American Progress After the War


By ROBERT A. TAFT, Senator from Ohio

Delivered before the Fifty-fourth Annual Congress of the Sons of the American Revolution, New York City, May 19, 1943

Vital Speeches of the Day, Vol. IX, pp. 538-541.

COMPATRIOTS, ladies and gentlemen, and fellow citizens of America, we meet tonight shortly after the end of the most successful Allied campaign of the war. The first great step to Allied victory has been taken, and we can now see ahead of us, after greater and more severe campaigns, the goal which we have sought. There is no difference of opinion in Congress or among the people with regard to our goal in the war, and no hesitation about giving to the armed forces the unlimited support and sacrifice which they require. There can be no goal now except the complete and unconditional surrender of Germany, Italy, and Japan. There may be differences as to the best method by which that can be obtained, but in general the decision in military matters must be left to our military and naval leaders.

It is natural, therefore, that the interest of the people hasturned to the much more controversial post-war questionswhich follow an Allied victory. I do not intend to discussthis evening the problems involved in international relationsand trade, so closely related to the maintenance of futurepeace, but to confine myself to the issues which must be facedhere in the United States. We are fighting a war to free theworld from the domination of brute force and permit all peoples to develop their own freedoms. In the course of accomplishing this task we are certainly concerned with retuning freedom in this country, and developing our American way of life along the basic traditional principles established in 1776, which have guided our destiny so well for 150 years. It would be ridiculous to abandon liberty in the United States, just at the moment that we are fighting to establish it throughout the world. In the long run the successful working out of our own problems may well have more effect on the happiness and future of the world than any international arrangements that can be made. It is difficult indeed to impose upon other people, by military force or by treaty, philosophies and forms of government to which they have not been trained. The most effective way to spread in this world the American conception of human freedom is to set an example in the United States so striking and convincing that it will be universally followed throughout the world. We did set the style in democratic forms of government which spread rapidly throughout the entire world during the nineteenth century.

I am going to say a good deal this evening against the plans of the National Resources Planning Board, but I should like to make it clear that it is their plans I object to and not the process of planning. The time has undoubtedly come to plan, and I am in favor of working out as completely as possible in advance the steps which the Government should take in the United States after the war. The George Post-War Planning Committee has been established by the Senate, and I am a member of that committee and in favor of a thorough job of planning. The danger does not lie in planning. It lies in bad planning and in the attempt to carry out every detail of a planned economy through compulsory bureaucratic orders directing every step of individual life.

In making our plans for a post-war America we undoubtedly desire to go forward to create a more prosperous people with a higher standard of living. So much emphasis has been put on this material side, however, that we are in danger of losing sight of the greatest purposes of life and the greatest causes of true happiness. Before our system can claim success it must not only create a people with a higher standard of living but a people of character—character that must include religious faith, morality, educated intelligence, and an ingrained demand for justice and unselfishness. In our striving for material things and a higher standard of living we must not change those basic principles of government and of personal conduct which create and protect the character of a people. It is the character of the American people which distinguishes it from a Fascist regime, no matter how successful that regime might be in material things.

All of us are concerned today with economics, for we begin to see how our economic affairs can be managed to reduce poverty and the hardship which results from it. But we cannot hope to achieve salvation by worshipping the god of a standard of living. The working out of economic improvement must be within the framework of American principles. Those principles were embodied by our forefathers in the American Constitution and Bill of Rights. They were formulated to protect and develop the independence and the character of the individual; to banish the idea of arbitrary government and State supremacy, represented in those days of hereditary royalty over the individual citizen.

There were three essential principles in the American form of republican government. First, local self-government, resulting from the independence of the States and the fact that there is delegated to the National Government only matters of direct national interest. If we permit the centralization of all governmental power in Washington, it leads directly to bureaucratic control of the daily life of 135,000,000 people, a control in which they have no effective voice and to which objections arc brushed aside as they are today by the Office of Price Administration. If men are to retain independence and self-reliance and character, they must run their own schools and their own cities and their own States.

Second, in order to prevent tyranny the founders divided even the limited powers given the Federal Government between the President, Congress, and the courts, in order that no one might have the domination over the individual which would submerge his life in that of the Government. Today that division is threatened. Administrative boards are established which make their own laws, administer the laws which they make, and then hear the cases which they themselves bring for the violation of their own laws. As a result we have seen, in cases like the National Labor Relations Board and many others, a complete elimination of any sense of justice and fairness. Men are coming to shrug their shoulders with helpless indifference, who should be burning with indignation. If continued, it will undoubtedly destroy that cornerstone of American character, a deeply-ingrained resentment against injustice.

Third and most important is the liberty of the individual insured by the Bill of Rights, the right of the individual to live his own life, to decide the occupation or business or profession he will enter, and to receive a material reward for hard work, for regular work, for training, for ability, for intelligence, and for genius. These were the three great principles which were designed to protect the character and independence of the American people. They have done so,and, besides that, they have made this country the greatest and most powerful Nation in the world today, and the Nation with the highest material standard of living—one Nation indivisible, with liberty and justice for all.

We have all kinds of attractive plans to increase further the material standard of living. Their advocates have no interest in the principles which our fathers established, however successful they may have been. Those principles are swept aside by the social reformer, sometimes deliberately, sometimes in his zeal to destroy hardship overnight. My own belief is that most of the ends sought can be accomplished perhaps more gradually within the framework of American Government. After the war the economic life of the country will have to be reconstituted. The kind of program we adopt may determine the course of the American people for a hundred years and forever. It is vital that we go forward with our effort for constant progress and improvement, but with those safeguards of character and independence which alone can maintain the real happiness of a people.

I have been reading the reports of the National Resources Planning Board. Those reports contain, I assume, the New Deal platform for post-war reconstruction. I wish that every American could read those reports and analyze them instead of absorbing merely a pleasing picture of Utopia from the headlines in the press. The keynote of those reports is unlimited Government spending. A new philosophy of finance is advanced—that the Government debt can be and should be indefinitely increased. Every problem is to be met by additional Government spending. The difficulty with the deficit policy of the thirties, they say, is that the deficits were not big enough. The reports are ecstatic regarding the effect of the war spending in producing full employment. Referring to this war spending, the 1941 report says, "Given our resources, equipment, techniques, and skills, only that decision—only that courageous implementation of the will-to-do—was required, to release the log-jam of idle plants and idle men." Not a word is said of the fact that the courageous implementation of the will-to-do had the backing of a sixteen-billion-dollar deficit in a single year. In the pamphlet After Defense—What? the Board says, "When we organize for maximum production on the basis of full employment, without being stopped by the costs, we discover, as have other nations, that increased production pays the real costs involved. Doing the job pays the bill." Perhaps they did not notice that doing the job in 1942 did not pay the bill, but left behind an increased debt of $60,000,000,000. Mr. Alvin H. Hansen, who directs the Board's thinking on this extraordinary theory, says "An internal debt is in fact so different from what we commonly think of as debt that it should scarcely be called a debt at all." Prof. Seymour E. Harris, of Harvard, now on leave with the Office of Price Administration, suggests a public debt of $4,000,000,000,000 as entirely possible. All this sounds like nonsense, but it is the basis of the plans of the National Resources Planning Board for making over America.

If deficits are a blessing in disguise, of course there are thousands of pleasing ways in which to create those deficits. The Board is preparing a vast program of public works. It proposes to subsidize every State and city and county and school. Tennessee Valley Authorities are to spring up in every valley. Every city is to be torn down and rebuilt from the bottom up. With regard to social-welfare measures and health and education and medical care, and the sky is the limit.

The Board gives lip service to private enterprise, but the measures which they propose would bring it to an untimelyend. The Government, according to the report for 1943, is to provide technical engineering assistance in the conversion of war plants. The Government is to provide credit for the same purpose, and of course guide the conversion along the lines which the Brain Trusters think desirable. The Government is to train workers for the converted plants. The Government is to decide where plants should be located in order that there may not be cross hauling of materials and manufactured goods. One locality is to be favored at the expense of another. The railroads are apparently to be taken over by a national transport agency, which shall also control the bus lines, air transport, and pipe lines. The whole effect of the report on transportation is Government ownership. Electric power also is to be operated by the Government, or by corporations with mixed private and public funds. It is suggested also that these mixed corporations be extended to manufacture aluminum, magnesium, synthetic rubber, chemicals, shipbuilding, and aircraft. I think I need hardly point out that once a government enters an industry the day of private enterprise in that industry is drawing to a close.

This program of the National Resources Planning Board is plausibly presented, and it has a global charm; but it leads directly to the abolition of local self-government, to the control of all industry by administrative boards having executive, legislative, and judicial powers, and to a 50-percent Socialist economy. It leaves nothing to the initiative or the ability of the average independent American.

What should be our post-war program? In my opinion, the first essential is sound finance. We will come out of this war with a public debt approaching $300,000,000,000. It is not impossible to pay the interest on that debt if we maintain a reasonable prosperity in this country and do not constantly increase that debt. Any policy of constant debt increase would lead to the ruin of our entire system and the destruction of all the values that constitute the past savings of the people of the United States. Why do we have inflation today? Simply because we have been forced by the war into a deficit policy. The same policy in peacetime, when we certainly cannot successfully impose the arbitrary controls on prices and wages we are now attempting, would soon depreciate our money as it was depreciated in Germany. All savings would be destroyed. All life insurance values would be destroyed. All incentive to any man to begin again the accumulation of property and capital would vanish. True, we have created full employment today, but we have not raised our standard of living, because more than half the products of our work are necessarily wasted in war.

The Hansen theory is attractive to politicians. They can spend all the money they wish on favorite projects without levying any taxes to pay for them. It is tempting and demoralizing to the people. It looks forward not only to the rain of the country but to the destruction of the character of the individual. We can't begin to make any plan until we crush the fallacy of unlimited public deficits. In the long run we must work for what we receive. We cannot get something for nothing. We cannot have capital to insure adequate production in the future unless we are economical and save in the present.

The spending theory is advanced as a cure for unemployment and depression. Certainly it did not cure it in the thirties, for never before have we taken so long to recover from a depression, and 10,000,000 were still unemployed when the defense crisis arose. The depressions before were always solved by giving free enterprise the chance to go ahead, and before 1930 it was only a few years before we returned to fuller employment and higher national income than we had ever had before.

And so our program, first of all, must be to create conditions in which free enterprise can go ahead, large and small industries, and particularly small, and new industry encouraged to start. Most of our industries have grown up from little plants, constructed without Government assistance, and enlarged by initiative and ability. As soon as a reasonable supply of any article is available price restrictions should be removed and all the other restraints of war eliminated. I do not mean that war powers should not be continued for a reasonable time after the armistice, but the men in charge should seek every opportunity to surrender them. The danger is that most Government bureaucrats of today will seek every opportunity to continue their own powers and their own jobs.

The Securities and Exchange Commission should be reorganized to permit freer capital markets, particularly in the smaller cities and the securities of smaller companies. Its purpose should be merely to prevent fraud and misrepresentation in the sale of securities, not to direct the flow of capital in the United States as the Government thinks it should flow.

As far as possible, the loaning activities of the Government should be eliminated, except in cases where it is clearly shown that private capital is unable to do the job. I believe we should consider Government assistance or insurance to institutions engaged in the financing of small industry, such assistance to be given perhaps through insurance of credits, or perhaps an insurance against excessive loss by those who invest in such industry.

The only regulation of industry which is desirable is that necessary to prevent monopoly and unfair competition. I am convinced that can be done by the enforcement of specific laws without sending Government controllers into every store and every plant to regulate profits and to direct operations.

A great deal more is known now with regard to inflation, deflation, and depressions. If wise men administer the fiscal affairs of government under present laws, with such additional prohibitions as may become necessary to prevent abuses of our existing system and unsound inflation, I believe the business cycle with its recurrent depressions can be largely eliminated. With impractical men inspired by unsound fiscal panaceas in charge, no kind of legislation can prevent disaster.

In short, I think we can return to a system of private enterprise, let the businessmen run their businesses and the farmers run their farms without the Government attempting to dictate to every individual businessman or farmer. I do not think it is necessary to proceed with a vast system of public works undertaken by States and municipalities through hand-outs from the Federal Government. Undoubtedly necessary and desirable public works should be undertaken when private activity falls off; but as a cure for major unemployment a public works program is bound to be a washout. It does not give enough employment for the money expended. I question very much whether after the war any large public works program will be immediately necessary, for I am convinced that the backlog of civilian demand will bring on at least a short period of intense activity by private enterprise.

We cannot escape a heavy post-war taxation, but it should be levied in such a way as to encourage saving and the investment in new projects involving risk. Since high rates must continue, I should be inclined to abolish entirely the capital gains tax. The discrimination against holders of common stock should be removed.

My program for free enterprise is one of progress withinthe framework of the American Constitution; limited regulation by law, and not by fiats of boards and czars; opportunity to individuals to make a success of their own lives without Government interference. The people of the United States realize today what bureaucratic regulation means, and how it may destroy their liberty.

In the field of social welfare we must go forward constantly in our effort to improve the condition of the lower-income groups. There is no reason why in this country extreme poverty should not be largely abolished, except for those shiftless and worthless people who will not work when given the opportunity. I have just read the National Resources Planning Board report on security, work and relief policies, a volume of 640 pages. It is extremely discouraging to anyone who wishes a practical program of social welfare. It defends the work of every single agency which the New Deal ever established. Its program is a bigger and better Public Works Administration, a bigger and better Work Projects Administration, another Civilian Conservation Corps and National Youth Administration, and unlimited Federal funds for relief, housing, education, and medical care. It never even inquiries where the money for this vast expenditure is to be found. This is not surprising perhaps when we find that it is written by Dr. Eveline M. Burns, an English socialist, one of the disciples of Mr. Harold Laski.

I believe in the principle of insuring to everyone, unless he refuses to work a minimum standard of living, but it must be held within a reasonable cost, without setting up a vast Federal bureaucracy, without destroying local self-government, and without removing the incentive to work which is the very keystone to adequate production.

We should go forward with an improved plan of old-age pensions. We can extend the principles of unemployment insurance to a much more extensive group of employees, but it should certainly be under State control and not completely nationalized as the board proposes, for we have now a system well able to meet the emergencies which may arise. The State-Federal Employment Service should be restored.

It is my belief that when unemployment does occur in great volume, beyond the ability of the unemployment compensation system to deal with it, there should be a State-Federal plan for direct relief and work relief. I am absolutely opposed to another Federal Work Projects Administration. I believe that the unemployment problem can be best met by each community dealing with its own peculiar circumstances. But because of the great expense and the inability of the States to finance this additional activity, I believe that both direct and work relief should be largely financed by Federal funds, with some State matching. In the State plan could be included a provision for relief to those poverty-stricken farmers who have been furnished rehabilitation by the Farm Security Administration.

I believe also that there should be some extension of Federal aid to health and medical care and hospital service, without the Federal Government bossing the job or socializing medicine. I have always been in favor of a housing program, and I believe that we should make definite plans today for the tremendous volume of housing which will be necessary after the war. As far as possible, it should be done through private enterprise, but in the case of the lower income groups I am convinced that a program of public housing should be continued. The size of the Government subsidy should be reduced, so that the cost will not prevent the construction within a reasonable time of all the public housing which may be required as part of the general plan.

But every social welfare program must recognize twoprinciples, and the National Resources Planning Board recognizes neither. In a broad sense, only those who are working today can support by their labor those who are not working today. Government assistance of any kind to those who are not working, or working inadequately, must come out of the earnings and the standard of living of the workers of the country. The theory advanced by Mr. Yantis, one of the members of the National Resources Planning Board, that leaf-raking itself creates wealth must be recognized as nonsense. Unless we are going to remove all incentive to work, and endanger the whole principle of reward for ability and hard work and education, the burden of the social welfare program cannot go beyond a reasonable expense. Vast expenditures for relief involve either heavy taxation, affecting every worker, or they involve the danger of inflation, which taxes the worker through increased prices. I am in favor of social welfare measures because they are necessary to prevent hardship and injustice. The theory that in some way they stimulate employment, or prime the pump, or benefit the rest of the population, is a dangerous fallacy. Not only does it offend every principle of common sense, but when we tried it in the thirties it only resulted in the continuation of unemployment. We must approach every social-welfare program with the question—Can the rest of the population afford it?

In the second place, if we are going to put a floor under wages a floor under housing, and a floor under medical care for those who are unable to earn an adequate sum to pay for them, we must see that the people who do work, who do save, who do provide their own homes and their own doctors, are better off than the Government beneficiaries. Otherwise we will remove every incentive to work and work harder. We cannot exaggerate the importance of that incentive. On it is based all the progress we have made. The average human being simply does not work any harder than he has to work in order to live, and improve his condition in life, and benefit his family. If we are going to give a man who has never worked a pension of $40 a month when he is 65, then we should give practically the same pension to the man who has worked and saved enough money to build himself a home or provide his family with a small income. If that makes a program of $40 a month too expensive, then perhaps we had better start with a program of $30 a month. If we provide Government housing for a man who is unable to earn $1,000 a year, then we will have to help to some extent the better workman who can earn $1,500 a year and wishes to provide his own home. But we must not destroy the relative position acquired throughout a lifetime of labor by men of greater ability or character or persistence. Otherwise we strike at the foundations of progress and of personal liberty.

In short, a social welfare program must avoid the destruction of local and State responsibility. It must not impose an intolerable and discouraging burden on those who really bring about progress in America. It must continue an adequate reward to the man who without Government assistance fights through his own life, and passes on to his sons and daughters advantages which he himself never enjoyed.

Human progress is bound to be slow. We cannot make this country over in a night. We can only go forward steadily and with determination, trying out new plans, reforming abuses, alleviating hardships, increasing opportunity. But in that progress, if we are not to destroy the character and the independence of our people, we must cleave to that great philosophy of Government, tested in the fires of American experience, which has made all of us proud to be Sons of the American Revolution.