1931 my income has almost disappeared and I can not keep body and soul together, any taxes imposed are a great hardship. The way to balance the Budget is to restore our economic life and then the balancing of the Budget will take care of itself. Our lack of sufficient revenue is an effect of the depression and the way to take care of that is to remove the cause of the depression. Senator COPELAND. If we can not do that, we are all scaled too high. Is it not probable that in the last analysis the purchase of these bonds would be by the bankers? Mr. RUKEYSER. I think it would be desirable to use bank credit as loans to individual investors, who in time will put the bonds in their tin boxes. It would also be desirable for the banks to increase their investments. Senator COPELAND. Then, with the return of prosperity the money now hoarded would naturally come back into circulation? Mr. RUKEYSER. The hoarders will put their money into profitable use as soon as they can see a profitable use. They are hoarding now because 2,000 banks failed last year and they are frightened. They have seen security prices decline for several years and they do not know of any profitable or safe place for their money. As soon as you convince them that there is a safe and profitable place for their money selfish interest will take care of that. Senator COPELAND. You made a strong point of the red tape involved. Last session we did pass some laws that gave greater freedom in the matter of the purchase of securities and the use of securities for public buildings. Of course, there is red tape left, but to me one of the sad things about the Government situation at this moment is that the program which we had launched for public construction has been practically stopped. Now, in the matter of building post offices and other public buildings we thought we had established a program which was going to be a forward moving one, but we find ourselves this year in a position where all such enterprises are cut off. Mr. RUKEYSER. The time to have done it ideally was when you first introduced that bill, because we have to consider these things through a whole cycle, through prosperity and depression. I think governmental agencies are just as much to blame for overspending in the prosperous period and overstimulating things as they are now for putting themselves in such a state where they have to underspend. It is not always a question of spending a lot. In order to be in a position to spend a lot you have to prepare for it in good years. Senator COPELAND. But, as a matter of fact, even with our failure to adopt such a program at the right time, we did a couple of years ago outline a program for public building construction on the part of the Government. Now, in New York, for instance, we were going to have a new post office, and in Buffalo and Rochester and at other places, and we found that this year the Budget carries no appropriations to go forward with projects which are already planned and ready to proceed with. Mr. RUKEYSER. If we all economize, individually, and the Government at the same time, and all overspend at the same time, how can we expect anything but a chaotic, idiotic, economic system in which we will have shortages at one stage and great overproduction at another stage? The man on the street is too frightened to be rational perhaps and can not be argued with at present, but the Government ought to consider public welfare rather than immediate financial considerations. Senator LA FOLLETTE. Thank you very much. The CHAIRMAN. Mr. McGrady. STATEMENT OF EDWARD F. MCGRADY, AMERICAN FEDERATION OF LABOR The CHAIRMAN. Mr. McGrady, give your full name to the reporter. Mr. MCGRADY. Edward F. McGrady, representing the American Federation of Labor. The CHAIRMAN. Proceed, Mr. McGrady. Mr. MCGRADY. Mr. Chairman, the principal criticism that I have heard to this bill is the cost. Our answer to that criticism is that the cost of unemployment will far exceed eventually the cost of creating employment. We have notified the leaders in our Government that already the serious human consequences of unemployment are apparent in American families, loss of courage, loss of initiative, loss of responsibility, bitterness and disrespect for law and religion; desperation, sometimes to the point of stealing, suicide, murder, and mental disorders, and these human catastrophes will last long after the depression is over. We do not see, at least up until the 1st of this month, any increase in employment, in spite of the programs that have been adopted by the present Congress. I want to call your attention to the fact that our survey of reports coming from 29,000 points in this country show that in February, 1932, in all the skilled trades, there was 31 per cent unemployed and 20 per cent working part time. Senator COPELAND. In addition to the 31 per cent? Mr. MCGRADY. Yes. Senator COPELAND. In addition to the 31 per cent unemployed there were 20 per cent on part time? Mr. MCGRADY. Yes. In the building trades there was 63 per cent unemployed and 16 per cent working part time. In the metal trades there were 37 per cent unemployed and 24 per cent working part time. In the printing trades there were 18 per cent unemployed and 31 per cent working part time. I would like to make a comparison in these trades for the years 1930, 1931, and 1932. In all trades, in February of 1930, there was 22 per cent unemployed. In 1931 there was 27 per cent, and this year it jumped to a little more than 31 per cent. In the building trades, in 1930, there was 43 per cent. In 1931 there was 52 per cent; and this year, 1932, 63 per cent. In the metal trades there was 18 per cent in 1930, and 29 per cent in 1931; and in 1932, 37 per cent. In the printing trade, in 1930, there was 5 per cent idle, and in 1931 it jumped to 10 per cent, and in February of this year 18 per cent. We do not look for any marked increase in employment for the year 1932 or 1933. We predict that you will have just as much suffering next winter as you have had in the past winter. Senator COPELAND. Mr. McGrady, you mean unless some Mr. MCGRADY (interposing). Unless the Federal Government will take the initiative to create work for the people; and I want to repeat again that the cost that this Government will eventually have to pay for unemployment will far outstrip the cost to the Government to create employment. We are particularly interested in section 13, which provides that the administrator may allocate not to exceed $100,000,000 of the amount authorized in section 7 for the purpose of making loans to limited dividend corporations created solely for the erection of housing, on projects for housing families of low-income levels. Our survey shows that in the United States to-day there are approximately 12,000,000 families that are housed little better than the animal. There are millions of houses in which there is no running water, in which there is no heat, in which there is no gas or electricity. You will find these largely distributed in the agricultural areas, particularly through the Southern States, and I do not need to tell you, Senator, what the condition is as far as housing is concerned in all of our great industrial centers. In the tenement houses it is just appalling, and money spent on housing is money mighty well spent, and will draw great dividends for all people in the years to come. We are not afraid of the Government not being able to balance its Budget. Like the previous speaker, we have very little patience with the propaganda that has been put forth in the press of the Nation and pumped into the Members of the Congress that the outstanding thing that this Congress must do is try and balance the Budget. We maintain that the outstanding thing that this Congress must do, should do, is to provide work in order that human beings may live in decency and in health and in comfort. That is much more important than balancing the Budget this year. Why should this generation be compelled to bear all of the burdens? Why should not the future generations bear part of this expense? This bill is an emergency measure, and these measures will be terminated at the end of the emergency period. The Nation-wide public works construction program in this bill offers the only effective method to combat the depression, stimulate business, and relieve unemployment. For that reason, the American Federation of Labor wants to place its approval on this type of legislation. I believe, Mr. Chairman, that is about all I have got to say. Senator COPELAND. I have no questions. The CHAIRMAN. Thank you very much, Mr. McGrady. We will adjourn until 10 o'clock to-morrow morning in this room. (Whereupon, at 12 o'clock noon, the subcommittee recessed until 10 o'clock a. m., Friday, March 11, 1932.) ESTABLISHMENT OF ADMINISTRATION OF PUBLIC WORKS FRIDAY, MARCH 11, 1932 UNITED STATES SENATE, COMMITTEE ON EDUCATION AND LABOR, Washington, D. C. The subcommittee met, pursuant to adjournment, at 10 o'clock a. m., Senator Robert M. La Follette presiding. Present: Senators La Follette, Copeland, and Byrnes. Senator LA FOLLETTE. The committee will be in order. Mr. Schmitt, will you give your full name and address to the reporter for the record? STATEMENT OF F. E. SCHMITT, EDITOR OF ENGINEERING NEWSRECORD, NEW YORK CITY Mr. SCHMITT. My name is Frederick E. Schmitt, editor of Engineering News-Record, 330 West Forty-second Street, New York. Senator LA FOLLETTE. How long have you held that position? Mr. SCHMITT. Four years. Senator LA FOLLETTE. Have you been studying the trends in the construction industry? Mr. SCHMITT. Yes; in a general way. The nature of my business makes that necessary. Senator LA FOLLETTE. Have you prepared a statement? Mr. SCHMITT. Yes, sir; I have a statement that I would like to present, with your permission. Senator LA FOLLETTE. I would be very glad to have you read it, and then we will ask you any questions that are suggested. Mr. SCHMITT. As your committee is considering the subject of the expansion of public works to relieve unemployment-am I right in interpreting that as the purpose of the bill? Senator LA FOLLETTE. Of course, as the author of the bill, I am interested also in the effect of a large public-works expansion upon general business conditions, but with that qualification your statement is correct. Mr. SCHMITT. My feeling is that they are connected, and I would like to call attention from both points of view to certain facts of immediate and critical importance. Let me say I am strongly in favor of the general principle of the bill. Opinions may not agree upon the details of the method, but 75 one can hardly dissent from the general purpose of curing the present unemployment and the resulting impoverishment of the country by providing jobs for those who lack them. Last summer the paper that I represent urged that employment be created on a large scale by public works supported by the national credit, both to prevent serious distress and to break the deflation process. Since that time, however, heavy curtailment of State and municipal public-works construction has created a new situation which demands separate consideration. If your committee can utilize the present bill, or any revised or altered measure, to check the shutdown of municipal construction, it would accomplish something of very great benefit. During the closing months of 1931 public construction projects were checked by the collapse of the bond market, which made it difficult or impossible for cities, counties, and in some cases States, to finance their projects by selling bonds. This check continued the decline in construction that had been in progress during most of the year. Both private and public construction suffered, in about the same way, as graphical comparison of contract figures reveals. (See chart.) A cost of hundreds of millions of dollars was involved in the decline of public works; in fact, conservative estimates go well beyond half a billion. This means that several hundred thousand workers were thrown out of jobs, or if already idle, were prevented from finding work. With the first of this year the money stringency suddenly became more acute. Cities found it all but impossible to borrow money to carry them over until tax-payment time, which was their normal practice. Demands that Budgets be balanced on the basis of probable cash collections, supplemented by protests against higher tax rates, could be met only by horizontal cuts of all departments or else by lopping off improvement work, and in most cases the latter was done. It is difficult to cut the cost of established city services, all of which are necessary to modern life. Moreover, many of the normal demands for services are increased by distress and unemployment, as in the case of schools, recreation, policing, charities, and relief. The money pressure, therefore, naturally resulted in curtailment of construction. The total of such retrenchments since the first of the year is mounting rapidly, and may reach a billion dollars, most of which would have been 1932 expenditure. A large part of this money will not be saved, but is being and will be paid out in doles. Translated into jobs the aggregate decreases of public construction will mean about a million men unemployed, which would increase our present unemployment by something like 10 per cent. That this prospect is not altogether imaginary may be seen from the fact that public engineering and architectural organizations have been reduced or dismissed on a large scale in recent weeks. The planners who thus became idle had been engaged in preparing plans for works to be constructed this year, and if plans are not made there will be nothing for the construction workers to do this summer. Nothing is now in sight in the way of increased employment by private industry to make up for this very great and sudden increase |