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I believe it should be limited to a year, and where the proceeding is brought in a Federal court Congress could erect a procedure that would give reasonable time to these people. It would have to be done by cooperation with the States, so that the States may so fix their laws in the different States to fit in with the statute that would be enacted for the Federal courts.

I got the notion from what happened in New York in 1920 when we enacted what was called the rent laws. I do not suppose that ordinarily the court of appeals would have sustained the rent laws, but they did on the theory that there was a chance of public disaster, and it was the exercise of the State's police power. Now we called them rent laws for short. But all they really were were amendments to the Code of Civil Procedure that allowed a tenant who was served with a dispossess to set up the defense that the rent was oppressive, and the money at the old rental was paid in to the municipal court, and the judge became a kind of a judge of whether the proposed increase in rent was justified. And it was the first time that a lot of our people found out who paid the taxes. They always thought the landlord pays them until they get into court and then they found that they paid them.

Senator BARKLEY. Governor, in that connection of course we all realize that most foreclosures on farm and city property are proceedings under the State laws and in the State courts. Mortgages are executed and enforced under State laws. There is a very limited field in which the Federal court even try foreclosure cases. And we can not, I suppose, as a matter of law, compel any creditor to withhold foreclosure if he sees fit to go into a court to assert his rights.

We have now on the calendar in the Senate, and had it up for consideration yesterday, and I hope we can pass it to-day, a bill based on the Hull bill introduced here, with which you may not be familiar, offering to loan money up to $500,000,000 for the purpose of postponing foreclosures on farms and small dweilings in cities for a period of two years while Congress attempts to work out some permanent refinancing solution of the whole farm and small home mortgage problem. Is that somewhat in line with your idea?

Mr. Smith. That would be helpful. And of course as President Roosevelt is going to have the governors of all the States here on Monday, as I understand it from the papers, that might be a good time to call the attention of the governors of the different States to the necessity for State legislation on foreclosures.

Senator GORE. Several of the mid-Western States are doing that now, Governor. There is a bill pending in the legislature of my State. I think perhaps Nebraska and Iowa have already passed such laws.

Mr. Smith. Well, I am in favor of it because it gives a fellow a chance.

Now, on our foreign debts. I still feel that I was right last spring when I said that I thought we ought not to cancel them but just declare everything off for a good long period of time.

The CHAIRMAN. What would you call a long period of time?

Mr. Smith. Well, you could start with five years. You could say, “Here, we won't talk about this for five years, if you will do business with us." But of course you have go to do something to the tariff before you invite a man to do business with him. We have built a wall around this country here that nobody can get through.


The CHAIRMAN. But they are getting through, Governor.

The same proportion or a greater proportion are getting through than our own trade in the United States.

Senator King. That statement is subject to modification.
Mr. Smith. Senator, I do not believe in the big, high tariff.
The CHAIRMAN. I know. That I do not object to at all.

Mr. Smith. My opinion of the tariff is that it should be only what is necessary to take up the difference between the cheap labor of foreign countries and the high-class labor of this country.

The CHAIRMAN. That is what I think, too. Mr. Smith. But I think we have got it a little higher than that. That is the trouble.

Senator THOMAS of Idaho. Governor, may I ask you a question on that?

Mr. Smith. Certainly.

Senator Thomas of Idaho. Do you think the depreciated currency affects the situation any so far as our tariff is concerned at this time?

Mr. Smith. Do you mean the depreciation of the foreign currencies?

Senator THOMAS of Idaho. The depreciation of the currencies in the foreign countries. Mr. Smith. Oh, yes; sure. They have got a poor money. They

a have got no money, and what they have isn't very much good. And when they get here with it they can not get anything with it.

Now, I got this notion from what would go on in a bank. You have got a customer in a bank and he owes you, and he can not pay. He is willing to trim down his overhead in his business. And we might take this up with the foreign countries to trim down their armaments a little bit, because I call that an overhead. You do not throw the fellow out of the bank and send for the sheriff and try to get the money out of him when you know he has not got it. You want to give him a chance. The way to give him a chance is to say “All right, now, we will just carry your loan along here in the deferred account for a couple of years; you keep doing business with us, and as you do business with us we will be kind to you."

Now, if we could say to these foreign countries: “All right, you come over here and buy some of our cotton, and buy some of our wheat, and some of our manufactured articles, and in accordance with the amount of good will that you display toward us we will deal in the future with these debts; for every million dollar's worth buy from us we will take 10 per cent of it from what you owe us”. I think we would get out that way quicker than by standing back and insisting on getting something that we all believe we won't get.

The CHAIRMAN. That is quite different than when the settlement was made. For instance, when the settlement was made it was made in every case upon the basis of ability to pay. And there was not a Government at that time that particularly objected, outside of France.

Mr. Smith. The answer to that, Senator, may be that at the time these arrangements were made these countries were in better condition to pay.

The CHAIRMAN. We understand that. So was the Government of the United States at that time in better condition to reduce the obligations.



Senator King. Well, it is obvious that the United States is not getting it and the other nations are not paying: So the philosophy of the ex-Governor of New York is eminently wise at this time.

The CHAIRMAN. Well, that is a question that is doubtful, too.

Mr. Smith. Here is another thing that I believe. I believe that we ought to recognize Russia. I do not know any reason for not doing it. Somebody says they owe us $100,000,000. We kept troops in Russia for quite a while when we were not at war with them, and we did some damage to them. I think we could sit around the table and settle that matter very easily.

There is no use of trading with them under cover. We are doing it. Through the Amtorg, or whatever you call it, the Russian Trading Co., our material and stuff is getting into Russia. We might just as well be represented there and let them be represented here at Washington and let us do business with them in the open.

Senator GORE. They have got a counterclaim against us based on the fact that we sent an army into Russia although we were at peace with Russia.

Mr. Smith. Yes.

Senator GORE. I think you are right to the extent that we ought to sit down and see how much their claims amount to, if anything, and offset them against our claims against them and arrive at what the difference is, and then have them agree to pay it. Our objection to recognition is gone then.

Mr. Smith. Of course, I do not believe in being against them just because they have a form of government that we do not like, you see. Because Jefferson told us in our Declaration of Independence that any time we did not like this Government we could pull it down and build it up the way we want it.

Senator GORE. He limited it to this Government. He did not say we had a right to change other people's governments, did he?

Mr. Smith. No.

Senator BARKLEY. Governor, I do not like to base the idea of recognition of Russia purely upon the possibilities of trade. That has the appearance on the surface of being a more or less mercenary way to look at it. But waiving all the other ethical and international questions involved, to what extent do you think the recognition of Russia would bring increased trade to the United States which would tend to relieve our present economic situation?

Mr. Smith. Well, to begin with I think that if we were on a friendly relationship with Russia that she would buy a lot of wheat here.

The CHAIRMAN. Has she not got a lot of wheat for export?

Mr. Smith. She has, but it has all gone over to that far eastern. front where all those soldiers are. The most of it has


there. The CHAIRMAN. She is exporting wheat to nearly every country. Senator BARKLEY. Would she buy cotton?

Mr. Smith. I do not know, Senator. I am not in a position to tell just what it is, but I know that they are buying in this country now.

Senator GORE. Machinery and things of that sort. Senator BARKLEY. They buy machinery. Senator HARRISON. Yes; they could buy some cotton. They have tried to buy cotton.

Senator BARKLEY. I was in Russia two years ago and came to a little town where they had a cotton mill, and the mill was closed and about 1,500 laboring men were out of work, and when we inquired

the reason, they said they could not get cotton from the United States. And they propounded a very pertinent inquiry, to this effect: They said, “We want cotton, and our mill is closed, and we are all out of work because we can not get cotton. You have got your cotton piled up in the fields. You want to sell it. Why can't we buy from you the cotton that you want to sell to us?” And that was a very embarrassing inquiry.

The CHAIRMAN. Do you think that they can not do that? What is to prevent them from doing it now?

Senator BARKLEY. There is no law against it, but the economic situation and the political estrangement between the two countries contributed to a situation that made it impossible for them to buy our cotton. In other words, they could not obtain either the money or the credit with which to purchase it although they wanted it.

Senator King. Senator, it is simply a question of credit. Germany backed her exports up to 60 per cent and therefore Russia bought con-. siderable commodities from Germany so long as the German Government backed the exports.

Senator BARKLEY. At that time I will say that our Government was not only frowning upon any proposals in this country to loan money to Russia, but frowning upon any proposal on the part of American manufacturers to sell to Russia on credit.

Senator King. However, it is well known that it is not a question of debts-if the governor will pardon me—that are impediments to recognition. When I was in Russia I told the leaders—and I talked to all of them—that as far as I was concerned I would forgive them their debts and recommend it to the Senate of the United States provided they would keep their international agreements, would cease their propaganda and disassociate themselves from the Third Internationale. They absolutely refused and said the Third Internationale was an organization which was to be utilized in the battering down of the walls of other governments because communism in order to succeed was to be world-wide.

The CHAIRMAN. The very basis of their present government.

Senator KING. It is not a question of their debts at all. I would forgive them their debts to-morrow if they would do the right thing.

Mr. Smith. Well, I do not think myself that they are making any headway with this communism. If there would be any place where you would see some of it, you would see it in a city like New York, and it does not mean anything down there. New York City is contented. The people are satisfied. They are suffering but they are satisfied. Now and then down in Union Square there are a half a dozen crack pots jump up on the platform and holler out at the people, but that has been going on down there since I was a boy.

Senator GORE. To what extent, Governor, do you think that the fact that they have forced labor should enter into the consideration of the subject? To me that has been the most important consideration. The fact that they have forced labor and do not pay wage of any sort, you might say, and produce things to sell without the payment of living wages, and then inject those products into a world market or into our market in competition with our products when we do pay a living wage. I think that is the most serious consideration

Mr. Smith. Well, we protect ourselves there with our tariff.
The CHAIRMAN. Well, that is to be abolished.
Mr. SMITH. How?

The CHAIRMAN. That is to be abolished, from what you say.
Mr. Smith. Oh, no. I am not for abolishing it, Senator.

Senator GORE. I agree with the governor in regard to the tariff, but we have dumping laws, and I think we ought to have dumping laws, and they might protect us against forced labor.

The CHAIRMAN. We have dumping laws now and just as strict as words can be drawn.

Senator BARKLEY. Mr. Chairman, in connection with that, and in connection with this depreciated currency, the chairman of the Tariff Commission, who does not belong to the political party that is supposed to be in favor of lower tariffs, issued a statement the other day in which he ridiculed the idea that the depreciated currencies were bringing an increase of imports into the United States. And in view of his position I think his statement is entitled to a good deal of credit.

Senator GORE. We can not increase imports without increasing exports.

Senator HARRISON. We have the law with reference to forced indentured labor.

Senator Walsh of Massachusetts. What time does the Senate convene, Mr. Chairman?

The CHAIRMAN. At 11. Can we not expedite the hearing?

Mr. SMITH. Yes. I will finish in about five minutes. I have got a few more things.

Senator BARKLEY. If we do not ask you any more questions.

Mír. Smith. On economy. Of course I believe in the reorganization of the Federal Government. I think it has got to be done. I think the machine has gotten too big. And I would favor the granting of broad power to the President for the consolidation of overlapping agencies of the Government and the reduction of them to a smaller number.

And I am not in sympathy with all this talk about dictators and monarchs and kings when you give the President of the United States the power to run the business of the country the way it would be run if it were a private undertaking. There is a great deal to that suggestion, and it can be taken from a speech that was made by Will Hays back in 1921, at a dinner of the Fifth Avenue Association in New York, when the original bill for the consolidation of the scattered activities of the Government was pending before both Houses here.

The CHAIRMAN. Well, he did not get anywhere with it.
Mr. Smith. I know, Senator.

The CHAIRMAN. Congress would not do a thing. We presented a plan then. They just laughed at it. .

. Mr. Smith. I know it is awful hard to do it. It took 10 years to do it in New York State. It was proposed originally in the constitutional convention in 1915, and it never became a part of the constitutional law of the State of New York until 1926, 11 years later, although everybody seemed to be in favor of it. Nobody every

made any speeches against it, but it never moved. The people that were to lose their jobs by it were the great force behind the knifing of it all the time, but they kept under cover.

Senator BARKLEY. And they will fight any such thing.
Senator GORE. That is the sensitive nerve here.
The CHAIRMAN. Have you studied any soldier payments?

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