Evening star., 1932-10-15

our paper money had the heaviest gold
backing, with two exceptions, Of any
paper money in the world.
I can tell you without fear of con-
tradiction that to say we were within
two weeks Of the edge Of the gold stand
ard because Of any lack Of gold is a libel
on the credit Of the United States.
just then, due to business stagna-
tion. there were not many eligible COM
mercial I. o. US in the market. If
the supply got much lower you would
have to have 100 cents in gold behind
every paper dollar. The difficulty was
not in going of the gold standard. 1t
was OF going further on the gold
standard.
| What happened? The adminiStra-
ton came to Congress and said, 1.-THE
Governments I. O. us are as good as
commercial ones. Let's make them ell
gible also as backing for paper money"
| A Democratic Senator and a Demo-
cratic Representative framed the meas
ure and Congress passed that law i'm
mediately and almost unanimously.
That was the Glass-Steagall act. And
now this slight amendment of the Fed
eral Reserve act is being advanced as
saving the Gibraltar of world stability
and preventing an American revolution
and 10 years Of misery.
No Gold Created.
You don't have to be a financial
wizard to know that the Glass-Steagall
act didn't create any gold. It was ad-
visable to make our currency more
flexible. and it did.
Here is the way the President. at
Des Moines, described the event:
| I'm the midst of this hurricane the
Republican administration kept a cool
head and rejected every counsel of
weakness"
| A counsel Of weakness Is exactly
what it did not reject. There was only
| one counsel of strength and that was
to turn over new leaf and, after two
years OF shadow boxing, to come out
| into the open and balance the budget.
This is what Mr.. Hoover says it did Il
quote):
| I'VE determined We would stand up
| like men and render the credit Of the
United States Government impregnable,
through the drastic reduction of Gov
ernment expenditures and increased
revenue. until we balanced the budget"
If so, when? Not when the crash
| came in 1929. Not in 1880, when def
cits were certain. No. The policy was
to hide and not to stand-to try to
| maintain confidence by abusing con-
| fidence.
| Now, let us take up the hectic time
when Congress was confronted with the
task of balancing the budget-about two
years late. The first administration
| indictment of Democrats in that Con-
gress is that the President proposed
drastic economy and the Democrats
/ forestalled it. I have got to talk
again in big figures. The budget mes
| sage of December recited: Actual ex-
penditures, 1881, S4091 ,633, ,908 pro-
posed expenditures, 1888. So 800. .672, ,450."
| The drastic economy suggested there
was cut of less than 2la per cent
| On February II last Chairman Crisp
of the House Committee on Ways and
Means quoted the Secretary of the
| Treasury as saying the very limit Of
| further economy was only 100000 900,
| or 2 per cent This was the time the
President says the Secretary told him
| the end of the gold standard was two
| weeks away The President made one
statement after another, both in public
and private. that the possibility of fur
| ther savings was practically nil. All
was sweetness and light. But then
came rude shock.
Quotes Rainey Speech.
About that time I sent to Demo-
cratic Leader Rainey some private stud
| les indicating overestimates of nearly
! 81 600, 100000 in the Treasury figures
| of receipts. I quote the result from Mr..
Rainey's speech in the Congressional
| Record:
1T was not 10 minutes till they con-
vinced me that the deficit was wrong,
| then We took the matter up with Under
secretary Mills. He said, They may be
right"
In a few days We got Treasury
revision downward of s450,000, ,000
From that moment the whole subject
: went into state of constant f1ux and
uncertainty. One private expert au-
thority after another went on record
that the Treasury figures were a billion
dollars out even after this revision.
The Treasury seemed to resent this.
On April % the Secretary said: THE
Treasury program calls for
balance in the sense there
will be no further increase in the pub
lie debt"
Right up to the day the new tax bill
became law, both he and the President
continued to say that the various pro
pOscO TeNeAuc pilAo "ouAo So-oASS sNNe
budget.
When the House Ways and Means
Committee examined the first treasury
tax bill it found an unscientific collec-
ton of special manufacturers excises
which it considered subversive of busi-
ness and wholly inadequate. Experience
has justified their fears. Collections
are running about As per cent OF es-
Inmates. The committee rejected the
Treasury suggestion in favor OF more
general manufacturers excise as the
only way to balance the budget. The
Treasury advised against that and stuck
to its own plan but its attitude became
wholly flaccid and neutral and so re-
mained. The Administration did not
raise a finger to help in the ensuing
fight
The committee reported the general
excise. Catching the whole house in
nervous mood. leading Republican,
Mr.. La Guardia of New York, seized an
opportunity will net say organized
revolt I was pressed to try to re-
vive the old Republican gag rule. I
refused it as utterly inconsistent with
Democratic principle.
A Majority of Five.
Republican speakers say the Demo-
Gratis controlled the House. We had q
nominal majority CT five. The final
vote against the committee bill was
223 to 153. I knew that the National
security depended on a balanced bud
get. The important thing was result,
not method. The administration which
now says that world credit and Amer
ican revolution depended on the result
then stood aside and chuckled and
jeered. The record bears out my
Judgment at that great crisis. The
story cannot be better told than by
quoting from the Congressional Record
Of March 20. took an unusual course
for a Speaker of the House. re-
Iinuuished the chair and addressed the
House Il quote the Record:
IT am now opposed to q sales tax:
But, gentlemen, if find 1t impossible
To balance the budget and restore the