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

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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 9 of 49)
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ten brief with a few charts, and the other brief is the same story told
in the form of charts and graphs.

The Chairman. Without objection, they will be received for filing
with the committee.

Congressman Wolcott. Mr. Chairman, I might say that I wish the
committee would give special thought to Mr. Upham's graphs and his
suggestions. INIr. Upham has been working very closely with the
House Rules Committee ever since I have been a member of it, for
the last 10 years.

We have relied heavily upon Mr. Upham's advice. He is an out-
standing highway engineer. He has been consulted on the Pennsyl-
vania highway, among others. He has studied economics, and has
been applying it to highway construction. I am sure Mr. Upham
and his advisers will be available if the committee would like to turn
to any phase of their work later on in Washington.

The Chairman. I think we will probably take it up in Washington
in connection with further testimony.

Are there any further questions to be asked of Mr. Upham '^

Mr. FoLSOM. No.

The CiiAiRiiAN. I think that concludes the program for witnesses
for the day. Without objection, the committee will meet at 10 o'clock
tomorrow morning when Commissioner Moses will be our first witness.

(An adjournment was thereupon taken to Friday, July 28, 1944, at
10 a. m.)



yU571)— 45— pt. 6-



POSTWAR ECONOMIC POLICY AND PLANNING



FBIDAY, JULY 38, 1944

House of Representatives,
Subcommittee on Public Works and Construction

OF THE Special Committee on Postwar
Economic Policy and Planning,
New York, N. Y.

The subcommittee met, pursuant to notice, at 10 a. m., in the United
States Courthouse, Foley Square, New York City, Hon. Walter A.
Lynch, chairman, presiding. ^ ^ ^ ^^ ^ ^

Present : Hon. Walter A. Lynch, New York ; Hon. John R. Murdock,
Arizona; Hon. Eugene Worley, Texas; Hon. Hamilton Fish, New
York ; Hon. B. Carroll Reece, Tennessee ; Hon. Jesse P. Wolcott, Michi-
gan ; Hon. William M. Colmer, Mississippi. . -r^ tt t^ ^

Also, present: Marion B. Folsom, staff director; A. D. H. Kaplan,

consultant. i t-, j? j

The Chairman. The meeting will come to order. Be tore proceed-
ing with the testimony this morning, I wish to state that I received a
telegram from our colleague, John Fogarty, of Rhode Island, that
he has been unable to attend the hearing because of the death of his

T*1 Ml PT*

So, without objection, we will send a letter expressing the condol-
ences of the committee to Congressman Fogarty.

I also wish at this time to express the appreciation of the committee
to the genial United States district attorney for the southern district
of New York, Mr. James B. McNally, through whose kindness and
courtesy we have secured the use of this spacious and cool courtroom.

Mr. McNally, you do not know how gi^eatly we appreciate your kind-
ness. I think it is quite appropriate that we should be in this spot, so
that our friends on the committee from the South and from the West
would know that, although New York is always a "hot spot," neverthe-
less, we have a cool atmosphere, too.

Congressman Colmer. Before you leave that subject, would you
yield to me ?

The Chairman. I will yield to Mr. Colmer.

Congressman Colmer. I express the hope that our genial district
attorney, who has been so courteous and hospitable, will not ask for a
new courthouse under the new program.

The Chairman. We will see whether Commissioner Moses will rec-
ommend such a thing.

The first witness that we will have this morning is Commissioner
Robert Moses. I shall permit Commissioner Moses to give the present
positions which he holds. I also want to say for the benefit of my
colleagues that the commissioner is an outstanding authority on public-

1771



1772 POSTWAR ECONOMIC POLICY AND PLANNING

lA'orks construction, particularly parks and the like, and lie belongs to
and is a member of so many different commissions that I doubt whether
or not he actually remembers all the commissions of which he is a
member.

Before proceeding with your testimony, Commissioner Moses, I wish
to review for your benefit, so that you may, if you want to, direct your
remarks to the subjects that I have in mind.

Yesterday there was apparently a clear and deep-cut division of
thought with respect to postwar public-works planning. Mayor
LaGuardia and Borough President Lyons and one of the witnesses
from up-State testified to the effect that there would be need, as soon
as possible, of Federal aid in postwar planning, and even in postwar
construction.

A different theory was expressed by Borough President Edgar
Nathan and by Commissioner Catherwood, representing the State
department of commerce.

Their testimony, in effect, was that there was no need of Federal
aid in postwar planning, or in construction ; that that was a State and
numicipal task which should be undertaken, with the possible excep-
tion of airports and roads.

Now, it seems to me that the latter theory fails to take into con-
sideration that we are facing a grave emergency which has not yet
come, but which certainly appears to be in the offing. Personally, I
disagree with the theory that there is no place for Federal planning
in postwar construction at this time, and I feel that any moneys
that may be expended by the Federal Government in connection with
postwar planning of public works, whether those public works be
Federal projects, State or municipal, or county projects, is just so
much insurance that the Government will not thereafter have to under-
take such projects as were originally undertaken in the early days of
WPA.

I understand that you have a prepared statement. After reading
the prepared statement, or in the course of it, if you could give an
expression of your own opinion —

Congressman Reece. Excuse me, Mr. Chairman. "Would you permit
an interjection?

The Chairman. Surely.

Congressman Reece. 1 did not gain the impression that any of the
witnesses who were on the stand yesterda}', suggested otherwise than
that we should have adequate plans for building programs in readi-
ness, so that, in the event public building programs to absorb unem-
ployment became necessary, we would be ready to take these projects
from the shelf and proceed immediately with construction of useful
projects.

The only difference, as you indicated, was whether that responsi-
bility should be assumed by the State and other governmental agencies,
rather than the Federal Government.

As I recall, they were all in accord that these plans should be drawn
up and be on the shelf.

The Chairman. I quite agree with my distinguished colleague that
the witnesses were all in accord, that there should be plans.

But my point was directed to the testimony, as I understood it, and
which appears in the newspapers this morning, to the effect that some



POSTWAR ECONOMIC POLICY AND PLANNING 1773

of the Avitnesses yesterday were of the opinion that there was no need
of Federal aid to the political subdivisions at this time, and until the
emergency should develop. And it was my thought that we would
get an opinion here this morning, if we could, without lengthy ques-
tioning. Therefore, I wanted the Commissioner, if you care to later
on, to direct your remarks to whether or not you believe that the
Federal Government should be of assistance to the States and the
municipalities and political subdivisions in the preparation of the
plans. When I speak of assistance, I mean financial assistance — the
possibility of financial aid in any of the projects undertaken thereafter
by the I^^'tate and political subdivisions.

Mr. Commissioner, will 3'ou give your name and long number of
titles which you hold ?

STATEMENT OF ROBERT MOSES, PARK COMMISSIONER, CITY OF

NEW YORK

Mr. IMosES. Robert Moses. I am park commissioner of the city of*
New York, and a member of the city planning commission. 1 am
president of the Long Island State park commission, chairman of the
State council of parks, chairman of the Jones Beach Parkway Au-
thority, Beth Page Park Authority, chairman of the Triborough
Bridge Authority. I think that is sufficient for the titles which I hold.

Mr. Chairman, I prepared this memorandum as a way of saving
your time and to indicate my approach to this problem. It is a much
broader problem than public works.

AVhatever the j^ardstick, the magnitude of the coming postwar
dislocation of spending and employment is staggering. Congress,,
which knows the figures, seems not to realize their importance. Com-
pare the current and last prewar year. National income is 142 billions,
as contrasted with 95 billions. Of the present enormous total, some
86 billions represent Government spending. Employment todaj^, in-
cluding the armed forces, is 62 millions as against a 52 prewar top.
If Government spending drops swiftly, how much income and employ-
ment can business make up and how quickly ? The best we can pos-
sibly expect is a national postwar income of 122 billions and employ-
ment totaling 50 million people.

The Committee for Economic Development and other optimists
tell us that, as soon as the war orders are completed, defense contracts
wound up and conversion effected, business will immediately absorb
all those seeking employment because of accumulated savings, ex-
pansion of plants, experience in mass production of munitions, new
incentives, boundless confidence in the future, and finally, because of
the tremendous unsatisfied demand for all kinds of goods and serv-
ices. These people claim that the real problem is the control of infla-
tion in the face of abnormal purchasing power and extreme shortages
of consumer goods.

The same groups overemphasize the effects of technological im-
provements and argue that enormous additional employment will
immediately be afforded through developments in the fields of metals,
plastics, aeronautics, electronics, television, power, prefabrication,
and so forth. Technical improvements do not always increase em-
ployment, and in any event it takes time to get them into mass pro-



1774 POSTWAR ECONOMIC POLICY AND PLANNING

duction. They belong, therefore, in the class of post-postwar stimu-
lants. Similarly, the notion that many millions of new cheap houses
with all the latest gadgets will be built right after the war is sheer
nonsense. Most people who have the means and the ambition will
repair, repaint, and refurnish their present homes rather than build
new ones.

We cannot afford to minimize the difficulties of conversion and the
time required for retooling. Business needs capital. It must be guar-
anteed opportunities for expansion in a friendly atmosphere. It must
be reliably informed in advance as to the rules of tlie game so that
it will not be subject to the whims and vagaries of politics. Small
business particularly needs restoratives but direct Federal loans with
the inevitable Federal control can't revive small business. That is
what the local banks and loaning agencies are for. Perhaps a Fed-
eral guarantee for local loans on the FHA model is the answer.

Labor must be assured of proper awards in the form of high wages,
reasonable hours, increased leisure, and a fair share of profits of all
kinds. Taxpayers must be promised an embargo on exorbitant and
punitive tax rates which would make both saving and spending im-
possible and throttle private enterprise. The debt must be retired
as prosperity increases and must not be a millstone around the necks
of those who are trying to get on their feet after the shock of war.
Relief abroad must be on a generous scale but rehabilitation and
reconstruction must not exceed our means. Immigration must con-
tinue to be reasonably restricted, so that we will not aggravate our
own domestic employment problem.

Another assumption which must be examined critically is that in-
creased foreign trade will immediately stimulate domestic employ-
ment. The average American's approach to international cooperation
is friendly but conservative. He is not a free-trader in the sense
that he is willing to lower American wage and living standards to
redress the balance in other countries. He is not willing to depend
entirely on foreign countries for strategic materials and to risk the
cutting off of these materials in another war. The average American
is for international economic and political cooperation, but he regards
these as ultimate objectives and does not favor the adoption of an in-
ternational planned economy. He believes that God still helps those
who help themselves and that full employment, like charity, begins
at home.

Given time and favorable conditions we can produce in unprece-
dented abundance the countless benefits of a mechanized civilization,
but it can't be done in a few months. There is a yawning gap which
must somehow be bridged. A tough transition period will precede
the new era of full employment. No responsible person can afford to be
dogmatic about the length of this period; but it may safely be as-
smned that it will last 2 years, beginning with the end of the Euro-
pean war and depending to a considerable extent on the length and
severity of the far-eastern campaign.

Given a reasonable amount of time, I do not question the initiative
of our people nor the resiliency of our American economic system. It
is the interval which concerns me, because in that period the entire
outlook on life of the generation which fought the war will be deter-
mined. Two years of buffeting about and pillar-to-post job hunting



POSTWAR ECONOMIC POLICY AND PLANNING 1775

will result in disillusionment, cynicism, and recourse to the desperate
remedies which have always been the stock in trade of demagogues and
agitators. Mustering-out pay and similar expedients are no substitute
for jobs.

In the transition period, business cannot possibly absorb all of those
looking for jobs, no matter how highly we estimate savings, en-
thusiasm, pent-up consumer demand, and the urgent need of all kinds
of repairs. Millions of men, discharged from the armed forces and
industry, must be employed by the Government on worth-while public
works, relegated to w^ork relief or the dole, or taken care of through
tremendous soldier and security benefits, largely paid out of the
Public Treasury and involving a crushing burden on business in the
form of direct and indirect taxes.

We do not even know what the men in tlie armed forces want to do
when they are discharged. The War Manpower and draft authorities
tell us rather glibly that jobs for servicemen will be taken care of by
the draft boards which are ready at a moment's notice to go into reverse
and to become branches of tlie employment service on what is called
D or demobilization day. On the other hand, those in charge of the
draft machinery frown on the suggestion that they make a canvass of
men in service to see that sort of jobs they actually want when they
get home. They say that such a canvass is too complicated and would
produce nothing of value. It is difficult, however, to understand why
machinery established to enable soldiers to vote in a Presidential
election cannot be used to find out what the same soldiers want to work
at after tlie war, a matter which from all accounts concerns them
much more vitally.

It is true that a sound public-works program, consisting only of
needed repairs, reconstruction, and improvements, and carried «n by
contract instead of w^ork relief, is not likely to employ at the scene
more than a maximum of 5,000,000 men at any time during the transi-
tion period; but back of these men are millions of others in mines,
mills, factories, transportation, and management, whose temporary
employment in this period will enormously help business recovery.

The public-works program should be flexible. It should be adjusted
to regional demands. It should not compete witli or elbow out private
employment, but should supplement it. Even a comparatively modest
works program will be difficult to achieve because of lack of funds;
delays in the preparation of detailed specifications; inability or un-
willingness of municipalities and States, wholly or even partly, to
finance either plans or construction ; absence of a definite policy as to
Federal grants; and the difficulty of getting the Federal, State, and
local governments together on a comprehensive program.

It was precisely the situation which, late in 1933, led to the estab-
lishment of the CWA and its successors. We had to accept a make-
shift relief program because we were not ready for contract work on
a large scale and had nothing better to offer. It is, however, fact, and
one which believers in a public-works program must face, that out of
$60,000,000 made available by Congress many months ago for high-
way plans on the basis of matching 50-50 by the several States, only
a fraction has so far been spent. I would suggest, therefore, that the
proportions of Federal and local design contributions be changed to 60
percent Federal and 40 percent local. Even this will be futile, unless



1776 POSTWAR ECONOMIC POLICY AND PLANNING

there is a definite promise of substantial Federal contributions to
construction as well as to design.

Not long ago a writer of financial articles described me as a very
badly informed gentleman because I advocated a conservative works
program to supplement the revival of private business. The main
argument on which this critic based his conclusion was that accumu-
lated savings in war bonds, bank deposits, and cash, and enormous State
unemployment reserves would tide over the average family, and that,
therefore, all those out of work need not fear an extended unemploy-
ment period. It seems incredible that any responsible person would
make this argument. If the owners of war bonds, many of them of the
cumulative savings type, cash them in before they are due, draw out
their bank deposits and spend their cash, we will have the finest
financial mess this country has ever seen.

As to unemployment reserves, it is theoretically true that such re-
serves are adequate to pay $20 a week to 5,000,000 persons for over a
year if we don't mind taking the last penny out of the till. Prac-
tically, however, the statement is false, because under existing laws it
is impossible to pay $20 a week to any person for a year. The average
maximum of benefits over all the States of the Union in 1 year is less
than $295.

It is all very well to depreciate, in principle, a deficit economy and
to characterize every Government expenditure as waste. For example,
large manufacturers of motorcars, who war against Government
spending, propose to turn out tremendously increased quantities of
cars after conversion. These cars are wholly dependent upon roads
built with Government money. Present highways have deteriorated
through age and neglect to the point where they are actually disin-
tegrating. It is high time we got over the preposterous notion that an
order for structural steel is beneficent if the steel goes into a private
speculative enterprise; but wasteful if it is used to repair or im-
prove a needed public facility.

The only really constructive official step taken thus far was the
appointment of Bernard M. Baruch and John Hancock to report to the
Director of Economic Stabilization on orderly cancellation of war
contracts, prompt disposition of surplus materials, and simplified ac-
counting. Unfortunately the Baruch report ran afoul of the contro-
versy between the President and Congress over Executive usurpation
and congressional prerogatives. If such controversies continue to
bedevil the adoption of plans for demobilization, we are headed
straight for the rocks.

We need a single representative and aiithoritative commission to
insure jobs in the transition and subsequent postwar period. It should
be a commission which fairly represents the Executive, both Houses
of Congress, business, labor, agriculture, technical groups, and the
general public. Its chief mandate would be to reconcile differences,
find common grounds, and prevent another of those great revulsions of
public opinion from global thinking to normalcy such as followed the
First World War.

There are too many investigating agencies and autliorities, public
and private, in the field today ; and it is almost impossible to reconcile
their pronouncements. Can we still establish such a commission this
year in the midst of a Presidential campaign when the tendency of



POSTWAR ECONOMIC POLICY AND PLANNING 1777

the party in power is to win with its friends, and of the opposition
to oppose everything which comes from tlie administration, irrespec-
tive of merit ?

It may seem a counsel of perfection to urge both leadership and
the spirit of compromise in the eve of a close election, but as applied
to the most urgent of our domestic postwar puzzles, it should not be
impossible. It is the greatest service we can render those who are
fighting at the front.

The proposed commission should establish, besides the principles
of conversion and disposition of surpluses; the national income and
employment which we aim at in the transition period and in the new
era; accumulation of reserves and other proper incentives to business;
the tax system of the country; our immediate objectives in inter-
national trade; the stimulation of American enterprise abroad; the
scope and financing of a flexible Nation-wide postwar public-works
plan ; the stimulation of repair work on a large scale ; the extent of
special soldier benefits; the necessary expansion of the Social Security
System; and finally, the proper relationships of the Federal, State,
and municipal governments in carrying out this program.

Suppose the present Congress does nothing further about the matter
this year, proceeds through its present numerous committees with
their conflicting objectives and ambitions, and refuses to take definite
action on the Baruch report and generally marks time to see how the
election is coming out. The situation which would then arise is
comparable to the one recently described by the Irish Minister to the
United States who was asked how things looked in London and in
Dublin. His reply was, 'Tn London the situation is serious but not
hopeless. In Dublin it is hopeless but not serious."

The employment and reconversion problem would be serious but
not hopeless, assuming that some constructive thinking continued to
be done on the subject and that public opinion was clarified as the
result of the campaign. On the other hand, it would take the new
Congress several months to come to any conclusions, and if the Euro-
pean war ends this year, we shall be in the midst of demobilization
by the time we have a plan and right up against the same old problem
of relief expedients on a large scale.

Only full cooperation of ca])ital, industry, labor, agriculture. Gov-
ernment, and all other forces will meet the challenge of postwar
emploj'ment. Neither private nor public leadership alone can do it.
Academic perfectionism is not the answer, nor unlimited expansion
of Government functions, nor leaving it all to business or all to public
works, nor complete international planned economy. The answer
lies in united effort, in sinking petty differences, in the objective con-
sideration of every tried and promising expedient, and finally in as
prompt, nonpartisan and patriotic action as can be brought about
in the midst of a national election. If we must wait until the election
is over, let us pray that the delay will not result in another gigantic
relief program, which will be a confession that we have learned
nothing since World War I.

As I understand it, this is a subcommittee of the committee dealing
with the general policy of policy and planning.

I thought in the short time that I had available to indicate, first
of all, the scope of the problem as to which I think there is very little



1778 POSTWAR ECONOMIC POLICY AND PLANNING

dispute. I mean, the various yardsticks in national income between
Government and private expenditures, the highest peak of prewar
employment and present employment, excluding and including the
people of the armed forces, and the idea of those figures was to show
what a tremendous drop seems to me to be inevitable after the war,

I have indicated, more or less arbitrarily, my notion that the real
problem of unemployment will last for at least 2 years following
the war. That is based on these figures which I think are in-
disputable. It is based also on a good deal of observation here and
in other parts of the country, and is based on experience, rather bitter
and unpleasant experience, that I had with a number of others at



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 9 of 49)