No Room for Complacency in Domestic Expenditures


By MORTON BODFISH, Executive Vice President, United States Savings and Loan League

Address before 49th Annual Convention of the League, Miami, Florida, December 5, 1941

Vital Speeches of the Day, Vol. VIII, pp. 269-272.

THE national crisis in which we find ourselves should give us one determined stand among many others, viz. to face the facts. With the tragic example of France before us, we should realize that, as businessmen, as custodians of the savings of middle-income America, we cannot afford to be indifferent or complacent about the domestic policies, particularly the domestic expenditures, of our government.

We all have a great responsibility to take an intelligent interest in national affairs. The need for unity should not blind us or confuse us about the pressing need for an honest and critical attitude toward inefficiency, extravagance, ormuddling in domestic affairs. Certainly we, as part of the public, should demand that the huge national defense program be handled with the same regard for efficiency, speed and reasonable economy that would be expected of a private concern.

We should not terminate our discussion on these matters because we are engaged in a great all-out effort to protect and preserve our political and economic institutions. Rather we should face the probability that we cannot succeed in that effort unless at the same time we keep our domestic machinery efficient, well-oiled and operating effectively. Arguments and speeches are not going to whip Hitler. Efficiency has been the determining factor every time in history when two great forces have come into conflict. Thus I suspect that we have a greater responsibility than in normal times to see that domestic affairs and expenditures are properly handled.

Sometime ago, Richard H. Tawney, the old British economist, a man of labor's point of view, visited with a small group of us. We asked him how he, as a Labor Party man, could be so conciliatory toward the British Government of Chamberlain and the Tory group, with all their ridiculous, tragic, blind appeasement policies. He said that it wasn't hard to explain, but that he could best explain it with a story. He said that in the last World War, in the Battle of the Somme, he was attached as a liaison officer to an Irish regiment. The Irish, as you know, in accordance with the typical tradition of that great group, are excellent fighters, but Ireland has had trouble in getting along with the British Government. He said the Irish regiment always went over the top shouting "God save Ireland, down with the British Government, but to hell with the Germans!"

Every one of us should follow our representatives in Congress more closely. We should know them. I think the best lesson we could have with regard to our relations with our government came directly from the Secretary of Commerce and Federal Loan Administrator some weeks ago. Mr. Jones said that the businessman needs to do two things in dealing with his government, first, keep his manners, and second, know his Congressmen.

We cannot afford to permit our representatives in Congress to go along with the tide of domestic spending without giving them some evidence that we consider it a dangerous thing to the welfare of this country. The horrors of war are being tempered a lot by many things called defense projects in the way of water power, roads, slum clearance, and Heaven knows what all, proposed by very patriotic local politicians or Federal Bureaus, which is, of course, one of the weaknesses in the working of the republic. We cannot, as good citizens, permit our representatives to become more interested in local politics and pressures than in the welfare of the country as a whole.

It is not fair to honest and courageous Congressmen for men of the type represented in this great convention not to give them vigorous, courageous and constant support and cooperation as they take their stand in opposition to "pork barrel" methods, when the economic health of the nation is threatened, even though it means a little "gravy" for our own district.

I think the most glaring inconsistency is a business group such as ours—although I am proud to say we are an exception—which passes a resolution for economy in general governmental expenditures, and then in delivering the resolution, talks to the Congressman about a new post office or something for his own district. It just doesn't add up, isn't consistent, and is not a credit to the business groups.

Our great organization is a proud exception. We had the financial strength of our government in our time of need and we have not once, when we passed that time of need,been back for more, for added or expanded HOLC share purchases, or a dozen others of the tempting easy things to develop our business which would have been inconsistent with the national welfare.

I will illustrate outside our field. There recently was passed in Congress a bill for the creation of defense roads and highways where roads and highways are not adequate from the point of view of military transportation. The first bill, which authorized $125,000,000 after the President of the United States had recommended $25,000,000, was passed by the Congress with a requirement that it be apportioned among the several states in relation to the population. In other words, the distribution of population in the United States was made the measure of military necessity, in the building of military highways and bridges, including bridge construction over which heavy armaments and tanks could pass.

The bill was vetoed by the President on August 2, with a stinging rebuke, "Such a distribution formula entirely disregards, it seems to me, the main purpose to be accomplished." The veto message said the apportionment method would require far larger sums of money to meet immediate requirements and that it would create critical deficiencies in some areas which would not be corrected even by five times the sum that had been appropriated which was five times the Presidential request.

The second bill authorized $25,000,000 to be apportioned and $25,000,000 without apportionment—in other words, still twice as much as the budget and the executive officers of our great government asked for, and still with fifty per cent apportioned according to population, which was nothing more than a local "pork barrel, log rolling" proposition.

The bill included a provision, not inserted by the officers of the administrative branch of the government, that a portion of the fund could be used for parking places to create additional parking spaces in congested districts of cities. It seems to me it is a tragic day when our representatives in Congress, without encouragement, without request from the executive or financial departments, provide funds to add to automobile parking space in our cities. Certainly we must have enough local integrity and effectiveness left to build parking lots without raiding the Federal treasury.

I am rather unsympathetic with the attitude that too many of us take at times of "blaming the boss." I have seen some very courageous veto messages from the President of the United States. I have just quoted from one. I would remind you that the principal opposition some years ago to subsidy farm rates on farm loans, costing the United States Treasury $50,000,000 a year, was the veto messages of the President of the United States. I think this organization has appropriately and sincerely tried to recognize the strength and propriety of that position.

As I have watched the tax situation in Washington and tried to keep in touch with it, I have realized that the Secretary of the Treasury has been extremely courageous in his advocacy of reducing domestic expenditures, including lopping a billion or two billion off the farm subsidies, and the like.

I am not trying to eulogize any particular individuals, but do want to make the case for not following the easy pattern of always "blaming the boss." Let's help our Congressmen and our Senators. We have a responsibility as their constituents. With all the dangers of inflation, cost of government, centralization, and the like, it is our Representatives and Senators who are the principal problem and who, also, are the principal opportunity.

It seems to me that this convention took a most appropriate action when the Resolutions Committee, under the leadership of Mr. Brock, brought in a resolution addressed to theJoint Committee on Reduction of Non-Essential Federal Expenditures headed by Senator Byrd of Virginia, a fine friend of the savings and home-financing institutions, which said we approve your general objectives and we step forward with eight items in which something can be done in line with the general domestic economy objective in the field that touches us.

There are some shocking things developing in the administrative situation in our country at the moment. The Truman Committee, which has been investigating the handling of some of the defense contracts, including their procurement by friends of persons in office, has found, for example, down in the Wolf Creek shell loading plant in Tennessee which was to have cost $20,000,000, that $51,000,000 has been spent, and it is not yet completed. They found one fellow was getting 65 cents an hour for killing flies. Another was getting $40 a week as a foreman in charge of water barrels. Another was getting double time pay for waiting. That illustration may be a little unfair, but I do think it again raises the question upon which we should all be thoughtful, vigilant, good-mannered, but courageous; namely, the domestic administration of expenditures, whether they are in the defense program or in the non-defense sphere of activity. You have all read in your newspapers about the amazing Currier case in Michigan, in which a contract was awarded for the building of a public housing project which cost the taxpayers of the United States government over $400,000 more than the Currier bid, on the theory it would avoid an argument between the C. I. O. and the A. F. of L. There was a pre-fabrication issue involved and an issue of streamlined assembly on the ground. It seems to me those things should be discussed, and when our Congressmen and Senators do take the courageous stand let's aid, back them, and do our part.

At the present time the Federal Government is spending $20,000,000 to $25,000,000 a year in departments that have nothing whatever to do with the defense of the nation on publicity, news writers, and the like. Each department grinds out propaganda on behalf of its own operation in competition with each of the other agencies of the government. I frankly feel these costly departmental publicity machines with each department trying to outdo the other, are not only an unnecessary expenditure in this country, but also have implications which threaten the very intent and independence, if not the integrity of the press and the means of communication from government to our citizens.

To illustrate, again, a billion dollar Rivers and Harbors bill is now pending involving over $557,000,000 for the St. Lawrence Seaway, the Florida Ship Canal, and Tombigbee River project. The balance of the bill is distributed among the states so that members will have enough stake in the bill to put it through intact.

Senator Vandenberg, Republican, said of it: "It represents the most scandalous distribution of pork in all the history of log-rolling and back-scratching legislation. It is a stench in the nostrils of hard-pressed taxpayers."

Senator Tydings, Democrat, said of it: "There is enough pork in this bill to load not only all the ships we are now building but all those we will build for a long time to come."

It seems to me our duty, as voters, as taxpayers and as patriotic citizens, is to follow, advise, encourage, and if necessary, protest to our representatives in Congress the use of public funds for such purposes at a time when the vital defense expenditures are so overwhelming.

The American taxpayer is a happy and agreeable taxpayer. We aren't perhaps surprised to find the American taxpayer is facing larger tax burdens, but we are sure that he is already paying $168 per capita in this country, while his British compatriot is paying $165 per capita. (This comparison is

not strictly accurate since it fails to take into full account the differences in the purchasing power of the currencies in the two countries.) The tremendous responsibility of making this nation the arsenal of democracy, will mean heavier and heavier industrial and financial burdens by the American taxpayer from here on out.

It will mean those figures will be multiplied probably two times before we are through. With such prodigious funds being handled by public officials and public agencies, the only hope, in my judgment, for a sound, careful and stable economy and the avoidance of a runaway or price level inflation, is a vigilant and efficient citizenry, such as is represented in this great organization and the seven million people we are serving and for whose savings and home ownership program we speak.

Individually, there is no question but that the members of Congress are earnest and conscientious men and women trying to do a courageous and constructive job. I firmly believe that they are trying honestly to represent their constituents and do a good job of that. So let's help them with the difficult problem of filling both roles, representing their constituents and serving the best interest of the country as a whole. We should remember among those constituents there are a great many people and organizations who are insistent upon local "gravy" projects and expenditures and activities which often are inconsistent with the broader interests of this country. We want them to be responsible to their constituents, and my challenge, my plea, is for us to be good constituents, and active constituents, so the courageous legislator who does think of the broad issues and acts accordingly is not abruptly retired from public service.

I can illustrate this problem a little further. While the thrift and savings activities of our institutions are becoming more popular, the whole idea of our other objective, home ownership, is threatened by more forces than at any previous time. Defense housing is being used as a cloak for all public housing. Over a billion dollars is already, or about to be, authorized for "defense" housing. Many social workers view all housing as "defense" housing.

Pressure groups are active for large scale programs of subsidies. At the last convention of the C. I. O., a resolution was passed calling for a public housing program of 1,000,000 homes for the next five years. They endorsed the Camden plan and are calling for rent control on a nation-wide scale.

The American Federation of Labor did not go quite so strong, but they had a resolution which called for $600,000,000 more of Lanham funds, which are used for defense housing, as you know, and they wanted merely that much to provide 150,000 new homes. They also endorsed the U. S. H. A.

Nathan Straus talks of the necessity of government housing for seven out of ten families of defense workers, and a public housing government building program for the next 15 years to rehouse 17,500,000 persons, in 4,500,000 new homes.

The Tolan Committee of the House, investigating defense migration, calls for large scale government building of housing, saying that 80 per cent of the defense workers must be housed by the government, and that private industry has failed and will continue to fail to meet the need.

A regional Farm Security director, speaking in Omaha on November 2, calls for a government-subsidized program of rural housing, the government to own the farm buildings and collect rent for them directly from the tenant.

Mrs. Samuel I. Rosenman, Chairman of the National Committee in the Housing Emergency said: "It is short-sighted not to utilize this expenditure for defense housing to its full advantage and to use it for permanent needs as well as present needs." Her husband is Judge Rosenman, who is at the President's request preparing a report on the reorganization of all government housing agencies.

In the 16th census of the United States, we have the figures which show a decline in home ownership in practically all sections of the country. In the District of Columbia, it has declined from 38.5 per cent in 1930 to 29.9 per cent in 1940. In Kansas, it declined from 56 per cent in 1930 to 51 per cent in 1940, North Carolina from 44.5 per cent to 42.4 per cent, Nebraska from 54.3 per cent to 47.1 per cent, and so on.

It is certain that a broad program of education is needed in every community in the land if we are going to further and carry out the American ideal of home ownership, whichis the peculiar and individual responsibility of this group. Public funds to build houses, like public funds to build military roads where they serve no military objective have no legitimate place, except in emergency defense areas, in the current spending program of the United States of America.

The situation is certainly one in which local leaders fa business and finance need to be awake to their great responsibility to think in terms of the national welfare and of curtailment of non-essential expenditures. And in so thinking, they have a second responsibility to convey that point of view to their representatives in Congress in order that the legislators may be enabled to take the stand for efficient, economical, effective handling of the internal affairs on which will hinge our victory in external combat.