Evening Star Newspaper, January 8, 1933, Page 21

. "EDITORIAL SECTION The Swunday Star. Special Articles Part 2--8 Pages WASHINGTON, D. C, SUNDAY MORNING, JANUARY 8, 1933. MANY INFLATIONARY PLAN IN CONGRESS ANALYZED Review of Proposed Legislation Shows Wide Variety Merits of BY ARTHUR CRAWFORD. URRENCY inflation is figuring increasingly in congressional discussions as Senators and Representatives grope for an answer to depression problems. ‘To some, particularly to farm groups, eurrency inflation appears an alluring anacea for economic ills underlying e low-price evil. To others, including officials of the outgoing Hoover administration and many financial experts, it appears as a menace which might lead the Nation ints complete financial disaster. ‘The farmers arc concerned be:ause rices of their product; have declined 0 per cent since 1930, while articles they buy have gone down less then 25 per cent and their mortgage obligations @re still at a high level. They think currency inflation might lift prices and enable them to pay their debts. The opposing groups have in mind the possible effect upon the Govern- ment’s credit, a disorganization of the currency system, a breakdown of ‘the gold standard and a further shock to Public confidence. Checked by Administration. The issue has been smoldering for months. It has been held in check in the present Congress by the opposition of the administration. It was kept somewhat submerged during the presi- dential campaign by the non-committal attitude of the Democratic candidate. But some of President-elect Franklin D. Roosevelt's active supporters, as well as a few who are influential in Repub- lican councils, believe that currency in- flation is the light needed to lead the Nation out of the present darkness. If Mr. Roosevelt and his Secretary of the Treasury take a strong stand against currency inflation the agitation may die in the new Congress. The success of the effort to lift the farmers’ prices through the domestic allotment plan, now being worked out with Mr. Roose- velt's approval, will have a bearing on the situation. If the new administra- tion fails to oppose all currency infla- tion proposals and other farm relief plans fail, it will be difficult for the op- position in Congress to continue to hold | them back. Farmers Support Change. ‘The formidable proportions of the ovement may be realized from the fact that all three of the leading farm organizations, in their recent annual conventions, advocated currency infla- tion, The American Farm Bureau Fed- eration proposed revaluation of the gold | dollar, with a view to restoring its pur- chasing power in terms of commodities to the average of 1921-1929. The National ‘Grange demanded that Congress “as- sume its constitutional duties to regu- late the value of money and inflate ci rency, which will raise commodity v wes to the point where they were in 1826, in order that all debts, both pri- yate and public, may be justly liqui- dated.” The National Farmers' Union, which is the most responsive to senti- ment in Western States, where a pros- perous silver mining industry is synony- mous with good times, declared for the Bryan free coinage of silver at a fixed Zatio of 16 to 1. ‘Within the past two weeks two Dem- ocratic Senators, Burton K. Wheeler of Montana and Carl Hayden of Arizona, have urged currency inflation in speeches over Nation-wide radio net- works. They are both interested in sil- ver, although offering different meth- ©ds. A former Democratic United States Senator, Robert L. Owen of Oklahoma, who, as chairman of the Senate Bank- and Currency Committee in the n administration, was one of the suthors of the Federal Reserve act, has an active propagandist for verious cy expansion measures before Congress for the past year. i Hoover’ Pictured Perils. President Hoover, during the cam- ign, pictured currency inflation as a ril which might lead to abandonment of the gold standard and a consequent depreciation of all paper money. Sec- retary of the Treasury Ogden L. Mills and Gov. Eugene Meyer of the Fed- eral Reserve Board have opposed all currency inflation sche; , taking the position that there has bzen no short- age of currency, that the methods pro- posed are unsound and that an increase in the pric: level can be brought about only by other means. President-elect Roosevelt succeeded, | ministration, which permitted substitu- of Views as to Schemes. same line is the Rankin-Thomas (Okla- homa) bill, which proposes the issuance of “Liberty” notes for the payment of Treasury deficits until such time as commodity prices are elevated to a proper level. Bills of this type purport to base the new currency on existing gold stocks, but make no provision for additional reserves. ‘Would Finance Mortgages. 2. Currency Secured Otherwise Than by Gold or Silver—The Frazier-Sin- | clair-Patman bill, backed by thc Na- tional Farmers' Union and epproved | ,last Spring by the Senct: Commiitee | on Agriculture, would provide for gov- | ernmental financing cf farm mortgages at face value by issucnce of Federal Re- | serve notes without gold backing and covered only by bonds secured by first mortgages on farms. The Lankford (Georgia) bill provides for the issuance of circulating Treasury notes secured by first liens on farm property to the amount of 80 per cent of the value of such property. The Campbell (Penn- sylvania) bill provides for the issuance of full legal tender Treasury notes at the request of States, counties, munici- palities or townships which present as security bonds based on local public im- provements. The Kelly (Pennsylvania) bill provides for the issuance of $5,000,- 000,000 of emergency credit bonds ex- changeable for Federal Reserve notes, for deposit with banks for use in mak- ing loans designed to stimulate industry. 3. Currency Secured by Government Bonds Heretofore Issued—Congress, in spite of the opposition of the adminis- tration, experimented with a mild form of controlled inflation of currency by approving the Borah-Glass amendment to the Home Loan Bank law, permitting an increase in national bank notes by giving bonds bearing interest at 3% per cent and less, the circulation privi- lege hitherto held only by 2 per cent bonds. There is some sentiment for an extension of this authorization be- yond three years, as now provided. The principle of bond-secured currency was involved in a restricted manner in the | Glass-Steagall act, initiated by the ad- tion of Government bonds for eligible paper as security for Federal Reserve notes, but without changing the re- quirement for a bold cover of at least 40 per cent. The present Congress will be asked to extend the one-year au- thorization in the Glass-Steagall act. The Keller bill would give all bonds of the United States the circulation privi- lege, while the Keller-Walsh (Massa- chusetts) bill would create an emer- | gency circulation fund to furnish cur- rency to banks, corporations or citizens | depositing Government bonds. Many Proposals on Silver. 4. Currency Based on Silver.—There are several different pians for increas- ing the part played by silver in our cur- rency system. The silver group believes there is a world-shortage and maldis- tribution of gold and that the mone- tary base should be broadened. The Wheeler-Evans bill proposes free coin- age of silver at a fixed ratio of 16 to 1. The Pittman and Arentz bills provide for the purchase by the Treasury of up to 5,000,000 ounces of silver monthly, silver certificates being used in pay- mcnt and the bullion being coined into silver dollars for the redemption of the certificates. The Somers, Cross, Glover and Borah bills provide for the pur- chase of silver and the issuance of silver certificates _under various different | methods. The Somers-Hayden resolu- | tion provides for acceptance of silver in payment of foreign debts and the use of such silver in the currency sys- | tem. 5. Revaluation of the Gold Dollar.— Under the compensated dollar plan, in- volving a regulation of the gold content of the dollar, there would be automatic adjustments, with a view to keeping it at a point where a dollar would always buy a fixed quantity of goods, as deter- mined by the index number of the gen- eral price level. The American Farm Bureau Federation proposes what Will This Save the Farmer? Voluntary Domestic Allotment Plan or Something Similar Seems in Fair Way of Adoption. BY THEODORE C. WALLEN. TURN of the political wheel has brought the Nation to the point of doing something drastic for American agriculture. Fifteen years of ceaseless efforts in | Congress and $2,000,000,000 from the | Federal Treasury have failed to solve | the farmer’s problem. He remains to- | day at the bottom of the economic pit. | Moreover, he is $10,000,000,000 in debt. | The conviction that his purchasing | power must be restored if there is to be | real economic recovery has made many urban creditors his allies before Con- gress. Sentiment for effective farm re- Lef has never been stronger. The new political season opens with the voluntary domestic allotment plan taking the center of the stage and over- shadowing the equalization fee and the export debéhture ideas. Whether or not this specific plan is adopted, something on that order is likely to go into the statute books within the next year. Even the equalization fee plan was strong enough to pass both Houses of Congress twice, if only to meet the presidential veto. The allotment principle has be- hind it virtuallv. all the support the equalizaticn fee had, and in addition it has the support of the President-elect, organized labor and outstanding business men. Its leading sponsors construe it to fit the Democratic and Republican na- tional platforms, especially the Demo- cratic. And if ever the time was ripe for a national farm relief program, it is now, in the midst of the depression, when everybody is looking for a way out and the will to try remedies is strong. ‘While this does not discount the | skepticism ebout the allotment plan in | the Hoover administretion and in high places in the financial world, the efforts of its opponents to head it off reflect in themselves the strength the plan had | developed as the time approaches for the “new deal” which the Nation or- dered in November. Designed to Increase Incomes. Upon the word of its sponsors, here is a plan designed to meet every vital defect of the earlier ill-fated schemes and to give a boost to agriculture and to business generally by pouring $600,- amounts to a 50 per cent increase in | the official price of gold, to correspond | to the appreciation in its purchasing | power. The redemption value of out- standing paper currency would be low- | |ered. The official price of gold in the future would be adjusted, =0 as to main- tein the purchasing power of the gold dollar at the 1921-1929 level. There have been pending in Congress for some time the Busby, Burtness and Golds- | borough bills, embodying plans of Prof. in his campaign speeches, in holding | Irving Fisher and other economists for aloof between advocates and opponents | of currency inflation. He stood on the Democratic platform declaration for “a sound currency to be preserved at all hazards,” but shed no light on his per- gonal view as to whether the differeht | proposals are in accord with sound | money principles. Nor did he take a | stand on the basic dispute over the adequacy of the existing currency sup- ply. | Economists are not in complete agree- ment on the subject. Twenty econo- mists who cigned an open letter to Fresident-elect Roosevelt during the past week, including such outstanding authorities as Prof. E. W. Kemmerer of Princeton, Prof. E. M. Patterson of the University of Pennsylvania and B. M Anderson, jr., of the Chase National Bank, asserted the gold standard of present weight and fineness should be unfliinchingly maintained and that agi- tation for currency experiments would impair confidence and retard recovery. Other Economists Differ. Other economists, including Prof. Irving Fisher of Yale and Prof. G. F. ‘Warren of Cornell, have sponsored the gold dollar revaluation proposal, as well a5 the Goldsborough price stabilization of the farm groups, although op- the issuance of currency to pay oldiers’ bonus, nan bill. To some of the proponents of an in- crease in currency the term inflation is | obnoxious. The word implies extension of currency or prices beyond natural and proper limits. They prefer to talk of currency expansion or reflation, & word coined during the present depr sion to denote a checking of the course of deflation and a return to normalcy. 1t is somewhat startling to discover that upward of 50 bills embodying vari- ous currency expansion proposals have been introduced in the Senate and House during the present Congress Many of them are in the Banking and Currency Committees of the two Houses. | Others are in the Senate Finance Com- mittee and the House Ways and Means Committee. One currency inflatién bill was approved by the Senate Committee on Agriculture. Still others, chiefly those relating to silver, are before the House Committee on Coinage, Weights and Measures. ‘The bills may be grouped into seven general classes, as follows: 1. Fiat Money.—The Patman bill for the immediate payment of the soldiers’ bonus by the issuance of ‘Treasury notes, which was passed by the House and defeated by the Senate last Spring, was characterized by President Hoover &s fiat money, although its sponsors in- gist the use of this term is not justi- Lcd. The newest measure as proposed in the along the controlling the value of the gold doll: ‘Would Use Federal Reserve. 6. Expapsion of Credit and Cur- rency Thtough the Federal Reserve | System.—The Goldsborough bill, which was passed by the House last Winter plates control of the price level by the | use of the powers of the Federal Re- | serve system, which include its so- | called open market operations under | which the Federal Rescrve Banks ex- |pand credit end currency by buying Government bonds. The Ramseyer- | Dickinson, Strong and Keller bills are similar in principle to the Goldsborough | bill. An early draft of the Goldsbor- | ough bill conferred power upon the | Federal Reserve Board to control the | official_price of gold. The American | | Farm Bureau Federation has sponsored | the Goldsborough bill, but now is giv- ing precedence to the gold control plan because of the failure of recent open | market operations of the Federal Re- | serve system to influence commodity prices. 7. New Monetary Plans.—The M- | Fadden bill embodying the ideas of a | secret organization known as the Cru- saders for Economic Liberty would abolish the gold standard and the Fed- crel Reserve system ond set up a new y_system based on “human the standard of value being the wages of unskilled common labor. Suggestions outside of Congress for new monetary bases have included electrical ards. Currency inflation has been' a tra- ditional remedy for lower prices in periods of hard times. It was the hope of obtaining higher prices that the farmers rallied in considerable numbers to the currency inflation free silver plan of the Bryan campaign of 1896 Seek to Increase Money. ‘The theory of those who now advo- cate currency inflation is that a basic dificulty in the present depression is a shortage of the circulating medium. tended that the purchssing power of the people will be increased. business and industry will be stimulated, prices of commodities will be advanced and prosperity will return. Admitting that the official figures on currency in circulation show a higher total than during the pre-depression Ereve. that s consiceranie per ol It i lerable part of it hoarded and that, for nfl:xs reasons, onmout half of it is in active use. st that e all inflation schemes insist is no shortage energy and various commodity stand-| By providing more money it is con- | 000,000 to $1,000,000,000 of “ into the farm belt each year. It would, they say, make tariff protection effective on the domestic consumption of farm | products of which there is an exportable surplus. It would increase the incomes of farmers without increasing produc- | tion, It would enable the farmers, like | manufecturers, to adjust production to demand. Yet, sponsors of the plan con- tend, there would be no export dump- ing. with its dangers of reprisals dr re- taliation from abroad; no price-fixing, | no interference with existing marketing | 4r..| agencies, no compulsion on farmers, no | Jate official residence in the United injury to consumers, no new Federal appropriation nor additional Treasury expense and no dictation from Wash- ington. It sounds like Gov. Roosevelt’s To- | was passed by the House last Winter|peka speech of the presidential cam- | tive paign. To the skeptics, its promises are | t00 good to be true. All the farm plans heretofore proposed have amounted to bounties encourazing farmers to increase production. By failing to control pro- duction they have left the tariff inef- fective as to large surplus crops. The original obective of the domestic ollot- ment plan; th , was to pay the farmer the amount of the tariff on the dcmestically consumed portion of his | crop in return for his agreement to limit production, and thus help hold down the depressing surplus. That is to say, the farmer would re- ceive, as now, the prevailing market price on his whole crop, plus a bounty | on that portion of it which was con- | sumed by human beings in this country. | The bounty would be, roughly, the | | amount of the tariff on such products. | With about 60 per cent of the Ameri can-grown wheat thus consumed here, | end the tariff at 42 cents a bushel, the | farmer would receive a bounty of 42 cents a bushel on 60 per cent of the wheat he raised. The percentage would fluctuate as production fell or increased. The bounty on cotton and tobacco would not be more than 5| cents a pound—or equivalent charges | on finished products. One-half cent a pound would be paid on rice, 2 cents a pound on hogs, and so on down the list, but with the experiment limited | at first to wheat, cotton, com (includ- | ing corn in the form of hogs) and to- " bacco. | Original Objective Changed. This is the underlying principle. In the evolution of the plan, the original | “objective” has been changed. The | proposed bounty is no longer the | amount of the tariff. Under the latest | | plan, the first on which all the farm crganizations have united, the bounty weuld be the amount necessary to give a farm product its pre-war exchange value. That is to say, the bounty would | be the difference between the product’s | | current market price and the pre-war price, with scme variation to cover changes in the cost of things the farmer | has to buy. In case of wheat, the average price between 1910 and 1914 was 83 cents. Adding a 7 per cent equalization adjustment to that, the aim would be to give the wheat farmer 92 cents a bushel for his wheat next year. Assuming the market price were 40 cents a bushel when the plan went | —to the Federal Government, THE HA the basis, the bounty would be 42 cents. To simplify matters, let us proceed on the original basis that the bounty will equal the tariff. Congress, of course, may adopt either basis. The excise tax, or bounty, would be paid by the processor—the miller who | grinds the wheat into flour, for instance which, | in turn, would pay the farmer the pro- ceeds. Because £o little of the ultimate cost of food is for the raw product— about three-fourths of a cent out of the 7-cent average retail price of a pound loaf of bread, for example—little, if any, of this cost would be passed on to the consumer, but would be taken up wholly or partly in the spread between the processors, wholesalers, middlemen and retailers. This, at least, is the theory of the sponsors. In the case of wheat, once the ma- chinery were established, the first step in this daring experiment would be to determine the five-year average total production of wheat in America and| the proportion consumed by human beings in the United States. If it should be found that 60 per cent of the crop (about 550,000,000 bushels at present) goes into such domestic consumption, it would then be deitermined what pro- portion of that 60 per cent was pro- duced in each State, in each county of that State, in each locality of that county and by each farmer in that lo- cality. Then the Government, through a local subdivision, would deal with the farmer. RVEST. Take a man whose average acreage for the last five years had been 100 acres, and whose average yield was 20 His base production | would then be 2,000 bushels. If the do-| bushels an acre. mestic allotment to his county equaled 60 per cent of the base production for all the farmers in that county, this farmer would then receive an allotment of 1,200 bushels as the amount upon which he would receive the bounty. In return he would sign a contract with the County Committee that he would not plant more than 100 acres the next year or that he would reduce his acre- age—up to 10 per cent reduction—if a general reduction were decided upon. As soon as the contracts were signed he could take his copy to the bank and borrow up to 90 per cent of its probable value upon it, or about $455. As soon as his crop was ripe he would harvest it and sell it in the usual way to his local elevator, receiving payment in full at the prevailing price, based upon the world market just as it is now. Then, at the end of the season, the lgcal Al lotment Committee would certify that he had kept his contract by not plant- | ing a larger acreage for harvest than the 100 acres specified, and the farmer then would receive a check in full payment of his bounty on the crop, minus an | estimated 2 per cent for administrative expense. If this came to 40 cents a bushel net, that would be $430 coming in at the end of the marketing year. If he had borrowed on his contract, the check would go first to the bank and STOUTEST RES ISTANCE SEEN BY CHINA AGAINST JAPAN \Dr. Alfred Sze Declares National Senti ment Has Been Outraged by Shanhaikwan Affair. BY FREDERIC WILLIAM WILE. TANKS to a reunited and| arcused sense of patriotic na- | tionalism, which finds Southern Canton and Northern N T | 1 houlcer, China will | lying down” Japan’s lates: | on of her territol declares Dr. Seo-Ke Alfred Sze. Dr. Sze is in Washington as a_diplomatic Minister of China without portfolio, so to speak, but, because of his long training and States as Chinese Minister, ranks as an authoritative spokesman of his coun- try. He arrived here last Fall, after having served as Minister to Great Britain and China's chief representa- at the League of Nations at the of the Japanese occupation churia in September, 1931, This of the Washington _public scheols and Cornell University con- tinu:s to enjoy the highest esteem thrcughout the American official world. Dr. Sz» is in active demand at moement, Washington and else £5 an eter of the t ci fna’s affalss, as mplified Shanhatkwan, Sacking Condemned. “I can imagine nothing more surely designed to put China on her fighting mettle,” sald Dr. Sze, “than the ruthless and utterly inexcusable sacking of Shanhatkwan. The circumstance that the Japanese chose as the latest point of their systematic attack on the ter- ritorial integrity of my country the spot where the Great Wall of China meets the sea and forms the border of so-called ‘China proper’ rivets the at- tention and stirs the passions of tHe Chinese people &s hardly anything els could do. In a way, they are probably mo: embittered or Shanhaikwan they were over Shanghai. Certain it is that China will not take ‘lying down’ this la , or any further, in- vasion of her territory by Japan. Nor need either the enemy or the outside world be in the slightest doubt that China_will be able to make matters difficult for her implacable foe. The valor and spirit of our fighting men did not evaporate on the battle fields around Shanghat and Chapel in Febru- ary, 1932. It is in no boasting sense or in idle prophecy that I confidently my countrymen to meet this newest and {mpudent challenge to their security and their national pride as the troops of the 19th route army faced nd repelled the flower of the Japanese army 11 months ago.” Impossible to Predict. Dr. Sze was asked whether in his Jjudgment China can rely upon the assurances left at the State Depart- ment last Friday to the effect that Japan “positively” plans no conquests south of Shanhaikwan and the Great Wall. The interviewer reminded Dr. Sze that the Japanese government de- luged the world with similar assurances, with respect to Manchuria, following the notorious Mudken incident a year and o half since. “It is quite impossi- ble to predict” replied Dr. l; “to incen of M: product by into effect, the bounty, then, would be 52 cents a Bushel. With the tarifl as what extent Japan Iate the mflwxx integrity and other national rights of China, and to repudi- ate by her acts her assurances to the League, her obligations as treaties the Kellogg pact and the nine-po Weshington treaty. The Japanese gencral staff has proceeded to ‘rcund out’ the alleged independent state of Manchukuo with an effrontery of which it is difficult to recall a parallel anywhere in the world. On the 24th of last November, the American press, including The Washington Star, published the new ‘official map of Man- chukuo,’ issued under the direction of the general staff at Tokio. It revealed for the krst time the boundaries of that 446,000-square mile product of Japan's military adventures in North China during the past 16 months. ‘When the Associated Press correspond. ent asked Gen. Araki, minister of war, to define the area of the new state, the general produced a copy of this map, ying: ‘Th's will answer your questio; n brief, Manchukuo includes the for- | mer Provinces of Fengtien, Kirin, Heil- ungkiang and Jehol.' “In thus mentioning Jehol as part of the new State, Gen. Araki carried its boundaries outside what the Chinese considered Manchuria. ~ Furthermore, the map showed that the territory claimed for Manchukuo had been split into five provinces, the four named by him and a section in the nerthwest called Khingan, after the mountain range that runs through it.” No Relation Seen. Having had it suggested to him that the New Year day essault delivered by the Japanese at Shanhatkwan might be their reply to the recent rappfoche- ment between China and Rus'ia, Dr. Sze said: “I see no relation betwe:n | the attack upon Shanhaikwan end the resumption of Sino-Russian relations, because for a considerable time the Japanese have made no secret of their desire to obtain domination over the province of Jehol, to which Shanhai- kwan furnishes an entrance, as well as to the key centers of Peiping and ‘Tientsin in the province of Hopei, lying g]m;:ledmtely to the south of the Great all.” Dr. Sze was importuned to say what co-cperation, if any, China now expects from the League of Nations or non- League powers in the presence of Japan's fresh threats to her territory and sovereignty. “All I can reply on thet score,” he said, “is that China has submitted her case to the League, which sent a commissicn of inquiry to the Far East, and the report of that commissicn is now before the League. The able Americen :oldier who represented the United States on the League commis- sion, Gen. Frank R. McCoy, has re- . _China upon the -mw% flfo'f'uf’mumm treaties freely and vountarily into.” » + (Copyright, 1083.) a Leaguo| member, and_her undertaking in_such | —From & painting by Robert Zund. he would receive the balance above the | loan advance. If a 5 per cent reduction in acreage had been decided upon for that year, the farmer would be so notified by the | local committee, and he would have to | show them that he had planted no | more than 95 acres for the new crop be- | fore his allotment would be paid. the farmer wanted to grow 150 acres of wheat, he would have two alternatives: Either he could withdraw from the plan and lose his right to receive benefit payments for the year, or he could ar- range with some other farmer to plant 50 acres less than the amount specified in this second farmer’s contract and to transfer the right to plant the balance. Incomes Figured. Assuming that wheat sells at 40 cents a bushel at the farm the farmer's in- | come on a crop of 2,000 bushels would | work out as follow: Income without the plan in operation— 2,000 bushels at $0.40......... $800 Income with the plan in op 2,000 bushels at $0.40........ $800 Bounty on 1,200 bushels at $0.40 480 ‘Total wheat income ‘The amount of the benefit payment | would be the same no matter whether |the farmer had a crop failure or a bumper yield. If he had a bad year and produced only 800 bushels on his 100 acres, he would still get the bene- fit payment on 1200 bushels, which would provide a form of crop insur- | ance; while if he had a bumper crop | and had 3,000 bushels to sell, the bene- | At payments would still be just the | same, on 1,200 bushsls. | The Secretary of Agriculture, or what- | ever central administrative authority might be designated, would have lati- tude to admit new farmers to the bene- fits of the plan on a basis permitting gradual increase in their crops from small beginnings to a “fair proportion” of the total crop raised within their lo- calities. Where farms merely changed hands, so also would the domestic al- lotment rights. In case of a severe crop failure, farmers would receive the boun- ty on only so much of their allotment as they were able to deliver. Thus the excise tax on the processor would al- ways be the source of the bounty pay- ments. [ Surplus Would Not Grow. | Since wheat prices would still be left | undisturbed at the world level, use of wheat for feeding chickens, hogs and other live stock would not be interfered with. Therefore, the surplus would not be increased as it would if wheat prices were raised too high for feed use. On cotton, tobacco and rice the plan would work much as has been outlined here for wheat, except that the domes- tic allotments on tobacco might be worked out separately on the different kinds of tobacco so as to adjust the production of each to its own demand. When the plan was applied to hogs, corn acreage as well as production or sales of hogs would be controlled, so as to prevent the reduction in hog sur- pluses from leading to a new surplus of beef or lambs. It is estimated that the bounty pay- ments to farmers on wheat alone ‘would | range from $180,000,000 to $200,000,000 | a year and that the restricted produc- tion would mean rising prices until they reached the pre-war level, or, in any | event, until the commodities exchanged | for manufactured goods in a ratio fixed by law as “fair.”” ‘Then the aid of the Federal plan would be withdrawn. In a dozen variations, the underlying principle is the same. The fundamental advantage claimed is that production would be controlled if it worked; the chief practical objection that it would be harder in practice than in theory to get farmers to curtail production and that the bounty would degenerate into a Federal hand-out. In fact, at the very beginnivg of the committee hear- |ings a rift has developed between the | theorists, who insist on the double ef- | fect of production control and imme- diate cash for the farmers, and the | politicians, who are content to stop with | the cash payment and make no attempt | to limit production, on the theory that |the additional money in circulation would help start the wheels of industry. Conservatives Oppose Idea. While the idea has captured a foot- hold in the East, chiefly because of its claimed ability to check the downward spiral of prices generally, the resistance comes ‘chiefly from the conservative school of thought to which any inter- ference with the natural forces of sup- ply and cemand is repugnant. Its con- stitutionality is challenged on the ground that it would tax the whole of the people for the benefit of ‘a class. ‘This objection the sponsors propose to meet by the legislative device of pro- viding for the excise tax in one section of the measure and for the payment to farmers in another, without stipulating that the payments are to be made from the proceeds from this unfl;l;atmmyflmttheexchew 1s ji le under the general taxing powers and differs little from the pres- ent tobacco tax paid by manufacturers. ration— Or, if in spite of the 100-acre limit| tax. They con- | With . | duties. main- | « Notwithstanding the multiplying ob- !PRESIDENT MAY EXERCISE HIS “POCKET VETO” POWER | Two Measures Face Defeat Through Such | | | about to be revived—the “pocket “veto” power of the President | of the United States. In a short while the short session of Con- gress, ending by constitutional limita- tion on March 4 of the odd-numbered years, will come to a close. Within the two weeks preceding the close of the current Congress, President Hoover may exercise what Woodrow Wilson described as “beyond all ques- tion the President’s most formidable perogative”—the ‘veto power, super- strengthened by the “pocket veto.” particular process places the President in g role similar to a third branch of the Legislature. | It is only between February 20 and March 4 that the presidential pocket- | ing of bills can take effect. Then, any | bill sent to the President, particularly | a bill that has his disapproval, stands | a high chance of dying the death with- | out benefit of a veto message to Con- | gress. When this formality is denied, Congress has no opportunity to repass a bill over the President’s objection. Constitution Gives Power. In this respect, Article I, section 7, clause 2 of the Constitution provides that “if any bill shall not be returned by tn» President within 10 days (Sun- days excepted) after it shall have been | presented to him, the.same shall be a | law, in like manner as if he had signed | it, unless the Congress by their ad- | journment prevent its return, in which | case it shall not be a law.” Thus an absolute veto power over all legislation enacted during the last two weeks of the current session of Congress is given to the President—and unless this Congress is an exception to the rule, its most important bills will be ground through the hopper at the last moment, as always. From the 20th day of February to March 4, 1933, there is only one Sun- day—but this one Sunday, granted un- der the constitutional exception, and the day on which the proposed legisla- tion arrives at the White House, gives the President actually 12 days in which to make a decision. At present there ;_;le two bills court~ ¥ “pocket veto.” ey are: |8 B Gollier so-called beer bill—for the legalization and taxation of 3.2 per cent amber fluid, an alcoholic content bill, 230 to 165, on December 20, but it has not yet won the approval of the Senate. 2. The three-way bill, revised and re- introduced December 6, 1932, by Senator McNary, Republican, of Oregon, and Representative Norton, Democrat, of Nebraska, to be enacted as an amend- ment to the agricultural marketing act as a crop surplus control bill. Taft in Similar Position. of being vetoed by it Hoover it mnug approved by the two branches — try, and objectors to the plan argue that local con(\lasion. gficnmmawm. ‘bureau- cracy and corruption. The operation of the law as to any commodity would await agreement by 60 per cent of the producers in that class. A further tendency to break down what President Hoover calls the spirit of rugged American individualism is feared. The idea of controlling pro- duction by acreage limitation is chal- lenced on the ground that the yields fluctuate seasonally. Attempts to esti- mate the domestic consumption under | some of the plans would be difficult, it is protested, because in the case of cot- ton, for instance, the demand is much greater at 5 cents than at 11 cents a pound. To limit wheat production in the United States, it is argued, might be to encourage Canadian production, just as BritisH rubber control stimu- lated Dutch production. There is objection to subsidizing an | industry already over-expanded. The wheat price level limit proposed to be fixed, it is protested, is based on a period when farm prices were dispro- perticnately high. Increased farm effi- ciency has reduced production costs since that price peak was established | and transportation rates are lower. | | gher Food Costs Feared. | It is insisted that the plan would |mean a burdensome increase in the cost of food to be borne by the con- | sumer, with the result that his real wages would be lowered. The proces- sors object to absorbing much of the cost. One after another of the claimed virtues of this unique idea have come under fire as the skeptics caught their breath, until scarcely any stand unchal- lenged today. If unable to show that export dumping of wheat will persist | they insist that the effect will be the same to a degree through inability to | avoid dumping of flour and other proc- | essed products. Behind the scenes a | major battle is under way, with the| opposition apparently figating a losing battle despite evidences of headway at some poinfs. The fact that the annual farm in- {ceme in the United States has fallen ;Irom $16,000,000,000 to $5,300,000,000 since the World War and that nearly $6,000,000,000 of that drop occurred in | the last three years has intensified the demand that something be done with- out delay. Opponents of the domestic allotment plan object that, at its best, the bounty would restore only $1,000,- 000,000 a year. The not disinterested reply is that this would be only a starter, that it would be augmented by the increase in market prices for farm products and that it would mean even more in general business revival. Not only insurance companies and others with heavy investments at stake | in the farm belt, but business men who | are looking for a place to “start things,” have been attracted to the plan. Where | | Wall Street very largely resisted the pre- | vious farm relief plans, that symbol of | organized Ameriean business, the Cham- ber of Commerce of the United States, bhas at its head today a president who unequivocally supports the domestic al- lotment plan. ‘Tobacco processors are skeptical of its workability in their field, since the years it takes to cure their tobacco might force long delays before they could cash in. Consumers’ organizations ere wary lest they commit themselves to higher food costs. Some foresee a $10 per capita annual increase in liv- ing expenses. Industrialists wonder whether any differential in real wages thus created might not put them at a disadvantage in world competition. It is objected, moreover, that to put such a plan in operation would be to create a mflged agricultural interest tremendous political power and Congress ‘would be under pressure to increase the farm bounties as it is under pressure to increase tariff that Jections to this most daring economic proposal ever in Amuh.ltnfilww This | £ 4 per cent. The House voted for this | Jac780r A These measures stand a fair chance it” would offer a strong temptation to | Coolidge White House . Action Between February 20 and March 4. HERE is an old American customof Congress and sent to the White | House before noon on March 4, 1933. The odds are in favor of President Hoover's making use of the “pocket veto” in his last two weeks in public life. He will stand then in the identi- cal position occupled by the late Presi- dent Taft after Woodrow Wilson was |elected to the presidency in 1912. Then | the sh8rt session of the Sixty-second | Congress was coming & an end just x= this, the short session &t the Seventy- |second Congress, is about to pass into history. Taft, before turning the reins over to | his Democratic successor, vetoed four bills: (1) A bill to prevent exhibition of obscene motion pictures; (2) the Webb-Kenyon bill, declaring shipment of intoxicating liquors to be Federally unlawful when shipped from one State to another; (3) a bill to regulate im- migration of aliens to the United States; (4) the sundry civil appropria- tion bill. The Webb-Kenyon act was passed over Taft's veto, the only measure thus triumphing during Taft's term of office. He had his own satisfaction later when he pocketed the bill prescribing condi- tions of labor and wage payments on American ships. Later that bill re- passed in the Wilson administration as the seamen’s act. Wilson Vetoed Nine Measures, President Wilson used the veto on nine measures sent to the White House during the final session of the Sixty- sixth Congress. This was the session that met in December, 1920, after Hard- ing had been clected to the presidency; the session that expired on March 4, 1921. Of these nine vetoes, three were ovgrggentincbot&hnum, ent ‘'oolidge, o his last three months in office, m; exercise his power of veto. In the course of his career at the White House, however, Mr. Coolidge vetoed 20 measures—end four of them were overridden. To date Herbert Hoover has vetoed 18 measures in all, two of his vetoes being overridden. ‘The complete record of vetoes—meas- ures vetoed and vetoes overridden from the administration of George Washing- ton to Herbert Hoover—are as follows: Measures Vote: President. vetoed. overridden. ‘Washington Van Buren.'..". Gie William Henry Harrison.. Tyler ‘- BD I S L1 O A DORDDOHODDOO3 D! @ ey EadElaonBluacconvsohonas w8 gue e This makes a total of 648 measures vetoed and 46 vetoes overridden from the beginning of the Nation to the last three months of the Hoover tration. In the whole course of America’s his-_ tory only eight -President refrained from sending veto messages to the Con- gress. These were John ms, Thomas Jefferson John Quincy Adam-. Martin Van Buren, Williem Henry Har- rison, Zachary Taylor, Millard Fill- more and James A. Garfield. As he died just before the first session of the Forty-seventh Congress met, there was no opportunity for Garfield to exercise the veto power. Incidentally, he was the only President who sent no_ veto message after the Civil War. Since then, beginning with Lincoln’s three vetoes, every President has exercised this prerogative, Grover Cleveland set- ting the record with 301, but there is & reason for that. Those 301 bills vetoed in the first Cleveland administration were the result of an avalanche of bills descending upon the White House for the purpose of scattering pensions pro- miscucusly to veterans of the Civil War. Indeed, so many fake cases were found, among them pensions to desert- ers and pensions even to men who had not served in the Army, that Cleveland wielded his veto power ruthlessly. It is expected that President Hoover will follow the precedent laid down by so many of his distinguished prede- cessors, that he will veto at least three or four bills which will be sent him between now and noon of March 4, lm!. that he will exercise the “pockét veto' for certain other measures which are not entirely to his satisfattion. In this action he will be reviving an American custom that began in the ad- ministration of President Andrew Jack- son, who, ipso facto, is the father of the “pocket veto.” “Pocket Veto” Began 100 Years Ago. The first pocket veto of a bill passed by the two houses of Congress took place almost 100 years ago. Then, at the close of the short session of the Twenty-second Congress, it was found that President Jackson had delayed sending a veto message to the Capitol. That Congress expired at noon on March 4, 1833. The bill that Jackson's pocket veto was directed against, had to do with Federal revenues raised from the sale of public lands, these funds directed to be distributed among the States. Up to the Civil War, the Presidents of the United States usually gave some sort of explanation for their use of the “pocket veto,” but later even that ob- servation died out. One of the out- standing exceptions to this current practice was the explanation made by President Hoover for refusing to sign the Wagner employment exchange bill at the close of the last Congress. Three days later, March 7, 1931, President Hoover gave out a statement contain- ing his reasons for withholding his signature from the bill. Only once has the President’s power to pocket a bill sent to him within 10 days of Congress adjournment been questioned, and this was during the Coolidge administration. It was & technical question advanced by Sena- tor Norris, asking if the President en- joyed this power at the end of the first Tegular session of Congress. Usually, the power is applied as in the current case, when the presidential term ex- pires with the shert Congress. The United States Supreme Court in the pocket veto case decided May 27, 1929, in support of the presidential preroga- tive in the case of the et veto. It will undoubtedly continue on down the ages. B Keep Him Home! Bresent, indications axe. that 1 in the Roosevelt -