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UNITED STATES OF AMERICA ongressional Recor PROCEEDINGS AND DEBATES OF THE 82? CONGRESS FIRST SESSION Appendtx VOLUME 97—PART 11 JANUARY 3, 1951, TO MARCH 15, 1951 (PAGES Al TO A1448) UNITED STATES GOVERNMENT PRINTING OFFICE, WASHINGTON, 1951
Congressional Record PROCEEDINGS AND DEBATES OF THE 827conerzss, FIRST SESSION The Spirit, Soul, and Voice of America EXTENSION OF REMARKS HON. ROBERT L. F. SIKES OF FLORIDA IN THE HOUSE OF REPRESENTATIVES Wednesday, January 3, 1951 Mr. SIKES. Mr. Speaker, I have the privilege of requesting that a very fine work by Mr. Thomas J. Brooks, assistant commissioner of agriculture for the State of Florida, be printed in the Appendix of the Concress1onat Recorp. It is en- titled “The Spirit, Soul, and Voice of America,” and is the type of reading in which every citizen should be interested. It follows: THe Sprit, Soul, AND VOICE OF AMERICA (By Thomas J. Brooks) The author, Thomas J. Brooks,-is assist- ant commissioner of agriculture for the State of Florida, in charge of the bureau of immigration. Mr. Brooks was born in Tennessee and during a colorful career served that State as Senator. He made a speech in the Senate which the United States Senate thought of enough impor- tance to have printed, as a Senate document, and sent it all over the country. When Mississippi State College created the chair of markets and rural economics, Mr. Brooks was chosen to fill that chair. In this ca- pacity, his work was outstanding and he was recognized and appointed by President Wood- row Wilson upon the recommendation of William Jennings Bryan, then serving as Secretary of State, to represent the United States at the International Institute of Agriculture in Rome, Italy. He was also chosen to be a member of the delegation sent from the United States to study rural credits in Europe. Upon that occasion he. was honored by having diplomatic courte- stes extended to him by every European country visited. He was chosen by the Joint Committee of the House and Senate on Banking and Currency of the United States Congress as consultant at the time of the construction of the Federal Reserve Act. He was called again, by the same committee, as consultant at the time of the construc- tion of the rural credit law. Mr. Brooks is the author of numerous works of prose and poetry. His textbook on Markets and Rural Economics was the first college text- book on the subject. Among his other no- table works are two treatises— March of Mind and Victory Over Doubt. Mr. Brooks ts also the author of hundreds of bulletins on agriculture and economics. Indfviduals, nations, and races have char- acteristics: crisis brings them out. XCVN—App.——1 Appendix 1776: The first test of the soul of America: The Boston tea party; Washington's response; the Declaration of Independence. 1812: The pirates. 1812: The second war with England. 1823: The Monroe Doctrine. 1846: Texas and Mexico. 1861: The Civil War. 1898: The war with Spain. 1914: The First World War: What each na- tion wanted; American flag and uniform at the peace conference. 1918: Alvin York. 1927: Charles Lindbergh. 1941: Second World War: The ideals in- volved; the disappointed; Russia; punishing war criminals. 1950: The third world war: A new flag? Battles round the world: The sun never sets on the graves of American soldiers; last mes- sages; empty chairs; help for the fallen foe. The forgotten man—feudalism; our civiliza- tion—philanthropies; “so long as that flag”; Uncle Sam's legacy to the future. THE SOUL OF AMERICA Individuals have distinguishing charac- teristics. Under ordinary circumstances you will notice nothing particularly unusual about them; but in emergencies inherent traits will flare up, revealing the real soul of the individual. Nations have their personalities, their out- standing characteristics, their traits, habits of thought, and manner of conduct. While pursuing the even tenor of their way there may not be a marked difference in their general conduct on questions of national policy or of ethical standards; but when a great crisis comes and the hammer of fate strikes the conscience bell in the campanile of the soul, then we get the overtones of the higher life latent in the mind of the Nation. There may not be many instances when a nation reaches the ideal which it cherishes; but sooner or later it will show its real self to the eyes of the world. The first test of the soul of America was when it made a protest against the govern- mental policy of “taxation without repre- sentation” and raised a flag of its own, dedl- cated to the fundamental principle that: “Governments derive their Just powers from the consent of the governed.” That was the soul of the new Republic. George Washington, of Virginia, proposed to equip a thousand men at his own expense to defend that principle and exemplified the superiority of that kingliness that rules in human hearts, in contradistinction to that of tinseled royalty, based on fear and braced by bayonets. When he became President of the new Republic he refused to accept his salary—that was the soul of America. When Patrick Henry thundered the challenge to tyranny with his declaration: “Give me lib- erty or give me death”—that was the voice of America. When Nathan Hale said: “I only regret that I have but one life to give to my coun- try.” That was the spirit of America. When freezing soldiers.at Valley Forge did not desert, when the snows were stained with blood from their frostbitten feet, that was the spirit of America. The next striking example of the American spirit was when it defiled the pirates of the Barbary States of north Africa and refused to purchase immunity from their depreda- tions on the high seas. Other nations, older and more powerful, were paying tribute to be exempt from molestation of the pirates ‘in their ocean commerce—not so the young nation of the west. Stephen Decatur was sent out with a crew of marines to challenge the desperadoes. He cleaned them out and that was the end of their robberies or col- lecting tributes from any country. That was the soul of America. Although the United States of America had been recognized by Great Britain, the dogma was still held to that “once an Eng- lishman always an Englishman” and the mother country still claimed the right to enter American ships, in search of English- men to impress into English service. Again the spirit of America glowed and war ensued (1812-14), which ended tri- umphantly for America. The soul of Amer- ica rang true to the ideals which have in- spired every turn in the progress of liberty, independence, and self-reliance. When the Nation became firmly estab- lished and recognized internationally, the nations of Europe looked with covetous eyes on the Latin-American states and made ges- tures in that direction. From Washington there emanated the famous Monroe Doc- trine, to the effect that no crowned head should set up a Kingdom in the Western Hemisphere (attempted in 1865 by Maxi- millian). As late as the Presidency of Grover Cleveland, England proposed to send battleships to Venezuela to force the pay- ment of debts to England. President Cleye- land sounded the warning that such an act would be considered a declaration of war and the United States would take part. Needless to say, nothing was done to forcefully collect the English debt. This doctrine represents the soul of America. Citizens from the United States went to Mexico, established a colony and applied for a State charter from the Mexican Gov- ernment. It was refused. This led the Col- onists to declare Texas a republic. Of course, war followed. The President of Mex- ico was captured and made to sign an agree- ment, acknowledging the independence of the Lone Star Republic of Texas. There ensued a dispute as to just where the line between Texas and Mexico should be. In the meantime, Texas applied for admission to the United States of America as a State, and was admitted. This made the dispute as to boundary a question for the United A3
A4 States and Mexico to settle and war fol- lowed. Old Glory waved over the proud heights of the castles of Montezuma. Mex- ico ceded a vast territory, mostly deserts, and the United States paid cash for part of it. The use of that has since been made of this country amply justifies the change of own- ership. When the original colonies were being set- tled slavery was recognized throughout Africa and in many parts of the world. The slave trade became profitable. The colony of South Carolina was the first to attempt to outlaw the trade, but England forbade its being stopped. A verse from Pope’s Essay on Man comes to mind: “Evil is a monster of so frightful a mein That to be hated needs but to be seen; But, seen too oft, familiar with its face, We first endure, then pity, then embrace.” South Carolina was the first State to fire @ gun in its defense. For 4 years the Union ‘was baptized in fire and blood. The earth was billowed with the graves of hundreds of thousands and the soil moistened with the tears of sorrowing kindred shed o’er the fal- len brave. The true soul of the Nation was not in the tones that rang out from the tower of conscience on either side. There was a jargon of discordant notes. When it was all over the Union was not divided. Slavery was abolished. It was the test of time that brought out the feeling of a com- mon heritage and each respected the other for his valor. This feeling of mutual respect represented the soul of America and since then, the blue and the gray have fought side by side ‘round the world: “Against the wrongs that need resistance For the cause that needs assistance For the future in the distance And the good that they might do.” Spain at one time laid claim to more than half of the Western Hemisphere. It was the custom during the days of exploration to claim all lands discovered for the country represented. (How would those Europeans have viewed the claims, if a ship load of In- dians had landed on their shores and claimed the country by right of discovery?) The newly discovered lands were held as con- quered, but not annexed boundaries. The remarkable fact is that no country practiced taking in any of its discoveries as a part of its own nation but held them as contribu- tory dependencies. The United States of America is the first to set the example of mak- ing no discrimination between new territory and the Original Thirteen States as to rights and privileges under the Constitution. We have always practiced the declaration set forth in the beginning—Government should be by consent. Thirty-five States have been organized since the original 13 and all have the same status and rights. Holding peoples as conquered vassals in discovered lands is still practiced on far- eastern islands by European nations. Eng- land learned a lesson when she threw away @ pearl richer than all her tribe, and lost the American colonies. She does not tax her dominions beyond the seas but holds them by trade and national sentiment. Spain was practicing the feudalistic sys- tem as of old and had lost all of her Ameri- can holdings but Cuba. She was ruling by rank tyranny. A revolt occurred and the United States looked on with increasing disgust, horror, and resentment. Viewing this struggle of the people to free them- selves, the United States declared war on Spain in the interest of Cuba, When the war was over, the United States purchased the Philippines from Spain and gave those isiands territorial status with the promise @f freedom. For these acts this Government Sid not ask one dollar of indemnity, one bit and, or promise of any favors. What : f Hptions ever fought a “good samaritan” ‘@ifhen the Philippines were set free and then invaded by Japan, we drove them out and asked no favors for that. These deeds Were exemplification of the principle that patriotism did not stop at boundary lines, but extended in defense of a principle ‘round the world. When World War I broke out there was no intention on the part of this country to take part. The war dragged on. American ves- sels were sunk by Germany. The purpose of the aggressor was conquest, with no limit as to boundaries. The only interest this country had in the struggle was to oppose aggression, and to join those fighting in self-defense. Monarchies, republics, despo- tisms, and neutrals were involved. The immediate cause of the conflict was Austria’s strife with one of the Balkans, The outcome of the world-wide antagonisms was of vast concern to the United States in its ultimate results. All contending forces seemed evenly balanced, when suddenly Russia withdrew to fight a civil war. This brought a crisis. Autocracy and conquest were on the aggressive and bid fair to win. At this point the United States entered on the side of the defensive—another instance of helping those who were right and needed support. The hammer of fate struck the conscience bell in the campanile of the soul of America. War on land, on the sea, under the sea, and in the air spread ‘round the world. The only flag that waved along the battle line from the North Sea to the Mediter- ranean that did not seek a dollar of in- demnity nor a foot of land as reward of victory was the Stars and Stripes. The only uniform worn by the 25,000,000 soldiers mustered into service that sought no mate- rial gain was the uniform of the soldiers of Uncle Sam. Germany wanted expansion, _ Austria wanted the Balkans, Bulgaria want- ed territory, Turkey wanted anything she could get, Russia was jealous of the Central Powers encroaching on the Asiatic coun- tries which she coveted, Italy wanted terri- tory, France wanted Alsace-Lorraine, Eng- land wanted the German colonies, the United States wanted nothing—but peace. That was the soul of America—the success of a righteous cause. Patriotism has assumed a wider meaning than mere love of country; to America it means love of principle and liberty through- out the world. At the peace conference every government represented its claims and grievances. The United States was the only nation repre- sented that asked for nothing—refused to accept anything. The President of the United States was there to defend the weaker na- tions, and incurred the lasting enmity of some of the stronger ones who wanted to treat the smaller ones ruthlessly. “Other nations fought bravely For their land and their line -But thou hast fought for a stranger In hate of a wrong not thine.” That is the soul of America. Individuals show forth the principle of lofty human character, and interpret for the Nation and the world the ideals of true no- bility of soul. To the extent that we have a citizenry led by these spirits the future is safe from the forces of evil, but should we cease to have such leadership an evil retribu- tion will claim its own. When Lindbergh, the Columbus of the air, made his memorable trip across the Atlantic from the United States to France—alone—he was lionized on two continents; but it did not turn his head. Gentle, unassuming, un- spoiled, he took the praise of his heroism with becoming modesty. Large offers to go into the movies did not tempt him—that typified the soul of America. When Alvin York performed the most remarkable feat in the annals of warfare, breaking up two machine-gun nests, capturing and bringing into camp 132 prisoners at one time, he APPENDIX TO THE CONGRESSIONAL RECORD aroused the admiration of all the Allies. He was acclaimed so widely that he was be- wildered, but it did not change his attitude or kindle a vain pride. At a banquet at the Waldorf Astoria, listening to the eulogies pro- claimed by men of note, he felt no elation but remarked afterward that he would have much rather been at home in the mountains of east Tennessee. When offered fabulous sums to sign advertisements or to go into the movies, he replied “No; this uniform that I wear shall never be commercialized. It cost too much to be measured in gold.” That typified the soul of America. The Second World War came only a quarter of a century later and was instigated by the same nation as that of the first, Germany. Again the war dragged on and finally the United States entered it on the side of the defenders as before. And of all the wars of recorded history this was the most world- wide and devastating in property and loss of life. Unprecedented carnage decimated most of Europe and much of the Far East. No ag- gressor ever made as much headway before being stopped as did Germany in this war. Again it appeared that Germany would con- quer all Europe when the United States joined forces with the Allies against the Germanic powers. This time Germany was crushed. Strange to relate, one of the more power- ful allies then boldly announced that a capitalist and communistic regime could not both survive in the same world. Russia be- gan operations showing that she would un- dertake the same thing that Germany had tried—world conquest. But the methods followed were different. Russian saboteurs create confusion in other countries. Russia has vetoed peace measures 45 times in the United Nations and keeps an iron curtain around her empire where she practices slav- ery on millions, to keep production up and military progress in full swing. Urging satellite countries to start trouble with the United Nations resulted in war in Korea. For the first time in all history there is a flag symbolizing the United Nations, now flying in Korea led by the Stars and Stripes. Old Glory has been carried around the world in defense of the principles on which this Government was founded. It was bowed to at Yorktown by the army of the most powerful nation in the world at that time. It drove piracy from the high seas when older nations were paying tribute for immunity to their commerce. For the sec- ond time it humbled British arms for in- vading American ships in search of seamen. It waved triumphantly above the proud heights of the Montezumas in Mexico. It stood the acid test of 4 years of civil strife. It sent tyranny back across the sea to crouch at the feet of throne-ruled Europe and freed Cuba and the Philippines. It wrote history on the battlefields of the Argonne and the Marne in the First World War. It attested the same zeal for liberty in World War I in Algiers, in Italy, in France, in Belgium, in Holland, in Germany, in the far-off Pacific Islands, in the jungles of the Far East, and in Japan. The sun never sets on the graves ef American soldiers who gave the last full measure of devotion to the principles of the Government as established by its founders. A million girls and women took part in the military shops and shared the hardships of army life in these two wars. Many a dying soldier spoke his last message to a falthful nurse, who took down his message and his address as she brushed the death damp from his brow. Many an orphan at home no more hears an answer to the call for daddy. That is the soul of America, Peacetime vigilance is as necessary as is flertness in war. Depression reached a cli- max in this country in 1933. The worst od of economic paralysis in our his put millions out of work. The Government turned to the “forgotten man” and extended aid to the millions out of work and willing
APPENDIX TO THE CONGRESSIONAL RECORD to earn an honest living. None was too poor or insignificant to be reeognized—that was the soul of America. Who has been the forgotten man down through the ages? He on whose shoulders rests the burdens of the material world. He is typified by the toilers of all time who have fed, clothed, and sheltered the teem- ing millions of all lands, but who has been scorned by those who profited by his labor. This forgotten man bullt the Pyramids of Egypt, the walls and swinging gardens of Babylon, the palaces of Nineveh, the temples of Palestine, the Parthenon of Athens, the Colosseum of Rome, and the castles of feu- dalistic Europe. Once in a great while this forgotten man speaks with the voice of desperation, and governments of class rule quake and tremble, This voice was heard in France and mon- archy crumbled in the great “reign of ter- ror” and the Bastile, symbol of feudalism, fell, It was the voice of the forgotten man that brought forth the Magna Carta in England as organic law, superior to the whims of kings and feudal lords. He tore authority from the castles on the hill and placed it by the fire- side of the cabin in the valley. It was the voice of the forgotten man that inspired the Declaration of Independence and the Constitution of the United States of America. It was the voice of the forgotten man that wrought havoc with the royal despotism of Russia; but, he only exchanged one despot- ism for another and which is disturbing the peace of the world and causing preparations for another war. A new dictatorship prom- ised security, only to lead to subjugation. A new coterie is reaching for the conquest of the world. A distracted world looks on in bewilderment and horror. The fate of civili- zation swings in the balance. The men who used to be forgotten are not forgotten in this country. The man and woman who are in the humble home, be- hind the plow, by the forge, in the mine, on the highways, in factories, colleges, and in the Government are not forgotten. He speaks in all lawmaking bodies, in adminis- trative offices, in institutions of learning and guides the destiny of the country. That is the voice of America. What have we to show the world of those things for which we are proud? What kind of civilization have we built that we can point to as an example of progress and achievement, as compared with those of any and all parts of the globe? We have reached up and harnessed the lightning from the skies and made a whisper- ing gallery of the world. We build broad- casting stations and talk to every nation and people in the uttermost parts of the earth. We build a civilization with the highest standard of living that has ever existed on this planet. We enjoy more of the equip- ment of a cultured life than ever before, We dig ores from the mountains and lo, tron monsters roll on tracks of steel across con~ tinents, carrying those who rush to and fro, and the burdens of the commercial world. The oceans are flecked with floating palaces carrying people across the seas and the prod- ucts of every clime from zone to zone. The continents are made to blossom with mag- nificent cities where the cornucopia of prog- ress pours its bounties into the lap of civili- gation. Nor does man stop here; the very Planet is made to tremble to the vibrant touch of the genius of man. Nor does he stop with the earth; out through space he dares to investigate. From analyzing the atom with hidden powers to exploring the boundless realms of space, with lens, mystic signs and numbers he eccurately calculates an eclipse of the sun or moon a thousand years hence. Nor does he pause at solar walk or milky way; on through space he goes bal~ aneing galaxies and systems of creation on pivots of thought. “Let blank defeat, and scorn, and shame Be his who strives to bind The onward, leaping waves of thought The free tide of the mind.” After World War I, for the first time an international civil court tried the instigators of wars of aggression as common criminals, That was & new procedure in jurisprudence. The future of the human race depends on the rational statesmanship exercised by the governments of the world. This Nation set the example of taking a vanquished foe by the hand and helping to restore him to norma! life, We have fought more wars for the libera- tion of others than all the nations of the past or present. We have given more for philanthropy than all the rest of the world. Are we not jeopardizing our solvency to pour out so many billions of money to resuscitate the bankrupt nations of the eastern con- tinent? If failure lies in wait, it will be because the Nation and its future citizens have lost the inspiration of the ideals as recited here. The torch of our liberty was lit at the sacred altar of high resolve. The youth of the land should hold to no standard short of the ideal that one is not worthy of the proud title of man, unless he is willing to work for the happiness of unborn generations who may never know that he ever lived. Only by this inspiration can the torch of liberty and jus- tice be passed on to those who follow the vision of unfolding glory. Thus will our country be: “Like the eagle whose gaze Feeds on the noontide beams; ‘Whose golden plume floats aloft Above the mountains and the crags.” In the language of Gen. Sam Houston in the United States Senate: “Sirs, so long as that flag bears aloft its glittering stars, bearing them victoriously in the din of battle and waving them trium- phantly above the storms of the ocean, so long, I trust, shall the rights and liberties of the American people be preserved and trans. mitted as a sacred legacy from one genera- tion to another, till discord shall wreck the spheres, the grand march of time shal! cease and not one fragment of all creation is left to chafe on the bosom of eternities’ waves.” If the legacy we leave to the future rings true to a cultured conscience, then shall the Nation’s spiritual glory call for emulation and blend with that which shone from the martyrs of truth in all ages and with the torchbearers of progress who have led the peoples of the earth from savagery to civilization. ’ Capitalism and the Modern Corporation —_—_—_—— EXTENSION OF REMARKS HON. HAROLD A. PATTEN OF ARIZONA IN THE HOUSE OF REPRESENTATIVES Wednesday, January 3, 1951 Mr. PATTEN. Mr. Speaker, Mr. Ed- ward T. McCormick, Commissioner, Se- curities and Exchange Commission, gave the following talk to the Calvin Bullock Forum in New York City on December 13,1950. I feel that this is a very timely subject and one that gives some very basic and fundamental facts regarding capitalism and corporations as they ex- A5 ist today. Under leave to extend, I in- clude the above-mentioned; CaPrraLism AND THE Monzszn ComposaTion (By Edward T. McCormick) Economic Committee (popularly known as the TNEC) to plan its report on the concen- tration of economic power it hired a word expert. You would all his name if I were at liberty to reveal it. For a very fancy price he wrote a confiden- tial memorandum on the wording of the re- port. His main idea was that certain words were irritation centers and should be avoided. One of his “bad” words, one of the words he cautioned against, was “capitalism.” Instead he recommended using sugar-coated variants. In recent years there seems to have been a considerable reluctance to use the word “eapitalism”—as though there was some- thing in its implications of which we might be ashamed. I have never understood that reluctance. To me it is a good word—grand in its history and meaning. Within the space of a few generations we have, under capitalism, changed our world so thoroughly in its technology, its economic structure, and the amount and forms of its wealth that it is not too much to say that we have been living through a revolution. It has brought about, by peaceful means, &@ spread of opportunity and of the real goods of life which bloody revolution has never been able to achieve. By natural develop- ment it has changed the face of our econ- omy without shock to our social ideals or social values. Nevertheless, like amy change, it has brought problems with it, and has created the need for vigilance in preserving those ideals and values. Essentially, capitalism fs a system of pri- vate productive enterprise, based on the profit incentive. It includes the local blacksmith who has saved enough to set himself up in business, and the giant corporation that or- ganizes the savings of thousands of inves- tors and the work of thousands of employees into productive, profit-making enterprise. However, it is the corporation that is the outstanding characteristic of our business life and it is my view that the development of capitalism to the present high level of productive efficiency would have been impos- sible without the creation of the corporate form of organization. In other words, it is this unique, artificial personality which has made it possible to bring together the enor- mous pools of funds, labor, and management 80 necessary to create our modern productive and distributive machinery, and to Keep it moving forward. I may note, at this point, that when we talk today about the small-business man, we can no longer refer only to the blacksmith and small shopkeeper. Millions of American in- vestors, whose savings are pooled to make giant corporate enterprise possible, ere the small-business men of our economic genera- tion. Perhaps the simplest way of understand- ing the importance and the special nature of the modern corporation is to see it as a government within a government; to recog- nize that the job of organizing the vast sums of investment, and the huge labor forces ‘under corporate control are problems of gov- ernment. When we see the corporation as @ business government we can see in per- spective many of its developments, and un- Gerstand many aspects of modern corporate regulation. We think of the concepts of democracy, bureaucracy, oligarchy, etc., as being related exclusively to established civil governments. In fact, all of us know from experience that government is a n attribute of any efficient collective action, whether it is civic, social, military, or economic, and in all these
A6 forms of collective endeavor as the venture becomes larger and more complex the pre- mium on centralized and efficient govern- ment becomes greater and the difficulty of preserving the direct contact of the individ- ual with the affairs of the venture becomes magnified, and entrenched and irresponsible control, based on apathy, ignorance, and mis- use of the franchise machinery is a possi- bility in any group action—corporate or otherwise. Furthermore, in each situation, the full participation of the individual, based on in- formation and a fair opportunity to exercise his voting rights is the only democratic an- swer to entrenched and irresponsible control. Many of us are strangely double-minded about the problems of government. We ac- cept as basic to our system a set of constitu- tional guaranties of our civil rights and civil liberties. We are proud of the entire ma- chinery of justice that works to preserve those rights. Yet, when our Congress be- latedly recognized in the 1930's that the very same guaranties should apply to the govern- ment of our business enterprises in which the public had a financial interest, cries of anger went up. We were, it was confidently observed, departing from the American tra- dition. Understandably, one seldom hears that sort of criticism of our Federal securities laws today. Along with our acceptance of the corporation as a system of business govern- ment has come an acceptance of the notion that the citizens of that government—that is, the investors—should have access to ma- terial information and the right to make an intelligent and informed use of their votes. We terfd today to accept the corporation and rules for corporate conduct as mat- ters of course. It is natural that we should. Practically every type of business endeavor is now carried on through the corporate de- vice and it is well-nigh impossible to state an accurate figure for the number of cor- porations—industrial, commercial, charitable, etc.—operating in this country. But accord- ing to recent figures released by the Bureau of Internal Revenue, about 526,000 corpora- tions filed income-tax returns in a recent tax year. Some idea of their significance can be gained from the fact that their total compiled receipts for that year amounted to the enormous figure of $290,000,000,000. These statistics are staggering. They tell us how much of a change has taken place in historical methods of business organization when we compare them with the past. The aggregate wealth of publicly subscribed cor- porations in England in the middle of the sixteenth century was only about £10,000, and at the height of the speculative fever in 1720, in the days when the South Sea bubble grew and burst, their wealth amounted to but £50,000,000—an aggregate for the whole of England that would make one good-sized enterprise today. Historically in England and many other countries, a businessman had to petition the sovereign or the legislature for a special patent or @ special statute in the event he desired to organize a corporation. There were several reasons for that. In early days the corporate form was often associated with monopoly privilege and the crown or the state was likely to grant that privilege only if adequately compensated for it. However, even though the appeal of limited liability drew more and more ventures of a competi- tive type into the corporate form, special acts of legislature continued until several of our States, in the last century, passed what the lawyers call general incorporation statutes—laws under which any legal venture might be incorporated, with more or less freedom in the promoters to write their own ticket in setting up the venture and dividing powers between the investors and the man- agement. Unfortunately, the turn of this century brought with it a race among the States to liberalize their corporation laws in order to attract the revenues that come from incor- poration fees. Almost as quickly as lawyers’ ingenuity could figure out ways of making the sale of securities, the payment of divi- dends, the manipulation of participations easy and legal, the laws were amended. In analogy to another type of competition among States, the phrase “Corporation Reno” was widely used as a description of places where the law was bent to serve the promoters’ aims. Any survey of the corporate charters and practices which mushroomed on these liber- alized laws will convince even the most dubious that while the laws certainly en- couraged promotions in corporate form, they were also making possible such Overreach- ing and abuse that if left unattended would soon have seriously threatened the very foundation of our capitalistic system. An over-all survey of the ills that resulted from these abuses is beyond my scope. But we have had an excellent sample of some of the financial consequences of this liberali- zation in the history of our public utility holding company empires. Here was an in- dustry which by its nature should have withstood changes in economic cycles better than almost any other. Yet the standardless and unchecked pyramiding of these empires, the creation of overburdening and complex financial structures, the manipulation of ac- counts and of public investors’ rights that characterized some of these enterprises, most of them legal under the enabling corpora- tion laws of the States, made the structures s0 vulnerable that they levered adverse changes in the underlying companies into tremendous losses for public investors. The frequency with which the corporation had historically been used to avoid contract obligations, defraud creditors, evade cove- nants, and perform skulduggery generally, led people like Woodrow Wilson, who was certainly no rabid radical, to condemn the lawyers for letting loose on society this in- strument for the subversion of individual obligations, With the growth of corporations, with the widespread of public ownership in corpo- rations, operating in many States, with the ever-increasing importance of public capital, something had to be done to preserve the in- tegrity of the investment in corporate secu- rities and the proper relation between the management and investors. Federal regulation in this fleld was in- evitable. There are two lines of development in cor- porate standards and methods of financial regulation exemplified in the Federal laws administered by the Securities and Exchange Commission. One line is purely regulatory. It aims directly at precribing the types of securities that can be issued, the conditions of issuance, the standards that are to be followed in dividend and other policies. That type of regulation is exenrplified in the Public Utility Holding Company Act. How- ever, it is limited in its field of application and has been, so far, incidental to major utility system reorganization programs pre- scribed by the law. The other type is exemplified by the Se- curities Act of 1933 and the reporting re- quirements of the Securities Exchange Act of 1934—a pattern whose primary emphasis is on disclosure. * That we have, under our Federal legisla- tion, made great strides in improving stand- ards of disclosure is obvious. But the ob- vious is sometimes worth repeating. Not only the requirements of Federal law under the securities acts, but great strides in the APPENDIX TO THE CONGRESSIONAL RECORD development of accounting technique have ended, we hope for good, the good old days. The good old days were the days when the Banker’s magazine took corporations to task for financial statements “notoriously in- correct, and in many cases made so sys- tematically, for the purpose of concealing from the stockholders and the public vio- lations of law and want of fidelity to their trusts,” and when Merchants’ Magazine and Commercial Review complained “Why should these officers be allowed to carry on their trust in secret, to keep from the public all knowledge of the changes in the value of the property? Indeed it is very much owing to the lack of such information that in- vestors shun these securities.” They were the days when William Z. Ripley called the disclosure practices of the 1920’s “impub- licity.” A securities act and an SEC were necessary because it was deemed wiser and more bene- ficial to buyer and seller alike to prevent loss at the outset through proper advance dis- closure than to let mistake or design cause harm which litigation seldom cures. Yet the standards of disclosure under the Securi- ties Acts are basically not new. Companies which by inadvertence or de- sign skate too closely to the limits of proper disclosure required by Federal law are likely to attribute the SEC’s concern with correct disclosure to bureaucratic idiosyncrasies. But the obligation of one who sells securi- ties to tell the whole truth about what he is selling predates the Securities Act. Lord Kilsant can tell you that. He was jailed by @ British court because the company of which he was president sold securities under & prospectus which correctly stated average earnings of his company over a period of years but failed to disclose that there were losses in the later years and that profits in the earlier years were war profits. Our Supreme Court awarded heavy damages un- der common law against an underwriter whose prospectus failed to fix clearly the boundaries of areas in which the issuer had timber rights. That is the kind of disclosure that is sometimes branded as “technical” when required by the SEC. But these cases were decided by courts and not by bureau- crats, and they were not decided under the Securities Act. As a result of these laws and the increase in public confidence in our system of busi- ness enterprise, the corporate security has emerged as one of the most significant forms of modern wealth. Laws which protect the integrity of a security, as one of my col- leagues in the SEC once remarked, are as basic as ancient laws against clipping gold coins which were so necessary in maintain- ing the stability of early gold economies, But I wish to add that protecting the integrity of the security is not merely a job of policing the relation between the stock- holder and his management. One of the prime attributes of the modern security is its liquidity. Liquidity depends on fair and orderly markets. Therefore, protecting the integrity of a security involves also a sur- veillance of the market in which the security dg traded. To the SEC has been delegated this responsibility. Markets at their best are indexes of values. The aim of our current system of market regulation is to keep them such. We must achieve this objective, for our securities mar- kets are more than mere barometers of busi- ness conditions. They are direct causative factors as well. They not only record the weather, they make it. Businessmen are as sensitive to the behavior of the securities markets as they are to other business factors. Not only are plans of financing likely to be dropped or modified in response to market
APPENDIX TO THE CONGRESSIONAL RECORD conditions (thus affecting the expenditure of tunds for working capital or plant and equipment) but the general mood of busi- nessmen, their willingness to risk expansion and to maintain full employment may be affected by securities market conditions. Our activity in regulating the markets places its whole emphasis in keeping the markets from becoming an instrument of eny particular person’s or group of persons’ idea of what price should be. A manipu- lator and an honest economist may join in believing that the market at any given time is underpricing a security. But neither the economist nor the manipulator is allowed to tamper with the market as a reflection of the collective judgment of buyers and sellers. I wish to emphasize, however, that our antimanipulative activities, coupled with the information requirements of the Securi- ties Acts and the periodic publication of re- liable information by listed companies, are not intended to guarantee that markets will not fluctuate sharply. We have been ob- serving sucn fluctuations within the past few weeks. But these activities and wide- spread information are invaluable aids in keeping the long-run markets geared and anchored to reality. It is hard to measure our success in the policing of our markets and in tempering market behavior with information and dis- closure. I believe that we have had a great deal of success, and that the old-fashioned rigs are largely things of the past. One measure of our performance has been the uninterrupted continuity of our markets. the existence of the SEC they suf- fered shocks from world events that could, in an era of unregulated high-binding, have driven them into such extreme disorder as to require shutting them down for a period. That has never happened under the SEC and we will have to see events of unprece- dented magnitude before it ever becomes a@ matter of serious consideration. To keep markets free and open so that this vital barometer and causal factor in our economy shall not be a prey to manipulation, to keep markets orderly within reasonable limits by the best and most reasonable forms of regulation we could provide, are more than technical challenges. I hope that my discussion has shown that they are jobs of top priority in our economic system. In view of the fundamental role of the corporation in our economy It follows that those who operate our corporations have a high responsibility for the maintenance of our capitalistic system. Unlike the big names of the last generation, the names of bankers whose primary emphasis was on finance and on operating the engines of finance, today’s big names are those of the corporate managers who have the job of day- to-day running of these business emptres. How these managers treat with labor, how they react to the public needs, to Govern- ment policies affecting the economy, and to the rights of investors will directly affect our strength. As time goes on and we realize the depth of our commitment to a stable world na- tional morale becomes a top-drawer concern. In measuring the responsibility and per- formance of the management of American big business, I do not think it too far fetched to suggest that ement has as much to do with the national morale as it does with the national economy. The way of life which we defend is in large part defined by our corporate system, and the of bie busivess cannot help but beer direct responsibility for the system and the values that Americans are called on to fight for. I think that the signs are en More than ever before, t is for- ward looking, responsive to the needs of those affected by business, and willing to look at its problems in broad perspective. Great tasks lie ahead of all of us, and without that kind of management we may fail. With it all our united efforts can be pitched toward a better America in a better ‘world, Change of House Rales EXTENSION OF REMARKS OF HON. HAROLD H. VELDE OF ILLINOIS IN THE HOUSE OF REPRESENTATIVES Wednesday, January 3, 1951 Mr. VELDE. Mr. Speaker, on Janu- ary 3, 1949, when the resolution changing the rules of the House was presented, I was a new Member just freshly sworn in. While I had had considerable training in the law prior to that time, I was not too familiar with the rules of the House of Representatives and parliamentary law generally. I had no opportunity then, as a new Member, to draw any con- clusions as to how the change of rules would operate on legislation. I was in the same position at that time as many of you Members who are sitting in the House for the first time today. I voted for the change of rules on January 3, 1949, because at that time I felt with the very meager information I had concerning the effect of the change, that it would actually further true repre- sentative government. After sitting in the House for 2 years, and watching the operation of the rules change, I find that I was mistaken in my idea that the change would promote truly representa- tive government. I find, on the other hand, that the rules change actually blocks the legislative processes, and in addition, gives additional dictatorial powers to one Member of the House of Representatives. I therefore shall vote for this amendment today, and urge all my colleagues who may or may not be well informed as to the operation of this rule, to do likewise. The St. Lawrence Seaway and Power Project EXTENSION OF REMARKS oF ‘HON. GEORGE A. DONDERO OF MICHIGAN IN THE HOUSE oF REPRESENTATIVES Wednesday, January 3, 1951 Mr. DONDERO. My. Speaker, today I have introduced a resolution for the construction of the St. Lawrence seaway end power project as a defense measure. States Government, including the Joint Chiefs of Staff and the National Secu- rity Resources Board as well as the Army AT and Navy, that the construction of the St. Lawrence seaway and power project will be a substantial addition to the in- dustrial mobilization requirements of this country. In this view the Canadian Government authorities as well as ‘the Canadian-American Joint Board of De- fense concur. The recent developments in interna- tional conditions emphasize again the fact that the defense of the American way of life and of individual freedom all over the world will fall upon the man- power and resources of the United States and its northern neighbor, Canada. When we contemplate the disparity in the population resources between our- selves and our enemies, it is obvious that the only way we can overcome this handicap is by the utilization of power, improved technology, and natural .re- sources. One of these basic resources is the steel industry which is at the foundation of our industrial civilization. The con- tinued operation of the steel industry and its expansion requires very large amounts of iron ore. It is now recog- nized that this country must utilize, in addition to Minnesota and Michigan, new sources of iron ore which must be brought to our middle western steel mills. This is at the very foundation of our strength and we cannot tamper with it without inviting disaster. It is important that this vital raw material be secured from our own sources in Michigan, Wisconsin, and Minnesota, and from other continental sources such as Ontario and Labrador in order to save our supplies, our ships, and our seamen from the danger of enemy submarines. Viewed in this light the St. Lawrence seaway has become a_ national necessity. The present conditions make it ob- vious that whether we engage in defen- sive mobilization or we are plunged into war we are in a long period of emer- gency and of danger. This period must be viewed in a longer span of years than World War II, which lasted from 1939 to 1945. We must in fact think of the development and mobilization of this country in terms of 10 or more years because the struggle for survival will be a long one. Recent newspaper reports indicate that Soviet Russia, which undertook a gigantic water development program connecting the Volga River with the Don River to create through navigation from the Black Sea to the Caspian Sea and from the Caspian to the White Sea and from the White Sea to the Baltic Sea, which was started in 1946, is nearing completion and it is being given high Priority as a part of their war mobiliza- tion program. In connection with this development the Russians are diverting water from the Arctic watershed to the Caspian Sea and in the process are gen- erating huge amounts of power. It is essential, therefore, that we in this country consider the continental de- velopments in Canada as well as in the United States for mutual defense of the
A8& whole Northern Hemisphere. This proj- ect, more than any other, will add to the joint capacity of our two countries to wage a successful struggle over the difficulties ahead. Comparison of 1950 Political Polls With Election Results EXTENSION OF REMARKS HON. CLARENCE s. BROWN OF OHIO IN THE HOUSE OF REPRESENTATIVES Wednesday, January 3, 1951 Mr. BROWN of Ohio. Mr. Speaker, I ask unanimous consent to revise and ex- tend my own remarks in the Appendix of the Recorp relative to a series of pre- dictions made by a number of political prognosticators and poll-takers on the congressional elections of 1950 in com- parison with the actual results. It seems to me, Mr. Speaker, that if the pollsters and the politicial prophets are to be given publicity and attention prior to an election, they also deserve and should be given an equal amount of attention and publicity after an election. Having the pleasure of knowing person- ally most of the galaxy of predictors whom I shall quote, I am sure they are all more than willing to have their past predictions and prophecies spread upon the pages of the CONGRESSIONAL RECORD so that the generations to come after us may have the benefit of their wisdom and their clairvoyant powers, as so well dis- played in the weeks and months prior to the congressional elections of November 1950. So, in the desire to be of service to pos- terity, I hereby submit the following re- port of recent political prophecies: 1950 Exvecrion Parepicrions sy Drmocrartic Party OFFICIALS AND SOME POLLS AND Sugveys 1, LESLIE BIFFLE, SfCRETARY OF THE SENATE At Miami, Fla,, on October 12, 1950, Leslie Biffie, Secretary of the Senate, predicted that the Democrats would keep control of the House and gain strength in the Senate. Biffle said “without any ifs, ands, or buts” we will beat Tart in Ohio, Carenart in Indiana, and MILLIKIN in Colorado. (UP New York Times, October 13, 1950.) Result: Senator Tarr defeated Joseph T. Fergusc1 by 481,184 votes; Senator CaPzHART defeated Alex M. Campbell by more than 103,000 votes; Senator Mrtitame defeated John A. Carroll by 27,000 votes; the Demo- crats lost strength in the Senate, thelr mar- gin whittled to two seats. On November 2, 1960, Biffle said reports reaching him indicate the Democrats will increase their Senate margin by one or two seats. (Washington Star, November 2, 1950.) Result: Democrats lost & Senate seats (net), decreasing thelr margin of control to 2 seate——Democrats 49 seats, Republicans 47 seats. &. WILLIAM M, BOYLE, JR., CHAIRMAN, DEMO- CRATIC NATIONAL COMMITTES Claims of prospective Democratic victories across the Nation’s bread basket in Novem- ber were made today by William M, Boyle, Jr., Democratic National Chairman. Reporting to party workers in the closed door strategy session held here last month, Mr. Boyle sald that State leaders predicted gains in Iowa, Nebraska, Kansas, South Da- kota, North Dakota, Ilinois, and Indiana, inoluding the election of Democratic Senators from Iowa and Indiana. Mr. Boyle wrote that Jake More, Iowa State chairman, had predicted the defeat of Sen- ator Bourke B. HICKENLOOPER, Republican, and election of at least four Democratic Con- gressmen. (New York Times, March 4, 1950.) Result; Republicans swept Iowa, Kansas, South Dakota, and North Dakota in both the House and Senate; Republicans also gained one House seat in Nebraska to aweep that State; Republicans picked up four House seats in Illinots; Republicans picked up five House seats in Indiana and reelected the Re- publican Senator. Boyle contended the outlook for his party had not been better for a long while in an off year. He said he was certain Democrats would control the Eighty-second Congress, registering gains in both Houses. (New York Times, October 26, 1950.) Result: Democrats retained control of both House and Senate by slim margins losing seats in each: Republicans: Democrats: House ....-----------.-------- a--- 236 Senate____-...----.--------------- 49 Democratic margin: House ...-.-.--------------------- 37 Senate...........----..----------- 2 The Democratic Party is assured of con- tinued control of Congress with good pros- pects of picking 2 to 4 Senate seats and gains in the House. Indications of another smash- ing Democratic victory, (Baltimore Sun, November 4, 1950.) Result: Democrats lost 5 Senate seats and 27 House seats. 8, SENATOR CLINTON ANDERSON, OF NEW MEXICO, CHAIRMAN OF SENATE DEMOCRATIC CAMPAIGN COMMITTEE Democrats will pick up at least two Senate seats and do no worse than break even in the House. (AP, Washington Star, November 7, 1960.) Result: Democrats lost 6 Senate seats, picking up one, and lost 29 House seats, picking up two. 4. PRESIDENT HARRY 8. TRUMAN (Regarding Senator Millard Tydings): His 8-to-1 victory in the Maryland primary was interpreted by the President as a victory for the administration. The President reckoned the outcome a good election omen. (News- week, October 2, 1950.) At @ press conference on October 19, 1950, Truman predicted a Democratic landslide on election day that would surprise as many Republicans as his victory of 1948. (New York Times, October 20, 1950.) In his speech in Kansas City on Novem- ber 4, 1950, Truman stated, “Tonight the Democratic Party 1s on its way to victory again.” (New York Times, November 6, 1950.) Result: Senator Tydings was defeated by Republican JoHN Mar Burier by 43,000 votes, Elsewhere Derflocrats lost 29 House seats and 5 Senate seats (in addition to Tydings), picking up only 1 Senate and 2 House seats, 8. VICE PRESIDENT ALBEN BARKLEY Vice President Atpzen W. Barxizy pre- dicted October 19 that the Democrats would keep both Houses and might pick up a few 3000.) (Congressional Quarterly, October 20, 1950. Result: While the Democrats kept control of both Houses, they lost 20 House seats and 6 Senate seats, picking up only one Senate and two House seats. APPENDIX TO THE CONGRESSIONAL RECORD The Vice President told newsmen that Demooratic prospects in Kansas were “very good.” (Baltimore Sun, October 8, 1950.) Result: Republicans swept Kansas in both House and Senate, 6. REPRESENTATIVE MICHAEL J. KIRWAN, OF OH10, CHAIRMAN, DEMOCRATIC CONGRESSIONAL CAMPAIGN COMMITTEE Decisive gains for Democrats. (Washing- ton Daily News, November 4, 1950.) Result: Democrats picked up only two Re- publicans’ House seats and only one. in the Senate. 7. WILLIAM GREEN, PRESIDENT, A. F. OF L, Green told the crowd at Peoria’s armory that he is convinced Senator Tarr, Repub- lican, of Ohio, will be defeated November 7 by Democrat Joseph Ferguson. (Washing- ton Post, October 10, 1950.) Result: Senator Tarr defeated Ferguson by a margin of 431,184 votes, 8. JACK KROLL, DIRECTOR OF CIO POLITICAL ACTION COMMITTEE Democrats will gain 3 or @ in Senate and 15 to 30 in House. (AP, Washington Star, November 7, 1950 ) Result: Democrats lost 6 in Senate, pick- ing up only 1, and lost 29 in House, picking up only 2 Republican seats. 9. DREW PEARSON, NOVEMBER 5, 1950, 6 P. M., ABC NETWORK “I predict that Anna Frohmiller will be elected Governor of Arizona.” Result: J. Howard Pyle, Republican guber- natorial candidate, was elected. “In Illinois I predict that Senator Lucas, Democrat, will win.” Result: Everett M. Dirksen, Republican senatorial candidate, defeated Lucas by 275,- 000 votes. “In Utah, Senator Elbert Thomas—I also predict he will win.” Result: WatLace F. BENNETT, Republican senatorial candidate, defeated Thomas by 22,000 votes. “In Iowa I predict that Senator Hicken- Loorgr, who has one of the worst absentee records in Congress, will lose.” Result: Senator HicKENLoorgrr, Republi- can, defeated Democratic Candidate Albert J. Loveland by 87,000 votes. “In Colorado I predict that Senator Mr.ur- xIN, Republican, will be defeated.” Result: Senator MiLumin, Republican, de- feated Democratic Candidate John A. Carroll by 27,000 votes. “In the second Idaho race, isolationist Henry DworsHak will also lose.” Result: Senator DworsHax defeated Claude J. Burtenshaw, Democratic candidate, by 10,000 votes. “I predict that Senator Tarr will win by @ very slender margin.” Result: Senator Tarr defeated candidate Ferguson by 431,184 votes. "I predict that Senator Tydings will be elected, also Governor Lane.” Result: Senator Tydings was defeated by candidate Butter by 43,000 votes; Governor Lane was defeated by Theodore R. McKeldin by 94,000 votes. “I predict that Judge Ferdinand Pecora will be elected.” Result: Candidate Impellittert, mayor, was elected. “Governor Dewey, for the first time in his life, will lose.” Result: Governor Dewey, Republican, de- feated gubernatorial candidate Walter Lynch by 572,000. ‘ae California, I predict Mrs. Douglas will win.” Result: Republican candidate Ricwaro Nrxon defeated Mrs. Douglas by 680,000 votes. 10, NEWSWEEK MAGAZINE February 18, 1950: Democratic strategists see a fair chance to pick up the House seats acting