On the Home Front


By JAMES S. KEMPER, President, Lumbermen's Mutual Casualty Company of Chicago

Delivered before the Farm Equipment Institute at The Edgewater Beach Hotel, Chicago, Illinois on October 2, 1941

Vital Speeches of the Day, Vol. VIII, pp. 143-146.

TODAY, as we meet here, the nation has pledged itself, subject to the approval of the Congress as to time and extent of aid, to underwrite the battle which the "democracies" are fighting in Europe and Asia and Africa.

It is not my intention to discuss the pros and cons of American participation in this war. I wish only to review with you briefly, if I may, some of the things that have happened "on the home front" in the past twenty-five years or so. I hope that out of this necessarily sketchy consideration we may get a thought or two that will assist in guiding our footsteps in the difficult days that lie ahead.

Like others in my business of insurance I live in a world of percentages. On the surface it is a dollars and cents balance-sheet world. Underneath, it is a world whose great objective is conservation—conservation of life and limb and property, conservation of time and energy, conservation of funds against the day of need.

It is difficult to speak in terms of dollars and cents and percentages without being misunderstood. Figures are cold, sometimes brutal, and not infrequently appraised as soulless.

What Shall It Profit Us?

Even so, I think that you here will agree that when figures represent the sweat, and the toil, and the sacrifice, and the hardship of millions of people they cannot lightly be dismissed.

I realize that in making any reference at all to dollars I shall run counter to the present philosophy of government in these United States. But, it is important that we should have a look at this picture lest in throwing to the winds discretion with respect to money we also may cast aside our precious heritage of liberty and freedom of opportunity.

Uncle Sam is sturdy. Uncomplainingly he has submitted to transfusions for the benefit of other nations. Again today his vitality is being tapped to supply needed stimulant to his friends. That is fine, and worthy of his high character and great generosity. But you and I who look to him for protection must be on guard lest in sacrificing for others he cripples himself. And don't forget that there are, even in our own country, a lot of sniping blood suckers who would be entirely willing to see him impotent. We want Uncle Sam to be a good neighbor, but we must see to it that he is not bled to death in the undertaking.

Paraphrasing the prophet of old—What shall it profit us if we save the whole world and lose our own souls—our own liberties?

World Plunged Into Chaos

From 1922 to 1929 we engaged in an orgy of wild speculation, and then we went into a depression—a very serious depression—not only here but elsewhere in the world. In recovering from that depression, the record of the United States was anything but impressive. Fourteen of the eighteen leading nations showed a recovery in industrial production from 1929 to June 1939 of from 8 to 83 per cent. But four nations were in the minus column and only Belgium, with a loss of 20 per cent, had a poorer showing than did our own country with its loss of 18 per cent.

I always have thought, and still believe, that we made the mistake of treating the patient with opiates instead of operating on a cancerous condition. In any event, we tried all the ideas and philosophies of the theorists and all sorts of self-anointed experts here and abroad and got exactly nowhere so far as real recovery was concerned. Perhaps that was because we tried to achieve social reform at the same time and so became involved in a maelstrom of crosscurrents that made clear thinking and sound planning impossible of achievement.

In any event, by August 1939 the people of the country had reached the conclusion that the programs under which we were operating were no good. And so in a Congress preponderantly of the majority political party the House in a patriotic vote that ignored party lines decisively defeated the 3 billion dollar spend-lend program recommended to them.

Renewed Hope for Nation

That action gave heart to those Americans who were thinking in terms of the national well being. It was hailed as a change in thinking and in attitude and as a determination to throw out of the window all the foibles and the cockeyed philosophies that had been tried out on a patient and cooperative people.

Then came along another European war, which focused attention on our lack of adequate military equipment. Incidental to the necessity for correcting that situation, the war afforded the planners, the parlor Bolshevists, the regimenters, exactly the opportunity they were looking for. All they needed to do was to divert the attention of the people from the mistakes that had been made by concerning them with the spectre of war, and under the guise of patriotic appeals reinstate the program that so recently the Congress had repudiated.

And so now we witness the spending program—the greatest spending program of all time. Much of it is necessary; much is not. The 1941 Congress appropriated and authorized during the first six months a billion dollars more than all the assets which all the life insurance companies in America have accumulated for the protection of 67 million of our countrymen. The same sum (which they have appropriated or authorized) exceeds by 4 billion dollars the entire accumulation of savings in national banks, state banks, private banks, savings banks and building and loan associations. I think a perfectly natural and appropriate inquiry under the circumstances is: "How long can this continue without serious impairment of the Federal credit?"

Mind you, I am not discussing today the menace of Hitlerism; the extent to which we should expend our resources in an effort to suppress it; the obligation we have in company with Britain and China and "Brother Joe" to spread the four freedoms to the four corners of the earth.

I simply am endeavoring to discuss with you the problem "on the home front," because I think my first obligation and the first obligation of every good American is to his own country.

Let us assume that the best investment we could make at this moment would be the suppression of totalitarianism abroad. Leaving aside the complication that arises through our alliance with Stalinism (a problem with which presumably we could deal later on) how sensible are we with respect to the handling of our rearmament program and aid to others? And just how much attention are we giving to the elimination of expenses of government that bear no relation either to rearmament or to helping our friends? And how well equipped are we to foot the bill against which we are mortgaging not only the accumulated savings of the people but their savings for a long time to come?

Thrift Philosophy Forgotten

Obviously, these questions assume that thrift has played some part in making America the greatest nation in the world. I think it was a vitally important contributing factor. I think, also, that the incentive to save was building character at the same time it was providing funds with which to develop the country. After that statement it hardly is necessary to observe that I do not share the philosophy of one economic specialist in our government who not so long ago recommended a tax to destroy the incentive to save. Nor do I subscribe to the theory advanced by another member of the government that there is no reason why one nation should have more of the wealth of the world than any other nation, presumably without reference to the industry or ability of the citizenry. And, finally, while I admit that it would be a bloodless revolution, I most certainly protest the philosophy of the foreign financial adviser to our government who favors the accomplishment of socialism through the spending by the government of all of the savings of the people.

The World War and Taxes

Now that I have, so to speak, laid my cards on the table with respect to the economic views of others, I should like, if I may, to explore with you for a moment this question of our ability to "foot the bill."

We entered the world war with only a billion dollars of debt, which was small compared to our wealth. Our taxes then were low (individual normal tax 2%—surtaxes 1 to 13%—corporation tax 2%).

Those were the happy days!

We had no federal death taxes—and many of the taxes we now know about were then not in the picture. So, when we got into the war and jumped up our spending tremendously, we were able to expand tax rates and tax bases. And,after the inauguration of the budget system under the direction of General Dawes in 1921, we proceeded to save money and gradually reduced the debt—which always had been the American way.

What has happened since? Well, in the first place, in the last decade, before we started our rearmament program, we built up the sort of debt that one would expect to find after a great war rather than after twenty years of peace.

No good citizen will object to the cost of making America impregnable against aggression on the part of any power or combination of powers. But, as I view it, no good American will calmly sit by and not protest waste and extravagance, even though it is hidden under the patriotic cloak of national defense.

In my capacity as President or insurance companies, under whose contracts widows and orphans of men injured in industry look for and receive compensation, I accept a trustee obligation in the administration of the funds in which the reserves to pay such compensation are invested. As a citizen and as a taxpayer I feel that I am entitled to have from my government that same attitude with respect to the savings of the people. Because, after all, government spending in excess of income is a mortgage on the peoples' savings.

It is unnecessary for me to dwell at length upon the 5,000 per cent increase in our national debt since 1917. It is unnecessary to call your attention to the fact that our tax rates are far in excess of the maximum which prevailed during the World War period with a per capita tax that is double what it was at that time.

Reduce Government Spending

In this present rearmament program we probably have done a better job than we did at the time of the world war, but have not done nearly as good a job as we might have done if authority had been centralized. So far as reduction in non-defense expenditures is concerned, there has been a lot of conversation and very little performance.

I agree completely with the Secretary of the Treasury that it would be a "tragic error" to fail to reduce non-defense spending. Such savings are just as important as new taxes from a dollars and cents standpoint. They especially are important because they present squarely to government the question of whether or not government intends to function efficiently in this situation.

The American people are willing to make any necessary sacrifices to support the cost of national defense. They recognize that this will mean giving up many things to which they have become accustomed. But, they have the right to expect that government will do its part and will see to it that every unnecessary expenditure of government is eliminated. There is an opportunity—indeed, a crying need— for drastic reduction in government expenditures, and the people will not tolerate continued indifference to that necessity.

The Tax Burden Analyzed

There is a general impression here that the British are carrying a much heavier tax burden than we are. Based upon that assumption, the British are excused for not having interfered with normal business and particularly with export trade to the extent that we have here in the United States.

What are the facts with respect to the tax burdens of the two countries?

Comparing our taxes to theirs on a per capita basis, the Finance Department of the Chamber of Commerce of the United States finds that our tax burden in the present fiscal year will be $168.42 compared to the British burden of $164.99 (converting at four dollars to the pound).

The chart for the three fiscal years 1940-1941-1942 follows:




United Kingdom




United States




These figures will be drastically changed when full allowance is made for the effect of a complete year of new taxes the figure then is likely to reach 24 billions instead of a estimated 22 1/2 billions which will give us a per capita burden of $180.00 as compared to $173.00 for Great Britain.

A better and more conclusive basis for comparison is the relation which taxes bear to the national income of the two countries. On this basis, even assuming a maximum probable income to us of 90 billion dollars for this fiscal year, the Chamber reports that taxes in America will consume 25 per cent of our total income compared to 22 per cent in Great Britain. These figures are based on estimated British taxes of 7 1/2 billion dollars compared to our tax burden of over 20.

The chart for the three fiscal years 1940-1941-194 follows:














The American people are beginning to inquire where these billions are going—what they are getting for their tax dollars.

It would seem that if the British, menaced as we are not and never could be, and after two years of war, are taxing their people less than we are being taxed, then in all fairness to those frugal citizens of our country who have saved against the rainy day of adversity we well might demand of our government a reappraisal and a complete revamping of our spending program. It would seem also that we should have another look at our whole priorities and export control program, and, following the British example, should pay some attention to our internal economy and our foreign trade channels.

Elect Enemies of Waste

Now, I should like to add one political (non-partisan political) note. In a few months the various states will begin the selection of candidates for membership in the House of Representatives. Under our form of government all our appropriations must originate in the House.

If there can be nominated as candidates of the major parties in every Congressional District in the United States men who are pledged to the elimination of waste and extravagance, the election in November will give to the American people the best guarantee they could have that we shall not, while seeking to suppress totalitarianism abroad, achieve it here as a result of impairment of the federal credit.

No greater call to service, no more important challenge, could be laid at the door of the people of this country than to give our best to the preservation of the American way of life. Unless we are vigilant in protecting our rights during this difficult period we may find that we have been forging the very chains with which we are to be shackled.

Americans Willing to Sacrifice

These dollars that are being spent so recklessly represent the sacrifice and the hardship of millions of our countrymen from the early days of the Republic until now. They are willing they should be spent to preserve our country. By the same token, they are unwilling that they should be spent carelessly—prodigally—for anything that cannot be justified. And, realizing that most dictatorships in Europe were made possible by the impairment of the credit of the central government of the affected countries, they have an additional concern about waste in this Republic of ours.

If ever there was a time in the history of this country when businessmen should take an active part in politics, that time is now. It's well enough to condemn the closed shop, indecision and lack of leadership in preventing inflationary trends, unfair priority stifling of small business, encroachment on the American system of free enterprise, but fine phrases and complete agreement with them at luncheon or dinner meetings are not enough. The men and women of America—and most importantly the women because they have the larger stake—must go to work at once. And so I say to you businessmen who are doing so much to perfect America's defense, don't overlook the primaries and elections of 1942. Upon their outcome may depend the type of government under which we shall live after the peace.

In the last twenty-five years our Republic has abandoned much of the tradition and philosophy of the founding fathers. In some quarters that is appraised as progress. Time alone will decide. But whatever else we may lose, it should be the hope and the prayer of each of us, and I hope also the effort of each of us, that tolerance be preserved. We proclaim to the world our desire for peace, we salute freedom of speech and of assembly, and yet in practice we fall far short.

A representative government cannot survive if its citizens are hamstrung and throttled in their expression of opinions. As Voltaire expressed it—"I disapprove what you say, but I will defend to the death your right to say it." God knowsthat because of our belief in freedom of speech we have not denied platform to the proponents of the ninety-nine varieties of alien philosophies emanating from countries whose people would give anything to live in this nation of liberty and opportunity. Yet, today, even amongst one's own intimate friends we find challenge, resentment and bitterness with respect to citizens who have braved criticism, not for gain of any kind but solely because they believe in free speech and in presenting their views of our pressing problems to their fellow countrymen.

Our Heritage is Freedom

And so, I plead with you for tolerance. Tolerance with respect to race and creed and philosophy. Tolerance of the type the forefathers sought and eventually achieved. Tolerance that makes it possible for us to say what we wish without fear of punitive penalty.

I am not pessimistic. I have faith in America and in American institutions. I believe they best can be preserved by being frank, by being fair, and above all by being realisticSpeaking to you today in this great mid-west of America, which gave the nation Abraham Lincoln, I ask you if we cannot emancipate ourselves from all the isms and the creeds of hate and of fear; and, thinking first of the great heritage we have, pledge ourselves to do what we can to preserve for ourselves, our children, and our children's children a nation of free men here on the Home Front.