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concerns which during the past decade have been far-sighted enough to put into operation voluntary plans for unemployment compensation or of dismissal wages, has amply proved the positive advantages of this device. The testimony of these pioneering employers uniformly shows that managers have thereby been stimulated to eliminate the wastes and inefficiencies which lead to and result from unemployment; that employees have gained a degree of security which is reflected in an improved morale and increased efficiency; and that consequently, the immediate cost of the plan is justified as a business investment. It is such evidence as this that has caused an increasing number of employers during this business crisis to recognize the merits of unemployment reserves. A few have even instituted new voluntary plans.

I suffer no illusion that the ideal of complete regularization of employment, or anything approaching it, can possibly be achieved by all employers under the varied sets of conditions which exist in industry. Nor will attempts at regularization by individual employers prevent entirely the recurrence of cyclical depressions. But I do wish to emphasize that to regularize employ. ment, to the extent that it can be done, employers obviously need a new and sustained inducement. And when unemployment cannot be avoided, it is my conviction that employers should be prepared to assume the social responsibility of providing systematically for the workers they now from time to time carelessly cast aside until they need them again.

To my mind, a strong case can be made for unemployment reserves simply as a means of preventing destitution among those ready and willing to work, but for whom no work can be found. Surely it would be more efficient, more adequate, and more self-respecting than the haphazard devices we now emplos. Moreover, it would remove from the taxpayer and the charitable a burden which should properly be charged to production costs just as effectively as industrial injuries under workmen's accident compensation now are. Faced as we are today with dwindling charity funds and exhaustion of tax resources, there is imperative need for the development of this third source of revenue in providing for unemployment relief.

I believe we must face the fact, however, that there is no hope of early and wide-spread adoption of unemployment reserve funds by American industry unless it is uniformly required of all business concerns by State legislation. The study of company plans made by Bryce M. Stewart of the Industrial Relations Counselors, Inc., has revealed that prior to the present emergency a mere baker's dozen of employers had set up such reserves. The recent announcement of a few additional voluntary plans should not be allowed to blind us to the validity of Mr. Stewart's conclusion that "a wide coverage of unemployment insurance

will come only through legislation." It is beyond my comprehension how anyone sincerely desirous of the prompt and general adoption of unemployment reserves by industry can oppose such legislation.

American plans for unemployment reserve funds legislation, such as the one proposed by the American Association for Labor Legislation, the similar plan enacted into law by Wisconsin in January 1932, and those now being proposed in bills in more than 20 State legislatures, seek merely to make State-wide what a few enlightened companies already have done of their own accord. They offer, moreover, the most promising direct stimulus to industrial stabilization that public authority is in a position to contribute. Such legislation will attack the problem of unemployment at its heart.

Congress can and should encourage the early adoption of State legislation providing for unemployment reserves. Senator Wagner, in his report as a member of the Senate Committee on Unemployment Insurance, has shown how this encouragement can be offered by means of income tax deductions to employers who set up unemployment reserves under State laws. Such an act of Congress, by its assistance to employees in those States which first enact this legislation, will effectively remove whatever basis there may be for the fear expressed by some cautious individuals that such laws may place employers at a disadvantage in interstate competition. States whose citizens are prepared to go forward now with this constructive method for dealing with our most urgent national problem are entitled to this reasonable aid from the Federal Government.

IV. It is a curious and rather shameful fact that whereas the Federal Government spends millions of dollars in furthering the activities of all kinds and conditions of commercial projects, there exists no single board

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or coinmission of any kind whose function, it is to deal effectively with the great disease of industry-unemployment. Certain minor activities exist, such as the Federal Employment Service and various bureaus in the Department of Labor. But there is no central independent authority of any kind working on this problem.

Such a situation should be remedied, not only for the human misery involved, but for the economic waste involved also. If $700 per year represents the spending power of the average man in employment, and there are 10,000,000 now unemployed, then this country is losing at present approximately $7,000,000,000, which might otherwise go for the products of industry. Every million men put back to work means roughly $700,000,000 circulating through the channels of trade. It is easily conceivable that a central authority on unemployment, properly organized and effectively administered, could recommend legislation and encourage practices which might within a year cut our present number of unemployed into one half, or even more. It is probably too much to say that this could be done the first year. But it might be done. Certainly much more can be done by any such effective attack than can possibly be done under present circumstances where the problem is left to shift for itself or, at best, is hopelessly mired in the mud of political chicanery. To this end, it is recommended that a Federal board on unemployment be set up, according to some such plan as the following:

1. The Federal board on unemployment to have no mandatory powers, but like the Tariff Board, recommend to the President and to Congress such legislative measures and voluntary practices as will be feasible for the Federal Government or for the State governments to undertake in order to attack the problem of unemployment in more organized and more effective way than heretofore.

2. The Federal board on unemployment to consist of seven members, four of whom to be of the party in power and three of whom to be of the largest minority party. The Secretary of Labor to be an ex-officio member of the board. In addition, a technical advisor be provided for, whose duty it would be to prepare material asked for by the board and to suggest lines of activity for the board. This position of technical advisor to be a full-time position with compensation sufficient to attract the best economic brains in the country.

3. The Federal board on unemployment to work in cooperation with the Secretary of Labor (who is an ex-cfficio member of it), but to report only to Congress and to the President.

4. Present problems which such a board might study and report on now: a. The Wagner bill for employment exchanges. b. A proper Federal plan for public works at this stage of the depression. c. Ways by which State employment exchanges might be improved. d. Advisability cf State compulsory unemployment reserves.

e. Advantages and disadvantages of the 5-day week, share-the-work plan, etc.

Let me emphasize the point that this board is not intended to be “just another commission." It is probably true that we have far too many incompetent, wasteful boards and commissions in Washington today. The point is, however, that this board, if properly administered, would be a productive institution. Insofar as it would promote the expansion of employment, in just such measure it would increase the productivity of all trade and the increased well-being of all wage earners. No one can seriously question the value to the people, over a period of many years, of the Interstate Commerce Commission. The field of the Federal board on unemployment would be even larger than that and might easily be even more effective in its influence on improving the condition of trade and standards of life of working men in general.

March 10, 1933.

STATEMENT BY WILL DURANT, GREAT NECK, N.Y.

I. CAUSES

1. Technology and the nature of man: Our “Mississippi” of inventions has greatly increased the productive capacity of the average American; the economic system, through the natural inequality of men and the resultant concentration of wealth, has left the purchasing power of the people far behind their productive power, despite the relatively high level of wages and salaries in America,

2. The war: A similar gap between popular production and consumption in other industrial nations led to surpluses of goods and capital, and drove these nations to compete for foreign markets and spheres of investment and control. War lies like an irrepressible seed in the very nature of our economic system. As England fought Germany in 1914, so America must, if our system cannot be changed, fight, first, Japan, and then the British Empire for the markets of the East. The War of 1914 helped to cause our depression by (a) destroying goods; (b) accumulating debts; (c) depreciating currencies; and (d) intensify. ing nationalism. Hence

3. Expensive armaments, requiring a burdensome taxation; and

4. Tariff walls, obstructing trade and destroying the machinery for paying the

5. International debts—an impossible burden because of the rise in the value of gold, the obstructions to trade, and the reduction of national incomes.

6. Domestic debts-an impossible burden because dollars worth approximately 100 cents when borrowed must, under present laws, be repaid in dollars worth 150 cents, by a debtor class, half of which is out of work. Hence the bankruptcy of the debtors, the consequent bankruptcy of one quarter of our banks, the practical bankruptcy of our mortgage companies, and the imminent bankruptcy of our insurance companies, unless the tide is changed.

7. Governmental extravagance, especially in the cities. 8. Revolutionary chaos, destroying political order and trade possibilities in China, Russia, India, and South America. Similar chaos is rising in Germany, and may appear in the United States.

II. POSSIBLE REMEDIES

1. Inflation seems unavoidable, if we are to reduce that burden of internal debt which is stifling trade and ruining our banks and investments.

(a) The evils of inflation would probably be (1) a temporary reduction in the purchasing power of wage earners and the recipients of fixed incomes; and (2) the difficulty of controlling inflation. But the experience of France, Italy, and England indicates that this fear has been exaggerated in the interests of the creditor class, which likes the idea of being paid with the present exaggerated dollar.

(6) The advantages of inflation would probably be (1) To raise prices; therefore (2) To discourage hoarding, stimulate purchasing, and so aid employment; (3) To encourage manufacturing, and easier credits to manufacturers; (4) To reduce the burden of internal debt; (5) To protect what remains of our foreign trade from the competition of inflated currencies.

2. Reruralization: Since the advance of invention renders improbable the industrial reemployment of all the unemployed, some of the new currency should be used for-or bonds should be issued to finance—the establishment of as many unemployed families as are willing upon unused land; not with a view to competing with existing farms, but in an attempt to free these unemployed from the humiliation of charity by teaching them to grow food for their independent sustenance.

3. Reconstruction Finance Corporation loans to limited dividend, municipally regulated housing corporations for the replacement of city slums with modern but modest apartments.

4. The gradual redistribution of wealth by (a) High taxes on inheritances, incomes, and the export of capital; and (0) The removal of tax-exemptions from governmental securities.

5. The encouragement of employment by (a) Shortening the working day commensurately with technological advances ; (0) Establishing legal minimum wages rising automatically with the price index; (c) Compulsory unemployment insurance; and (d) The establishment of employment agencies in all post offices.

6. The restoration of the credit system by (a) Removing the limits on postal savings, so offering a secure repository for the people's funds. In this way the Government could borrow directly from the people, and it might pay 3 percent on sums left for a year; (b) Regulating national banks, in their investments and procedures, to enable them collectively to guarantee their individual solvency; (c) Encouraging a similar application of the principle of in

surance by the States to all State banks; (d) Governmental supervision and control of the credit system. Currencies are the roads of commerce, and should be kept open and safe like other public highways.

7. The promotion of international peace by (a) Tariff agreements with individual nations; (0) The reduction of intergovernmental debts-and, if possible, of international private debts-in proportion to the increased purchasing power of gold; (c) The conditional recognition of Russia; (d) Permanent international commissions to deal continuously with the recurrent causes of war: Foreign markets, investment spheres, food, fuel, raw materials, and trade routes; (e) A consequently practicable reduction of armaments.

8. The establishment of a national economic council to give unity, order and self-control to industry, to bring about, by agreement, higher levels of remuneration, thereby to raise the purchasing power of the public, and to rest the industry and prosperity of America not on the capture of foreign markets at the cost of war, but on our own market of 126,000,000 people.

9. The reconstruction of our economic system by (a) The maintenance of private ownership and operation of industry and agriculture, in order to utilize the productive incentives of personal ambition and family affection; but the control of the abuses of this highly productive system through (b) The legal recapture and retention of all the mineral, fuel, and power resources of the soil; (c) The unification and governmental control of all major means of transportation; and (d) Governmental credits to agricultural and industrial cooperatives, with a view to building peaceably a cooperative commonwealth free from that regimentation of men and minds which seems to go with complete governmental ownership of industry.

10. The reconstruction of democracy by (a) Requiring specific technical preparation for public office, through (1) A United States civil academy, corresponding to the United States Military Academy and the United States Naval Academy, training men and women, democratically selected from all the States, in the art and science of municipal and State administration; and through (2) Similar schools of government in all major universities. (6) Making this educational qualification for office thoroughly democratic by promoting equality of educational opportunity. Democracy should be redefined as meaning, not the equal right of all to hold office, but the equal right and opportunity of all to make themselves fit to hold office.

PLAN FOR ECONOMIC REHABILITATION THROUGH PRACTICAL RELIEF FOR THE

UNEMPLOYED

(By William J. Ezickson, A.B., M.D., Philadelphia, Pa.)

THE BASIS OF PRESENT ECONOMIC DIFFICULTY

All informed economic, academic, and legislative thought is unanimous in their opinion that the basis of our long-continued economic difficulty is our inability to put to work our monetary reserve, resulting in a financial drought that is perilous to vast masses of our people.

It is also accepted universally as true, that credit, the instrument through which alone those monetary reserves can be employed in our mechanism of production and exchange, cannot be put to work involuntarily and against its will, nor can it be brought into active use by any form of pressure exerted by government, nor by means of any brute force.

The use of credit in our operations of production and exchange must arise as a voluntary act in response to demand for such use, and the development of a demand for the use of redit totally dependent, in turn, upon a contingent expansion of general business activity.

Now, since the expansion of business activity is dependent upon an increased consumption of the products of industry, which, in turn, is dependent upon the · contingent increase of the buying power of the people, and since the increase of that buying power is normally contingent upon an increase of employment, we find ourselves confronted by a cycle of events, each contingent upon another, and that before any effective results can be obtained from any effort to rehabilitate business, that cycle must be broken.

It is the continued existence of this cycle of events unbroken, which creates the paradox of millions suffering want and hunger in the midst of plenty. of millions of unemployed in the face of needs for food, clothing, and shelter that can not be satisfied for lack of an acceptable “medium of exchange."

It is plainly evident from those facts that all action must be directed and concentrated upon the one objective, to wit, to secure a steady and general increase in the consumption of gocds. That to secure this, buying power must be injected into the circulatory system of the Nation, so that everyone will have the necessary means to purchase the food, clothing, shelter, and other services required to maintain the American standard of living.

We cannot wait until the operations of the business cycle produce jobs for the unemployed for millions of them face starvation and are crushed with despair-millions of them will then be beyond employability because of age or technological conditions, and other millions will have passed the habitforming years during which skill at their tasks and discipline must be acquired.

We must face the fact that in this great emergency Government can do literally nothing toward lifting the Nation out of this terrible financial drought. Only the people themselves, through their own voluntary action, can do that and they will do that if our Government will but place the means they shall use therefor within reach of all of them.

HERE IS THE MEANS THE GOVERNMENT CAN PROVIDE

The plan.-1. Let the Congress of these United States authorize to be issued by the Treasury a series of noninterest bearing, self-liquidating trade certificates for the period of 1 year per series.

2. Let the said certificates be issued in denominations of $1 and their eventual redemption be had upon receipt by the Treasury of the face value of each such certificate, payable to the Treasury as hereinafter provided.

3. Let the people of the United States who shall receive those certificates in any manner, voluntarily impose a sales tax upon themselves, of not to exceed 2 cents per week, per dollar of face value of such certificate.

4. Let the Congress authorize the Postal Department to sell a sales tax stamp, which the bearer of such certificate shall purchase and affix to the reverse side of such certificate in the spaces provided therefor.

5. Let the Congress provide that such certificate shall be legal tender in the payment of all manner of private debt arising from exchange of goods or services, when the requisite stamps are affixed thereto and shall not be bankable.

6. Let the Congress provide that the face value of such certificate shall be paid to the final bearer who shall present the same for redemption to the Treasury or its agents with fifty-two sales tax stamps affixed as provided.

7. Let the Congress provide that the initiation of the circulation of each series of the said certificates shall be had by the distribution thereof, through the States to the already existing agencies dispensing relief, to the unemployed, in such amounts as will best serve to meet their needs for food, clothing, and shelter, and that the total sum of each such series of certificates to be issued monthly shall be that required to cover those needs.

8. Let the Congress provide for the limited issue of eight monthly series of such certificates, the redemption of every such series to be effected by the termination of the twentieth month from and after the issue of the first series thereof.

9. Let the Congress provide suitable administrative officers for the undertaking and appropriate such portion of the proceeds received from the voluntary sales tax paid by the people to such administrative expense, any remaining surplus to accrue to the Treasury.

DYNAMICS OF THE PLAN AS A MEDIUM OF EXCHANGE

It is self-evident from the foregoing that the certificates to be issued by the Treasury, as provided, are intended to serve as an auxiliary medium of exchange in the United States pending their liquidation and redemption during the time and in the manner provided.

The form of these certificates shall be of such design as the Congress sball determine, but the face of the certificate shall bear words and figures similar to the following:

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