Constructive Reconversion


By ROBERT A. TAFT, Senator from Ohio

Delivered in the Senate of the United States, Washington, D. C., August 10, 1944

Vital Speeches of the Day, Vol. X, pp. 698-704.

MR. PRESIDENT, the question of post-war conversion was first dealt with by the Baruch committee report. That report was made on February 15, 1944. It received very general commendation from all the newspapers in the United States. It was generally accepted as a program for post-war conversion. So far as I can see, the Kilgore bill has practically neglected the Baruch report and thrown it to one side. It proposes an entirely different program. Why the Baruch report was not sooner written into legislation I do not know. At this point in my remarks I ask unanimous consent to have printed in the Record the summary index oi recommendations A, B, and C of the Baruch report because I think that report shows the basis for our whole reconversion legislation, particularly as embodied in the George bill.

Part III. Summary Index of Recommendations

A. Human Side of Demobilization

1. That the Government forces dealing with the human problems of demobilization be unified on two fronts—the executive and Congress.

2. On the executive side, creation in the Office of War Mobilization of the new post of Work Director to "see that the human side of demobilization is not forgotten."

3. This Work Director to be a man of such outstanding calibre as "to command the immediate confidence of the country."

4. This Work Director to work with Congress in the development of a combined program of legislation and operations "to carry out the objectives that all of us share."

5. Among the fields to be covered by this Work Director—personal demobilization of the armed forces, developing adequate machinery for job placement of veterans and demobilized war workers, adequate care for returning veterans, physical and occupational therapy for wounded and disabled, resumption of education interrupted by war, vocational training, the special employment problems of the great war industries and others.

6. That there be in each community only one place to which returning servicemen and servicewomen need to go to learn all their rights and how to get them.


1. To assure quick cash pending settlement, a complete financial kit is assembled, including:

(a) Immediate payment—the full 100 percent—for all completed articles.

(b) On the uncompleted portion of the contract, immediate payment—the full 100 percent—of the Government's estimate of factual items, where proof ordinarily is simple, such as direct labor or materials, and of other items on which the Government is able to satisfy itself, up to 90 percent of the contractor's total estimated costs.

(c) Immediate payment—the full 100 percent—of settlements with subcontractors as soon as approved.

(d) Payment by the Government of interest on termination claims until settled.

(e) As insurance against delays in validating claims, a new simplified system of T (termination) loans by local banks, with Government guaranties, to be available to all war contractors, primes and subs.

(f) For those unable to obtain such loans from their local banks in 30 days, the Government to make the loans directly.

(g) Until the new T loans are authorized by Congress, extension of V and VT loans to all eligible borrowers.

(h) Finally, for hardship cases, unable to use any of the tools outlined above, expedited settlements.

2. Quick, fair, and final settlement through negotiation by contractors and procurement agencies.

3. As a more effective safeguard of the public interest than the kind of review suggested by the Comptroller General:

(a) Review powers of Comptroller General limited to fraud with every administrative aid for detecting fraud.

(b) That all sizable settlements be made by teams of negotiators.

(c) These teams to file written reports and keep full records of the bases of settlement.

(d) Contractors to keep records for 3 years.

(e) That the Comptroller General and the Attorney General be added to the Joint Contract Termination Board.

(f) Further administrative safeguards now under study.

4. Establishment on an operating basis of a Joint Contract Termination Board within the Office of War Mobilization, to unify procedures and policies of all agencies:

(a) The Board chairman to be a civilian, independent of any of the procurement agencies, answerable to the Director of War Mobilization.

(b) This chairman to require progress reports from all agencies and to report regularly to Congress.

(c) Also to maintain a running survey of the extent to which V and VT loans and the new T loans are taken out.

(d) To keep a constant eye on all aspects of contract settlement recommending any changes that become necessary.

(e) The War Production Board be added to the Joint Contract Board.

5. Spread acceptance by war contractors of the Uniform Termination Article for fixed-price contracts.

6. Speed the handling of subcontractor claims:

(a) The procurement agencies to be authorized by legislation to protect subcontractors in event of insolvency or default of their customers.

(b) A standard termination article for subcontractors to be completed soon to supplement the uniform termination article for prime contractors.

(c) A minimum figure to be set by the Director of War Mobilization below which nuisance-sized claims can be immediately validated with suitable safeguards.

(d) Vigorous experiment with the so-called company-sized type of settlement, seeking a workable plan.

7. Schools to be set up around the country for training Government negotiators and contractor representatives in the same classrooms.

8. Prompt clearance of Government property from private plants not later than 60 days after the filing of inventory lists, the manufacturers having the right to remove and store the property earlier at their own risks. 9. This entire termination program to be put into effect y the agencies at once to the extent administratively possible. 10. Prompt enactment of legislation to make this program fully effective, including appropriate authority to permit company-wide settlements, to the extent found practicable.


1. The Director of War Mobilization to name a Surplus Property Administrator in the Office of War Mobilization with full authority for handling every aspect of surplus disposal.

2. A Surplus Property Policy Board, the Administrator as chairman with full and final authority, and with these agencies represented: War, Navy, Treasury, Reconstruction Finance Corporation, Maritime Commission, War Production Board, Bureau of the Budget, the Food Administrator, the Attorney General, Federal Works Agency, State Department, and Foreign Economic Administration.

3. Four major outlets to handle actual disposal, each in a clearly defined field, with no over-lappings:

(a) Consumer goods to the Treasury Procurement Division.

(b) Capital and producer goods, all types of industrial property, to a single corporation within the Reconstruction Finance Corporation, consolidating present R. F. C. subsidiaries.

(c) Ships and maritime property to the Maritime Commission.

(d) Food to the Food Administrator.

4. All of these agencies, as well as any other agencies called upon to handle special disposal problems, to follow policies laid down by the Administrator in consultation with the Policy Board.

5. The Surplus Administrator to report to Congress as soon as possible on legislation needed, basing his recommendations on actual experience with the problem.

6. Our own suggestions as to the broad policies that the Surplus Administrator may wish to follow are summed up in 10 basic principles:

"1. Sell as much as he can as early as he can without unduly disrupting normal trade.

"2. Listen to pressure groups, but act in the national interest.

"3 No sales, no rentals to speculators, none to promoters.

"4. Get fair market prices for the values with proceeds of all sales going to reduce the national debt.

"5 Sell as in a goldfish bowl, with records always open to public inspection.

"6. As far as practicable, use the same regular channels of trade that private business would in disposing of the particular properties.

"7. No Government operation of surplus war plants in competition with private industry.

"8. No monopoly; equal access to surpluses for all businesses; preference to local ownership, but no subsidizing of one part of the country against another.

"9. Scrap what must be scrapped, but no deliberate destruction of useful property.

"10. Before selling surplus equipment abroad, assure America's own productive efficiency on which our high wages and high living standards rest."

7. The Surplus Administrator to be a man of proven} executive capacity, business sagacity, unquestioned integrity, and great courage to fight off the selfish interests who will be seeking to exploit these surpluses.

8. The facts on all sales to be open to public inspection, with regular reports from each disposal agency to Congress,

9. All of the disposal agencies to make effective use of industry advisory committees.

10: The disposal agencies to lease as well as sell, to exchange properties, to sell on credit—but leasing must not become a hidden device for Government ownership of subsidies.

11. The Army and the Navy to examine their inventories of the most critical civilian items to see what can be safely released during the war for the civilian economy without hurting the war.

12. Surplus Administrator to study how to centralize the handling of real property, also, to explore the possibilities of beginning to liquidate Government holdings.

13. The closest cooperation between the War Production Board and the Surplus Administrator so that controls do not necessarily hinder disposition by unduly limiting potential buyers, particularly in assuring prompt disposal of small quantities of surplus materials.

14. The Surplus Administrator and the disposal agencies to have available to them in carrying out their policies the entire field force of all the various agencies, including the services.

Mr. President, the summary includes three parts. The first is the human side of demobilization, under recommendation A. That part relates to the Work Director. It proposes none of the vast powers for the Work Director contained in the Murray-Kilgore bill.

Recommendation B relates to the settlement of terminated war contracts. That subject was dealt with in a bill which Congress has already passed.

Recommendation C deals with surplus property. That subject is dealt with in a bill introduced today by the Senator from Tennessee [Mr. Stewart]. I hope that bill may be reported in some form by the Military Affairs Subcommittee before Monday of next week.

Those are the three things which the Baruch report recommended, and those are the things which we are now considering. The current discussion of the pending bill should therefore deal with the subject of the human side of demobilization, as covered by the Baruch report.

The second function of this bill is to set up an over-all agency, headed by a Director of War Mobilization and Reconversion. It is proposed to continue the Office of War Mobilization, which is an over-all agency for war purposes, as an over-all peace agency over the other three agencies. Therefore, the questions which we have before us deal, first, With the general over-all agency, laying down certain principles of legislation, and, second, creating a Work Director to have some general supervision over the problem of the human side of demobilization.

The Vast Powers of the Murray-Kilgore Bill

I wish to discus the amendment offered by the Senator from Montana [Mr. Murray] and the Senator from West Virginia [Mr. Kilgore].

In the first place, the first paragraph, title I, section 101, would set up an over-all Director. The powers proposed to be given are rather comprehensive. The George amendment is substantially the same, except that it makes somewhat more clear the fact that no additional powers are intended to be conferred. The language of the George amendment is as follows:

Nothing contained in this section shall be construed as authorizing any activities which are not within the scope of the powers possessed by the President or the executive agencies under existing law or future acts of the Congress.

So it is intended merely to give the over-all Director power to coordinate the programs of other agencies.

But the Murray-Kilgore bill gives much more extensive bureaucratic powers to the Director than does the George bill. It provides first that he shall—evaluate and report on current and projected public and private activities affecting war mobilization and peacetime full production and employment; survey continuously the necessity for such additional programs of legislation as will achieve the objects of this act; promote and assist in the development of war mobilization and post-war adjustment plans and surveys by other Government agencies, such surveys shall include (without being limited thereto) programs and measures for public works, housing, taxation, industrial and regional development, expansion of foreign trade, social security, and the maintenance of competitive enterprise. I In other words, that would give him full power, as I see it, to set up a new National Resources Planning Board, such as the one which was abolished by Congress last year. In fact, I have no doubt that if that provision were enacted into law, the same individuals who were operating the National Resources Planning Board, most of whom are now scattered among other agencies, would be again placed on a National Resources Planning Board.

The bill also provides for an assistant director, who is not provided for in the George bill. He is called a deputy director. He would receive a salary of $10,000 a year.

It shall be the function of the Deputy Director and the Division of Programs and Projects to assist the Director in discharging his responsibilities under subsection (c) of this section.

(c) In addition to any authority which the President may delegate to him, the Director shall, subject to the direction of the President and with the assistance of the Deputy Director—

And so forth. In other words, as I see it, we would have a Knudsen-Hillman concept again. It is proposed to set up a board with two individuals at the top, the second of whom must always be consulted. I do not know whether this bill was in any way inspired by Mr. Hillman, but I cannot help thinking that the position which is proposed to be created is one which is designed for a man with the labor views of Mr. Hillman.

The bill proceeds and confers rather broader powers than are given in the George bill. The Director is given power to direct a Government agency to rescind, modify, or amend any regulation or order.

Then there is created something called a National Production-Employment Board, consisting of three representatives of industry, three representatives of labor, three representatives of agriculture, and one public member who shall be the chairman—a kind of special-interest bill.

In the George bill provision is made for the creation of a committee; but the committee provided for in the George bill is merely advisory to the Administrator. Apparently theKilgore bill considers that the Board shall have certain powers of its own, for it provides—

(b) It shall be the general function of the Board to review the programs and activities of the Director and other Government agencies with respect to war mobilization and post-war adjustment and make to the President, the Congress, and the Director such recommendations relating to legislation, policies, and procedures as it may deem necessary to achieve the objectives of this act.

In other words, the Board will review everything the Director does, and will rush to the President whenever the Director does anything they think is not suitable or is not in accord with what they think should be done.

In addition to that, on page 8, in subsection (e), it is provided that—

The Director, with the advice and consent of the Board, shall—

(1) establish industry advisory councils for the various industries, and area advisory councils for various geographic areas, which are substantially and directly affected by the policies, programs, and operations of Government agencies performing functions subject to the jurisdiction of the Office.

These industry committees are to be something like the former N. R. A. committees. They are going to decide how much production should be allowed. The whole thing contemplates, as I see it, a full control of production for some 2 or 3 years after the war, and these committees are to be the means of carrying it out. These industry committees are made up of industrial members and labor members or made up of all labor members, so far as the bill provides, for the Director may appoint anyone he wishes to serve on these industry and area advisory committees. It is recognized that this may threaten a kind of monopoly control in violation of the anti-trust laws, because down at the bottom of the page it is provided—

That full information on all such councils shall be submitted to the Attorney General and no such councils shall continue any operations or activities which the Attorney General finds and certifies to the Director tend to promote the restraint of trade or the extension of monopoly.

It is pointed out by Mr. Arthur Krock that if the Attorney General approves of an N. R. A., he can merely withhold any opinion, and then the committees can go ahead with any plans they choose to formulate, or any industry codes.

It seems to me that the whole tone of the Kilgore bill in title I indicates a completely integrated control of industry, labor, and everyone else for a period of 3 years after the war, whereas all that the Baruch report recommends and all that the George bill does is to create an over-all Director who shall have general power to coordinate the plans of the various agencies of the Government under the powers which have already been conferred upon the Government.

In a provision of section 201 (b) the War Production Board is given extensive power. The bill now steps outside the Director of War Mobilization and Adjustment and goes to the War Production Board. The bill provides that it shall permit the expansion of plans and shall have the right to tell the War Department it must permit civilian production to resume. Conceivably, we might give that power to the over-all Director of Mobilization such as Mr. Byrnes; but certainly I do not think Congress wishes to bestow upon the War Production Board the right to say that a certain industry shall now begin to operate, even though the War Department thinks its operation will interfere with the successful prosecution of the war.

When we reach page 11 we find that the Murray-Kilgore bill begins to interfere with the whole operation of the termination-of-contracts bill. For instance, on page 12, in paragraph (2), the Director is authorized to—

(2) Establish policies and procedures to be followed by the contracting agencies in the curtailment, nonrenewal, and termination of contracts, to include as he may deem necessary the submission of detailed programs for approval.

So that having passed the contract-termination bill and having worked it out with the House at great length, the Senate is now asked to give someone else the power to change the whole thing; and by subsection (d), on page 13, we would even repeal a part of the contract-termination bill. Of course the George bill does none of that.

I do not intend to deal with the whole question of unemployment compensation, but we come to the question of the Work Administrator and the powers which are given to him. He is under a general director, but he is given these extensive powers:

The Work Administrator shall prescribe regulations and issue directives to Federal agencies necessary to effectuate the objectives of this title and all such Federal agncies shall be governed by these.

He is given powers to prescribe regulations to effectuate the objectives of the title. Every court of which I know would consider that to be a delegation of legislative power to make regulations having the effect of law.

Mr. President, what are the objectives of that title? The first objective is—

(a) To facilitate the most effective mobilization and maximum utilization of the Nation's manpower in the prosecution of the war.

In other words, by regulations to effectuate "the objectives of this title," the Work Administrator can clearly prescribe a national service act. He may do anything "to facilitate the most effective mobilization and maximum utilization of the Nation's manpower in the prosecution of the war." The War Manpower Commission is doing something along that line without much authority but once this bill is enacted into law, the Work Administrator may issue any order he pleases regarding the impressment of men into work, requiring them to work, drafting them for any work he sees fit.

The second objective is—

(b) To maintain maximum employment in the transition from war to peacetime production.

Under that it appears to me that the Work Administrator could prescribe regulations for a complete P. W. A. and could establish a P. W. A.

We have talked about abolishing bureaus. The Work Administrator could establish more bureaus, under the Murray-Kilgore bill, than the Senator from Virginia [Mr. Byrd] could abolish in the course of 3 years of the hardest kind of work.

The third objective is—

(c) To provide for the coordination of the demobilization of servicemen with employment opportunities under a policy of demobilizing servicemen as rapidly as the military situation permits.

The Work Administrator could issue regulations binding the Army and Navy as to exactly how they should proceed to demobilize servicemen.

The fourth objective is—

(d) To provide necessary training of ex-servicemen and war workers.

Under that objective the Work Administrator could certainly set up a new and bigger N. Y. A., and could proceed

to set up a general Federal plan of training—an N. Y. A., or a C. C. C, or any other bureau he might see fit to set up. The fifth objective, finally, is—

(e) To provide the necessary economic assistance to returning ex-servicemen and war workers in connection with transfer, training, and reemployment.

In other words, he may authorize any spending he sees fit to authorize and may set up any bureau to engage in such spending.

The only restraint which I can see on the Work Administrator is that if he wishes to spend some money, of course he has to come back to the Congress to get the appropriations in order to have the money to spend. But we have seen how effective that restraint is in trying to check the establishment of bureaus. Bureau after bureau has been set up in the Government during the war without any authority from Congress. I do not know how they financed themselves for the time being, but finally they have come to Congress and Congress has had to give them the financing necessary to enable them to continue.

Of course, Mr. President, the Murray-Kilgore bill goes further than unemployment compensation. It provides for transportation; namely—

The Work Administrator is hereby authorized to pay the cost of transportation of workers and ex-servicemen, including transportation of dependents and household effects from their last previous residence to new jobs, in accordance with such regulations as may be prescribed by the Work Administrator.

That seems to me to give the Work Administrator power for the next 3 years to move people all over the United States at Government expense. Whenever a man wanted a new job, or the Administrator thinks there ought to be more workmen in one place, and fewer in another, any workman could be moved back and forth across the country.

Under the George bill he would be permitted merely to obtain the money in order to return home. If he did not wish to go home he could indicate one other place to which he wished to go. As I read the George bill, there would be only one payment to those who are away from home and are offered transportation to their homes. In my opinion, there may be cases in which a number of persons will be stranded at a plant in the country, or at some place in the desert, and there should be authority by which relief could be granted in that kind of a situation and the persons who are stranded in those places brought back to the places from which they came. But under the Kilgore bill there would be an indefinite power granted for the next 3 years to move people all over the United States at Government expense.

Under paragraph (b) of section 306 there is the following language:

The United States Employment Service shall be continued as a nationally operated system of public employment offices for a period of 2 years after the termination of hostilities as proclaimed by the President or by concurrent resolution of the Congress.

That means that the U. S. E. S. is to be continued for at least 3 years more. The Congress is asked to tie its hands as to any further disposition. I see no reason why any provision of that kind should be made at the present time. The United States Employment Service is now proceeding under war powers. It will continue until the termination of hostilities, and then there should be worked out a joint State-Federal employment system so that the matter of employment can be turned back to the States, to be operated in connection with the unemployment-compensation bureaus of the various States. That is what every State wants. The States turned over those powers only because the President demanded it following Pearl Harbor. He insisted upon the transfer being made, and nearly every Governor stipulated that the powers should be returned to the States just as soon as the war came to an end.

The next provision dealing with vocational training has been somewhat changed by the amendment which has been offered. So far as I can see, however, it is not substantially different. It still provides for 6 months of training, Government compensation at the rate of $50 a month for a man without dependents, $75 a month if he has one dependent, and $100 a month if he has two or more dependents. Those rates apply while he is engaged in receiving 6 months of vocational training.

No Parallel Between Civilians and Veterans

Of course, we supply educational facilities to soldiers. But I am unable to see the parallel between soldiers and workmen who have already been engaged in war work, and who presumably have learned the general character of the work in which they have been engaged. They have learned and are familiar with a trade. I feel confident that in nearly every case those men are prepared to look after their own training, or to go to the State training institutions which have been established and are supported partly by Federal funds. Some time ago, last year, as I recall, Congress passed a retraining and rehabilitation bill. The bill provided that the Federal Government should give assistance to State systems. Such a provision is entirely adequate.

The attempt to draw a parallel between ex-servicemen and workmen is entirely wrong. Ex-servicemen are serving in the war for as little as $50 a month. During the same time nearly all civilian workers have been receiving wages which are much higher than were ever before paid in the United States. We have sold more than $25,000,000,000 worth of E bonds. That amount constitutes a reserve with which to take care of needy people. In addition to that, the currency of the United States has increased from $6,000,000,000 to $22,000,000,000, which must represent a very considerable amount of savings in cash.

Mr. Millikin. Mr. President, will the Senator yield?

Mr. Taft. I yield.

Mr. Millikin. May I remind the distinguished Senator from Ohio that as of last April there was approximately $107,000,000,000 in our banks, representing $10,000,000,000 of Government funds, plus about $62,000,000,000 of demand deposits, and $34,000,000,000 plus of savings deposits.

Mr. Taft. That should be added in part to the currency and to the E bonds to which I have referred in estimating civilian savings. The Army and Navy put on a drive for the sale of E bonds, and they have received excellent responses, considering what the soldiers receive in the way of wages, but the actual amount of bonds sold to the soldiers and sailors as of today is about $815,000,000. While the men and women in the service have been able to buy $815,000,000 worth of bonds, the people at home, because of the wages which they have been receiving, have been able to buy approximately $24,500,000,000 worth of E bonds. Certainly no parallel can be drawn between what the Government owes to the servicemen and what it owes to workmen who have been working in war industries at reasonable civilian wages and, in many cases, high wages.

The mustering-out pay, which was provided by the G. I. bill, is proposed to be nearly doubled. It was satisfactory to the soldiers and was worked out in a compromise between the Senate and the House. There seems to be no reason to increase the compensation except that since we are throwing away money to the workmen, it is thought that we must increase the compensation to the soldiers by some parallel Drovision.


I wish to say a word or two with reference to unemployment compensation. I believe that those who have drawn the pending bill have entirely misconceived the real purpose of unemployment-compensation insurance. Unemployment compensation insurance is not supposed to be relief. It is not supposed to meet a great relief crisis. In England and in this country the period during which compensation may be paid is limited to 26 weeks. The payment is in cash. It is intended merely to insure the workman against short periods of unemployment. It has always been contemplated that if it is impossible to get a workman back to work in 6 months, something else must be done. He should not be idle longer.

Nearly every social plan I have ever seen proposes that when the period of 6 months comes to an end provision must then be made for work relief if there still exists a severe unemployment crisis. Some type of work relief should be worked out between the States and the Government, and if there is any such crisis as that to which I have referred we shall have to develop some plan in order to get men to work. But the purpose of unemployment compensation is merely insurance. It is intended to make cash payments as an incident to the work which has already been done and wages already earned. Some part of the men's wages has been put aside by the employer in order to create a fund.

The argument that we should now undertake to deal with the unemployment insurance problem on the theory that there will be a great depression is entirely erroneous. It has been pointed out that any attempt to base unemployment insurance on the number of dependents which the beneficiary may have is not unemployment insurance at all. What is provided here is not unemployment compensation. It goes beyond the purpose of unemployment compensation. The States have provided what unemployment compensation is to be. The compensation may be low in some States, but living costs may be low in some States. When a man is receiving something without working there is always the danger that he may make no effort to obtain work, and many of the States have felt that the compensation should not be more than $15 a week. I believe that the increase in living costs warrant, the compensation being increased to $20 a week in some States, and in other States to $25. But that is a matter for the States to determine.

If we are to provide for relief we must do something entirely different. We cannot do it merely by paying people a dole. If there is to be any such unemployment as has been suggested here, we must provide some great general plan of work relief.

Furthermore, unemployment is a very uncertain term. No one has ever made a very satisfactory census of unemployment. Should every man who wants a job be counted as unemployed? Are we to undertake to provide work for two, three, and possibly four workers in a family even though one man in the family has a very good job? What about the two or three million housewives who have been working in the shops? Strictly speaking, when they return to their homes and give up work they should not be counted as unemployed. I do not know whether they are included in Mr. Altmeyer's figures, but it seems quite obvious that if the wife of a soldier was working while her husband was abroad, and discontinued her employment after he returned home, she should not be counted as unemployed. Yet if she lists her name as willing to take work she will get that benefit for anywhere from 3 to 5 years, because obviously there is not going to be work for those women. There is always going to be a priority for servicemen, anyway. So she can with perfect safety list her name for work and be quite comment she is not going to be required to work. So I say that this bill in its general dishing out of money to everybody goes far beyond any purpose of unemployment compensation.


Mr. President, we face a tremendous Budget after the war. The most conservative estimate of Government expenditures after the war I have seen is $17,000,000,000 a year. I think $20,000,000,000 is much closer to it. There will be $6,000,000,000 for interest alone in all probability; there will be four or five billion dollars for current Government expenses; there will be at least $5,000,000,000 for the Army and Navy on a permanent basis. I discussed the matter last night with a man who is familiar with it who thinks the Army and Navy are planning on a post-war expenditure of from seven to eight billion dollars, instead of $5,000,000,-000. I would hope it could be held to $5,000,000,000. Under the plan we have adopted, we are certainly going to pay at least $2,000,000,000 a year for the veterans for hospitalization alone. The bill for the last war is about $600,-000,000, and I should think that without considering the provisions of the G. I. bill, except as to hospital service, there will be required $2,000,000,000 a year for hospitalization as a permanent feature. Many of the provisions of the G. I. bill are simply temporary, which perhaps we can charge to the cost of the war. So, in my opinion, we are going to have an annual Government expenditure of $20,-000,000,000, and no one, so far as I know, has devised a tax measure that will raise that much money. I do not know how it is going to be raised.

The present tax bill raises about $45,000,000,000 a year on a national income of $150,000,000,000, which cannot possibly be continued. If the national income is reduced to $120,000,000,000, the present tax system might raise something like $25,000,000,000, but certainly everyone agrees that it will be necessary to cut the taxes on individuals; it will be necessary to cut the taxes on corporations if the people are to have opportunity to work at all, if industry is to be stimulated. There are various plans. One proposes to cut corporation taxes and another wants to cut the individual taxes, but if we are going to raise anything like seventeen or twenty billion dollars of revenue, we are bound to have a very heavy tax burden under any circumstances.

I think obviously we must levy taxes that will meet our necessities. It is said that many new things must be done by the Federal Government because the States cannot do them. It is said they cannot do them because they have not the taxing power. Therefore, it has to be done by Federal taxation. But what evidence is there that the Federal Government can raise more than $20,000,000,000 a year in normal peacetimes without choking incentive to death? Who has devised such a system ? What is the basis of the assumption that the Federal Government can find a tax system to give it unlimited money to spend for every single purpose?

I believe very strongly that if we are to be successful at all, we must limit Government expenditures. We cannot go on collecting vast sums of billions of dollars year after year to be paid out by the Government to individuals throughout the United States.

Mr. Downey. May I ask of the distinguished Senator if it is not agreed by economists, both from the conservative and the radical group, as well as by industrialists, that general employment in the United States in the post-war era on a 40-hour week, with the soldiers returned and the womenand other extraordinary workers out of employment, would produce within a year or two $150,000,000,000 national income?

Mr. Taft. No; I do not think that is agreed at all. I do not see how we can possibly tell whether we can employ ail the people who want work or not until we actually try it. I hope we can. Obviously we cannot employ them at present day take-home wages. That is an impossibility on the basis of anybody's figures.

In any event, my point is that we are going to have a tremendous tax burden at best, li we go on in anything like this bill, we are going to wreck the United States there can be no question about that. Either the tax burden will be so heavy that industry cannot operate—and if the present corporation tax structure is maintained there will be no incentive to go into business or to continue in old business—or the business tax burden will be so heavy as gradually to destroy private enterprise and cause the Government to take over, thereby bringing about a form of State socialism.

Or resort will be had to the alternative philosophy, which the proponents of this bill seem to espouse, of borrowing money at a rate of from ten to twenty billion dollars a year and increase the national debt by that amount. That would mean real inflation. We have had a hard enough time to hold prices to present levels because of the Government deficit. People are willing to save and submit to controls in time of war but they will never submit to them in times of peace. If we continue with a deficit of $15,000,000,000 a year—and that is about what it is—we will undoubtedly* force prices up until there is brought about complete inflation, which will wreck our whole economic system. If we are going to go forward we will have to balance the budget. We are going to have a hard enough time to deal with a debt of $300,000,000,000, and if we are going to add to it constantly every year it will not be very long until the whole structure breaks down.

We must consider all the proposed expenditures. That proposed by this bill is only one; there are a dozen other bills proposing expenditures of billions of dollars which, if they are all enacted by the Congress, will build up to something like an annual budget of $50,000,000,000 a year, and if wc start in peacetime with that kind of a budget we will find there is nothing left of this country and the institutions under which we have grown up with and which incidentally have made this country the rich and powerful and successful nation it is.

Murray-Kilgore Bill Violates Every Principle of Sound Government; The George Bill Provides All the Machinery Necessary to Achieve Reconversion and Reemployment

Mr. President, the Murray-Kilgore bill violates every principle of sound government in the post-war era. In the first place, it suppresses local self-government; it places in the Federal Government all control of labor, all control of unemployment compensation, all control of reemployment. In the second place, it delegates complete legislative power. I suppose there is no Senator here who has not said he is in favor of Congress passing the laws and not giving the power to some bureaucrat to do so. Yet it is proposed, by the pending bill, simply to hand over to some bureaucrat the power to make any law and, in effect, do anything he thinks necessary to help in this supposed post-war emergency.

In the third place, it would destroy individual liberty, because it would impose an N. R. A. control over all industry, and impose a work administrator's control over all individuals.

Finally, it proposes unlimited spending. It adopts the theory that every problem we have to meet is to be solved simply by more Government power and more Government spending.

There is no Member of the Senate who has not talked against bureaucracy and the establishment of bureaus, yet here it is proposed that we establish a whole series of new bureaus to deal with every problem which Congress itself has not adequately considered.

The alternative, the George bill, is a simple bill which does no more than provide the implementation of the Baruch plan and the report of the George post-war committee made last spring, which was very much in accord with the Baruch plan. We can solve our problems by sound principles just as well as we can by some kind of Federal panacea of spending. We have an existing system of State unemployment compensation. There has been built up $6,000,000,000 in the unemployment compensation funds to take care of just the emergency that is contemplated. If it is thought the benefits are not adequate, why does not the C. I. O. go to the State legislatures? I have no doubt that the same pressure that is being brought here, if brought on the State legislatures, would produce a $20 weekly wage in any legislature I can think of, because it is recognized that the benefits may have been low, that costs of living have gone up, and that $20 is reasonable.

The George bill provides simple power to the Work Administrator to go over the whole retraining problem and submit further recommendations to the Congress, if it seems that the present system should be expanded. But there is a State system oi vocational education, there is a retraining system already established, supported in part by Federal funds. We do not have to give the Work Administrator power to set up an entirely new system, and the George bill does not do that.

In general, what American workmen want is opportunity to find jobs. They do not want to be ordered around. I do not believe they are interested in more unemployment compensation. Most of them have saved their money. They want to take a little vacation in their own time, and then look for the jobs they want, and they want to do that by themselves. What is proposed by the George bill is that the Federal Government give them the information necessary, and assist them to obtain employment. That is what the American workman has always done, and that is what he will do after the present war.

Finally, the George bill provides no vast plan of Federal spending. Altogether it would add somewhat less than a billion dollars to the total expenditures after the war, and it would not provide for that permanently, because the expenditure will have to be taken up by unemployment compensation taxes. The Federal Government will have to figure hereafter, when it employs people, that it will have to pay some unemployment compensation insurance, so that Federal employees will also have insurance.

Mr. President, in the Murray-Kilgore bill we have a plan which would be absolutely destructive of the entire American economy after the war. As against that we have the George bill which implements the Baruch report and gives the Government power to deal with the situation in an intelligent American way. This plan will, I feel confident, be far more likely to produce prosperity and jobs than a plan which will be advertised as a general Government attempt to continue complete regulation and lavish Government spending for at least 3 years after the termination of the war with Germany.