10 'NEW DEAL' RULE OF INDUSTRY ASSAILED BY COL. KNOX MAIN GOVERNMENT DUTV IS REGULATION, HE SAYS HAGERSTOWN, Nd., Aug. 20 (I.N.S.).--The text of the address of Col. Frank Knox before the United Retail Mer chants Association of Maryland, West Virginia and Penn sylvania last night follows: Governor Nice, members of the United Retails Merchants Association, and citizens of Maryland: I am acutely aware of the fact that this is a unique oc casion. A great association of American business men has chosen Hagerstown as the meet ing-place for its annual outdoor national convention. The United Retail Merchants Association has done me the honor to in vite me to address them at this national convention. It has in vited the citizens of Maryland to join with them in this meet ing. Solution of Problems It is obvious, therefore, that this is not an ordinary polit ical meeting. The United Re tail Merchants are not a po litical organization. They are nonpartisan. It happens that I am the nominee of the Republican party for the Vice Presidency of the United States. I am now engaged in the campaign. You have given me unrestricted freedom of choice in my re marks, but it would not be in good taste for me to convert the occasion to partisan polit ical uses. I shall speak to you less as a candidate for public office and more as an Amer ican citizen interested in the solution of grave economic problems now facing the na tion. I am pleased to speak at such a meeting as this. As a news paper proprietor, I have long had Intimate relations with re tail merchants I know some thing of their services to our economic life. I know some thing of their problems and troubles. A Typical Story Only recently. I had the pleas ure of speaking at the laying of the cornerstone of a new department store in my home city. There was a story be hind that new building. The founder of that store was once a poor immigrant boy. without a single advantage in the race of life. He began work as a small boy for a meager wage. In due time, he started a small store. He had a hard struggle. He faced competition and de pression. But the little store lived and grew. It developed into a great mercantile enterprise. In due time, wealth came to him. And in his advanced years, he gave a large part of his fortune to the education and support of boys and girls who start life as he did without advantages. It is a typical American story. It tells the story of the opportu nity open to Americans who start at the bottom, of the re wards that come for hard work, of the services America expects of its successful citizens. There is probably no other large coun try in which we could find such a story. Merchants Praised I take it as a privilege to be able to speak to this group of merchants and to the thousands gathered here with them. I am glad of the opportunity to talk to you about some of the prob lems of the retail merchant and all other men who earn their livings. But first, I want to congratu late you retail merchants on your convention. No business has suffered more from depression than the mercantile business. All of you here are battle scarred veterans of six years of depression. You have faced the decline of consumption, the loss of customers, the impossibility of collections, an increase of competition and a heavier bur den of taxation. Confidence in Future I am reminded of the retail er who put up a sign on his store: "Business as Usual Dur ing Alterations." After three idle days, he went out in dis gust and changed the sign to read, "No Business as Usual During Alterations." But you have fought through the de pression, and you gather here with courage and confidence in the future. You are one of the great agencies in American economic life. You are the instrument through which the huge output of our fields and factories is distributed to a hundred and thirty million consumers. You exercise a great and useful function. It is an unhappy fact that this function is not every where clearly understood. There are many who see the farmer and the manufacturer as more useful than the merchant. They see the merchant as a mere un productive middleman. This is a misconception of our economic system, it is part only of a larger misconception that has done much evil in our time. That is the tendency to ward economic antagonism among the great producing groups in our economic system. This system is a great machine for the production and distribu tion of goods and services. This machine is not made up of un related and independent parts. District TOO 6 It is made up of Interlocking parts. Each one contributes to the total output. The miner, the farmer, the workingman, the manufacturer, the banker, the merchant, the railway--all these are useful and indispensable parts in this great economic machine. They are partners. Each one adds his share to pro duction, and should have his share in the product. Whenever one of these part ners is ill-rewarded or depressed, the whole economic life of the country is depressed. When the factory worker is unemployed, the farmer suffers. When the farmers are in distress, our banks fail and our railroads are bankrupted. Group Hatred Fostered In the face of these simple economic truths, the fundamen tal partnership of labor and trade and agriculture and indus try is not everywhere recognized. There has been a growing tend ency toward group rivalry, group hatred, and group legislation. There has even been a tendency on the part of Government to take sides and to pass legisla tion favoring one group at the expense of the others. Not so long ago. a high Government of ficial urged a political alliance between workers and farmers to take over the Government of this Nation. Such a proposal is monstrous. It is un-American. The foment ing of class hatreds in this fashion leads to disaster. In self-defense, every occupational group is forced to organize and fight every other group. It makes us a nation of armed camps, snarling and fighting to obtain special advantage from government. This is not the American way. In Europe, this tendency has developed into class strife, revolutions and dictatorships. Survival of Fittest In our economic system of free enterprise, there is an automatic direction of industry and trade. In the main the rewards of each group are in proportion to its contribution to the product. Automatically, society determines what groups should survive, what parts of the machine must be altered. If a producer makes a poor commodity, his competitor gets his market. If a store-keeper carries poor goods, his com petitor gets his customers. If a farmer grows the wrong things, another farmer gets his 'sales. And under this system Amer ica produces the greatest out put of wealth, pays the high est rate of wages, gives the finest standard of living, in the history of the world. You have been nearing a lot lately about economic royalists. It is a nice phrase, but what does it mean? Take your own retail business. There are a million and a half retail stores in the country. The average number of employes is two. If the retail business of this coun try is run by econo-- c royal ists, there are a million and a half of them. NRA Asailed You can not be very much of a king when you boss just two people. The nearest approach to economic royalists we have had in this country was the bureaucracy of the NRA. They were economic royalists for quite a while, but toward the end, they looked like kings suf fering from delirium tremens. This economic system of ours Is founded on free enterprise. It works, even in depression. It does not break down, although it may be badly wounded by a world depression. It is the only system that will work. We have been giving the other system a trial. We have tried government regimentation, and we shall be years recovering from the experi ment. We tried government control of Industry, and it de layed recovery. We tried crack ing down on business, and it paralyzed investment. We tried to control farm pro duction and cattle starved in the fields. We plowed up cot ton. and thousands of cotton workers were on relief. We paid farmers to not to grow wheat, and had to import mil lions of bushels to get bread. We paid rich sugar corporations in Hawaii millions of dollars not to grow sugar, and had to import millions of pounds from foreign sugar-growers. Lesson Is Simple What is the lesson from all this? It is a simple one. It is the lesson that the business of this country can not be run from Washington. It is the lesson that a million and a half re tailers know better how to run the mercantile business of the country that one bureaucrat in Washington, even an Army gen eral. It is the lesson that not even a brain truster can tell when a drought is coming. Do you remember the Presi dent's reemployment agreement, 'CLASS HATREDS LEAD TO DISASTER' E ■"\v T- C y Jlf®fc jy j|| J 3m BL v 'IKK- fl I .Jap F A E Krl r ■hEk ■MF /x *3 Br A WL 'lfl FT Jr flxs ilk wlhfl |F aEBHE" V f Jr w wKSIM
w f IBt COL. FRANK KNOX, Republican candidate for Vice President, speaking at Hagers town, Md., to a tri-State meeting of merchants, charged the Democratic administration with fostering class hatreds. These hatreds, he said, will lead the Nation to disaster. Inter national News Photo. forced on more than two mil lion employers in the frenzy of 1933? This was the agreement that was to put six million men back at work in six months. If the terms of that one-sided agreement had been enforced, it would almost certainly have closed up half the small shops, the small businesses, and the small industries in the country. Only the big fellows could have lived under it. Wonderful Advance When our present machine system started in this country about a hundred years ago, men worked 72 hours a week. Wom en and little children worked the same hours, or longer. But now men work 48 hours or 40 hours or less. The wages they now receive buy just four times as much as they bought at the be ginning. The American working man works just two-thirds as long for just four times the wage he got in the beginning of this system. This is the most wonderful ad vance in human betterment in the history of the world. It was made entirely without a New Deal. It is high time that we should abandon this foolish notion that Government can direct industry and control production and guarantee profits and insure wages. Let me outline, very briefly and very simply, my idea of the relation of the National Government to our business af fairs. Relation of Government It is not possible tonight to discuss the many individual duties and powers of our Fed eral Government. There are vitally important functions which the Constitution assigns to the National Government. There are other functions which the National Government exer cises jointly with the States. There are certain activities of great Importance to the nation that can not be left to private enterprise, such as the postal service. The activity of our National 25,000 Stand in Rain To Hear Col. Knox (Continued from Page 1) supporting themselves and ths other half as well.** Tribute to Ritchie After a tribute to Gov. Harry Nice, Republican who introduced him, Knox said: "Permit me to pause a mo ment to pay my personal trib ute to another great American. While he was my political oppo nent, nevertheless on all funda mental issues now before this nation, including constitution alism, State rights, economy and efficiency in Government, in dividual liberty and in opposi tion to religious, racial and class hatred of every kind. I am confident he would today, had he lived, been speaking the same ideas in the same lan guage. I refer to Albert C. Ritchie, whose passing has been a loss to the whole nation." Applause greeted the Republi can vice presidential nominee when he declared fair competition in business should be guaranteed THE WASHINGTON TIMES, THURSDAY, AUGUST 20, 1936 Government in these many fields is a matter of absorbing interest to the nation, but it must be left to a later discus sion. There we are concerned with the relation of Government to business. And I tell you that in this relation the primary function of government is regu lation. This regulation should not be aimed at the control and direc tion of private enterprise. Its objective should be to make en terprise fair. It should attempt to guarantee fair play. Where one partner in our economic or der is at a hopeless disadvan tage, it is proper for the Gov ernment to step in and equalize the conditions of competition. Regulation Necessary Depositors in banks are not always able to know the condi tion of their banks. It is proper for the Government to regulate in their protection. Natural monopoly has very special ad vantages. It is proper to regu late such monopolies. Artifically created monopoly which extorts unreasonable profits is uneco nomic and unsound. It is proper to break them up. The buyer of securities can not always tell what is back of the securities. It is proper to regulate in his interest. With the great tides of economic and social change in our time, there will be new forms of Federal regulation. But whatever form it takes, it must be within the framework of the Constitution. Even where regulation is clear ly desirable it is a very vital question whether it is a matter for Federal regulation or for local regulation by the States. It is a splendid idea to look at the Constitution before you un dertake to regulate business by Federal law. It will save a lot of embarrassment later. The Constitution is surpris ingly clear on this matter, and any administration that does not look at the Constitution occasionally is going to be sur- ♦by the Government, and added that this fairness should be brought about by regulation and not by attempted control and direc r tion. I Basic Partnership Colonel Knox declared further: "There has been a growing tendency toward group rivalry, group hatred and group legis lation. There has even been a tendency on the part of Govern ment to take sides and to pass legislation favoring one group at the expense of the others. Not so long ago a high Govern ment official urged a political alliance between workers and farmers to take over the Gov ernment of this nation. "This Is not the American way. In Europe this tendency has developed into class strife, revolutions and dictatorships." Colonel Knox recalled President j Roosevelt's reference to "economic l royalists" in the latter's accept l ance speech at Philadelphia. prised. In fact, our present Ad ministration has been surprised eight times in two years. Not far from here, in a neigh boring State, there was in 1933 a small manufacturer, strug gling desperately against de pression, against competition, paying his workers what he could. The Federal Government put him in jail because he could not meet wage and hour sched ules set up by a group of men sitting around a table in Wash ington. This is what happens when the Federal Government undertakes to regulate local busi ness. The Constitution was the one thing between this man and a jail sentence. Nobody knows just what the Robinson-Patman bill means to the retailer and to the con sumer. It may be well meant. It may be intended to make competition fairer. But it gives the Federal Government enor mous power over every retail business in America. It may turn out to be oppressive or confis catory. In such case, the Con stitution is our refuge. The American people do not concern themselves often over technical matters of the Con stitution. But they have a sturdy common sense that sees very clearly when Government is misusing its powers. For a time, the American people were hypo tized by the idea that the Gov ernment could do everything, from solving the problem of poverty to growing trees in a desert. But they did not stay hypnotized. Strange Farming They have begun to wonder if plowing up cotton is a proper activity of the Federal Govern ment. They have decided that a Government that makes even little pigs flee for their lives is a peculiar kind of Government. They have decided that farming by affidavit is a funny sort of farming. They have decided that growing potatoes in your back yard is not a matter of Fed eral jurisdiction. You might, under certain circumstances, let your wife advise you about grow ing potatoes, but you draw the line at a G-Man from Washing ton. They have decided that the National Government does not have to build a dog-pound in Memphis, Tenn., with marble shower baths. It is not that they object to a dog having a bath. The people believe in washing dogs. But they would like to see their National Gov ernment devote less time to dog pounds and more time to bal ancing the national budget. I see in the papers where the Government has approved a $6,000 project in White Plains, N. Y„ to remove "efflorescense" from some bridges. They seem to like big words at Washing ton, all the way down. But it would be better if they spent less time removing "efflores cence" and more time studying the currency situation. 'New Deal Crackpots 9 Whatever the activities of our Federal Government, there are three simple standards which should govern its con duct of national affairs. The people want these standards observed. They are entitled to have them. The first of these standards is simplicity. We cannot go back to those simple times when Thomas Jefferson ate his breakfast, got on his horse, and rode to the White House to be inaugurated. But we GROUP LEGISLATION, RIVALRIES STIR HATRED, NOMINEE ASSERTS should not have the endless confusion and complexity, and milling around and general hullabaloo that now character ize our National Government. We want fewer laws and bet ter laws. We want laws that the people can understand. Every corporation in America is interested in the new sur plus profits tax law of 1936. Many of you here tonight will have to pay taxes under that law. Let us read you a part of that law. as originally passed by the House. Here It is: "If the dividend credit is a percentage of the adjusted net income which is less than 62'/z and such percentage is not shown in the foregoing table, the tax shall be a percentage of the adjusted net income equal to the sum of 7.5, plus 11-31sts of the amount by which 62'/z exceeds the percentage which the dividend credit is of the adjusted net income." If that is not entirely clear, I can read It again. Explains Simplicity Simplicity of gov ernment means that the Federal Govern ment leaves individuals alone. Within the last three years, our Government has signed indi vidual contracts with about three million employers in trade and industry. It has made in dividual contracts with some thing under four million farm ers. It has made individual contracts with hundreds of thou sands more. It is now struggling with a dubious social security measure which will r.equire the Federal Government to go into the inti mate details of the private lives of about thirty millions more. They will follow these individ uals from childhood to death, and then ask some more ques tions of the surviving relatives. That is not simplicity in govern ment. Second, there should be econ omy in government. This is not a debatable issue. Taxes must be raised to pay for the increas ing activities of the Federal Government. For those many things that the Government must do. there must be payment. The people should bear this bur den cheerfully and patriotically, whether it be to pay for the deficit in Mr. Farley's postal system or for the salaries of Congressmen. Needless Taxation Taxation for the proper ex penditures of government is per sonally a burden, but it is a bur den that must be borne. But every tax is a net subtraction from private industry or private consumption. Taxation properly imposed is a necessary evil, but taxation to support govern mental waste, extravagances or experiment is an unnecessary evil. When taxes are devoted to useless projects or unnecessary public officials, they represent sheer economic loss to the people. Even when they are devoted to useful governmental projects, they are subtracted from the living and the produc tion of the people. We hear much discussion of the usefulness of various public He conquered the wilderness on bear steak and likker" i e 1 1 l bbbJh By 'jPw- His great-grandson conquers i I sales problems on lighter foods, lighter whiskies No hardy backwoodsmen are we. Our but kinder, gentler, easier on the system. F"' S' Q S I life i» lesa rigorous, more nervoua. No QLD DRUM is distilled f rom selected J*' l 1 "heavy ioodaforus-Weneedlighterfare. premium grain exactly as used in the w. *A_ Lighter whiskey, too! A pick-me-up that diatillation of the most expensive whis- B doesn't knock you down. Try OLD kies. Puts lew strain on you. less drain on DRUM Blended Whiskey! It's lighter... your pocketbook. A millionaire's whis- J without weight or "head" key at a workingman's price. Try OLD S I ewnUTTI lull 9 0-P rooi tren K ,h DRUM. Initspnceclass,youcan'tbeatid K/ Wk A-- O IS»S MARYLAND OISTKUntV. IHC.. Xtav. Maryland. TM SRMN NIUTRAL SRmtTS iff J W fVgf* fl V- OLD DRUM "■r* BLBNDBD WBMXIT-W PROOF fffififlHKWV V Telephone District TOOO expenditures. No public expen diture is ever justified until it can be shown that the govern mental project is worth more to the people than the total they would have got with the money if they had been allowed to keep It. When government takes taxes from the poor to build a com munity poultry house in New Jersey, the expenditure is not justified by this test. Nowa days, three-fifths of all Federal taxes come from taxes on the working masses of the people. Six years ago, the cost of Gov ernment in the United States, national and local, was one seventh of the entire income of all the people. Last year it was one-fourth. Cannot Continue A continuation of this progres sive encroachment of govern mental expense on national in come will mean that in the end one-half the people will be sup porting themselves and the other half as well. It cannot continue. It leads inevitably to government insolvency or to currency inflation or to Com munism. Gov e r nment extravagance leads to bureaucracy and bu reaucy leads to governmental extravagance. Each one feeds upon the other, and both of them feed upon the people. His tory is strewn with examples of nations that ate out their eco nomic hearts with bureaucra cies. A governmental bureau is like a camel, his head once in the tent the devil himself can not keep the rest of him out. And when he is in the tent, the owner is out. I am informed that there are now in Washington three sep arate and independent commis sions working at taxpayers' ex pense to find out why there are so many unnecessary commis sions. There should be shortly another commission to find out what these three have been do ing. Confidence Needed Third, this nation should have certainty in government. Our economic order rests on con fidence. The banker must be confident of the soundness of the currency he deals in. The merchant must be confident of the inviolability of the contracts he makes with his producers and his customers. The manu facturer must be confident that his estimated costs will not be arbitrarily changed by govern ment action. The farmer must be confi dent that government will not artifically destroy his prospec tive markets. The investor must be confident that his govern ment will not confiscate his re turns. Above all. the plain man who provides most of the capital which supports industry must be confident that his little sav ings will not be wiped out by governmental action. Our competitive system ex poses us all to heavy hazards of life. We all must face com petition and changing demand and failure of markets and climatic uncertainties. These hazards are the common lot of men. Man has faced them through the countless ages, with a courage and ingenuity that have built a wonderful civiliza tion. It is asking too much to de mand that he face, year after year, the additional unnecessary hazards of arbitrary and unan nounced governmental regimen tation. A philosophy of "try anything once" is not even sound for a tinhorn gambler. In due time, he will go broke. "Try Anything Once" For a sovereign government of a great nation, a philosophy of "try anything once" is intol erable. It has been said of a certain type of English sports man that his attitude toward life is: "It's a fine morning; let's go out and shoot some thing." That's not a good at titude for the American Gov ernment. For the past three years, all American business has lived in the shadow of fear and uncer tainty. Business men cannot create recovery when they have to spend their time reading the papers to see what happened to them the day before in Wash ington. There is lying stagnant in this country today a vast pool of idle capital funds. It is a store of capital so vast that it would alone suffice co supply the capital needs of many a foreign nation. It lies stagnant because of fear. Defends System Give business men some as surance that there will be no further violent and sudden in terferences with the vital im plements of industrial enter prise, and our whole economio life will burst into a vigor never known before. Recovery will become a fact instead of a debate. But it must not be just a breathing spell. It must be a moratorium. Our American economic sys tem is not a perfect system. It has some weaknesses, some faults, some ugly spots. It has risks. But it happens to be the greatest and richest economic: system in the history of the world. It has within itself the God-given faculty of curing its own ills, remedying its own de fects, wiping out its own injus tices. The Ladder of Success Not even a world war followed by a world depression could kill it. Not even mistakes of gov ernment can maim it perma nently. It has one precious characteristic that is almost pe culiar to it. In nearly all the other large nations of the world, this characteristic has been de stroyed. It still has a ladder of success with just one rule. Any man may climb it who is first to put his foot on the bottom rung. The United States is the one great economic democracy of all times. We must not let mis takes of government tear it down.