate price.

The specifications of the plan, upon which most of the reasonable
leaders of agriculture have agreed, seem to me to be as follows:

The plan must provide for the producer of staple surplus commodities,
such as wheat, cotton, corn (in the form of hogs) and tobacco, a tariff
benefit over world prices which is equivalent to the benefit given by
the tariff to industrial products, and that differential benefit must be
applied, so that the increase in the farm income purchasing and
debt-paying power will not stimulate further production, additional
production.

The plan must finance itself. Agriculture has at no time sought and does
not seek any such access to the public treasury as was provided by the
futile and costly attempts at price stabilisation by the Federal Farm
Board. It seeks only equality of opportunity and tariff productive
industry.

The plan must not make use of any mechanism which would cause our
European customers to retaliate on the ground of dumping. It must be
based on making the tariff effective and direct in its operation.

The plan must make use of existing agencies, and, so far as possible, be
decentralised in its administration so that the chief responsibility for
its success will rest with the localities of this country, rather than
with created bureaucratic machinery in Washington.

The plan must operate as nearly as possible on a co-operative basis and
its effect must be to enhance and strengthen a co-operative movement. It
should, moreover, be constituted so that it can be withdrawn whenever
the emergency is passed and whenever normal foreign markets have been
re-established.

The plan must be, in so far as possible, voluntary. I like the idea that
the plan should not be put into operation unless it has the support of a
large reasonable proportion of the producers of the exportable
commodities to which it is to apply. It must be so organised that the
benefits will go to the man who participates.

These seem to me to be the essential specifications of a workable plan.
In determining the details necessary to the solution of so vast a
problem, it goes without saying that many minds must meet and many
persons work together. Such co-operation must of necessity come from
those who have had the widest experience with the problem and who enjoy
to the greatest degree the confidence of the farmers of the nation.
Without in any sense seeking to avoid responsibility, I shall avail
myself of the widest possible range of such assistance. I am confident
of a solution, for the specification, for the first time in our economic
history, is clear.




  THE POWER ISSUE




  CHAPTER EIGHT


The power issue, where vigorously handled in the public interest, means
abundant and cheaper power for American industry, reduced rates and
increased use in millions of urban and rural homes--to say little of the
preservation of our water-power resources in co-ordination with flood
control, reclamation and irrigation. The American people have a vital
stake in the proper handling of this issue.

Let us be clear at the outset that the liberty of individuals to carry
on their business should not be abrogated unless the larger interests of
the many are concerned. It is the purpose of government to see that not
only the legitimate interests of the few are protected, but that the
welfare and rights of the many are conserved. These are the principles
which must be remembered in any consideration of this question. This, I
take it, is sound government--not politics. Those are the essential
basic conditions under which government can be of service.

Power has been discussed so much in complex language, in terms which
only a lawyer can understand, or in figures which only accountants can
understand, that there is need for bringing it back into the realm of
simple, honest terms understood by millions of our citizens.

This is particularly true, because there has not only been lack of
information, and information difficult to understand, but there has been
in the past few years, as the Federal Trade Commission has shown, a
systematic, subtle, deliberate and unprincipled campaign of
misinformation, of propaganda, and, if I may use the words, of lies and
falsehood.

The spreading of this information has been bought and paid for by
certain great private utility corporations. It has permeated the
schools, the editorial columns of newspapers, the activities of
political parties and the printed literature in our book stores.

A false public policy has been spread through the land, through the use
of every means, from the innocent school-teacher down to others far less
innocent.

Let us go back to the beginning of the subject. What is a public
utility? Let me take you back three hundred years to King James of
England. The reign of this King is remembered for many great events,
two of them in particular: he gave us a great translation of the Bible
and the inception of a great public policy. It was in the days when
Shakespeare was writing and when the English were settling Jamestown,
that a public outcry arose in England from travellers who sought to
cross the deeper streams by means of ferryboats.

Obviously these ferries, which were needed to connect the highway on one
side with the highway on the other, were limited to specific points.
They were, therefore, monopolistic in their nature.

The ferryboat operators, because of their privileged position, had the
chance to charge whatever the traffic would bear, and bad service and
high rates had the effect of forcing much trade and travel into long
detours or to the dangers of attempting to ford the streams. The greed
and avarice of some of these ferryboat owners remained a public issue
for many years, until in the days of Lord Hale a statement of public
policy was set forth by the great Chief Justice.

The law lord said that the ferrymen's business was quite different from
other businesses, that the ferry business was, in fact, vested with a
public character, that to charge excessive rates was to set up obstacles
to public use, and that the rendering of good service was a necessary
and public responsibility.

"Each ferry," said Lord Hale, "ought to be under a public regulation, to
wit, that it give attendance at due time, a boat in due order and take
but reasonable toll."

In these simple words Lord Hale laid down a standard which, in theory at
least, has been the definition of common law with respect to the
authority of government over public utilities from that day to this.

With the advance of civilisation, many other necessities of a
monopolistic character have been added to the list of public
utilities--such necessities as railroads, street railways, pipelines and
the distribution of gas and electricity. This principle was accepted,
firmly established, and became a basic part of our theory of government.

The next problem was how to be sure that the services of this kind
should be satisfactory and cheap enough, while, at the same time, making
possible the safe investment of new capital.

For more than two centuries the protection of the public was through
legislative action, but, with the growth of the use of public utilities
of all kinds, a more convenient, direct and scientific method had to be
adopted--a method which we know as control and regulation by public
service or public utility commission.

Let me make it clear that I have no objection to the method of control
through a public service commission. It is the proper way for the people
themselves to protect their interests. In practice, however, it has in
many instances departed from its proper sphere of action and also from
its theory of responsibility. It is an undeniable fact that in our
modern American practice the public service commissions of many states
have often failed to live up to the high purpose for which they were
created. In many instances their selection has been obtained by the
public utility corporations themselves. These corporations have often
influenced, to the prejudice of the public, the actions of public
service commissions. Moreover, some of the commissions have, either
through deliberate intent or through sheer inertia, adopted a theory of
their duties wholly at variance with the original object for which they
were created.

For example, when I became Governor of the State of New York I found
that the Public Service Commission of the State had adopted the
unwarranted and unsound view that its sole function was to act as an
arbitrator or a court between the public on one side and the utility
corporations on the other.

I thereupon laid down a principle which created horror and havoc among
the Insulls and other magnates of that type. I declared that the Public
Service Commission is not a mere judicial body to act solely as umpire
between complaining consumer or complaining investor on the one hand and
the great public utility system on the other. I declared that, as the
agent of the Legislature, it had delegated authority to act as the agent
of the public; that it is not a mere arbitrator between the people and
the public utilities, but was created for the purpose of seeing that the
utilities do two things--give service and charge reasonable rates. I
told them that, in performing this function, it must be as agent of the
public upon its own initiative as well as upon petition to investigate
the acts of public utilities relative to service and rules and to
enforce adequate service and reasonable rates.

The regulation commission must be a tribune of the people, putting its
engineering, accounting and legal resources into real use for the
purpose of getting the facts and doing justice to both the consumers and
the investors in public utilities. This means positive and active
protection of the public against private greed.

So much for the simple, clear, definite theory of regulation--a theory
which to-day is honoured more in the breach than in the observance.

Now I come to another principle which, in spite of being befogged by
many utility companies and, I am sorry to say, by many of our courts as
well, is nevertheless clear and simple at root. The ferry-man of old,
under King James, through regulation and control of the government, was
compelled to give good service for a fair return on his labour and his
property. But to-day the public utilities have found ways of paying to
themselves inordinate and unreasonable profits and overcapitalising
their equipment by as much as even ten times the sums they have put into
it.

The condition of overcapitalisation does not need any elaborate
presentation of figures for proof. I merely ask you to remember a few
facts in connection with it. Senator Norris, using the facts of the
Federal Trade Commission, in a speech in the Senate last year, pointed
out the overcapitalisation of many companies by name in definite figures
and summed up the discussion by setting forth in round numbers, to the
extent of five hundred and twenty millions of dollars, the amounts these
main companies had been found to have overcapitalised.

This means that the people of the United States were called upon to
supply profits upon this amount of watered stock. It meant that someone
was deriving profits from the capitalisation into which they had put no
substantial capital. It meant that the people had to pay these unjust
profits through higher rates.

As Senator Norris said: "Just try to comprehend what this means. With
the investigation only partially finished, the Federal Trade Commission
has disclosed 'write-ups' [water] . . . upon which the people must pay a
profit for all time. . . . Unless some change is made in public
authority, it must be paid for ever."

Let us consider for a moment the vast importance of the American
utilities in our economic life--and in this I am not including the
railways and other transportation companies. The utility industry in
1931 collected over four billion dollars from the users of electricity,
gas, telephone and telegraph. This means an average of one hundred and
thirty-three dollars for every family in the United States.

According to the figures of the industry itself, the American public has
invested nearly twenty-three billion dollars in public utilities, again
excluding the railways. Of this sum nearly eight billions were invested
in the electric light and power industry alone during the five years
that preceded the stock market collapse in 1929.

Compare this with the eleven billions invested in railways, nine
billions in farm mortgages and with the national debt of the United
States itself, which was something slightly less than this investment in
public utilities. You will readily see that this "lusty child" of the
United States needs to be kept very closely under the watchful eye of
its parent--the people.

But these figures do not measure the human importance of electric power
in our present social order. Electricity is no longer a luxury; it is a
definite necessity. It lights our homes, our places of work, our
streets; it turns the wheels of our transportation and our factories.

It can relieve the drudgery of the housewife and lift a great burden
from the shoulders of the farmer. It has not done so yet. We are
backward in the use of electricity in our homes and on our farms. In
Canada the average home uses twice as much electric power per family as
we do in the United States. What prevents us from taking advantage of
this great economic and human agency?

It is not because we lack undeveloped water-power or unclaimed supplies
of coal and oil. The reason we cannot take advantage of our own
possibilities is because many selfish interests in control of light and
power industries have not been sufficiently far-sighted to establish
rates low enough to encourage widespread public use. The price you pay
for your utility service is a determining factor in your use of it.

Low prices to the domestic consumer will result in his using far more
electrical appliances than he does to-day.

Through lack of vigilance in state capitals and in the national
government, we have allowed many utility companies to get round the
common law, to capitalise themselves without regard to actual investment
made in property, to pyramid capital through holding companies and
without restraint of law, to sell billions of dollars of securities
which the public have been falsely led into believing were properly
supervised by the government itself.

The crash of the "Insull Empire" has given an excellent example of the
truth. The great "Insull monstrosity," made up of a group of holding and
investment companies and exercising control over hundreds of operating
companies, had distributed securities among hundreds of thousands of
investors, and had taken their money to an amount running to over one
and a half billion dollars. The Insull organisation grew until it
reached a position where it was an important factor in the lives of
millions of people. The name was magic. The investing public did not
realise then, as it does now, that the methods used in building up these
holding companies were wholly contrary to every sound public policy.
They did not realise that there had been arbitrary write-ups of assets,
inflation of vast capital accounts; they did not realise that there had
been excessive prices paid for property acquired; they did not realise
that the expense of financing had been capitalised; they did not realise
that payments of dividends had been made out of capital.

They did not realise that some subsidiaries had been milked and milked
to keep alive the weaker sisters in the great chain. They did not
realise that there had been borrowings and lendings, an interchange of
assets, of liabilities and of capital between the component parts of the
whole. They did not realise that all these conditions necessitated
terrific overcharges for service by these corporations.

The Insull failure has opened our eyes. It shows us that the development
of these financial monstrosities was such as to compel ultimate ruin;
that practices had been indulged in that suggest the old days of railway
wildcatting; that private manipulation had out-smarted the slow-moving
power of government.

As always, the public paid, and paid dearly. As always, the public is
beginning to understand the need for reform after that same public has
been fleeced.

The new deal for the American people can be applied very definitely to
the relationship between the electric utilities on the one side and the
consumer and investor on the other.

True regulation is for the equal benefit of the consumer and the
investor, and the only man who will suffer from true regulation is the
speculator or the unscrupulous promoter who levies tribute equally from
the man who buys the service and from the man who invests his savings in
this great industry.

I seek to protect both the consumer and the investor. To that end I
propose, as I have in the past, the following remedies on the part of
the government for the regulation and control of public utilities
engaged in the power business and corporations and companies relating
thereto:

1. Full publicity as to all capital issues of stock, bonds and other
securities, liabilities and indebtedness, and capital investment, and
frequent information as to gross and net earnings.

2. Publicity on stock ownership of stocks and bonds and other
securities, including the stock and other interest of all officers and
directors.

3. Publicity with respect to all inter-company contracts and services
and interchange of power.

4. Regulation and control of holding companies by the Federal power
commission and the same publicity with regard to such holding companies
as provided by the operating companies.

5. Co-operation of the Federal power commission with public utilities
commissions of the several states, obtaining information and data
pertaining to the regulation and control of such public utilities.

6. Regulation and control of the issue of stocks and bonds and other
securities on the principle of prudent investment only.

7. Abolishing by law the reproduction of cost theory for rate-making and
establishing in place of it the actual money, prudent investment
principle as the basis of rate-making.

8. Legislation making it a crime to publish or circulate false or
deceptive matter relating to public utilities.

The proper relationship of the government to the development through
government itself of power resources and power manufacture is clear
enough if the fundamental rights of the individual and the government
are kept in mind. I do not hold with those who advocate government
ownership or government operation of all utilities. As a broad general
rule, the development of utilities should remain, with certain
exceptions, a function for private initiative and private capital.

But the exceptions are of vital importance, local, state and national,
and I believe that the overwhelming majority of the people of this
country agree with me.

Again, we must go back to first principles; a utility is in most cases a
monopoly, and it is by no means possible in every case for government to
ensure from mere inspection, supervision and regulation that the public
should get a fair deal--in other words, to ensure adequate service and
reasonable rates.

Therefore I lay down the following principle: that where a community or
a district is not satisfied with the service rendered or the rates
charged by a private utility, it has the undeniable right, as one of its
functions of government, one of its functions of home rule, to set up,
after a fair referendum has been taken, its own governmentally owned and
operated service.

This right has been recognised in most of the states of the Union. Its
general recognition by every state will hasten the day of better service
and lower rates.

It is perfectly clear to me and to every thinking citizen that no
community which is sure that it is now being served well and at
reasonable rates by a private utility company will seek to build or
operate its own plant. But, on the other hand, the very fact that a
community, by vote of the electorate, may create a yardstick of its
own, will in most cases guarantee good service and low rates. This is
the principle that applies to communities. I would apply the same
principles to the Federal and State governments.

State-owned or Federal-owned power sites can and should properly be
developed by government itself. When so developed, private capital
should be given the first opportunity to transmit and distribute the
power on the basis of the best service and the lowest rates to give a
reasonable profit only.

The nation, through its Federal Government, has sovereignty over vast
water-power resources in many parts of the United States. A very few of
them are in progress of development. A few more are in the stage of blue
prints and many others have not even been surveyed.

We have undertaken the development of the Boulder Dam on the Colorado
River. The power will be sold by the United States Government at a cost
that will return the government investment with four per cent interest
in fifty years. States and municipalities were given a prior right to
contract the power so generated. Long before that we undertook the
development at Muscle Shoals. We have spent millions on this project.
The 1930 session of the Congress passed the bill introduced by Senator
Norris for public operation of Muscle Shoals. The bill was vetoed.

There are two other great developments to be undertaken by the Federal
Government. One is the Columbia River in the north-west. This vast
water-power can be of incalculable value to this whole section of the
country. One is the St. Lawrence River in the north-east. Together with
Muscle Shoals in the south-east and Boulder Dam in the south-west, we
shall for ever have a national yardstick to prevent extortion against
the public and to encourage the wider use of that servant of the
public--electricity.

As an important part of this policy, the natural hydro-electric power
resources belonging to the people should remain for ever in their
possession. This policy is as radical as American liberty, as radical as
the Constitution of the United States. Never shall the Federal
Government part with its sovereignty and control over its power
resources while I am President of the United States.




  THE RAILWAYS




  CHAPTER NINE


The development of the public utilities is, particularly at this present
stage of our economic life, the development of the nation. In the
building of the West, for example, that great public utility--the
railway--was the dominant factor. For ninety years the railways have
been the means of tying us all together in national unity.

In this development we have seen great heroism, great faith and,
unfortunately, also great injustice. When the railway first stretched
out across the western plains it was regarded as a miracle, challenging
the imagination of the people. Later there came an age when the
railways, controlled by men who unfortunately did not recognise the
large public interest at stake, were regarded by those same people as an
octopus, crushing out their life and sapping their substance.

But that day has passed. The railway is becoming a servant of the
people, largely owned by the people themselves. It is this new
relationship of the railway that should guide our consideration of its
problems. The railway that was first a miracle, next a sinister threat,
has now become a part of our national economic life. We are now
concerned about its preservation.

The problem of the railways is the problem of each and every one of us.
No single economic activity enters into the life of every individual so
much as do these great carriers. It is well to pause a moment and
examine the extent of that interest.

The issue should be thought through in terms of individual men and
women. A railway indirectly affects everyone within its vast territory.
Directly it affects three great groups.

First, there are its owners. They are not, as too many still suppose,
great railway magnates sitting in luxurious offices and clubs. They are
the people throughout the country who have a savings bank account or an
insurance policy, or, in some measure, an ordinary banking account.
Figures, though they may be dull, nevertheless _do_ talk.

There are more than eleven billions of railway bonds outstanding--about
half as many, in fact, as there are United States Government
obligations. Nearly five billions of them are owned by savings banks and
insurance companies--which means that they are owned by the millions of
policy-holders and savings bank depositors.

When you put money in the bank or pay an insurance premium, you are
automatically buying an interest in the railways.

Some two billion dollars more of railway bonds are held by churches,
hospitals, charitable organisations, colleges and similar institutions
as endowment. The remaining bonds are scattered far and wide among a
host of people whose life savings have been invested in this standard
American industry.

Even railway stocks are held in small units of a few shares here and
there, by school-teachers, doctors, salesmen, thrifty workmen. Experts
in railway finance know that perhaps thirty million people have a stake
in these great American enterprises.

Next, there are the people who work in the railway systems, either
directly on the lines or in the industries which furnish railway
supplies. There are over one million seven hundred thousand railway
employees required to handle normal traffic, and to these must be added,
in direct interest, hundreds of thousands of men who supply coal, forge
rails, cut ties, manufacture rolling stock and contribute labour to
maintain the systems.

Most numerous of all are the people who ride or ship goods over the
steel highways. That includes about all of us.

There is no reason to disguise the fact that the railways are in serious
difficulties. And when so large a part of the American people have a
direct cash stake in the situation, I take it that our job is neither to
howl about a calamity nor gloss over the trouble, but patiently and
carefully to get to the bottom of the situation, find out why the
trouble exists and try to plan for a removal of the basic causes of that
trouble.

I do not share the opinion that has been aired recently that the
railways have served their purpose and are about to disappear. Capable
students of American transportation do not support that view. As
Professor Ripley of Harvard has pointed out, if you tried to carry all
railway freight by motor-truck, you would have to have a fleet of trucks
which would make a solid line, bumper to bumper, all the way from New
York to San Francisco; or, to put it differently, you would have to have
a ten-ton truck moving every thirty seconds over every mile of improved
road in the United States.

Let us put it another way. In a normal year our railways are called upon
to transport over thirty million people one thousand miles and to
transport four hundred and forty million tons of freight one thousand
miles. No other machine is available to carry that load.

There is no danger of the railways going out of business. They have a
great economic place in the scheme of things for a good long time to
come.

Why, then, the difficulty?

In the first place, we unbalanced the system of things. We
built--properly--hundreds of thousands of miles of first-rate highways
directly paralleling the railway-tracks. These we paid for out of taxes
or bond issues. To-day many hundred buses and trucks engage in
interstate commerce, using these rights of way for which they have made
no investment.

You and I, in our annual tax-bills, pay for most of the maintenance of
the highways and interest charges on their construction. The motor
vehicles pay only a small part. Naturally they can often haul passengers
and freight at a relatively smaller overhead and capital, lower taxes
and lower maintenance costs for their right of way.

Also we, the national government, allow them to operate free from many
restrictions which would ensure safety to the public and fair working
conditions for labour. We should not give them any unfair competitive
advantages over the rails.

We do not desire to put motor vehicle transportation out of its
legitimate field of business, for it is a necessary and important part
of our transportation systems; but motor transportation should be placed
under the same Federal supervision as railway transportation.

While thus forcing the railways to meet unfair competition, we have not
only permitted but frequently required them to compete unreasonably with
each other. In regulating the railways we have preserved the policy that
at all times, between principal points, there must be competing railway
systems. There is a great deal to be said for this policy, so long as
there is traffic enough to support competing lines. So long as you have
that traffic, the competition helps to ensure efficiency.

But as the railways have been allowed to increase their capacity far
beyond traffic needs, the wastes of competition have become more and
more insupportable. Now we face the issues: Shall we permit them--force
them, in fact--to bankrupt each other? Or shall we permit them to
consolidate and so to economise through reducing unprofitable services?
In other words, shall we permit them to divide traffic and so eliminate
some of the present wastes?

No solution is entirely attractive, because we have the problem of an
overbuilt plant, or partially unemployed capital, a problem similar in
its difficulty to that of unemployed labour. But a definite, sound
public policy actually carried out will hasten improvement.

We can cut out some expensive deadwood in the shape of unnecessary or
duplicated facilities. The public generally does not realise that thirty
per cent of railway mileage carries only two per cent of the freight and
passenger traffic. This does not mean that all of this mileage can or
ought to be scrapped. But it does suggest that a considerable amount of
judicious pruning can gradually be done without public detriment.

Finally, there has been entirely too much manuvring for position among
the railways themselves in the past ten years. We have had an epidemic
of railway holding companies whose financial operations were, to say the
least, not generally beneficial to the orderly development of
transportation. They were financial comets, free to rove through the
system, spending other people's money in financial gambles and in
acquiring side enterprises outside of the direct sphere of railwaying. A
great deal of money has been lost and a great deal of damage has been
done by these companies.

All of the foregoing should indicate that one chief cause of the present
railway problem has been that typical cause of many of our problems, the
entire absence of any national planning for the continuance and
operation of this absolutely vital national utility.

The individual railways should be regarded as parts of a national
transportation service. This does not mean all should be under one
management. Indeed, the principal doubt of the efficiency of
consolidations has been caused by the repeated demonstration that a
great railway is made by good executives; and experience has shown that
the mileage over which one manager can be effective is limited to a
small fraction of our national mileage.

But it is necessary that a single railway should have a recognised field
of operation and a part to play in the entire national scheme of
transportation. It is necessary that each rail service should fit into
and be co-ordinated with other rail services and with other forms of
transportation. Let it be noted that our postal service uses every
variety of transport: rail, automobile, steamship and aeroplane; but it
controls few of these vehicles.

We might well approach the railway problem from a similar point of
view--survey all our national transportation needs, determine the most
efficient, economical means of transportation, and substitute a national
policy for national lack of planning, and encourage that growth and
expansion most healthful to the general welfare.

In common counsel and common purposes we shall find the corrective of a
present unhappy tendency to look for dictators. The wisdom of many men
can save us from the errors of supposed super-men.

To those who may shrink from any suggestion of a more vigorous and
coherent public railway programme, I venture to point out that it has
not been the existence but the lack of a public policy which has caused
just criticism of railway regulation.

The definite programmes of the past--to stop rate wars, to prevent
rebates and discriminations, to improve safety--these have all produced
great public benefits and have saved the railways from themselves. But
in the post-war political drift and private mastery, we have too often
fumbled rather than grappled with railway problems.

I do not share the view that government regulation _per se_ is
responsible for any great amount of the present difficulties. Had this
been true we should have known it long before the depression came.

In the words of one of the railway presidents: "There is no question
whatever that the regulation of the railways of the country has been in
the public interest." Regulation, in fact, has protected the investors
as well as patrons, and I think that no enlightened man would care to
go back to the old days when unregulated railway operation landed
one-third of the railway mileage in receivership.

When the depression came, with its great loss of tonnage, the combined
effect of uneconomic competition, unproductive and over-extended
mileage, imprudent financial adventures and frequently ill-advised
management resulted in a situation where many railways literally were
unable to earn their interest charges.

The government then, through the Reconstruction Finance Corporation,
undertook to tide over the emergency by freely lending money to the
railways, with a view to keeping them afloat.

I am glad to approve this policy--as an emergency measure--though I do
not approve of many of the methods. As far as it goes, the policy is a
good one. We had far too great a stake in the situation to allow a
general smash-up.

I shall continue the policy of trying to prevent receiverships. But I do
not believe that this is more than a stop-gap. Lending money is all
right if--and only if--you put your borrower in a position where he can
pay you back.

The criticism, I think, is well founded that the government did not
follow through with a well-considered programme of putting the railways
back upon their feet. And certainly when the railways applied for cash
the government was at least entitled to make the kind of requirement
which a private banker would make under similar circumstances to protect
his interest. The government, in lending public money, is entitled and
should make sure to protect the public interest.

Further, when mere loans cannot clear up the situation, the necessary
readjustments ought to be provided as a part of the plan of lending. In
its railway relief, as elsewhere, the last administration has lent
money, not in accordance with a plan for relieving fundamental
difficulties, but only with the hope that within a year or two the
depression would end.

Facing the facts squarely, we may as well realise, first rather than
last, the fundamental issues.

Railway securities in general must not be allowed to drift into default.
The damage done to savings banks, insurance companies, and fiduciary
institutions generally would be too great.

But let me make clear that the extension of government credit will be
largely wasted unless, with it, there are adopted the constructive
measures required to clean house. In individual railways these turn on
the financial conditions peculiar to each case. In certain situations
where fixed charges impose an unsound overstrain, these charges must be
reduced.

In general, corrective measures must be adopted making for a sounder
financial structure along the lines I will now enumerate. Unless the
underlying conditions are recognised we are wasting our time and our
money.

Concretely, I advocate:

First--That the government announce its intention to stand back of the
railways for a specific period; its help being definitely conditioned
upon acceptance by the railways of such requirements as may in
individual cases be found necessary to readjust top-heavy financial
structures through appropriate scaling-down of fixed charges. I propose
the preliminary development of a national transportation policy with the
aid of legislative and administrative officials and representatives of
all interests most deeply concerned with the welfare and service of the
railways, including investors, labour, shippers and passengers. I
propose that in the application of this policy to the railways the
Reconstruction Finance Corporation, working with the Interstate Commerce
Commission, share the work of planning the reorganisation or
readjustment for the protection of all concerned.

And I also propose that when such plans have been worked out, the same
agencies shall indicate a specified period of support to see the
railways through in the carrying out of these plans.

Second--To aid in the rehabilitation of roads unable to meet the present
unprecedented strain, or that may succumb to past or future
mismanagement, I propose a thorough overhauling of the Federal laws
affecting railway receiverships, and indeed of all kinds of public
utility receiverships. As they now stand they suggest Mr. Dooley's
favourite dictum that they are arranged so that every member of the bar
may get his fair share of the assets. There is an urgent need to
eliminate a multiplicity of court actions, a maze of judicial steps, a
long period of business chaos and a staggering expense allowed to
lawyers, receivers, committees, and so on. Included in this revised
procedure should be a provision by which the interests of
security-holders and creditors shall be more thoroughly protected at all
points against irresponsible or self-interested reorganisation managers.

Third--I advocate the regulation of competing motor-carriers, by the
Interstate Commerce Commission. Where rail service should be
supplemented by motor service to promote the public interest, the
railways should be permitted in this manner to extend their
transportation facilities. They should be encouraged to modernise and
adapt their plant to the new needs of a changing world.

Fourth--I believe that the policy of enforced competition between
railways can be carried to unnecessary lengths. For example, the
Interstate Commerce Commission should be relieved of requiring
competition where traffic is insufficient to support competing lines,
recognising the clear and absolute responsibility for protecting the
public against any abuses of monopolistic power. Likewise, I believe
that the elimination of non-paying mileage should be encouraged wherever
the transportation needs of the community affected can be otherwise
adequately met.

Fifth--Proposed consolidations of railways which are lawful and in the
public interest should be pressed to a conclusion. At the same time the
provisions of the law should be revised in line with the policies here
proposed and with repeated suggestions of the Interstate Commerce
Commission and of representatives of shippers, carriers and their
employees, to ensure further protection of public and private interests
involved. There should be clearer definitions of the objects, powers and
duties of the Commission in promoting and safeguarding all the
inter-related particular interests comprehended within the public
interest. Those who have invested their money or their lives in the
service of the railway; those who are dependent upon its service to buy
or sell goods; those who rely upon it for the preservation of
communities into which they have built their lives--all have vital
interests which must be further safeguarded.

All of the appropriate agencies of the Federal and state governments
should have a part in a national effort to improve the health of these
great arteries of commerce.

Sixth--So-called "railway holding companies" should be definitely put
under the regulation and control of the Interstate Commerce Commission
in like manner as railways themselves. We cannot let our fundamental
policies be blocked by screens of corporate complexities.

Finally we must realise that government encouragement and co-operation,
more than mere restriction and repression, will produce lasting
improvement in transportation conditions. The economy and efficiency of
railway operation will depend upon the capacity of railway management
and its freedom from undue burdens and restraints when it is balanced by
the acceptance of public responsibilities. It will also depend in large
measure upon the competence and morale of railway employees--perhaps the
largest body of skilled workers functioning as a unit in our industrial
life.

Transportation is not a mechanised service. It is a service of human
beings whose lives are worthy of even more intelligent care than that
necessary to preserve the physical mechanisms which they operate. And it
is clear to me that all the men and women who are employed in our great
transportation systems are entitled to the highest possible wages that
the industry can afford to pay.

We must pay the fair cost of this transportation, which is a small
fraction of the selling price of commodities. We cannot burden our
producers or restrict their markets by excessive costs of
transportation.

As a soundly devised public policy reaches its fruition, railway
security-owners may expect greater certainty of fair, but not excessive
return; the public may reasonably expect lower rates; labour may
reasonably anticipate security in properly compensated work.

I do not fear any government action which will relieve railway
managements of performing their responsibilities. It is well to remember
that the actual railway operators are not the owners of the railways,
nor the major users of railway services, and to-day they only command
access to capital on the basis of their ability to protect capital.

Their position now depends, as it ought to, on their being able to do
their job well. We are entitled to demand, and I think they would be
the first to concede, that they give a management which is sound,
economic and skilful; that they do not use their positions as financial
stewards to further personal desires for gain or power. They are, in
reality, public servants who are entitled to every assistance from the
government, but held to high standards of accountability.

The new situation to-day is that most of our railways throughout the
nation are failing month by month to earn the fixed charges on their
existing debts. Continuance of this failure means bankruptcy.

I want the railways to stand on their own feet, ultimately to reduce
their debts instead of increasing them, and thereby save not only a
great national investment, but also the safety of employment of nearly
two million American railway workers. The maintenance of their standard
of living is a vital concern of the national government.

In the great task of re-ordering the dislocated economics of America we
must constantly strive for three ends: efficiency of service, safety of
financial structure and permanence of employment. The railway mesh is
the warp on which our economic web is largely fashioned. It has made a
continent into a nation. It has saved us from splitting, like Europe,
into small, clashing units; it made possible the rise of the West; it is
our service of supply. These are not matters of private concern; they
have no place in the excesses of speculation, nor can they be allowed to
become springboards of financial ambition.

Such readjustments as must be made should be so made that they will not
have to be done again; and the system must become, as it should be,
secure, serviceable, national.




  THE TARIFF




  CHAPTER TEN


From the beginning of our government one of the most difficult questions
in our economic life has been the tariff. But it is a fact that it is
now so interwoven with our whole economic structure, and that structure
is so intricate and delicate a pattern of causes and effects, that
tariff revision must be undertaken with scrupulous care, and only on the
basis of established facts.

Yet there is scarcely a major problem in our national life--agriculture,
industry and labour, merchant marine, international debt and even
disarmament--that does not involve the question of the tariff.

A tariff is a tax on certain goods passing from the producer to the
consumer. It is laid on these goods rather than other similar ones
because they originate abroad. This is obviously protection for the
producers of competing goods at home. Peasants who live at lower levels
than our farmers, workers who are sweated to reduce costs, ought not to
determine prices for American-made goods. There are standards which we
desire to set for ourselves. Tariffs should be high enough to maintain
living standards, which we set for ourselves. But if they are higher
they become a particularly vicious kind of direct tax which is laid
doubly on the consumer. Not only are the prices of foreign goods raised,
but those of domestic goods also.

In the past the proposition has been laid down with great boldness that
high tariffs interfere only slightly, if at all, with our export or our
import trade; that they are necessary to the success of agriculture and
afford essential farm relief; that they do not interfere with the
payments of debts to us--that they are absolutely necessary to the
economic formula for the abolition of poverty.

The experience of the last four years has unhappily demonstrated the
error of every single one of these propositions; that every one of them
has been one of the effective causes of the present depression, and
finally that no substantial progress of recovery from the depression,
either here or abroad, can be had without forthright recognition of
these errors.

I ask effective action to reverse these disastrous policies.

The false promises of prosperity of the recent past were based on the
assertion that although our agriculture was producing a surplus far in
excess of our power to consume, and although, due to the mass and
automatic-machine production to-day, our industrial production had also
passed far beyond the point of domestic consumption, nevertheless we
should press forward to increase industrial production as the only means
of maintaining profitable employment. It was insisted that although we
could not consume these things at home, there was an unlimited market
for our rapidly increasing surplus in export trade, and that we were on
the verge of the greatest commercial expansion in history.

But when later confronted by the difficult question as to how foreign
nations would pay their debts to us, and pay also for the increasing
surplus it was proposed to sell to them, when by almost prohibitive
tariffs the world commerce in goods was blocked, the astounding
suggestion was ventured that we should finance our export by loans to
"backward and crippled countries"--coupled with the reaffirmation that
high tariffs would not interfere with the repayment of such loans.

Ostensibly for the purpose of enacting legislation for the relief of
agriculture, the Congress was called into special session. The
disastrous fruit of that session was the notorious and indefensible
Grundy-Smoot-Hawley Tariff. The net result was a barbed-wire
entanglement against our economic contacts with the world at large.

As to the much-heralded purpose of that special session, the result was
a ghastly jest. This was so for several reasons: the principal cash
crops of our farms are produced much in excess of our requirements; no
tariff on the surplus crop, no matter how high the wall, has the
slightest effect in raising the domestic price of that crop; the
producers of these crops are as effectively thrust outside the
protection of our tariff as if there was no tariff at all. But the
tariff does protect the price of our industrial products and raises them
above world prices--as the farmer with increasing bitterness has come to
realise, he sells on a free-trade basis, but buys in a protected market.
The higher industrial tariffs go, the greater is the farmer's burden.

The first effect of the Grundy Tariff was to increase or sustain the
cost of all that agriculture buys. But the harm to our whole
agricultural population did not stop there. Under recent world
conditions, the Grundy Tariff, by gradually impairing the export markets
for our farm surplus, resulted in a tremendous decrease in the price of
all the farmer sells. The result of both these forces was practically to
cut in half the pre-war purchasing power of American agriculture. The
things the farmer buys now cost nine per cent above pre-war prices; the
things that the farmer sells are forty-three per cent below pre-war
prices. The farmer is hit both ways in consequence of the tariff. It
increases the prices of what he buys, and, by restricting the foreign
market that controls the price of his products, reduces his returns from
what he sells.

The destructive effect of the Grundy Tariff has not been confined to
agriculture. It has ruined our export trade in industrial products as
well. Industry, with its foreign trade cut off, naturally began to look
to the home market--a market supplied for the greater part by farm
families. But when industry turned its eyes to the home market, it found
that the Grundy Tariff had reduced the buying power of the farmer.

Deprived of any American market, the other industrial nations, in order
to support their own industries and take care of their own unemployment
problems, had to find new outlets. In this quest they took to trade
agreements with countries other than ourselves. They also undertook the
preservation of their own domestic markets against importations, by
trade restrictions of all kinds. An almost frantic movement toward
self-contained nationalism began. The direct result was a series of
retaliatory and defensive measures in the shape of tariffs, embargoes,
import quotas and international arrangements.

Almost immediately international commerce began to languish, and
especially the export markets for our industrial and agricultural
surpluses began to disappear. The Grundy bill was passed in June, 1930;
in that month our exports were three hundred and ninety-four million
dollars in value and our imports two hundred and fifty millions. In an
almost uninterrupted decline, this foreign trade dropped away so that,
two years later, in June, 1932, our exports were worth one hundred and
fifteen millions and our imports seventy-eight millions. These facts
speak for themselves.

In 1929, a year before the enactment of the Grundy Tariff, we exported
fifty-four and eight-tenths per cent of all the cotton produced in the
United States--more than one-half. This means that in 1929 every other
row of cotton produced was sold abroad. Of wheat, seventeen and
nine-tenths per cent was exported, though the foreign sales were largely
sacrificed. And so with the grower of rye, who was able to dispose of
twenty and nine-tenths per cent of his crop to foreign markets. The
grower of leaf tobacco had a stake of forty-one and two-tenths per cent
of his income overseas. One-third of the lard in this country was
exported in that year; this concerns the corn-grower, for corn is
exported in the form of lard.

The ink on the Grundy bill was hardly dry before foreign markets
commenced their programme of retaliation. Brick against brick they built
their walls against us. They learned their lesson from us. "The villainy
you teach me I shall practise."

While the Grundy bill was before Congress, our State Department received
one hundred and sixty protests from thirty-three nations, many of whom
after the passage of the bill erected their own tariff walls to the
detriment or destruction of much of our export trade.

What was the result? In two years, 1930 to May, 1932, American
manufacturers established two hundred and fifty-eight factories in
foreign countries to escape the penalty on the introduction of
American-made goods--forty-eight of these were in Europe, twelve in
Latin America, twenty-eight in the Far East and seventy-one in Canada.
Every week of 1932 had seen four American factories moving to Canada.

Premier Bennett, of the Dominion, was reported to have said in a speech
that "a factory is moving every day of the year from the United States
to Canada," and assured those at the recent conference at Ottawa that by
the arrangements made there Great Britain and her Colonies would take
from Canada two hundred and fifty billions of trade which would
otherwise go to the United States.

This puts more men on the street here, men who had been employed in the
factories that moved to Canada.

There was a secondary and perhaps even more disastrous effect of this
tariff. Billions of dollars of debts are due to this country from
abroad. If the debtor nations cannot export goods and services, they
must try to pay gold. We started such a drain on the gold reserves of
the principal commercial countries as to force practically all of them
off the gold standard. What has happened? The value of the money of each
of these countries, relative to the value of the dollar, declined
alarmingly. It took more Argentine pesos to buy an American plough. It
took more English shillings to buy an American bushel of wheat or bale
of cotton.

They could not buy our goods with their money. These goods were thrown
back on our markets, and prices fell still more.

Summing up, the Grundy Tariff has largely extinguished the export
markets for our industrial and our farm supplies; it has prevented the
payment of public and private debts to us and the interest thereon,
increasing our taxation to meet the expense of our government, and,
finally, it has driven our factories abroad.

The process still continues. But unless this process is reversed
throughout the world, there is no hope for full economic recovery or for
true prosperity in the United States.

The essential trouble is that the past leaders of the nation thought
they had a good patent in the doctrine of unscalable tariff walls and
that no other nation could use the idea. Either the patent has
expired--or it never was any good--or else all other nations have
infringed and there is no court of appeal.

Do not ever expect the authors of this scheme to admit that it was a
stupid, blundering idea. On the contrary, they adopted the boldest
alibi, with regard to it, in the history of politics. They sought to
avoid all responsibility for mismanagement by blaming the foreign
victims for their economic blundering. They said, and they still say,
that all our troubles come from abroad, that our past administration is
not to be held to answer. This excuse is a classic of impertinence. If
ever a condition was directly traceable to two specific American-made
causes, it is the depression of this country and the world. These two
causes are inter-related.

The second one, in the point of time, is this Grundy Tariff. The first
one is the fact that by improvident loans to "backward and crippled
countries" we financed practically our entire export trade and payment
of interest and principal to us by our debtors. Thus in part we even
financed the payment of German reparations.

When we began to diminish that financing in 1929, the economic structure
of the world began to totter. When, in 1930, we imposed the Grundy
Tariff, the tottering structure crumbled.

What can be done now?

We can create a competitive tariff, which means one which will put
American producers on a market equality with their foreign
competitors--one that equalises the difference in the cost of
production--not a prohibitory tariff back of which producers can combine
to practise extortion upon the American public.

I appreciate that the doctrine thus announced is not widely different
from that preached by statesmen and politicians who have been in power
in this country. I know that the theory professed by them has been that
the tariff should equalise the difference in the cost of production,
which for all practical purposes does not exceed labour cost as between
this country and competitive countries--but I know that in practice this
theory is utterly disregarded. The rates are imposed far in excess of
any such differences, looking to the total exclusion of
imports--prohibitory rates.

Instances without number to show the pious professions of those who
have controlled the destiny of our nation, and the actual performance
under that leadership, could be cited from the debates on the Grundy
Tariff.

The outrageously excessive rates in that bill, as it became law, must
come down. But we should not lower them below the point indicated. Such
revision of the tariff will injure no legitimate interest. Labour need
have no apprehension concerning such a course, for labour knows, by long
and bitter experience, that the highly protected industries pay not one
penny higher wages than the unprotected industries, such as the
automobile industry.

How is this reduction to be accomplished?

By international negotiation as the first and most desirable method, in
view of present world conditions; by consenting to reduce to some extent
some of our duties in order to secure a lowering of foreign walls that a
larger surplus may be admitted from abroad.

It is worth remembering that President McKinley, in his last public
address in 1901, said: "The period of exclusion is past. The period of
expansion of our trade and commerce is the present problem. Reciprocal
treaties are in harmony with the spirit of the time; measures of
retaliation are not."

I have none of the fear that possesses some timorous minds that we
should get the worst of it in such reciprocal arrangements. I ask if you
have lost faith in our Yankee tradition of good old-fashioned trading?
Do you believe that our early instincts for successful barter have
atrophied or degenerated? I do not think so. There cannot and shall not
be any foreign dictation of our tariff policies.

I propose to accomplish the necessary reduction through the agency of
the Tariff Commission.

One of the most deplorable features of tariff legislation is the
log-rolling by which it has been effected in the past. Perfectly
indefensible rates are introduced through an understanding usually
implied rather than understood among members of Congress, each of whom
is interested in one or more of such. It is a case of you scratch my
back and I will scratch yours. This evil must be recognised by even the
most ardent supporter of the theory of protection.

To avoid this, as well as other evils in tariff-making, a Democratic
Congress in 1916 passed and a Democratic President approved a bill
creating the bi-partisan tariff commission, charged with the duty of
supplying Congress with accurate and full information upon which to base
tariff rates. It functioned as a scientific body until 1922, when by the
incorporation of the so-called flexible provisions of the act of that
year, it was transferred into a political body.

Under these provisions, re-enacted in the Grundy Tariff of 1930, the
Commission reports not to Congress but to the President, who is
empowered upon its recommendation to raise or lower the tariff rates by
as much as fifty per cent. How ineffective this method of removing from
the tariff some of its inequities--a wag said, "its iniquities"--I need
not detail.

At the last session of Congress, by the practically unanimous action of
the Democrats of both Houses, aided by liberal-minded Republicans, a
bill was passed, but vetoed by the President, which, for the purpose of
preventing log-rolling, provided that a report having been made on a
particular item, with recommendation as to the rate of duty it ought to
bear, a measure to make effective such rate could not include any other
item not directly affected by the change proposed. In that way each
particular tariff rate proposed would be judged upon its merits alone.

Another feature of this bill, designed to obviate log-rolling,
contemplated the appointment of a public counsel, who should be heard on
all applications for changes in rates before the Commission, on the one
hand from increases sought by producers, often greedy, or from decreases
asked by importers, equally actuated by selfish motives, or by others
seeking such reductions. I hope some such change may be speedily
enacted.

I am confident that under such a system rates would be adopted generally
so reasonable that there would be very little opportunity for criticism
or even cavilling as to them.

Despite the efforts repeated in every political campaign to stigmatise
the Democratic party as a free-trade party, there has never been a
tariff act passed since the government came into existence in which the
duties were not levied with a view to giving the American producer an
advantage over his foreign competitor. And I think that you will agree
with me that the difference to-day between the two major parties on the
subject of the tariff is that the Republican party would put duties so
high as to make them practically prohibitive. The Democratic party will
put them as low as the preservation of American industry will permit.

I do not expect that the tariff will disappear as a political issue for
some time to come, but I do expect that its modification according to
the principles I have briefed will so clearly show its advantages to the
nation as a whole that the discussion of it will devolve upon its more
scientific application.




  JUDICIAL REFORM




  CHAPTER ELEVEN


Every government policy should first be laid against the specification
of the greatest good for the greatest number of individual men and
women. Thus it is that matters which are not the direct responsibility
of the Federal Government should often be matters of concern to it.
Support and help should be given to national movements and impetus to
trends which will give us a better government. So it is well to consider
the points where government most closely touches the individual, whether
it happens to be a Federal function or not. One of them, assuredly, is
justice; and from the manner in which he receives justice does the
average citizen himself judge government, be it local, state or
national.

It is unnecessary to take time in establishing the fact that the
administration of justice is generally unpopular with the people of this
country. Growing complaint with the law's injustices, delays and costs
has to a great extent characterised every generation. The present one is
no exception, but at the present time the problem rises into
significance beyond the mere stage of dissatisfaction. It becomes a
public problem of great importance.

Speedy and efficient justice is no more necessary to the individual in
such vast communities as New York or Chicago than it is in the smaller
places, but in the large communities it should be placed as soon as
possible on a par of importance with health, sanitation and police
protection if we are to give adequate government to the great masses of
our citizens.

It is a matter of common knowledge that justice has not been adequately
provided. Moreover, in a time of economic distress such as this, the
multiplication of legal actions involving debts increases. The necessity
for relief is accentuated.

It is impossible and unnecessary to consider here the extent to which
this situation is caused by technical difficulty. It may be taken for
granted that most of it is due to the fact that the rules of the legal
game are such that in the absence of very strong administrative control
it will be used not for a direct search for the truth, but to permit
such legal manuvres as will further the interests of those who do not
want the truth to be found.

The jury trial, for example, established in order to provide the means
for trustworthy decisions on matters of fact, is used all too frequently
for purposes of delay. Absurd motions likewise enter the picture. In the
long run the actual issue comes to be laid over with a network of
unessential matters of strategy.

So long as years of delay are assured by the condition of the calendars
of the courts, this delay itself will be used to threaten those who have
rightful claims. Such delays constitute actual denials of justice; on
the other hand, those defendants who have legitimate defences are
threatened with long and irritating legal processes. It is a common
thing among courts where reform has been attempted that the very fact
that justice has been made more expeditious means the quick settlement
of many cases that should never have been in the courts at all.
Thousands of cases find their way into the courts for the simple reason
that to put them there, with the delay involved, is to set up a means to
force an unjust settlement. Long delay is caused by non-meritorious
cases, and non-meritorious cases are put into the courts because of long
delay. The whole thing is a vicious circle.

The only way to attack the problem is by rigorous application of
judicial efficiency. In the face of this congestion the remedy commonly
proposed is to add new judges or new courts, but it will readily be
seen that if the problem is what I have stated it to be, such a
so-called remedy merely aggravates the complaint. There are, of course,
legitimate demands for additional judicial man-power in sections where
the population has grown rapidly. But it is easy to see that to apply
this remedy in all cases is to add to the ravages of the disease, to
contribute to the confusion, and, what is profoundly important at this
time, to burden still further an already seriously embarrassed taxpayer.
With taxes mounting in all the subdivisions of government, the time has
come for a veritable searching of heart with regard to the cost of the
public service, and new demands should be most carefully scrutinised in
the light of this problem of dollars and cents.

Moreover, the cost to the litigant is very serious. This applies not
only to the cost imposed by the governmental authorities, but
professional fees as well. An English lawyer, in a very discriminating
statement concerning the administration of justice in his own country,
recently said that justice in no country in the world is so expensive to
obtain as in England, except in the United States. Writers and lawyers
in Continental countries comment severely on this feature of
Anglo-American government. In Germany, according to this authority,
Claude Mullins, an ordinary civil action for fifty pounds can be
brought for total fees on both sides of not more than eighteen pounds.
On the other hand, in England and the United States the cost of
litigation is still deeply embedded in the mysterious recesses of
lawyers' accounts; but we may be certain that it is much, much higher.
Justice, then, is not only delayed, but it is excessively costly.

Stripped of frills, the problem comes down to a question of
administration. Some of the realism that goes into matters less clouded
by theory and tradition need to be applied to the administration of
justice. There are, of course, important considerations of policy that
distinguish the administration of justice from the administration of
some of the more prosaic activities of life. But it is not too much to
say that the fact that the law is a learned profession and that its
exponents are men trained in theoretical wisdom and are quick to
distinguish fine shades of meaning has permitted them to invest their
business with an almost mystical attribute that forbids the laying of
the hard hands of common sense on the things they are doing.

If the experience of England is any guide to what we may expect in the
way of reform, our progress out of the present unsatisfactory condition
will be slow and, I fear, painful. The day of the great law-giver is
past. A modern diversified and almost incoherent society requires that
reform be the result of many efforts. Co-operation among the
innumerable interests requires vastly detailed and patient planning and
labour. While many marked improvements have taken place in the past
thirty years in connection with the administration of justice, it has
been notable that altogether too many well-planned attempts at
improvements have failed. If we are to succeed now, it must be by
widespread co-operation and unflinching labour.

One of the difficulties of the past has been that attempts at reform
have concerned themselves largely with the highest courts. These courts,
as the result of consistent efforts on the part of reformers and largely
because of the generally splendid personnel of judges who have served in
them, have been a credit to the nation. It is nevertheless true that our
inferior courts have been and are vastly in need of reconstructive
improvement. The great delay occasioned in some of our city tribunals,
the unsatisfactory nature of justice as it is administered by justices
of the peace and the unsatisfactory condition in the administration of
criminal justice, all point to the necessity for serious action to
provide the means of justice to the poor and the unfortunate.

In the quest of reform there is no question as to the willingness of
leaders of the bar to assist, not only individually as lawyers, but
through the various legal associations. Vast energy and sums of money
have been spent in order to justify the expectation of those who believe
that lawyers ought to be in the forefront of reform in this field. But
in spite of the professional co-operation and assistance, I have felt
from the beginning that reform cannot ultimately succeed unless it is
participated in by the lay public. For example, in the creation of a
Commission on the Administration of Justice for the State of New York, I
insisted that there be lay membership. England found in the long
struggle for legal reform in the nineteenth century that laymen were
indispensable.

Kenneth Dayton, Chairman of the Committee on Law Reform of the
Association of the Bar, says of the part that laymen played in law
reform in England: "The lesson of the early battlers has not been lost
upon the English public. Increasingly, the examination into the
administration of justice and its improvement has been delegated to
laymen. The first commission, appointed in 1850, consisted of seven
attorneys, but on petition of Parliament two business men were added to
the commission. The proportion of laymen upon subsequent commissions has
constantly increased. A Parliamentary committee appointed in 1909
contained but one lawyer out of ten members. The 1913 commission was
made up of one judge, two lawyers and eight laymen. Of this commission
it was said 'even this meagre representation of the legal profession was
objected to by the commission as discrediting its report.'"

The laymen are the people. They have no vested interests, except in
unusual instances, in the administration of justice. They are not
lawyers with the fear of antagonising the judiciary, nor are they judges
who hesitate to reconstruct the conditions under which they work.
Moreover, the intelligent layman is liable to cut through cobwebs that
frustrate the efforts of the lawyers.

It is now clear to all thoughtful observers that reform in the
administration of justice means an attack much more fundamental than the
mere alteration of the rules of procedure, though these must be altered.
It is more a problem of government than of law. It is concerned with
questions of administrative policy and with social welfare.

This involves a broad search of the experience of the various states and
most certainly of other countries. It means that we should, wherever
possible, adopt the best. For example, there has developed throughout
the country a system for the management of the court calendar which
originated in Cleveland and the details of which are familiar to many
members of the bar. The Federal Courts in New York have adopted it and
the New York State Supreme Court of the First Department are thus
expediting their business and at the same time saving money for
litigants and taxpayers.

Some legislation, perhaps even a number of constitutional changes within
the states, is desirable, but the most important improvements can be
achieved without new laws.

A thoughtful judge in the City of New York, Bernard Shientag, commenting
upon the need for judicial statistics, says that "the absence of such
statistics has, more than anything else, checked the progress of the
law."

One of the activities of the State Commission I appointed is the
creation throughout the state of a system by which there will be
state-wide statistics concerning all of the courts. It is planned that
this work should be carried on and if and when a permanent judicial
council is created, the present temporary commission will divest itself
of this function and transfer it to such a permanent body.

The value of such information, systematically gathered and intelligently
presented, is of extraordinary importance. It will give officials
themselves a picture of the state of litigation in the courts which will
permit us to know what work the courts are doing, how much of it there
is, and how long it takes to dispose of cases. It will, I hope, be a
permanent guide to the legislatures in the creation of new courts and
new judges. It will give us an assurance that we shall not be permitted
to enact legislation, adding to the expense of the courts, without
accurate scientific means of knowing the extent of the need and whether
it is immediately necessary.

Action required in law reform may in many respects be applied with
singular appropriateness to much of public life to-day. The principle of
fewer new laws has been widely advocated; but that has too often been
the cry of touchy conservatism, a wish to escape the regulatory arm of
the government. The general wisdom of the demand for fewer laws is
undeniable. But its necessary correlative principle is to use with
intelligence and energy the powers that we have. Administration,
informed, energetic and economical, is a deep need of government to-day.
The public, particularly in these moments of stress, deserves of its
servants an example of unselfish application to duty.

Every member of the bar has something of the character of a public
servant, and he owes it to his profession and to the public to encourage
and to give his efforts for the correction of the faults in the
administration of justice which I have pointed out.




  CRIME AND CRIMINALS




  CHAPTER TWELVE


At almost any moment a great crime or a series of lesser ones may
startle the public into feeling, as it has often before, that decency
and security require a dictatorship. This is far from the case, for
every scrap of authentic information from those who have been waging war
against crime and criminals, night and day, reveals that there is but
one way we can reduce crime. That is through a policy of prevention.

To no other institutions of learning in the world do so many
post-graduates return for advanced instruction as to those "colleges of
crime" which a still unenlightened civilisation, in this respect, has
erected for the opposite purpose--our penal institutions, state and
national.

Prison statistics show that from fifty to sixty per cent of those once
sent to jail become habitual offenders and eventually return again. When
we consider that this huge percentage represents only those persons who
have been caught in the act and have been successfully prosecuted, and
that we must add those who have escaped detection or who have slipped
through the many holes in our creaking and antiquated machinery of
justice and prosecution, we are forced to admit that, as a protection to
society, the whole prison system has been miserably inadequate and
ineffective. We are only beginning to realise that the overwhelming
majority of our convicted criminals return to society in a short time
and become again our neighbours and active members of our community.

We have assumed that the horrors of prison life, that the stigma which
society brands upon every prisoner, were forcing him through sheer
terror into the path of virtue on his release. That is not true. We must
always have prisons. There are always those who are criminals by
instinct, who must be kept from society and from injuring others,
because their minds are incapable of reformation, their wills too weak
to keep them from lives of crime. These must be rearrested and
rearrested and rearrested. Our police records are full of criminal
biographies of those who have spent, since they reached adolescence, far
more time in jail than out of it. For such our prisons must be
maintained.

But we are finding from practical experience that the permanent
reformation of the first offender is possible in far more instances than
we realised. For example, in the State of Massachusetts eighty per cent
of those who have been placed on probation, instead of being sent to
jail, have made good. In the State of New York more than twenty-five
thousand are being placed on probation yearly, as our courts and our
judges have become convinced of the value of the probation system in
reducing crime.

In the past twenty-four years the State of New York has placed two
hundred and fifty thousand on probation.

We have, unfortunately, no figures showing how many of these were
permanently reformed in New York, but they have contributed in that time
over twenty-three millions of dollars in fines, restitutions and support
of dependants; and I have no doubt that the percentage of permanent
reformations in New York State closely approximates that of
Massachusetts.

There are three ways of dealing with the first offender. We can send him
to jail and keep him there until the expiration of his sentence; we can
parole him before the sentence expires; or we can put him on probation
after he is sentenced without his going to jail at all.

Let me make clear the difference between probation and parole, for it
is often confused in the public mind. When a convicted prisoner, at the
time of his sentence, is released from custody but kept under the
observation of a court officer, without going to prison to serve any
part of his sentence, he is said to be placed on probation. If he is
actually sent to prison, but later found worthy of being released, again
under the observation and technically in the custody of a special
officer, he is said to be placed on parole.

In both cases his past record is looked into before action is taken and
a failure to report to the proper officer, or a new offence against the
law, sends him to prison to serve out his sentence with added penalties.

If the criminal's past history gives good reason to believe that he is
not of the naturally criminal type, that he is capable of real reform
and of becoming a useful citizen, there is no doubt that probation,
viewed from the selfish standpoint of protection to society alone, is
the most efficient method that we have, and yet it is the least
appreciated of all our efforts to rid society of the criminal.

By segregation, by removing the first offender from the demoralising
contact with the habitually criminal, by a study of the criminal
himself, treating him as an individual rather than in the mass, we can
do much to reduce that staggering percentage of second offenders.

By shortening the terms of those who show, after their incarceration,
hopeful symptoms of a real repentance, we can add a still greater number
of good citizens to our communities.

By investigation of the past history of first offenders or of those who,
in the opinion of the judge who tries the case, have been the victims
somewhat of circumstances and who are not hopelessly criminal in their
tendencies, and by the placing of such as are found worthy upon
probation, I believe we shall empty our prisons still further.

Economically, probation is to the financial advantage of the State.
Statistics show that it costs, roughly, eighteen dollars a year to
supervise each person released on probation. Under more watchful
scrutiny and closer observation it may perhaps eventually cost as much
as twenty-five dollars for each person. Against that set the three
hundred and fifty to five hundred dollars a year it costs the State to
keep a man in jail a year. I hope that in all states we shall be
continually decreasing the number of our prison guards and wardens and
increasing the number of our parole and probation officers.

Probation officers, however, must be properly trained and competent
persons. In this we have been lamentably weak. We shall find a way to
secure really qualified probation officers, just as we are now insisting
on really competent parole officers. It is a state's affair, and this
whole matter of probation should be made the state's business and put
under wide state control.

Probation in one form or another has been established in twenty-one out
of the forty-eight states. By its intelligent extension crime can be
decreased, the overcrowded conditions in our penal institutions greatly
ameliorated and the necessity for building more and more prisons, for
needlessly and ineffectively spending huge prison budgets, reduced.

The report of the commission which I appointed to investigate prison
administration and construction in the State of New York, with Mr. Sam
A. Lewisohn as chairman, reported in February, 1932, some most pertinent
facts, and made some important comments. The commission told me: "If
reformation is the objective, it will, in the majority of cases, be
accomplished in a relatively short time. Incarceration over a long
period will, of itself, unfit the individual for return to society on a
useful basis, or make such a procedure exceedingly difficult, if not
hopeless." I am sure the commission is right.

Their report pointed out that the indeterminate sentence law originally
registered its opinion of the gravity of a crime by the length of the
maximum sentence. Unfortunately amendments "during the last few years
have in most instances completely destroyed or rendered impotent the
spirit of the indeterminate sentence law. The long _minimum_ sentences
brought about by these amendments prevent the application of modern
reformative measures, as it is impossible to apply them in many
instances because of the likelihood of escape. As an illustration, it is
frequently found that two young men have been convicted of identical
offences--one given a reformatory sentence with no minimum and the other
a prison sentence the minimum of which, in some instances, has been as
high as seventy years. It is obvious that there is no hope for
reformation in the latter case."

I should like to give some examples of inhuman sentences which have come
to my knowledge in the State of New York, through this same report. In a
group of one hundred and seventy-six first offenders recently surveyed
at Sing Sing Prison, the aggregate minimum sentences totalled round
three thousand five hundred years and the aggregate maximum sentences
between five and six thousand years.

In Auburn Prison there are two youths, aged twenty-one and twenty-five,
who are serving sentences of forty-seven years and six months to life
for robbery. One of these will be sixty-eight and the other seventy-two
years of age when released. One man sixty-nine years of age is serving a
sentence of from fifteen to thirty years for robbery. He will be
eighty-four years of age when released.

In Sing Sing Prison one youth, aged twenty years, is serving a sentence
of from forty-five to ninety years for robbery. He will be sixty-five
years of age if released at the expiration of his minimum term. Another
youth of nineteen is serving a sentence of from thirty to sixty years
for robbery. A third, aged twenty-nine, is serving a sentence of
twenty-five to fifty years. In Clinton Prison a boy of twenty-one is
serving a sentence of from seventy to eighty years. Another, twenty, is
serving a sentence of fifty-seven years and six months to life. . . .
But why go on?

The whole thing is a tremendous human tragedy, apart from the crimes,
which were tragedy enough, for these men have no chance to come
back--and some of them can. From the cold practical standpoint the
commission declares that such indiscriminate severity is "a very costly
experiment for the State and one which may create very serious financial
problems in the large increase entailed in prison capacity."

As a result of a public hearing in which Judges, District Attorneys,
members of the Division of Parole of the State and others were invited
to discuss this problem, the following recommendation was advanced by
the commission: that a section of the Penal Law be amended to provide
that in instances where it is felt that the minimum sentence imposed by
the court is too severe, that the Parole Board be empowered to make
application to the committing court for a re-sentence, which may result
in a reduction of the original minimum sentence. When the application
for a reduction of the minimum sentence is before the court the district
attorney shall be entitled to be heard. Provided that the judge agrees
to a reduction of the minimum sentence the offender shall then be
eligible for consideration for parole, subject to such conditions on
release as may be lawfully imposed by the Parole Board.

It is certain that the severity of sentences has not prevented a marked
increase in convictions.

The code of criminal procedure and penal law in most of the states needs
a new study. There should be a new basis of criminal jurisprudence which
shall seek not only to punish criminals but to restore them to society.
Only then shall we really succeed in our war upon crime in this
country.




  BANKING AND SPECULATION




  CHAPTER THIRTEEN


There has been a terrible race between the rising tide of bubble
fortunes in the stock market and unemployment. Even in 1925 there were
two million fewer men at work in the principal fields of employment than
there had been six years previously, although the population and
production had vastly increased and many new industries had appeared. A
programme of buy more, owe more and spend more, caused the deluge of
high-pressure selling, lavish extravagance, head-on plunges into debt
and the wildest speculation the nation had ever seen. It was the heyday
of promoters, sloganeers, mushroom millionaires, opportunists,
adventurers of all kinds.

It was already obvious in 1928 that the forced production of our
industry was far too great for our domestic markets. This fact was met
by an audacious and fateful suggestion from the leaders of the national
government. We were to sell "the constantly increasing surplus" abroad.
But how could this be done in the collapsed state of world finance? The
answer, which was tragically wrong, was made: "It is an essential part
of the further expansion of our foreign trade that we should interest
ourselves in the development of backward or crippled countries by means
of loans." I have mentioned this policy before, but it is necessary to
do so again, because it played so great a part in our difficulties in
banking and speculation. The United States, which had already loaned
fourteen billions of dollars abroad, was lending overseas at the rate of
two billions a year. Thus was produced in fact the crop of foreign bonds
which American investors know to their cost.

The old economics had gone out of business; to the suggestion that mass
and machine production must ultimately destroy employment, it was simply
observed that the idea was a re-echo of a century before. So the new
economics went merrily on. The agitation had already begun for the
raising of higher protective tariffs. A copper-riveted American market
was desired, sealed by the highest tariff in the history of the world.
American industry, accelerated to a pace never before known, suddenly
found the brakes locked on a slippery road. The law of gravity did the
rest.

For some years the collapse of farm prices had prostrated agriculture,
with nothing done to help. In industry, larger industrial groups,
mergers, holding companies, began to return fabulous paper profits; but
the number of corporations reporting net income was steadily
diminishing. In banking, Paul Warburg, a great financial authority and a
great man, who had given years of his life to the original building up
of the Federal Reserve System, issued early in 1929 public warning that
speculation had gone wild and that the country would have to pay for it.
Notwithstanding the appearance of prosperity, unemployment was steadily
increasing. Months before, the American Federation of Labour had sounded
an alarm with regard to the rapid decrease in the number of jobs.

The Federal Reserve Board saw the clouds, too, but did little.

It has been suggested that the American public was apparently elected to
the rle of Alice in Wonderland; and I agree that Alice was peering into
the looking-glass of the new economics. White knights had great schemes
of unlimited sales in foreign markets and discounted the future ten
years ahead. The poor-house was to vanish like the Cheshire cat. A Mad
Hatter invited everyone to "have some more profits," though there were
no profits, except on paper. A cynical Father William in the lower
district of Manhattan balanced the sinuous eel on the end of his nose.
A puzzled, somewhat sceptical Alice asked some simple questions:

"Will not the printing and selling of more stocks and bonds, the
building of new plants, and the increase of efficiency, produce more
goods than we can buy?"

"No!" shouted Jabberwock. "The more we produce, the more we can buy."

"What if we produce a surplus?"

"Oh, we can sell it to foreign consumers."

"How can the foreigners buy it?"

"Why, we will lend them the money."

"I see," says Alice; "they will buy our surplus with our own money. Of
course, these foreigners will pay us back by sending us their goods?"

"Oh, not at all," says Humpty Dumpty. "We sit on a high wall of a
Hawley-Smoot Tariff."

"How will the foreigners pay off these loans?"

"That is easy; did you ever hear of a moratorium?"

Silly as it may seem, here we are at the heart of the magic formula of
1928. This "lift yourself up by your own bootstraps" theory was
believed; it appeared to work. Under the spell of this fable the people
sacrificed on the altar of the stock markets the frugal savings of a
lifetime. Business men sincerely believed that they had heard expert
advice and risked their solvency by a new burst of expansion. Bankers
made their loans not wisely but too much. Common sense was hushed before
the spell of an economic necromancy.

Between August, 1928, and the end of that year the market balloon rose
thirty per cent. It did not stop. It went up and up for many fantastic
months, until at last it was eighty per cent higher than the year
before. These were figures of a dream. The balloon had reached the
economic stratosphere, above the air, where mere men cannot survive.
Then came the crash. The paper profits vanished overnight; the savings
pushed into the market at the peak dwindled to nothing. Only the cold
reality remained--the debts were real--the only realities in the cold
dawn of deflation amid a nebulous welter of magnificently engraved
certificates not worth the cost of the artistic scroll-work upon them.

The depression steadily deepened.

Explanations and false hopes were held out again and again that the
worst was over. Now, there was nothing more in all this than a wild
gamble that the situation would, in some unexplained way, come out
right. The Federal Budget for 1930 was arranged on the theory that
nothing had altered. The safety of our financial system, the jobs and
livings of millions of individuals and the safety of business
enterprises in general, were staked on this guess. The people who faced
the facts were saved; the others were ruined.

Not for partisan purposes, but in order to set forth history aright, it
is necessary, even here, to state the facts. In October of 1931, the
official policy of the national administration was: "The depression has
been deepened by events from abroad which are beyond the control of
either our citizens or our government." This excuse was maintained until
that administration went out of power.

But the records of the civilised nations of the world prove two facts:
first, that the economic structure of other nations was affected by our
own tide of speculation and the curtailment of our lending helped to
bring on their distress; second, that the bubble burst first in the land
of its origin--the United States. The major collapse abroad followed. It
was not simultaneous with ours. Moreover, further curtailment of our
loans, plus the continual stagnation caused by the high tariff,
continued the depression throughout international commerce. If in your
mind you hesitate to believe this on the grounds that it may be actuated
by political motives, then I beg you to look for yourself at any
reliable index of international trade, of loans, of price trends, of
interest rates, of production, of the other nations of the world.

Speculation and overproduction were encouraged through false economic
policies.

The crash was minimised and the people were misled as to its gravity.

The cause was erroneously charged to the other nations of the world.

By refusing to recognise and correct evils at home which had brought
forth chaos, relief was delayed and reform forgotten.

The logical question before us now is this: What steps can be taken to
recognise the errors of the past? What concrete remedies have been
proposed to prevent them from happening in the future?

It is first necessary to look the facts squarely in the face. They are
as follows: Two-thirds of American industry is concentrated in a few
hundred corporations, and actually managed by not more than five
thousand men. More than half of the savings of the country are invested
in corporation stocks and bonds, which have been made the sport of the
American stock markets. Fewer than three dozen private banking houses,
and stock-selling adjuncts in the commercial banks, have directed the
flow of capital within the country and outside it. Economic power is
concentrated in a few hands. A great part of our working population has
no chance of earning a living except by the grace of this concentrated
economic machinery. Millions of Americans are out of work, throwing upon
the already overburdened government the necessity of relief. The tariff
has cut off any chance of a foreign market for our products--the effect
of which has been the cutting of the earnings of the farmer to the
extent of threatening him generally with foreclosure and want.

In outlining my economic creed it is necessary to make clear again my
point of view with regard to the individual. I believe that our
industrial and economic system is made for individual men and women, and
not individual men and women for the benefit of the system. I believe
that the individual should have full liberty of action to make the most
of himself; but I do not believe that in the name of that sacred word,
individualism, a few powerful interests should be permitted to make
industrial cannon-fodder of the lives of half the population of the
United States. I believe in the sacredness of private property, which
means that I do not believe that it should be subjected to the ruthless
manipulation of professional gamblers in the stock market and in the
corporate system. I share the general complaint against regimentation; I
dislike it not only when it is carried out by an informal group
amounting to an economic government of the United States, but also when
it is done by the government of the United States itself. I believe
that the government, without becoming a prying bureaucracy, can act as a
check of counterbalance of this oligarchy, so as to secure initiative,
life, a chance to work, and the safety of savings to men and women,
rather than safety of exploitation to the exploiter, safety of
manipulation to the financial manipulator, safety of unlicensed power to
those who would speculate to the bitter end with the welfare and
property of other people.

We must get back to first principles; we must make American
individualism what it was intended to be--equality of opportunity for
all, the right of exploitation for none.

I propose an orderly, explicit and practical group of fundamental
remedies. These will protect not the few, but the great mass of average
American men and women who, I am not ashamed to repeat, have been
forgotten by those in power. These measures, like my own whole theory of
the conduct of government, are based on telling the truth.

Government cannot prevent some individuals from making errors of
judgment. But government can prevent to a very great degree the fooling
of sensible people through misstatements and through the withholding of
information on the part of private organisations great and small, which
seek to sell investments to the people.

Toward this end and to inspire truth-telling, I propose that every
effort be made to prevent the issue of manufactured and unnecessary
securities of all kinds which are brought out merely for the purpose of
enriching those who handle their sale to the public; and I further
propose that with respect to legitimate securities, the sellers shall
tell the uses to which the money is to be put. This truth-telling
requires that definite and accurate statements be made to the buyers in
respect to the bonuses and commissions the sellers are to receive; and
furthermore, true information as to the investment of principal, as to
the true earnings, true liabilities and true assets of the corporation
itself.

We are well aware of the difficulty and often the impossibility under
which state governments have laboured in the regulation of holding
companies which sell securities in interstate commerce. It is logical
and necessary that the full extent of Federal power be applied to such
regulation.

We have seen the collapse of the Forshay, Ohrstrom, Insull and other
lesser dynasties, and the wreck of the supposed financial safety of
thousands of our citizens. The Kreuger fraud, alone, shows the urgent
necessity of regulation.

For the very practical reason that the many exchanges in the business
of buying and selling securities and commodities can, by the practical
expedient of moving elsewhere, avoid regulation in any given state, I
propose the use of Federal authority in their regulation.

The events of the past three years prove that the supervision of
national banks for the protection of depositors has been ineffective. I
propose much more rigid supervision.

We have witnessed not only the unrestrained use of bank deposits in
speculation to the detriment of local credit, but we are also aware that
this speculation was encouraged by the government itself. I propose that
such speculation be discouraged and prevented.

Investment banking is a legitimate business. Commercial banking is
another wholly separate and distinct legitimate business. Their
consolidation and mingling are contrary to public policy. I propose
their separation.

Prior to the panic of 1929 the funds of the Federal Reserve System were
used practically without check for many speculative purposes. I propose
the restriction of Federal Reserve Banks in accordance with the original
plans and earlier practices of the Federal Reserve System.

I propose two new policies for which legislation is not required. They
are policies of fair and open dealing on the part of officials of the
national administration with the American, the investing, public. In the
first place, I promise that it will no longer be possible for
international bankers or others to sell to the investing public in
America foreign securities on the implied understanding that these
securities have been passed on or approved by the State Department or
any other agency of the Federal Government. I assure that high public
officials in the new administration will neither by word nor deed seek
to influence the prices of stocks or bonds. The government has access to
vast information concerning the economic life of the country; there will
be no statements at variance with the scientific information possessed.

Restored confidence in the actions and statements of executive authority
is indispensable. The kind of confidence we most need is confidence in
the integrity, the soundness, the liberalism, the vision and the
old-fashioned horse-sense of our national leadership. Without that kind
of leadership we are for ever insecure. With that confidence the future
is ours to conquer.




  HOLDING COMPANIES




  CHAPTER FOURTEEN


The evils which have grown out of the holding companies must be
corrected if we are to square a way for sound progress in many lines of
business. The form of the holding company is inherently such that it
lends itself to secrecy, mismanagement and fraud. At best the holding
company is an artificial super-corporation designed to give unity of
purpose and direction to more or less related businesses. There are
holding companies which accomplish this purpose honestly and profitably
to all concerned; but there is, unfortunately, too great a temptation to
use for utterly selfish purposes the concentration of vast financial and
management power they place in the hands of a few individuals.

These companies were created by ambitious financial and management
interests for several purposes. They gave a broader scope to management.
They facilitated inter-company sales policies and financing. They
created a unity which made possible the distribution of securities. But
the public often took their mere size as the illusion of integrity.

The urgent requirements of our industrial progress in the past may have
justified the creation of holding companies, but gross irregularities
and gigantic losses which have occurred through them demand definite
control.

Within the period of our great expansion there came a change in our ways
of doing business which is an important factor in the methods we shall
now use to prevent the further financial exploitation of our people by
the holding companies. In the past many great businesses were owned and
managed by the same individuals. The matter of pride in reputation,
pride in the manner of small dealings as well as the large, is just one
of the many things that entered into and created the goodwill of many of
our older business institutions. But management, to-day, is not
generally in the hands of ownership. Shares of corporations are owned by
individuals who have never seen and never desire to see their company's
office or plant and who do not possess any of the pride of ownership
that used to come to a partner in a business enterprise when he watched
his product, the product of his own strength and brain, moving to
market. To-day, controlling interests not only may have the
disadvantages of absentee ownership, but title may even rest in another
corporation itself before it filters down into the hands of individual
shareholders.

When businesses grew to such size that they were beyond individual
ownership, it was not long before management became a game by which
controlling interests were used as pawns. This was the logical result of
the corporation method of doing business, but it added a complication
which easily lent itself to the predatory designs of the unscrupulous.
Businesses eventually became pawns themselves in dreams of financial
empires where small stockholders no longer had any voice; it was
forgotten that one individual with ten shares had as much right to
demand honesty in management as another who owned five hundred or a
thousand.

The size of the financial operations which developed required the use of
vast capital resources, and it was at this moment that banking interests
stepped in. Many unscrupulous financiers were interested primarily in
the sale of securities to the public rather than in conservatively
directing the affairs of the company. The more securities that were sold
the greater would be their profits, and so it became the plan to invent
new methods and new excuses for additional flotations.

The tragedy and disillusionment to-day is the inevitable result of this
relationship of financial and management control. Such results as we
have before us to-day could not have occurred without collusion and a
purpose which violated good morals, even if not the letter of the law.

For facts, figures and definite instances of theft, of malicious
misinformation of the public, of bribery and of every sort of
stock-selling abuse in connection with holding companies, the Federal
Trade Commission, in its investigation of public utilities, can supply
incontrovertible evidence.

Unscrupulous managers, slipping inside profits to those in on the ground
floor, making illegal contracts for their own advantage rather than for
that of the businesses they were paid, enormously, to manage, and
receiving huge fees from operating companies for so-called services and
so-called expert advice, made it their policy to conceal as much as
possible of what had gone on. The falsification of accounts, the
concealment of assets, the wilful confusion of a maze of inter-company
agreements, the blocking of investigation by the cleverest legal devices
that minds lacking in old-fashioned honour could conceive--these are but
some of the abuses toward which their path took them.

What chance had the small stockholder, even though he knew what was
happening? What chance had the small stockholder who believed what he
was told by the cleverest promoters and spellbinders who could be
employed?

Thus it was that the financial and management control of these companies
wielded great power to their own advantage. If it resulted to the
stockholder's disadvantage, what matter? Decent ethics of business which
asked those in responsible position, "What does your conscience say in
this respect?" now only whispered, "Can we get away with this without
running foul of the law?" or "How long have we before we have to cease
these operations?" Indeed, personal ambition was given such freedom that
the policies of these holding companies, affecting the welfare and
happiness of thousands of men and women, were sometimes controlled by
the most trivial personal considerations.

I have said that we must let the light in on holding companies because,
with complete information available to the public, such irregular
practices can no longer continue.

We must have uniform accounting systems.

Stockholders in holding companies, on suitable representation, must have
the right at any time to examine the transcript of every word that is
said at a directors' meeting.

A stockholder must have the right to examine every company contract--be
it with officers or directors or with other companies.

Reports of holding companies must show actual ownership in shares and
changes of ownership by officers and directors.

With the knowledge that such information can at any time become public,
many holding company irregularities would automatically cease.

Such simple and self-evidently necessary regulation will receive no
objection from those holding companies operating to the advantage of the
shareholder. The opposition which arises when legislation to this end
comes under consideration will, in no small measure, furnish the
investor, which is the American public, with a roster of those companies
which seek to avoid the light, to avoid the controls of honesty and
decency, and to continue operation under those evil conditions which
have stolen the savings of many an innocent man and woman.

Government regulation of the holding companies needs no new machinery of
government.

Unrestrained financial exploitations which create fictitious values
never justified by earnings have been one of the great causes of our
present tragic condition. Unnecessary mergers and consolidations for the
purpose of exploitation have unnecessarily thrown thousands out of work.
Public confidence in the men and methods employed in the use of capital
is essential. We can regain that confidence by cleaning house and
keeping it clean.

I should like to repeat, as I have said before, that "if we must
restrict the operations of the speculator, the manipulator, even the
financier, I believe that we must accept the restriction as needful, not
to hamper individualism, but to protect it."

Certain requirements must be satisfied, in the main, by individuals who
claim and hold control of the great industrial and financial
combinations which dominate so large a part of our industrial life. They
have undertaken to be not business men, but princes--princes of
property. I am not prepared to say that the system which produces them
is wrong. I am very clear that they must fearlessly and competently
assume the responsibility which goes with power. So many enlightened
business men know this that the statement would be little more than a
platitude were it not for an added implication.

This implication is, briefly, that the responsible heads of finance and
industry, instead of acting each for himself, must work together to
achieve the common end.

They must, where necessary, sacrifice this or that private advantage,
and in reciprocal self-denial seek a general advantage. It is here that
formal government--political government, if you choose--comes in.

Whenever in the pursuit of this objective the lone wolf, the unethical
competitor, the reckless promoter, the Ishmael or Insull, whose hand is
against every man's, declines to join in achieving an end recognised as
being for the public welfare, and threatens to drag the industry back to
a state of anarchy, the government may properly be asked to supply
restraint.




  NATIONAL AND
  INTERNATIONAL UNITY




  CHAPTER FIFTEEN


The long view should not be confused by items of temporary expediency.
Hence I have described the entire compass of my policy as a "concert of
interests"--north and south, east and west--agriculture, industry,
commerce and finance. With this broad purpose in mind I have further
described the spirit of my programme as a "new deal," which is plain
English for a changed concept of the duty and responsibility of
government toward economic life. Into this general plan and actuated by
this spirit I have been setting the details of the programme intended to
right specific troubles of specific groups without, at the same time,
inflicting hardships upon other groups. Above all, my programme has
looked to the long view, intending to see that the factors that brought
about our present condition may not occur again.

The central fact of our economic life is its failure to see beyond the
barriers of immediate concerns. Perhaps it is too strong a word to call
this ignorance, but it certainly means that we do not know enough about
ways to produce and we do not know enough about ways to keep on
producing. With the most efficient system of industry ever devised our
country has been brought to the point of reducing its output by one-half
while most of us sit around in bewilderment and indecision. We need to
know how to keep on working. If we can learn this, and I believe we can,
all our other problems can be solved with ease.

The theory upon which we have been producing for years is a shocking
impossibility; it is that goods can be produced that cannot be bought.

There are two unusual features which characterised business during our
late decade of prosperity. First, great strides toward productive
efficiency were made. Second, the goods produced by this efficiency were
in large part being purchased on credit. Credit is, of course, a
necessity to business. But to-day we know that our recent use of credit
was ungoverned and unmeasured. To reduce it to homely terms, people
incurred more debts than they could safely carry, and the incurrence of
this debt, encouraged as it was by reckless statements from Washington,
had much to do with the crash that we experienced.

To prevent such an unmeasured expansion of credit is the task of
statesmanship in the next few years. That is not to say that I favour
the use of complete government control over the use of credit, but that
I do propose the use of government assistance in bringing to the
attention of producer and consumer alike such enlightened information as
will enable the people to protect themselves against unwarranted and
headlong plunges into excessive debt. It is up to the government to
maintain its most sacred trust, the welfare of its citizens. And such a
trust requires the regulation of such balance among productive processes
as will tend to a stabilisation of the structure of business. That such
a balance ought to be maintained by co-operation within business itself
goes without saying. It is my hope that interference of government to
bring about such a stabilisation can be kept at a minimum, limiting
itself perhaps to a wise dissemination of information.

The other factor is that whenever income in any great group of the
population becomes so disproportionate as to dry up purchasing power
within any one group, the balance of economic life is thrown out of
order. It is a proper concern of government to use wise measures of
regulation such as will bring this purchasing power back to normal. This
emergency exists among the farmers in this country to-day, and I have
not hesitated to say that the government owes a duty with respect to
the restoration of their purchasing power.

Other industries have problems which are in many essentials similar to
those of agriculture, and they ought to be met in similar ways. Most of
the other industries are more highly integrated, however, and their
planning policies are frequently further advanced. I mentioned two
categories of those who are suffering the worst of contemporary
distresses. Besides the farmers, there are the workers in other
industries.

We need for them a greater measure of security. Old-age, sickness and
unemployment insurance are minimal requirements in these days. But they
are not enough. Whether we are thinking of the heart-breaking problem of
present distress and of the possibilities of preventing its recurrence
in the future, or whether we are merely thinking about the prosperity
and continuity of industry itself, we know now that some measure of
regularisation and planning for balance among industries, and for
envisaging production as a national activity, must be devised. We must
set up some new objectives; we must have new kinds of management.
Business must think less of its own profit and more of the national
function it performs. Each unit of it must think of itself as part of a
greater whole, one piece in a larger design.

I believe with all my heart that business and professional men have a
high sense of their responsibilities as American citizens and a high
regard for the public welfare. I am confident that they will go along
with me in working whole-heartedly toward the national good in the
broadest sense of that term.

Instead of romantic adventurings in foreign markets we expect and hope
to substitute realistic study and actual exchange of goods. We shall try
to discover with each country in turn the things which can be exchanged
with mutual benefit and shall seek to further this exchange to the best
of our ability. This economic interchange is the most important item in
our country's foreign policy.

Out of economic disputes arise the irritations which leap to competitive
armaments and are fruitful causes of war. More realistic mutual
arrangements for trade, substituted for the present system in which each
nation attempts to exploit the markets of every other, giving nothing in
return, will do more for the peace of the world and will contribute more
to supplement the eventual reduction of armament burdens than any other
policy which could be devised. And at the same time it will make
possible the approach to a national economic policy at home which will
have as its central feature the fitting of production programmes to the
actual probabilities of consumption. At least the issue will no longer
be confused by the impossible hopes of selling in foreign markets which
cannot now pay for their products. There will no longer be the excuse
for the overbuilding of American industries. And they can begin the
process of accommodation to markets on which they can count. This has
been too long delayed.

The relations between government and business will necessarily be in
process of re-definition during the coming years. I said in a speech
which redefined individualism in modern terms that business leaders are
now expected to assume the responsibilities which accompany their power.
A great deal can be done in this way, especially if we mobilise public
opinion.

Our new national administration is going to restore the confidence that
the majority of men and women in this country rightfully repose in their
own integrity and ability. It is going to bring about governmental
action to mesh more with the rights and the essential needs of the
individual man and woman.

These are not merely hopes. These are the battle-orders imposed upon
myself and my party. I began and ended the Presidential campaign along
those lines. I am going to begin our new national administration upon
them.

I have forgiven the personalities of the heat of the campaign. I do not
forget that many fine men were forced out of office by the election.
They were so fettered by old-fashioned political commitments and
strait-jacketed by outworn policies that they were literally bound hand
and foot. But we must never forget the harm of these commitments and the
anachronism of these policies. We must remember them well in order to
recognise their faults and avoid the creation of similar ones for the
future.

Our new national administration has already faced the facts in its
economic campaign attacks upon our major problems. It is going to tell
the truth about current conditions and their relation to the future.
Perhaps of all, the first great truth is with regard to a general
condition, and we must face it at once. Emergency relief under way and
planned will succeed only in the vital work of maintaining life. But it
corrects nothing. From now on we must be far more concerned with the
quality of life itself. Concentration upon purely temporary relief
measures must not cause a "freezing" of national progress along lines of
social equality and justice. If our present social order is to endure,
it must prove itself worthy of our toil and self-sacrifice and of the
lives of those who have been before us. And it must prove itself worthy
within the next few years.

We must recognise that there have been profound changes in the economic
forces of the world in a very short period. We must also understand
those changes, comparatively slow in coming, which impose a new set of
actualities upon us. There is nothing new in saying that we are now the
creditor nation of the world, but our people have not yet realised its
implications. Capital for our expansion into the West came from abroad.
It was not until the early eighteen-nineties that foreign financing
became unnecessary. At the time of the World War the tide changed
because of the pressing needs of Europe. Our participation in the
expansion of international industry is too recent to require comment,
though we know by bitter experience that some of it was unwise. The
economic depression greatly jeopardised the security of all loans. The
inability of some of our creditors to pay should bring home to us the
radical nature of the change in international affairs. It would be well
for some of our professional critics to remember that in our form of
government we are now one of the older nations of the world, through our
most severe political growing pains, arrived at mature years and with a
new sense of responsibility toward the rest of the world.

That is why what was loaned by our people through their government must
be repaid by foreign governments to our people. It is sound common sense
to assist your debtors in every way, but there is neither practicality
nor honour nor world safety in cancellation. The stabilisation of world
finance can best be achieved by a clear understanding of just
obligations. A policy unduly favouring foreign loans has resulted in
more great sums being owed us, has failed to achieve any real
international unity, and has confirmed foreign hopes for a repudiation
of debts. Our new administration will deal fairly, honestly and sanely
with this situation. It will remember, however, that as society is now
organised, we are divided into nations and that it is the duty of our
administration to first consider the welfare of its own people. I
strongly feel that the welfare of the world depends just as much upon
ourselves as it does upon others, but there is only one view to be taken
of these great money obligations between nations. These sums represent
national labour, the labour of a great mass of individuals.

Any haziness with regard to our international position upon debts is as
dangerous as that which has led us into serious social injustices within
the past few years. I refer to the fact that a haziness with regard to
just and unjust monopolies has been fostered within recent years,
resulting in an aggressive encroachment of the desires of the few upon
the rights of the many. The few have rights which must be preserved; at
the same time the human rights of the many are paramount.

We must ask what an administration can do to improve the quality of life
in this nation. We must decide, and the administration must see eye to
eye with us, upon that factor in the national life which can best be
used to make events move. We must support with aggressive vigour every
effort along that line and encourage its momentum. It should be the
foundation of the administrative policy. It should underlie all plans on
detailed issues. What is this single factor in the United States and the
world to-day?

It is interdependence--our mutual dependence one upon the other--of
individuals, of businesses, of industries, of towns, of villages, of
cities, of states, of nations. Thorough understanding of and the proper
use of interdependence is vital--first, to get a clear view of our
problems; second, to really solve them.

The problems and the policies of our new national administration show
the fact of this interdependence--the tariff, for example, being a part
of every major problem. Specific action can and shall be taken to make
interdependence the means for national recovery and stability.

There is no better illustration of the fact of interdependence and what
may be accomplished through a real understanding of it than in the
recent personal experience of countless families in every part of this
country to-day. These families, supported by agricultural or industrial
labour, through no fault of their own, have found themselves in physical
want, in privation, in discouragement, in fear. Business men who have
been successful through honesty, hard work and the fruits of experience,
have had their "safe investments" swept away in addition to the loss of
their jobs. Yet when these families faced facts, they discovered anew
that the vital factor for self-preservation and any possible progress
was the dependence of one upon the other. This realisation spurred each
member of the family to the full performance of his duty to every other
member. Thus courage was restored and forward-looking plans developed.

Human interdependence is no more true than economic interdependence. Our
economic problems, however, are simplified rather than complicated by
their interdependence and the fact that economic laws are definitely
man-made. I should like to repeat in practically the same words as my
acceptance speech:

"Never in history have the interests of all the people been so united
in a single economic problem. Picture to yourself the groups of property
represented in the form of bonds and mortgages--government bonds of all
kinds, bonds of industrial and utility companies, mortgages on real
estate and the vast investments of the nation in the railroads. Each and
every one of them affects the whole financial fabric. . . ."

My responsibility will be to direct relief toward all these groups
together. I shall prevent efforts which would give one favoured group
priority over another. In this connection, the easing of the burden of
taxation is a work which can be accomplished through a thorough
understanding of interdependence. The whole field, as I have said
before, of the sources of taxation should be allotted between the
Federal and the state governments in order to do away with the present
unjust duplication.

The general understanding of interdependence has grown almost in direct
ratio to the decline of personal security in the last four years.
Whether the result is called fraternity, or mutual responsibility, or
the understanding of social justice, makes little difference. Out of
this growth I see a closer meshing of every line of human endeavour and
a greater unity for this nation.

As the different parts of our territories come steadily nearer by
reason of time-saving devices of modern communication and travel, each
man and woman becomes more and more responsible for the human conditions
surrounding all of his nearer and nearer neighbours. It is the same with
nations.

At the risk of repeating, for the sake of clarity, several things which
have been noted before, it is obvious that many of our international
problems are also interdependent with each other.

For example, success in a practical programme limiting armaments,
abolishing certain instruments of warfare and decreasing the offensive
of attacking power of all nations, will, in my judgment, have a very
positive and salutary influence on debt and economic discussions.

As to economic conferences, I am clear that an economic programme for
the world should not be submerged in conversations relating to
disarmament or to debts. I recognise, of course, a relationship, but not
an identity. Therefore, I cannot go along with the thought that the
personnel conducting the conversations should be identical. These
arrangements will be found to require selective treatment, even though
this be with full recognition of the possibility that in the ultimate
outcome a relationship may become clear.

I have good reason to believe that many nations who, like us, are
suffering from the stoppage of industry, will meet us half-way and put
all the cards on the table for the purpose of breaking an actual
deadlock which has paralysed world trade and thrown millions here and
abroad out of useful work. Let me at the same time make it clear that a
trade conference with the other nations of the world does not, and
should not, involve the United States in any participation in political
controversies in Europe or elsewhere. Nor does it involve the renewal in
any way of the problem of twelve years ago of American participation as
a member of the League of Nations.

In common with millions of my fellow-countrymen, I worked and spoke, in
1920, in behalf of American participation in a League of Nations,
conceived in the highest spirit of world friendship for the great object
of preventing a return of world war. For that course I have no apology
to make.

If, to-day, I believed that the same or even similar factors entered
into the argument, I would still favour America's entry into the League;
and I would go so far as to seek to win over the overwhelming opposition
which exists in this country to-day. But the League of Nations to-day is
not the League of Nations conceived by Woodrow Wilson. It might have
been had the United States joined. Too often through these years its
major function has been not the broad overwhelming purpose of world
peace, but rather a mere meeting-place for the political discussion of
strictly European political national difficulties. In these the United
States should have no part.

American participation in the League would not serve the highest purpose
of the prevention of war and a settlement of international difficulties
in accordance with fundamental American ideals; the League has not
developed through these years along the course contemplated by its
founder, nor have the principal members shown a disposition to divert
the huge loans spent on armaments into the channels of legitimate trade,
balanced budgets and payment of obligations.

The difficulties with regard to these obligations can be measurably
obviated, I am convinced, if we are realistic about providing ways and
means in which payment is possible through the profits rising from the
rehabilitation of trade by tariff adjustments.

The depression has opened the eyes of many men to their social
responsibilities. It has opened the eyes of many politicians to their
true political responsibilities to the nation. I have little personal
patience with those men--Democrats and Republicans alike--who have been
thinking so long in the outworn partisan grooves that they cannot see
the merit of accomplishment unless it bears the label of their own
party. I shall give credit where credit is due, even in the camp of my
partisan enemies. To this extent I shall personally erase partisan
lines.

Some of the most practical, hard-headed and ambitious men I know have
been so buffeted by circumstances these last few years that they realise
they must all get down on their knees together in a new humbleness of
spirit--out of which grows united and effective action.

I shall repeat many times that I shall ceaselessly endeavour to bring
government back to a more intimate understanding of and relation to
human problems. This is essential, that government may serve the basic
purpose for which it was originally created.

The American people have been thoroughly disillusioned concerning our
economic policies at home and abroad. There has arisen an insistent
demand for a new deal. I have been telling you some of the ways in which
I conceive these insistent demands ought to be met. I should like to say
again that there is neither magic nor cure-all in any of this. Hard
necessity drives us now. The mandate is clear and peremptory. These are
the things we must do. They are methods to be tried for attaining a
genuine concert of interests. I desire to pledge myself to this service.
It will be long and arduous; with the help of all of you we shall reach
the goal. I look forward with confidence.




  INAUGURAL ADDRESS

  (Delivered at Washington, March 4th, 1933)




  CHAPTER SIXTEEN


This is a day of national consecration, and I am certain that on this
day my fellow-Americans expect that on my induction into the Presidency
I will address them with a candour and a decision which the present
situation of our people impels.

This is pre-eminently the time to speak the truth, the whole truth,
frankly and boldly. Nor need we shrink from honestly facing conditions
in our country to-day. This great nation will endure as it has endured,
will revive and will prosper. So first of all let me assert my firm
belief that the only thing we have to fear is fear itself--nameless,
unreasoning, unjustified terror which paralyses needed efforts to
convert retreat into advance.

In every dark hour of our national life a leadership of frankness and of
vigour has met with that understanding and support of the people
themselves which is essential to victory, and I am convinced that you
will again give that support to leadership in these critical days.

In such a spirit on my part and on yours, we face our common
difficulties. They concern, thank God, only material things. Values have
shrunk to fantastic levels; taxes have risen; our ability to pay has
fallen; government of all kinds is faced by serious curtailment of
income; the means of exchange are frozen in the currents of trade; the
withered leaves of industrial enterprise lie on every side; farmers find
no markets for their produce, and the savings of many years in thousands
of families are gone.

More important, a host of unemployed citizens face the grim problem of
existence, and an equally great number toil with little return. Only a
foolish optimist can deny the dark realities of the moment.

And yet our distress comes from no failure of substance. We are stricken
by no plague of locusts. Compared with the perils which our forefathers
conquered because they believed and were not afraid, we have still much
to be thankful for. Nature still offers her bounty, and human efforts
have multiplied it. Plenty is at our doorstep, but a generous use of it
languishes in the very sight of the supply.

Primarily, this is because the rulers of the exchange of mankind's goods
have failed through their own stubbornness and their own incompetence,
have admitted their failure and have abdicated. Practices of the
unscrupulous money-changers stand indicted in the court of public
opinion, rejected by the hearts and minds of men.

True, they have tried, but their efforts have been cast in the pattern
of an outworn tradition. Faced by failure of credit, they have proposed
only the lending of more money. Stripped of the lure of profit by which
to induce our people to follow their false leadership, they have
resorted to exhortations, pleading tearfully for restored confidence.
They know only the rules of a generation of self-seekers. They have no
vision, and when there is no vision the people perish.

Yes, the money-changers have fled from their high seats in the temple of
our civilisation. We may now restore that temple to the ancient truths.
The measure of the restoration lies in the extent to which we apply
social values more noble than mere monetary profit.

Happiness lies not in the mere possession of money; it lies in the joy
of achievement, in the thrill of creative effort. The joy and moral
stimulation of work no longer must be forgotten in the mad chase of
evanescent profits. These dark days will be worth all they cost us if
they teach us that our true destiny is not to be ministered unto, but
to minister to ourselves and to our fellow-men.

Recognition of the falsity of material wealth as the standard of success
goes hand in hand with the abandonment of the false belief that public
office and high political position are to be valued only by the
standards of pride of place and personal profit; and there must be an
end to a conduct in banking and in business which too often has given to
a sacred trust the likeness of callous and selfish wrongdoing. Small
wonder that confidence languishes, for it thrives only on honesty, on
honour, on the sacredness of obligations, on faithful protection and on
unselfish performance. Without them it cannot live.

Restoration calls, however, not for changes in ethics alone. This nation
asks for action, and action now. Our greatest primary task is to put
people to work. This is no unsolvable problem if we face it wisely and
courageously. It can be accomplished in part by direct recruiting by the
government itself, treating the task as we would treat the emergency of
a war, but at the same time through this employment accomplishing
greatly needed projects to stimulate and reorganise the use of our great
national resources.

Hand in hand with this we must frankly recognise the overbalance of
population in our industrial centres and, by engaging on a national
scale in a redistribution, endeavour to provide a better use of the land
for those best fitted for the land. Yes, the task can be helped by
definite efforts to raise the values of agricultural products and with
this the power to purchase the output of our cities. It can be helped by
preventing realistically the tragedy of the growing loss, through
foreclosure, of our small homes and our farms. It can be helped by
insistence that the Federal, state and the local governments act
forthwith on the demand that their cost be drastically reduced. It can
be helped by the unifying of relief activities which to-day are often
scattered, uneconomical and unequal. It can be helped by national
planning for and supervision of all forms of transportation and of
communications and other utilities which have a definitely public
character. There are many ways in which it can be helped, but it can
never be helped by merely talking about it. We must act; we must act
quickly.

And, finally, in our progress toward a resumption of work, we require
two safeguards against a return of the evils of the old order; there
must be a strict supervision of all banking and credits and investments;
there must be an end to speculation with other people's money; and there
must be provision for an adequate but sound currency. . . .

Through this programme of action we address ourselves to putting our own
national house in order and making income balance outgo. Our
international trade relations, though vastly important, are in point of
time and necessity secondary to the establishment of a sound national
economy. I favour as a practical policy the putting of first things
first. I shall spare no effort to restore world trade by international
economic readjustment, but the emergency at home cannot wait on that
accomplishment.

The basic thought that guides these specific means of national recovery
is not narrowly nationalistic. It is the insistence, as a first
consideration, upon the interdependence of the various elements in and
parts of the United States of America--a recognition of the old and
permanently important manifestation of the American spirit of the
pioneer. It is the way to recovery. It is the immediate way. It is the
strongest assurance that recovery will endure.

In the field of world policy I would dedicate this nation to the policy
of the good neighbour--the neighbour who resolutely respects himself
and, because he does so, respects the rights of others--the neighbour
who respects the sanctity of his agreements in and with a world of
neighbours.

If I read the temper of our people correctly, we now realise as we have
never realised before our interdependence on each other; that we cannot
merely take, but we must give as well; that, if we are to go forward, we
must move as a trained and loyal army willing to sacrifice for the good
of a common discipline, because without such discipline no progress can
be made, no leadership become effective. We are, I know, ready and
willing to submit our lives and our property to such discipline because
it makes possible a leadership which aims at the larger good. This I
propose to offer, pledging that the larger purposes will bind upon us,
bind upon us all as a sacred obligation with a unity of duty hitherto
evoked only in time of armed strife. With this pledge taken, I assume
unhesitatingly the leadership of this great army of our people,
dedicated to a disciplined attack upon our common problems.

Action in this image, action to this end is feasible under the form of
government which we have inherited from our ancestors. Our Constitution
is so simple and practical that it is possible always to meet
extraordinary needs by changes in emphasis and arrangement without loss
of essential form. That is why our constitutional system has proved
itself the most superbly enduring political mechanism the modern world
has ever seen. It has met every stress of vast expansion of territory,
of foreign wars, of bitter internal strife, of world relations.

And it is to be hoped that the normal balance of executive and
legislative authority may be wholly equal, wholly adequate to meet the
unprecedented task before us. But it may be that an unprecedented demand
and need for undelayed action may call for temporary departure from that
normal balance of public procedure.

I am prepared under my constitutional duty to recommend the measures
that a stricken nation in the midst of a stricken world may require.
These measures, or such other measures as the Congress may build out of
its experience and wisdom, I shall seek, within my constitutional
authority, to bring to speedy adoption.

But in the event that the Congress shall fail to take one of these two
courses, in the event that the national emergency is still critical, I
shall not evade the clear course of duty that will then confront me. I
shall ask the Congress for the one remaining instrument to meet the
crisis--broad executive power to wage a war against the emergency, as
great as the power that would be given to me if we were, in fact,
invaded by a foreign foe.

For the trust reposed in me I will return the courage and the devotion
that befit the time. I can do no less.

We face the arduous days that lie before us in the warm courage of
national unity; with the clear consciousness of seeking old and precious
moral values; with the clean satisfaction that comes from the stern
performance of duty by old and young alike. We aim at the assurance of a
rounded, a permanent national life.

We do not distrust the future of essential democracy. The people of the
United States have not failed. In their need they have registered a
mandate that they want direct, vigorous action. They have asked for
discipline and direction under leadership. They have made me the present
instrument of their wishes. In the spirit of the gift, I take it.

In this dedication of a nation we humbly ask the blessing of God. May He
protect each and every one of us. May He guide me in the days to come.




  INDEX


  Absolute ownership, 232
  Accounting, Holding Company, 234
  Adjustment, Government in Economics, 13
  Administration, unemployment, 118
  Administration of justice, commission on, 199
  Age, Machine, 23
  Agricultural-Industrial Balance, 65
  Agriculture, 30
  Agriculture, Advisory Commission on, 58
  Agriculture and Markets, Department of, 99
  Agriculture, Tariff Effect upon, 179
  Aid, Town, Equalisation of, 58
  Anti-Trust Laws, 26
  Authority, State, for Local Expenditure, 83

  Balance, Economic, 33
  Banking, 217
  Banking, Private, 223
  Banks, Rural, 127
  Bennett, Premier, 183
  Board, Farm, 131
  Bonds, Railway, 158
  Boulder Dam, 153
  Bryce, James, 66
  Budget, Federal (1930), 221
  Business Ethics, 234
  Business, Concentration of, 31
  Business, Government in, 24, 33, 246
  Business Rights, Individual, 139

  California, Local Government in, 81
  Canada, American Factories in, 183
  Cancellation, Debt, 249
  Census, Farmer, 60
  "Cincinnati Labour Plan," 113
  Climate Analysis, 60
  Code of Criminal Procedure and Penal Law, 213
  Colorado, Forms of "Indiana Plan" in, 83
  Columbia River Project, 154
  Commerce, Tariff Effect upon International, 181
  Commission, Administration of Justice, 199
  Commission, Federal Trade, 140
  Commission, Interstate Commerce, 168
  Commission, Interstate, on Employment Insurance, 117
  Commission, Tariff, 188
  Competency, Rights of Personal, 20
  Competing Railway Systems, 162
  Competitive Tariffs, 186
  Complexity of Local Governments, 76
  Consolidation of Railways, 170
  Contract, Social and Governmental, 34
  Co-operatives, Farm, 126
  Corn, 183
  Corporate Profits, 219
  Corporate Shares, 232
  Corporations, 25, 33
  Correction and Social Welfare Department, 94
  Cost, Justice, 196
  Cost, Local and National Government, 72
  Cost Theory for Utility Rate-making, 151
  Cotton, 125, 182
  Counties, Consolidation of, 82
  Crash of 1929, 29
  Credit, Rural, 127
  Credit, Structure, 30
  Credit, Unmeasured, 242
  Creditor Nation, 248
  Creed, Economic, 224
  Crime and Criminals, 92, 205
  Crop Analysis, 60
  Crops, Money, 125

  Dayton, Kenneth, 199
  Debts, Foreign, 248
  Delay, Judicial, 195
  Democracy Challenged, 86
  Democracy, definition of, 17
  Departments, Consolidation of Federal, 71
  Depression, U.S. Responsibility for, 222
  Depressions, Theories of, 45
  Disarmament, 253
  Distribution, Control of, 47
  Districts, Governmental, 78
  Dollar, Farm, 128
  Duplications, Tax, 103

  Economic Balance, 33
  Economic Creed, 224
  Economic Cycle, 112
  Economies, Federal, 71
  Education, Lack of Planning in, 42
  Employment Insurance, Interstate Commission on, 117
  Employment Service, Public, 118
  Ethics, Business, 234
  Expansion, Industrial, 48
  Expansion, Period of Forced, 28
  Expenditures, Local Government, 76
  Expenditures, State Supervision of Local, 85
  Experimentation, Governmental, 51

  Factories Moving Abroad, 183
  Farm Plans, 133
  Farm Relief, my State, 57
  Farmer, Present Position of, 61
  Federal Budget of 1930, 221
  Federal Power Commission, 151
  Federal Reserve System, 219, 227
  Federal Trade Commission, 140
  Federalism, 11
  Ferries of Seventeenth Century, 141
  Financial Power, 27
  Financiers, 23, 35, 233
  First Offenders, 207
  Five-day Week, 113
  Food Taxes, 105
  Foreign Debts, 248
  Foreign Loans, 179, 218
  Forshay, 226
  Franklin, Benjamin, 11

  Goods, International Exchange of, 245
  Government, Business and, 24, 246
  Government, European, Growth of, 18
  Government, Historic Economic Changes in, 22
  Government, Local, Reorganisation of, 71
  Governors, Clearing-house for, 67
  Grade Crossings, 126
  Grange, The, 58

  Hale, Chancellor Lord, 141
  Hamilton, Alexander, 19
  Health, State, 100
  High Tariffs, 178
  Highway Taxes, 161
  Holding Companies, 150, 171, 226, 234

  Immigration, European, 30
  Income, Disproportionate, 243
  Income, Farm, 127
  Income Tax, 105
  "Indiana Plan," 83
  Individual Business Rights, 139
  Individual Opportunity, 31
  Industrial Revolution, 22
  Industry, Control of American, 223
  Industry, Planning in, 43
  Industry, Rural, 66
  Industry and Agriculture, 56
  Inheritance Tax, 105
  Insull, 144, 148, 226
  Insurance, Employment, 116
  Interdependence, 250
  Interests, Concert of, 241
  International Exchange of Goods, 245
  International Markets, 30
  Interstate Commerce Commission, 168
  Investment Publicity, 226
  Investments, Public Service, 145

  James, King of England, 140
  Jefferson, Thomas, 11
  Jeffersonian Principles, 12
  Judicial Delay, 195
  Judicial Reform, 193
  Jurisdiction, Local Overlapping, 82
  Jury Trial, 194
  Justice, Costs of, 196

  Kreuger Fraud, 226

  Laboratories, States are Government, 67
  Labour, American Federation of, 219
  Labour, New York, Department of, 97
  Labour Planning "Cincinnati," 113
  Land, Free Western, 21
  Land, Sub-Marginal, 62
  Land Utilisation, 55
  Law, Lack of Planning in Profession of, 43
  Lawyers, Responsibility of, 198
  Layers of Government, 78
  League of Nations, 254
  Lewisohn, Sam A., 210
  Living, American Standard of, 61
  Loans, Foreign, 49, 179, 218
  Local Credit, 227
  Local Government, 71, 73, 76
  Log-rolling, Tariff, 189

  Machine Age, 23
  Machine Production, 218
  Management and Ownership, 232
  Managers, Unscrupulous, 234
  Markets, International, 30
  Massachusetts, Probation in, 207
  McKinley, William, 187
  Michigan, Local Government in, 81
  Minnesota, Local Government in, 81
  Missouri, Local Government in, 81
  Mortgages, Farm, 130
  Muscle Shoals, 153

  National Banks, 227
  New Jersey, Local Government in, 81
  New Mexico, Forms of "Indiana Plan" in, 83
  New York State Commission on Administration of Justice, 199
  New York State Crops, 126
  New York State, Local Government in, 75
  New York State, Probation in, 207
  Nicholson, Meredith, 17
  Norris, Senator, 146, 154
  North Carolina, Local Government in, 81

  Obsolete Governmental Forms, 74
  Officers, Probation, 209
  Officials, Local, 79
  Ohio, Forms of "Indiana Plan" in, 83
  Oklahoma, Forms of "Indiana Plan" in, 83
  Old Age Insurance, 112
  Old Age Pensions, 97
  Old Age Security, 120
  Oligarchy, Economic, 32
  Operating Companies, 234
  Opportunity, Equality of, 28
  Over-capitalisation, Public Service, 145
  Ownership, Absentee, 233
  Ownership, Government, Utility, 151
  Ownership and Management, 232
  "Ox-Cart" Age, 74

  Parole, 207
  Parties in U.S., Birth of Major Political, 21
  Pennsylvania, Local Government in, 81
  Pensions, Old Age, 97
  Planning, Economic, 40, 55
  Planning, Railway, 162
  Politics, Quality of National, 9
  Population, Farm, 127
  Population, Sub-Marginal Land, 64
  Population, Transient, 74
  Power, Electric, 139
  Power, Farm and Household, Use of, 58
  Power, Financial, 26
  Power Sites, 153
  Presidential Tariff Powers, 188
  Principles, Jeffersonian, 12
  Prison Statistics, 205
  Private Banking, 223
  Probation, 207
  Probation Officers, 209
  Production, Control of, 47
  Production, Machine, 218
  Profits, Corporate, 219
  Profits, Public Service, 144
  Profits, Railway, 169
  Profits, Safer but Smaller, 49
  Profits Tax, 105
  Public Service Investments, 145
  Public Service Profits, 144
  Public Utilities, 234
  Publicity Investment, 226
  Purchasing Power, 33

  Railway Bonds, 158
  Railway, Consolidation of, 170
  Railway Development, 23
  Railway Employees, 159
  Railway Planning, 162
  Railway Profits, 169
  Railway Regulation, 165
  Railway Relief Plans, 168
  Railway Stocks, 159
  Railways and the R.F.C., 166
  Reafforestation, 62
  Reciprocal Treaties, 187
  Reconstruction Finance Corporation, 25, 166
  Recreation, 62
  Referendum, Utility, 151
  Reform, Judicial, 193
  Regulation of Holding Companies, 236
  Relief, Farm, 130
  Relief, N.Y. State Laws for, 57
  Relief Measures, Temporary, 247
  Remedies, Fundamental, 225
  Resources, Waste of Natural, 44
  Responsibility for Depression, U.S., 222
  Responsibility, Financial, 237
  Revolution, Industrial, 22
  Rights, Individual, 8
  Ripley, Professor, 160
  Roads, Dirt, 126
  Roads, Farm to Market, 58
  Roosevelt, Theodore, 11, 26
  Rural Industrial Group, New, 57
  Rural Industry, 65

  Segregation of Criminals, 208
  Sentences, Inhuman Prison, 211
  Services, Governmental, Reallocation of, 82
  Simplification of Local Government, 82
  Sites, Power, 153
  Social Order, Changes in, 39
  Social Welfare, N.Y. State Department of, 94
  Soil Analysis, 59
  Special Interests, 44
  Speculation, 35, 217, 221
  St. Lawrence River Project, 58, 154
  Stability, Necessity for, 50
  State Department, U.S., 183
  State Government Expenditures, Essential, 93
  State Wards, 91
  Statesmanship, Duty of, 34
  Statistics, Prison, 205
  Stock Speculation, 41
  Stock, Watered, 146
  Stocks, Railway, 159
  Sub-Marginal Land, 62
  Suburban Governmental Units, 76
  Supply and Demand, Laws of, 111
  Surpluses, Corporate, 29
  Survey of Land, N.Y. State, 58

  Tariff, 24, 129, 177, 179, 186, 188, 218, 222
  Taxation before 1929, 28
  Tax Burdens, Equalisation of, 85
  Taxes, 73, 102
  Taxes, Farm, 126
  Taxes, Reallotment of Sources of, 103
  Thought, Changes in Economic, 49
  Tobacco, 182
  Town Form of Government, 74
  Trade Commission, Federal, 234
  Traffic, Passenger and Freight, 163
  Transient Population, 74
  Treaties, Reciprocal, 187
  Trial, Jury, 194
  Truck Traffic, Motor, 160
  "Trust-busting," 26

  Unemployment, "Accidents" of, 115
  Unemployment Administration, 118
  Unemployment, Ages of, 112
  Unemployment Insurance, 116
  Unemployment, Normal, 116
  Units of Government, 75
  Utilities, Common Law upon, 141
  Utilities, Public, 234
  Utility Holding Companies, Regulation of, 150
  Utility Ownership, Government, 152
  Utility, Public, Definition of, 140
  Utility Referendum, 151
  Utility Regulation Proposals, 150
  Utility Stocks, 151
  Utilisation, Land, 55

  Virginia, Local Government in, 81

  Warburg, Paul, 219
  Wards of the State, 92
  War, World, 46
  Wheat, 125
  Wilson, Woodrow, 10, 26

  York's Laws, Duke of, 73
  Youth, Position of, 41


       *       *       *       *       *


  TRANSCRIBER'S NOTES:

    Archaic, alternate and misspellings of words have been
    retained to match the original work with the exception of
    those listed below.

    Page 96: "Welface" changed to "Welfare" (the Department of
    Social Welfare).




[End of Looking Forward, by Franklin D. Roosevelt]
