Bureaucratic Confusion at Washington


By ROBERT A. TAFT, U. S. Senator from Ohio

Broadcast made May 2, 1941

Vital Speeches of the Day, Vol. VII, pp. 503-505

I WISH to discuss this week the confusion which exists among the various defense bureaus in Washington, and the effort to use the defense crisis as a basis for usurping powers Congress has never been willing to give by law, to regulate everything and everybody.

Regardless of differences on the lend-lease bill, on convoys, and on the question of America's intervention in the war, the American people are definitely agreed on one policy—that is the policy of increasing our production of airplanes, ships, guns, tanks, and other military and naval equipment. Our production must be increased as fast as possible, both for the purpose of furnishing aid to Britain, and for making impregnable the defense of the United States. My own opinion is that this is the only way in which we can give effective aid to Britain. But is doesn't do any good just to pass laws, or appropriate money, or talk about aid to Britain in the newspapers.

It is most unfortunate that practically nothing was done to increase our productive capacity during the first nine months of the war. Congress authorized 6,000 Army airplanes before war began, in April, 1939, but very few orders for these planes had been given a year later. The British themselves underestimated the seriousness of the war, and failed to place the orders in this country which might have led to the increase of our manufacturing capacity. It is tragic that the neglect of 1939 should have prevented our aid becoming substantially effective until 1942.

After the break-through in France, the President set up a Council of National Defense, but it was made up of seven men, without a chairman, without legal powers, each one reporting directly to the President, who simply did not have the time to coordinate their work. Finally, after the election of 1940, the President admitted the inefficiency of this arrangement by establishing the Office of Production Management. But even then he divided the control between Mr.Knudsen and Mr. Hillman, and limited the powers which they could exercise. Ever since, their power has been steadily cut down, and other independent bureaus created, like the Labor Mediation Board, the Defense Housing Coordinator, and the Price Stabilizer.

And now the President has announced that the whole lease-lend program will be administered by Mr. Harry Hopkins, entirely independent of Knudsen-Hillman. When the lease-lend bill was debated, its proponents claimed that it would permit the coordination of American and British purchases in a single buying agency. Instead of that, the President has simply created a new agency, and British buying is far more complicated than it was when done directly by the British Purchasing Commission.

Harry Hopkins' administration of the W.P.A. could hardly be called a success except perhaps from a political viewpoint, and the same is true of his efforts as Secretary of Commerce. I say that any administration which takes away the administration of the seven-billion-dollar lend-lease program from Knudsen and gives it to Harry Hopkins brands itself as completely incompetent and inefficient.

Another example of diffused power which results in incompetent administration is shown by the present labor setup. The government's labor powers are divided among many bureaus. There is the Department of Labor, with its Division of Conciliation. There is the National Labor Relations Board. There is Mr. Sidney Hillman, supposed to run labor from the Office of Production Management, and there is the National Defense Mediation Board just created by the President, entirely independent of Mr. Hillman and of the Department of Labor. How can labor or anyone else know when the government speaks? How can anyone tell what the labor policy of the government is? The National Labor Relations Board in the past has encouraged strikes. Is that still its policy? What's the use of more legislationif every government bureau operates completely at cross-purposes with every other bureau?

The defense organization has followed the history of all New Deal organization. One Bureau has been created independent of all other bureaus and deriving its power directly from the President. Only the President can coordinate their policies, and he has neither the time, inclination, nor ability to do so. Whether from nature or design, the President has always tried to retain in his own hands all the powers of the Executive, and has refused to delegate to anyone any comprehensive authority. Of course this is thoroughly approved by the New Dealers, who are always able to slip in the back door and block any policy they do not like when it comes back to the President for approval.

But surely the time has come to forget prejudice, and look only for efficiency in the production of arms. In my opinion, there should be a War Resources Administration with a single head, as recommended for years in the official Mobilization Plan, and the various labor bureaus should be concentrated under one man who can speak authoritatively the voice of the President and of the government. There is no real doubt about the tremendous productive capacity of the United States, or its ability to stand against the world, but that capacity must be organized in the most efficient possible way.

But there is another side to the defense effort. I spoke two weeks ago of the dangers of inflation. The defense program will result in the government spending about twenty-four billion dollars in the twelve months beginning July first. Even with the tremendous increase in taxes, the government will have to borrow more than ten billion dollars. The spending of that money will pyramid the demand for goods of all kinds, and bring about an inflationary boom. The great demand for goods will tend to raise prices, and to cause the construction of non-defense plants with the demand which such construction causes for steel and building materials and machinery. And, above all, since this whole boom is based on government borrowing and defense activity, which cannot possibly continue, it is likely to bring about a serious depression after the war.

In order to prevent inflation and depression, I believe it is vitally necessary that we adopt some official economic policy, and give some board or bureau authority to speak for the government. Since it is not directly related to defense, probably the power should be given to some agency other than the proposed War Resources Administration. But certainly those powers must be carefully defined by statute and carefully limited. The fixing of prices is bound to lead to the fixing of profits, of practices, and of all the details of every business transaction in the United States. Ultimately it must lead to the fixing of wages. I have always been strenuously opposed to price fixing in time of peace, because I believe that it means the socialization of industry. But I believe some such powers are justified by the tremendous defense program, and the tremendous amount of money the government must borrow. In my opinion, powers to fix prices should only relate to basic commodities and to those closely related to defense. There should be a board to determine finally the prices to be fixed, and this dangerous and arbitrary power should not be left to the discretion of one man. Such a board also should determine whether it is better to restrict civilian non-defense consumption or permit the expansion of existing facilities.

In this field, as in the defense field, there is a complete confusion among government bureaus. The Federal Reserve Board has large powers to control inflation. The Treasury has many of the same powers and others. Wehave the Department of Agriculture, determining prices and economic policies for farm products. We have the Commodity Credit Corporation, regulating prices by the making of loans. The Department of Justice is controlling prices by eliminating monopoly and prosecuting conspirators in restraint of trade under the Sherman Act and the Clayton Act As far as I can discover, none of these departments consult any other, and their policies are frequently conflicting.

Now the President has suddenly created a new office, that of Price Administration and Civilian Supply, and appointed as Administrator, Mr. Leon Henderson. Like the Office of Production Management, the Office of the Defense Housing Coordinator, and the Mediation Board, this Office of Price Administration is created as part of the Executive Office of the President. It has never been authorized by Congress. A new theory has been developed under which a whole series of new bureaus are being created by executive order. We see a new bureaucracy, completely under the President's direction, super-imposed on the complicated bureaucratic setup already created by Congress. It is a substantial step towards that government by executive order which now exists in Germany and Italy.

In the order establishing the Office of Price Administration, the President goes even further and authorizes price fixing, for which there is no statutory justification whatever. This order authorizes the Administrator to "determine and publish, after proper investigation, such maximum prices, commissions, margins, fees, charges or other elements of cost or price of materials or commodities, as the Administrator may from time to time deem fair and reasonable." If the President can create an office, appoint one of his henchmen without confirmation by the Senate, and authorize him to fix prices without statutory authority, there is absolutely no limit to executive power in the United States. There is no legal penalty prescribed for a violation of prices, but in one of his orders, Mr. Henderson says that in the event of refusal or failure to abide by his price limitations he will see that "Congress, the various federal, state and local agencies and committees, including defense organizations, and the public are fully informed of the instances of such profiteering or non-cooperation; and that the powers of the government are fully asserted in order to protect the public interest in the maintenance of fair prices." In other words, Mr. Henderson is going to conduct a smear campaign against anybody who disobeys the orders which he has no right to issue. In other places he suggests that he will confiscate the plants or the materials themselves, if anyone disobeys his illegal orders. Of course price fixing based on this kind of lack of power is more than likely to fail. It cannot be enforced in the courts, and violations will become more frequent until the whole structure collapses. But more than that, the whole process is merely government by blackmail.

If Mr. Henderson can do what he is proposing to do in time of peace, then he can go on doing it after the war is over. Undoubtedly the President will declare another emergency then to prevent another depression, and if we acquiesce in the present usurpation of authority, we will have fastened on us an economic control by the government, regulating every business transaction and the life of every American citizen. In my opinion, the method by which the President is undertaking to fix prices is the most outrageous power grab which this country has ever seen.

Now Mr. Henderson has gone one step further. He has announced that he will use the power to fix prices, which he is usurping, to force industries to spend millions on new plants because Mr. Henderson thinks, contrary to many other members of the government, that such plants are necessary to meet an enlarged non-defense demand. The power to fix prices is to be enforced by other confiscatory powers not intended for that purpose, and then, by a kind of secondary blackmail, American citizens are to be forced into investments many of which can only involve serious financial loss.

Both to secure efficient coordination and reasonable democratic processes, Congress should immediately enact a statute defining what powers over prices and production the government must have during the present emergency, limiting the time during which those powers can be exercised, providing for an appeal to a board or a court which will not be guided by the whim of an economic theorist, and limiting the powers to those which are definitely required to prevent inflation and subsequent depression.

We are aiding England in order to preserve democracy throughout the world. It is indeed a poor method of attaining that objective to abandon democracy at home. The New Dealers seem to think that because the President was elected by a majority of the people, anything that he chooses to do is therefore democracy. But they forget that democracy is merely a means to an end, and that end is individual liberty. American democracy does not just mean a plebisciteevery four years. It is a way of life, guaranteeing individual freedom under the Bill of Rights, guaranteeing local self-government through the independence of the states, and guaranteeing permanent freedom by a clear restriction on the powers of the Executive and a division of the powers of the federal government between the Executive, Congress and the courts. History has shown repeatedly that if all the powers of the state are gradually concentrated in the Executive, they are never returned to the people.

The very seriousness of the emergency is all the more reason why we should adhere as closely as possible to the principles of our American Constitution. It is true that in time of war the powers of the Executive have always been enlarged through the necessity of the case, but there is absolutely no necessity today for the granting of arbitrary powers outside of the actual defense program. Congress today has almost no business before it, for the very simple reason that the President is attempting to govern the country by executive decree. It is essential that Congress assert its right to legislate on all questions relating to the organization of the government and the powers which the Executive may exercise.