Mr. SPAHR. I am sorry. The important thing here in my judgment is a careful analysis of this mechanism, which the layman will not understand, and a bill like that is a dangerous thing because it would be as though we have some technical question of chemistry coming up, or a question involving the physical health of the people, and they go out and take a poll on it, instead of calling in experts in medicine and experts in chemistry to decide the matter. We are not that irrational with matters of health, but apparently we are with matters of cconomy. We do not take the bill itself, but we are discussing the preamble. I say that this bill is as technical as anything that you will find in the field of chemistry or medicine. It takes chemists and not laymen, and they must be experts in order to determine the prob lem. That little pamphlet that you have here is a very fine example of the difficulty. Here is some person taking a poll writing down a lot of things that they conceive to be are within the confines of this bill, and in that connection I might say here, repeating a statement that has been made before, that a lot of these people do not understand the meaning of national income at all, the statement being, "It is said that national income has no meaning no matter what definition is adopted." There are economists that take that position, and that is something that a layman cannot touch, he simply cannot touch anything like that at all. Yet, this bill rests upon that conception, and it will fall upon it or rise upon it as the case may be. This bill rests upon that conception. So I am quite aware of that, because we have a very large file of things of that type, polls that have been taken of this type of poll.

Mr. BENDER. Dr. Spahr, obviously that poll was taken by those who favor the bill. After they had taken the poll on the general question they stated the purpose in this manner, and I would like to know if you think that this understanding of the bill is correct when they say this, and I will ask you this simple question: What would you think of a bill like this-that is what they inquire-first, the President would find out just how many jobs are going to be for the coming year, then if there were not enough jobs for everyone Congress would give financial help to provide business, so that it could provide more places-then, if there was still too few jobs, the Government would give contracts to provide business and public building works to make up the balance of the jobs needed; is that correct?

Mr. SPAHR. I am sorry, I could not hear you very well as you were reading that, but, as I understood you, I would say that is substantially

correct.

Mr. BENDER. Mr. Chairman, could we have a little more order, please.

The CHAIRMAN. Let there be order. Gentlemen, we must have order.

Mr. BENDER. That was in response to this proposal, and their bill indicates: For, 83; against, 12; doubtful, 5 percent. Evidently you agree that is a correct appraisal of the bill, in any event? Will you go that far, regardless of what you say about the value of the poll, or its significance?

Mr. SPAHR. If we eliminate the value of the poll, or its significance, I think that this is a correct appraisal of the bill, as I understood you to read it.

Mr. BENDER. Of the contents of this bill?

Mr. SPAHR. I think so. I think that is right.

Mr. BENDER. You feel that that is a correct appraisal and, as such, you are against it?

Mr. SPAHR. I think that is correct, and I am against it.

Mr. BENDER. In a few words, what is your principal reason for being opposed to this proposition?

Mr. SPAIR. The Government could not tell, it could not tell what is going to happen, first. Second, the Government could not deliver, could not deliver unless it were to regiment its economy. On the other hand, if we have the other alternative, and if we want to maintain free-enterprise system, I suggest this is my paper, I think we have a better alternative to that which can be put into effect and which I think will accomplish the desired result much more closely and will bring it about much more nearly than will this proposal here. I think it comes down, as I said, to the issue as to whether we will have to regiment our economy or whether we will really try to maintain private-enterprise system in order to re-create prosperity and raise the standard of living and increase the freedom of the individual.

Mr. BENDER. Have we ever regimented our economy?

Mr. SPAHR. Certainly we have, during the war. There is no ques

tion about that.

Mr. BENDER. I thought we did before the war a little bit; is that not so?

Mr. SPAIR. It is always a matter of degree. I do not believe that I would call that an economic regimentation then, but we were crowding up on it in one way or another very rapidly at that time.

Mr. BENDER. How long would you say we have been moving in the direction of regimentation?

Mr. SPAHR. I would say it is always a relative thing, ever since we have government and regulation we have some regimentation. It is a matter of degree. I think we have moved rather fast on it during the 1930's.

Mr. BENDER. Mr. Chairman, that is all I have to ask the witness. The CHAIRMAN. Mr. Gossett. Do you have any questions?

Mr. GOSSETT. A few, Mr. Chairman. It is like strychnine-in small doses it is beneficial when taken; in large doses, it is fatal?

Mr. SPAHR. That is quite true. Sometimes the matter of degree is a very important matter.

The CHAIRMAN. Have you any more questions, Mr. Gossett?
Mr. GOSSETT. I believe that is the only thing I have.

The CHAIRMAN. Mr. LaFollette, do you have a few questions for the witness?

Mr. LAFOLLETTE. I have some questions.

The CHAIRMAN. You may proceed, Mr. LaFollette.

Mr. LAFOLLETTE. Dr. Spahr, as you pointed out, starting at the bottom of page 19, then you go on in the balance of your statement, and you state the alternative program.

Mr. SPAHR. Yes; from there on I set it out fairly fully.

Mr. LAFOLLETTE. Among other things you say:

They should protect the weak from the strong and give careful consideration to ways to aid the needy, aged, and helpless without undermining their selfreliance and self-respect.

Would you mind telling me of a specific program or policy that you think the Government could follow to carry that out?

Mr. SPAHR. Yes, sir; that would refer, I should think, to what we now have in the shape of our social-security program, or our program to take care of unemployment in the case of old age, old-age unemployment, and sickness. It is one of the most difficult things that we have ever had to legislate on. How far you can go to protect the weak and helpless, aged, and still not undermine their independence and selfrespect is always a matter of opinion. I want to say there, that there is some field for social security. We should do all we can that is within reasonable bounds, in that direction, and at the same time not do that type of thing that will take people away and make people loaf on the job, and many of them would adopt the thing of getting money for doing nothing, and refuse to take jobs from private enterprise, so what we have to do is to work out very carefully this thing according to the very best judgment available. That is about all I can say on that.

Mr. LAFOLLETTE. In principle, leaving your own reservations, as I understand your view, there are certain limits as to it, but you have no objection, then, or you are in a sense proposing in your statement and in your broadening of it, unemployment insurance, old-age pen- . sions, and a proper social-security system?

Mr. SPAHR. I think it is safe to say, Congressman, that in this country we do not intend to let people starve, and we try to do better than that, we try to take care of the needy cases.

Mr. LAFOLLETTE. As a matter of national legislation, when you say protect the weak from the strong, you are thinking of unemployment compensation as one proper element; is that right?

Mr. SPAIR. I think that would be one of the elements that would enter into it.

Mr. LAFOLLETTE. Along that line, how about minimum-wage laws? Mr. SPAHR. Congressman, I should think that that is along the same line but where to draw the line is a difficult question.

Mr. LAFOLLETTE. You think that that follows in that same general field, but where to draw the line, that is a different question?

Mr. SPAIR. I think that is one of the most difficult questions that you have to answer in that regard.

Mr. LAFOLLETTE. One effect of that is to keep buying power down or keep it up in the masses, preferably, so that they can buy what is produced, and even unemployment compensation has an effect in the buying of the necessities of life, while they are out of employment; is that correct?

Mr. SPAUR. I would say that is correct. Yes; that is true.

Mr. LAFOLLETTE. From the standpoint of monopolies is it your opinion that the labor market should be completely free, that people should bargain for a wage as individuals, as they come along?

Mr. SPAHR. Oh, no. I have defined free competition on which I should see the individual laborer, and the individual laborer cannot compete with the employer, most certainly, and that would not envisage free competition. As I conceive free competition from the point of view of labor, it means that labor must be organized to compete and get anything like a reasonable basis with the employer. Mr. LAFOLLETTE. Do you know Dr. Willford I. King?

Mr. SPAHR. Yes, I know him. He is a member of the department of which I am in charge.

Mr. LAFOLLETTE. Then you know him personally. He is a member of your own department?

Mr. SPAHR. Yes; he is a member of the department of which I am the head.

Mr. LAFOLLETTE. He has written a document which is called Where Does the C. O. O. Programme Lead? Are you familiar with that? Mr. SPAHR. I may have seen it, I suspect I have. I know of it.

Mr. LAFOLLETTE. He made some statements in here about the fact that he does not think much of the minimum-wage laws, at least 65 cents an hour, he does not think much of that. Do you agree with your colleague?

Mr. SPAHR. You appreciate the extreme delicacy of the situation I am confronted with, I am sure, from the fact that he is in my department, but may I say that he is employed with us as a statistician.

Mr. LAFOLLETTE. If you do not mind me asking a couple of other questions; in this document I find this statement, and I would like to read it to you and see what you think of that; he says:

Since a considerable proportion of potential workers prefer idleness at low pay to hard work and high pay, it follows that unemployment insurance insures unemployment.

Mr. SPAHR. May I say in reply to that that he is employed as a statistician in our department.

Mr. LAFOLLETTE. He is employed as a statistician in the New York University, Department of Economics.

Mr. SPAHR. That is correct. That is right.

Mr. LA FOLLETTE. Then you do not assume any responsibility for him?

Mr. SPAHR. I do not assume any responsibility only as a statistician. Mr. LAFOLLETTE. He makes another statement in here that I cannot quite lay my hands on, but he says that if workers were left at all times to sell their labor for the best price obtainable on the labor market there would never be any unemployment problem. Do you believe in that?

Mr. SPAHR. No; I do not share the same viewpoint in that regard. Mr. LAFOLLETTE. I just wish to point out for the record that this thing is being circulated by the Committee for Constitutional Government, Inc., I am interested in knowing that this man is a statistician and not a leading economist of New York University. In other words I was inclined to think, Dr. Spahr, before you put me on the right track, that maybe New York University Department of Economics was interested in selling a service to the chambers of commerce of the country, and Committee for Constitutional Government.

Mr. SPAHR. I should be very sorry if you had any such opinion as that, because it would be a mistaken opinion.

Mr. LAFOLLETTE. I respect your intellectual honesty. You do not mind my having found Professor King's document and having called your attention to certain parts of it?

Mr. SPAHR. Oh, no, indeed. We all know, I think at least I should, that statisticians and mathematicians are interested in various fields. Mr. LAFOLLETTE. And you can get psychiatrist to say a man is crazy and another to say he isn't.

Mr. SPAHR. As far as New York University is officially concerned, Dr. King is a statistician.

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Mr. LAFOLLETTE. Thank you very much. I believe that is all I have.

The CHAIRMAN. Mr. Elliott, do you have any questions?

Mr. ELLIOTT. The questions I have in mind have been asked by others. I do not believe I have any now.

The CHAIRMAN. Mr. Resa, do you have any questions?

Mr. RESA. I have a few. Dr. Spahr, will you give me your definition of a compensatory economy program?

Mr. SPAHR. It is where the Government attempts to compensate for what private economy is not doing to accomplish an end.

The CHAIRMAN. Will you raise your voice a little bit, please? Off the record for a moment.

(There was discussion off the record.)

The CHAIRMAN. Back on the record. You may procced, Dr. Spahr.

Mr. SPAHR. The question was the definition of a compensatory economic program.

Mr. BENDER. Mr. Chairman. A little louder, I cannot hear him. Mr. RESA. If you will just raise your voice a little more, please. Mr. SPAHR. I am very sorry. My definition of compensatory economic program would be that policy in which the Government attempts to compensate in some manner, either by putting out more purchasing power in circulation, or taking out from what private economy has not been able to do, in order to supplement it, in order to accomplish the same purpose that the Government has in mind. That may sound a little confused, but I believe that gives you my idea.

Mr. RESA. An assertion was made in your statement on page 14 which seems to indicate that you regard this bill H. R. 2202 as a measure designed to provide for transition from a wartime to a peacetime economy; is that right?

Mr. SPAHR. No, no. I did not mean to convey that though. The bill is being put out quickly in a period of transition, of course, and it has that thought in mind, but in my opinion it is a long-time

program.

Mr. RESA. On page 20 of your statement you say:

In brief, if our Government officials really desire to preserve and to encourage private enterprise and private capitalism, they should give more attention to what makes it function best and what causes the maladjustments that result in unemployment. Then they should endeavor to create the atmosphere favorable to the best functioning of the system.

Do you think that the collapse which occurred in 1929 resulted—I mean the one which resulted in the depression for several years following that year-resulted from a failure to create an atmosphere favorable to the best functioning of the capitalistic system?

Mr. SPAIR. Partly, if I may say so-I teach business science at the New York University, and so I try to keep up with the main schools of thought on that. I believe that the most reputable men who have studied business fluctuations, say that the causes are both external and internal, that we have outside causes and internal causes, and that they come in various phases, in various shapes and forms, and from various sources. The Government is an outside cause. It does not operate alone. It operates against the thing. We had certain Government policies during the twenties which the Government