Stabilization Act, establishing a board composed of the Secretary of the Treasury, the Secretary of Commerce, the Secretary of Agriculture, and the Secretary of Labor. The whole experience of the 1930's is concrete evidence that the Government must deal with the problem and that it cannot abdicate this responsibility.

During depression we are conscious of the need for Government action, but as soon as we have prosperity we seem to forget it. In 1928, in the midst of the great boom, Senator Wesley Jones, of Washington, introduced a bill for a reserve of public works to be constructed during depression. The bill was killed, according to the Senate committee report on S. 380, because it was deemed unwise to mention depression before a Presidential campaign. That same year Senator Wagner introduced the employment-stabilization bill. It was a bill to provide for the advance planning and regulated construction of public works, for the stabilization of industry, and for aiding in the prevention of unemployment.

This bill, which could have been so helpful when the crash came. in 1929, lay dormant for 3 vital years. It was only in the midst of the deepest depression of our history, when it was too late to take measures that might have prevented the catastrophe, that we realized what should have been done. When the bill was finally passed in 1931, it was in emasculated form.

The Employment Stabilization Act did not provide for a comprehensive program on unemployment. It was not concerned with many types of measures that can be taken to prevent a great depression. It dealt exclusively with the planning and timing of public works as a means of providing employment during depression. It was enacted during a great crisis when public works could do no more than alleviate the mass unemployment that already existed. This could be done under the act, and this was done as far as possible. As a matter of fact, John Garner put through a bill in 1932 authorizing expenditure of $2,200,000,000 for public works. This bill followed the principles established in the Employment Stabilization Act. The money was to be used only for the construction of public works previously approved by Congress or the Executive, except for $70,000,000 for post offices in the smaller communities. The bill was vetoed by President Hoover. In 1933 Congress passed another bill authorizing 3.3 billion dollars for public works. The construction so authorized was undertaken through the PWA.

The Employment Stabilization Act never contemplated the submission of a national budget with recommendations to deal with prospective depressions. It only provided for plans to arrange the construction of public works in a manner which would assist in the stabilization of employment. The timing of public works is a useful part of a program for dealing with prospective unemployment. But by itself, it is entirely inadequate. Under any circumstances, it would not be possible to do anything now under this act, for these functions which had been consolidated with those of the National Resources Planning Board were abolished by Congress in 1943.

The full-employment bill is a logical development of the act of 1931. It recognizes the continuing responsibility of Government to see that there are enough job opportunities. It provides for a national budget that will show the amount of production necessary to

maintain full employment, and it requires estimates to be made of the prospective demand for this production. Such a national budget will be transmitted by the President to Congress each year and will be considered by a joint congressional committee which will report to the Senate and the House of Representatives its findings and recommendations with respect to the national budget.

This procedure seems to me the common-sense and dollarwise way to deal with the problem of unemployment-through prevention rather than through relief. The first step is to get the facts and place them before those who have the responsibility for dealing with the problem.

The argument has been made that if the national budget calls attention to a prospective deficiency or excess of demand, depression or prosperity will start at once. The evidence does not bear out this view. We don't get prosperity or depression merely by predicting it. If we could, we would never have had the crisis of 1929 to 1933. Businessmen were assured time and time again that prosperity was just around the corner. Businessmen act on the prospects for demand for their products from their customers. When demand falls off, they stop production. A national budget that recognizes a deficiency, in opportunities for employment and carries a recommendation for dealing with the problem can give increased confidence to businessmen to continue with their investment, their production, and their employment.

In spite of the oft-repeated statement that the Government cannot make accurate estimates of the type required by this bill, I want to go on record as stating that the Government is in a position to make reasonably good estimates. In dealing with the tax and savings program during the war we had to make estimates of prospective income and expenditure. From these estimates we developed a program to reduce and limit over-all expenditure to the available supply of consumer goods. Nobody claims that the statistical data we new have are perfect. They can and will be improved under this bill. Estimates of the national budget will be made after consultation with business on the basis of data provided by business.

I have seen some doubt cast as to the competence of the Government to prepare a national budget on the grounds that the Government has not done very well in estimating its expenditures and receipts. I should like to comment briefly on the receipts side of this criticism, since the estimate of receipts is a statutory responsibility of the Treasury Department. In the 6 years before the war, from 1935 to 1940, the average error between estimated and actual tax receipts averaged about 6 percent. In 4 of these 6 years, the error was 5 percent or less. Now, this is not a bad record, because it is more difficult to estimate tax receipts than it is to forecast business conditions. We estimate tax receipts by starting with an estimate of business conditions. An arror of 6 percent in tax receipts is probably comparable to an error of 3 percent on national income.

It is the estimate of national income and its components that is significant for the purposes of the proposed national budget. An error of 3 percent would represent a difference of not more than 1,500,000 jobs from the number actually employed. In dealing with the problem of preventing mass unemployment, an error of 3 percent could not

impair the usefulness of the national budget. In practice, the real problem will be to see whether a deficiency in demand is developing in the construction, equipment, and durable goods industries which generally precedes a great depression. The national budget will be submitted annually; but quarterly reports will be made to Congress, taking account of changing conditions.

The National Budget will compel the attention of Congress and the executive departments to the problem of employment. But it would be a serious mistake to assume that the submission of a budget can of itself prevent mass unemployment. The responsibility of the Government does not end there. The important thing is to take the positive steps that will facilitate and encourage an expansion of consumption and private investment whenever this becomes necessary to prevent a great depression.

There is no reason for assuming that the remedy that will be recommended, when a deficiency in employment opportunities appears, will be Government spending. There will be times when changes in our tax policy will be needed to help maintain employment and production. There will be times when changes in credit policy will be needed. There may be times, of course, when, because of a decline in private construction, the proper remedy will be an expansion of public construction. We should be ready to proceed promptly with the construction of necessary and useful public works whenever there is a falling off in private construction.

This bill is not a spending bill. It does not authorize any expenditure. Whatever legislation may be recommended in the National Budget in connection with the maintenance of employment will go to Congress and will be subject to the same procedures as now. In fact, there will be the additional opportunity of having the joint congressional committee on the National Budget give to the Congress its report on the policies that should guide Congress in dealing with legislation relating to the National Budget.

In addition to the specific criticisms of the bill which I have discussed, there are certain broad objections offered by some-and apparently believed by many more. I call these objections the Union League Club objections, because they find their most enthusiastic supporters in the stuffy environs of the most exclusive clubs. But they deserve to be held up to critical and public analysis where their merits can be evaluated.

The most pervading of these Union League Club arguments is the defeatist attitude with respect to our economic system. Mr. William L. Kleitz, vice president of the Guaranty Trust Co. of New York City, for example, told the Senate Banking and Currency Committee that depressions are inevitable under the free-enterprise system. I should like to put myself on record as dissenting from the view that the freeenterprise system makes such periods of unemployment necessary for those least able to bear them. I have greater faith in the vigor of the free-enterprise system than that, and I know that you gentlemen have

also.

It is a false dilemma which gives us the choice between full employment and a free society; and those who tell us that depressions are the price we pay for freedom are doing no favor to the cause of freedom. The system of private enterprise has enabled the United States to out

produce every country in the world, and to win this most destructive of all wars with a minimum loss of American lives and a maximum reliance on the products of industry. I am sure that the system of free enterprise will also enable us to win the peace, if its friends will stop insisting that it must produce depressions to realize its natural destiny.

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The second of these Union League Club arguments is that a fullemployment policy is expensive and that relief is cheaper. For example, Mr. Rufus Tucker, the chief economist of the General Motors Corp., told the Senate Banking and Currency Committee that the taxpayers may" he said only "may"-"have a moral obligation to keep any citizen from starvation *" but that this obligation can often be fulfilled more cheaply in other ways than by providing jobs. I am sure that you will agree with me that this is an exceedingly narrow view of the problem. Ignoring altogether its callous disregard of the feelings of the unemployed, it errs even on the side of expense, for it treats only the symptoms of unemployment and makes no attempt to effect a cure. It is like the view taken by a doctor who prescribed that a poor patient should wear a truss all through his life because the doctor feels that an operation would be unduly expensive or bothersome.

Lastly, some of the club intellectuals believe that a pool of unemployed helps to keep labor in its place, and is conducive to the profitable operation of the enterprises with which they are connected. Naturally, these persons seldom express their opinions for the record. In addition to the three broad currents of opposition to the full employment bill which I have just mentioned, there are other persons whose opposition is based on the honest belief that the adoption of some policy or policies which they particularly advocate will result in the attainment of the objective of continuing full employment. To the extent that these people are right, there is room for the consideration and adoption of their policies within the broad framework of the full employment bill.

Finally, I want to emphasize again that this bill is in complete accord with our system of free enterprise. It does not authorize the Government to operate any plants or factories or productive facilities. It does not authorize the use of any compulsory measures in determining where people are to be employed. Every businessman remains free to run his business as he always has. The Government's sole function is to exercise the necessary foresight in dealing with prospective developments that affect employment and to take such measures as are authorized by law to prevent a deficiency or excess in deInand. The whole spirit of this legislation is not to coerce industry but to provide an environment in which industry can realize its enormous potentialities for production and employment.

The full employment bill makes no assumption with respect to the general character of our economic problems at any particular time. The bill specifically provides that the National Budget shall make recommendations for the control of inflation whenever this shall be necessary as well as recommendations for achieving and maintaining full employment. There is nothing inflationary in this bill.

Some opponents of this bill have leveled most of their attack on an alleged promise to provide every man and woman with a job. This

bill does not do this. It merely recognizes the Government's responsibility to see that there are enough opportunities for productive work to employ all the men and women willing and able to work. The chance to earn a living is so fundamental a human right that it cannot be denied by quibbling or by the equivocal use of words. In a modern industrial society the opportunity to work is the very basis of the inalienable and God-given rights of life, liberty, and the pursuit of happiness.

There is no class or sectional interest in this bill. It is truly a national bill to promote the general welfare by protecting the national economy. Of course, it is in the interest of labor to have an adequate demand for our production so that there will be sufficient jobs for all men and women willing and able to work. But it is no less in the interest of agriculture and industry. The farmers of this country know that unemployment in American industry means low prices and the accumulation of surplus crops. They know that a sound postwar farm program must start with plenty of jobs and good wages in industry so that our workers can consume the foods and materials which our farmers can produce in abundance and businessinen know what depression means to them-reduced output, losses, and even failures. The maintenance of production and the profits of business depends upon an adequate demand for output. Such a demand requires the prevention of mass unemployment.

Some people seem to think we cannot afford full employment. There is a confusion of thought here. It is unemployment that we cannot afford. The unemployment of the 1930's cost us in lost income far more than the war; and this cost was not distributed among all the people on an equitable basis. It was concentrated in large part on the unemployed workers and the depressed farmers. We cannot afford another depression like that.

If we put our full resources to work we can increase our production of consumer goods by 50 percent above the 1940 level, and our production of capital goods, including construction, by more than 100 percent above the 1940 level. This chart, based on a Commerce Department study when Jesse Jones was Secretary, shows in more detail what full employment means to business. My own review of the facts, when I was Director of War Mobilization and Reconversion, has convinced me that we can and must increase consumption by 50 percent and expand construction and investment by 100 percent above prewar levels. We cannot let one-fourth of our resources go to waste. As Secretary of the Treasury, I say that it will be much harder to balance our budget and to service our national debt if we drift into another great depression.

There is no doubt in my mind that we can prevent mass unemployment if we decide to deal intelligently with this problem. I have said it before and I shall say it again:

Depressions, like wars, are not acts of God. Man makes them. If we make them, we can unmake them. We must create, in peace, a new prosperity and a greater opportunity for jobs than has existed before.

We shall not solve the problem of unemployment by ignoring it. We must not repeat the error of 1921 and 1931 of trying to deal with this problem when it is too late. This is a bill that should be enacted promptly. In my opinion, it is an urgent bill-not because we need