Evening star., 1932-11-05

democratic campaign continues to be
based-that is, that the Republican
party brought on the depression-he is
now thrust back as his sole remaining
explanation to the boom of 1928. He
been a boom there never would have
been a slump. and if there never had
been slump IN the United States there
would never have been depression in
the world.
If by maintaining the prosperity of
the country over long term Of years
the people become so overconfident of
the future and thus overoptimistic, the
Republican party might be praised at
least for the period Of prosperity. The
collapse of the boom brought about
great losses, but I beg to submit that
some of the greatest leaders among the
boom promoters of that period belonged
to the Democratic party. and the
actually in promoting during that Pc
riod which he now so warmly de-
nounces. do not criticize his acts. He
was merely participating in the pre-
vailing mood. like the former Demo-
cratic candidate who undertook the
| construction of the tallest building in
the world at the same boom time.
OF more Importance, the Governor in
| his speeches conveys the impression
that as President should have stopped
the boom. He does not describe the
method by which I should have stopped
it. OF course, there is no constitutional
nor statutory authority to Presidents to
stop booms. If the President should
have attempted to stop the boom, one
OF the persons he would have needed to
| nQnnnnroflp
didate.
The only way I can see that a
President could even tilt with boom
would be to turn himself personally
into a bIue-sky law and go on the
stump analyZing balance sheets and
stock market prices and proving to the
people that their investments were
overvalued. I have little taste for this
proposal that the White House should
be turned into stock printers office.
I earnestly object to the idea that
such form of dictatorship should ever
be set up over the American people
even if they do get over-optimistic.
Even the Democratic platform does not
seem to acord with the Governor, for
| it says: I'VE condemn the actions of
| high public officials designed to in
| fuence stock market prices"
WOuu NecO heVlSlONS.
This type of reasoning led the Gov
| ernor to propose in this city that the
presidential influence shall be used in
municipal finance HE said: If neces-
sary they must be compelled to walk
efficiency" and added: This is what
I propose to do toward the credit
represented by the II billions of mu-
nicipal bonds" 1t occurs to me We
should need to revise our whole form
of Government and the Constitution in
dozen places If the President is to
supervise mayors and municipalities.
The Governor seems to have some
idea of creating a Federal blue-sky law
to prevent boomS and control the issue
Of all sorts of securities. The full con-
stitutional authority for action of this
kind rests, Of course, in the States,
and I am advised that this is not
within the constitutional authority of
the Federal Government. In any event,
I doubt whether the people in any
State in the UIion would like to have
another board in Washington. distant
from their own close inspection and
understanding, dealing out certificates
as to issue of securities and thus con-
trolling the industries of their States
In any event his plan would be CEN
tralization of Government beyond any,
thing we have hitherto witnessed and
does not seem to accord with the for
gctoen Democratic theory of State
rights. All of this has been within the
power of New York State, not only to
protect its own citizens but the citi-
zens OF other States. and the Governor
seems to have forgotten it until this
campaign.
Many years ago the Democratic party
undertook to remedy this whole Ques-
ton of booms and slump5 by the crea-
ton Of the Federal Reserve System.
That was the new discovery of its
founders and far from wanting the
President to do this job they stipulated
that this board should have these
powers entirely independent of the
President by making the board BIZ
partisan.
1t was indeed promised by Demo-
cratic leaders at the time the Federal
Reserve System was created that they
had found the solution to prevent
boomS, slumpS and panics. I could
quote from multitude of speeches at
the time of the passage of the act, and,
further, from the assurances given in
political campaigns as to this enormous
accomplishment of their party.
Quotes Democratic Leaders.
I find in speeches of President Will
son, Secretary McAooo. Senator Carter
Glass and other leaders of their party
the recurrent idea that through the
control of interest rates and other au-
thorities the Federal Reserve System
would prevent booms and consequently
slumps and panics. A few of their eX-
pressionS are of interest:
I'VE shall have no more financial
panics."
"Panics are impossible"
/ business men can now proceed in
perfect confidence that they will no
longer put their property in peril"
Now the business man may work out
his destiny without living in terror of
panic and hard times"
"Panics in the future are unthink-
able"
Never again can panic come to the
American people"
The whole country went along for
years with much confidence in these
statements, and although no one can
say with certainty, it is likely that this
! confidence contributed to the building
up of the boom which led to the crash.
The Governor will discover his errors
in connection with responsibilities for
this boom If he examines its relation
| to the Federal Reserve System. That
system did Loyalty endeavor to restrain
speculation. Many months before the
collapse it issued warnings to the banks
about loaning money for speculative
purposes and gave these warnings to
the public. 1t placed restrictions on
rediscounts, and they did force up the
interests rate for speculative money to
Is and even to 20 per cent. But that
did not stop the mania for speculation.
I do not criticize the FEDERAL system.
I believe in it. All the point make is
that, using its utmost powers, it failed
in the face of a great mass movement.
Now the blame is to be transferred to