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toew York City,
December 26th 1938*
Mr. M. S# E c c l e s ,
Chairman, fed. Reserve System,
Vfashington, D. C.
Dear S i r : I see where you and Senator Byrd are having quite a
disagreement concerning the financial policies of the government.
I am not going into what the Senator has to say bfct I certainly
donrt hesitate in saying that the monetary policies of the Fed.
Reserve Banks and the Treasury dept. are the bunk as far as putting men, and money to work, and take the people offrelief, I
sometimes think that the politicians now in power - like their
job so well that by keeping sufficient voters in the poorhouse
and paying them for loafing, they will continue to buy their
votes, and artificial popularity for themselves, and thus perpetuate themselves, and their relatives in office.( A rotten state
of affairs but a fact.)
Ever since the administration accepted that nonsenical
ff
gold price" theory of that chicken professor from Cornell, I
have said that if that was the kind of financial intelligence
we had to run the country, I felt sorry for the people, and I have
had plenty of reason not to change my mind.
In the first place - it is not the price of gold that
makes commodity values — but it is the use of the gold in international commerce — — - the actual amountGdf gpJLdu used in the ifeg
international credit system which regulates the value of commodities
( outside supply and demand of course)
and since you goldhoarders in Washington have taken out of use, and circulation,
Billions of "4 worth of gold that rightfully should be used in the
worlds commerce, you have forced world commodity values down in
value in a corresponding relation to the gold weight you have withdrawn from its rightful purpose.("of being receipts for values or
services rendered, andLpossessed, entitling the holder, whoever
it be , to new services and merchandised)
By your crazy gold hoarding policies you have destroyed
the market valued of such international merchandise as cotton and
wheat, you have lowered the international values of products of
the ground in relation the volume of gold you have withdrawn from
international circulation, and after doing such a foolish thing,
you turn around and put the producer of *S» commodities on relief,
you tax poor people to pay the farmer to loaf, you tax the workers
boss,and their payroll^so that more people are put out of work, and
still more on relief, and you tax business still more; you take
productive capital ®way from manufacturers who could use it to increase their business with more employment following, and you
turn that over to millions of loafers - and drunks - for coi6fe#and
buns, and whisky. No v/onder the haad man is so popular with people
who donft believe in hard work or saving their money*
You tax the workers payroll, and §ut him out of work,
and on relief,—- when you should put the tax on the productive
horse pov/ers in the factories, to put the men in a preferred position in the shop, give him a better competitive position in relation to the machine, and women labor. — There is no more sensible tax in an over-industrialized situation than a stiff tax on
productive electric horse powers ( and ether f©«ms of mechanical
power) in the factory where machines are ever putting men out of
# 2.
a b#ob and throwing them on the government and thereby the taxpayer*
The payroll tax should be eliminated altogether for the benefit of
re-employment.
Unemployment and old age pension taxes should come out of
the mechanical horie power tax in industry, and no other place, if
we want to put people back to work.
An electric horse, power tax on all manufacturing plants would
reach the big manufacturers who make their o?m electric power,
It would make possible a shift in taxes from the electric
power producer, to the motor power consumerf and make possible a
lower rate of electric power for the home.This lower electric rate to the residential user would
stimulate the sale of more electric appliances for the home*
Shifting the tax from the power producer to the industrial
user, would then ciake it possible to reduce the tax on the utility,
and thus make lower cost possible for the residential consumer. It
could also be used to but taxes on real estate, and thus bring lower
tents to the poorer people.
Taxes should be used to create economic lalances , and
stimulate employment of the greatest number of people. That is certainly not being done by taxing a mans payroll,--- but - it certainly
would put men to work if we shifted the tax to the automatic machine
thru such a simple means as taxing the total horse power in a factory,
leaving out horse power used for sanitary purposes. - — This horse
power tax should be used to reduce utility taxes, real estate taxes,
payroll and old age and unemployment taxes, and as said before, it
would reach the large manufacturers who now make their own electric
power, and thus, I believe, escapes the tax on Utilities.
As an example I will iake a furniture manufacturer who
makes a million § worth a year with 200 men ( and woman, I am sorry
to say) and has about #00 electric horse powers for his automatic
high speed machines,—— he is responsible for at least 50 men being
out out of a job because of his highly mechanized factory. Let him
pay $ 10 to $ 20 per year per productive horse pover of whatever kind,
and he will soon find work for 10 6r twenty men more.—- The cost of
the tax will be absorbed by the consumer but he will not feel it when
he is working.
An industrial horse power tax would be the most stimulating to re-employment, and the least felt by the consumer, and be
most evenly distributed in the final stages.
~
And ,back to the gold situation, —
the government should
let Iqj3e several billions offgold, it should use it to pay bills with
and stop borrowing, there is no excuse for th#4 wild plunge into debt.
Commodity prices would go up quick, and you should stop relief to the
farmer, and the processing taxes. Our dollars would be cheaper quickly
in the foreign mafcket, and promote our exports, and again increase
employment of many people. There would he more cash in circulation
and that is just what we need to get still more people to spend and
buy and produce. — — — And then
there would be an awful yelling
about —
INFLATION - — - seems everybody is getting used to the Poor
house for which Hoover ( poor fellow) is supposed to have laid the
foundation ,—- and, which is certain -- Roosevelt put the roof on,
and now they are afraid of prosperity. — • — Of course, I realixe that
there can be no prosperity, no re-employment, no stability, no happy
homes, as long as the present money (mis) managers let the international
gold speculators, mortgage speculators, ( these profiteers in misery)
bankers and money lenders, and other welfish interest keeping them
from their dmty to the mass of the people.
# 3.
It will be a sorry day soon enough when the foreign gold experts
begin taking back their gold —• at their own price — with a great
loss to Uncle sap, as they call us, for we must be blind idiots if
we ban not see that handwriting on the wall already.
Many years ago, when the english negotiated their debt settlement with our government after the world war, an english economist
when he saw that it was impossible to reach a sane agreement on the
settlement of the debt because our stupid negotiators coulfnt lool^
ahead farther than to their nose tip, said: tf We will drown the
Americans in gold if thevare so crazy about itIM — — and even though
it took ten years more tlnan he expected
they have done it now.
Ten ot twelve years ago I said that for the benefit ofl our working
people, and in the interest of employment, the war debt should be
canceled or cut down to a small percentage of the total. That too has
heen proven, - — the Germans, because the allies forced them to keep
up war debt payments which were phycically impossiblef almost killed
our export trade because they had to get exchange by any and all means.
And who were the final loosers ? — the sj(hylocks who tried to collect.
But, I am straying far and wide from my subject, which is a
request for more sanity in our monetary affairs$ and our fiscal affairs',
this administration has been in ofifice long enough to show some results
it should not try to hide its failures at home with an effort to stir
up hate toward other nations, and create a situation that can only
lead to a new war, -- maybe we have promises to the munition makers
that must be fulfilled too, especially these poor munition makers in
Delaware* — — What this country needs today more than relief and
a good five ceiat cigar is:Tt A better gentile government for better
gentile Americans?
Jours truly,
( Hans A. Plough)
l£0 West 91st St
N, Y. C.
@FedFRASER