Expert Government


By THOMAS I. PARKINSON, President of the Equitable Life Assurance Society of the U. S.

At the 139th dinner of the Economic Club of New York, at the Hotel Astor, New York, January 27, 1942

Vital Speeches of the Day, Vol. VIII, pp. 264-267.

IT is a pleasure to be here in this distinguished company, and to be introduced as a born lawyer. You may be sorry for that before I get through, and then, I have been plastered all over with an academic background from which I realize I could not escape even if I tried—and yet the realization of the two facts to which the Chairman has referred—my previous association with the law and with academic institutions,—may take some little of the starch out of what I had contemplated saying to you. In other words, I am introduced as a lawyer and a "perfesser."

Well, to get off with something of an academic start, I had in mind to recall to you, that is, those, of you who were educated in the days when we read Caesar's Com-

mentaries, that Caesar observed that when the Germans went to war they took their families, women and children, along with them—and now we have to realize the Germans have developed a modern war which they bring to our families, women and children, the people at home, the Home Front, must bear in the wars of today, in our present war, a degree of participation which has not been usual in the years that intervened between Caesar's Gallic Wars and our own time.

"The morale of the people," said Senator George, a few days ago, "must be maintained if we are to win the war."

Some one else said that the people who hold out the longest will win this war. Now, I cannot help emphasizing a little of my own more recent experience, in presenting an idea to you.

We, in the life insurance business have had a hard fight, so if we thought during the last few years to represent effectively the idea of saving and thrift and the value of thrift institutions—not alone to those who use them but to the general welfare, as an incidental result. We did that through a period in which some false political philosophy was handed out to the people of this country. We did it in a period in which people were taught, our people were taught, continuously, that saving was detrimental to the public good; that spending was the thing. Why, one of the great apostles of that philosophy had the nerve to write an article which appeared in the Atlantic Monthly entitled "Spending for a Rainy Day."

That represented a false political philosophy which made it difficult for us in the life insurance business and in like thrifted institutions, to keep alive the very spirit of saving and of thrift.

But not now! The people are told every day that their savings, their thrift, their sacrifices are essential to the success of the nation, and we do not need to argue it—we know it is true.

The morale of the people, the sacrifices of the people, the savings of the people, the life of the nation.

And there was more false political philosophy which antedates 1933, and which was just as detrimental to the public welfare. Indeed, may I say that I think that my generation has failed more in the field in which I have worked than in any other field of intellectual and practical effort. We have made tremendous progress in this country in the field of the practical sciences. I do not need to cite them; but we have made a grand failure out of political and economic science.

The people were taught that when prosperity got into trouble, when their economic system went awry, to have patience and the government would fix it all. You remember those days when prosperity was just around the corner and the government was about to lead us to it. Some of the old-fashioned folks thought the government had nothing to do with it, but the people were told that if they would just have patience and rely on the government, all would be well.

Now we know, even the least of us, without political theory, without debate, without preaching—now we know, that a nation is just as strong as its people and no stronger, and what the people do determines what they have; not what the government does.

I am sure we are all ready to make the sacrifices which Secretary Morgenthau calls for, when he asks us through our savings and our thrift to provide what he accurately calls the "sinews of war."

Where do these sinews of war come from?—The funds with which to do the things which must be done? They come from the people; they come from the institution of private property, which belongs to the people, and particularly that great mass which President Coolidge used to call "The average run of folks." There is where the sinews of war are—they don't belong to the government.

The government takes by taxation or it gets by borrowing, by borrowing the funds which belong to the people, and they are the sinews of war.

We are ready to make the sacrifices; we are ready to make our contributions, not only in funds but in sacrifices, in deprivations, and, if necessary, in the gift to the nation of our very lives. We have the courage, but we need leadership!

Ours is not a democracy; ours is a representative government, established in a written constitution dividing the powers of government between the nation and the states. National affairs in the national government—local affairs in the state and local governments. We do not act in a town meeting; we act through our representatives duly elected. We have never until recent years depended upon the expert, but rather relied on representatives elected by the people and responsible to the people.

We are a little suspicious of "expert" government.

We want leadership; we want frank and trusting leadership; we want to trust our leaders and have reason to trust them and we want them to trust us. And, if they do, they will find a united America; they will find a spontaneous and complete, all-out cooperation in support of their plans and their executions of public policy.

But, we do not want to be disturbed by those little things that contribute to lack of confidence; we do not want when we are putting our all into cooperation with the government to feel that somebody, encouraged by the government, is pulling off some trickery that we have to keep an eye on over our shoulder. We do not want to feel that while we are giving our all to produce the airplanes and the other mechanisms of modern war, that somebody else is planning not the winning of the foreign war, but a subtly insinuating effort at domestic revolution.

And that I may not be misunderstood, what I mean is illustrated by what has happened not once but several times recently when excellent advisory committees, engaged in the representation of labor and management alike in matters which relate to the production capacity of the plants under their care, when such committees have been trying to go forward with the plans for such production, representatives of government departments—keen, clever, irresponsible, "smart-boys" have tried to get over the signatures of those representatives of both management and labor seemingly innocent declarations, seemingly patriotic declarations of the principles involved, when there cunningly hid in the phraseology, fundamental suggestions in support of some labor policy like the closed shop.

I think I speak for the business world when I say that we are competent to turn out what public leaders need to prosecute this war to a successful conclusion. We are ready to do it, but we want the same kind of cooperation by responsible representatives of the people in public office that they ask of us.

You know that story about cooperation: There was a fellow who went into one of these cooperative municipal garden efforts and he drew one of the meanest pieces of ground in the whole tract but be labored hard and at the end of the season on an occasion like this, he was awarded the first prize. He was told in the words of the Presenter of the Scroll that he was getting this prize because of what he and God had done to make that piece of land bloom and produce—and he was asked had he any thing he would like to say.

"Yes," said he, 1 would like to tell these folks that I wish they could have seen that piece of land when God alone was responsible for its condition!"

Now that is not the kind of cooperation we want. If we are told reasonably definitely what is wanted of us, I am sure there will be not only response but enthusiastic response on the part of every representative of American business. Our problems are not so much different from those that have been encountered by our predecessors on similar occasions. As Peter Grimm was made to say, "Everything that happens happens again,"

Back in 1917-1918 we faced the same problems. We hada price law then—and some day, as Judge Dewey has just suggested, we may have a price law this time. The price law which Congress passed, did not fix the price of sugar, what it said was in effect that the price of sugar should be reasonable, and it said that it was a criminal offense for anyone to charge an unreasonable price for sugar. What is an unreasonable price for sugar? One that can be decided by the courts and the juries and in due course District Attorneys drew indictments.

I am on dangerous ground tonight, but I am going to try to get this idea to you. And those indictments have a good deal of difficulty specifying the crime of which the Defendant was accused but generally they said in the language of the statute, which is the lawyer's recourse usually— that the defendant was accused of charging an unreasonable price for sugar. Now to be very brief and to point out how, were you to determine what was a reasonable price for sugar—there never had been any such phrase in the law before—was the court to tell the jury what was a reasonable price in determining whether the price charged was unreasonable or was he to say to the jury "You must know what is a reasonable price for sugar—you retire and determine whether this fellow charged an unreasonable price."

There were nine such indictments in different parts of the country and nine different ways in which the judges handled that problem. Some told the juries what was a reasonable price, some told the juries to go find out for themselves what was a reasonable price, and when those cases got to the Supreme Court of the United States, which by the way at that time did not contain the five "unreasonable" men of 1937, nor the five "crusaders" of 1942—but was a splendid aggregation of judicial statesmen who had previously been great lawyers and who had earned the right to be members of that great court, they held that a law framing a rule of conduct in such indefinite language as a "reasonable price" for sugar was invalid and unenforcible in the criminal courts. But they said, "the representatives of the government, that might have been true before 1917, but this is war time, and under the war power this law is good."

"No," said the Supreme Court—and there was no dissent from this—"there is nothing in the war power that suspends the fundamental guarantees of due process and one of the guarantees of due process is that the accused shall know the charge made against him so definitely that he can defend it. That," said the court, "was a fundamental of English and American jurisprudence which had come down from the Magna Charta and was not to be set aside even in war times."

I am not here to say tonight that the present Supreme Court would hold the same, or contrary—probably it would be contrary—but the point I want to make is this: Congress had undoubted power in a period of war to fix prices and other rules of conduct of individuals within a state, which it would not have power to fix in other than war times. Congress has the power under our federal system to fix the rule of conduct so that those of us who want to cooperate and do the thing that will help to win, will be in the same position as those who do not.

Most of us would be quite willing voluntarily to cooperate; some might not. It is, therefore, in a federal system like ours possible that those who do not want to cooperate voluntarily may think that they can escape; but the genius of our Constitution and our government is such that it is adaptable to developments and conditions and, as I say, there is no doubt about the power of Congress in wartime to fix rules of conduct such as the prices which shall be charged for commodities, even within a state.

It was not that Congress had fixed prices that resulted in that decision to which I referred a moment ago; it was due to the fact that Congress had not fixed the prices but had passed the job of fixing them over to somebody else. In that instance it was the court's and the jury's. In the pending price bill, let me take a moment of your time to do something which I am afraid you wouldn't do yourselves, that is, read to you a couple of sentences of that pending price bill, reported out of conference a few days ago. Here it is:

"Whenever in the judgment of the Price Administrator,"—now, of course, it doesn't matter who he is—"the price or prices of commodities have risen or threaten to rise to a manner or extent not in keeping with the purposes of this Act, he may by regulation or order establish such maximum price or prices as in his judgment will be generally fair and equitable and will effectuate the purposes of this Act."

That is the delegation by Congress to a Price Administrator, of the God-given power of Congress to fix the rule by which the people of this country shall be governed and guided in this hour of crisis. The delegation to somebody else to do what he thinks is fair and reasonable when in his judgment he thinks it ought to be done.

And then this price bill, which declares in a ponderous preamble that among its intentions is the "prevention of inflation and all its dire consequences," and they are as oratorically stated in that preamble, as anywhere I have seen them, after that statement of purposes, this price bill goes on to exempt from its provisions all wages and to give an unbelievable preference to farm commodities.

Now, think of it seriously: Here is the representative body elected by the people of this country, by you and me and like folks all over the country to represent us with the power to do what they believe should be done in this crisis. In the first place, omitting from the price control two of the most important elements in price control, wages and farm commodity prices and then handing the rest of the job over to an individual to be done as and when he thinks, in his judgment, as the statute says, it should be done.

That is expert government from which our fathers and their fathers fought to find relief; to get away from law developed by experts who thought they could go up on the mountain or into a vacuum and think for the people and to get down to a law where the people's daily lives were evolved and followed through their contact with their representatives until what they wanted became the law.

There is no use gearing our machinery, gearing our energies and our enthusiasms, in a great fight for democracies in the rest of the world if we are going to risk the danger of losing its essentials here at home. What are its essentials? Its essentials are representative Government and the protection by written constitutions of the fundamentals of individual freedom in such manner as speech, religion, the press, of assembly and petition, and I add, in such matters as the pursuit of happiness, including the happiness that comes to human beings through their right to acquire, use and dispose of private property.

We can not preserve those essentials unless we avoid two things that are emphasized by this pending price bill. One is the delegation of the fixing of public policy to experts as distinguished from the representatives of the people responsible.

The other is the preservation of private property and especially against the consequences of unsound currency andfiscal policy. If we are to drift along in this country to an unsound currency and an unsound fiscal policy to finance this war then we shall have lost it without the issues on the battlefield. We have all been told what is sound financing of this war. It is through reasonable and well and fairly placed taxation and through the sale of the government bonds to the people and the savings institutions of the people. We have been told by our own fiscal leaders that it is unsound and unsafe financing of this war to sell those bonds to the commercial banks. We are not preaching this now. Government circles, representatives of the Treasury and of the Finance Committees of both Houses of Congress have told us that it is inflationary financing of the war to sell the government bonds to the commercial banks. Most of you know why. Because they do not use existing funds to pay for those bonds.

Under the banking laws, which I have not time to go into now, but in which you ought to have and take an interest, they can create the funds to pay for those bonds, thereby greatly increasing bank deposits and the number of dollars circulating in the country. And you know that if you tremendously increase the number of dollars each one of them is worth less and buys less.

Why do I harp on this? The general principle is accepted and broadcast that the sound financing of the war calls for the sale of the government bonds to the people themselves and to their savings institutions.

At the last offering of government bonds, one financial institution administering the savings of the people subscribed for 200 million dollars of the 1,500 million dollars offered by the Treasury. There were awarded to that institution 26 million dollars. Why? Because the commercial banks got a very large percentage of the whole offering.

There is action inconsistent with sound formula. I simply want to emphasize tonight that the time must come very soon when sound theory and sound pronouncement will be followed by sound action. And if that is to be so, perhaps the greatest contribution that you and I can make would be not to undertake to be critical of what our harassed leaders are trying to do, because I join with Judge Dewey in denying that I have any such purpose in mind; I am willing to give everything I have, including life itself, in support of the action which our leaders shall decide to take. But until that time I conceive it my duty, as he conceives it his, to help as much as possible to guide our public leaders into doing that which is sound rather than that which is unsound.

Fortunately for us, the opportunity to be constructively critical and helpful exists under our form of government without the danger of doing harm. Those Congressmen who are our representatives have the power. They are the liaison between the people and the executives who carry out the policies of the people. To the extent that we believe that present policy is unsound, let us communicate our helpful, constructive suggestions to our Congressmen and not simply broadcast them wildly and dangerously. And then, since the Congress, and Congress alone has the power to coordinate this federal government of ours into an efficient instrument for the conduct of this war,—since the Congress and Congress alone has that power, if we fail, it will be the fault of Congress; and that Congress is capable of faults in its present personnel is indicated by the delay, the haggling and the unsatisfactory product which we find in this price control bill now pending.

Fortunately for us again, what I am saying is not mere theory—the Congress comes up for election in the fall of this year.