"The United States Treasury will pay to the bearer on demand, after receipt of the value represented by 52 stamps affixed to the reverse side hereof, the sum of $1 in lawful money of the United States.

"This certificate shall be legal tender in payment of all private debt arising from the exchange of goods and services during the period covered by each of the respective sales tax stamps affixed hereto and pending its redemption at the time and in the manner as provided by law.

"This certificate will not be legal tender in the payment of debt, taxes, or customs duties due the United States and is not bankable, except as specifically authorized by law therefor."

The circulation of the proposed auxiliary medium of exchange is initiated and maintained throughout the United States through the payment of unemployment relief therewith, in the manner previously set forth.

SELF-LIQUIDATING REDEMPTION FEATURE OF THE AUXILIARY MEDIUM OF EXCHANGE

The Congress shall provide that sales tax stamps for the uses and purposes of this auxiliary medium of exchange shall be made available for purchase at all post offices in the United States, the proceeds of such sales tax stamps to be impounded in a redemption fund set up in the Treasury which shall be disbursed only for the purpose of retiring by redemption the certificate that shall be presented for payment in accord with the terms and provisions of the proposed auxiliary medium of exchange. These funds shall also be available in such amounts as the Congress shall prescribe for the payment of such administrative expense as may be incurred thereby.

The Congress, through means of this auxiliary medium of exchange-having placed within the grasp of all the people the most potent force availablebuying power-which they themselves can create through their voluntary action and cooperation, and by its general use break the terrible financial drought from which the Nation suffers, and having given the people the one and only opportunity they need to help themselves, and to restore employment through rehabilitating general business activity in a normal manner and in the shortest possible period of time, and by a method that is beneficial to all and burdensome to none, the next step is the actual operation of the plan, a step that can be taken within 30 days from its authorization by the Congress.

Each person to whom any of these auxiliary medium of exchange trade cer tificates shall be distributed. shall purchase and aflix to such certificate as a condition precedent to its circulation as legal tender for its face value, a sales tax stamp, and the recipient of such certificate, during the succeeding weeks in which such certificate shall be outstanding, shall likewise purchase such sales tax stamps and affix the same to the reverse side of such certificate and in the spaces provided for each weekly validation, as a condition precedent to the further circulation of such certificate as legal tender pending their eventual redemption.

In the event such certificate shall be outstanding for the period of 1 year from their date of issue, there shall be affixed thereto by its respective successive bearers, 52 sales tax stamps, and in the event the face value of the certificate shall be $1, the cash value of the sales tax stamps sold by Government therefor shall total $1.04 per such $1 trade certificate. And such trade certificate shall have automatically-through the voluntary act of the people in taxing themselves therefor-established a self-liquidating redemption fund.

ECONOMIC SEQUENCES OF PLAN

It is proposed to issue this Auxiliary medium of exchange in series (monthly), and it is estimated that the full needs of the unemployed which are to be met therewith, approximate 100 millions of dollars monthly.

A total of eight successive monthly series are to be issued.

The total sum of trade certificates issued during the first 8 months will remain in circulation for an additional 4 months, when the first series issued will be retired by redemption through the operation of its self-liquidating feature. At the end of the twentieth month all the outstanding trade certificates will be similarly retired through the self-liquidation feature of the plan.

It is further estimated that each trade certificate so issued in this auxiliary medium of exchange plan will be used in exchange, a minimum of once per week, during the time it shall be outstanding. That, in turn, means goods and services purchased to the minimum amount of $400,000,000 during the first month the series shall be in circulation.

By the end of the eighth month, therefore, when the total sum of these trade certificates shall approximate $800,000,000 in circulation, the total volume of monthly exchanges for goods and services will approximate a minimum of $3,200,000,000-which shall continue in full volume until the end of the twelfth month-when the volume of exchanges will begin to decrease in an amount proportionate to the value of the series withdrawn from circulation by retirement and redemption.

But long before the eighth series of the proposed trade certificate shall have been put into circulation, the volume of buying power-previously injected into

the economic order-will have operated to cause such a tremendous increase in the general consumption of goods-with ensuing demand for new goods-as to compel industry to expand its activities to meet this new demand-thus bringing about those conditions that are so vitally essential in the present task of putting our monetary reserves to work-through the expansion of our credit mechanism.

Thus, may the existing dangerous cycle of events be broken and the perilous financial drought be lifted-through the only medium possible in the absence of any abnormal event-the voluntary act of the people taken to help themselves. The incidental advantages to government arising from a steady increase of revenue from a steadily expanding business activity in the Nation; the great advantages arising to industry through a measurable stabilization of the commodity price level and with it a corresponding stabilization of the purchasing power of the dollar; the tremendous advantages that will accrue to all agricultural interests through the vastly enhanced buying power of the Nation and its repercussion upon the price of all agricultural commodities: the great social advantages that will arise from the renewed spirit of hope. courage, and ambitions of our entire Nation; all those advantages are so selfevident that they require no presentation here.

If industry is to be left to recover its momentum through self-activating impulses, long delay in the return of any measurable degree of prosperity may be anticipated. In the meantime, millions of people cannot continue to

suffer evils and wrongs thrust upon them by the operations of an economic system that cannot cure those evils; hence, if that system is to endure, delay in putting before the people the means with which to help themselves will prove doubly perilous.

There are those who would lead our people down the road to quick ruin, through inflation of our money, in the mistaken belief that more money will mean more buying power. Those who are informed know this is not true. But, in the absence of any other course, this road to ruin may be easily and ignorantly followed.

The Congress must give the people a chance to help themselvs. In the presence of the existing inability to put our great monetary reserves to work it has no other choice of means for this purpose but a plan of an auxiliary medium of exchange, which is respectfully submitted herewith.

STATEMENT BY H. L. FERGUSON, NEWPORT NEWS, VA.

The international situation is, in my judgment, the largest single influence in keeping down commodity prices.

The foreign debts should be written down to a point within the capacity of the debtors to pay, which would, I believe, result in a marked increase in commodity prices. A moderate downward revision of tariffs would seem proper in this connection.

In my judgment, one of the biggest single factors which has not been commented upon at any length in this country has been the payment of artificially high salaries and wages, particularly by the railroads. For many years their wages have been higher relatively than in other industries and at the present time are completely out of line. Restoration of railroad credit and consequent buying power appear of prime importance.

The theory of high wages furnishing purchasing power and prosperity is untenable when applied to restricted groups. The disparity between wages of farmers and public-utility employees and city industrial workers is entirely too great for any economical system. It appears to me that the country people must be assisted both by an increase in price of what they sell and a decrease in price of what they buy.

STATEMENT OF DAVID M. FIGART, NEW YORK CITY

SOME VIEWS ON THE PRESENT DEPRESSION

There seems to be fairly wide agreement that lack of purchasing power on the part of the people somehow has had a great deal to do with our present troubles. One theory is that too large a proportion of the earnings of industry, and of the savings of the people, went into capital equipment--such as factories, machinery, public works-and too little into the hands of potential consumers. The result was that the productive power of our industrial machine temporarily outstripped consuming power. Surpluses of goods began to pile up, factories began closing, thus curtailing an already inadequate market by reducing the purchasing power of the people upon whom the factories were dependent for their outlet. Every dollar shrinkage in wages meant a shrinkage of many dollars in the business of the country; every man laid off meant fear and anxiety among others.

There is also some measure of agreement on how to cure or prevent business recessions; but it is in broad general terms, such as the need for a redistribution of wealth, the need for greater purchasing power among consumers, the need for security of employment. When it comes to specific measures to be applied at this time, there is a wide divergence of opinion.

President Hoover tried to get industry to maintain wages; but when a manufacturer sees his sales falling off, the most natural thing in the world is for him to reduce output by laying off men. Some people feel that our industrial machine has become too efficient; but it does not seem right to blame a machine which gives us--or should give us-more goods with less effort, greater wealth with greater leisure; it would seem that the blame lies rather with the human

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errors made in distributing the wealth. Some, pointing to technological unemployment, urge the sharing of work; but the remedy for too little work is more work, not the same work redistributed. Nor is it changing the age, skill, or sex of the workers.

A great program of public works-if it could ever be put into force might prove an excellent emergency measure; but, although it would increase employment and thus add to purchasing power, the route would be very circuitous, and hunger and want cannot wait. (The fact that such a program would add to future taxes would not seem to be a very strong argument against it; it is not improbable that the wisest policy a government could pursue in a depression would be to increase indebtedness, not try to decrease it; and it may be that the efforts to balance the national Budget at this time will prove unfortunate. Failing proper adjustment by industry itself between investment goods and consuming power, there remains only government which can impose artificial measures to restore the balance.)

Depressions work themselves out naturally, if one is content to wait for this. The decreased buying power of the community, due to cessation of wages and dividends, forces down the output of goods and price levels, and, supplemented by drawing upon savings, borrowing, and charity, ultimately exceeds the value of goods being manufactured. Inventories are then gradually exhausted and factories forced to reopen, bringing additional employment and increased buying power. The unfortunate thing is that the disease has not been eradicated; it is only the end of an epidemic. There has been a frightful business mortality, involving the loss of much of our wealth; the vast majority of us, on whom the prosperity of business depends, face the future in debt, with buying power curtailed for years to come. We must produce, but we may not consume. If, at the end of a depression, all indebtedness could be wiped out, we might look ahead with some confidence; but the significant thing about it is that the debts we owe are largely owed to institutions or individuals who are not potential consumers, and who, when we pay them, are obliged to invest in stocks or bonds, thus adding to capital equipment whether we need it or not. So that in the very process of liquidating the last depression, we lay the foundation for a future depression.

From every point of view, therefore, it becomes necessary to reconsider our attitude toward this question of purchasing power, which means-translated into everyday business terms-wages and dividends. This has never before hit us quite so forcibly because until recently there has always been unlimited scope in America for investment in capital goods. Temporarily, we are equipped with all the plant we need or can use. Our problem is not to build more factories-perhaps not even to modernize those we have but to find a way to distribute the goods we are now equipped to turn out. Considering that the market is in our midst-those forty or fifty millions of our people who exist in poverty-the problem of distribution should not be very difficult.

Under a machine civilization great masses of the population gave up their liberty. They had a right to expect in exchange therefor a greater share of this world's goods, and, more important still, a greater degree of security, than they ever had before. The operation of this machine came into the power of those who from the very outset misinterpreted their trust; they forgot that they should be working for the good of all; they worked only for themselves. The result has been a great body of industrial slaves who, immediately they produce a sufficiency of the necessities of life, are prohibited from consuming their share.

The rights of the stockholder have been exaggrated out of all proportion to the rights of labor. A stockholder is one who invests capital for which be has no immediate use, in the expectation of earning a return through utilization of the knowledge and skill of others. If dividends cease, he still has his capital left. But let the wages of workers cease, and they have nothing to fall back upon; through no fault of their own-perhaps because of their very efficiencythey are suddenly deprived of the daily needs of life-food, clothing, shelter— for themselves and their dependents.

If we maintain that so-called “sound business methods" must take precedence over unspeakable human suffering, we are nevertheless forced to admit from an equally cold-blooded business standpoint that such a policy is suicidal. The stockholder who wants dividends, and who wants to preserve his capital must first see that wages are maintained; for upon such purchasing power

depends the market for the products made by his company. This is funda

mental.

All wealth is the result of labor; and the right to consume wealth obviously arises simultaneously with its creation. When an excess of wanted goods accumulates, as in the period prior to this depression, it is because the right of the people to consume these goods has been for some reason withheld. Had a greater proportion of corporate earnings been distributed to consumers in prosperous years, and correspondingly less invested in plant extensions, demand might have been maintained at a level near the productive capacity of the country. Excess plant facilities thus represent purchasing power unwisely withheld from distribution, and now frozen into the form of corporate surpluses and reserves. This suggests two courses of action: First, to right the wrong unwittingly done to consumers; second, to prevent the recurrence of such a condition in future.

A PROPOSED REMEDY FOR UNEMPLOYMENT

If we accept the principle of industry's responsibility to the community; if we admit the soundness of the principle of employing reserves accumulated in prosperity to carry us through periods of distress, as nature utilizes in winter the reserves accumulated in summer-then the utilization of corporate reserves in this time of national emergency would appear to be justified. Knowing that the output of labor increased far more rapidly than did labor's share in the product, then it would seem to be only fair to restore to labor that portion that was withheld, and to restore it now when lack of it means dire want.

It would appear that this could be done by thawing out for belated distribution the purchasing power frozen into corporate surpluses and reserves, through cooperation with the Reconstruction Finance Corporation, operating under slightly amended laws. What is proposed is, in effect, an industrial loan, with nominal interest and repayable out of future profits, made to the great basic industries of the country, secured by their physical assets, the proceeds to go directly to the reemployment of men who were formerly on their pay roll.

The capital of the country is largely represented by great manufacturing plants which are now idle. These have great potential but little present worth. The proposal involves an immediate and direct increase in purchasing power, and consequently in the consumption of products turned out by such plants. It is a challenge to industry to conserve its capital structure by restoring demand to predepression levels, rather than reconstructing industry to present depressed levels. It involves no increase in governmental tax burdens. It will restore price levels and at the same time bring relief to the debtor class. It will restore confidence in security of employment and tend to coax out hoarded purchasing power where it exists. It places upon industry itself, not upon charity, the responsibility for the welfare of its workers and their families, which is where it rightly belongs.

A decrease in wages of $2,300,000,000 from 1919 to 1921 was accompanied by a decrease in factory output of $18,600,000,000. A recovery in wages of $2,800,000,000 by 1923 was accompanied by a recovery in output of $16,800,000,000. A decrease in wages of $4,400,000,000 from 1929 to 1931 was accompanied by a decrease in output of $29,100,000,000. Yet those manufacturing plants which cut wages so drastically and destroyed their own market had, at the end of 1929, surplus and undivided profits amounting to nearly $20,000,000,000.

This proposition is not greatly unlike that of unemployment insurance, which, though it is a palliative and not a cure, will probably become standard practice until something better is found. If our major industries had adopted some such plan in past years, a portion of their surplus or reserves would have been carried now as Unemployment insurance reserves", and would have been available for distribution. These same industries today have large reserves carried under some other name. The proposal, in effect, is to utilize a portion thereof just as if they had been accumulated for this specific emergency. The name is unimportant; the important thing is the actual existence of the reserves, and the part they can take in serving humanity by relieving distress. Industry must definitely accept the responsibility of maintaining men in employment. There is no difference in principle between the duty of a bank to safeguard the deposits (past labor) of its clients, and the duty of industry to