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• w Chairman xxxxxxx December £8, JEMOEANDUJI: To Fron - The President Ciiairaan Eccles I am sending you herewith a redraft of the which I discubced with you Uie oUi&r day, &nd alao a 2jwpege suiainary or recapitulatian of the salient points. This redrafted memorandum i& L. imXerLal provement, I think, inEr.au.ch &e it brings out points u&d oraits some duplications which were in the draft I left with you tJid wLicaf becau&e of luck of tlSBj I did not h.L.ve U opportuiiity to revise before talking with you# Needieeo to MQTj I earnestly hope that you y«ill find thii autteriai helpful to you. Attachment The political tide la running tfitnrt the Administration* The people and many of their representatives in OOBgTtil tr« confused fay the aultitudinoue factions launched against the enemy of depression* and by the clamor of the opposition which comraands aoet of thy pr—•< The M«lnlnlml1<wi threw Into faction a grettt arsay, launching &n offensive on a l l sectors. The public n*a had i t e QJQi fixed only on the sany segments of the battle line—upon individuals in the line—Johnson,, Richberg, TugTsrel.lf X9kMI« Hoi>kiii6, etc.—and baa been bewildered by individu&l actions arid often conflicts of «ictioa« cross-purpose©. There bti '.niduubtedly been war-te aetiQa.t The public gftMl has been upon the individual clashes* Above a l l , the public tea failed to Bee what a tremendous victory h)M been ton £i.iottg the bfittlefront M a ^ i o l e t 1K5W such l o s t ground lias been recaptured, IKTK tmr bsick on UM road to r e covery the nation bm» been biNDught. The Oppotttlon now f i l l i n g the prOM d t b vita;ier^tion OBB be jsede to look ridiculous j i t Cfin be coiapletel^ routed cna annihilated t^1 an aggreci::ive campaign, stating the cold, hard uaanswer&ble f&cts?; of the M N L jsoaent that cajap&.i;pi ! • not being aade •ffeotlToXj* At the I t should be :aade forcefally without BOflK delay, Gince i t i s the h^bit of our people, if not a l l peoples, to vote against ratter thwi for, the aaapaJLgn should be pitched against the daagar* of t return of reaction which would usher in another era of collapse aatd dlftastytr even though i t a i ^ i t be - * - temporarily preceded by another period of unbalanced prosperity each fti M had in the £0fs, when ZZ percent of the national in- come went to le&s th&n one percent of the people, with affluence at the top but vr@tche&iei;c among gwnt M M M f at the bottom of the population pgpMMlriU As aiming uh&z Governor L&ndon symbolizes what the opposition mill stand for, it appears that the otgor attack will be against spending^ue., in favor of balancing the tradget by drastic reductions of g u m II—I til expenditures, 1% M M bo AflMMrttwIad beyond all HMMMMMftfL contradiction that thli would be the p&th b&ck to reaction and aev defliition, with • return of misery for the great rsa^set; of oar people and ulti;acte destruction of our d — i w t l i fors of goveriiiaant. For the opposition offer© nothing but a return to policies vhltb brought U5 to the edge of revolution, to en unprecedented econoiaic pVO0tmctloil« the poli- cies offered by the opootdtion have been tried and failed M com- pletely ttet only blind men, incapable of Iturniag from experience^ would have tlie effrontery to pro MMM now & resuaption of euch policiea. This Adalriit;tration c^ae into office inheriting the most donorsdised, aoit chaotic conditions in tha p*MM tii-ie history of laerica. It mey be doubted whether Lincoln faced • country more ithmtttTrt &nd ^nic-ridden. When thia AdBlnlstrattlon -took office it Inheritt?d a nauion&l debt ol" faorettMUB20 billions, a not only bMMIil of tlie si^teken tax policies .nirEued under Re publican JbdBinljtrittlOBf in the 2Q*B9 friien tAxea wnra reduced four tlaM though they should b m been —Intalrnri in order "to pay off the I I ' ilMWIIil debt, bat also because UM Hoover M•ililltnttffli by failing to intervene soon enough nd on • broad enough scale, by letting the deflation run far on tta course— with untold misery to all, our pto de and Io«P— in the national income e^tiaated in excess of 150 billions—added a deficit of a billion dollar* in one year and i o n than three billion dollars the next to the burden. The cost to the present Admlnli/tr&tion in stopping the deflation and turning the tide H I vastly increased over vbftt Mold bsv* been the QfcM Imd the Hoover AdBlalfftrmtlon not pei'iititted deflation to go to sucli ciii>aEtrou£i extrene&. In viei' of the :ofigriificent accoapliahBBrt M far achieved of rtopping the rain and farinflllC t.he country tmr baci-: on ^he roiid to recovery, i t would beftbMOrdfor the Admiaistrfction to be on the defensive. I t should be justly proud of the achievement, and prepared for a gnashing of~ feiisive. We hum coae fully half w&y back to the levels of 1929 aeeeured hy the national income, yet we have a long way to go yet» To turn back now, to revert to the opposition ,>olicie£-. which were tried and which failed rtlintumi 1,, would be a fatal aistak«« To slash the bilrtft in c&pituliitivm to c r i t i c e , ?rc>uid be not only to confess error r/here there h&c been nune, not merely to adait that the c r i t i c e are right (ami they are proved vrQttf on their record), but :iost of a i l and MTSt of ,...11 i t would bt p o l i t i c a l ly and economically WTQttg« It WM14 Wit back trie recovery, per- fa telly * Budget if. The essential, igparod bat incontrovertible fact 1B th&t tfre budfffet i s bein,: balanced rirrht now; i t i s being balanced in the only way that i t can be balanced without i n viting mother deflation and mother dih&tter that aif^ht end in real revolution find tike emi of th© cieaocriitic tj»{mmw the ©mi of the GonEtit'itioUj the end of American l i b e r t i e s and traditions* The dmkfftt loday i s not froa the iae*igre handful of Recie in t h i s country, but frost the blind reactionaries who^e policies a l l but broiipit M to public revolt Md BOUld| i f reinstituteri, jeopertiise the very things of wliich they j r a t e taut arm too blind and greedy i t ••inderetaiici ham to protect. yhe ^ud^ret i s ]?ein.-.? bfcituioed aonf in the only wc.y that i t can rightly be balanced, by lmm—lilllj n&tioitai lntXMM9 out of •hiofcl alone QM WMM the revenues with wJiich to effect • bslMMHU That mtinmt income, ¥hlch 9*ak from MOM then 80 billions in 10£9 to lees than 40 biliiont, in the last y a r of the Hoover roglaie, Is nearly halfway ht.ok to 19S9 levels. revemAen €xre rising correiipixuciingly. As a direct r e s u l t , our tfcx they are close to $£»500f000»000 niorc now than they were in tlw l u i t fMr of Mr* Hoover• I t should be receabereu that taaM to pay off the national debt w i l l not b*? collected out of a s t a t i c national income, especially when t h a t laoCMM hftfl been aore Bun cut in aa lM:,;)pened l a the latst dagra of the Hoover Adslxil8txmtl<MQU t to p&y off tha debt will be collected out of a dynsuale, restored and ( • ! kliouid be UM 0*M OttdatT orderly economic pro— grsMi) stei-diily iiT| rn*1*ifl nAtloaal income* That la rtqr thi arj t h a t the present or l a t e r fMMHfittliOtta MBBOt ©iKliire tin lad bui*~ den i s foolishly unrealistic* !?o generation whioh i i ispoveriched can beer tiixation, but • nation vdth • restored, and ex;->andiiig national income om.\f without SM^ BArdahip iPuiteYcjr, w d u n taaoM that would be umiiitnf to i;.n Inpoveri&liGd nation. Mor will tbt Uixe^i 00M out of the " l i t t l e f«ULo*9* aj Liberty bngRMOFt and othar raisled and •ffliilrtinfl calamity hM&tra are to fond of ia^» ing. in The texes w i l l come oat of the IBOOBMI BnrpOUuHMi oiled up w good tiiae&w by corporations and iadivlduals and will be c o l - lected oa the equitable bftftla of aldlltgr to pagr« Hot only thia tend to deflect these surpluses from UM ipocjnlati.fi oala (to say nothing of w o r t h i e r forei.pi boodo) Into which b i l l i o n s were poured in the 20* &f but* olWB doflatlonajry taodoneioa d©¥elop, the Go¥eriimeat (NUB tesi ; >oi i arily ioapoad pa^iiig off faore of i t s debt aad d i v e r t the funds into the spending atroaai and into the — D — dl of the unaer-oriviio/^ed oho ivill tKQf foodj olothlng Mid other good thus bffillg fcbOUt OXOfctloa Of MO* re&l wfc<h* Xhfttj very eiaoly Btfttod* i s tiie ooonofuic orocec-e, uot under a ;;U-ti.c but undo* y expandlag tttrtnoay t>i shioh >o< pic like Libt-rty Loo u.. D© unaware* H t h recovery uuderway iJid tax ooXXootloaa oonroepondio^ly nnj tho grost osrodlt ononototj Boob OJ ttoo R*F«C«| who S»O«L«G« l : .c#i=., tfi &.CC UM Bpeodlaf« 1^ fioablod lo oolXoot MOTO than tnev- are In other voxcUj tho pro0f«rof i r •arponriiiuro uro d l o l n l ffhliag i h i l « roronaos t r o l a a r — l i i g « toadily Throo jeer:. tgOj uador tho guppoood hiionoo t h o twirtgnt p o l l o i o e or tho Soovor Adslnlotrovtloai eh&rtod l l a o o vouXd ihoti tho U M O riwi'U"t t t H f t t i Q» S3WSJFSStBR% FOVCUEK19S - . . -.-. I ..•••'. 1,1^' . . . lituroo i t o o d U y poin^l*l : -,r'd ~ Lhf? fcwo llaoo oxrfing farthor tad furthor oaoy flroa oooti othor - tho attboJtoaoo who budgot ineviuibi^ grovliig y o o t o r ond grooto>« rtod line,: hoTO boon x,j>.?n&d» ,. i . rooovocy proooodo« Tod«jrf tho That of oxpoadltufo In foing d o n M Shot »f rovoauo hoo tttraod apoojpd* Bor* ring <s reireraal of policies, a return to d@flo>ticmoi7 0j0OsitrO8| the Liaoi OVO bound to arooo« i i ... , i'irtit, on Iht r a t e a t wlilch these lineu will cooiity vlth vhioh prltmto ontorprii p tht lood of OApXoyin^ "the unempioyeo <iad. tivn relievos tho H»ioriiojoiil of i t o inoooopoblo duty to parovldo for tho unoaplogrod in [aeMitise. A pren&iure effort to boXonoo the bu:,.:;et by tho wrong - 7 - aathod of forcing radnoad ax >aoditur*0f ahaad of tfca tint whan prlvata bualnaaa i t prepared to wttbatltttta It;, e n axpandlturaaj would inpada recovery tad Invltt anotaaor onaat of daflatlon« It would be to oonfao that tha »tapa alraady bakanf winch bava b m tniwtnifly st&ocaaafulj which &re ^roduciag «. balancing biui^eL, have been RTOOg «h«B| ac^ -roved ay tilt fact.,--, they hi.ve bMO -tso^olutcly rijht* ; isco.-uily, ttM rttt* ftt vhloh lib* lines converge ce^au,. u^oa tht taeady upward progrwsi of the- national LnoooMj vhloh MM op to alioat 60 blllloiui in 1954 - a jain of fully ten blllloni over UM IAI W yaar of the Hoover rc;°i;ne - exiri is running OIOM VO GO blllioni at UM praftant rate of baaineso aetlYltj« Vo attoapt nov to i;arce • [nanatm i budgat hiTtwia would ;:low up thli proosai ruiaoaoly* It would inpl; i gt^.^ie condition of tht country, •UaiWflll,, WJ the Brookin^fl InstitUtt bai mptuni "nr; in tiie final volume of* its axbaostlvw study of tna da$Hpaaalon and of praaant day- woonoaio iditiona (Tilno— aw ionic Projgraaaj paga 85) i "If we ami to achieve tho goal of aatiafaotory Btand«rds of living for ayaryonai UM Clrst raguiraatmt ia to increase prograaaiTwl|F the v^vai awxxtttt of tna iaOOM divided* Only ai tha aggragata national 1nnni Ln>araagee ftpon 3.) billionfli will UM goal of ft high i taadard I Living '.ar everyone ba attainad* n The dittributioQ of Lncottt fro;a year to year if. of oriaavy signlfioanoa not for ita aomontiry effects upon UM wall tn1 mi; of tha •aaaaay but fw it« poaalblt OQMUH Lativa affaoti in trosoting ft fuller atlliaation of cur productive facilitlee end J^ onmiaqjuant progrwwiiva in* create in tna ft^gragata inooaa to b& available for dl#» n rt intoraatad in Maintaining • statin ; Ituation la ahleh tha total Inooawj avtan If actually diatrlbutcsd, vould bo altogathar inadequate; va ay* i n terested rathar La ptrodiftalag a iijaaal n situation in which tntrrtating quantltlaa of ne^ly oraatad gooi i sad aarrloaa vould bMOM &¥&iifc.ble for everyone?. M of 3GV j-erJl Obje .- Li i i La i UM r<u;.I Tlalon vhlob tin (§•• Moooaieai •tt^portocl by thi teat DMLL tei bsld outj MOQOMIO HI ught in thifl iktixioii and abrofi.d - not by the raaiiVloinrIan and tin hty^lingt of bankfl bat txy tndapandaiitf foi1 wax dUlookln t aaonoBlata Ri rafa*aaantad la UM data<shad and cijviivi.ftref.itod Borooklngi group* Thia LApXle^ • p aooiaitaaij v,u.te aapltal 1 PW| faoolaaj acw noiManiii IBJ naiihar ragiaasitatio&i nor raatrlotloni i t la . - to aaJu tha s a p i t a l l a t l o lea pirodttoa and dlatribuia to iX§ f u l l oa>pajOlt^T| aada*1 our Gooatltn* t-ion, our traditiooai U b t r t l e i and ffaadoa of lnltlatlT«« aaTa our iliajoonUn laatltutlaaa froai tha iM||iaa1i Uij tba MM ildt aad uie bllad raaotloaaxlaa on tha otbar« to tha taalth «<ilatribator» aad T<HKU axlstlag .^tfatic waaJLth of (ha country To vie tribute plaoaa ^r tapar aarlriid , It v.ni H *u..-cn on It l i tha an awn To dlatributa tha : ^e to dlatrl uta >oTcrty# i i aoatiii ^athar aa an aid aga paaaloa or foi' irtiatajyai" jorpoaaj wouXd ba to dlstrlbuta worth** laaa pa>par. The problem i s to create sueb an abundanoa of rail waalth ~ houaM| c l o t h i a : , foodj a l l tha khlagl people need and -vi^ut ami use vhlon l i tha only raal aanitli^ of ahloh placaa of mp&r Mill til aonay - 9 - ara but Uie ajabol ~ that tha attaiaabla . al if . ' . i p standard of Lirtng fo* ttvtr.v- -i1.- will '.•£• raaoh«Ct| i I Lt con bt tmcer an orderly ittosio tai a undavvagrt . and kfu baan froa UM Thli i i tha real aotlva'tlaa of tha Inception* [t MMHRI UM firuitloi] of it«: aaplratioBi I wr tin rorgottao aa& and tin XIM 44jalnlsiratiOQf S QXpendltore .. . arad vlt . r< wl^a> been Licx*e«s.&ed iv as&rly ^0 so far <.;.rc e bs lot wilj hi 1 . u u.^i- nal Lnoowi KXL111OQS| not cmXy aw tax rwnmtta up by tomi |8^600,000,000 over Lhree f9tOF§ ago, wh*a the EfOOWMT i . d i n l straxion went out, but the falttt CWf i i r t ^ d B#Ottrltlai on UM IBlthni i s up by 20 b i l l i o n s , th« wJLttf of 111 t EM I '. Qp by 7;r b i l l i o n * ) the values of a l l r e a l e^;U;Le, urbaa and rural f are Op, df bank and Lniurmao« company a s s e t s , of a l l oilier ratl asa«ta| inoidUamtaUgr gcrraroaaat bonda wttich aold dovnf for aoM Uiauaai M io?? ah. 32 three yaaya 1 (of ao^ arc at I owalaa and u a e r lower LnWi^irt rwtaa^ Cotttntatad wltb Uaa bllllo&a 1190x1 billiooa 0/ looraaaad valnai La o:.^ rlaa -,-i1 &<mm 9 b l U l o m la the public dabij ihla Ifl a troaa figure whloh la i f allowaaea t§ aadt fiwp the Traaaarx*! oaab balaao«B| the • ,.. mad by . • . . . .t In ineh a^aoolai a Uia lunraaant tram ra^aloatlon oX UM dollars tin R«7*0*| and Dadaetlag thoaa the rlaa la trie dabt l i arouad S biiii^ru,, an lasignlfloant atM bv »arlson tdtb fch< restoratloa* - 10 f-rbt ..•green ^'ouj l i l t Of lir Etebt fie-.- be Lg&oraat OP i r r J .- .. • NagBJL-* . ..'• L< a l a r m i s t s * suoh ai the r£&«gpr are Llkt the •ah&lloi p o l i t i c i a n s ' 1 whom Lord ?:*fc.e«:uley i ribs In hia History of s^igXi idj 1 o t i m a l l y srled oat that •reaL B r i t a i n - • '-•• ing ruiasd bj •., llaciMd i • i ol tha Irlt the clebt ttiftt theiz EM^dUii . 3ug}jiMi8 MM! Sarburgej • m only L iwfii MKN mpCNMd as baosloaB* :"'he ..,'.., UM 8OOT«T< • . • KncKna i . frfitnfl^nf) todagp are LUw tin 'ahaXloi politioiaofl" who, B, .. aultsy s e i d j eav or tat dtobt gren but a t t • b ..... « Aortal ti-oc-lUi grm ouch f a s t e r * It a nrerlookodj Rl0o f that ... . eountrj •f . 9 f 0 0 0 t 0 0 0 j XXJ La O M ymr and dXed up i d e f i c i t : : > X), WO, )00 La another year :. l a s t MUT| that thi •ar^inourred detu . . :- • • • , y e t tri i debt ; ee Lti -'•:.. wrong HXons9 . ,. . ^ • IOHCJ •: ' -. .- u "ed tolag taxi U EU i bia La the t>a;ae period,, and despite the fact that our people squandered oae oi La t reign seourltiei • At tfc Iarc« Burplasea that »• ierc able . u 'm - d t a l equi] h o t e l s | factori< , power i 2 that in the t , vastly to ' etc., i tad oeh a? national •ewi Ui >rti - hoaesj '. .... , regating fully |10QfCX}0fCKX)9(XX)« !•»! eh^f oan't w »It i f undt l a f a c t | do far better? ftth the restoration now uxicierwev, vlth the recovery of • national Lncoat not aersly of 19^3 bat of the i Uidoa en- visioned b v tie Brookinga reportj Lt v l l l be possible to pay off tht present debt vlth & rapidity itraatij oTO<io<Hni; that of the K>**« The alaraiftts also erwrlook tho faet that our oatlx* tiationaXi gross dUibt of B NMI 50 biXULoaa a i ^ m t i to but l i t t l s warn than four •oatlM of oar o o i i l national UMMMM lnoraax In tha aatlooal dao/t of m BOMI :J UM BI i Ls »f L9£9« fha gpross ..illi'.uin slnos this AdaloX- •trfctloa took ojTice i s but l i t t l e nora than one Month's ooraal national ineosfl at 1929 I«r*l8 f and the oat inoraase in the debt sisea t h i s Lnlataratlon took oiTice aaouatfj to studbi less than tMO vaelcs of the aoraal aatio;i^I 1 nooawij Can i t 1 • iously ooatandad that • Savevu* •ant should not co^aa s aoath f a aoraal inoose f Just as an Lodllvidual v;oula, In utder to recover frost s c r i t i c a l illness? often ttsed anaXogjr betv;et;r, an indlTldtial Incurring debt Is false* In the Rowever, the ^ilng into debt and s nation i r s t ilaea>« an lndiTidoal ordinar*- i l y can not expeet his ineosMii out of vaioh he east pay his o^htsj to expend^ sliereas a pro^reesi've nation like oors can ootmt upon Iti : national incoac growing wto&ully larger* But| beyond bhatj hew ean a natloii| whUffh Is a l l of the teopXey becoae fiaiuici^ilv embarrassed by borrowing froa i t s e l f and payin Uurest to i t s e l f f - 12 - It should be rene&bered, also, that tlM budget M M unbalanced in large part, not to relieve the unemployed, or the distress of the farm &xid home owners, but to save the banks, the insurance companies, the railroads and the private credit structure all along the line, IB not the Government at much under obligation to unbalance its budget in order to come to the rescue of its citisens who are out of work and destitute through no fault of their own, as to unbalance the budget in order to save the private credit structure? It If altogether illogical and unret.£on&.ble for those who approved and, in fact, solicited government funds in order to support the credit structure to draw the line against support of the unemployed until such time M private enterprise is able to provide employment. Ho one objected in the 1MB% war to unbalancing the budget to the tune of |9,000,000,000 in one yetr and §15,000,000,000 thf next in order to protect our citizensftffclnctt foreign foe. By what logic am. it be held that the sejue citizens should not be protected likewise aguinst the equally deadly ravages of depression? A favorite theme of the objectors is that people with fixed incomes suffer because of t&xec and lower interest ftttWK But this vim-r completely overlooks the fftCt that taxes will be collected out of surpluses, according to ability to p&yf find that owners of fixed incomes are infinitely better off with assured incomes even at lower interest Itttftfl than with inflated and excessive interest returns which the national econoxay cannot support and which vanish, along with >rinciple^, in A oallapM &nd deflation ag^avated, if http://fraser.stlouisfed.org/not directly Federal Reserve Bank of St. Louis induced by excessive interest rctes. - 15 - j-.g ). c^.-u>a;Y o f i. The AdBinletretloo bei deolared for aa abundance eocwuojji u.iC r e e t r i e t l ••>» p e l i c ; i n i~-* it t ^ 3 ar&rj e x - .. . rercnee •the effects of aaxvJUtditoad over^-expanslon • it to overcoaM the effftcta ©f tiie laduiitrial high t a r i f f polloles raftered kqp the • .e~ pubuHowi Adainlatim^lowif aotably inciv i:;^ ir« Hoowri la UM t) 1 ,' thi •ffevia of ^iloh wmr* to los« foreign wuritoti f«p B^rleultuxml oatput nad to »oo#nta»t« dosestlc onbalAooe h i t m n ftgrlcultox* m Uxdostfy M aaeh that Lhrou^hcmt UM W>§« a^rloaltiirt MM sufferiag acutely aaidst supposed >ro«p*rltj« That aora aqtiltabla balaaoi baa already been Largely restored] Uie Adminlatratioa'1 varloaa atepa to bait tha deflation aad reatore the general -rice level to • point of reasonable ^ustice bet—an cabtor aad creditor - the departure ttom ld9 ranraJjotttloOj ^ t c , - bave a l l pmibinod to lay the fouadatioiia for • atabXaj ovdaorljf iroigreai ahead bo UM goal of abundance} the £•£•€,, the Banking Act^ of L9SS aad particularly of 1936 prorlde Ihe Trmtninantaiitieii for ao ooatrolliog stoolc aarkwt and credit soaditloaa aj to aalca for aore Btabillsed progreae^ freedaa froa the ipeool a t i v e mwreinai of the 20*a aad aToidaaoe of the axtraaos of deflation I inflation^ I rereraal of polley aoW| la U M bodgat« ^ 0 il strike at U M foundation* ahiob nave been laid end tha pirogreaa alraadj reaiinwi - 14 ards vhe a c h l a v a r i t of an ooo&oaQ ol abusidaiioaj It w i l l be greeted bg the opposltloa aa • so&fas&lon of arro?| i t v i l l plaoa the Adaloiatiratloii on UM dafensivai and iapl^ that UM Doogjlaaaaj UM ti.r^'Urgs, DM Aldrlchasj UM .Liberty Laagiiaj the Chaafear of COM UM latioaal Aaaocla'tlon of tottJTaotiir«m« UM Ka KibUcMuui e r , K&QX| Unndon - UM orovd that hfti ftlmya b^tn tad tXwgra vUUL ba ftfaijiat Uila Adadalstraitlan - era riglit« Thia la UM crowd iiuit it pemmr rmtbmr than recovery - UM orowd tba>t foar 18 y—xa a%i i:i poaNNFj UMt t r i e d UM v&ry pollcisfi ablofa aadad in the grwtta>st msh in oat •onmnaiifi historyj UM orow) tba>t willed thia Adaloistz*tlofl a debt of SO blXllooi lad I daaMXraJLi4Md| Toatrate coanLryi yet ^hcy Btti banra UM inU11 BMI aucUioitjf to propoaa bhftt we go biadi to the very pollolftfl ^hich wrecked uhe oountxy* d fatM prophet;: on UMIT OVO record. They banri bsan To o»plt\ll>tl to UMIT now voolcl be uathinkable> obaa titlli /.dniinistrfetion 1 js >olloi»a now being ••ply vlndlcatad by UM aoajaawarablc toet of laprov»M -i. ratflacrtad la every ladaoi of ba&laassi indostrlaJLi economic and finaAolal aotlTlt^* Xht r#owd LWalf la now only a vindication bat • refutation of UM policy to fBhich UM oppoaitAcm bl . UM iwtlon to r*taro« Far froai rotrim'tinfl or rc^rectin.; UM tiaw la opportnuM to Usrov UM rsoorU tecic into UM i t e t h of thosa cri\.icii| to tako •& s.^~ grcaai^ra staod| and to raatata a^pmaslTaljf UM otojeetivaa of . Binlatn&loD afhloh are la fact bain t a e d tills .. .•. . >t only ... - bain oad through thi proeassas i , La aotloa ^:v' this ArialnI stratloa^ as evidaaoad by tha disdnlshad praaatiras and liioraaslnjj rtrraauesj bat will ye b&l&neex; at fast &s ptrlvata industry ataps in and bakes u; tha sl*ek of Miploy—ntj irivmta ci:;,diai J41 {•ttliic laj tu • r»mlt y proofita t n inirttni Ln UM -:.i.i, Last da/fl of .. the MM) -<O UM tone of b l l l i o o BOOWRPI 1 ..- ,.' 1 L :.... « i t AMnrioaa iaoaliMiae • thaj wmr* out of UM r«d n w-r . , by tha drop la baakruptolM (^iieh aojabered aore than E5f000 for thi Lo«« MO BTC LnorMuilngj Ixat 9 Months •' L9^j with gregatlng nora than thrwM|iUKrt«ri of a bUlloa dollarS| [oor«r Miya racorarj MUI underway) J not walj are profits to- c r i » l n g j bat unwtpl^meat la diainliihingj vrmn Ui,i-t;;i s t i l l •xc«aslira| 'the fmtJL^rifcl inyoiue iw accordingly ri; Lug 1 1 vlth tt6 bax eollactlooAj but only M bhli proosi UM bad^atj la othar sosdaj 1 . ttin—a la It soaslbla to balance . rlvata eatarprise taxes over Just ao faat will fOTTiiaant ipandlng aXatok off| CAU' Ut totem rachurtioo la &OTaTraawnt apandlng fastar than prifata astarprlaa picks tip UM load would only halt ihc proeoaa li aot rtfmMi It aad proaipitata anothar daflatloii« - ysron.:: a&tiiod. p,:" baXfa,.ri.c l:v; tae oiujjet iis ixll what tha tpposltioB ofTaaraj a r r a y a l o a to UM Hoorais»4)ougla8-^»ibaF^r Laagaa • 77 of budgdt-balaacin^ would not oa3j jeopardise recoveryt bat - 16 es a sitb.tic aa,c ju ^c^rqXty,,.u.c9aojsy Tor the nation us a athole nftii for kh< *ic.i, poverty .:i, tiaa i l g r i l l e d 'or tli« j&iisea, ass \ < wroeperoui i :fr. • tint fi it rhe rooking^ 1 stu [ : , aaon o t h e r s , g r a p h i c a l l y lajpTilial liii Urn BAJOT d e f e c t s In mr eoonooie Bystea La the ->*.- - focp vhloh tin opj»i Ltion oi e n as) BK Md; - »t»* ever, ^o ihat & re^er^ion would not merely ^er^etuate tht defecte bat leac to axK>ther oollAps«« • t lw bron^it The opposition prof«ss»a to fear Inflation a thi vorst Lafli tloa : ^ e,. . u r i u , eal < ti to Bad other prises ia our h i s t o r y ; Lt offers aotMag acw to correct the v ;*„ (refects LQ th« Bystea whicii >rodueed . . evil r o . ; u i u set forth La Uw atudloi r o c r r o d t y , km all—iapojrt Au As fautjor si tha 20*& ami that I .r UM i r s t UJM la «IP history capital ftccufflulnfd f a s t e r yam i t could be profitably oaployed la production. 3 xr £>5 i jrattrt M hft i-i* t x L. - .^ i ; fr^iLl^r; pnMtt aavMM of iwigzmtion ftad a f a i r l y ,ilgh oirth rftt* ,;tve u a ,of3fcstic narket i .v v prei N rapidly that ai faat a oa i t a l aoouatilatftd It a 1 be put parof I'Uibiy iato new fxroductloa] tariff imiltaQeouffljri until smr h h .alley k i l l e d Lt off, » • bad a for*ig2i starket* i» andri 5:iegfried h i .,. L , i »rloi Male Bjy Lbs 2Off8| f i./cj m i*d i t^rc froatiarj for the f i r s t tlaa l a our s:i_, fcorj Uu -ice of laud, ration iurned UM other wgrj our Boustainoufi bariffa coat ui aur foreign martetiij and ior the first tiae in o.ir history oapltal aeottaulAtod auoh faster than I t could \m pat into productive «nt«rp!rifi«j at the - 17 - tlrac, ej Berle and Beans have ,-' . la oorporat orthj ve witnessed rapid c-iarigee rrgani station j with &< growth of • y n t iwwhtr of La* duatrlal giants* shieh aoausailated vast profits wire::, they ....;.<-. not aloa dti - ~^ - : .- ; •• y is /•'.:, dividends or, as would .xvc bMa bsst of a i i , Lome pric#4| MB toeicUnitftl tTl jakttge i n . Uiti v.l.:..- . Kv.'vkUii-rcial pi-per ; o t . i UMI uta . ,:. b«nki oonld no long«? tacLftt on that ono« IUadaa«a.tftX t^rpt .van; but - P«t tfffcct v.-u- (hat the» caul•: _. ipiXX^d onrwc into stookj m l ;:!..._ v~ I proO9( . -. . aoouaolatic»u or esta'ta aod otlmr B eeuitwian— :: .: ;; Republican Ad Ling wa d M it I brmtioiu to bait UMI prooi tOQ&Qmjgp U M B t o o k :.ii..r;-5.-L OH Soovaar did notlting to abate Lt unt»il the crash caae; nor i;: ^ay~ - I'erei^ now hjr !!*• BflovT6| ^. • oation against p Snoxasj sto« a tc safagaax^d arrtaea of tha salaait^rj on .... i . . La policy would axpoea the naLLou. to tbt MMMI evil,;;. . . iltoatioQ re60j n n vmtxwa^ Jieir The ffecta of set forth bsy Brookinge (Ineoaw and Eoonoaie IS©) •JUf to tncrcwwi dlatribution astd i u : reeultai M found in the MO owl diTiaion of our stodj the ;>rocc;edi; of the nation's sffortfl going in disproportionate and Increasing —aaar< •aall perceii'tu^e of the population—In 1929 as BUOfl ai S3 >er it ol the national Inoow to I peroent of the paopl>« Ra found thi nnaatlsfled pants—aeods aooording to any good soe i a l standard—:^r the 9& percent of a l l faailiei aho are noa below the level of ^5000 unmnai incoae saffloieat to absorb ict of a i l our nroinad aapaoitj tsader present conditions of prodiaetiTitvj and .. i l l i deej euch sore frosi soeli EOVexplorcd potentialltlef i L lit thereafter be opened ap« \ e - 18 fouuu the incoaes of the r i c h going la larga proportion to ,,vL.i,;:: ^is1. \,;\eto savings $tron ;ly aa mailed by other* I s * pounded a t th*;* :>.;uree by cur r e t i m throu ; &iw praoiloi of aecuaulatiivs corporate surplus. Thai e u*vi.i ;; , t f t e r ppovic:.ri;: for BttGh incre^te oi capital goods ae could be Hpofitabiy employed, *t Pound s p i l l i n g over into l e s e fruitful or K)fiitively haraful U8ea9 ranging I i v: Ljp loana (bad ae well tit, good) to the a r t i f i c i a l bidding up j ol rice. * . \ l c >ro a r t l e s f aotabl^ cor : >orate seeurl*we began to disottru the amnmr to our q the basic defect l a ..ir econoaio wV^teri, aot d i * eoirered i n tlie t e c h n i c a l proae. :>i:. o^ >roduotion f ir to i-c fotaad I n the r a y i n I j&h • a ' u c Jit v . l . i r ; iti I LaCDsie, The answer i s a f f i r s a t i v c - ; t h i ; : i s the ;\Lace a t r b i c h y-e do find faftl I c Th« | l i B i s t r i vl.'.i' US^'AIV *t, !ianrt piag to correct t i baeic laladjustaent* i »ff«ot »f 'o oite vu, rookiagi urther ( Mtge bug ::i,, - « » >f t h ,>c >le appears to be fuadaaentally reaponsibla for Qm parsiste&t failure to s a i l forth our productive >owor«« I t bai b R shown, alao that the itan ar i oi Living esired 'or the Aaericaa >eople c<. a nholi u , be attained >nl^ If ro ctn soaehow grcatlj iaerease the aatiosal output of goode arid EMurvioes* Dar problea It. to eter ,- bether the flow of the Inarm* stre&a to the various groups i n society can be i o .3ori.fico • £ t o BX^mnfi ^ro_;ro* t d v f l v tlie e f f e c t i v e <,e i od for gooda and l i n t evoke an ever greater volune of prodoolloa—which woul< M i s i steai \'i i tgw ttin aggrej^t* laftawm to be d i v i d e d » " I t haj beea bg rest >riau buyia int ->-or, bg pottia noaey th bottoa oi tht . :a in^ . i n i 1 . , that tlM .jrcu-riv >ro;;r©ys of haf been achieved* A reversal of policy no*, t h e r e f o r e . - 19 , Lnrilcatad bo dieactroui froa aver? ut idpointj /.. ,, tiu^er.U. >ai • certain >agre»i dgjit ' *equeBt OP r e l i e f , to ba mad oalj U ifl nrlae f a l l s to tefct »?•» tbt an. >iot ;..i..ai load] Ih ftdalalatttrad fro t r f xrivs/cc, cntcrrm ^ Lngfad of il Lgton by n o •..... = •<•. K «ri<mo« In . -en uiat of CLQQ yoarkfg la tbe ioelaX flold i bonXd bi hfMTii:^ la r e n>»t>r>H»t1 foam bg thos* sxiMKrltxiead la ha.ad.liii; ruadaj r»aantaint caa be feb^ted by do£s£ aaaj altli UM pvovl Ion tkmX p&TBon aoat daelara tha—alvai pauparlsad La ordar to %*% on r* XlMt r •- for vorlu Xacidontallyi a baXancad budget will w t aaploy • >Ic - aa Boorar aa$>2j proved. • •. resulte only when bu»l- Lvai cnctlari I ^r goocU| and ardajri foar pa - ... tu i .ti nit froa tc DG aly iaopl( .. .-... i nogr vita waiob bo boya aad thlSj f\irtharf Li UM J—.;• papocaai •hlcfa kaapa up aad ad< • , .- aatlonal iricoi-ie oat of attlea CKMH the taxaa aalea balaaca tba budgat« ^0TQi.t UM ftdalnlatra'tloii*I Inflltratloo In otter •;:' boylag povar Into tha treaa .ots at the faadaw ktal aansi oi tha troubla* In an iaaadiata aaaaura «hloh i ml f e c t , parhapa offsatting possible honalng trognmg d< .. bar« e s t l n i l a t l T * ef- racosaloo la fch< r i n / , - the largest rninan of - 2.0 - zonatruction la tha ihortset poaslble ti— f through the stimulation oi ,>rivet.€i oapital f has bean agreed upon fag tha w i m l Lntareated official** }:/4il WJ' H e a l :' ; t?fclth Auu,ia This AriBinlatratloaj dedicated to an abundance eeonoeyj the Lntereat* of the aadrprlvllftfed| IIM not only prc tsrsdl t ie.ai:).: recuveiv, i rorid« Uu*ough the etook aarimt EMukln^ controls t. »a©&iis ox" coabat'tlng both Inflation tod do- i'iation, but l i ill • position to oTf«r mplloit propOMkUi :'ar &chie-vin ; tiit; i;.e,;ree of abundanot re^re^ericed by a otft&dllj rlelag oatlonaX Locoaa baaad apoa r e a l saaXtbj not ha—d on papav aoiMQfi bat baaed on fttllJFTg torta f u l l ^roduotiTitj of our aoosoalo •anTiinaj, pOUafl tin techiiolv7;;iQt.I bexicifitu in innflDMrftbXa . ielui;-, Io oite tha final Brookinga report once wap& (p&^e 15S)i "The ifinnMiatail kao^lcii,;e raaultinc tnm •odaara • teiantlflci and technical diaoovariafl L« to yaat that were i t rapidly and oontinuouftly applied to tha 1»[UWioKOnt of pyodnotiTt xrooasaaai wt ootiXd iwive a vata of induatrlal adtancamiiitj and attain • Urmal of produetloa in the not dlstaat faturaj that vould dwarf anything that haa been known La tha paa^** This foal la in Bight under tha Administration's deeXared iolieiaS| and dtaoaatvabla resulti BO far ~ th??ig}i the goal Li i t l l l far ahaad| Lt l i not in sl^xt ondar • reversion ^o t,hc: blind rreed, cnv balanoed eoonoay and budget-balanoiag eethode of the opposition - to - 21 d to thoff* HHrthotlJB BO* oould tM tiM pnNktMrt ;>urrible ?Uu $MCL l i a t t a i n a b l e bg :ue Log &i o o t t -4 c a p i t a l d w rfttes ioi - *a ha tlus dl^trlba'tloQ oi occ:* th« ^duiiiistrattott*! polioyj forcing .ir*™*; im nro i t , »iiv-a i,*^ f a H t o F M I VMltli pcroctuotion, but s p i l l or«r Into * (•culattoni I01 keeping thi* flxpi J i r e c v e d Lato (In ipettdXag s t r a t a Uurough fating «p- plus In -I ifiw of ^ro^pcrity Mod thah r&daciag debt Incarred in periods of oefl&Tdun, The Soramwnt amat b« IIMI oo«pe:as€»t-ory taodiiuD in umiaF v^iii .:i,_, tin CIo^ i;kici btiiftllflf ajid a t the t>s.ae wise pra¥ent4im ex— e i t h e r la tha dir*€tloa of i.u'l«»cioa or d e f l t t l o i u The budget Is the key to ths whole1 ;-;olic^: and progrmau 1* Case for i*dg|inlstra^on needs aggressive presentation; opposition proposes retorn to unbalanced econoisiy of 20*s when 25$ of national income went to 1$ of the people (Brookings Institution studies), and 200 corporations, including 106 industrials and 52 public utilities, each with assets over #90,000,000, had combined assets in 1930 of $Slf074#Q00,00Q$ this equals roughly 22% of the country*s total wealth and is 49$ of all non-banking corporate wealth, while 300,000 smaller companies owned the remaining half (The Modern Corporation and Private Property, Berle and Means); these individual and corporate beneficiaries of unbalanced economy, through Liberty League, National Association of Manufacturers, etc., are moat violent foes of Administration* Th^a Administration jjj$*erlteft» not only chaotic conditions, prostrate business and banking, but a national debt of £0 billion?t taxes which should have been applied to curtailing this debt ware reduced 4 times in the 20*sj also the preceding Administration left a deficit of nearly 1 billion in *52 and over 3 billions in •SS, and by letting deflation run far on its course, vastly added to cost of turning the tide back to recovery* Rsator&tio,** underway; country about half way back to 1929 levelsj national income, which fell from over 80 billions in 1929 to less than 40 billions In *5£, was up to SO billions for 1954 and running close to 60 billions at present rate of business activity. Budget is balancings restoration of national income, out of which alone cose t^xes to balance budget, has resulted in increase of tax collections estimated for current fiscal year to be $£,400,000,000 above *5S; consequently, government spending needs decline; S*0«X*»€+, f,C.A, and R.F.C. collecting more than putting out* Taxes tp balance budget^ will coae, not out of present income, but future surpluses from restored national income, on basis of capacity to payj not out of "little fellow*$ fixed income groups do not suffer, better off with smaller, assured interest than artificial rates which national economy unable to sustain, with danger of losses of principle as well as Interest; government @ust deflect surpluses, which caused stock market, real estate, etc., inflation of 20*s, to pay off debt and, when deflationary tendencies develop, to spending stream. — f ~ 6. Preaature budget balance by wrong method of slashing expenditures before private enterprise taken up unemployment slack, is proposed by opposition5 this would set back recovery, threaten new deflation, reverse successful processes set in notion by M'ainistratlon; this Implies a static economy and perpetuation of unbalance ?• Coat of recovery aaallt Administration expended about 8 billions (as of November, 1935); deducting treasury balances, value of assets in E«F«C«9 etc*, and gold increment, net debt increase is about S billions1 this contrasts with gain of 10 to 20 billions in national incoaej increase of 20 billions in listed stocks, 7£ billions in listed bonds, and incalculable gain In values of real estate, urban and foral, and other assets1 government bonds, soae selling down to 33 In *SSf now at presiiu.11, under lover interest rates $ hence cost of carrying debt greatly reduced* Bm Debt burden exag&erfctedi in last war coimtry incurred deficit of 9 billions in one year, 13 billions the next? war-incurred debt of #26,000,000,000 paid d a w ty 10 billions In 20* e despite 4 tax reductions; at same tiae sow© 10 billions squandered on foreign bonds and fully 100 billions added to capital wealth; entire national debt of 50 billions is about 4 souths of nenaal (1929) national income; gross increase of 3 billions under this Administration is about one month1 s norml national income; net increase of S billion*? is less than Z weeks of noraal national incoaae; a country cannot impoverish itself by borrowing from and paying interest to Itself? bulk of debt Incurred at behest of and to save banks, insurance companies end private credit structure? critics did not object to unbalancing budget In war or to save private credit structure in §0fs$ objections illogical against also protecting citizens from ravages of economic forces; §Sacauleyfs 0 History ot dtgland® exposes false analogy between individual*s debt and nation*s debt, and blindness of alarmists rho see debt g » wing but fail to see that national wealth and Incosse grow faster; serious thing is not debt, but loss of f40»000t000f000 annually of national Income* 9* Administration prograsa succeedingi going off gold, revaluing dollar, necessary expedients to restore equitable debtor-creditor re* latlonships; debt burden further adjusted by H«0«&*C»f F«CJU# etc., in funding debt® over longer periods at lower rates} «.. s A.A.A,, a temporary expedient, has restored parity (nonexistent in £>**) between agriculture «aid tariff-protected lxuftustry; fans ineoatv which declined to nearly 4 Mllloiig its 1952 «wtia»tod to b© back to 7 billions for I98ftf $,S«C»» banking acts of *H and f S5, etc*, provide safeguards ag&iost rotors to evils of £0*s» -sue! will contribute to -attaixiaeat #f goal of Adainlstratlon* g objectives are being rmlised for legedj goal 6f afeimdaac# s t i l l far off; to Imlt now and verse policy or revert to reaction of opposition would invite new deflation, perpeiuate evils whlct! developed infl**. tionarj bubbles i s 20* s and resultaat oollapaei reaction aow say doom Democracy, including the Constitution, and lead to Faseisa or Sociaiisaj probXeit aow i s pro^feotlos and diatri^m* tioa or real wMltb to laaxiss^i capacity of machine age, plus technological advances; this eorvta&oas dynamict not s t a t i c , . economy, and orderly, stabilized progress, with government' i» cowpmmt&ry w&diw&$ tliroagh wmet«ry credit aud taxiag powers i lepublieaa opposition proposes retiim to imbalance Qt 20*s, «it& coae«atrat«d p®w«sr aad wealth at top f poverty or_ pmvoy for masses, including small industrialists and business ®®s| wealth distrlfeators wjuld divide up existing i a - , adeqmte wealth wbleh woald be to distribute povertyj ?o«s~ sendites, e t c . , would distribute worthless paper isoaej, aelthdr creating laor dlvtrtbating real wealth* Administration policies and objectives, based on sound economics, %emx salvatliaa ©f profit*«0tiv€ t individualistic society, Dewocratic iBstitutioaB and traditions•