United States. Congress. Senate. Special Committee.

Post-war economic policy and planning. Joint hearings before the special committees on post-war economic policy and planning, Congress of the United States, Seventy-eighth Congress, second session, pursuant to S. Res. 102 and H. Res. 408, resolutions creating special committees on post-war economic (unit 6) online

. (page 31 of 49)
Online LibraryUnited States. Congress. Senate. Special CommitteePost-war economic policy and planning. Joint hearings before the special committees on post-war economic policy and planning, Congress of the United States, Seventy-eighth Congress, second session, pursuant to S. Res. 102 and H. Res. 408, resolutions creating special committees on post-war economic (unit 6) → online text (page 31 of 49)
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tlie framework of this new program. This program, for its success,
depends on putting money in the consumer's envelope and labor musti
be regaided as a consumer and it will not operate unless we look
toward a greater income for every citizen.

Mr. Beardsley Ruml has said the standard of living will have to be
raised 40 percent and other people have said as high as 50 percent if
we make this thing go. We should make it go, that is our business.
We are the kind of people tliat make the impossible go. That is what
the spirit of private enterprise is and when private enterprise apostles
say to me we cannot do this, I say they are not private enterprise
people any more, they have gone over to the other side.

The CuAiRMAisr. We are glad to have this very illuminating disus-
sion here. I just wanted to comment briefly on the fact that we are
glad to know that we have a former craftsman here on the committee
and I judge from his remark, and he need not answer this question,
that bricklaying pays very poorly as compared with being a Member
of Congress and that therefore he is not a very warm advocate of
raising the salary of IMembers of Congress. They are doing pretty
well comparatively.

Mr. FoGARTY. There are a lot of times when I would like to be laying
brick instead of having tliis job I have.

The CiiAiRAiAX. IMeaning thereby you were not on the spot when
you were laying bricks.

Mr. FoGARTY. I was a free man.

Mv. Simpson. I would like to ask a question,

ISIr. Hedges, are the electrical workers employed at the present time
by the REA and if so to what extent ?

Mr. Hp:d(;es. Well, electrical workers are employed by the REA but
our membership in that field is low. We have a top agreement, an
arrangement with the Administration setting up labor standards but
our luck M-ith the cooperatives has been pot luck. We have about 60
contracts out of 800 REA cooperatives. Shall I stop there before I
get into something else? You know what that is.

99579 — 45 — pt. 6 16


Mr. Simpson. Maybe that is going to be changed. I heard in a few
instances it has.

Mr. Hedges. We hoped that it might be changed.

Mr. Simpson. But it would be a very virgin field for your people,
wouldn't it?

Mr. Hedges. That is right and we have tried to make the arrange-
ments so we can live with that kind of economy. It is not the same
kind of economy you have in an industrial set-up at all.

Mr. Simpson. After the war that would he new construction for
your people which would not involve the building of houses — homes —
because the homes are already built and they are using coal-oil

Mr. Hedges. That is right.

Mr. Lynch. May I make one inquiry to clear up the matter?

Mr. Hedges, referring back to the question asked by my colleague,
the gentleman from Arizona, about the possibility of public construc-
tion competing with private construction, experience shows that there
is or has been very little actual competition between the two; isn't
that correct? In the boom period of 1925 there was very little public
construction although private construction increased enormously so
that actually if public officials keep their eye on the barometer of
conditions there is very little likelihood of real competition. Don't
you think that is so ?

Mr. Hedges. There will be little competition. My feeling about it
is that there are zones of activity for various kinds of capital and that
we have not yet, as citizens and economists, seen clearly enough these
zones of activities and the relationship to each other. They are not
competitors ; they supplement each other.

Ml'. Lynch. As I understand it, in the ordinary times we may look
forward to about 70 percent of private construction and possibly 30
percent of public construction ordinarily ; isn't that so ?

Mr. Hedges. Well, I have seen those figures, $10,000,000,000 for
private and $5,000,000,000 for public works. I have seen those figures,
too. I have never made a definite study of that over the years to see
how it works out but I have seen those figures.

Mr. Lynch. I think your idea is the same, perhaps, as ours, that
the purpose of looking forward into the future with respect to public
construction is that public construction should be in the nature of
supplementing private construction so as to keep the building industry
in a stabilized condition.

Mr. Hedges. That is right.

Mr. Lynch. You would agree with that, would you?

Mr. Hedges. That is right.

The Chairman. JSIr. Hedges, I am sure that I speak the sentiments
of this committee when I state the fact that you have made a very in-
telligent contribution to the thinking of this committee in its efforts
to arrive at the proper conclusion of what part public works shall
play in the postwar period. I like your frankness and your broad-
minded approach to these problems. I wish all of our labor leaders and
industrialists were as frank.

I was just a bit concerned about your figure though for the post-
war economy, the national income. I believe you have gone a little
more optimistic than any witness we have hacl when you talk about
$160,000,000,000 or $175,000,000,000 economy.


Mr. Hedges. Mr. Chairman, could I make this observation? I lag-
behind Henry Kaiser, he says $200,000,000,000.

The Chairman. If I may make a comment on that, sir, by way of
digression, I am sure if Henry Kaiser continued to have the Public
Treasury behind him he could make it $300,000,000,000. But I am
talking about a private economy, the economy we have been accustomed
to. I do not see how we are going to go on spending public funds.

Now, I agree with what has been said, I agree with what you said,
sir, to the effect that private employment should be given the first
opportunity. That should be accentuated. The emphasis should be
placed upon private employment. But in the final analysis you know
and I know, we all know, that if private employment does not provide
its full share, then we are going to have public employment or public
works to some degree. But, we just raised the national debt to $300,-
000,000,000 the other day. The chances are we are going to raise it
again before we get through with this war. Now, there is bound to
be a limit beyond- which we cannot go insofar as that is concerned.
What was the highest national income we had prior to this artificial
situation ?

T^Ir. Hedges. About $70,000,000,000.

The Chairman. Do you think it is plausible, feasible, to expect
more than a doubling of that after the war ?

Mr. Hedges. I think it is not only possible, it will be necessary. You
will never get rid of your national debt unless you increase your
production to that figure. The only hope of our paying our debt off
is the kind of income I described.

The Chairman. I agree with you in principle as to that. Wliile I
think you have our objectives high, I do not think we ought to kid
ourselves to the point of becoming unrealistic. Frankly, I do not
believe that we can reach that peak in a postwar economy. I hope
1 am in error ; I hope you are correct. My own thought is if we could
get up to $125,000,000,000 or $140,000,000,000 we are going to be doing
pretty well.

I am just wondering now, agreeing with you, if you are going to
get rid of that national debt, retire it, it will take you 100 vears on the
basis of $3,000,000,000 a year, assuming we held it to $300,000,000,000.

What do you base your hopes on for that other, a desire or what you
think is necessary ?

Mr. HJEDGES. The accomplishment during the war period. It is not
a theory any more, it is a fact.

The Chairman. Isn't there a difference? Isn't there a difference,
Mr. Hedges, between a Government-financed economy under the lash
of war necessity and the ordinary peacetime economy?

Mr. Hedges. It appears to be, but it seems to me our opportunity is
what might be called a historical opportunity. AVe have a world trade
opportunity that we never had before. We have got the capital.

The Chairman. May I interrupt you right there ? We have a world
trade opportunity we never had. Meaning again that there is a
demand ?

Mr. Hedges. That is right.

The Chairman. What about the ability to pay for it?

Mr. Hedges. Well, that will be part of our job, to devise the system
by which they can both pay and trade with us.

The Chairman. I am just thinking out loud.


Mr. Hedges. I am, too, this is outside of the particular subject, it
touches on the larger view.

The Chairman. Do you think, for instance, we should follow the
precedent set after the last war and loan those people money with
which to purchase our goods, our products?

Mr. Hedges. I certainly would say at once we should not loan any
Fascist country money. The loan should be to a democratic country
and if we can find it pays us to make that kind of loan, that should be
the guide, not the theory.

The Chairman. I think you will find we will loan to the Fascist
country if we think it could pay us back.
Mr. Hedges. It did not pay us to loan money to Germany in 1918.
The Chairman. For that matter we loaned it to our present allies
and we did not get it back.

^yiiat I am trying to get at is. Would that be sound economy for
us to loan money to these countries with which to buy our products
without some reasonable assurance we were going tc^get it back?

Mr. Hedges. I think if it were and you were to put it on a dollar-and-
cents method, we should do it but we should perhaps devise other
systems, maybe a system of barter will be set up, I do not know. I am
not an expert in export trade but my plea here today is, here is an op-
portunity and let us not be tied down by our own ideologies. Let us
be free now, let us be engineers and not ideologists and do the job that
the opportunity lies before us to do.

The Chairman. But at the same time let us be realists alono' with
it. ^

Mr. Hedges. That is what I am saying, not ideologists, realists then.
The Chairman. Well, now, let us go to something else.
You made some reference to CED, the Committee for Economic
Development. Did I get the proper inference from your statement
that you thought that committee of businessmen is doing a splendid

Mr. Hedges. I have spoken for them ; surely I do. I was up in New
York 3 weeks ago with a group of their research people. We did not
have a great deal of difference of opinion. I would not underwrite
everything they did, but I certainly think they have played a great
part in this era and have a great many communities ready for this
change we need to make.

The Chairman. I am glad to hear you say it, sir. I think they are
making a substantial contribution.
Mr. Hedges. That is right.

The Chairman. You spoke of this committee helping with that job.
Of course, that is what we are trying to do. But I wanted to be a
little more specific. If we are going to expect private enterprise to
take up this job and do get anything like the national income we have
been discussing; I take it you have in mind there must be some incen-
tives to private enterprise to encourage them to go on. Do you have
anything particular in mind about that, sir?
Mr. Hedges. No ; I had not ; not concretely.

The Chairman. Would you care to say anything about the question
of taxation ? We hear a great deal about the necessity for reducing
taxes in the postwar era in order to stimulate private" enterprise, to


make the venture attractive. Do you have anything to say about

Mr. Hedges. Well, I could make some comments. I think incentive
taxation is going to be used in this era, but the mere fact that you
lower taxes might not produce better business at all.

Now, this whole program depends on keeping money moving. Sav-
ings, that is collective savings, is a menace in this kind of a program.
A man who has a million dollars and wnll not use it is a menace to this
kind of society. If you can use your taxation system to get the man
to use his money for the economic good, that is the only reason he
should have it, his use of it, that would be something else. That is
the kind of tax system I think you will have to have in this program.

The Chair3han. But also would you not agree that the man who is
the owner of $1,000,000 who would be taxed 90 or 05 percent of what-
ever profit he might make from an investment of that capital might
be very slow to make the gesture, to go into such a venture ?

Mr. Hedges. Well, that might be, that would all depend on what
you think a fair profit is. I do not know, I have never found out.

The Chairman". I do not know either, except that I know it is a
matter of common sense that a man who has money is not going to
risk losing it unless there is some profit to be gained as the result of
taking the risk.

Mr. Hedges. I have always had a feeling that the man who invested
the capital of $100,000 by means of stock dividends boosted that to a
capitalization of $5,000,000 was not quite on the side of the public
or society. If that is what you mean, I would be against it. But I
think every servant is worthy of his hire and a capitalist is a neces-
sary person in our society and he should have a proper return for the
services performed.

The Chair]sean. What I meant to say was, in my humble judgment
and I was in hopes I could find you in accord, that capital, if it was
going to take the risk, it would also have to have the opportunity of
making a profit.

Mr. Hedges. You would have to define risk, Mr. Chairman.

The Chairman. Well, that would be a rather difficult thing at this
time. I would be willing for you to define it.

Mr. Hedges. I could not. I think we greatly overrate risk. Some
of the biggest profits have been in public-utility fields. Is there any
risk in it ?

The Chairman. Well, since we cannot agree on what is risk and
neither of us undertakes to define it, I will not go into this further.

Is there anything else, Mr. Hedges?

Again, Mr. Hedges, on behalf of the committee we want to thank
you for your appearance here this morning.

Mr. Hedges. You have treated me very nicely and I am grateful.

(Wliereupon, at 11 : 50 a. m. the hearing was adjourned.)



House or Representatrt;s,
Subcommittee ox Public Works and

Construction of the Special Committee on

Postwar Economic Policy and Planning,

Chicago^ III.

The subcommittee met pursuant to notice, at 9 : 30 a. m., Hon. Walter
A. Lynch (chairman) presiding.

Present : Hon. Waher A. Lynch, New York ; Hon. John E. Fogarty,
Ehode Island; Hon. John E. Murdock, Arizona; Hon. Jay LeFevre,
New York ; Dr. A. D. H. Kaplan, consultant ; H. B. Arthur, consultant;
Winifred G. Osborne, secretary of the committee.

Also present: Hon. A. J. Sabath, Chicago; Hon. Martin Gorski,
Chicago ; Hon. Edward A. Kelly, Chicago ; Hon. William A. Kowan,
Chicago ; Hon. T. J. O'Brien, Chicago ; Hon. W. W. Link, Chicago.

The Chairman. Gentlemen, this is a meeting of the Subcommittee
on Public Works and Construction of the Special Committee on Post-
war Economic Policy and Planning of the House of Kepresentatives.
The purpose of these hearings is to get a broad picture of the need of
public works so that this committee may report back to its full com-
mittee and give to the full committee the facts which we have developed.

As you probably know, there are some people who feel that public
works, or rather the construction of public works, will be the cure-all
of the economic depressions that may come in the future. I say that
the viewpoint of the committee is that we look upon construction of
public works as only a part of the great scheme that we must develop
if we are going to keep the income of the country up to that high
standard which is necessary to give jobs to the people of this country.

We have invited here this morning several of the distinguished peo-
ple from the Middle West, and the committee is particularly pleased
that the mayor of this great city has consented to come here this morn-
ing to give the committee the benefit of his views.

Mayor Kelly.


Mayor Kelly. If it will please the chairman, I would like to read
the statement and then that can be placed into the record so that there
will be no question of what I said here this morning, not because of any
desire to do it but sometimes because of error.

I am happy, today, for two reasons, namely :

(1) That the National Government honors Chicago by sending this
august committee to our city ; and



(2) That the National Government, by so doing, evidences its
interest in the postwar economy — in useful employment, if you please.

We, in Chicago, have been concerned for some time about Jobs for our
returning service m.en and women.

The National Government, and rightfully, took these Chicago boys
and girls from their homes and jobs, some 425.000 of them, and put
them into uniform as the war clouds gathered. We, in Chicago, their
fathers and mothers, brotliers and sisters, husbands and wives, and
sweethearts, are proud of their war record.

We are glad to leani, from time to time, that the National Govern-
ment is concerned and is definitely planning insurance for families
covering those who aren't coming back, increased hospitalization for
the injured, financial aid to continue veterans' education, or to go
into business, or to buy a home, and so on down the line.

We, in Chicago, want the record to show that we heartily endorse
every move of our National Government to ease the return of our
veterans and to adjust them, once again, to their place in our national
economy from whence the National Government took them.

We concur that this is strictly a function of the National Govern-
ment — and just as much a war cost as the cost of bombs and bullets and

Chicago has just one question.

What is the National Government going to do for the thousands
and thousands of returning veterans who only ask jobs to support their
families? We, in Chicago, believe this is urgent. Two weeks ago we
read in our local papers a quotation from Selective Service —

That more than 100,000 Illinois men, most of them from the Chicago area, have
already come marching home again as discharged veterans.

Will there be jobs at good wages for them?

Gentlemen, I submit that employment, in all its varied and sundry
ramifications, is a matter that can best be handled by the National
Government and its agencies created for this very purpose. Local gov-
ernments can only assist in such things — and that's what we are trying
to do here in Chicago.

Industry in Chicago tells me it is going to do its level best to provide
employment for all who want to work in Chicago. That's a big order.
There may be change-over gaps — delays in retooling.

May I give to you gentlemen a brief insight into what happened tc
Chicago emplojanent as a result of the war, as follows :

(1) There are now more than 835,000 persons employed in the manu-
facturing establishments in the Chicago area; 320,000 of these are

(2) This is 385,000 more than in 1940.

(3) In addition, 425,000 answered the call of the Nation and are in
the armed services.

^4) In all there will be more than 800,000 seeking employment.

(5) I have received literally hundreds of letters from service men
and women who were entertained in Chicago's servicemen's centers, in-
dicating that they expect to make Chicago their home after the war.

In a nutshell, that is the problem which I, as mayor of Chicago,
want to present to this committee having to do with national postwar
economy. It is a tough one. Where are all of these people going to
find jobs? In my opinion, the National Government will not have


discharged its complete war duty until it solves tliis postwar employ-
ment problem — not only in Chicago but also in every other metro-
politan city in the country. It is in these congested manufacturing
areas where unemployment is first felt and is the hardest to combat.

Without, for a moment, losing sight of the fact that this is a na-
tional problem, Chicago offers the following possible solution:

Chicago believes that whatever jobs industry does not provide. Gov-
ernment should — and the^e at prevailing wages — and quickly. To
that end, Chicago has prei)ared a postwar public-works program
totaling $937,000,000. The list has been checked and double-checked,
not only by the city's engineers and department heads, its engineering
board of review, its plamiino; commission, but also by Chicago's
Postwar Economic xVdvisory Committee, made up of representatives
of manufacturers, business, finance, and labor. In summarized form,
the list is attached.

I do not want you gentlemen to infer that Chicago taxpayers can
shoulder this added financial load, this $937,000,000. Quite the con-
trary is true. If there is a shrinkage in employment after the war,
Chicago will have difhculty securing from its taxpayers the funds to
pay for the maintenance of its garbage collection, its police and fire
service, its health and recreation, and other local essentials. Decreased
income does not spell increased taxes.

Permit me to give you one illustration. Chicago has some slum
districts and some blighted areas as do all other metropolitan cities.
Those areas should be rebuilt. In addition, Chicago urgently needs
more housing. In our $937,000,000 program we have labeled $100,-
000,000 for housing. The city's income is not sufficient to appropriate
much money for housing. We have decided to raise $5,000,000 on this
housing project. We are asking the State to contribute another
$5,000,000, a total from local funds of only one-tenth of the total im-
mediately needed. Now assume, if you will, that $100,000,000 is
provided somehow or other; how many dwelling units will it pro-
vide? Under the Chicago Housing Authority, nine housing projects
have been built. These provide 7,265 dwelling units, with a total of
30,160 rooms at an aggregate cost of $28,214,557. At the average cost,
the $100,000,000 would provide 25,753 dwelling units, with 106,837
rooms, which could be rented overnicrht.

This $937,000,000 program admittedly includes projects which
would have been built by now had not the war intervened, together
with those which we believe will be built in normal operation of the
city in 10, 20, 25, or 30 years. Chicago's taxpayers might pay for them
if given that long to pay — but the debt service over so many years
would be far too excessive. In ordinary practice, Chicago would
build at a lesser rate and more or less pay as it went.

AVhat we propose, however, is to compress the program into 3, 4, 5,
or 10 years — whatever time is required to provide enough emplo^^ment,
in addition to that provided by industry, so that everyone' who needs
and wants to work in Chicago can have jobs at god wages. I have
no hope that the collection of local taxes can be so accelerated, regard-
less of the emergency.

Gentlemen, may I be pardoned for interjecting here a personal
opinion of many, many years standing? It is that any questions of
economics can be answered completelv by providing jobs for all at
good wages and doing needed and worth-while work.


Along this line of reasoning, recently I caused a letter to be sent to
some of the heads of schools of economics of some of the universities.
My query was: "How much of every dollar spent for public works
accrues to labor?" I haven't the complete answer for you yet, from
these sources, but what I have is both interesting and thought-provok-
ing. For example : Normally, on heavy construction in metropolitan
areas, the division between on-site labor and materials seems some-
thing like 35 percent labor, 65 percent materials, equipment, and other

But, consider a 20-ton structural steel member for a bridge in
Chicago. It is high in material-percentage cost. It doesn't take
very long for the steel workers to rivet or bolt it into place on site.
But, before it reached the site there was the labor of transportation
by truck and rail. Also, it provided work for the rolling mills
possibly at Gary, Ind., or at Pittsburgh, Pa. And before this there
was the labor at the Bessemer furnace smelting the ore into the steel
and the transportation of the ore from the upper Great Lakes region,
until we finally come back to the ore in the ground which, obviously,

Online LibraryUnited States. Congress. Senate. Special CommitteePost-war economic policy and planning. Joint hearings before the special committees on post-war economic policy and planning, Congress of the United States, Seventy-eighth Congress, second session, pursuant to S. Res. 102 and H. Res. 408, resolutions creating special committees on post-war economic (unit 6) → online text (page 31 of 49)