thought would, if they were put into effect, help to move the country along and thereby help foreign countries, and that included the matter of gold movements, in order to take care of foreign countries insofar as their currency was concerned, putting it on a stable basis, and our money policy would be assisted thereby. At the same time we were facing the matter of stabilization in this country. The mechanisms that we had and which the Government was partly connected with, and which were a part of our money market and a part of the fiscal system so operated that it let the stock market run loose, and that was one of the bad manifestations of those policies which finally collapsed and carried our economy down. Of course, that was an approximation, and a proximate cause, not the only cause, so I would say in answering your question this way that the Government partly forced that condition, and world forces caused by the other World War were aiding it under the surface, because this was something which projected over the whole world, so that our collapse was part of the world collapse, and I would be very doubtful if any government could have stepped in, no matter what type of government or what part of the world it happened to be in, they all had their collapse, regardless of the types and regardless of the causes, because the causes were too deeply imbedded to be taken out. We know this from our studies of past fluctuations, and it is a certain rather definite pattern, and the pattern has been followed of the primary and the secondary reaction, because we thought in the light of our policies in the 1920's that we were smart enough to prevent the secondary reaction. We predicted that with the Federal Reserve System that we had that we would avoid it, but we did not. We found this force that was set up, a force that comes about when you get into a war, you will have enough disturbances regardless of what your policies are, you will have reactions, perhaps a boom, and then the reaction.

Mr. RESA. Dr. Spahr, the things you are describing are definite conditions. I still am at a loss to understand what Congress could do that could be said to be the creation of an atmosphere favorable to business.

Mr. SPAHR. In my paragraph beginning with the word "specifically," being the seventh line on page 20, I enumerate a great number of those specific items that I believe would answer the question from my point of view.

Mr. RESA. One of the specific measures that you recommend is

They should regulate in the interests of peaceful settlement of disputes rather than endeavor to produce and to direct. They should abandon the barbaric fetish that domestic wars in the field of industrial relations have some rational defense; they should proceed to establish effective machinery for mediation and arbitration.

Dr. Spahr, now, would you not say that that is a form of regimentation?

Mr. SPAHR. No more than our laws which would hale anybody into court when they commit a crime. If I strike my wife I would have to go to court. So, it is regimentation in the sense that we try to prevent crime, and assault and robbery, and things of that kind.

Mr. RESA. Am I correct in the understanding that by this proposal you mean to suggest a method for dealing with any resort to violence in strikes and other labor disturbances?

Mr. SPAHR. A proviso by which we could avoid strikes and other

labor disturbances and violence which may accompany them; providing an alternative to that.

Mr. RESA. Is it not a fact that the economic structure can be as much disturbed by a peaceful and lawful strike or refusal to work as by a strike in which violence is resorted to?

Mr. SPAHR. If I were in Congress, I would try to draft a law to make effective the prohibition of strikes.

Mr. RESA. Do you not think that that would be an impediment to the freedom of the workingman that you have referred to elsewhere? Mr. SPAHR. I draw a distinction between the right to strike and the right to quit his job. I see no reason why labor has to strike to get an adjustment. They can organize and present their complaints, and if they cannot get a satisfactory agreement, then they can have an arbitration and mediation, and they can stay on their jobs, and in their employment, and they will not suffer unemployment and run the risk of a strike. Society would not suffer; industry would not suffer. All of us would continue. Suppose a settlement was made that labor does not like, and they might quit. He always has the right to quit, but I think that is a different thing, but when it comes to a matter of them coming back and throwing bricks through the window after a settlement has been made, I do not think that is correct.

Mr. RESA. I am not advocating that, you must understand.

Mr. SPAHR. Oh. I just want to make my position clear in that regard.

Mr. RESA. What do you propose to do in the case management refuses to arbitrate?

Mr. SPAHR. I would do precisely the same thing as before.

Mr. RESA. In other words, you would suggest or recommend measures for compulsion to cause management as well as labor to negotiate labor disputes?

Mr. SPAHR. Yes, Congressman, I certainly would do that.

Mr. RESA. Isn't it a fact that that is a form of regimentation? Would that not be an infringement upon the liberty of the American citizen?

Mr. SPAHR. Not in an undesirable way, according to my standards. I do not see where it would be an infringement of any material rights. I do not see why we should have any freedom for one and not for the other. It should be the same for labor and for management.

Mr. RESA. Dr. Spahr, you do recognize that there is a desirable and proper, as well as undesirable and improper, restriction of the freedom of citizens, in the interest of the common public good?

Mr. SPAHR. By all means. I am very much concerned with that. Mr. RESA. Dr. Spahr, now, briefly, you used the phrase "painful amount of unemployment." If that were to occur, would mend that the Federal Government do nothing about it?

you recom

Mr. SPAHR. By no means; no. I certainly would not make such a recommendation.

Mr. RESA. Do you think that the Federal Government could do anything about it without incurring expenditures?

Mr. SPAHR. No; I do not think they could possibly do so.

Mr. RESA. I believe that is all I care to ask.

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

Mr. RICH. Yes; Dr. Spahr, the title of this bill H. R. 2202 says:

to establish a national policy and program for assuring continuing full employ

ment in a free competitive economy, through the concerted efforts of industry, agriculture, labor, State, and local governments, and the Federal Government. Do you know of anything in the country, any organization, or of anyone in the country, that does not want to have full employment for all the people in this country?

Mr. SPAHR. Of course not, certainly not, not that I ever heard of. Mr. RICH. Certainly not. No one, no organization, no individual, no Member of Congress that does not want a job for everybody, and anybdy that would feel that one was opposed to a job for our people needs medical care.

every

Mr. SPAHR. Anybody that does not want full employment for person in the country as you indicate, a job for everyone, I should think he would be very unwise.

Mr. RICH. I should think so too. Who are the people in this country who create the greatest number of jobs?

Mr. SPAHR. Well, the employers, industry, agriculture, farmers, the farmers themselves. Industry, I believe. I do not know how that will count up as against the farmers. I would have to look it up.

Mr. RICH. Industry could not exist if it were not for the employees. Mr. SPAHR. Obviously industry could not exist if it did not have employees.

Mr. RICH. They are the most vital, the most essential, I do not want to say "commodity", I am seeking a better word, because that is not. the word I have in mind.

The CHAIRMAN. Element? Constituent?

Mr. RICH. Thank you, Mr. Chairman. That enters into the operation of any business?

Mr. SPAHR. There can be no question of that.

Mr. RICH. Labor is the most important thing that you would have? Mr. SPAHR. When you say industry you are taking into consideration labor and management and capital, and natural resources; it is ebviously true.

Mr. RICH. If we want to give everybody employment, and we want to see that this country is successful, it is necessary then for us to try to see that everybody has a job; is that correct?

Mr. SPAHR. That is the thing that we should try to do.

Mr. RICH. If this bill is enacted, does this bill give any false assurances that everyone will have jobs if we pass this bill?

Mr. SPAHR. I think it is an unfortunate implication, Congressman, in this bill that goes out to the public, and gives the public the idea that Congress can do what is in the declaration of the purpose that is set out, and it cannot do it-I repeat, it cannot do it.

Mr. RICH. I quite agree with you, I certainly do agree with you. But in your report here you give the Government as an economic forecaster, and you point here that in 1937, we will take that year, that the Federal Government gave a certain amount for estimated receipts and expenditures, but they found out later that they spent 30 percent more than they figured they would spend, and they found out that their receipts for that year, they found out that they were 6 percent less than the amount of receipts, that is, they had 6 percent less receipts and increased expenditures of 30 percent. Take the year of 1938, they figured that they would spend a certain amount, and they spent 30 percent more, in fact it was 32 percent more than they said they would, and they found out that the receipts were 14 percent less than they

figured they would be. Sometimes it seems to me that we have pretty bad forecasters in the Government, do you not think?

Mr. SPAHR. You are bound to have; of necessity you are bound to have.

Mr. HOFFMAN. By forecasters, I think we could go a little further and say that bad forecasters are inevitable, bad forecasters because they are attacking an impossible situation, is that not so, Dr. Spahr? Mr. SPAHR. That would be my idea about it. I think that is the consensus of opinion.

Mr. RICH. The situation is this: That in determining accurately these things that would have to be done by the Government it would be a very difficult job for the President or any economists or board of advisers that he may appoint.

Mr. SPAIR. That is correct, it would be an impossible job, as a matter of fact.

Mr. RICH. I quite agree with you there. As a matter of fact, does not this bill tend to destroy the soundness of Federal finances?

Mr. SPAHR. The bill embraces the idea of compensatory financing. It has the idea of working both ways, but when this thing is put out, this tax program, it is almost always one that works in the way of deficit financing which means that the deficit will grow, and it will almost always be greater and greater each year. If the program is to be enforced, you could not logically prevent it.

Mr. RICH. If we land encouragement in every way possible to the people in this country who want to create jobs, and I believe we will be better off in trying to encourage them than otherwise, try to encourage them definitely by a private enterprise, then we will not have the Government entering into the field of trying to create jobs-is that your opinion?

Mr. SPAIR. If I understand your question. I believe it would be much better to try to encourage private enterprise, and see that private enterprise creates these jobs, than having the Government enter into the business field and trying to create jobs, because history has shown it never works out.

Mr. RICH. That is my idea. I think if we should lend encouragement in every way possible to the people of this country who want to create jobs for our people-I believe we will be better off, much better off, in trying to encourage them through private enterprise than we will by having the Government enter into the field of trying to create jobs. Would you say that is a sound idea?

Mr. SPAIR. Yes; as I said before, it is entirely correct. Now, Mr. Chairman, may I say something off the record?

The CHAIRMAN. Off the record.

(There was a discussion off the record.)

The CHAIRMAN. Gentlemen, due to a legislative situation we will be unable to hold a hearing this afternoon, but our next witness will be Mr. Arch D. Schultz, representing the Ohio Chamber of Commerce. We will be unable to hear him now, but I want to have his statement placed before the members, and we will take him up tomorrow morning, and question him in regard to his statement.

The committee will now stand adjourned to reconvene tomorrow morning at 10 a. m.

(Whereupon, at 12 o'clock noon, the committee adjourned to reconvene on Thursday, October 18, 1945, at 10 a. m.)

FULL EMPLOYMENT ACT OF 1945

THURSDAY, OCTOBER 18, 1945

HOUSE OF REPRESENTATIVE,

COMMITTEE ON EXPENDITURES IN THE EXECUTIVE DEPARTMENTS,

Washington, D. C.

The committee met at 10 a. m., Hon. Carter Manasco (chairman) presiding.

The CHAIRMAN. The committee will be in order. Our first witness is Dr. George Benson, president of Harding College.

Mr. HOFFMAN. Mr. Chairman, before proceeding with the witness, I would like to make a short statement for the record.

Yesterday, when Mr. Cochran was questioning Dr. Spahr, he called attention to the fact that small business firms, industrialists, manufacturers were coming to the Government for aid. To me it appeared that his purpose was to point out some claimed inconsistency between small business opposing this bill and its actions in seeking assistance from the Federal Government in other matters.

I only want to call attention to the fact that those coming to the Government now come in opposition to directives of the OPA and are seeking relief from orders of Government agencies heretofore established. They are not asking for aid in the sense of wanting the Federal Government to grant them relief from either normal or abnormal conditions, other than those which had ben created by Government agencies.

Also I want to insert in the record at the close of the testimony of Mr. Cowan, a statement from the Sinclair Oil Corp., sent to all stockholders of that corporation-of which I am not one. Mr. Cowan had stated that many of these advertisements in newspapers, offering jobs, were, according to my interpretation of his testimony, not made in good faith. One other witness intimated the same thought, that oftentimes the compensation for the jobs was less, in the new job, than was the compensation in the old job.

Here is the letter, dated October 10, 1945, and I would like to have it made a part of the record at that point in the record that I indicated. The letter speaks for itself.

The CHAIRMAN. Without objection, it will be incorporated in the record at the close of Mr. Cowan's testimony.

(The letter referred to is as follows:)

499