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try, England, France, Germany, J a p a n , Scotland, Canada, Canal Zone, Hawaii, and Philippine Islands, to become collectors' pieces. A few additional covers can be had from D. H . KillefTer, 60 East 42nd St., New York, Ν. Y., b y those interested. Broadcasting on a scale hitherto u n a t t e m p t e d was arranged with the important radio systems by the Publicity Committee, with the special help of Charles A. R . de Carvajal. The total time on the air exceeded 6 hours over important chains of stations and, in addition, several of the regular broadcasters were good enough to use material on chemistry supplied them. Over the networks of the National Broadcasting Co., eight programs were broadcast, including the following speakers: Willard M. Allen, William B. Bell, E. R. Bridgwater, Eugene P. Burke, Lammot du Pont, Gustavus J. Esselen, Francis P . Garvan, Charles H. Herty, A. W. Hixson, H . E . Howe, D . H . KillefTer, George W. McCov, J. A. Nieuwland, H . C. Sherman, Harold C. Urey, James W. Wàdsworth, J. M. Weiss, Alfred H. White, Frank C. Whitmore, and J. R. Withrow. The Columbia Broadcasting System d r a m a tized three centuries of chemistry in America, with brief addresses by Roger Adams, Edward Bartow, and T h o m a s Midgley, Jr., over their nationwide chain of stations on Wednesday eve-
VOL. 13, N O . 9
ning. T h e Bamberger Broadcasting Service broadcast news events of the meeting as prepared b y K . W. Haeseler daily. Several commercial programs used material on the meeting, particularly R. H . M a c y & Co., Jolly Bill a n d Jane, and the Β. Τ. Babbitt Co. A report of t h e golf tournament appears elsewhere in this issue (see page 195). The General Committee of the meeting was under t h e direc tion of Arthur W. Hixson, Chairman, Lawrence W. Bass, Vice Chairmanj a n d D . P. Morgan, Secretary-Treasurer. Francis P. G a r v a n was Honorary Chairman of t h e General Committee and Mrs. Garvan was Honorary C h a i r m a n of t h e Ladies' Com mittee. Percy E. Landolt headed the General Advisory Com mittee, A. Cressy Morrison was Chairman of t h e Finance Com mittee, and R. T . Baldwin was in charge of auditing. All print ing for the meeting was handled by H. B. Lowe, a n d A. W. Thomas headed t h e Indicator committee which advised with F . W. Zons, its editor, in the preparation of the special issue for the meeting. A special committee of the Manufacturing Chem ists' Association, consisting of Lammot du Pont, George Merck, and Ε. Μ . Allen, cooperated throughout the meeting.
Recovery—by Alchemy or Chemistry? 1 WILLIAM B. BELL, C h a i r m a n , American Cyanamid and C h e m i c a l C o r p . , R o c k e f e l l e r P l a z a , New Y o r k , Ν . Υ . REGARD the topic assigned to me with some amusement for, as a matter of fact, I suppose there is no one in my audience who knows less about chemistry than I do. Cer tainly, in so distinguished a gathering of chem ists, 1 will not attempt to touch on it. I have had sufficient experience with research organiza tions in our own company to know how danger ous t h a t would be. However, on the subject of "Recovery—by Alchemy" I have you a t a disadvantage. I know more about it t h a n you do because I looked up in the dictionary only the other day the definition of "alchemy," and found it t o be: " T h e immature chemistry of the Middle Ages, characterized by the pursuit of t h e transmuta tion of base metals into gold, a n d t h e search for t h e alkahest and t h e panacea." T h a t is the first definition. T h e second jis: " A n y cunning, mysterious, or preternatural process of changing the structure or appearance of things." You see at once t h a t so far a s we have had any planned recovery in this country, it h a s all been by alchemy. I a m quoting still further from t h e dictionary—"The alkahest was an WILLIAM imaginary infallible solvent and t h e panacea a pretended remedy for all diseases." W h a t is t h e favorite panacea? W e have h a d a number, b u t the favorite panacea today is national planning. I t is a magic word. Everybody leaps a t once to t h e idea of national planning. Why? Well, because we have listened so frequently to t h e charge t h a t business planning has been a complete failure. It is said t h a t we designed too many plants, we created too much overcapacity, and now, as a consequence, we are compelled t o grind the faces of labor, to rob the consumer, to bear down on our stockholders and bondholders in an effort to carry dividends and interest, what we can of them, on these great investments. And, as a result, business has been indicted, tried, convicted of this great crime of bad planning.
I
Business P l a n n i n g T h e curious p a r t of t h a t is t h a t business really did a very creditable job on planning. Yes, there is too much capacity in railroads. I think t h a t we will all, however, deal somewhat leniently with those who laid out the railroad additional capacity, when we realize t h a t t h e y could not foresee a n y more than most of us foresaw the advent of the automobile, particularly t h e pri vate passenger car, b u t t h e bus as well, the interurban line, a n d the airplane, which yet is not a great factor b u t will become so. I think we will all be somewhat gentle a n d wonder whether w e ourselves, h a d we been managing railroads, would have done a better job of prophecy. W h e n it comes to t h e coal industry, there is certainly over capacity, b u t there, too, look what t h e coal people h a d to antici pate. Would we have been wiser, would politicians have been wiser in anticipating t h e inroads of oil, t h e inroads of natural gas, the inroads of hydroelectric systems, in fact, the inroads which they themselves created on their own industry by a greater ef ficiency t h a n the use of coal? I n the oil industry there is a n overcapacity for reasons which 1 Presented before the general meeting at the 89th meeting of the Ameri can Chemical Society, New York, Ν. Υ., April 22 to 26, 1935.
are obvious, b u t which no one could foresee, and outside of those three industries, notwithstanding assertions to t h e contrary, there is very little overcapacity—in most industries none. One of t h e most instructive books on the sub ject that I know is the Brookings Institution's " S t u d y of Production," in which it has been demonstrated t h a t , if you take the average of all industry, all industrial capacity including t h e railroads, t h e coal mines, and t h e oil fields, you find t h a t , a s compared with t h e average demand over t h e period 1923 t o 1929, t h e average overcapacity is exactly 20 per cent and in that no allowance is made for t h e obsolete equipment in plants which are actually running. Those of you who are familiar, and you all are familiar w i t h plant operation, realize a t once t h a t a 20 per cent margin, when proper allow ance is m a d e for seasonal requirements and other factors, is no overcapacity whatever. It has been asserted t h a t there is a great overcapacity in the shoe business—900 million pairs a year against a normal demand of 300 million pairs a year, b u t in t h e pick-up of 1934, during January, February, a n d March, we had B. B E L L a demand at t h e rate of 427 million pairs of shoes and we found t h a t t h e capacity of t h e country was being overtaxed in making shoes. In short, t h e true situation is t h a t there is, generally speaking, very little overcapacity in industry and far less than there is in most departments of our Government. Nevertheless, in t h e vilification of industry and its leaders which is t a k i n g place, t h a t charge h a s received a great deal of credence a n d I suppose most people t o d a y who have not visited Russia or I t a l y or Ger m a n y might b e tempted t o believe t h a t national planning pre sents points of superiority over business planning. Is N a t i o n a l P l a n n i n g S o u n d ? Let u s consider whether national planning is really sound and whether it does not inevitably lead to greater troubles t h a n any t h a t we have yet realized. Let u s assume t h a t we are a group of governmental national planners, t h a t we are about to tackle t h e problem in government planning. Let us lay aside all greed, all avarice, a n d assume t h a t freedom a n d independence which hitherto have been regarded as t h e exclusive property of govern ment planning. Let u s tackle t h e classic problem suggested by D r . Robbins of London University—the problem of how m a n y umbrellas and how many raincoats industry shall b e allowed t o produce in America for t h e coming season. Obviously, if we are going t o do a better job t h a n business does on t h a t , we m u s t assume a truly scientific attitude. W e must take into consideration, and we will presume we now have before us, tables in which t h e costs of all materials are included. W e will assume t h a t we are ready to determine which materials a r e best, whether t h e umbrellas, a t a given cost for rayon or cotton or silk, shall contain which of those articles. W e will have the price of steel ribs, we will h a v e t h e price of various plastics and one thing or another for handles. W e will assume t h a t we even know what t h e taxes are going to be. T h a t is quite an item. I think we would be safe in assuming t h a t costs of these m a terials will n o t be decreased by t h e breaking u p of holding com panies, and with all those assumptions, let us set t h e factors u p
M A Y 10, 1935
NEWS EDITION
in equations and begin to solve t h e m . When we finish we will h a v e certain costs for t h i s t y p e of umbrella, for t h a t t y p e of umbrella, for t h e o t h e r t y p e of umbrella, a n d then we will be faced with t h e question of h o w to deal with similar tables, similar costs, and similar factors, a n d similar equations in reference to waterproof suitings o r clothing. W e will h a v e the m a n u f a c t u r ing cost of raincoats to consider a n d in either p r o g r a m t h e cost of capital, a m o u n t of t h e capital involved, both in t h e p a s t investment a n d in t h e projected increases or i m p r o v e m e n t which m a y b e necessary. Having gotten all t h a t , we will come down t o certain figures for umbrellas, certain figures for r a i n c o a t s , a n d t h e n we will h a v e t o reëstimate everything because a t those prices—the prices which those costs will render possible—we m u s t consider w h a t t h e m a r k e t will absorb of t h o s e articles. T h e n we are in position t o order industry t o go ahead a n d produce raincoats or umbrellas, a s t h e case m a y be, a n d in specified quantities. W h a t do y o u think of t h a t a s a scheme for efficiency? Well, of course, obviously y o u are going to lose competition on t h a t basis. After all, we recognize t h a t competition does produce lower costs a n d gives people a m o r e a b u n d a n t life. T h i s h a s been recognized by p r o p o n e n t s of national planning a n d t h e y have u n d e r t a k e n t o meet it in this w a y . T h e y have s a i d : We believe that the group of experts who are figuring the cost of raincoats and the number t h a t should be produced will inevitably become prejudiced in favor of raincoats, so we will put them off in Room Ζ and let t h e m complete their figures out there. And we realize that the same fate will overtake those who are estimating and planning the production of umbrellas, so we will p u t them in Room A, and let them complete their figures there. Then we will bring the two groups together with their figures in Room M, where another group—a third group of experts—will arbi trate and determine which of the two groups is to be most encouraged, which product is to receive the widest scope. I n that way we will preserve an academic competition, which will, in turn, enable us to «retain the benefits of competition, b u t without the waste. In that way the plan proceeds. Y o u may say: T h a t is fantastic. When it comes to such complex programs as are necessary t o maintain the economic structure of life in the United States, it is absurd to suppose that the Government of the United States by national planning can deal with a half-million commodities which we humans w a n t in this country and present the ten million factors which enter into those equations, a million or more of them, and thus arrive at a sensible conclusion. And if we attempted it, some error would ine\ r itably creep into almost every one of those calculations. Some change would occur; if no errors, a t least there would be a change during the period of calculation. As a conse quence, the plan simply would not function according to program. I t is impossible that it should. I t will never be attempted. National Planning in Russia B u t wait, it has been a t t e m p t e d . T o begin with, i t h a s been a t t e m p t e d in Russia. I d o n o t k n o w w h e t h e r any of you h a v e h a d t i m e to read t h e book t h a t came o u t a few d a y s ago by T u r n e r E v a n s . T h e t i t l e is, " I S p e a k for t h e Silent." I t is by a m a n who w a s a professor of unusual ability a n d w h o did h i s work for t h e fish t r u s t i n Russia. I ana going t o cite a p a r a g r a p h from t h e book. Each unit or department of an industry drew up its own five-year plan with great care. These plans were then combined b y the man agement of the industry and sent to t h e center in Moscow. There the plans were again combined into larger units until a whole industry in each commissariat was combined; and lastly, these plans from all the commissariats were sent to the State Planning Commission and incorporated into a final general plan. The results were multitudes of tabulations, by which it was pos sible, for instance, to see where and how much roofing iron, shoes, caviar, horseshoe nails, tractors, wheat, pork, eggs, butter, milk, fish, etc., would be produced, and also how they would be used a t any given moment of the five-year plan. These tables also showed how much any article produced in each year of the five would cost, the quantity and quality of man-power necessary at any moment in any branch of industry, t h e wages for every category of labor, the housing requirements, in fact every conceivable detail. Could a n y t h i n g be more a b s u r d ? And we all know w h a t h a p pened. I t j u s t c a n n o t b e done, a n d when i t is a t t e m p t e d you hamstring i n d u s t r y ; you reduce t h e s t a n d a r d of living; you regiment t o such a n e x t e n t t h a t t h e whole structure begins to go down. And d o n o t suppose t h a t w e cannot t r y to d o j u s t t h a t thing in t h e United S t a t e s . H a s o u r D e p a r t m e n t of Agriculture decided t h a t n a t i o n a l planning is n o t so good a n d a b a n d o n e d its a t t e m p t s ? N o t a t all. I t now h a s before Congress a bill nominally for t h e clarification of t h e existing act, b u t actually for its extension of power, which goes far beyond a n y t h i n g t h a t t h e y have a t t e m p t e d before. If it passes, we will find t h a t agri
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culture not only is regimented hut that every i n d u s t r y which uses agricultural products is regimented. W h a t W o u l d H a p p e n if W c H a d N a t i o n a l P l a n n i n g ? Now, as a m a t t e r of fact, w h a t does happen when y o u h a v e na tional planning? W h a t would happen in t h e United States? W h a t would happen would be this: Let u s go back to o u r u m brella situation. We would find t h a t Congressman Jones would run into districts where t h e umbrella factories are located on a platform of "Jones a n d More Umbrellas.'' W e would find t h a t Congressman Smith, who comes from a district where t h e y have waterproofed cloths a n d raincoat factories, would r u n on a plat form of " M o r e Raincoats a n d Congressman S m i t h . " T h a t is t h e w a y it would work. You do not have to u s e y o u r imagina tion W h a t d i d o u r Secretary of Agriculture say the other day? H a v i n g considered t h a t there were more votes out i n t h e West and South where cotton grows than in New E n g l a n d , h e told t h e manufacturers of textiles t o stop their whining a n d go in for prefabricated houses. National planning, looked a t from a strictly scientific point of view, analyzed u n d e r t h e microscope, analyzed in t h e light of experience, leads to j u s t one thing—political dominance of in dustry with t h e most disastrous effects. You see i t in I t a l y ; in Russia; you see i t in Germany. Do n o t l e t us see it in t h e United States. In fact, this situation a b o u t the planning of agriculture in t h e U n i t e d TStates is so serious t h a t I am going to give you some figures w ith which most pepole a r e not as y e t familiar. Agricultural Planning T h e Administration h a s adopted t h e policy of minimizing t h e growth of i m p o r t s of agricultural commodities and t h e m e t h o d by which i t minimizes t h e m is to t a k e figures from t h e fiscal year ended J u n e 30, 1934, and compare t h e m w i t h t h e figures for t h e fiscal year ended J u n e 3 0 , 1933. B u t t h i s tendency, this trend, has developed only within the last few m o n t h s a n d h a s grown so r a p i d l y t h a t , unless you deal with t h e last few m o n t h s , (and t h a t i s t h e reason I say you are probably not familiar with these figures) y o u will n o t appreciate their significance. Corn. I n t h e eight m o n t h s ended F e b r u a r y , 1933, w e im ported 115,000 bushels of corn. I n t h e eight months which ended in F e b r u a r y , 1935, we have imported 5,709,000 bushels— 115,000 vs. 5,709,000. A n d i n January a n d F e b r u a r y , t h e last of the eight months, we were importing a t the r a t e of 23,300,000 bushels of corn. I h a p p e n to be very m u c h interested in a com pany which generates serums i n hogs- W e h a v e some 2000 hogs in N e w Y o r k S t a t e a n d several hundred horses. W e are feeding t h e m now o n Argentine corn. Our collections from t h e Argentine where we h a v e a branch office have greatly improved. Business is pretty good down in t h e Argentine. We imported 20,000 bushels of o a t s i n 1933. T h e current rate of importation of oats is 13,000,000 bushels a year—20,000 vs. 13,000,000. Wheat. We imported 3628 bushels of wheat in the eight m o n t h s ended F e b r u a r y , 1933, as against 9,163,000 bushels in 1935. On t o p of this we are importing off-grade wheat for feed, a t the rate of over 20,000,000 bushels a year—about five times t h e rate of 1933. Unless some a t t e n t i o n is given to this question of national planning in relation t o agriculture, we will h a v e no agriculture left in this c o u n t r y a t t h e rate we are going. I t is a very serious matter. Cotton. In t h e case of the cotton crop, we a r e suffering from still a n o t h e r difficulty. W e a r e faced with t h e fact t h a t , with t h e prices w h i c h have been induced here b y loans to t h e farmers, a n d so on, a price w h i c h was supposed t o h a v e been securely pegged at 12 cents, b u t which you notice has slipped of late, we cannot export c o t t o n as we formerly d i d . L e t m e cite some figures a b o u t c o t t o n . Over a long p e r i o d America supplied about 6 0 per cent of t h e world's requirements of c o t t o n . In three years this percentage has d r o p p e d to probably not much over 40 p e r cent. D u r i n g t h e same t i m e other p r o d u c i n g industries of t h e world, in other countries of the world, h a v e increased their production b y from 2,000,000 t o 2,500,000 bales—an increase of a p p r o x i m a t e l y 2 5 per cent—while the exports from this c o u n t r y t h u s far in t h e current crop y e a r for t h e season ending in J u l y , will be a b o u t 4,750,000 bales—the lowest of any year since 1895 with t h e ex ception of one w a r year, 1917—18. Our cotton t e n a n t s a r e in terrible shape, a s p r o b a b l y you know. O u r cotton export business is fast disappearing. I n order to give i t a n o t h e r p u s h in t h a t direction, because too much national p l a n n i n g does give this sort of push, w e h a v e this situation arising out of t h e N R A . I m p o r t s of bleached c o t t o n cloth from J a p a n in t h e first eight m o n t h s of t h e c u r r e n t fiscal year were received a t t h e r a t e of about 36 times t h a t for last year, and during the last t h r e e months for which information is avail able, they have been running about 6000 per cent over t h e im ports for t h e s a m e period last year. Y o u m a y t h i n k t h a t per centage is high because the quantity is considerable. Based
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upon figures for the last m o n t h for which information is available, I miss my guess if we are not importing Japanese unbleached cloth at t h e r a t e of about 50,000,000 square yards per montfci. That i> a very substantial figure and a t t h e r a t e we are going, n o one knows where t h a t will stop. Gentlemen, t h e chemical industry is interested in these things. We are interested in cotton cloth being m a d e in the United States, and the processing t a x , combined with the effect of N R ^ \ costs, is p u t t i n g the cotton situation in a n impossible condition. One of t h e most efficient and enterprising institutions in thae country, in order t o hold its export business, so I am told, h a s found it necessary t o set u p a factory in Brazil, where cotton costs and manufacturing costs are not being tinkered w i t h by tine government. The same is true of other companies. I t is a f a c t t h a t over 1,000,000 spindles and looms have gone o u t of t h i s country to equip factories in Brazil because we cannot retain ar*y import business on t h e basis of these costs. R e s u l t s of N a t i o n a l P l a n n i n g We have had too much national planning already. W h a t w a s the first example of it? We started t o increase purchasing power by increasing wages. Well, the increase in purchasing power w a s tried and played o u t and terminated three or four years a g o . Anybody would b e able to t h i n k out, I should suppose, t h a t if you raised wages with a view t o increasing p u r c h a s i n g power, you advanced the cost of the articles which the men w o o received t h e wages buy and you cannot possibly b e a t t h a t game. T h e faster t h e wages go up, t h e faster t h e prices go up. Then, o n t o p of t h a t , we had the codes which made prices in some cases possible of bolstering, and t h e plan defeated itself. Besides t h a t , half the people of the United States h a v e fixed incomes, or practically so. They are people on salaries, slo^vrising salaries, people on pensions or independent incomes from insurance policies. They depend on rents or interest. T h ^ y are simply crucified by anything in the way of increasing prices and there is no merit in the increase of prices as such. If I charge $10 fora hat insi. ad of $5, it does not reemploy a n y body. T h e same n u m b e r of people can m a k e that hat. It d o e s not bring a b o u t a n y reemployment. W h a t is needed ta bring a b o u t reemployment, which is a t t h e b o t t o m of our depression a n d the thing that makes it so difficult to bear, is not a n iidvan.ee in prices, but increase in volume, and when you get increase in volume, more men must be employed. In t h a t way business gets going. W e have the cart before the horse in a way that htas completely blocked the horse and he has no chance. T h e next idea t o be adopted was t h a t if we increased prices, people would rush in and buy. Well, if you have a monopoly, perhaps so, for a little while. Generally, however, t h e princirple of price resistance comes in so hard and fast t h a t you d o not g e t anywhere with that. If y o u wanted to sell m e something, woold you start in b y raising the price? I hope not! Next, in order t o remedy some possible troubles in connection with banking particularly, but both business and banking, -we undertook to copy the British Securities Act which is based on t h e principle t h a t directors and other corporation officers are r e sponsible for any misstatements t h a t t h e y m a y make and tfciat t h e y are liable unless they can show a complete defense, based on honesty a n d reasonable diligence, a n d care in the selection of tihe engineers a n d accountants who produce t h e figures upon -fche strength of which t h e public is asked to invest its money. T h e British Act aims to foster a d v e n t u r e so long as i t is honest, a n d what did we do? W e claimed t h a t we copied the British A.ct. As a m a t t e r of fact we d i d nothing of the kind. W h a t we d i d was to m a k e it a case where you had t o guarantee, n o t simply honesty, reasonable prudence, or diligence, but everything t h a t could possibly affect t h e price of the security as stated in "the prospectus. T h a t is an u t t e r impossibility. Nobody can do t h a t , a n d we have the security market so tied up t h a t , evert in spite of the amendments that have been made, everyone; is afraid to go ahead unless he is forced to refund, in which erase h e has to t a k e his chance. Nothing could b e more effective in t h e way of producing unemployment than to tie u p long-term money which is the o n l y kind of mone3 r t h a t is of any use when it comes to construction activity, and that is where the unemployment arises chiefly- in this country. When it comes t o banking, what did we do? What we did ~vvas t o omit t h e very essential things everybody hoped would c o m e o u t of this terrific panic, this disastrous situation, the things which a r e necessary to sound banking, a n d what are t h e y ? First of all, there m u s t be branch banking. Do not j u m p at tfciat. T h a t does n o t mean branch banking with headquarters in îsew York. W h a t it does m e a n is a banking chain of size suffreicn-t so t h a t it will present the possibility of diversification, which i s essential t o a sound banking situation, a n d enough banks to s u p p o r t t h e amount of investigation and so on that is required. Did we d o t h a t ? N o , we have let t h a t alone because it might r u n into political difficulties. W h a t is t h e other t h i n g we should have done? We should have set up a uniform system of inspection—a single system
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o f inspection—and what we are setting u p is something totally different. We are setting u p a uniform sj'stem by which the *£vhole credit facilities of the United States are being turned over fco politicians under title II of the new banking law. In other "vrords, when you want a loan for industry, you will have t o cons u l t Congressman Smith and see what he can do for you. Then we are trying t o top all those difficulties by breaking up Jlarge companies. After listening to t h e address t h a t preceded lane—that of L a m m o t du P o n t on " H u m a n W a n t s a n d the Ohcmical I n d u s t r i e s " [IND. E N G . C H E M . , 27, 485 (1935)]—is •Cherc a n y o n e in the audience who can fail to appreciate what jiarge capital employed in t h e solution of business and research iproblems c a n do to increase t h e happiness a n d abundance of ^mankind? I t is one of the most striking documents to which H have ever listened. I t covers seemingly the whole field of chemistry a n d is really, of course, a reflection of the company whose president y o u have j u s t heard. Is i t sensible t o break up things like t h a t a n d penalize t h e m ? "What difference does it make, whether I a m 5 feet tall or 6.6 feet? The q u e s t i o n is, am I honest, and if I a m dishonest, why not punish me, big or little? W h a t we need in this country is a law •which will be obeyed by t h e big fellow7 and by the little fellow :and which will be based on honesty. U . S. N e e d s A d m i n i s t r a t i o n of J u s t i c e I really think of all the social reforms for which the United States should be athirst, t h e greatest is t h e swift, speedy, a n d certain administration of justice. We do not have it. T h e y have i t in England to an extent which I should think we might well t r y t o emulate, although it might t a k e decades to do so. That is w h a t we need most, honest enforcement of the law, and that i s one of t h e chief sources of unrest in this country. I d o not know t h a t the enforcement is so dishonest. I think usually it is pretty honest, b u t it is so slow a n d seems to be so beclouded with doubt at certain stages of the proceedings, t h a t our people, many of them, feel something m u s t be wrong. I n England there is no such feeling and when the White Star Line pads i t s balance sheet, Lord Kilsant goes to jail. These a r e some of t h e things which, it seems to me, should be done in t h i s country. I suppose every one of us, being in close contact with business, is working to see what can be developed, in order t o satisfy h u m a n wants and increase human jobs— of course every one of us knows t h a t this country has been r e a d y for prosperity for some time. U. S . Is R e a d y for R e c o v e r y Mc thing but a comprehensive system of folly can possibly keep this c o u n t r y from recovering in short order. I suppose t h a t Colonel Ayres is as satisfactory and dependable a statistician as there is in the country', and Colonel Ayres, as you noticed some months ago, stated t h a t there were $85,000,000,000 of d e m a n d accumulated in the durable goods and construction industries. That, combined with the ordinary consuming demands, is enough to k e e p every one of our 9,000,000 men now idle busy for t h e next six or eight years. AL1 this country needs is to clear away these obstacles, balance its b u d g e t , and live within its income. You will not get a n y courage o r any great adventure out of this country until you know t h a t the Government has p u t its house in order and is living within its income, a n d do not let a n y b o d y fool y o u into trying to make you believe t h a t t h a t means a n y b o d y is going t o starve to death. W e can do all the relief work through t h e Federal Government that we did in t h e year ended J u n e 30, 1934, by t h e expenditure of $1,250,000,000. I n fact, we did n o t spend quite t h a t much, a n d if we do n o t waste any more money than we wasted t h a t year a n d if we will spend t h a t m u c h for direct relief, we can balance our budget. This will give confidence to a n extent t h a t will exceed all t h e rest of these factors combined. W i t h o u t t h a t , we face inflation. N o country can go on indefinitely running u p great deficits and not sooner or later come to t h e chaos t h a t follows inflation. W h e n we get to t h a t point, we will n o t have any standards of living left. W e will have to go through t h e painful process t h a t G e r m a n y a n d Austria a n d Poland a n d these other countries have h a d to pursue, and t h e y are not t h r o u g h yet. B a l a n c e the budget. B u t in order to do t h a t we must cut o u t the most extravagant form of relief, public works, and public works, even though we spent $3,000,000,000 or $4,000,000,000 a year, could not by any stretch of the imagination take u p this unemployment which represents in normal times the expenditure of s o m e t h i n g in the neighborhood of $30,000,000,000 or $40,000,000,000. Public works is n o t the answer. I t is simply jeopardizing t h e credit of t h e Government. I t makes everybody nervous because, if continued, we know it will end in disaster. Gentlemen, let u s away with government planning! L e t us c u t down on government waste a n d let Congress within t h e next three or four m o n t h s of its session feel t h a t t h e American public d e m a n d s the flood gates of prosperity be opened.
