POWER TO REGULATE INTERSTATE COMMERCE INVOKED

Unfortunately, however, this book was published just when the Supreme Court held the A. A. A. unconstitutional. As a result, the plan did not receive the attention it merited. Only when the Supreme Court upheld the constitutionality of the National Labor Relations Act did it become apparent that what Dr. Ezekiel had proposed to do under the general-welfare clause could be done just as well under the power to regulate interstate commerce. The Industrial Expansion Act, therefore, while based essentially upon the Ezekiel proposal as outlined in his book, rests not upon the constitutional power upon which he based his plan but rather on the power of Congress to regulate interstate commerce, which as construed by the Court in the National Labor Relations Act decision is amply broad to legalize the provisions of the Industrial Expansion Act.

The formulation of this act stems more directly from a resolution adopted by the State convention of the Commonwealth Federation of New York, held on April 17, 1937, favoring a measure that would enact into law the plan outlined by Dr. Ezekiel. The sponsors of this bill have worked assiduously for several months prior to its introduction to put the bill into its present form.

TAXING POWER USED TO STEP UP PRODUCTION

The central theory of the bill is that if the power of the Government can be invoked to reduce production, as in the case of corn, wheat, and cotton, the same instrument can be used to step up production all along the line. That is to say, why cannot a 25-percent tax be imposed on the value added to goods by processing in the principal or essential industries? To the units that cooperate in stepping up production, keeping down prices, and meeting certain labor requirements regarding hours and wages, this processing tax will be refunded. It is recognized that this use of the processing tax is purely a method of persuasion. It is the teeth that were put into the A. A. A. and that were left out of the N. R. A.

ONLY ESSENTIAL INDUSTRIES AFFECTED

To begin with, the processing tax would not be levied on any industry until a comprehensive plan had been worked out for all the essential industries. The units within the industry would first be given the opportunity to set up their own code; if they failed to do this, and the industry were essential, the Government would have the power to set up a code. No units would be compelled to come in, except and insofar as a refunding of the processing tax would persuade it to do so. Moreover, it is not the intention, under this plan, to bring all industry within the operation of the plan. It is the feeling of the authors that this was a mistake under the N. R. A., and that in the operation of this act only the industries actually necessary to the operation of a Nation-wide plan should be affected.

NATIONAL INCOME INCREASED FROM $65,000,000,000 TO $95,000,000,000

If industry is stepped up all along the line, it should be possible to increase our present national income of $65,000,000,000 a year to $95,

000,000,000 a year. The individual manufacturer, therefore, would be just as safe in turning out 95 units as he is today in turning out 65. There would be the same chance of disposing of his product at a profit, for the simple reason that the national income would be stepped up proportionately. But the Government depends not only upon the coercive pressure of the processing tax but also upon governmental cooperation with all manufacturing units that are willing to come in under the general plan. The industrial expansion authority, for instance, would have the power to enter into contracts with all manufacturers by which it would take over at cost a certain percentage of the total output, should it prove to be unsalable.

This, briefly, is a summary of the machinery provided by the Industrial Expansion Act, and the economic analysis and theory upon which it is based. Since the actual provisions of the bill have been discussed at length in the remarks of Congressmen Voorhis and Allen, I shall not further discuss this phase of the bill.

UNCORKING THE HORN OF PLENTY

I wish, rather, to devote my remarks to that rather large group of American citizens who can see the anomaly of actual poverty in the midst of potential abundance; who realize the great productive capacity of the United States, measured in terms of natural resources, modern factories, a highly perfected technique of production, and a highly skilled and industrious citizenry; who, envisioning the possibilities of production in a country where artificial shackles have been removed, have also been moved by the injustice done to large sections of the people in denying them access to the Nation's raw materials and machinery of production.

I know that these people do not need to be persuaded that our objective is a desirable one. They are already persuaded. Their concern, however, as well as ours, is to find the method by which this goal may best be reached.

SOCIAL OWNERSHIP THE SOLUTION?

We are all, of course, familiar with the various approaches to this problem. First and foremost come the adherents of that school of thought which believes that the natural resources and means of production upon which the welfare of society depends ought to be owned and operated by society itself.

On the one hand are the Socialists, who have believed that it was possible to achieve this goal by gradual extension of the field of political ownership to the taking over of utilities, natural resources, and essential factories after properly compensating the owners therefor. But it has become perfectly clear that the 4 percent of the people who own 80 percent of the Nation's wealth are thoroughly opposed to any plan of this kind, and that they will use their wealth in any way they find effective to defeat it. Consequently most Socialists, observing their frustration here and their failure abroad, have concluded that this program, while it is thoroughly logical and ethical, is nonetheless politically impossible.

On the other hand are the true Marxists, who believe that this changein the ownership of the means of production can come about only as a

result of a violent revolution, overturning the present capitalist class, and the setting up of a dictatorship of the proletariat on the part of the masses, through which instruments the classless society will finally be achieved.

NEITHER SOCIALISM NOR COMMUNISM FEASIBLE HERE

But it has always seemed to me that there was little justification for any hope in such a program in the United States. I have written extensively on the subject, and have as a result been condemned at considerable length in the official publications of the Communist Party in this country. I have long been convinced that the American people will never regain that equality of opportunity that has been an American heritage by the traditional program of either the Socialists or the Communists. On the other hand, I am equally sure that the old order of laissez-faire and rugged individualism will never again work satisfactorily. I am convinced that the American people will regain the equality of opportunity of which they dream only when American industry is operating at full capacity.

EXPANSION OF PRODUCTION THE LAST FRONTIER

In the field, between 65 and 95 percent of capacity operation is, in my opinion, to be found the frontier which alone can reestablish the equality of opportunity in which we all believe. It is my firm conviction that only through such a plan as that proposed in the Industrial Expansion Act is it possible to move in the direction of capacity production, a high standard of living, and equality of opportunity. I believe that in any other direction lies the certainty of failure— failure that will set in operation forces of retrogression rather than

progress.

GERMANY'S EXPERIENCE A LESSON

There is, as I see it, a deadly parallel between what is happening in the United States today and what happened in Germany in the decade preceding Hitler's rise to power. During this period three friends of mine visited Germany, and because of their backgrounds came into intimate contact with certain large, and at that time important, groups of the German people.

FRIEND NO. 1

This man, because of his pioneering in certain fields of labor relations in this country, had the opportunity during a 6-month stay in Germany to meet many of the most important leaders of the Social Democratic Party. When he returned in the spring of 1933 he told me that he, as an outsider, seeing the desperate need for action by the Government-that is, the Social Democratic Party-had warned some of these leaders that they must act before it was too late, because Hitler might very readily come into power if they failed. But they had the situation figured out statistically. Hitler could not possibly, with his antilabor policy, win over a majority of the German voters. They were positive that very few of the unemployed would support Hitler, because after all they belonged in the main to the working class, they had a working-class psychology, and it was inconceivable

that they would turn against their friends and join an avowed enemy of labor. These unemployed people, however, regardless of class background, had become desperate and demanded action. They listened uncritically to the promises of Hitler, and concluded that it would probably be all right to give him a chance.

FRIEND NO. 2

This was a young man recently graduated from college, who as an undergraduate had been in close touch with the various youth movements of the world. In Germany he met many of the young Communists and some of the Communist spokesmen. He told me that they were hopefully watching the rapid liquidation of the status of that large number of people who had formerly belonged to the middle class. They were confident that as these people were forced into the ranks of the unemployed proletariat they would join with their equally unfortunate comrades to give the Communists the needed mass support for a successful class revolt. But these dispossessed members of the middle class did not join the Communists. They joined Hitler.

FRIEND NO. 3

This was a woman who, with her husband, had played a long and distinguished role in the history of the American Socialist Party before and during the World War. While in Germany she naturally had entry into Social Democratic circles. They pointed with pride to what they were doing for labor-aiding in unionization, shorter hours, better working conditions, unemployment insurance, old-age pensions, workmen's compensation, industrial housing, municipal ownership, and so forth. But as she viewed all this progress she could not shake from her mind the disturbing conditions of that large part of the population that had formerly belonged to the middle class and who were now being forced into the ranks of the economic outcasts. What was being done for them, and what plans did they have for their future? The invariable answer was, "Aber das ist nicht unsere sache."

"BUT THAT IS NOT OUR PROBLEM”

This is the answer that would be given by almost any farm or labor leader in the United States today. The average farm audience does not care to hear about the problems of business or the workers. They want to know how they can get cost of production for their crops, and they regard anything else as extraneous. Since a disastrous export market lessens the price of the local crop, obviously the most sensible suggestion is to reduce production to the level of the effective domestic demand, thereby reducing labor and increasing income. And if the A. A. A. and Soil Conservation Act can reduce agricultural output. to the amount for which there is an effective demand, laboring men are wondering why labor cannot be made artificially scarce by limiting the number of hours per week that any man can work. Important. labor leaders are offering this as an ultimate solution for the problems of the workingman.

THOSE INSIDE WILL NOT SUPPORT THOSE OUTSIDE EITHER BY TAXATION OR PRODUCTION FOR USE

The liberals of the country might as well realize that the 80 percent of the people who have a place within the system, whether as owners and profit takers or merely as poorly paid farmers and workers, and who produce the $65,000,000,000 that makes up our national annual income, are not willing to take care of the 20 percent who are outside. The argument that purchasing power given to these people would make greater prosperity possible has never had any great persuasive force with the average man. If he has a place within the system, he feels that he is contributing to the Nation's total income, and that the unemployed man is not. In an emergency he was willing to admit that he owed some obligation as his brother's keeper, but the plain truth of the matter is that he will not assume this role permanently. The weakness of the relief program lies in the ethical nature of its hold on the people within the economic system. Political realism should teach us that this is not enough.

The time has come when the various groups and individuals who are seeking to improve the lot of the "one-third of our people who are ill-fed, ill-clad, and ill-housed" must get behind a program that will have a chance to divide politically not the people outside from the people inside, but rather the one-fifth who now own and control the United States and all that is in it, from the unemployed, those who are employed at low wages, and those who earn the barest subsistence on the Nation's farms-in short, the 80 percent of the people who, whether inside or outside the system, are unable to enjoy even a modest standard of living.

So far as the traditional Socialist program is concerned, no one can question its thoroughly logical approach; but socialism has always left in the hands of the enemy those psychological instruments that are so well designed to take care of every form of psychological lag. It is needless to argue the point, since the voters have already given their answer in the past two Presidential elections.

The Communist program is based on certain assumptions that are not applicable to this country. The question, therefore, is whether there is some program, outside of socialism and communism, which will solve the problem and at the same time appeal to the great majority of the citizens of the United States. The sponsors of the Industrial Expansion Act believe that this measure provides a program that can now secure this support. Briefly, these are the reasons for our optimism.

REGIMENTATION NOW A FAMILIAR TOOL

If the Industrial Expansion Act had been proposed in 1932, it would have been premature. The people of the country, despite the chaos then prevailing, would have cried out against this attempt at industrial regimentation. The farmers were with difficulty persuaded to accept the A. A. A., which merely permitted them to reduce their output to the level of the effective domestic demand. As a matter of fact, farm leaders had been advocating this kind of program for many years. The A. A. A. gave the farmers the kind of scarcity they were interested in.