, i i , ' , ‘ APPENDIX TO THE CONGRESSIONAL RECORD This story presents facts in the tidelands controversy which have not been driven home to the American people-—whose lih- erties and property rights under constitu- ficial government are the real stake. As sald by Attorney General Price Daniel of Texas, Oil and Texas are merely incidental to the case as compared to principles in- volved. Dantel believes that the people have been misled by a smoke screen and propa- ganda from the instigators of the “big grab.” “In our country,” said Daniel, “property rights are not automatically attached to the powers of government.” If the Supreme Court's philosophy ts al- lowed to stand in this case, he suggests, then the Federal Government will have a power over every river, farm, home, mine, and factory of the Nation to a degree never dreamcd of by the founders of this demuc- racy, Tue “Bic Gras" (Installment 2, March 6) (By Allen Duckworth) “Honest Harold” Ickes’ quick-change act is a curious angle in the “big grab"—~the Federal Government's attempt to seize un- derseas oi] lands from the States Changing is a part of Ickes’ political nature. He was supposed to be a Republican, but Ickes has worn the Bull Moose coat of Teday Roosevelt, the Republican coat of Charles Evans Hughes, the Democratic cont of James M Cox and of Al Smith All were losers in Presidential campaigns. “Honest Harold” finally made a political touchdewn in 1932 when Franklin D. Roose- velt was elected Prepident. Roosevelt put Ickes in high cotton with a Cabinet appolnt- ment to Secretary of Interior, Now, for the oll angle Around the turn of the century, It be- came known that oil could be found under the ocean bed California ploneered in this exploration, Later, Texas and Louisiana came into the tidelands drilling picture. Texas has taken in eight millions of dollars for it» State school fund by leasing under- water lunds to oll prospectors. It was considered a matter of settled law that the States owned the land, and could lease it as they saw fit. Eyen “Honest Hurold” Ickes thought the States had undisputed ownership on De- cember 22, 1933. A tellow by the name of Olin S. Proctor of Long Beach, Calif., wrote to Secretary Ickes and asked {f he could lease some submerged land from the Federal Government. “Honest Harold” told Proctor he couldn't get Federal leases. In a letter dated December 22, 1933, ‘“Hon- est Harold” quoted a Supreme Court of the United States opinion to Mr. Proctor to make it quite clear to Mr. Proctor. Ickes said it was a matter of “settled law.” “Title to the soll under the ocean within the 3-mile Iimit is in the State of California,” wrote Ickes. He srid the land could “not be appropriated except by authority of Calt- lornia” This is amazing in light of later events. Somehow or another “Honest Harold” changed his mind and the “settled law” be- came unsettled. Just to refresh your memory, this hap- pened: The “big grab” plot was taken to Congress. California of] lands, Congress was told, must be declared part of the Federal domain. Only Congress had the power to do that, it was argued. Suggestions that it could be made a court matter without consent of Congress were disputed then by the big- grab crowd. Congress refused to confiscate the Califor- nla lands. It refused to grant permission to the Attorney General to sue California, It was then that the “big grab” plotters decided it was @ court matter after all—re- gurdiess of what Congress thought. Later, when Congress decided to take ac- tion in favor of the States, President Tru- man vetoed the resolution on the grounds that the matter was before the Supreme Court and Congress should not interfere. In other words, it was a congressional mat- ter only if Congress would rule their way. But Jet us return to “Honest Harold’s” quick-change exhibition. Ickes admitted at a congressional hearing in 1946 that he had told Mr. Proctor that the Federal Government didn’t have control of the undetseas lands. Ickes said his mind began to change. He explained that ‘appll- cunts (for Federal leases) and thetr lawyors continued to insist that the United States does own the land and oil and that the De- partment (of Interfor) does have the power to grant them ofl and gas leases" It is only natural that one would wonder who were the “applicants aud their lawyers” who were able to sway “Honest Harold” trom the “settled law.” A search through oficial records throws a bit of light on the identity of ut least two applicants and one lawyer. The evidence shows that Ickes was friendly to one applicant aud took a personal interest in his application Robert W. Kenny, at that time attorney general of California, at a congressional hear ing, introduced documents to show that: On May 17, 1944, Fred W. Johnson, Land Commissioner in Ickes’ Department of the Interfor at the time, wrote to the branch office 1n Los Angeles, Calif,, and said he would like to have quick action on any oll- and gas- lease application presented by WwW W Chapin, of San Francisco, or C. P. Ritter, of Los Angeles On June 24, 1944, Commissioner Johnson prodded the Los Angeles office with a tele- gram and urged that the Chapin-Ritter ap- plication be nir-mailed to Weshington it it had been filed. When the reply came from Ios Angeles the lease application “filed by C. P. Ritter, presi- dent of Consolidated Petroleum Co.,” for tidelands rights, was enclosed With the application was this informa- fon: ‘ “Mr. Ritter presented a letter from the Secretary of Interior (Ickes) suggesting that he file an application and stating that he would get tu the bottom of this matter per- taining to the tidelands ” Ickes testified at a later hearing that be- fore the Ritter application was filed he had talked several times with Chapin. Ritter also called to see Ickes. “He [Chapin] frequently came In to see me, usually when he was in Washington,” Ickes testified. Ickes sald that Chapin’s Inwyer, George Bush, of Los Angeles, ‘was firmly of the opinion that the Federal Government, rather than the State of California, held the title to those tidelands,” Said Ickes: “Mr. Chapin talked to me on two or three occasions about this. And, subsequently, Mr. Ritter came in, He went over the same ground.” Chapin sent Ickes some letters written by Bush. “Then I made up my mind that I thought the courts ought to decide this, since it was a legal matter,” Ickes stated. When Olin 8. Proctor wrote “Honest Har- old” back in 1933, it was a matter of “settled Jaw.” But after conferences with Chapin and with Ritter, the law became unsettled. Another interesting angle in the various testimony that Ickes gave about changing his mind Involves the White House. In 1946, when Ickes recalled about the be- ginning of his “doubts,” he credited those doubts to lease applicants and their attor- neys, Al1401 Two years later he added the White House touch. Ickes told Congressmen that he had Junch- eon on April 27, 1937, with President Roose- velt and Harry Hopkins and “the President raised the question as to the ownership of oil found under the ocean.” The late Ed Moore, of Oklahoma, then in the United States Senate, was curious. He usked Ickes why he didn't say anything about Roosevelt raising the tidelands question in his former testamony. Ickes said he had forgotten about the luncheon with the President of the United States and had just recently refreshed his memory by reading his diary. Regardless of whether Roosevelt was tnter- ested, the record will show there was no dash to the Supreme Court by the “big grab” boys until alter Roosevelt was dead. Another item from Ickes’ diary was ques- tioned It was in Ickes’ testimony at a hear- ing in 1948 when he referred to Hatton Sum- ners, of Dallas, then tn Congress and chair- man of the powerful House Judiciary Com- mittee Ickes said he had talked to Sumners back in 1938 about California tidelands and Sumners was of the opinion “that the United States alrendy has title” Senator Pat McCarran, of Nevada, went out and telegraphed Sumners, who was in New Mexico Sumners replied by wire: “IT never entertained or expressed an opin- jon that the United States has title to tide- lands and that sult ought to be instigated against California or any other Stute.” Tue “Bic Gras” (Installment 3, March 6) (By Allen Duckworth) The big oil companies came in for quite a lashing during the “big grab” campaign. Arguments that the States had a clear and legal title to underseas lands off their shores were drowned out by the how) that the big oll barons must be cornered. It is true that the big oll companies spent vast Sums in trying to protect their titles. They had invested money. And they made no secret of trying to save drilling rights they had purchased, in good faith, from the indl- vidual States, Little emphasis has been placed on the influence exerted on the other side by those supporting the big grab—those who wanted Federal leases and who demanded that those having State permits be treated as tres- pnasers. We touched a bit on that in yesterdny’s article, when we related how W. W. Chapin of San Francisco made frequent calls on “Honest Hurold” Ickes while Ickes was Sec- retary of the Interior, and how the Depart- ment took more than casual interest in Chapin’s attempt to secure ol] lands off the California coast. Now let us turn back to the newspaper files of April 18, 1949, to a column by Drew Pearson, the Washington columnist. To quote: “Salt Lake City's dignified, whitehaired postmaster, I, A. Smoot, called on President Truman the other day to plead for a strong hand in crushing the oil lobby. The lobby is now pushing another bill through Con. gress to restore the rich tidelands to the States. “There was no hedging in Truman's reply. “‘As long as I am President,’ he declared, J will never permit the submerged oi) lands to go back to the States '” Mr. Pearson didn’t tell the whole story. So we will have to look further for informa- tion on I. A. Smoot of Salt Lake City, Utah. The dignified postmaster, Mr. Pearson mentions made his White House visit after the California decision of the Supreme Court saying the State did not own its tidetands. This decision later was applied to Texas and
A1402 Louisiana. Then, as now, Congress was con- sidering a resolution to override the Court's far-fetched opinion. An uninformed reader might get the idea that Postmaster Smoot was up there in Washington on official business, such as getting his mail sacks repaired or suggesting that they put better glue on the back of stamps, and decided he had better drop in and tell President Truman what the big oil companies were up to. Smoot is a former State land commissioner of Idaho. After going to Utah, he became prominent in politics and served in the legis- lature. President Roosevelt named Smoot postmaster in 1933. A District of Columbia suit now on file is trying to force the Department of Interior to issue Federal leases on tidelands under the noncompetitive system. A plaintiff listed in the sult is I. A. Smoot, of Salt Lake City, Utah. And if we look on the records of the Department of the Interior, we find that I. A. Smoot filed application LA-053269 on April 8, 1938, for an 800-acre Federal lease of California tidelands. J. Stuart Watson, assistant executive officer of the State Lands Commission of California, says the Smoot application covers an area about three-quarters of a mile from where oil is being produced by State- Tet leases A pleasure pier of the city of Long Beach runs out over the tract Smoot wants to lease via Federal permit, Watson reports. Watson estimated that the land Smoot wants is worth at least a million dollars. He called that a conservative estimate. Smoot called on Truman in 1949. Accord- ing to the Assoctated Press Salt Lake City Bureau, Smoot did not retire from the post- mastership until December 1, 1950. So, it appears Smoot was on the Federal payroll when he called at the White House to do some lobbying against the oll lobbyists and in favor of I. A. Smoot. Incidentally, since retiring from the post office, Smoot has been connected with Con- solidated Uranium Mines Co., Inc., the Asso- ciated Press reported. The suit Smoot figures in now involves persons who applied for Federal leases years ago in hopes that the United States Supremo Court eventually would rule in their favor. But they still haven’t received those leases, because the Department of the Interior be- lieves a stronger leasing act is needed. Three attorneys signed the petition tn the suit by Smoot and 39 others. One of those attorneys was Max Barash. Max Barash was chief counsel for the De- partment of the Interior's geological survey department when Harold Ickes was Secre-~ tary of the Interior Later, In private practice, Barash took the sult in behalf of the oil lease applicants against the Department of the Intertor, where he once worked. (Barash told the Washington Bureau of the Dallas Morning News that he dropped out of the case some months ago, but declined to say why.) Ickes, no longer Secretary of the Interior, is plugging for recognition of those leases under the Mineral Leasing Act of 1920; even though he once said that act should not apply to tidelands. Main objection to the leasing act is that it provides much less income from oll rentals and royalties than the States have been able to obtain. Returning to the subject of who was in- fluencing for what, Congress’ records con- tain some letters written by persons who think tt would be a terrible mistake not to hand out tidelands leases on a noncompeti- tive bid basis. Congress is discussing that now. There fre two phases in congressional consideration at present. A movement is in progress to override the Supreme Court opinion com- Pictely and declare the States have full con- trol over tidelands leasing. Another piece of legislation concerns “temporary” leasing arrangements, so that oll production and ex- ploration can go on while it is being decided once and for all who owns those lands, That's where the issue of competitive bids, a State system, comes in as against Federal noncompetitive bids, One of those who wrote to Senator JosrrH C. O’MaHonry to say that competitive bid- ding would be “against the public interest” was Arnold M. Seiler, of Salt Lake City, Utah. The record shows that an Arnold M. Seller has filed application for a Federal of} lease on 320 acres of tidelands. J. H. Morgan, of Salt Lake City wrote to Senator O’Manoney along the same line. The record shows that folks by the name of Morgan in Salt Lake City have filed appli- cations for hundreds of acres of tidelands leases. The list includes John H. Morgan, Merin Morgan, N. G. Morgan, N. G. Morgan, Sr, and John H. Morgan, Jr. Grace Hull, of Salt Lake City, protests com- petitive bidding. The record shows that a Grace Hull has an application for a 780-acre tidelands lease. Clarence I, Justheim, Salt Lake City oil promoter, has been loud in his protests against State ownership of tidelands. The record shows that a Clarence I. Just- heim has filed application for Federal leases on more than 3,000 acres off the California coast. And there are other applications un- der the name of Margaret L. Justeheim. Why all the fuss over what Kind of leasing act the Federal Government shall use when and if Uncle Sam takes complete control of the tidelands? B. L. Krebs, a New Orleans Times-Picayune writer, revealed 2 years ago that the Federal leasing act as now written allows far less in- come than does the Louisiana system. Krebs showed that federally owned land, in one case, was leased in Louisiana and brought only $161 for a 3-year period. But if the leasing had been done by the State of Louisiana, the return to the public treas- ury would have been $27,000 the first year, half that amount each year for the two suc- ceeding years. One of the reasons the States get more money is that they call for competitive bids. In certain cases, under the Federal Leasing Act, bids are not asked. They just pasa out the leases. So here we go again with “Honest Harold” Ickes. Back in 1946, “Honest Harold" appeared before a Senate committee and stated that the tidelands should be made a Federal oil reserve Furthermore, he said, “the Mineral Leasing Act of 1920 is not applicable to sub- merged lands.” Two years after Ickes said that, he ap- peared before another congressional com- mittee. He had resigned from the Truman Cabinet, was admitted to practice law be- fore the United States Supreme Court, and had become a newspaper columnist. Representative J. M. Comss, of Texas, read from Ickes’ column of November 3, 1947, in the Washington Evening Star: “Recently the Solicitor of the Department of the Interior, Mastin G. White, also of Texas, and the Attorney General agreed that the Federal Leasing Act did not extend to those California tidelands. I challenge this finding.” Asked Congressman Compas: “Did you write that?” Ickes replied: “I wrote that.” Comss pressed further: “Now then, under the Federal Leasing Act, I will ask you if it 1s not true that if that act applies to tidelands then, under the law the Depart~ ment will have to go and take the appli- cations for leases in there, in the order in which they were filed, and parcel them out to those applicants at 26 cents an acre. Is that not right?” Ickes: “Whatever the provision is; yes.” APPENDIX TO THE CONGRESSIONAL RECORD And that testimony came from a man who, 2 years before, had said the Leasing Act should not apply to tidelands, and who had said those valuable lands should be set aside as a Federal oll reserve. Attorney General Price Daniel, of Texas, has told Congressmen the difference between State and Federal control in terms of dollars. Texas leased 350,000 tidelands acres to oil companies, prior to the Ickes-inspired law~- suit against the State, for more than $7,000,000. If the Federal Leasing Act that Ickes sup- ports had been applied, instead of competi- tive State bidding, the income would have been only $87,000, Daniel estimated. THE “Bro GRAB” (Installment 4, March 7) (By Allen Duckworth) When the ‘‘big grab" scheme was hatched, under the generalship of “Honest Harold” Ickes, there was a lot of flag waving. The Navy must have oll to keep Old Glory on high, said some of the original instigators to the “big grab.” So, said they, those un- derwater ofl lands off the coasts must be taken from the States and made a reserve for emergencies, And “Honest Harold” said so, too. “These lands should be held as a Federal oil reserve,” IcKes told a congressional com- mittee in 1946 This sounded very nice to those who did not recall what a mess there was during the Harding administration when the Navy put certain ofl lands in the hands of the De- partment of the Interior and the Teapot Dome leasing scandal developed. This time, Navy-owned lands were not in- volved in the proposed transfer to the In- terior Department Rather, they were lands that did not, under law at the time, be- long to Federal Government at all. The land belongs to the States. At least, the Supreme Court had said so up to then. In the case of Texas, the lands belonged to the State under the agreement that ad- mitted Texas to the Union, and Texas has dedicated the oll-leasing income from those Jands to the school kids While the flag was being waved and the public was being told that the influence of the big ofl barons must be crushed, some clever moves were being made. Certain individuals played a long shot. They applied for Federal oil leases on sub- merged lands off the California coast. The Department of the Interior was not is- suing any Federal leases on tidelands, but these individuals put themselves on record as having filed applications. These applications were long-range specu- lations. If things worked out all right in Washington, holders of these applications might be able to eat high on the hog. This brings us to a letter read into the record last year before a United States Sen- ate hearing. The letter would indicate that some of those who hope to obtain Federal leases would be willing to sell them to big o!] com- panies at a handsome profit. In other words, big ofl companies have been operating under State leases. ‘They have invested a lot of money. But if Fed- eral leases are approved, in some instances, the oil companies might find Federal per- mits slapped down on top of their old State permits. They might have to get out or pay those with the new-style leases. The possibility is stated blandly in the let- ter the Senators had read vo them. Quoting from the letter in the Senate record; The letter is addressed to Robert E. George, of Los Angeles, Calif., and is dated February 10, 1950. It is signed by Robert F. Purvis.
APPENDIX TO THE CONGRESSIONAL RECORD “In recent years,” the letter reads, “you have doubtiess read and heard a great deal about the tidelands-oil controversy between the United States and California, the high light of which was the United States Su- preme Court decision in 1947 declaring the United States to have paramount rights to the submerged lands involved ” The letter details the oll riches involved in the lands off the California coast, and then gets down to the real business: “My friend and client, Joseph Cunning- ham, anticipated by 13 years the Supreme Court decision of 1947 by filing on, with his nominees, some 10,000 acres of submerged lands. * * *” Mr. George is then Informed that there is @ suit pending to force the Department of the Interior to honor those old applica- tions—those applications filed before the Federal Government was given any power over tidelands oil by the Supreme Court, It was revealed that no less a personage than former Senator Burton K Wheeler now acting as lawyer and was pressing this legal claim. The letter leads up to an offer to Mr. George to invest in an enterprise known as the Shore Line Oil Co. This company, it is indicated, had acquired an interest in some of the old applications. Purvis, the letter stated, was in need of a bit of ready cash and was willing to part with some of his shares if Mr. George was interested. Now for the kicker line’ “In my opinion, it 1s a most magnificent gamble in that all existing law is on our side and the high stakes involved are out of all proportion to the risk of losing ° ** “If the permits are granted, oll companies will offer fabulous sums either for the stock or for operating agreements or leases bear- ing handsome royalties. * * *” Little wonder that the Department of the Interior, under Secretary Julius A. Krug, and later under the present Secretary, Oscar L. Chapman, balked at being rushed into granting those lease applications under the Mineral Leasing Act of 1920. Yet, former Senator Wheeler insists that the applications should be granted So does “Honest Harold” Ickes, who fa- thered the “big grab” of lands from the States while he was Secretary of the Interior. The States are trying to get Congress to override the Supreme Court and declare all of the tidelands the rightful property of {individual States. And while that is being considered, Congress also is trying to decide how oil leases shall be made, If the Federal Government retains control. While Congress considers leasing legisla- tion, holders of the old applications demand in District of Columbia Court that the In- terior Department be forced to issue leases to them. Not so long ago, there were whoops and hollers about the menace of the big oll com- panies. Now, the record would indicate, the little fellows would be willing to sell back the lands to the big boys. If and when that is done, the oil operations would be back where they began—in the hands of the big oil com- panies. There would be a major difference, how- ever. The Federal Government will be grabbing the leasing cash and royalties that formerly went to the State treasuries. As for Texas, the big loser will be the school] kids, since all from these lands go to the public school fund. Tae “Bio Gras” (Installment 5, March 8) (By Allen Duckworth) When “Honest Harold” Ickes cast the cloud on the States’ ownership of submerged oil lands off their coasts, a wave of highly specu- lative investing was set off. Here's what happened: When it became apparent that Secretary of the Interior Ickes had changed his mind after stating firmly that the tidelands legally belonged to the States and had decided they belonged to the Central Government after all, there was a rush to file for Federal leases on underwater properties. Some of the applications for Federal leases plopped right on top of valuable State leases issued by California and paid for by the leasees in good faith. Ickes let the applications cool in the De- partment of the Interior. Now that the Supreme Court has spoken, saying that Texas, Loulstana, and California don’t own those underseas ot] lands, a great clamor has been set up to honor those old lense applications that Ickes allowed to pile up. Congress isn’t so sure it will let the Su- preme Court get away with its bizarre opinion And even if it does it wants to make sure those leases won't be handed out at bargain rates by the Federal Government. Impatient holders of the old applications don’t want to wait. They are suing in Dis- trict of Columbia District Court to force the Interior Department to issue them leases under the Mineral Leasing Act of 1920. Harold Ickes thinks the leasing ought to be granted under the old act, although he once stated that the act should not apply to submerged oil lands. Ickes “changes like a weather vane,’ tormer Senator Sheridan Downey once observed. Under Federal law, you can get oil pros pecting (wildcat) leases, without bidding in competition with others, on a first-come, first-serve basis, al a few cents an acre, Congress is taking another look, Even if the Department of the Interior is to boss the tidelands oil, Congress isn't sure it wants the 1920 mineral leasing law to apply. Much evidence of speculation on Federal leases has been uncovered. In yesterday's article, a letter was quoted from the official record to show that a Call- fornia man had stated that it would be pos- sible, if Federal leases were granted, to sell them to the big oil companies. It is obvi- ous that the big ofl companies would be happy to buy off Federal leaseholders to pro- tect their investments under State leases. The evidence points to some outright spec- ulation on the outcome of the Supreme Court decision against the individual States. It is to be remembered that the United States Supreme Court did not hand down its decision in the California tidelands case until June 23, 1947. Long before that, however, Ickes had had his famous change of mind, which he admits came about after applicants and their attor- neys pressed the matter upon him. Among the applicants for Federal leases sent to the Department of the Interior was one on May 5, 1939, in the name of Earl G. Sinclair and Lauren D. Cherry. Robert W. Kenny, as attorney general of California, gave evidence to Congress of what he called “a traffic throughout the United States whereby people have been led to be- Meve that there is a great get-rich-quick opportunity if State tidelands can be upset.” He used Lauren D. Cherry's unapproved, but undented, application as an example, Kenny offered in evidence documents showing that Cherry sold interests in his application on at least four occasions. A 2-percent interest in the application was sold for 6100 to Alma Goettsch of Long Beach, Calif., in 1939—8 years before the Supreme Court spoke. Andrew Sheaser of Long Beach paid $75 for a 1-percent interest in May 1941. Alma Goettsch put in $70 for an additional inter- est of 1 percent June 3, 1041. Anna H, Kruetzfeldt of Long Beach found she could buy an interest on the install- A1403 ment plan. She paid 865 down on a 1l-per- cent interest priced at $1765. It must be remembered that these sales were not in oil leases. They were in mere applications—applications that could not be granted until the Supreme Court ruled the right way. The Supreme Court number came up as expected. Payoff hasn't come—yet. Former Senator Burton K. Wheeler is a lawyer for some of those applicants who want Federal leases right now. Ickes 1s taking their part, too, Texas officials, especially Attorney General Price Daniel, do not believe the tidelands fight has been made in good faith by the Fejeral Government. Daniel believes the people have been mis- Jed—misled not only on the merits of the controversy over oi] between the Federal Gov- ernment and the States, but have had a Supreme Court opinion slapped on the books that threatens the very theory of resistance to high dictatorial powers in thia country, He urges that Congress undo this injus- tice of the Supreme Court. Daniel cites the double talk. First, the American people were told the tidelands should be made a naval reserve for national defense. Now, some of the same folks who talked like that want to hand out Federal oll leases on applications that have been used for speculative purposes. “This naval reserve and national defense has been put up as a smoke screen,” Daniel told Congress. “TI think that I can illustrate that best by recalling former Secretary Ickes’ testi-~ mony,” Daniel said at a healing. “Ho sat right here in this chair and told the committee that it was his idea that this property should be set aside for naval pur- poses, “There is your smoke screen to get plenty of popular appeal behind their idea. That is tor the purpose of getting it in the hands of the Federal Government. “Then, before he left the stand, he [Ickes] told the committee what he really thought ought to be done with it after the Federal Government got hold of it under the pre- tense of naval reserves and national de- fonse He told the committee he thought the Mineral Leasing Act applies to all of these lands and criticized the solicitor of the Interlor Department and Attorney Gen- eral Clark for holding to the contrary. “Bo he thinks the Mineral Leasing Act ought to apply to these lands. “That would mean all this proposed naval reserve on the California coast would go out at 25 cents an acre to these 1,021 appli- cants who have their applications on file like Senator Wheeler’s clients.” Tuer “Big Gras” (Installment 6, March 9) (By Alien Duckworth) There are those who insist that “Pappy” O’Dantel, of Texas, was able to contribute little during his term in the United Btates 8enate That is not true. term: “Legal looting.” The term was applied to the methods used to put across the “big grab’—the political conspiracy to saw off valuable seaward boundaries of the States of Texas, Louisiana, and California. This fight is nearing a climax. Texas is pleading for Congress to override a warped, politically tainted edict of the United States Supreme Court. Texas has a selfish interest. Those sub- merged lands off its coasts are leased to oil prospectors. The school kids of Texas have a stake. Oll-lease revenue goes to the pub- Ne-school fund. There’s mo.c than a selish interest. He coined 8 classic
A1404 Texas is trying to awaken other States to the menace. If that strange philosophy spawned in the waters of bureaucracy is allowed to stand, the extension of Federal seizures could wipe out any horizon dividing the title to prop- erty. State control of waters, fish, piers, tiverbeds, lakes, and all other submerged lands could be transferred to the Federal Government. Under the Constitution, the Congress is the maker of laws. The Supreme Court in- terprets them-—or fs supposed to. Now the Supreme Court, in the tidelands case, has started making laws. It has started breaking solemn agreements, And the Pres- ident of the United States has aided and abetted. Three times did Congress refuse to grant the Justice Department authority to pro- ceed against the States to seize their oil- bearing tidelands. That was back in the thirties, Texas was in there fighting from the start, although the original attack was against California because California took a lead in tapping undersens ofl deposits. After all, 58 past Supreme Court decisions had favored State control of offshore lands. And, in the special case of Texas, the United States had agreed that Texas could keep all vacant lands “lying within its limits” when it joined the Union. There must be a reason sor the “big grab” plot. Jimmy Allred, while Governor of Texas, had an explanation. Said Allred: “When lands become valuable somebody wants to get them.” Allred was a good New Dealer, but he couldn't digest the plot cooked up by the “big grab” chiefs headed by “Honest Har- old" Ickes, the Secretary of the Interior. Failing to get congressional action, the “big grab’ crowd ignored Congress and turned to the courts, anyway. But it is interesting to recall that while Franklin D. Roosevelt was alive, nothing was done about suing the States. Roosevelt has been criticized severely for favoring super powers for the Federal Gov- ernment, But he was a piker along that line when compared with President Truman, Six weeks after President Roosevelt died the big grab really got going good. The argument had been that of! drillers with California leases were trespassers. Attorney General Francis Biddle filed a eult against the Pacific Western Ot] Co. for trespass on 144 acres of productive tidelanda off the coast of Santa Barbara County, Calif. Now, as every citizen knows, when a suit 4s filed in Federal district court, each side has a chance to present evidence. The case can be appealed to a circuit court. And, if desired, it can be taken all the way to the Supreme Court of the United States. While every citizen understands that simple judicial system, every citizen also Knows there are cases in which certain parties do not want to hear evidence. Too, every citizen knows that the law isn’t per- fect and that a smart lawyer who looks close enough and long enough 1s likely to find a loophole—in his favor. The States, alarmed by this lawsult in California, pressed for Congress to clarify ownership of the tidelands; to say flatly that the Federal Government had no claim. Law and precedent were on the side of the States, but you can cloud any title, no matter how good, with a lawsuit, no matter how weak, Congressional sentiment leaned toward the States. This didn't set well In the big grab circles. It became evident to them that they must put new gears in their strategy. While Congress deliberated on the quit- claim legislation, a new Attorney General game to the Cabinet—Tom C. Clark, of Dallas, "ex. Obviously, the congressional resolution would blow the district court trespass suit right into the bay. There must be some way to go right to the Supreme Court, with no dilly-dallying with evidence and testimony. The “big grab” found a path to the Su- preme Court itself under article III, section 2, of the Constitution, which reads: “In all cases affecting Ambassadors, other public ministers, and consuls, and those in which a State shall be a party, the Su- preme Court shall have original jurisdic- tion, * * 0” ‘That was © wonderful idea, as you shall see, The Attorney General dismissed the dis- trict court trespass suit against the oil company. A suit as an original action was filed In Supreme Court against California itself. Such procedure js rare. Harold Ickes has taken full credit for the switch of the case from district court in Califfornia to the Supreme Court in Wash- ington. Writing in his newspaper column, Man to Man, back 1n July 1947, Ickes said: “I decided that the surest and quickest rout was a beeline to the Supreme Court it- self.” After Roosevelt died, relates Ickes, Attor- ney General Biddle, with the blessing of President Harry 8. Truman, filed the district court suit. That wasn’t good enough for “Honest Harold.” “I had always urged the filing of an origi- nal sult in the Supreme Court,” the Ickes story goes. After Tom Clark replaced Biddle as Attor- ney General: “I persuaded President Truman to instruct his Attorney General, Mr. Tom Clark, to dis- miss tho suit in the district court and file an original proceeding in the Supreme Court. “Thus we were able to get a much quicker final decision than if the case had dragged its weary way from the district court to the circuit court of appeal and then to the 5u- preme Court.” Mark you well that this Supreme Court suit was filed while Congress had before it the quitclaim resolution in favor of the States. Congress wasn't in as big a hurry as the “big grab” crowd. Congress didn’t do its Job overnight It held exhaustive hearings. It heard both sides, including Harold Ickes. Congress passed the quitclaim resolution in 1946. President Truman slapped a veto on the resolution. The President’s reason for a veto: The case was before the Supreme Court and “the ju- risdiction of the Supreme Court should not be interfered with while it is arriving at it decision, * * *” When the “hig grab" boys made the beeline to the Supreme Court while Congress was deliberating, it was all right. When the Congress acted while the Su- preme Court was deliberating, it was all wrong. Or was it that there was a rather certain feeling that the Supreme Court would de- liver the goods as per schedule? Mr. Justice Black wrote an opinion June 23, 1947, saying that the Federal Government had first say on California's underseas oil Jands. Mr, Justice Felix Frankfurter, in his dis- sent, registered judicial shock. As Nberal as is Frankfurter’s background, the Roase- velt appointee insisted that the Supreme Court was taking over a function of the Congress. The “big grab” crowd had won its first round It then cast hungry eyes at the echool-Kids’ land in Texas, APPENDIX TO THE CONGRESSIONAL RECORD Tre “Bra Gras" (Installment 7, March 10) (By Allen Duckworth) There was a bit of talk around Texas a few years ago about the actions of Attorney Gen- eral Price Daniel. Why, asked some, was the attorney gen- eral of Texas spending so much of his time worrying about a California lawsuit? What difference did it make to Texas if the Federal Government confiscated California offshore oi] lands? After all, wasn’t Texas secure? Didn’t Texas have a special agreement with the Federal Government that gave it the right to keep all its unsold lands after joining the union? Attorney General Daniel wasn’t so sure the “pig grab” crowd would respect that title. Neither was Gov. Beauford Jester. As things have panned out, Attorney Gen- eral Daniel was as right as a fox with a crystal bal) The “big grab” plotters in Washington were using the strategy of divide and con- quer. They weren't going after all the States at once. First, they would pick off California, apparently the weak sister, Then they would use a Supreme Court opinion in the California cage to slick Texas and Loul- sinna. And then, who knows? Dantel helped California defend its law- suit, because he was dead sure that the di- vide-and-conquer scheme would hit Texas eventually. He argued on behalf of the Na- tional Association of Attorneys General who appeared as amicus curiae (‘friend of the court”). Aided by Governor Jester, Daniel tried to line up Nation-wide sentiment against this obvious creeping paralysis of super-Federal powers. Congress tried to help with a resolu- tion that the States had full ownership, but President Truman slapped it down with a veto. The “big grab” was stretching for the critical gobble and wasn’t t» be trifled with. Even while Daniel worked in the Califor- nia case, efforts were made to lull him and Texans generally. After arguing for the State attorneys gen- eral in the California case, Daniel got a friendly pat on the back from Attorney Gen- eral Tom Clark, who had presented the Fed- eral side. Sald Clark: “Well, you've had a nice trip up here, but that's all it amounts to. Texas is different from California and will never be sued. I have Just handed the press a written state- ment to that effect.” Many a Texan read with relief that written statement by Texas-born Tom Clark. It was the lawsuit “involves only the area off the coast of California.” In that statement pre- pared for Clark, the Justice Department said: “When asked regarding his native State of Texas, the Attorney General—Clark—pointed out that Texas had been an independent na- tion, a Republic, for 10 years before joining the Union. As a Republic it owned all of the Jands within its boundaries, including the Marginal sea commonly called tidelands. This area similar to that involved in the California case extended into the Gulf of Mexico and was under the sovereignty of Texas all during the Republic and was re- tained by it under the provisions of the Act of Admission.” The Attorney General, Clark, stated quite plainly that Texas reteined those lands. It was convincing enough for many Texans. (Months later, in a congressional hearing, Clark told Representative Ep Gossrrr that “I still feel that Texas has special rights,” but added that Texas could plead those “special defenses" in court.) After following the “big grab” strategy under the direction of “Honest Harold" Ickes, Daniel knew pretty much what to expect. When the Caltfornia opinion by Mr. Jus- tice Black wa: read, Dantel and Jestzr were moe appreh neiya t! an cver,
APPENDIX TO THE CONGRESSIONAL RECORD Lawyer Daniel and Lawyer Jester read the opinion more carefully than the average lay- man. The language did far more than take con- tro! of thousands of acres of offshore lands in California. An entirely new philosophy of government seemed to have been set up—not by revolu- tion, nor by act of Congress, but by ukase of the Supreme Court. Said Mr Justice Black: “The crucial question * * * fs not merely who owns the bare legal title to the lands * * * The United States here as- serts rights jin two capacities transcending those of a mere property owner. * * *” Many a great lawyer gasped and reread those words. “Bare legal title * * * owner * * *”" The opinion went on with talk about how the Federal Government had to protect the coast in time of war as an argument ‘or own- ing the coastal lands. It took only a reading of M1 Justice Reed’s dissent to realize how this opinion of the Court might be extended to other property. Yes, udmitted Reed, the United States had certain powers of protection over the coasts, just as it had over every “river, farm, mine, and factory of the Nation” Could Reed have been hinting at the pos- sible projection to other property of this theory expressed by the majority? Commented Governor Jester in a speech to the National Governors Conference’ “It is the first decision within our knowledge holding that exercise of the Federal Govern- ment’s responsibility to protect the shores and lunds of this country can ripen into rights heretofore identified with ownership of such shores and lands.” Mr. Justice Frankfurter criticized the ma- jority opinion in the California case by say- ing that the right of the Federal Govern- ment to regulate commerce and to wage wars and protect the country were being mixed with “rights of ownership ” The legal lightning struck Texas on De- cember 21, 1948. Note the date. President Truman had been down in Texas on his campaign tour. “Texas ig in a class by itself; it entered the Union by treaty,’ Truman said in a speech at Austin, September 20, 1948. Certainly, thought thousands of Texans, the President would not allow a sult against Texas after that statement. Texas gave Truman the largest majority ef any Democratic State. Sixty days after the election, the Federal suit was filed to confiscate Texas tidelands. “It is the position of the United States,” said Attorney General Clark's motion for leave to file sult against Texas, “that the rule there announced (in the California case) 1s equally applicable to the sea bed and subsoil of the Gulf of Mexico adjacent to Texas.” How about those special defenses Texas had? They were brushed aside in a vague man- ner that even the Supreme Court itself has yet to explain in the quaint opinion that followed. Texas was hustled in and out of court and stripped of her tidelands in short order— without being allowed t> develop testimony in defenses of historic rights she had en- joyed for a hundred years. But that is an~ other chapter in the story of the “big grab. THE “Bic Gras” (Installment 8, March 11) (By Allen Duckworth) Old Man Texas was hustled in and out of the Bupreme Court of the United States. When the bum’s rush was over Old Man Texas found himself much poorer. The mere property Court said he must give up 2,608,000 acres of land he had owned more than a century. His experience in the long-range “big grab” scheme that was hatcned in Washing~ ton is a warning to every State and every citizen of the dangerous possibilities in the Supreme Court's decision. What happened to Old Man Te*xas in los ing those 2,608,000 acres of off-shore oll lands could happen to inland States, he belteves, Mf the theory of nationalization is extended. Old Man Texas says to the other States who haven't been sued yet, to industries, and to all property owners “Pull up a chair and listen to me, pardner. You may be next” One has only to look over at once Merry Ol England, where nationalization of most everything the Government decides it wants “for public welfare’ has progressed since the close of the last war to understand what Old Man Texas is talking about. The submerged oil lands of Californta were first on the nationalization Mst over here. Then it was Texas and Loulsiana What next? The shores of the Great Lakes of the Northern States? Seizure of rivers and creeks and lakes from inland States? Basic industries trom the hands of private owners? Fartetched? Old Man Texas merely quotes the exact words of Mr. Justice Hugo Black In the first tidelands-seizure opinion Black used the phrases “bare titic’ and “mere property owner" in brushing aside the State's objec- tions and allowing the Government to lay claim to the valuable of] lands just because the Government said it was necessary. Incidentally no one in the Federal Gov- ernment has proven yet that it can manage the oll Iands better than the States. And the States have shown, up to now, that they can get more out of the big oll companies than can the Federal Government. Projecting this theory expressed by the Supreme Court, the Federal Government could seize anything by merely saying it was necessary. A shameful angle is the manner in which Old Man Texas was handled in court. Here is the record: Old Man Texas was refused a district court trial. Old Man Texas was refused the right tu present evidence. Old Man Texas wasn’t allowed near as much time to prepare his defenses as was Uncle Sam, who had gone on a bureaucratic binge and was suing Old Man Texas. Old Mun Texas didn’t even have the bene- fit of having a majority of the court ruling against him. The treatment given Old Man Texas was pretty rough in the Supreme Court, from his viewpoint, But in the light of the whole his- tory of the “big grab” it was consistent with the Federal strategy. We already have shown, in previous stories of this series, how “Honest Harold’ Ickes, as Secretary of the Interior, made the first reach of the “big grab.” We have shown how he did a complete about face after stat- ing flatly that it was a matter of “settled law” that the States owned their submerged lands. We have shown how President Tru- man refused to let Congress act in favor of the States. After winning {ts Supreme Court lawsuit against California, the Federal prosecutors turned to Texas. Unlike California, Texas had an tron-clad defense. The United States told Texas to keep its unsold lands when it joined the Union in return for payment of its public debts. Texas was the only State ever to do that. The agreement was in writing. When the lawsult was filed, the Texas attorney general, Price Daniel, said only Con~ A1405 gress, not the Court, had the authority to act “Congress made the agreement and has recognized it for more than 100 years This court should not permit the Attorney General to sue without permission of Congress," Daniel argued. But, he added, if there wan going to be a lawsuit, why not have a tull one, so that evidence might be heard? Those weren't Daniel's words. He put them in lawyer language for the court. But that’s what it amounted to. Daniel was asking for Texas only what the most humble citizen can demand and get Daniel wanted to try the case before a dis- trict court or a master assigned to hear evi dence. He wanted a chance to present evi- dence of Texas’ ownership and use of those lands Then, if the Federal Government didn’t Ike the verdict, it could appeal— clear up to the Supreme Court—if it desired. Nope. ‘Those Federal prosecutors didn't want any testimony—period. So, the court ordered Texas to the bar. Texas couldn't prepare its brief in reply to Federal claims until it examined the Federal charges. Daniel was forced to wait 77 days before the Federal brief wan delivered to him. Texas was given only 27 days to prepare, print, and file its brief. The Federal Government ralsed points that would require Texas to restudy and re- vise its entire argument. “A physically impossible task,” the scrappy little Texas attorney general pro- tested to the court, in vain Even time was used against Texas in that rush to grab the offshore of] lands—lands Texas had owned since winning its inde- pendence at San Jacinto. Seventy-seven days for the prosecution. Twenty-seven days for Texas. Dante! and his assistants holed up in an Austin hotel room and worked daya and nights against the deadline, Crews of print- ers labored overtime. When Daniel en- trained last March for Washington, the ink wasn’t dry on the hastily prepared and printed: brief copies. His own copy hadn't been found. Philip B. Perlman, Solicitor General, pre- sented the Federal case Perlman admitted that the annexation agreement gave Texas its public lands, but he insisted that the seaward lands were not Jands in the same sense. Asked Mr. Justice Minton, who later voted to uphold the Texas claim. “Was it not land that was under the water? There was not anything else” They gave Attorney General Price Daniel 2 hours to argue the Texas cuse that day in March last year Defenses for common criminals usually last longer in plain county courtrooms. But that was all—-2 hours— that the Supreme Court allowed Texas for argument over 2,500,000 acres of land whose oil lease incomes help educate the kids of Texas. Three months lJater—last June—the famous minority opinion came in against Texas. There are nine members of the Court. ‘I'wo did not participate in the Texas case. That left seven Four of the seven voted against Texas, three voted for Texas. The opinion, written by politically con- scious Mr. Justice Douglas, admitted that Texas once owned those lands as & republic, but lost them somehow when she entered the Union. Scoffed Mr. Justice Frankfurter in a classic dissent: “The Court, now decided that when Texas entered the Union she Jost what she had and the United States acquired it. “How that shift came to pass remains for me a puzzie.”
A1406 Tue “Bra Gras” (Installment 9, March 12) (By Allen Duckworth) Twenty-four percent of all the land in the United States is owned by the Federal Government The Federal Government is reaching for more land and power. Unlcss Congress stops the trend the indi- vidual States are threatened with an even- tual draining of their power and wealth. The new threat is part of the general scheme to whittle away powers of the States and invest the Federal Government with un- Umited authority. Recent decisions of the Supreme Court of the Uniced States point the wa,. This coun- try has been nosed onto the road to national- ization. Already possessing almost a quarter of all the Nation’s continental lands, the Federal Government will confiscate an underwater territory as large as the New England States combined if Congress does not slap down the Court reasoning. The Court has said the Federal Govern- ment can claim the submerged oil lands off the cousts of Texas, California, and Louisiana as a matter of national necessity. Valuable though they are, those tidelands are pittance when compared to the other possibilitics of nationalization. Do the tidelands opinions really point to- ward a growing nationalization policy in Washington? Some of the Nation's greatest legal authort- ties interpret the Supreme Court decisions that way. They fear that the Court has pointed the way for greater gras. Next on the grab list, they fear, will be har- bors, river beds, inland Jakes and streams, and perhaps basic industries. Already the States have been rocked by Su- preme Court decisions clipping their powers on everything from conduct of elections to running thelr universities. Now that the States’ political powers have been weakened, the attack shifts to the States’ finances. Strip the States of both power and income, then the Federal Government will emerge supreme in everything. The “divide and conquer” method has been ‘used. That was the strategy to prevent a general uproar throughout the country. Few Americans were especially excited when the Federal Government won Supreme Court approval for confiscation of California's submerged oil lands. But that was only the beginning. In spite of statements designed to lull Texas into a feeling of security about its own Jands, Texns was next on the list And Lou- jsiana The Supreme Court again stamped its O K for Federal confiscation in an opin~. jon that disregarded both law and precedent. The Court wrote its own law to fit the occa- sion, thus stepping out of its judicial role and inveding the province of Congress. The Court’s reasoning could be extended to ownership of the iron ore deposits under the Great Lakes, kelp (an iodine source) from the coastal States, copper and precious metals of the Western States, coal of the Eastern States, “It can happen here,” warns Robert Lee Bobbitt of San Antonio, former attorney gen- eral of Texas and chairman of the Texas State Bar Committee to fight the Supreme Court decision. “If you have any doubt, then take a look at once proud and powerful old England. That once great empire stands socialized and paralyzed ” Gasped Senator Tom CONNALLY of Texas, after the Supreme Court decision last year: “Ie there no possible end or limit to arbitrary powe1?” When the Federal Government extends ownership of lands it does more than ac- quire property. The more property the Government owns, the fewer taxes the States can levy on lands and resources. Reduce the tax dollar income of a State and {t becomes less powerful as it becomes poorer. It must look to the central gov- ernment for financial help. And with that financial help comes greater Federal] powers over the States and their citizens. The stakes in the big-grab scheme are tremendous. Each year, Pennsylvania scoops from 500,- 000 to 1,600,000 tons of coal from river beds. Delaware has 50,000 acres of oyster beds, leased out by the State government for revenues, While the suits against Texas, California, and Louisiana involved tidelands oil, it must be remembered that the Federal Government claims all tidelands—not merely those con- taining oil. Only 15 miles of the California coast is producing oll, but the Federal Government is fighting to obtain control over the other 1,185 miles Long Beach, Calif., 1s a classic example of what other harbor cities, such as Boston, Mass., are threatened with. More than 320 square miles, or 37 percent, of the entire area of Long Beach 1s tidelands. They in- clude the public harbor, the beach, the amusements zone, the municipal auditorium. Public and private investment on these lands is estimated at more than 200,000,000 by Board of Harbor Commissioners. Maine has more of its tidelands under kelp leases than Texas has under ol] leases. Florida, with the longest coastline, re- ceives far more money from the use of its tidelands resources of fish, shell sand, hotel ana pier sites than Texas does from tidelands oil. “Government will be further removed from the people, instead of being brought closer to them, if fishing, cultivating oysters, build- ing docks and ports, removing seaweed, oys- ter end coquina shell, digging ofl wells and e' gaging in all other activities in the mar- ginal sen are controlled by bureaus in Washington,” observed the University of Florida Law Review. “Yet the decision leads to precisely this” Equally alarmed was the Marquette Law Review. The Supreme Court's tidelands decision language was so broad that “it could be held to apply to other State-owned property, 1f not to private property,” said the Mar- quette Review. “Carried to its logical conclusion, this doc- trine of national ownership could be ap- plied to almost any kind of property—State or privately owned. * * * “The steady whittling away of the rights of the States is a cause for concern of everyone.” Aside from certain Federal officials, in- cluding President Truman, whose philoso- phy supports greater powers for the Wash- ington Government, the big grab campaign has been encouraged by those who hope to profit from Federal leases if they can upset Btate titles. Resolutions are pending in Congress that would repudiate the Supreme Court decisions against the States. Such legistation will have to hurdle the White House. Although Congress, In 1948, passed a reso- lution by overwhelming vote to give the States undisputed title, President Truman slapped on a veto. His excuse was that the matter was pending in court and Congress should not interfere while the court was deliberating. Truman probably will veto the new reso- lution if Congress passes it. APPENDIX TO THE CONGRESSIONAL RECORD He'll have to think up a new excuse this time. And there is a good chance that States can muster the votes to veto his veto. Toronto Stock Frauds EXTENSION OF REMARKS HON. FRANK M. KARSTEN OF MISSOURI IN THE HOUSE OF REPRESENTATIVES Wednesday, March 14, 1951 Mr. KARSTEN of Missouri. Mr. Speaker, under leave to extend my re- marks in the Recorp, I include the fol- lowing article which is one of a series published in the St. Louis Star-Times: Toronto, ONraRIo.—“Beautifully engraved invitations to the poorhouse.” That's how Chairman Harry A. McDonald, of the United States Securities and Exchange Commission, describes the gold, silver, uranium, cobalt, and oll stock promotions carried on by mail and telephone from here into the United States. Although illegal in the United States, these promotions which extract an estimated $52,- 000,000 a year from American suckers are legalized by the provincial government of Ontario. Yet, every Toronto mail order promotion which the SEC and the United States Post Office have investigated has been found to be promoted by fraud. Investigations show, said BEC Chairman McDonald, that the frauds of the mail-order promoters ‘‘are particularly vicious in char- acter, that their operations are continuous, and that these operations are conducted more or less exclusively from Toronto.” The buccaneers of Bay Street, Toronto's Wall Street, conduct their raids on American investment capital from suites in downtown office buildings. From outside appearances, the suites look like staid broKerage offices, but the descrip- tion of them here is “boiler rooms,” because of the high-pressure methods used to gell stock, I saw them going full blast. The Bay Street boiler rooms are literally small factories, They mail out millions of pieces of literature, telling United States suckers in glowing terms how to make easy money in mines and wells at the “develop- ment stage.” This “development stage” can range any- where from a lease On a quarter section of moose pasture in the wilds of western Canada to an abandoned mine that hasn't produced for years in northern Ontario. I saw mimeographed letters and expen- sively printed and illustrated pamphlets, folders, and brochures filled with glorious promises of wealth, being folded, sealed into envelopes and mailed to potential suckers in St. Louis, Kansas City, Topeka, Des Moines, and other cities by the thousands. Each form letter advised the addressee— whose name had been copied from sucker lists furnished by a firm in Chicago—that he had been selected to participate in an unparalleled, unusual, or historical oppor- tunity to make money. The folding, the sealing, and the mailing are done by teams of bored-looking women. They sit at improvised tables in the back ’ room of the boiler-room suite and stuff the come-on literature into envelopes on a pro- duction-line basis. Most of these women are immigrants to Canada from England, Scotland, and Ire- land, who have come here in response to this
APPENDIX TO THE CONGRESSIONAL RECORD country's drive to expand its 14,000,000 popu- lation and build up its industry. I talked to several of them. They told me they became disgusted with their work as soon as they figured out what the boss was doing. But they are hanging on until they can find productive work that pays as well, or nearly as well, they told me. The broker-dealers and underwriters pay their employees well, I was told. Salesmen who remote over long-distance telephones for hours at a time to sell the suckers in the States receive from 15 to 20 percent of their gross sales. After dark the lights keep burning in the promoters’ offices The electric lighting isn’t good in most of Toronto because of a Prov- ince-wide power shortage, and yon are con- stantly reminded to turn out the lights when you leave. The lighting filckers at times—so badly you can hardly see well enough to read But by night fall the mailing operation is finished Under the flickering bulbs salesmen with their feet upon their desks and their hats pushed back on their heads like characters out of Hollywood production, squint at the cards listing suckers they are to call and feed the long-distance operators two or three numbers at a time, in case some don't answer, I saw them working over the telephone in groups of four to six, each talking to a differ- ent prospect in an American city, perspiring a little under their hatbands with the effort to sound convincing. The babble of voices coaxing, declaiming, and even warning would rise and fall, punc- tuated by sharp, metallic clicks of the re- ceiver as some the salesmen would hang up and dial long distance again for other numbers, Most of the salesmen seemed to keep their calls to 4 minutes, although they would exceed that limit if an extra minute or two was needed to hook the sucker With com- missions dangling in front of them, they worked hard. The long-distance telephoning begins at 6 p m. eastern standard time, which 1s also Toronto time, when Americans on the east- ern seaboard and as far west as Indiana are sitting down to dinner, The salesmen want to be sure to catch them at home. At 7 p.m the telephoning begins to swing into the States on central standard time— Indiana, Illinois, Missouri, and Wisconsin. Then the calls begin going into Chicago and St. Louis. I overheard one salesman making his pitch to a woman in Michigan. The victim must have been a housewife, because I heard him saying “I'm sure your husband would approve * © * an opportunity to get in at the beginning * * * that’s where the money is going to be made * * * in the west- ern Canadian oils.” He babbled on about a pipeline somebody was going to build, how some of the “big boys” were poking around, interested, how the stock was rising on the market, how he could hold a block of stock at the spe- cial bargain price until midnight tomorrow night. At 8p m the telephone barrage descended into the Mountain States. I heard a fat, anxious salesman trying to get through to Denver. He was pleading with the operator as though it were a matter of life or death, As he pleaded and argued, perspiration ran down his beefy, red face in rivulets and he kept wiping it away with his pudgy hands, At 9 p. m_ the Toronto telephone rings the bells on the west coust. In the Los An- geles area, I was told, “prospects” respond more readily than in any other section of the United States. . “They are more speculative minded,” & salesman remarked. There are approximately 55 big boiler rooms in Toronto, and many small ones, Officially, the total is 113. And there are nearly 300 salesmen. I was told a good stock salesman can make as much as $20,000 a year, working 6 hours a day, 6 days a week. Most of them don't work on Sunday. They figure Americans don't like to gamble on Sunday. In every instance the stock promoted over the telephone was being peddled illegally in the United States. In every instance it represented nothing more than the promoters’ promise. In no instance could 1t be sold or traded by anyone hypnotized into buying it. There is no market for {t and there never was Yet, this is the type of promotion which is not only tolerated by the Ontario Securities Commission as long as it is fired to persons outside the borders of Ontario, but accepted by the Broker-Dealers’ Association, the pro- moters’ offictal club I asked W. M. Wismer, executive secre tary of the association and a former coun- sel for the Commission, why licensed broker- dealers in Ontario are permitted to violate the laws of their good neighbor to the south. He siid the law violations were only tech- nical, the SEC does not understand the spec- ulative nature of Canadian petroleum and mining development, he said. Neither he nor any official of the Securl- ties Commission was able to show me a single instance of where a current boiler-room stock promotion had paid a dividend, or ever would. Old Erin EXTENSION OF REMARKS OF HON. THOMAS J. LANE OF MASSACHUSETTS IN THE HOUSE OF REPRESENTATIVES Tuesday, March 13, 1951 Mr. LANE. Mr. Speaker, under leave to extend my remarks, I wish to include the following. Mr, James Patrick McGovern compiled the Poems of World War II, which was published by the Bethesda-Chevy Chase Post, No. 105, De- partment of Maryland, the American Le- gion, in April 1945. Included in this pub- lication was the following poem entitled “Valor of the Celt,” which is most appro- priate in observance of St. Patrick’s Day on March 17, and which poem is dedi- cated to the fighting spirit of the Irish: VALOR OF THE CELT What mean the neutral mandates of today As long as Irish hearts, not laws, hold sway? Two thousand years ago the Celts were bold To prove their valor, never since grown cold; For centuries their sons have heard drums roll Abroad and home, and won the hero's scroll, Who can recount each deed, recall each name, Enrolling Irish warriors in halls of fame? Their spirit on every front has never ceased To be among the Allies a buoyant yeast. The race itself stands now with vision clear An international and stalwart peer. No mortal power can cloud fair Ireland's brow; As her men always fought, so they fight now; They fill the foremost ranks where danger lies, Spurred by the valorous will which death defies, Impelled by native love for soll that’s free, Dauntless wherever they meet with tyranny. Al1407 For many flags, by land, in sky, on sea, The Celtic race fulfills its destiny; A hundred ships of war silp down the ways, Each christened in an Irish martyr’s praise; And untold shrines in foreign, distant parts Will keep Old Erin warm within true hearts. —James Patrick McGovern, You and the $71,600,000,000 Budget EXTENSION OF REMARKS OF HON. BURR P. HARRISON OF VIRGINIA IN THE HOUSE OF REPRESENTATIVES Wednesday, March 14, 1951 Mr. HARRISON of Virginia. Mr. Speaker, under leave to extend my re- marks in the Appendix, I include an edi- torial entitled “You and the $71,600,- 000,000 Budget,” which appeared in the March 1951 issue of the Virginia Farm Bureau News: You AND THE $71,600,000,000 Buncer The chances are that few of us have any very clear conception of just what the Pres- ident’s $71,600,000,000 budget means to us in terms of the actual cash which will be ex- tracted from our pockets through Federal taxation, To Dr. William H. Stauffer, director of research for the Virginia State Chamber of Commerce, we are indebted for some eye- opening figures on this subject. For example it has been estimated that Virginia’s share of the $71,600,000,000 budget will be $1,103,000,000. If this amount were divided equally among all Virginia citizens each would be required to pay $33.36. For a family of four the amount would be $1,329. The share for each employed person would be 8861. Actually, of course, such payments are not made in equal amounts since a large pro- portion of the Federal budget is collected directly from individuals and corporations. In the final analysis, however, the average individual does pay either directly or indi- rectly very close to his proportionate share of the tax burden. A few individuals with high incomes are very heavily taxed, of course, but the total take from these is relatively small. Beyond a certain point corporations must necessarily pass on to their customers any increase in taxes levied against them or else face bankruptcy. Thus they merely become tax collection agencies. All of which means that in one form or another, Mr. John Q. Average will pay very close to $861 each year in Federal taxes whether he realizes it or not, that is, if we are not to continue to inflate the currency with deficit financing. The only real way to reduce the $861 figure js to squeeze some of the fat out of the $71,600,000,000 budget. This will not be done, however, unless tux- payers insist that all items not strictly related to national defense be reduced to a minimum if not eliminated altogether. As we go about this job of reducing and eliminating nondefense expenditures, we should bear in mind that the task will be tough—there are always those who can and will present arguments that every public project is essential to national defense, even though the job involved might be taking the blood pressure of grasshoppers in Timbuctu. We ourselves must insist that Congress separate the wheat from the chaff, or else be prepared to pay our proportionate share of the bloated 871,600,000,000 budget. If the job isn't done we should blame neither the President nor the Congress but ourselves.
A1408 THE PRICE OF MEAT There's an opinion abroad (and regrettably it has been fostered by some Government agencies) that meat is high. But viewed from the standpoint of the percentage of his disposable income which the average con- sumer spends for meat, the argument talls completely apart. On the basis of United States Department of Agriculture figures, meat took only 55 percent of total disposa- ble consumer income last year as compared with 66 percent in 1913. Stating it another way, the price of meat or any other commodity will maintain about the same ratio to income yeur in and year out, in good times or bad, as long as the economy ts free. It is only when a managed economy comes along that the balance is apt to k2 upset A perfect example of this situa- tion is a floating dock on the edge of a lake, which rises and falls with the level of the water. Prices float in much the same way on purchasing power, and while they may bob up and down a little under the influence of temporary fluctuations in supply and de- mand, they'll ncither sink to the bottom nor rise out of tre water and fly as long as nature’s economic laws remain in effect. If we could ever get that lesson across to our self-appointed would-be managers and care- takers in Washington, we'd all be better off, for the Nation could look forward to a truly balanced and stable economy, and not a rigidly frozen one. Toronto Stock Frauds EXTENSION OF REMARKS OF HON. FRANK M. KARSTEN OF MISSOURI IN THE HOUSE OF REPRESENTATIVES Wednesday, March 14, 1951 Mr. KARSTEN of Missouri. Mr. Speaker, under leave to extend my re- marks in the Recorp, I include the fol- lowing article, which is one of a series published in the St. Louis Star-Times: TORONTO, ONTARIO.—This Canadian finan- cial capital on the shores of Lake Ontario is headquarters for one of the biggest stock frauds in the world today—perhaps the biggest. Main target of this gigantic swindle is the United States. Toronto promoters are ex- tracting more than $1,000,000 a week by their own estimate from gullible Americans—more than 652,000,000 a year. In the St. Louis area alone, according to estimates by the better business bureau, the take by Toronto swindlers is more than €15,000 a month—more than $180,000 a year. The racket here consists of promoting gi- gantic stock lotteries which offer Americans chances—in the form of stock at 20 to 30 cents a share—on finding gold, silver, cobalt, tantalum, uranium, and oil in the moose pastures of Canada. Such stock is suid in 8t. Louls and other major American cities through millions of pieces of mail and thousands of long-distance telephone calls from coast to coast. The United States Securities and Exchange Commission has found that all the Toronto mail-order promotioygs it has examined are promoted by fraud and violate United States securities laws, But they are tolerated by the standards of the Province of Ontario. This makes it impossible to stop them, al- though both the Canadian and United States post offices have tried. Years of investigations by the United States Securities and Exchange Commission und postal authorities show that Amcricans who invest in the mail-order gold mine and oil promotions are simply giving their money away. To explore the operation of these promo- tions, I went to Toronto with William C. Rosenbaum, of the St. Louis Better Business Bureau. Rosenbaum, who is head of the bureau's investors’ department, is a former United States postal inspector. He was one of the post-office investigators who broke up the notorious Fort Worth oil swindles in the 1920's. This is what ve found: 1. The mail-order stock lotteries are a multi-million-dollar business. They operate on the fringe of legitimate Canadian oil and mineral development. They are powerfully entrenched in Toronto. 2. While the mail order promoters offer Americans “rich opportunities” to make money, investigation here shows that the only one who profits is the promoter, Most of the mining he docs fs in the sucker’s wal- let. 3 The promoter sells stock he takes down (buys) from the treasury of the mining or oll enterprise at 5, 10, or 15 cents a share to American suckers, at 20, 30, or 45 cents a share This permits him to keep two-thirds of the “take” for “promotional expense.” 4. The one-third remitted to the treasury of the enterprise is not enough to bring the mine or well into production on the initial capitalization. 6 If the promotion turns out to be a dry hole, the promotor can quit with his 200 to 400 percent profits on stock sales This leaves the sucker who bought the stock on get-rich- quick promises holding the bag. 6. 11 the promoter strikes ofl or finds gold, he shuffies the sucker out of the deal by ro- capitalizing. This reduces the value of the stock the sucker has purchased, sometimes to the vanishing point. In one instance, a reries of recapitalizations in a gold mine cut shareholders from 1,000 to 15 shares of stock within a few years. 7. The leeway given promoters by securities Jaw enforcement here has made Toronto a haven for confidence men and fugitives from United States justice. 8. One of the big promoters here is Albert Edward DePalma, a one-time St. Louls waiter and necktie salesman, who came here and got rich selling stock in gold and tantalum promotions, DePalma fled New York State 3 years ago to avoid prosecution on mail- fraud indictments in Cleveland. He is still promoting his gold and tantalum mines, and has added an oil well to the list. 9. The only place in Canada or the United States where the Toronto promoters dare not peddle stock by high pressure mail and tele- phone tactics is within the Province of On- tario—which licenses them. But Ontario rarely interferes with the promoters as long as they sell outside the Province, 10. The mail order promotions are toler- ated here officially despite the fact that more than 700 citations have been issued by United States authorities against the promoters for selling securities in the United States against United States laws. Sixty of them are charged by the United States Post Office with promoting by fraud or under fictitious names. Another 6&3 have been ordered to cease and desist stock promo- tions in a dozen States. But the promotions go on. Ontario securi- ties authorities told Rosenbaum and me they cannot enforce the securities laws of “other jurisdictions.” They said also the United States fraud orders were based on “technical violations” and “prejudice.” These fraud orders—designed to prevent sucker mail from reaching the promoters from the United States—are issued by United States Post Office trial examiners in Phil- adelphia and Washington, on the basis of thorough investigation. APPENDIX TO THE CONGRESSIONAL RECORD Nevertheless, the Ontario Securitics Com- mission does not recognize them, although !t makes little independent investigation of its own into the promoters’ get-rich-quick claims. For this reason, Ontario authorities do not interfere when promoters dodge the postal fraud orders by changing names, addresses, or both, two or three times a year. Despite the vigilance, the United States Post Office cannot move fast enough to keep up with the evasive tactics of the promoters. The result is that a good deal of sucker- response mail—some of it containing mil- lions of dollars in payment for phony stock— gets through the postal barrier and cascades onto the promoters’ desks. Mail which ts halted at the border ts stamped with a fraud notice in big red let- ters and returned to the sender. Promoters here complained bitterly about this to Rosenbaum and me. They said it was interfering with “Canadian enterprise.” And they are backed up in their complaints by their own securities commissioners The United States Securities and Exchange Commission and the Post Office also attempt to curb the racket by obtaining secret indict- ments against some promoters. The indict- ments are held in abeyance until the pro- moters cross the border into the United States. Somehow, the promoters either learn or suspect they are under indictment. They stay out of the United States. Instead of taking their customary vacations in Florida, they are going to Europe this year. United States authorities cannot touch awindlers in Canada because the Extradition Treaty between the United States and Canada does not cover stock fraud. Efforts to include this as an extraditable offense have been made by Congress since 1942, but the Ottawa Parliament bas con- sistently rejected the amendment, partly be- cause of powerful political pressure exerted by organized promoters from here. When the Canadian Post Office withdrew the use of the mails from 27 persons and firms on suspicion of stock fraud last spring the howl that went up in Ottawa shook the Government. After 3 months, mailing privileges were re- stored—and the promoters went right on with their stock-selling schemes. In Canada, other provinces are having the same trouble with the Outsrio swindlers as the United States, but are powerless to inter- vene because Canada has no dominion-wide securities law. Not only the United States Government, but the securitics departments of the States have attempted to bar these promotions, without much success. In the last 2 years, such States as New York, Pennsylvania, Ohio, Indiana, HMnois, Missour!, Wisconsin, Kansas, Nebraska, and California have at- tempted to halt mail order stock sales from here by injunction or cease and desist orders. The results have been poor. Canadians have found to their intense delight that Americans lke to gamble. “I am the first to admit,” said W. M Wis- mer, secretary of the Bro_er-Dealers’ Asso- elation in which most of the promoters are members, “that Americans are bigger gam- blers and speculators than Canadians.” He told Rosenbaum and me that as long as Americans like to wager their money on horse races, Canada might as well take a cut. He and other members of the association admitted that the Toronto stock promotions are in competitiou for United States sucker money with American bookmakers and gamblers. Of the approximately 175 promoters here, at least 115 are selling stock in the United States in violation of the United States law. Even Canadians, like one member of the Ontario legislature, have charged that se- curities law enforcement here is so lax that
APPENDIX TO THE CONGRESSIONAL RECORD & bell hop one day became a broker-dealer the next. Rosenbaum and I ran into an ex-piano salesman who is regarded as one of the “hottest” stock salesmen in town. We found, too, that this whole nuisy racket causes a great deal of anguish to brokers who are members of the Toronto Stock Exchange and to legitimate securities dealers who don't peddle stock through the mails, But they do not bring much pressure to bear to clean up Bay Street—the Wall Street of Canada—where many of the boiler-room promoters have fancy offices. We found that Toronto is an oasis of fraud on the North American ccntinent For this reason, the Toronto swindlers can sit in their offices, grind out millions of pieces of misleuding come-on promotion, raid the United States and other provinces for sucker money and laugh at the Jaws of the United States. Defense Housing and Community Facili- ties and Services Act of 1951 EXTENSION OF REMARKS OF HON. FRANK BUCHANAN OF PENNSYLVANIA IN THE HOUSE OF REPRESENTATIVES Wednesday, March 14, 1951 Mr. BUCHANAN. Mr. Speaker, under leave to extend my remarks in the REc- or, I include the following summary of the Defense Housing and Community Facilities and Serv:ces Act cf 1951, H. R. 2988, Eighty-sccond Congress, as report~- ed March 6, 1951: QUESTION AND ANSWERS GENTDRAL 1, Question. What is the purpose of this bill? Answer, This bill is designed to assure that housing and community facilities and serv- ices reyulred to support national defense activities will be provided when and where needod The bill is directly related to, and r presents an essential part of, th? defense mobilization program It derives from the hard experience in the defense and war pe- riod of World War IJ that (a) in many ureas, defense production cannot proceed until the additional workers required to run the pro- duction lines can be brought in from other areas, and (b) the needed additional defense workers cannot be brought into the defense area and kept there on essential defense production work unless adequate housing and community facilities and services are available for them. The failure to recognize clearly those essential facts and to make ade- quate provisions for meeting those necds effectively resulted in serlous and crippling delays in the production of many defense items during the eurly part of the defense and war period of World War I, 2. Question What are community factilli- ties and services under the bill? Answer. Community facilities are defined in the bill as those facilitics necessary for carrying on community Iving including pri- marily water works, sewers, sewage, garbage, and refuse disposal facilities, police and fire protection facilities, public sanitary facill- ties, works for treatment and purification of water, schools, libraries, hospitals, and other places for the care of the sick, recreational facilities, streets and roads, and day-care centers. “Community services” are services neces- sary for carrying on community living, in- XCVli—App.—_—89 cluding maintenance and operation of com- munity facilities. These are in general the facilities and services which were furnished under the Lanham Act during World War II as "de- fense public works.” 3. Question Why are additional housing and community facilities and services needed for national defense? Answer, The bill contemplates the use of existing facilities, wherever possible, to meet defense needs. However,’it is clear that the needs of the defense production program cannot be met solely by converting and re- activating existing plants. There must be recourse to new plant construction and ex- pansion. This ts made necessary becuuse our total capacity for the production of cer= tain basic materials falls short of our de- fense needs, because it is not physically pos- sible to produce certain new types of mili- tary equipment and weapons in existing plants, and because no existing plant capac- ity is adequate to meet such needs as those of the Atomic Energy Commission which must provide new installations in relatively jsolated areas, The construction and oper- ation of new plants, as well as the expan- sion of old plants, narmally requires workers to be brought into the area, In order to attract workers to such arens and to avold Jabor turnover, it is essential to provide housing for them and their families and to provide the community facilities and serv- ices necessary for community HMving. Of course, utilities and other community facil- jties are also necessary for the operation of the plant itself. Because of the continuing housing short- age resulting from general increases in popu- lation and other factors, in almost no area will there be sufficlent housing to accommo. date a sudden influx of defense workers. Similarly, there is generally a shortage of utilities and other facilities necessary to serve even the existing housing and other local needs 4. Question. What are the major provisions of this bill? Answer. The bill provides for: (a) Mberallzed FHA mortgage insurance to stimulate private production of housing re- quired for in-migrant defense workers; (b) authority for the “ederal Government, to provide housing directly in those cases where private enterprise cannot meet dc- fense-caused housing needs; (c) authority for the Federal Government to assist localities in providing community facilities and services required in connection with defense activities, and, In cases where a local community can .ot supply essential fa- cilities even with such assistance, to directly provide such facilities and services; (d) authority for the Federal Government to acquire land at certain isolated defense installations, to prepare general plans for the development of the land for needed housing and community factlities, to provide site im- provements, and to dispose of the land to private purchasers for the development in ac- cordance with such plans, and to local agen- cles for public use; (e) authority for the Federal Government to make loans to maintain the existing pro- ductive capacity of the prefabricated housing industry needed for defense; and (f) certain amendments to existing legisia- tion to gear it to defense needs. 5. Question. Why is this additional legis- lative authority necessary? Answer. The legisintive authority con- tained in this bill ts necessary for the fol- lowing reasons: (a) Bxisting aids to private enterprise for the production of housing in defense areas are not sufficiently Mberal to stimulate pri- vate enterprise to furnish the maximum amount of housing needed because of the im- pact of defense activities, and such aids are not designed to best meet the needs of in- migrant defense workers; A1409 (b) There is no existing authority for the Federal Government to provide defense hous- ing in cases where such housing cannot be provide.. by private enterprise; (c) There is no existing legislation ade- quate for assisting local communities in the provision of, or for providing, community facilities and services required because of the impact of defense activities; (d) There is no existing authority for the Federal Government to purchase land at iso- lated defense installations for the purpose of disposing of it to private owners for develop- ment of housing and commercial facilities in accordance with general plans for the area and to local agencies for public use; and (e) Existing loan authorizations are insuf- ficient for the purpose of loans to maintain the industrial capacity of prefabricated hous- ine manufacturers in this defense period. 6 Question. Why can't community facili- tles and services needed in connection with defense be furnished by the localitics with- out Federal assistance? Answer. In many cases, especially in rela- tively isolated areas, it would be legally im- poss'ble, because of constitutional and statu- tory debt Nmitations, for local governments to bear the entire burden of furnishing com- munity facilities and services required by the sudden impact of defense activities in the aren. Even if legally possible, it would Im- pose an unfair share of the expense of our mobilization program on a disproportionate number of munictpalities and people. The ability of municipalities to furnish addi- tional community facilities and services is especially limited at the present time because of recent heavy increases in municipal ex- penditures for such facilities and services. The unprecedented increase in urban popu- Jation and the unprecedented housing boom since the war have placed a corresponding burden on all community facilities and serv- ices. To this has been added the backlog of public construction postponed during World War II because of the shortuge of materials. The concentration of this construction with- in the postwar period, as against existing statutory and constitutional debt limita- tiona, has greatly reduced the borrowing au- thority of many cities. Even existing needs for faciiities and services are being met with difficulty. 7. Question Wouldn't the relaxation of credit controls be sufficient to stimulate the provision of defense housing by private in- dustry? Answer. Even with the relaxation of credit controls, the existing conventional financing of housing and the existing programs of Federal mortage insurance would not be Itheral enough to stimulate private indus- try to supply the needs for housing in de- fense areas. Residential mortgage insurance aids are not geared to defense-area needs and risks. The requirement of economic soundness in the regular mortgage-insur- ance program cannot be met in many In- stances in defense areas with respect to Jocation and long-term marketability, Also the existing law is inadequate to assure that the housing will best meet defense needs. The mortgage-insurance program for this housing must be carried out in accordance with programing operations coordinated with the mobilization program as provided in the bill. Unlike existing authority, the provisions of the bill would permit one- and two-family structures, for example, to be programed for rent and required to be held for rental. This is essential to pro- viding the type of house needed by inmigrant drfense workers and their families. Existing legislation 1s also inadequate be- cause it makes no provision for the con- struction of temporary housing in areas where the need {s clearly temporary. Existing legislation 1s entirely inadequate for the provision of any housing which pri- vate enterprise cannot be encouraged to pro- vide even with liberal mortgage-insurance
A1410 assistance. In some areas it will be quite clear that the need will continue only dur- ing a short period. It may be necessary to bring workers into other areas on such a large scale and within such a limited time that operative builders, although otherwise able to build, cannot do so within the time required. In such cases it is essential to the mobilization program that the Federal Government provide the housing as author- ized in the bill. 8. Question. Why haven't credit controls already been relaxed in arenas of defense- housing shortage? Answer. Credit controls are now in proc- ess of being relaxed in such areas. Credit controls have already been relaxed on a se- lective and controlled basis at the Atomic Energy Commission installations in the Sa- vannoh River area and at Paducah, Ky. Similar action will be taken shortly in con- nection with other defense installations. The extent of the need for housing at most defense installations and the extent of the need for relaxation of credit restrictions 1s only now becoming sufficient for proper identification und measurement. It is im-~ portant to avoid indiscriminate and un- planned relaxation of credit controls, as such relaxation must be accomplished in a manner which will best meet the needs of essential in-migrant defense workers. 9. Question. Why can’t defense housing needs be mot through FHA-insured military (Wherry Act) housing? Answer. FHA mortgage insurance under the so-called Wherry Act is limited to hous- ing for military and civillfan personnel at permanent military installations. It could not be used for housing to serve personnel at temporary military installations or per- sonnel of defense plants or other nonmill- tary defense installations. 10. Question. Why is federally owned housing built during World War II inade- quate to meet new defense needs? Answer. Most of this housing is already occupied by veterans, military personnel, and defense workers, and vacancies occurring in defense areas are already being used for de- fense workers. Monthly turn-over is less than 3 percent and, accordingly, few units can, as a practical matter, be made available for defense workers, Also, the location of this existing housing is based on World War II defense requirements which will obviously differ from the pattern of new defense needs. 11. Question, Does the bill contemplate the establishment of new agencies for its ad- ministration? Answer. No. Existing agencies would be utilized for the program contemplated by the bill, 12. Question. How would defense housing areas be determined and housing programed for those areas? Answer Based on defense program in- formation as to production plans, manpower requirements, and available accommoda- tions, the President would decide whether a shortage of housing exists or impends in the area which impedes or threatens to impede defense activities. The Housing and Home Finance Administrator would determine, on the basis of surveys, the number of units to be eligible for the special mortgage insur- ance authorized under this bill, as well as the types of housing needed, the rent levels to be served, etc. Any federally provided housing would be limited, after consultation with housing industry representatives, to that which could not be built Ly private enterprise. 13. Question. Would the bill grant any power to the Government not previously granted? Answer. No; except for the authority tn title III to purchase and cell land in isolated areas for the development of needed housing end commercial facilities by private enter- prise. The private housing aids are similar to, though less broad and liberal than, the title VI mortgage insurance program of World War II, The authority in title IT with respect to the provision of housing and aids for, and the provision of, community factli- ties and services, where necessary for de- fense purposes, are similar to those con- tained in the Lanham Act of World War IL 14, Question, Is this bill socialistic? Answer. No. The fundamental principle of the bill is that necessary defense housing and community facilities shall be provided by private enterprise and local communities to the fullest extent possible, and the Gov- ernment is permitted to provide them only as a last resort. The bill undertakes, in fact, to help private enterprise and local govern- ments to do more of the job than they could otherwise do in order to hold Government action or operations to a minimum. Any federally owned housing under the bil] would have to be disposed of to private owners, with preference to occupants and veterans, as soon as feasible consistent with defense requirements. 15. Question Who supported this bill? Answer. In addition +o various Federal agencies, including the Director of Office of Defense Mobilization (Hon Charles E Wil- s0n), the Department of Defense, and the Atomic Energy Commission, those present- ing testimony or submitting statements in support of the bill were: Hon. Pavt Brown, Hon. Ctinton D McKinnon, Hon Jonmn A. Buatntk, Hon. JoHN J. River, Hon. Leroy JOHNSON, Hon Huait MitcHELL, Members of Congress; Mortgage Bankers Association of America; National Savings & Loan League; American Municipal Association; City Man- ager, Norfolk, Va; Mayor of Wilmington, N C.; Mayor of Gury, Ind; American Feder- ation of Labor; Congress of Industrial Or- ganizations; Americans for JYemocratic Ac- tion; National Association of Housing Officials, National Housing Conference; National Conference of Catholic Charities; American Association of Social Workers; American Institute of Architects, Jewirh War Veterans of the United States of America, 16 Question Who opposed this bill? Answer. Three organizations presented Vestimony or submitted statements contend- ing that— 1. The Congress should postpone action on the bill until specific and immediate needs have been demonstrated. Chamber of Commerce of the United States of America: The bill “should be laid aside until a definite need for it develops. * * * legislation could be passed quickly should a clear need for it become apparent.” National Retail Lumber Dealers Associa- tion: “Authorization of such a program be- fore any specific need has been demonstrated would be unsound. * * * No supple- mental legislation for private defense hous- ing and community facilities 1s necessary at this time.” 2. Defense housing and community factl- ity needs can be met by existing legislation, or with a few simple amendments to exist- ing law. National Association of Real Estate Boards: “The National Association of Real Estate Boards is not here in opposition to purposes for which the bill is intended. We will prove that this legislation {s not needed because most of its provisions are already incorpo- rated in existing law.” TITLE I. MORTGAGE INSURANCE FOR DEFENSE HOUSINGS 1, Question. What is the purpose of this title? Answer. It is the purpose of the title to encourage private enterprise to furnish as much of the needed defense housing as pos- sible, It stresses assistance to rental hous- APPENDIX TO THE CONGRESSIONAL RECORD ing, since that is the type most needed by workers coming Into defense areas. 2 Question. What does this title provide? Answer. It adds a new title IX to the National Housing Act to make special FHA mortgag? insurance aids a' allable to private industry for the producticu of housing need- ed in defense areas. The special insurance aids would be available only in areas or lo- calities in which the President finds that a shortage of housing exists or impends which impedes or threatens to impede national de- fense activities. One- or two-family homes, as well as multifamily rental housing would be eligible for the special FHA mortgage in- surance aids and the housing would be re- quired to be made available for persons en- gaged in defense activities. 3. Question. How would this help to sup- ply defense housing needs? Answer The new dectense-housing insur- ance program would be more liberal than the existing permanent peacetime aids sup- plied through the FHA. Under the proposed new program, mortgages may be insured if the property {ts an acceptable risk in view of the needs of national defense. This would permit the FHA to underwrite projects in defense areas which might not meet the criteria of economic soundness, especially as to location and long-range continued mar- ketability, which are required by FHA under its regular programs. ‘This departure will permit FHA mortgage insurance on housing where there may be some question as to whether the Eousing will be marl.etuble when tho emergency or defense need 1s termi- nated In addition, the FHA would be au- thorized to insure mortgage loans on mare liberal terms, It would permit mortgage loans having a higher ratio of loan to value and longer maturities, thereby permitting Jower down payments and lowe: monthly financing charges 4. Question What means are provided to assure that the housing will be used to best meet defense needs? Answer. The morigage insurance provided by the new title would be available only for property located in areas where the Presi- dent has found that a shortage ot housing impedes or threatens to impede national defense activities. The Housing und Home Finance Administrator, with the approval of the President, would program the number of houses in such localities which could be financed with the ald of these special in- surance provisions The FHA would have power to require properties covered by mort- gages insured under the new title to be held for rental to defense workers or military per- sonnel, 5 Question. Is mortgage insurance under this title consistent with anti-inflationary restrictions already imposed on housing? Answer. Yes. The purpose of housing- credit controis is to curb inflation and con- serve materials for national defense pur- poses The use of material for housing provided under this bill would, of course, be used for national defense purposes. The credit controls are designed to reduce the volume of housing construction frum the 1,400,000 homes started in 1950 to about 800,000 to 850,000 for 1951. Out of this total of 800,000 to 850,000 housing units to be started in 1951 there will come whatever housing is required to be channeled specifi- cally for military personnel and defense workers. This bill assists the provision of defense housing on a controlled and selec- tive basis, but does not provide for an in- crease in the total volume of housing. 6 Question. What kind of housing would be built under this title? Answer. Two general types: one- and two- family units, and multifamily rental hous- ing. The one- and two-family housing would be designed and constructed for ulti- mate sale but woul¢ be required to be held
APPENDIX TO THE CONGRESSIONAL RECORD for rent for persons engaged in defense ac- tivities for such periods of time as may be necessary. 7. Question. What rental ranges can be ex- pected under this title? Answer. Except in high-cost areas, it is estimated that maximum rents for one- and two-family houses will range trom $75 to $93 a month, for two-, three-, and four-bedroom houses, and from $77 to 89 in the case of multiunit housing. Rents could be lower where construction costs permit. 8. Question Why does this title stross rental housing? Antwer. Because it is felt that persons coming into communities to work in defense plunts initially desire to rent rather than purchase a home, since they are uncertain as to how long they may remain in the locality, 9. Question. What will happen to the housing ussisted under this title aiter de- fense needs are over? Antwer. Requirements that one- and two- family houses must be held for rental to delense workers will be relaxed as defense necds lessen and the housing will be rented or sould in the regular market. The multi- unit housing will continue as privately owned and operated rental housing 10. Question Are there cost or mortgage limits on housing under this title? Is any provision made tor hih-cost areas? Answer. The mottgage limit on one- and two-family units js 8,100 (but not more than 90 yercent of appraised value) for o single-family resident and $15,000 for a two- family residence, except that in a high-cost area the $8,102) may be increased to $9,000 and the $15,000 may be raised to 616,000. In addition, the mortgage limit may be in- creased by the FHA by §900 for a third bed- room and another $300 tor a fourth bed~ roum In the case of multiunit residences, the maximum mortgage amount jis $8,100 por family unit, or $7,200 if the unit con- tains Iess than four bedrooms. 11 Question Would the proposed new title IX have the same Inflationary effect that was altributed to the old title VI during and after World War II? Answcr While the proposed new title IX (which would he added to the National Hous- ing Act by title I of this uct) uLes the same general approach as the old title VI, it ts de- liberately designed to avoid the inflationary tendency of title VI. Under the latter, mort- gages were based on “necessary current cost,” so that they automatically increased when costs rose, thus tending to contribute to risb- ing costs The proposed title IX, on the other hand, would base mortgages on ap- praised value (FHA, however, could insure mortgages under title IX tf they represent “acceptable risk,” even though they do not meet certain normal economic soundness eriterin, such as those of location and con- tinued marketability ) By using value in- stead of necessary current cust for comput- ing mortgages, title IX insured loans would tend to curb cost rises rather than support them. 12 Question. How much will this title cost the Government? Answer FHA experience thus far would indicate that this program should cost the Government nothing. The costs of the FHA credit-insurance programs are defrayed out of premiums and fees collected from the lending institutions. Income from _pre- miums, fees, and other sources has been suf- ficient to defray administrative expenses, pay losses, and establish reserves in the insur~ ance funds, TITLE If. PROVISION OF DEFENSE HOUSING AND COMMUNITY FACILITIES AND SERVICES 1, Question. What is the purpose of this title? Answer. It is the purpose of this title to provide for carrying out the objectives of the bill in areas where private industry can- not furnish the housing needed for defense activities, or local communities would not, without the assistance of the bill, furnish necessary community facilities and services, The title would authorize the President to provide housing and to give assistance for the provision of, or provide, community facilities and services in areas where lack of such housing, facilities, or services would impede the defense effort and they would not otherwise be provided when and where needed. 2 Question. How much money ts provided for this title? Answer No money is appropriated by the bill and the bill does not authorize appro- priation of any specific sum. The funds to be provided will be determined through the regular congressional appropriation process after consideration of evidence of need The President’s budget asks for $125,000,000 for this title for fiscal 1952. 3. Question ITlow would the housing pro- vided under this title be financed and built? Answer The houring would be dircetly finaneed by the Federal Government from appropilated funds. It would be built by private firms under contract ‘‘ith the Fed- eral Government. 4. Question, What kinds of housing would be provided? Answer. To the greatest extent practicable, the housing 1s required to be one- to four- family structures of permanent construction suitable for sale as individual structures. Multifamily residences would be prov ‘ed where required by local conditions In lo- calities where the need for housing appears to be of temporary duration, the housing provided would be temporary, with first con- sideration being given to mobile or portable housing or housing otherwise constructed so that it could be moved from one area to an- other for reuse according to need. 5 Question What rents would be charged? Would the Government subsidize rents for workers? Answer. The bill requires that the rents charged be fair rents based on value as de- termined by the President. These rents would not ke stbsidized 6 Question Wh» could live In federally provided defenre hou Jng? Answer. The housing would be occupied, while the need continues, by military per- sonnel or civilian workers required to be brought Into the area for carrying out de~ fense activities The President would be em- powered to prescribe the class or classes of eligible persons and the preferences and priorities in the rental of this housing. When it is determined that any federally provided housing is no longer needed for housing defense workers, preference in oc- cupancy pending disposition would be given to veterans, and among veterans to disabled veterans and dependent parents and unre- married widows of deceased veterans whose death was service-connected. Occupancy could also be permitted by persons displaced from their homes by Government acqutel- tion of land for defense industries or {nstal- lations 7 Question, Why not use existing federally owned World War II housing, instead of building new Federal housing? Answer. The majority of the dwellings pro- vided tn the World War II housing program has been disposed of, and of the remaining inventory (about 118,000 permanent and 178,000 temporary units) nearly al) are oc- cupled and could not be made available for purposes of the present emergency except as vacancies occur, without displacing the pres- ent tenants, most of whom are veterans, many of them engaged, or soon to be en- gaged, in defense activities. Moreover, in many cases, due to technological and other changes in materials and equipment needed for defense and the consequent shift of de- Al411 fense plants, World War II housing may not be located in areas where housing is re- quired to meet present needs. Despite these draw-backs, however, war housing in the present inventory will be used to the greatest practicable extent in meeting needs as they arise in the defense program. Vacancies will be used for defense workers, The new housing authorized by this bill would be that required in any locality over and above that which could be supplied out of exist'ng fed- erally controlled housing. No new housing would be provided where World War ITI hous- ing could meet the need. 8. Question, What would become of this housing after the defense need is over? Answer, Provision is made in the bill to assure ultimate disposition of permanent housing for private use It is required that all permanent housing be sold as expedi- tiously as possible and in the public interest, considering the purposes for which it was provided. For all structures suitable for separate sale, preference in sale would he given to occupants and veterans. Pending disposition of housing no longer needed for defense workers, veterans are to be given first preference in rental, thus increasing the chance of ultimate sale to veterans under the preference accorded occupants. Per- manent projects consisting of structures not Bultable for separate sale would be sold as entities, with first preference to groups of veterans organized on a mutual ownership or cooperative basis. Terms of sale would be full payment to the Government within 25 years, with interest of not leas than 4 percent on unpaid balances. These are the same general provisions that Congress last year adopted for disposition of federally owned permanent World War IT housing. Due to present uncertainties, the method and final date of disposition of any tem- porary housing provided under this title would be left for later determination by Congress. Assurance is given, however, that temporary housing would be disposed of as soon as possible when no longer needed tor defense purposes, and would not be allowed to continue tn ure for housing purposes. 9. Question. What would this housing cost? Answer. The average cost of two- three- and four-bedroom family dwelling units in any project provided by the Federal Govern- ment would be limited to $9,000, $10,000, and $11,000 respectively. These limits would ap- ply to over-all costs, Including land and site improvements. In the Territories and pos- sessions of the United States, these cost Umits may be increased by the President by up to 60 percent. These limits corre« spond to the values of housing on which maximum mortgage amounts are based under the proposed alds to private builders in title I for single-family houses, except that no {ncrease for high-cost areas is per- mitted for Government construction. Mort- gage Mmits for private construction could be increased by 8900 in high-cost areas. 10. Question. What assistance would the Federal Government give for community fa- ellities? Answer. The Federal Government may give assistance for the provision of, or itself provide, community facilities and services only when necessary to mect newly arisen needs directly attributable to defense ac- tivities. Such Federal action would be au. thorized only when additional facilities or services are necessitated by the fact that military personnel or civilian workers re- quired for carrying out national defense activities must be brought into the locality from other areas or other additions to the local labor force are needed for such pur- poses, or where water, or sewerage exten- sions or almilar facilities must be provided for a defense plant or installation. When these conditions are met, the Federal Gov- ernment would be authorized to make grants
A1412 or loans to public and nonprofit agencies for the provision, operation, and mainte- nance of the needed facilities and services. Such grants could not be in amounts exceed- ing that portion of the total cost of the fa- cilities or services, or their operation, esti- mated to be the result of the impact of the defense activity, less amounts estimated to be recoverable from revenue or other sources by the local agency. The Federal Government itself would provide or operate community facilities and services only where no appropriate State, city, or other local agency having responsibility for such facili- ties in the area is available, able, and will- ing, with such assistance as the Govornment js authorized to give under this bill, to pro- vide or operate the needed facilities and services, 11. Question. Would Federal assistance be available for community facilities in all lo- ‘calities? Answer. No. Such assistance could be given only upon a finding by the President that community facilities or services aro needed in the particulur area or locality to support defense activities, and then only when Federal assistance is necessary to meet newly arlsing community needs which are directly attributable to defense activities and would not otherwise be met. 12, Question How would ald for schoois under this title be related to existing school- aid legislation? Answer. Assistance for educational facil- ities and services would be supplementary to, and would conform closely to the prin- ciples and procedures established by, the school-aid acts, Public Laws 815 and 874 of the last Congress. Aid under this bill would be given only to the extent that the present aids are inadequate. The existing aids were, of course, not designed to mect the problems of new defense areas. It may be noted that these provisions of the bill were prepared and recommended by the Committee on Education and Labor on the basis of its extensive studies both prior and subsequent to its reports on the school-ald acts. 13. Question. Why shouldn't local commu- nities provide all community facilities with their own funds? Answer. Cities are generally unable finan- cially to assume unanticipated large new burdens requiring capital expansion and in- creased service budgets. This is particularly true now when, as a result of postwar ex- pansion and the housing boom, as well as the backlog of construction of public works postponed during World War II, most com- munities have already greatly expandcd their facilities and services and many have reached thelr statutory debt limits. Even if legally and practically possible, however, it would be obviously unfair to make certaln com- munities bear the full cost of facilities made necessary by the common effort for the de- Tense of the Nation as a whole. 14. Question. Would the Federal Govern- ment operate schools, hospitals, and other facilities? Answer. Only in cases where the local communities are unwilling or unable to un- dertake such responsibilities, even with Gov- ernment aid under the bill, would the Fed- eral Government either provide such facili-~ ties directly or operate them with its own personnel, The bill seeks to make direct Federal provision and operation of such fa- cilities unnecessary by providing assistance to local agencies to permit them to assume these responsibilities. Even in those cases where the Federal Government was forced to provide or operate them directly, the bill would require their transfer to the local agencies just as soon as possible. In no event could the Government exercise any control or supervision over curriculum, per- sonnel, or program of instruction in any school, 15, Question. Would housing and commu- nity facilities provided under this title con- form to State and local laws? Answer. The bill would require that hous- ing and community facilities constructed by the United States conform to requirements of State and Jocal health and sanitation laws. To the maximum extent practicable, considering limitations on materials and re- quirements of defense, except for temporary construction, housing and community fa- cilities would be required to conform to re- quirements of State ind local building codes. 16. Question. Won’t communities and States suffer from removal of housing sites from tax rolls? Answer. No, The bill provides for annual payments in Meu of taxes and special assess~ ments approximating full taxes and assess- ments on residential real property held under this title, less approximate amounts fcr Fed- eral expenditures for items usually furnished by the taxing authority. 17. Question What disposition would be made of federally built community facilities? Answer The hill requires that any such community facilities be disposed of to the appropriate State or local agencies not later than a date and subject to terms and condi- tions which Congress will determine. With a few exceptions it would require the out- right donation of educational facilities to such agencies within 18 months of comple- tion. 18. Question. Who would administer this title? Answer The President could delegate re- sponsibilities under this title and title III to such Federal agency or agencies as he deemed appropriate to best assure the most efficient use of existing Federal agencies and the most expeditious handling of such re- sponsibilities in the interests of national detense 19, Question Who would construct com- munity facilities under this title? Answer. Community facilities would usually be constructed in the normal man- ner by the local communities or their con- tractors Where the Federal Government !t- self provided such facilities they would be constructed by private construction firms who would contract with the Federal Gov- ernment for the work. TITLE III. PROVISION OF SITES FOR NECESSARY D-.ELOPMENT IN CONNECTION WITH ISOLATED DEFENSE INSTALLATIONS 1, Question. What is the purpose of this title and why is it needed? Answer, Title III is designed to meet special problems involved in providing sult- able land for necessary housing, commercial services, and community facilities serving large defense installations, such as Atomic Energy installations, in isolated or relatively isolated areas. This title provides for Gov- ernment acquisition, planning, site improve- ment, and disposal of land in such areas. It is intended to facilitate the establishment of new communities, or, if necessary, the rapid expansion of existing communities, when large defense installations are located in areas in which communities of adequate size do not exist. The authority provided in this title ts needed to assure that as much as possible of the housing and commercial buildings re- quired for such defense installations shall be provided by private enterprise through private financing and ownership, thereby avoiding the development of Government towns. It is also needed to help avoid land speculation and to assure the development of communities in the most economical and efficient manner so that defense needs will be adequately served. Thus in isolated de- fense areas, it would be possible to avoid the burden of increased residential and com- mercial rents caused by land speculation, Such authority could only be used in con- nection with a defense installation in an APPENDIX TO THE CONGRESSIONAL RECORD isolated area (1) if housing or community facilities for the installation would not otherwise be provided when and where re- quired, or (2) if there would otherwise be speculation or uneconomic use of land re- sources which would impair the efficiency of defense activities at such a defenso installa- tion. 2. Question. Would the Government buy large tracts of land for continued public ownership? Answer No. The primary purpose of title III is to encourage and assist private ownership rather than public ownership or the construction of Government towns. It is the intent of the bill that the land ac- quired by the Government under it shall be dirposed of as quickly as practicable to pri- vate enterprise for the development of the community and to local agencies for public use Without the provisions of title ITT, land speculation at isolatcd defense installa- tions cannot be avoided. Excessive land costs, due to speculation, inevitably increase the cost of public facilitfes and could very well make it impossible for private enter- prise to provide adequate housing for de- fense workers receiving moderate wages. Appropriations authorized for the purposes of the title are Mmited to a 10,000,009 re- volving fund. This would limit the amount of land held at any one time under this tiile Any increase in authorization would be reviewed by the Congress on the basi» of the evidence of need presented at the time. 3 Question. Could the Federal Government construct housing or other buildings under this title? Answer No buildings cou'd be constructed by the Federal Government under the au- thority of title III. However, necessary housing and community facilities and serv- ices could be provided under other provi- sions of the bill where they cannot other- wise be provided when and where needed to serve the defense installations. Any defense Installation constructed on the land would be constructed under other congressional authority. 4. Question Could the purposes of this title be carried out under the Atomic Energy Act? Answer. No. The Atomic Energy Act con- fers no authority to acquire Jand and dispose of it to private developers tor housing or comlaercial purposes, or to public agencies for public use as is provided in title III of the bill. While the Atomic Energy Commis- sion has authority under its act to acquire land for housing, it can do so only if the Commission 1s building and financing the housing This results In Government-owned towns. Neither can the purpose of title III be accomplished by any other existing legislation Through the provisions of title III, it will be porsible to avoid the necessity for the construction of Government-owned towns and at the same time to secure the provision of the types of housing, community facilities, and commercial enterprises which will best serve the needs of the detense in- stallation. This title will also facilitate the assumption by the residents of the responsi- bilities of local government under State laws, a matter which has proved to be extremely difficult in the case of the Government- owned towns which the Atomic Energy Com- mission has constructed in the past This title will afford relief to the Atomic Energy Commission which has expressed its view that it should not be diverted from its major purposes to cope with housing and land planning problems, 5 Question Wouldn't Federal acquisition of land undor this title deprive local and State jurisdictions of essential tax revenues? Answer. No. The bill would make special provision to compensate State and local gov- ernments for loss of tax revenues occasioned by the acquisition of land for the defense installation or the acquisition of land under
APPENDIX TO THE CONGRESSIONAL RECORD the provisions of title III. This title would require payments in Heu of taxcs and special assessments approximating, but not excced- ing, the taxes and special assessments which would be paid to the taxing authorities upon the property acquired and held under the title if they were not exempt from taxation and spectal assessments, less (1) credit for Federal expenditures for community facill- ties, and (2) other Federal payments in lieu of taxes or special assessments on the prop- erty. In addition, under certain conditions similar payments in lieu of taxes would bo paid on the defense installation itself. With respect to the defense installation itself, however (as distinguished from its sitc), tax payments would be approximately 10 percent of the amount of taxes which would be levied with respect to it if it were subject to tax- ation Thts limitation is included because of the unusually high ratio of the cost of improvements on some defense installations to the cost of services rendered to them ny the communities. Payments under this title for defense in- stallations themselves would not be made where construction of such installations wus commenced before June 27, 1950, unless the President found that such payments were necessary to permit local ownership and op- eration of public facilities and services re- quired tn connection with the housing and community facilities serving the installation. 6. Question. How much would this title cost? Answer. Since the $10,000,000 authorized as a revolving fund for acquisition and site improvement of land 18 expected to be re- covered through !ts disposition, the only net cost anticipated under this title will be the payments in lieu of taxes and assessments, for which separate appropriations are authorized, TITLE IV. PREFABRICATFD HOUSING 1. Question, What does this title provide? Answer. It would authortze the HHFA to mz.ke $15,000,000 1n loans outstanding at any or time to aid the production of prefabri- cated houses or housing components of pro- ducers who have a demonstrated capacity to produce and market their products. These loans would be made in order to enable such producers to maintain their housing produc- tion capacity for defense purposes No loan could be made under this authority unless suitable private financing fs unavatlable. The program is designed to assure that the ex- isting prefabricated housing industry, which has an estimated capacity of about 100,000 homes annually, will have a necessary Koulce of adequate working capital to maintain its operations so that it can serve defense and emergency needs, instead of being compelled to convert to some other kind of production through lack of uuitable credit under defence conditions. Loans could be made for dis- tribution and erection of prefatricated houses, as well as for their production 2. Question. How does the new loan pro- gram under this title differ from the previous prefabricated housing loan programs? Answer. (&) The funds are specifically di- rected toward maintaining prefabricated production to serve defense necds (b) Unlike earlier programs which had as one of their main purposes the encourage- ment of new enterprises, this program 1s Iim- ited to the maintenance of present produc- tion capacity. Therefore, the financing would aid only housing of prefabricated pro- ducers who have demonstrated their capacity to produce and market their houses. It woule not be available for new enterprises, nor for the Lustron Corporation if reorgan- ized. (c) The program makes ac ditional funds available to ald in both production and dis- tribution of prefabricated housing, since previously authorized funds are nearly all committed, (d) The program includes producers of mobile or portable housing to serve tempo- rary defense housing needs as provided un- der title II of this bill, TITLE V, AMEITIDMENTS TO EXISTING LAWS AND GENERAL PROVISIONS 1. Question, What provisions a e made to adjust existing housing laws to help meet de- fense needs? Answer. The final or “miscellaneous” titie of the bill would amend a number of such laws for this purpose: (a) The authority for the special FHA military housing mortgage insurance pro- vided under title VIII of the Nationul tous- ing Act for rental housing for personnel of permanent military installations would be extended for 2 years beyond the present ex- piration date of July 1, 1951. In addition, this title would be extended to permit tnsur- ance of mortgages on housing constiucted for personnel at permanent Atomic Energy Commission installations (b) Public Law 671, Seventy-sixsth Con- fress, now permits Fedorally assisted low- rent housing projects and related powers 10 60ns engagid in natlonal defence activities. This law would be amended to permit pay- ments in cu of taxes somewhat higher thin are presently authorized and to make it clear that rentals and eligibility for admission and for continued occupancy may be based on dcfense use rather than low-rent hou ing ue. (c) Because of the critical international situation and the consequent suspension of disposition of Federally owned war and vet- erans’ housing built during and immediately arter World Wur II, the President would be authorized to extend disposition deadline dates prescribed in the Housing Act of 1950 for this housing. (d) Anew provision would be added to the Lanham Act to permit income Hmitations to be placed on occupancy of existing federally owned houting constructed during the last war so that this housing may better serve the needs of present defense workers (ec) An amendment to the National Hous- ing Act would permit the Federal rloubstiyg Commissioner to insure mortgages upon homes purchased by persons called into the active military service notwithstanding tne requirements of the act that the mo.tyaror (under certain FHA programs) must cccupy the pronerty. (f{) Certain changes would be made in the yield insurance program (title VII of the National Housing Act) to encourage the use of this title for tho development of more moderate rental housing for defense workers. (The yield insurance program is designed to encourage equity investment in rental hous- ing with rentals within the capacity of families of moderate income. No mortgage financing is involved. The FHA is authorized to insure 8 minimum annual amortization of 2 percent of total investment and an annual rate of return of not more than 234 percent on outstanding investment.) 2. Question. What special provision is made for veterans who are defense workers? Answer, The bill would provide that vet- erans who are defense workers in arcas of housing shortage as determined by the Presi- dent could use their veterans’ home loan benefits under the GI bill of rights withcut restriction of any sort {if the cost of the home involved did not exceed 89,000, $10,000 and $11,000 for two-bedroom, three-bedroom and four-bedroom family units, respectively. 3. Question. The bill sometimes hans been called a $3,000,000,000 measure. What are the financial authorizations in the bill? Answer. The 63,000,000,000 referred to is the authorization to FHA to insure up to @3,000,000,000 of additional home mortgage loans under the FHA mortgage insurance provisions. This authorization could only be used as released by the President. It A1413 would be used for the existing FHA insurance programs as well as the new special defense housing program and the military housing insurance program. This does not represent expenditures to be made by the Federal Government. It would be insurance only. Past experience over a period of 17 years has been that mortgage insurance premiums and fees more than cover both administrative expenses and losses incurred, In addition to the increase of mortgage Insurance authorizations, the bill would au- thorize (a) appropriations for the purposes of title II—the provision of housing by the Federal Government and aid to localities for, and the provision of, commumity facilt- ties and services, (b) the appropriation of $10,000,000 to a revolving fund to be used for the purposes of site acquisition in iso- lated localities under title ITI; and (c) bor- rowing by the Housing Administrator from the Treasury of 615,000,000 for the pur- puses of prefabricated housing loans under title IV. Any appropriations for title II would, of course, have to be justified before appropria- tions committees before being made avail- able for the purposes of that title. No amount for such appropriations can be stip- wiated in this bill because the extent of the over-all needs cannot presently be esti- mated vith any accuracy. (Sce question II 2, p. 14) 4 Question What provision is made for famalltes furced to move from sites of new de= fense Installations? Ansewer. The bill provides that the Pres{- dent muy, where he determines that persons huve been displaced from their homes as a result of acquisttion of sites tor defense in= stallations or industries, authorize such per- sons to occupy or purchase housing assisted under the provisions of this bill or for which credit restrictions, have been relaxed, 6 Question Would there be any time Iimi- tation on the exercise of powers to be granted under this bill? Answer Yes. Powers to insure mortgages under title I, agreements to extend assist- ance for community facilities or services un« der title IJ, and commencement of construc- tion of housing or community facilities under title IL, acquisition of land under title III, and loans under title IV could not be made aiter June 30, 1953. Toronto Stock Frauds EXTENSION OF REMARKS HON. FRANK M. KARSTEN OF MISSOURI IN THE HOUSE OF REPRESENTATIVES Wednesday, March 14, 1951 Mr. KARSTEN of Missouri. Mr. Spcaker, under leave to extend my re- marks in the Recorp, I include the fol- lowing article, which is one of a series published in the St. Louis Star-Times: Toronto, ONTARIO.—It's possible to get rich in the mine and oj] promotions here, But not for the sucker in the United States. The stock the American buys makes only one man rich—the Toronto promoter, Up and down Toronto's Bay Street, you hear stories of mining ventures like Que- mont and Noranda which struck gold and made their stockholders lots of money. You hear how Imperial O!l drilled 110 holes before Leduc No 1 gushed tn and be- came the starter for the Alberta oil boom. But I didn't find that any one of these bonanza ventures were promoted by mall
Al414 order and telephone solicitation, Neither did William C, Rosenbaum, of the St. Louis Better Business Bureau, who surveyed the Toronto promotions with me. In our canvass of the Toronto stock lot- terles, Rosenbtum and I found no record that any of the mail-order mine enterprises promoted illegally in the United States trom here paid anyone a dime—except the pro- moter. It isn’t hard to sec why only the promoter makes money on these deals. The cost of promotion is so high that it makes the prospect of bringing a moose- pasture mine into production a mathe- matical miracle. In Missouri, for example, the cost of pro- moting a speculative stock venture is re- stricted to 20 percent of funds from salcs. This means that 80 percent goes into the company treasury to develop the property In Ontario, however, promotion costs are 6624 percent of funds derived from stock sales Two-thirds of the take goes into the promoter’s pocket. Only one-third gues into the company treasury, The ratlo is official, It is fixed by tho Broker-Dealers’ Association of Ontario and approved by the Ontario Securitics Commis- sion, Rosenbhum and I were told promotion costs are high because of long-distance sell- ing. Also, we were told, adverse publicity and efforts of the United Stites Securities and Eachange Commission and the United States Post Office to protect Americans from fraud have forced promoters to spend more money for gaudy literature, publicity, and telephone calls. Americen buyer resistance to Toronto stocks, offic.uls told us, ts increasing While it is theoretically possible to bring a mine into production on a two-thilds stock mark-up, woe found it is not done on the initial capitalization. . This ig one reason the sucker can't win, Mining and ofl venture companies are cap- Italized at about 3,009,000 shares of stock, at 61 per value. Under securities recula- tions, the broker-dealer who wants to sell the stock commits himcelf to marketing a siz- able block~--nbout 5€0,000 shares In return for taking this risk, he is givon options on other shares at ascending prices. The broker-dealer buys the first 500,000 shires at 10 cents a share from the company treasury It costs him $50,000. He sells it to the suckers for 30 cents a share, grossing $150,000, This leaves him a 8100,000 selling profit, from which he deducts promotion expenses, such as mailings, long-distance telephone calls, and salesmen's commissions, Even with a lavish promotional campaign, his net is likely to run about #50,000. The next batch of stock costs him 15 cents a share from the mine treasury. We puts it on the market at 45 cents a share At this point, one of the most misleading phases of the whole racket comes into play. The promoter advises the suckers that “Consolidatcd Connivance Gold Mines, Ltd ,” is going up in price. Instead of 30 cents, it will be offered at 45 cents a share. “Holding back some of the 30-cent shares for our earlier customers,” the promoter wires the sucker “But you must act before midnight tomorrow night” St. Louisans who were high-pressured from Toronto said they believed the stock had actually risen on the market 15 cents wu share, That's the way it sounds. They didn’t know the promoter is simply closing out his 10-cent shares and getting ready to move his 15-cent optioned shares Into selling position. The victim doesn’t know that the whole- sale price of the shares is fixed by the On- tario Securities Commission and the retail markup is fixed by the Broker-Deulers’ Asso- Clation. He docsn't know there isn't any market for his stock. And the broker-dealers of Yoronto make a special point of not telling him The deadline of midnight tomorrow night is pure fiction. It is intended to create a feeling of urrency in the mind of the sucker. It often works. This technique of selling the sucker a second time 1s called reloading in the racket here. Sometimes it gets so bad the Ontario Securities Commission has to crack duwn For {nstance, when the Commission can- eeled the registration of Junior Golds Se- curities, Ltd., on February 3, 1950, it charged that Sidney C. Davidge, president of the firm, and A. C, Gardiner, a salesman, had reloaded a victim in New York State who was mcn- tally incompetent Commission records show the victim start- ed out by purchasing 25 shares of Yukeno Lead & Silver Mines, Ltd, in the spring of 1949 Then the victim had a dream that gold would be found in the dizpines, although the mine Junior Golds was promoting was a lead mine. Anyway, he sent Davidze and Gar- diner a map he drew from his vision showing where the gold was The promoters kept feeding him more stock, Within a few months the victim had purchased 4,500 shares for $1,250, his life savings Davidge told the Commission when this case was heard that he thou ht the New York sucker was Just kidding hiin about the vision and the map. “This,” observed the Commission, “was an unfortunate example of overreaching " If the promoter finds that the gold mine or oil well can become commercially profit- able, the sucker 1s spe*dily shuffled out by a series of recapitalizations. Since the initial capitalization ts not suffi- cient to bring the mine into production, the promoter reorganizes the company and issues more stock. Since each share of stock is essentially oa chance a7ainst potential riches, the more new stock the promoter issues the less the orlg- inal shareholders pet. Recapitalization cm continue until the potential value of the original shares approaches zero. Take the experience of the Casey Summit Mine, in the Kenora mining district of north- western Ontario. Launched in 1932, it did not achieve production under the initial cap- italization It was reorganized in 1935 as Argosy Gold Mines. One share of stock in the new com- pany was exchanged for four and a fraction shares in the old. Holders of 1,000 shares of Casey Summit stock wound up with 226 shares of Argosy stock on the first recapi- talization In 1938 Argosy was recapitalized as Jason Mines, Ltd One share of Jason stock was given for five shares of Ar.osy. That left the original holder of 1,000 shares of Casey Summit with 45 shares of Jason. Jason produced $2,400,000 worth of gold between 1940 and 1947, and paid two divi- dends of 2 cents per share each. Under the old Casey Summit set-up, the stockholder with 1,000 shares would have recelved $40. But he had been reduced to 45 shares. All he got was 81.80. In 1948 New Jason Mines, Ltd., was formed, issuing one share for every three in old Jason. The original stockholder who had bought 1,000 shares now had 15 left. This isn’t simply what can happen in a Canadian promotion—it is what does happen to bring a mail-order mine into production, There may be gold or there may be oil, but the sucker docsn’t reap any reward from it. Only the promoter gets rich, APPENDIX TO THE CONGRESSIONAL RECORD Address by Hon. Edward Martin, of Penn- sylvania, at the Annual Meeting of the Sunday League at Bridgeton, N. J. EXTENSION OF REMARKS OF HON. H. ALEXANDER SMITH OF NEW JERSEY IN TIE SENATE OF THE UNITED STATES Wednesday, March 14 (legislative day of Monday, March 12), 1951 Mr. SMITH of New Jersey. Mr. Pres- ident, at the eighteenth anniversary meeting of the Interdenominational Sunday League which was held in Bridgeton, N. J., last night, we of New Jersey had the honor of having as the guest speaker our distinguished col- league the senior Senator from Pennsyl- vamia IMr. Mantin]. He delivered an outstanding address, and I ask unani- mous consent to have it printed in full in the Reconp. There being no objection, the address was ordered to be printed in the Recorp, as follows: ADDRESS oF UN!Trp STATES SENATOR Epwarn Marvin, oF PL.NNSYLVANIA, AT THE ANNUAL Mrrtine of tHe SUNDAY LeEacuUr, INC, aT Bripseron, N J, TuEspAY EVENING, MARCH 13, 1951 Meetings such as this are Hving symbols of faith in God and devotion to the Chris- tlan ideals unon which our great land of liberty was established. In mectings such as this many genera- tlons of God-fearing Americans have strensthened the moral and spiritual foun- dation of our Nation’s greatness. In coming into the great State of New Jersey T recall the historic importance of your State as the principal battleground of the Revolution Iam mindful alro of the proud place New Jersey holds today as u great industrial State, a great agricultural State, and as a center of education, science, culture, and religion. I welcome this opportunity to praise the splendid service given your State and the Nation by your distinguished United States Sonators I, ALEXANDER SMITH and Rozert C. HrnpricKson, It 4s an honor to be a‘so- ciated in the United States Senate with these outstanding American statesmen. It is a privilege also to tell you of my high re:ard for your distinguished Governor, the Honorable Alfred E. Driscoll. He has made a national reputation as a foremost exponent of economy and efficiency in government. We have reached a time of great peril in tue history of our Republic. The American way of Hie Is threatened by enemies at home and abroad. The precious freedoms we prize so highly are in danger, The great issue is whether we are to live {n a peaceful world or whether we are to be plunged into the most terrible war of all time. To meet the crisis we are mobilizing all the power of our rich resources to defend our homes and our liberties. We are calling the youth of our land to the colors We are preparing to start a system of universal military training. We are pouring billlons upon billions of dollars into the production of weapons and munitions for our Armed Forces. But, my fellow Americans, 1f we are to survive as a free nation—if we are to pre- serve peace, freedom, and justice in the world-- we need more than armies, more than weapons, more than wealth.
APPENDIX TO THE CONGRESSIONAL RECORD Above all, we need the strength that comes from God. We need the strength that can be gen- erated only by obedience to the laws of God and man—by deeper devotion to the teach- ings of the Holy Bible—by living in accord- ance with the Ten Commandments, the Golden Rule, and the Sermon on the Mount. We support the American principle that the state and church must be ceparate. But we know that one cannot live without the other. No government can rise above the moral and spiritual standards of its people. Freedom, good will, and tolerance cannot be maintained without a strong militant church In this blessed land of ours we have been so fortunate. Throughout its history there has run a golden thread of deep religious conviction The spirit of religion guided the Pilgrim fathers to the New World. They began the Mayflower compact with the words, “In the name of God. Amen” William Penn, illustrious founder of Penn- sylvania, established his holy experiment on the spirit of religious freedom. “If we are not ruled by God,”’ Wilitam Penn asseited, “we will be ruled by tyrants.” Faith in God sustained the pioneers tn their lives of struggle and hardship. George Washington, kneeling in prayer in the snow at Valley Forge, has given patriotic inspira- tion to many generations of Americans. “Firm reliance upon the protection of divine providence” js set forth in the Declara- tion of Independence Benjamin Franklin suggested that prayers for divine guidance be offered in framing the Constitution Abraham Lincoln, in his immortal Gettys- burg address, reterred to the United States as “this Nation, under God” With these magnificent examples before us, we are forced to wonder why we have de- parted from the right course. We have reason to be alarmed at recent dis- closures that indicate such a widespread breakdown of decency and morallty. Can we remain calm while there js revealed evidence of corruption, bribery, and racket- eering, not only in the criminal underworld, but in the very seat of the Government itesel{? The other day there appeared in the press a statement which should shock every right- thinking American out of his complacency. It was made by Senator Fuuoricnr, of Ar- kansas He is chairman of the Senate sub- committee investigating charges of political influence, favoritism, and graft in connection with loans made by the Reconstruction Fi- nance Corporation, Senator FULBRIGHT was quoted as saying the testimony produced before his commit- tee shows the need for a “general investiga- tion of the moral level in government.” Senator FULBRIGHT was further quoted in these words: “If people lose faith in the honesty of their Government by reason of rather tecent de- velopment then we will be in greater danger from within than from without. Loss of confidence in our Government is as great @ menace to our security as is communism " Another Senate investigation has brought out into the open criminal activity by or- ganizen crime syndicates reaching into many States of the Union. This disgraceful condition is described as a “record of official corruption” It was submitted 2 weeks ago by the Senate Crime Investigating Committee headed by Senator Keravver, of Tennessee. Because of its tremendous importance I should like to read a portion of that report, from which I now quote: “The most shocking revelation of the testi- mony before us 18 the extent of offictal cor- ruption and connivance jn facilitating and promoting organized crime. “The committee has found evidence of cor- ruption and connivance at all levels of Gov- ernment—Federal, State, and local. “Such evidence of the corruption of Fed- eral Government officials as we received, is primarily in connection with t.: enforce- ment of the income-tax laws. “The evidence of corruption and connt- vance with organized crime in State and locul government is present in five different lorms: “1. Direct bribe or protection payments made to law-enforcement officials, so that they will not interfere with specific criminal activities “2. Political influence and pressure of im- portant officials or political leaders used to protect criminal activities or further the in- terests of criminal gangs. “3. Law-enlorcement officials found in the possession of unusual and unexplained wealth, “4, Law-enforcement officials participating directly in the business of organized crime. “5 Contributions to the campaign funds of candidates fur political office at various levels frequeutly made by organized criminals without reference to political affiliation. Not infrequently, contributions are made to both major political parties; gangsters op- erate on both sides of the street.” At another point in the report this state- ment is made, and again I quote. “The committee figures conservatively that $20,000,000,000 changes hands every year in the United States us a result ot or- ganized illegal gambling " That $20,000,000,000 figure 1s just for gam- bling alone In order to understand the magnitude of organized crime in the United States 1t would be necessary to add the n- come from many other criminal activities. hurcotics, the white-slave traffic, illegal Joun-shark rackets, swindling schemes, the €xtortion rackets, and even organized mur- der. I have discussed these conditions of crime and corruption because there is a definite relationship between religion and good gov- ernment. Our civic duty and our religious duty are Interwoven. Both must be honored and ob- served 1f we ure to measure up to the re- sponsibilities of citizenship One hundred and fifty-five years ago George Washington expressed that thought so clearly in his famous Farewell Address, Warhington sald, and I quote “Of ull the ditpositions and habits which lead to political prosperity religion and mo- rality are indispensable supports, “Reason and experience both turbid us to expect that natfonal morality can prevail in exclusion of religious principle " Yes, my fellow Americans, national mo- rality has been weakened because we have allowed our material progress to advance tar beyohd our gains in spiritual strength, In the words of the poet, Oliver Gold- smith: “Ill fares the land to hastening ills a prey, Where wealth accumulates, and men de- cay” Every one of us here is shocked by the revelations of corruption, graft, and racket- ecting to which I have referred. But the thing that so greatly uisturbs me is the indifferent attitude of so many of our people In every community thousands of good citizens seem to accept these matters as a necessary evil—something we cannut cope with. Such citizens, and many of them are church members, have lost their sense of civic duty and civic responsibility. They must be awakened to the Importance of the fight for honesty and decency—hboth in and out of government, Al415 Unless the moral forces of our communi- tes arouse themselves to drive out racketeers and grafters, wherever they exist, there can be no hope of honest, decent government. We cannot have good government unless we elect to public office courageous men of outstanding ability, upright character, and unquertioned integrity. We must drive out of office those politt- clans whose objective is personal gain and personal power, not public service Victory over the racketeers and graftors can be won only i1 every right-thinking, law- abiding citizen takes an interes. in govern- ment, Men and women of the church should take an Intelligent and militant part in politics, because clevn, honest politics is the tounda- tion of gocd government, And good government, !n our Republic, ts the greatest safeguard of individual freedom, including the most precious of all—freedom of religion. To hold the Nne in American we must have f slong, courageous, sell -reliant, God-tearing people We must have a strong, militant church and a strong, solvent Government. We must have a total mobilication of all the moral forces Our churches must be the armories of trained battalions of men and women working for God and country. The battalions must be formed into armies under courageous and rithteous lendership With flags tlyinc, they must march forward to fight the evils which have brought us to a time of national peril. We must keep in mind always the historic mission of the United States-- to lead the world in progress for justice, freedom, and peuce. Even at this critical time in world affairs we must not yield tu the belief that war is inevitable, We must never abandon nope that we can live in peace, us ordained by the Creator of the Universe. Let the Voice of America resound through- out the world with a message of peace and gocd will, Let us tell the glories of the American way of Hfe. Let us make known to people every- where that our plan means freedom of the individual—that tt gives more of the good tuings of life to more people than any other 6,+tem the world has ever known. But Nrst—and most important—let us put our own house in order. Let us so live that we can be an example of religion, patriotism, and high moral standards The crying need of the hour Is for a great spiritual rearmament, not only in America but all over the world. Not until this is accomplished can we beat our swords into plowshares and live at pence, secure in the fatherhood of God and the brotherhoud of man, Propaganda Is Costly EXTENSION OF REMARKS HON. EDWARD MARTIN OF PENNSYLVANIA IN THE SENATE OF THE UNITED STATES Wednesday, March 14 (legislative day of Monday, March 12), 1951 Mr. MARTIN. Mr. President, I ask unanimous consent to have printed in the Appendix of the Recorp an editorial entitled “Propaganda Is Costly,” pub- lished in the Shenandoah (Pa.) Evening Herald of March 10, 1951,
A1416 There being no objection, the editorial was ordered to be printed in the Recorp, as follows: Propaaanpa Is Costiy Washington is the center of the huge Government propaganda machine which provides an estimated 45,000 Federal em- ployees with full-time work to dispense in- formation, publicity and out-and-out prop- aganda. This figure, by the way, was sup- plied by the Budget Bureau on congresstonal demand 2 years ago. It has hardly decreased since 1919. Paul R. Leach, chief of the Washington Bureau, Detroit Free Press, dug into this Federal press agent quagmire and found the State Department tops the list with nearly 6,000 assorted press agents here und abroad. Yes, the Economic Cooperation Ad- ministration is included in this bracket. The dough is pretty good—avernging from $3,000 to $1C,300, with a few section chiefs drawing $15,0C0 per annum. (That’s better money than the rewrite battery 1s drawing on New York Local, AP.) Pub ic Relations for the Department of Defense engages about 1,800 while the De- partment of Agriculture has a press agent payroll of 420, not including 390 mcre on research, writing, and editing publications. We could go on with a lot more figures, but, perhaps, the taxpuying public gets a vague idea that “thought control” is hardly peanuts. (Note to Herald news room gentry’ What’s the mittter with you puys? Wanna’ be reporters all your lives? Why not make a try for “Director, Off_ce of Information,” Depertment of (you-name-it, Pal) and get along in the world?) Secretary Acheson’s Letter to Marine Corporal Moulette EXTENSION OF REMARKS oF EON. HARLEY M. KILGORE OF WEST VIRGINIA IN THE SENATE OF THE UNITED STATES Wednesday, March 14 (legislattwe day of Monday, March 12), 1951 Mr KILGORE. Mr. President, I ask unan’mous consent to have printed in the Appendix of the Recorp a very fine editorial in regard to Secretary Achcson's letter io Marine Corporal Moulette, which appeared on Saturday, March 10, in the Charleston (W. Va.) Daily Mail. The Daily Mail is one of the leading Repub- lican newspapers in West Virginia. There being no objection, the editorial was ordered to be printed in the Recorp, as follows: The exchange of letters between Marine Corporal Moulette, his father, who is the aseistnat to the mayor of Camden, N J., and Secretary of State Denn Acheson is a revealing and heart-warming correspond- ence which throws a good deal of light on the American temper. The corporal’s reaction to the Korean po- Nee action, the great auesttons of national policy and the future of the United States is, we imagine, typical enough to be taken seriously. To him the war is, first of all, a great personal inconvenience, an interrup- tion in a planned and promising life. He has no personal enthusiasm for it, and he 1s resigned to fighting it “only because of the ob'gation we—the marines—have to each other,” His father is not unsympathetic, which becomes him, but he is concerned over a reaction which, if it is general, is certainly going to make it difficult to implement na- tional policy where disagreement is poten- tially, at least, a form of divisior. Dean Acheson, in the summing up, deals admirably with both. His expressions of sympathy ring true. The corporal’s ques- tions are, in fact, much like those which Mr. Acheson confronted with his own son in World War II, But there are other consid- erations beyond those which touch upon the individual, and Mr, Acheson states them well. “The Mberty we enjoy ts not won and preserved without unremitting effort, with- out sacrifice, without eternal vigilance.” This is one of the cliches of patriotic oratory. It 1s also one of the soJemn truths of our national existence. It has been proved time and again that we cannot enjoy what someone else has wo. for us unless we are willing to keep up the installments. It may be, in this connection, that the Korean engagement is a tactical mistake, althouth Mr Acheson does not think so. But strategically it is a phase of the struggle which the United States muct fight and must win To dwell on the hardships which this may involve is natural, but Mr. Acheson {s surely right when he says thut “the great thing is not what happens to us but how wo bear what happens to us” To his preat credit the corporal sees the Secretary’s point and graciously acknowl- edges that he stands corrected. Happenings in Washington EXTENSION OF REMARKS HON. EDWARD MARTIN OF PENNSYLVANIA IN THE SENATE OF THE UNITED STATES Wednesday, March 14 (lemslative day of Monday, March 12), 1951 Mr. MARTIN. Mr. President, I ask unanimous consent to have printed in the Appendix of the Rrcorp a broadcast by me entitled “Happenings in Washing- ton, Pregram No. 36.” There being no objection, the broad- cast was ordered to be printed in the Reccrp, as follows: HAPPENINGS IN WASHINGTON, Program No 36 (By United States Senator Epwarp Martin, of Pennsylvania) This is Ep Martin, speaking to you from the Nation's Capital, and bringing you the first in a new series of broadcasts on Hap- penings 1n Washington. When I inaugurated these talks in June of 1949, I stated that I hoped to bring you a better understanding of developments in your Government. I said I would endeavor to keep you ad- vised about legislation that is being con- stdered in Congress and how it would affect Pennsylvania. I now repeat and reemphasize that pledge. In the present critical situation it is a most important duty of good citizenship to be fully informed on the great problems of the day. It is equally important to study the pro- posals that are offered to meet those prob- lems in order to reach decisions that will best contribute to the preservation of free- dom and the American way of life. The grave problems now before Congress are your problems. They reach into your home and your job. They determine your standard of living, the purchasing power of APPENDIX TO THE CONGRESSIONAL RECORD your earnings, and the future of your chil- dren. Under the American system of government the decisions that are reached must reflect the will of the people—expressed through thelr elected representatives in both Houses of Congress. Never in the history of the United States have we been called upon to make decisions as important as those now before the Eighty- second Congress. The problems arising out of international relations will decide whether we are to have war or peace. The course we take in domestic affairs will determine whether we are to preserve the American plan of individua] freedom or whother we are to continue on the road to state socialism. In the brief time at my disposal I want to outline some of the problems now before Congress. I am sure that nearly every American will agree that we must keep our country strong. We must have military strength, financial strength, industrial strength, and spiritual strength if we are to have leadership for peace 1n the world. Upon that objective we all agree—but there are many divergent opinions as to how we are to reach that goal. In recent months there has been a great debate on whether we should send American combut divisions to Europe at this time. There has been a great deal of discussion as to whether the President has the power to order troops overseas without first consult- Ing Congress I belleve that even if the President has that power he should seek the advice of Congress—because the Members of Congress are the direct representatives of the people— and the people are still the Government of these United States, Another important decision that Congress must make has to do with the proposal to drop the selective-service age limit to 18 and the establishment of universal military train- ing. I believe that no boy should be sent into combat without at least 1 year of intensive training. For many years I have advocated universal military training as the best system by which every young man cun and should be prepared to serve his country in time of crisis These militory questions are part of build- ing our defense against danger from abroad. But military strength is only a part of our defense. To safcguard freedom of the indi- vidual we must maintain the economic and financial strength of our country. The Finance Committee of the Senate, of which I am a member, is now holding hear- ings on the Reciprocal Trade Act. The ques- tion before us is whether this act should be extended, and if so, should it be amended to provide protection for the American work- er against the influx of goods produced in low wage foreign countries. I have alined myself with those who be- eve that drastic changes should be made in the Reciprocal Trade Agreement Act. I believe it should be amended s0 as to protect the Jobs of our workers against unfair competition fostered by the Truman ad- ministration and the State Department. Recently there was submitted to Congress a list of 60 different industries which have been injured or seriously threatened in the normal economic times prior to the outbreak of war in Korea. I have mentioned only a few of the grave problems with which Congress 1s struggling. But the most dangerous threat to Ameri- can safety and security is the continued reck- less disregard for the financial stability of our country. In these days of peril we sometimes for- get that we are now saddled with a national debt in excess of $260,000,000,000.
APPENDIX TO THE CONGRESSIONAL RECORD The worst evils that strike at the founda- tion of our lberties are public debt, exces- sive taxation, deficit financing and extrava- gant spending by all levels of Government. We can win against foreign enemies and can still be destroyed as a free nation by un- sound fiscal policies which must result in financial collapse and national bankruptcy. The inevitable consequence 1s the loss of all freedom under socialistic dictatorship. You may recall that the President, in his state of the Union message, said: “The Government must practice rigid economy in its nondefense activities. Many of the things we would normally do must be curtailed or postponed.” The statement was cheered in Congress. It raised the hopes of the American people. It gave the impression that in the trying days ahead the Truman administration was committed to economy in nondefense ex- penditures. But it took only a single week for this pledge to vanish in thin air. When the President submitted his budget for the fis- cal year beginning July 1, 1951, it called for the spending of $71,500,000,000 It pro- vided for revenues of $55,000,000,000, leav- ing a deficit of sixteen and a half billion to be made up by additional taxation. Instead of calling for “rigid economy in nondefense activities,” the budget proposed the highest nondefense spending in our Na- tion’s history, an increase of 86,000,000,000 over this year’s figure. Members of Congress and the American people were shocked at this utter disregard by the President of his economy pledge. That stalwart Democrat, Senator Harry Byrp, of Virginia, called the budget mes- sage “the very height of fiscal irresponsibil- ity” But Mr Truman dared Cougress to cut @ single dollar from his spending requests. He said, and I quote, “The requirements of national security are reflected in every major function of the budget ” When we examine sume of the major func- tions that he advocated, we find the same old socialistic proposals that have been re jected by ono Congress aiter another. Formerly they were pushed as part of a B0- called social-welfare program. Now they are put forward in the guise of measures neces- sary for national defense. Included are the Brannan plan, to regi- ment agriculture at a cost of billions of dol- lars to the taxpayers, the vicious schen.o to socialize the practice of medicine, the dangerous proposal to place education under Federal regulation, and other socialistic schemes. Now the President talks about a balanced budget, and he has asked for $16,000,000,000 in new or increased taxes. He has recom~- mended to Congress additional tax proposals that would raise €10,000,060,000 and has said he would make further proposals for another #6,000,000,000. I have always been a strong advocate of a balanced budget. I believe that we should pay the cost of building our defense on & pay-as-you-go basis. But I want to make it clear, however, that I do not propose to sup- port revenue measures that would add $16,- 000,000,000 to the backbreaking burden now carried by the American taxpayer. I am convinced that somewhere between $6,000,000,000 and 89,000,000,000 can be chopped out of Mr. Truman's 871,500,000,000 budget. I do not propose to load new taxes on the taxpayers of the United States to pay for the Brannan plan, socialized medicine, 80- clalized education, and the other socialistic programs in the budget. I refused to do it in peacetime. I cer= ‘tainly will not do it at a time when every possible dollar must be dedicated to the de- fense of the Republic. I am convinced that every department of Government could reduce its spending by 20 percent without sacritice of efficiency and without curtailing any essential service. Let me cite one example of what can be done where there is the will to economize. The Honorable Lindsay ©. Warren, the Comptroller General of the United States, ia the directing head of the General Accounting Office. He ts appointed by Congress, not the President, for a 16-year term and cannot be reappointed, In April 1946 that agency reached a penk of 14,904 employees. This figure was steadily reduced until it was down to 7,063 at the beginning of 1951. That was a reu ctirn of 7,841 persons, representing an annual payroll reduction of $31,877,560 In other words, Mr Warren is operating the General Accounting Office with less than half the people he had in 1946 and it is operating in 1851 with greater efficiency than ever before In the same period every department and agency under the President was growing, expanding and bursting at the seams For some tlme the number of Federal employees has been increasing at the rate of 1,400 a day Tet me tell you, my fellow Pennsylvanians, that a strong, solvent, economically sound America must be our first Iine of defense against Communist aggression It is the only way we can stop the drift toward a socialistic state Therefore I shall battle against every scheme for needless spending that would increase the tax burden upon the wage earner and upon productive industry With the spirit of American patriotism as our guide, each ef us, as individuals, can help strengthen the defense of our country. The troubled times ahead call for work and sacrifice Every American must be prepared to do his share. This is En Martin, speaking to you from the Nation's Capital. The next talk in this teries will be given 2 weeks from today. Thank you so much for your attention, The New Alger Hiss Line EXTENSION OF REMARKS or HON. KENNETH B, KEATING OF NEW YORK IN THE HOUSE OF REPRESENTATIVES Tuesday, March 13, 1951 Mr. KEATING. Mr. Speaker, the conviction of Alger Hiss has been con- firmed by our highest court through refusal to review his case. This brings to a close not only a bril- liant and potentially promising career, but also one of the most sordid chapters in the history of the administration which controls the executive branch of the Government. The recent attempt to escape responsibility will fool no one. In the beginning, the apologists for the ad- ministration defended their erstwhile idol by claiming that he was being picked on and vilified for political hysterical reasons and that a trial would surely result in his vindication. After a jury had unanimously found him guilty following an eminently fair second trial, the official line changed to the effect that he was shielding his wife or someone else in a commendable spirit of chivalry or martyrdom. It was the story heard on all sides among his ad- Al1417 mirers and many of his former associ- ates in Government. Now a new administration apologia appears in the current issue of Harper’s magazine, where the author alleges that Mr. Hiss “was never an important figure in the State Department.” This newly concocted fantasy ts effectively answered in two editorials in the Washington ‘Times-Herald, which, under leave to ex- tend my remarks, are included below. The factual data furnished by former Ambassador Arthur Bliss Lane must be accepted, unless refuted by equally pow- erful evidence: [From the Washington Times-Herald] Tue UNIMPORTANCE OF ALGER HI8S In a magazine article in defense of Sec- retary of State Acheson, Mr. Elmer Davis, the news analyst and wartime director of the OWI, attempts to slough off Alger Hiss in a way that could surprise no one more than Hiss himeelf. The article, The Crusade Against Ache- son, appears in the March 1951 iasue of Harper's magazine, and contains this bit of beautiful letters: “Let it be noted, by the way, that Hiss was never an important figure in the State Department. He was a rising young man, & useful technician; but that he ever made policy, at Yalta or anywhere else, 1s pure (or rather impure) myth.” We take this to be the new line on Hiss goon to be adopted by administration apolo- gists everywhere The old line, of course, was that poor Hirs was but a “red herring” victim of some nasty Republican politictans play- ing nasty politics. ‘This won't do any longer, now that Hiss has been convicted, and so we are to’d that he wasn't real'y an tmpor- tant fellow to begin with, and let’s not furs about him. An unimportant fellow, this Hiss? Well, suppose we go back to August 6, 1948, and ree what Hiss himself, testifying before the House Un-American Activities Committee, had to say on this point. We give here some key questions and answers as they appear in the official record of that hearing: ‘Mr Munot Did you participate in the Yalta Conference? “Mr, Hiss I did, Mr. Chairman. “Mr. Munbt. Did you draft or participate in the drafting of parts of the Yalta agree~ ment? “Mr, Hiss. I think it is accurate and not an immodest statement to say that I did to some extent, yes.” Is this a mere technician speaking? Mr. Davis would have us think so. A bit later in the hearing, Mr. MuNpT asked Hiss if he had participated in drawing up the veto provisions that later were to ap- pear in the United Nations charter This colloquy developed: “Mr Munor. What I was trying to get to is whether you participated in the creation of the draft “Mr. Hiss I did participate in the crea- tion of the draft that was sent by President Roosevelt to Churchill and Stalin, which was the draft actually adopted at Yalta and ac- tually adopted at San Francisco. “Mr. Munot. Did you lend your influence in the direction of having the veto provision included tn that draft? “Mr, Hiss. I did. That was practically the unanimous position of the American Govern- ment, I might add.” Such was the vein in which this allegedly unimportant flunkey testified. That a par- ticular decision may have been taken in the face of his opposition, or that he may not have been consulted in some matters, Js quite beside the point. The fact remains that he was there, on the scene of big decisions, participating in them in a major capacity and lending his influence as he saw fit.
A1418 Later that August of 1948, in a letter to the House committee, Hiss named all sorts of VIP's as his former associates and superiors and declared, in part: “This charge (1. e., that Hiss was or had been a Communist) goes beyond the per- sonal, Attempts will be made to use it, and the resulting publicity, to discredit recent great achievements of this country in which I was privileged to participate. * * “As an Official of the Department of state, I was appointed secretary general, the top administrative officer, of the peace-building international assembly that created the United Nations.” Does that indicate merely “a rising young man, a useful technician?” That same August, Adolph A. Berle, Jr., former Assistant Secretary of State, set for the House committee the first time “when Hiss would have been in a position to do anything effectively"—when Acheson became Assistant Secretary and Hiss his executive assistant, Mr. Berle also told how, in the fall of 1944, there was a difference of opinion in the State Department: “T lelt that the Russians were not going to be sympathetic and cooperative. * * I was pressing for a pretty clean-cut show- down then. * * * The opposite group in the State Department was largely the men— Mr. Acheson's group, of course, with Mr, Hiss as his principal assistant in the mat- ter" The unimportant Alger Hiss, is it? You be the judge. We add only the postscript otf Mr Berle: “I got trimmed in that fight, and, as a result, went to Brazil, and that ended my diplomatic career.” [From the Washington Times-Herald] Speak Up, GENTLEMEN We have here a challenge to former officials of the State department, to come forward and tell the truth about Alger Hiss. The challenge is put by one of their own, Arthur Bliss Lane, a distinguished career diplomat with an unblemished record of public service. Mr. Lane hos issued his challenge in the form of a letter to the Times-Herald, just as the Supreme Court thumbs Hiss up the river for as light a term in prison as any traitor ever got, The Supreme Court decision leaves Hiss no way out, unless Truman has the brass to grant him an Executive pardon. That is possible, of course. Truman has pardoned plenty of other criminals with less claim on the administration's own peculiar brand of loyalty The other criminals merely gave the ad- ministration its gangster friends, gangster money and gangster political support. Hiss, the spy for Russia, gave the whole New Deal the cover post of moral and intellectual snob appeal and so worked in powerful ways in the highest circles of American ignorance, He helped bend the minds of college profes- sors who helped bend the minds of a genera= tion's students, voters, soldiers and wives. Now he is safely behind the bars. But yet it remains an obligation for all honest men who know what he has done to put the facts on record. Mr. Lane's challenge reads as follows: “IT have read your splendid editorial of to- day [Times-Herald, Sunday, March 11] ree futing the contention of Mr. Elmer Davis, former head of the Office of War Information, that Alger Hiss was an unimportant per- sonage in the Department of State. “The Hiss case, with its terrifying inter national implications, 1s so serious that, without regard to the legal and judictal cone siderations, all those who had contact offie cially or privately with Hiss should make &@ public record of their recollection so that the American people may determine whether he was or was not an important cog in the formation of our foreign policy culminating in the Tehran, Yalta, Potsdam, and Korean disasters. “Shortly after my arrival in Washington in October 1944, en route to my post as Ambas- sador to the Polish Government in London (later I was appointed to the Government in Warsaw) I was invited by the then Assistant Secretary of State Adolf A. Berle, Jr, to at- tend the biweekly meetings of the policy committee of the Department of State. “This was during the period of the serious illness of Secretary Hull. The meetings were presided over by the then Under Secretary of State, Mr. Edward R. Stettinius, Jr, and the meetings were discontinued when Mr, Stettinius was appointed Secretary of State in the latter part of 1944. “At these meetings Hiss generally sat on the left hand of Mr. Stettinius and it was to him, as well as to Mr. Leo Pasvolsky (whose reliabilit, is without a blemish) that Mr. Stettintus requested advice in front of the rest of the gathering on such mutters as the Dumbarton Oaks Conference and the future organization of the United Nations. “I would suggest for the sake of accuracy that other former State Department officials should also testify through your columns as to whether Hiss played an important or un- important part in the making of decisions of major policy. “The meetings which I attended at the in- vitation of Mr Berle were also attended by 15 o: 20 other State Department officials, several of whom were, like myself, astounded at the apparent influence which this at that time relatively unknown official was exer- cising on matters of the greatest interna- tional importance. “It is evident from his having been one of the insiders at Yalta and by his appointment as Secretary-General of the United Nations Conference at San Francisco in April 1945 that Hiss was more than a figurehend during that crucial year. “By the way, was {t not the Office of War Information that broadcast to the world that the Germans, not the Russians, were respon- sible for the murder of 4,000 Polish officers whose bodies were found in the mass grave at Katyn, near Smolensk, in 1943? “We know now from medical and diplo- matic evidence that the Sovict Government wa responsible for this atrocious crime, yet Mr. Elmer Davis' OWI tried to make the world swallow the Soviet propaganda. “Yours very truly, “ARTHUR Briss LANE” There it is, gentlemen. You have heard from one of your own and one you can’t shrug off. Speak right up. Just address your revelations to “Voice of the People, Times-Herald, 1317 H Street NW., Washing- ton 5, D.C.” Stick to the facts, leave off the rhetoric and keep it clean, otherwise call it as you see it. Who'll be the first? Disorders in Barcelona, Spain EXTENSION OF REMARKS OF HON. JOSEPH R. McCARTHY OF WISCONSIN IN THE SENATE OF THE UNITED STATES Wednesday, March 14 (legislative day of Monday, March 12), 1951 Mr. McCARTHY. Mr. President, I ask unanimous consent to have printed in the Appendix of the Recorp an article by Constantine Brown relating to dis- turbances in Barcelona, Spain, published APPENDIX TO THE CONGRESSIONAL RECORD in the Washington Evening Star of March 13, 1951. There being no objection, the article was ordered to be printed in the Recorp, as follows; Bap News FoR THE MILITARY—INDUSTRIAL D1sorpers IN SPAIN COULD HINDER PLANS OF E1sENHOWER FOR EUROPEAN DEFENSE (By Constantine Brown) Disturbances are reported to have broken out in Barcelona, Spain’s most important in- dustrial city. A strike followed by street riots in that second largest clty of Spain were caused by the increasing cost of living and the prospect that about 650,000 persons, most of them em- ployed in cotton mills, will become unem- ployed in the next few weeks because of the lack of cotton. While this may be pleasing news for those who oppose the Franco regime, it is highly unwelcome news for General Eisenhower and all other military planners among the At- lantic pact nations. Spain is not a member of that organization and is not likely to be accepted, for political reasons, by western European nations. But from the military strategic point of view that country is regarded as one of the highly important assets tu the general de- fense plan for Europe. And the military planners know that a country which is not healthy economically 1s unlikely to be of real assistance in the event of a general conflict with the Russians and their satellites This was one of the reasons for building up the free nations economically and also the reason why this country has come to Marshal Tito’s assistance in recent months By provid- ing him with millions of dollars for food when the Yugoslav crops failed. Because it was evident that a serious crisis may break out in Spain, Congress last sum- mer approved a loan of $65,000,000 to Spain through the Export-Import Bank. This legis- lation did not please the White House and the State Department President Truman approved it only reluctantly and said so pub- lcly Taking the cue, apparently from the feel- ings which prevailed among the Executive branch's policy-makers, the Export-Import Bank was slow in granting the sums ap- proved by Congress. Of the $65,000,000 only $12,500,000 has becn approved so far. Because of crop failures during the last 3 years, Spain is in great need of food grains. Yet the Export-Import Bank did not provide any portion of the loan to be used for the purchase of wheat or corn in this country. There {s a surplus of wheat in the United States. The administration is anxfous for Congress to approve a gift of 2,000,000 tons of food grains to India. Administration spokesmen argue that in spite of the Indian Government's hostile attitude in the United Nations, political considerations must not be permitted to affect humanitarian actions, But it appears to average observers that in applying this golden rule, what is sauce for the goose 1s not sauce for the gander. While we do not permit politics to influ- ence our help to Communist Yugoslavia or to pro-Red-China-India, we draw the line when Franco’s Spain is concerned. Because of an alleged expected shortage of cotton, the Agriculture Department has established quotas for the export of that commodity. These quotas have a political tinge. By using the figures for the last 3 years in the establishment of these quotas India can purchase much larger quantities of cotton than can Spain. The reason is believed to be that prior to 1947 India got the bulk of her cotton from Pakistan. It was only after its political quarrel with that sister republic that the New Delhi government started buying cotton in this country,
APPENDIX TO THE CONGRESSIONAL RECORD During that period Spain has been able to buy little in the United States because of the dollar shortage. Spain's quotas for the 1950-51 period was set at only 51,000 bales. It happens that Spain used to be one of this country’s best cotton markets. Her mills are cooled for the American type and not for long-staple Egyptian cotton. When the Export-Import Bank was di- rected by law to extend Spain credits for $65,000,000, the Spanish Government hoped that it could purchase the needed cotton in this country. Now it has discovered that money for such a purpose is not available and at the same time it is faced with a quota established by the Agriculture Department limiting tts imports drastically. Jefferson-Jackson Day Dinner Address by Hon. John L. McClellan, of Arkansas EXTENSION OF REMARKS or HON. HARRY FLOOD BYRD OF VIRGINIA IN THE SENATE OF THE UNITED STATES Wednesday, March 14 (leguslative day of Monday, March 12), 1951 Mr. BYRD. Mr. President, I ask unan- imous consent that there be printed in the Appendix of the ReEcorn a very able address delivered by the senior Senator from Arkansas [Mr. McCLeL- LAN] on the occasion of the Jefferson- Jackson Day dinner in Richmond, Va., March 9, 1951. There being no objection, the address was ordered to be printed in the Recorp, as follows: Apprrss oF SENATOR JOHN L. MCCLELLAN AT THE JEYFERSON-JACKSON DaY DINNER, RICH- MOND, Va., Magc# 9, 19-1 Mr. Chairman, distingutat ed guests, fellow Democrats, and citizens of Virginia, the holding of Jefferson-Jackson Day dinners is now a long-ectablished, popular custom of the Democratic Party. The original was held in Washington, D. C., in 1830. It was given in memory of Thomas Jefferson, and its guest of honor was President Jackson. Although on that occasion President Jackson gave his solemn and now famous toast, “Our Federal Union, 1t must be preserved.” today these dinners are regarded as strictly partisan in character. They might well be churacterized as an annual one-night political revival. They verve to revive our enthustasm, to stim- ulate greater interest and activity. and to en- list support calculrted to insure success of the part” tn coming campaigns. On these occasions tt is both appropriat) and generally expected that the remarks of tre speakers shall be directed largely to extolling virtues of the Democratic Party and its leaders, both present and past, and to condemning and damning the opposition party While taking some advantage of the opportunity for that purpose, out of defer- ence to what I conceive to be of equul or greater importance, and in the spirit of the famous toast of President Jackson, I should like also to refer to some of our problems that, in my judgment, lergely transcend par- tisan considerations. The grave dangers that now threaten our destruction do not permit the indulgence of politics as usual, anymore than does the mobilization of our military strength and the resulting strain on our economy per- mit of business es usual. The challenge we face seems tc me to 1.2 of such magnitude that it can only he met and repelled by the strong resolve, sacrificial courage, and forti- tude of a united people. In the difficult days ahead, I am persuaded that we can reach greater heights of pae triotism if we will place the stronger em- phasis cn achieving that unity and on de- votion and service to our country, rather than on gaining the temporary political suc- cess of any person or any party. The polit- ical party that will cxercise the wisdom and courage to adopt and present the highest standard of policies and pr‘nciples in its platform, in my judgment, will not only meet with popular acclaim and be moat like- ly to succeed in coming elections, but it will be the party best prepared and most com- petent to guide our Nation through the perilous vicissitudes that now so seriously endanger our priceless heritage of freedom. I want ycur party and mine, the Democratic Party, tv measur~ up to its opportunities and to those responsibilities of leadership and statesmanship that the exigencies of the present crisis demand. Tam not implying that party affiliations or considerations should be unduly mini- mized or wholly d:sregarded. Surely party politics has a proper place in our scheme of government. Our traditional two-party sys- tem has for a century and a half contributed mightily to the success anc’ strength of our democracy. It has provided a wholesome an an effective cueck and balance and the means by which the will of the majority is determined and is made to prevail. Our two-party system ~enerally affords the full- est opportunity for presenting the issues on which the people in the exerciss of their franchise register a decision and impress their will upon the Government, and upon their servants whom they choose and entrust with the responsibilities of public office. We desire not to abandon this system but rather to strengthen and improve it so that public «nd political issues may be more clearly defined, ard more intelligently un- derstood by the people when they make their decision in the marking of their ballots ou election day. It was that great and immortal Virginian, one whom we revere and honor tonight, who 150 years ago s0 ably formulated ana promulgated the philosophy of government upon which the Democratic Party waa founded. The great ideals .nd principles which Thomas Jefferson profoundly es- poused, and which for the most part have influenced and guided the deliberations and policies of the Democratic Party since its existence, have been a source of constant inspiration to me throughout my public I‘7e, just a3 they have claimed and sustaired the hope and faith of the American peopie in our free and democratic ‘nstitutions and in the true concepts of justice and equality under the lav. The superb quality of leadership and statesmanship our party hrs often provided are in a large measure responsible for the great economic growth and power our Nation has achieved and for the unequaled and un- excelled happiness and prosperity that our people have enjoyed. To perpetuate these ideals and to preserve their benefits and b.essings to posterity is the highest aim to which the Democratic Party can aspire, and is the most sacred and inescapable duty and obligation it has assumed. First of all, you and I are Americans. Our beloved country and ite welfare is our first concern. Secondly, we are partisan and Democrrt3 in our politics. Iam by heritage, by training, and above all by conscience and choice a Democrat. I yteld to no one in my loyalty and devotion to the principles of the real Democratic Party. I have never, how- ever, boasted of being a “yellow-dog Demo- erat.” Buch an aphorism has never appealed to me. TI itke neither the description nor the implication that he who professes to be such {s willing to swallow or support any A1419 proposal, plank, or platform, however re- pugnant to his conscience it may be so long as it bears a “Democrat” labe:. If in modern times some descriptive or identifying term must be used to emphasize the different kinds of Democrate—such as “New Dealer,” “Fair Dealer,” or some other— then I prefer to be known and accepted as a Jeffersonian Demociat—a southern Demo- crat, if you please. I regard those as hcnor- able distinctions, for it is traditionally char- acterlatic of Jeffersonian-southern Demo- crats to stand firmly for the basic and funda- mental principles of liberty. In times of great stress and under oft-repeated pressure, Jeffersonian-southern Democrats in the National Congress have been unwilling ‘io abandon those principles or to barter them away for temporary political expediency or in exchange for political patronage and favors. I have not and you perhaps have not agreed with all that is contained in recent Democratic national platforms, or with some legislative proposals of the present adminis- tration. However, in disagreeing with and opposing some provisions in the national platform and some legislation sponsored by the administration, we have not sought nor have we attempted to find sanctuary for our opposition in the philosophy of the Republi- can Party. On most of the issues that are highly cone troversial among Democrats, we fing that a Jarge segment of the Republican Party and its leaders have simply adopted a “mee tooism” attitude. In many instances, both the Republican Party and its leaders strongly advocate the same proposals to which we Jef- fersonian Democrats so vigorously object. This “me-tooism” attitude is possibly the outstanding weaknens today in the Republi- can Party. Its tack of courage and willing- ness to accept issues, and its failure to chal- lenge unwise and unsound proposals and to vigorously champion the opposition view- point have caused such serious impairment of its vitality that today it borders on bank- ruptcy in both ideals and leadership. As a result, many American citizens who are largely independent in their political think- ing and voting have practically abandoned all hope of any improvement or prospect for better government under a Republican administration. Such losses as we have sustained and such gains as Republicans have made in recent campaigns are attributable primarily to ob- Jectionable policies and programs with which our own party is burdened, rather than to the faith and confidence of the people in the Republican Party. In recent years the Republican Party has weaseled and vacillated 60 much and “me-too'd” so many things that the people have been unwilling to look to it and to trust it to bring about the progress and reforms in Government that are desir- able and needed. It is not my purpore to cast unwarranted aspersions upon the opposition party. I want always to be charitable and temperate, but in any just and fatr comparison of the two major parties, the Republican Party 1n- variably suffers and is found wanting. Therefore, I wish to make {tt plain that while disagreeing with some parts of the Damo- cratic platform and while cpposing some legislative recommendations of the President, I tntend to lend neither encouragement nor comfort to the Republican Party, for I have neither interest in nor desire for its success, However, there are some good Republicans. There are those in the Congress and in the Senate of the United States who sometimes rise above party to principle and vote with us southern Democrats. When they do that, they usually attain their highest mark of statesmanship. With their assistance and support, we are often able to defeat un- wholesome legislative proposals, and like- wise to prevent some misguided leaders of the Democratic Party and the Con‘rces from