Trust Co.; A. W. Chamberlain, assistant vice president Union Trust Co.; Eugene Chrystal, Eastman Kodak Co.; A. B. Clark, vice president Union Trust Co.; Harvey E. Cory, treasurer Alling & Cory Co.; Fred J. Cross, president A. J. Cross Manufacturing Co.; William A. E. Drescher, director Rochester Trust & Safe Deposit Co., also Rochester Savings Bank; T. R. Dwyer, executive vice president First National Bank & Trust Co.; Elmer E. Fairchild, president the E. E. Fairchild Corporation; Marion B. Folsom, Eastman Kodak Co., also director LincolnAlliance Bank & Trust Co.; William W. Foster, president Union Trust Co.; Louis S. Foulkes, director First National Bank & Trust Co.; Frank E. Gannett, publisher Rochester Times-Union, Democrat, and Chronicle, director Lincoln-Alliance Bank & Trust Co.; H. Wilbur Graves, secretary H. B. Graves Co. (Inc.); George H. Hawks, director Rochester Trust & Safe Deposit Co.; Albert A. Nopeman, director Rochester Savings Bank, also Lincoln-Alliance Bank & Trust Co.; Ernest B. Houghton, manager Guardian Life Insurance Co.; A. C. Jackson, secretary and treasurer East Side Savings Bank; Meyer Jacobstein, president First National Bank & Trust Co.; Kenneth B. Keating, director Union Trust Co.; Edward G. Miner, president the Pfaudler Co.; Frank W. Moffett, vice president General Railway Signal Co.; Abraham H. Neisner, director First National Bank & Trust Co.; O. H. Peiper, vice president Ritter Dental Manufacturing Co., also director Rochester Trust & Safe Deposit Co.; Carl S. Potter, vice president and secretary Security Trust Co.; Roland O. Roberts, manager Weed & Co.; D. M. Rose, secretary Union Trust Co.; Edwin Allen_Stebbins, president Rochester Savings Bank; Irving W. Steele, I. W. Steele & Co. (investments); S. Clarence Steele, Sage, Wolcott & Steele (investments); Simon N. Stein, president the Stein-Bloch Co.; Frank S. Thomas, vice president Genesee Valley Trust Co.; Fred K. Thompson, director Union Trust Co.; Charles F. Turton, vice president Rochester Savings Bank; Robert G. Watson, president Rochester Trust & Safe Deposit Co.; George D. Whedon, secretary and treasurer Monroe County Savings Bank; Julius M. Wile, vice president Security Trust Co.; George M. Wood, treasurer Lawyers' Cooperative Publishing Co. Hon. WILLIS C. HAWLEY, SOCIETY OF THE FIRST DIVISION, DISTRICT OF COLUMBIA BRANCH, House Office Building, Washington, D. C. DEAR SIR: You are a member of the committee holding hearings on the measure to cash the veterans' adjusted-service certificates at this session. Though not speaking for the Society of the First Division, American Expeditionary Forces, because we have had no meetings on the subject, I have personal knowledge that they would be happy and free from worries if they could obtain the cash which the certificates represent. I have made a personal study of the subject especially covering the points raised by those opposed to the measure and am inclosing a copy for your iuformation and such use as you may choose to make of it. I sincerely hope it will be of some use to you in helping you to reach a decision on the question before you. Respectfully yours, DAVID FRIESEL. REASONABLE PROOF THAT CASHING OF THE SERVICE CERTIFICATES WILL BRING BACK PROSPERITY, BY DAVID FRIESEL The statements herein refute the statements of all those who have appeared before the committees of both Houses of Congress in opposition to the cashing of the aforementioned certificates. CASHING THE SERVICE CERTIFICATES I am writing this not to present anything new, for I believe that every Member of the Senate and House is familiar with these facts, but, seeing evidences of the strenuous drive made by what I believe to be either very short-sighted or very selfish interests, I think that presenting these facts and statements will help to further impress the Members of the Senate and House who are holding hearings on proposed legislation to cash the certificates and help to fortify and guard them against the attacks of the aforementioned interests. To get anywhere it is of course first necessary to state the conditions existing, the results desired, and the medium proposed which will bring about said results. EXISTING CONDITIONS No one will deny that we are at present experiencing such an economic depression as has never been experienced in the history of our country. People are literally starving, every section is affected, and something must be done, and this immediately, if serious consequences are to be avoided. Not a day passes but the newspapers bring news of suffering and privation from every corner of the land. THE CAUSE Periodically we are met by an economic depression. It seems to this writer that in every so many years the purchasing wealth of the country is accumulated in the hands of so few that the rest of our population are hard pressed in trying to consume even a small percentage of our production. This writer is not a communist nor socialist, and does not advocate the taking away of wealth from the rich and giving same to the poor. I make this statement so that there will be no misunderstanding. However, I have observed that every time we found a way to divert savings into the hands of the consumers prosperity has followed. At this writing the wealth has accumulated to the nonspending class faster than usual due to the gambling mania experienced by our people a short time ago. This does not mean that the people who have the wealth are hoarding it, but it does mean that they can not possibly spend enough to counteract the accumulation. SOME BANKERS AND ECONOMISTS Our noted economists seem to be lost. No one has appeared to show the way out. In spite of the fact that the statements of all the bankers who appeared before the committees to fight the bonus legislation are outright silly and can easily be shown up as such by any of our noted economists not one has done so. The reasoning of this group of oppositionists falls in line with that of some others of our promient bankers and business men who claim that our people have too high a standard of living and forthwith set out to prove it by reducing wages and laying off workers. Only yesterday I learned that at Sparrows Point, Md., thousands of wage earners received a 10 per cent cut in wages, and I was further given to understand that the leader of the opposition is financially interested in Sparrows Point. If we permit the onslaught of these wage cutting proponents, our depression will surely increase. A way must be found to increase the purchasing power of the masses if we wish to avert a more serious situation. Starvation actually overshadows the whole country and we have not to look into past history such as the French and more recently the Russian revolutions to see what follows in the wake of starving citizens. THE PROBLEM The problem before the governing bodies of the country is-what can be done to bring back prosperity and end the depression? Everywhere people are cold and hungry. Something must be done immediately to alleviate the suffering while a definite plan of action to pervent recurrence of such a situation is perfected. IRRESPONSIBLE STATEMENTS We should greatly discount the statements of citizens such as Messrs. Mellon, Mills, Young, Case, Eugene R. Black, John W. Barton, and others. These people are very powerful and are setting out to prove their statements through actions which will do real damage to the welfare of the country. Their attitudes and figurings seem extremely short-sighted if not outright selfish. They are threatening dire results and are creating an atmosphere of fear that will be difficult to overcome. They are threatening the very existence of the country. It is up to our Senators and Congressmen to save the situation by passing this bill immediately and thereby show up the fallacy of these people's claims. To show how far the aforementioned powers have gone we have but to look at the statements that some of them have recently made. Doctor Black will do as a starter. Mr. Eugene R. Black is governor of the Federal Reserve Bank of Atlanta, and therefore a power. He recently came out with a statement that the country had too high a standard of living. In his opinion we should give up all our automobiles, radios, etc., and put all our money in the bank. Mr. John W. Barton, president of the National Bank Division, at the latest convention of the American Bankers' Association, came out with the statement that the only way out of the depression is a reduced consumption. To top this off, the association, through its president, Mr. Rome C. Stephenson, announced that it would carry on an intensive campaign against spending and for saving in order to bring back prosperity. To add insult to injury Mr. Thomas F. Wallace, president of the National Association of Mutual Savings Banks, states it is impossible for any country to save too much. He goes on to say that all the money we do not need for "necessities" should go into the savings banks. Imagine the president of an association of 600 banks with deposits of about $10,000,000,000 advocating less spending when business is actually 30 per cent below normal chiefly because consumers have not spent enough. He urges the investment of more money in capital equipment, when over $20,000,000,000 worth of capital equipment is idle because of slackened demand for the output. Most incredible of all, this banker urges us to put more money in the banks when they are daily proclaiming, through the lowest interest rates in a decade, that they can not find responsible borrowers for the savings already in their possession. What a fallacy! Can you imagine us all saving our money and letting every business in the country, employing thousands upon thousands of workers, go on the rocks because there is no demand for their products? What prosperity we would then have! What are the real facts? The real facts are that not since the war have we been able to consume anywhere near what we could produce. If we reduce our standard of living, buy fewer autos, radios, etc., we render useless at least $20,000,000,000 worth of productive capital and keep traveling down and down until we are on a level with China. We should most certainly greatly discount the statements of the abovementioned people. Not one of their statements will stand reasoning. We must look elsewhere for a remedy for our ills and we haven't far to go to find a beginning. Here it is: THE REMEDY The Government has, at this writing, but one medium by which it can bring about the greatest and speediest relief possible. It owes an honorable debt, which should have been paid long ago, to millions of its most patriotic citizens, most of whom are in dire need. This debt, if paid, will create such a wide distribution of real wealth and purchasing power as to reach every corner of the United States. The powers that were mentioned above will of course leave no stone unturned to have their way. They will threaten dire results and give no end of figures to try to impress their will. They will make all sorts of statements that should be greatly discounted. For example: 36468-31- -30 IRRESPONSIBLE FIGURES The amount needed to cash the certificates has been estimated by the Veterans Bureau as roughly $3,400,000,000. The arguments used by those opposed to the measure are: a. That the veterans would be unprotected in their old age, etc. (They fail to consider that by the time the certificates mature the veterans will be lucky to have anything due them after deducting their loans plus the interest charged them.) b. The issuing of $3,500,000,000 in bonds will ruin the country. (To make this statement more impressive manipulation of the market seems to set in.) The first argument needs no analysis. Everyone can see the fallacy of the statement. Let's therefore analyze the second argument. How much of the $3,500,000,000 will need floating and will doing so be ruinous? To begin with there is now in the Treasury over $760,000,000 which was expressly set aside to redeem the certificates. Deducting this from the amount needed as given out by the Veterans Bureau leaves a total of $2,640,000,000 or a little over 2% billion dollars. Therefore, will floating 2% billions do irreparable damage to any part of a country which does $1,000,000,000,000 worth of business a year? 66 * * * Let's see what Wall Street's own magazine has to say. Mr. Theodore M. Knappen, the associate editor, in the issue of January 24, 1931 states: "Eighty billion credit dollars available and scarcely half of it in use." Quoting him further he says: we find that the total volume of credit directly supported by Federal Reserve System is roundly $35,000,000,000. Including the banks which are not members of the Federal reserve, which are indirectly dependent upon it, the total volume is around 60 billions. It is estimated by competent economists that the present holdings of monetary gold in the United States would permit of expansion of credit to a total of 80 to 100 billions. At present the twelve Federal reserve banks are using only about half of their nominal credit, however, their gold reserve stands at about 80 per cent of the Federal reserve notes outstanding, whereas they might lawfully be as low as 40 per cent. Instead of the approximate billion now issued to member banks the amount could be increased to about $4,000,000,000 (the amount of the monetarily available gold), which same would enable the member banks theoretically to increase their deposits (loan) by $30,000,000,000 without any decrease of the legal reserve ratio, which is admitted to be unnecessarily high." This was Wall Street's answer to the bankers hue and cry of ruin. We have used Wall Street to show that there is absolutely no danger, now let's go on with the discussion. Business in the mass, not the few great money corporations, but the thousands upon thousands of small firms throughout the country are crying for money with which to carry on. Due to the closing of about 1,500 banks these firms were forced to close up shop, so to speak. No need to go into detail as to the harm done, nor the number of people put out of work. Any sane person can see it. There are untold billions in bonds outstanding. Is it not silly to suppose that the floating of $2,600,000,000 more will do irreparable harm? Now, pick up any financial magazine and you will continually see the hue and cry for America to refinance the world. Why? Because these same bankers have more money than they know how to use. Why not use it to refinance home industries? Why not begin at home; why all the hue and cry to reduce the foreign debt? There is so much good that would result from the wide distribution of the $3,500,000,000 that one wonders why the pressure against it. I wonder if it is outrightly selfish. Let's take a glance at the good that will result. GAIN VERSUS LOSS The main question through the whole discussion that each committee member of either house of Congress should keep before him at all times should be: Will the advantages outweigh the disadvantages? Above we have answered the calamity howlers and shown that the disadvantages in cashing the certificates will be so slight as to be negligible. Now let's see what the advantages will be. Every issue of the Congressional Record quotes reports from responsible persons from all sections of the country showing the deplorable conditions that exist. Taking one at random-a letter from Mr. W. G. Jones (see Congressional Record January 30, 1931), who, talking of conditions in Elliott County, Ky., has the following to say: "(1) Their food is grown for themselves-75 per cent of the families. "(2) They have been feeding fodder to their milk cows and horses. They have no credit and the merchants have extended credit to them until they are almost bankrupt. "(3) I find them all in debt from $50 to $400 in each familiy. "(1) Out of 120 families interviewed 75 lack the bare necessities of life. Their children need shoes, clothes, etc. Their conditions are deplorable. "(5) Out of 1,500 families in Elliott County 1,000 need immediate aid." The above is from just one section of the country. The same holds true in all sections. Unless something is done immediately to help out so that the banks can reopen and the businesses resume something which may not be easily remedied is bound to occur. Is there any better way to help these people than for the Government to pay off its debt and in this way distribute three and one-half billions to over 3,000,000 places throughout the country? Can you think of anything else that will revive things as quickly as this would? The great amount of good that will result can hardly be imagined. Just think of the masses of people in every corner of the country who would immediately pay up their bills to the butcher, grocer, clothier, etc. What else can follow but that the butcher, grocer, clothier, etc., will do the same and in addition will be ready to extend further credit to those not receiving certificates? Furthermore, do you think for a moment that a veteran and his family, saved from worry and starvation, would hesitate even a second in helping his poorer neighbor? They know each other's sufferings as no one else can and they sympathize and help each other accordingly. Why go on with the endless chain? Anyone with half an eye could see the good that would result. There isn't a corner of the United States that would not be affected. Then, the prosperity having taken a turn toward us instead of away from us, the President and the Congress should take steps to prevent a recurrence of such a situation. However, before this time can come about we must hurry the relief in the form of legislation for cashing the full face value of the certificates. It isn't any more the veterans alone who are concerned but the welfare of the whole country is at stake. No half-way measures will accomplish the desired result. There should be no compromise and absolutely no delay. Delaying at this time means irreparable damage in the future. DAVID FRIESEL. HACKENSACK, N. J., January 30, 1931. CHAIRMAN, WAYS AND MEANS COMMITTEE, House of Representatives, Washington, D. C.: We observe with grave apprehension the hearings before your committee on the soldiers' bonus question. You are earnestly urged to oppose any plan that calls for payment of certificates in cash at this time and issuing on part of Government of large bond issue. This would result in confiscation of capital through depreciation in value of existing Government bond issues. It would seriously impair the ability of banks, insurance companies, and other financial institutions, because of the depreciation in the value of the Government securities they now hold, from cooperating in restoring prosperity. It would also cause a great hardship to those institutions who, for patriotic reasons, have invested enormous sums in Government securities. Prices of these securities have already had substantial depreciation since the hearings began because of apprehension of holders as to their value if any Government financing on the enormous scale required to finance the bonus is carried out. The temporary help which the veterans would receive would eventually operate to their disadvantage because substantial part of money would soon be spent and the protection which present law, so carefully and scientifically prepared, was designed to give will be lost to them forever. BERGEN COUNTY CHAMBER OF COMMERCE, |