Evening star. [volume] (Washington, D.C.) 1854-1972, 1932-12-06

i bility should fall upon the Federal Gov
eminent.
| Many OF the economies recommend
ed in the budget were presented at the
last session of the Congress but failed
of adoption. If the Economy and APP
preparations Committees of the Con-
gress in canvassing these proposed ex-
penditureS shall find further reductions
which can be made without impairing
essential Government services, 1t will
be welcomed both by the country and
by myself. But under 10 circumstances
| do I feel that the Congress should fail
to uphold the total of reductions rec
commended.
Disappointment In Revenues.
Some of the older revenues and some
/ of the revenues provided under the act
| passed during the last session of the
Congress, particularly those generally
| referred to as the nuisance taxes, have
not been as prolific of income as had
been hoped Further revenue Is neces-
sary in addition to the amount OF re-
auctions in expenditures recommended.
Many of the manufacturers excise taxes
upon selected industries not only failed
to produce satisfactory revenue, but
! they are in many ways unjust and dis
! criminatory. The time has come when,
if the Government is to have an ade-
uuate basis of revenGe to assure bal
! anced budget, this system of special
manufacturers excise taxes should be
extended to cover practically all manu-
features at uniform rate, except nee
essary food and possibly some grades
Of clothing.
At the last session the Congress re-
sponded to my request for authority to
ments. The act provides for the
grouping and consolidation of execu-
i've and administrative agencies accord
ing to major purpose, and thereby re-
ducing the number and overlap and du-
plication of effort. Executive orders
issued for these purposes are required
to be transmitted to the Congress
while in session and do not become eff
fective until after the expiration of 60
calendar days after such transmission,
unless the Congress shall sooner APP
prove.
I shall issue such executive orders
within few days grouping or consoh-
dating over so executive and admins
trative agencies including large num-
Der Of commissions and "independent"
agencies.
The second step, OF course, remains
that after these various bureaus and
agencies are placed cheek by jowl into
such groups, the administrative officers
in charge of the groups shall eliminate
their overlap and still further CONSOLE
date these activities. Therein lie large
economies.
The Congress must be warned that q
host of interested persons inside and
outside the Government, whose vision
is concentrated on some particular
function, will at once protest against
these proposals. These same sorts of
activities have prevented reorganization
of the Government for over quarter
Of a century. They must be disregarded
if the task Is to be accomplished.
Banking.
The basis of every other and every
further effort toward recovery is to re-
organize at once our banking system.
The shocks to our economic system have
undoubtedly multiplied by the weakness
of our financial system. I first called
attention of the Congress in 1929 to
this condition, and have increasingly
recommended remedy since that time.
The subject has been exhaustively in
vestigated both by the committees of
the Congress and the officers of the
Federal Reserve System.
The banking and financial system is
presumed to serve in furnishing the
essential lubricant to the wheels of in
dustry, agriculture and commerce, that
is, credit. Its diversion from proper
use, its improper use, or its insufhciency
instantly brings hardship and disloca-
ton IN economic life. AS a system our
!, Io- Fof1 AI 60 I.s-
emergency. 1t can be said withour ques-
ton of doubt that our losses and dis
tress have been greatly augmented by
its wholly inadequate organization. Its
inability as a system to respond to cur
needs is today constant drain upon
progress toward recovery. In this
statement 1 am not referring to indi-
v1dual banks or bankers. Thousands of
them have shown distinguished courage
and ability. On the contrary, am re-
ferring to the system itself, which is
SO organized, or SO lacking in organiza-
ton, that in an emergency its very
mechanism jeopardizes or paralyZes the
action of sound banks and its instabil-
ity is responsible for periodic dangers
to our whole economic system.
Bank failures rose in 1881 to 101h per
cent of all the banks as compared to
l u per cent of the failures of all other
types of enterprise. Since January l,
1880, we have had 1865 banks suspend,
with $4,000, 100000 in deposits Partly
from fears and drains from abroad,
partly from these failures themselves
(Which, indeed, often caused closing of
sound banks), we have witnessed hoard
ing of currency to an enormous sum,
rising during the height of the crisis to
over 81 SOC, 100000. The results from
| i0fprroa PfinY of off III
expressed themselves in strangulation
Of credit which at times has almost
stif1ed the Nations business and agri-
culture. The losses, suffering and trag-
edieS Of our people are incalculable
Not alone do they lie in the losses of
savings to millions of homes, injury by
deprival of working capital to thou
sands of small businesses, but also in
the frantic pressure to recall loans to
meet pressure Of boarding and in liqui-
dalton of failed banks, millions of other
people have suffered in the loss of their
homes and farms, businesses have been
ruined, unemployment increased, and
farmers prices diminished
That this failure to function is I'M
necessary and is the fault of our par
ticular system is plainly indicated by
the fact that In Great Britain, where
the economic mechanism has suffered
far greater shocks than our own, there
has not been single bank failure dur
ing the depression. Again in Canada,
where the situation has been in large
, degree identical with our own, there
have not been substantial bank failures
Defended in Crisis.
The creation of the Reconstruction
Finance Corporation and the amend
ments to the Federal Reserve act served
to defend the Nation in a great crisis.
They are not remedies; they are relief.
, It is inconceivable that the Reconstruc-
! ton Corporation, which has extended
, aid to nearly 5000 institutions and is
manifestly but temporary device. can
go ON indefinitely.
It Is TODAY n matter Of satisfaction