An Address by Mr. Arthur Crock

MR. CROCK was introduced by Major James Baxter, the President:

MR. CROCK: It would be no disparagement of the excellence of Canada's newspapers or the intelligence of its citizens were I to assume that you are not quite clear as to what we are doing or trying to do in the United States. Daily, the despatches from Washington present confusions and contradictions that must seem fundamental to the citizens of another country.

For example, you have been reading for months of our effort to advance prices and increase consumption by adding to purchasing power. Yet recently you saw that, with the approval of the President, our Federal Co-ordinator of Railways had informed the steel rails (steel plates) companies that they must reduce the price of this commodity from $37.75 to $35 before the government would approve purchases or the railroads would make them. This must have seemed inconsistent with the Administration's main objective.

It may be somewhat bewildering also to read of sharp reductions in the wages of Federal employees who are low-priced people, and powerful efforts to increase the earning of low-salaried Americans engaged in private industry; of pledges to balance the Federal budget, and economy swamped by huge government expenditures charged to something called the "extraordinary budget". You may not comprehend the relationship that could exist between the stimulation of private business by colossal and new legislative incentive and its discouragement by forming a government corporation as a rival to private building enterprise.

You may have knit your brows over a national plan, the progress of which was statistically disputed by two fact-finding government agencies--the Federal Reserve Board and the accountants of the National Recovery Administration, one reporting that industry, especially industry subjected to the codes and the processing taxes, has slumped in the last two months; the other insisting that only the steel business had slid backward.

And, I presume that with some of the most friendly of your economists in Canada and in Great Britain, you have not understood how the gold market activities of our Reconstruction Finance Corporation can serve to coin a dollar "that will not change its purchasing and debt-paying power in a generation."

It is not my claim, standing before you today, that I can explain these things with pellucid clarity and make harmony of seeming contradictions. Perhaps there are economists who can; I am not an economist. Perhaps there are journalists who can. They are incomparably my superiors. My only hope is that I may be able, in grateful response to your generous invitation to come to Toronto, to give somewhat clearly my conception of what the government of the United States is driving toward, of the abrupt change this represents in our national psychology and structure and of the reasons that brought it about.

An article recently published in the Week-end Review of London sought to recall to those who are trying to understand the American recovery movement what happened at or national elections in 1932. Although Mr. Roosevelt in his campaign speeches never spoke of revolution, never pledged himself to take income from him who had earned and give it to him who had not, undoubtedly millions of voters supported him in that hope. They were the debtor class. Many of them were the new debtor class, people whom the world's depression had robbed of occupation and income through no fault of their own and who saw no way to pay the debts they had contracted and were daily contracting. They, after three years of suffering were unwilling to wait longer the slow if sure evolution of classic economics. They were unwilling to suffer longer to prove once again that Adam Smith was right. Privation and its resultant unhappiness had put them in a mood to try new regimentations designed to modify and put some Christian charity into the law of supply and demand.

Under the previous regime these people had waited patiently for the copy-book maxims to set things right. They had witnessed the downfall of many drives to restore the flow of credit, to induce those who had money to loan it to those who had not the spirit or conviction to borrow. They had seen the failure of effort to keep up wages on the assurance that natural recovery was at hand. They had economized and compelled their local and national governments to economize in the hope that "work and save" was still the sesame that would open the gate to rehabilitation.

In Franklin Roosevelt they believed they had a leader who would find and would have the fortitude to use, new methods to restore employment and income in the United States. To President Hoover's warnings of what would follow a change in government, the attitude of the vast majority was: "It can't be any worse. It may be better. Let's try something now." That, members of the Empire Club, is what we are doing in the United States and the attempt was launched with the encouragement of the people. The inauguration of new methods in a country of more than 125 millions, with highly diversified groups, not a homogeneous nation, and with borders as wide as your own imperial land, is certain to produce contradictions and confusions real as well as seeming.

I have the feeling that, speaking in another country, even in a country as friendly as this good neighbour of Canada, it would be poor taste to indulge in criticism of the men and methods engaged in our New Deal in the United States. It is not my wish to pretend that I am an ardent partisan of some of these men and some of these methods. But I should, on this occasion, prefer, if you will permit, not to analyze our effort narrowly and critically, but to try to explain what we are doing and to relate it to an aspect of our nation] psychology in the United States which, even in Canada, may not be wholly understood.

In viewing the great recovery experiment in our country you should, I think, take from the top of the list of descriptives the word "economics". Of course, if the President succeeds in raising prices and wages and providing the increased purchasing power to pay for these, the benefits will be economic. But our effort is really sociological. As a social enterprise it should be weighed and finally judged. The old or classic economists accepted as a fact that human nature and the physical elements of the planet made certain a precise operation of economic laws. Normal times would be succeeded by flush times; these would be followed by depressions; then normal and flush times would come again. The annals of humanity have sustained that belief.

But in these changes the testimony of historians is that people starve, freeze and are unhappy that people suffer a loss of standards, that the clock of progress is turned back. They point to generations that have never known the bliss of contentment. The answer of the old economists has been that these things are written and cannot be changed.

What the United States government is now trying to do is to prove by legislative devices that the old economists are wrong. Our Federal effort is to demonstrate that there are quicker steps to the restoration of the true balances,, and that there are ways to hold them true for at least a generation. The President has said as much; what he is now endeavouring to do is to prove it. A powerful sentiment among some of his most cherished advisers is that man was ignored by the old economists in their olympian calculations; that, had they kept in mind the human casualties wrought while economic laws are operating, they would not have been as complacent in their decision that these laws cannot be intelligently modified.

Those in charge of our government policies at this time are not complacent. The suffering of society are uppermost in their minds, and what they are trying to do is to relieve these through new economic measures.

It is not unusual to find the people of the United States engaged in almost poetical experiments in idealism. I wonder if Canadians have ever stopped to think that they are living alongside for three thousand peaceful miles the most idealistic people in the world. Perhaps you do, and it may make you shudder sometimes. But it is more likely that you don't, because our withdrawal from all responsibility for improving the post-war world we had helped to create, and keep the Kaiser from creating, has been greatly stressed to prove the United States a nation of materialists. Our attitude on the war debts and recently toward international trade and tariff arrangements has brought from abroad steady charges of materialism. Uncle Sam has been called Uncle Shylock more often than by his real name for ten years. Mr. Coolidge's remark, "They hired the money, didn't they", has been accepted as the hard spirit of America.

I repeat that we are a nation of idealists. When our imagination is touched by a man, as in the case of Mr. Roosevelt" and by an idea, as in the instance of the National Recovery Act, we are all for taking a chance and for disregarding those who croak about the lessons of history. When we discover that the forebodings are accurate, we are entirely willing to repeal or forego our idealism. I have in mind the prohibition amendment. We are within a few days of relegating that venture in moral legislation to the limbo of another or, I hope, a thousand years. But for more than ten years we doggedly tried to enforce it. Only a nation of idealists could have adopted prohibition and stood by it for so long. Yet we are practical, too, for the repeal machinery has worked more swiftly than any student of the American constitution ever believed was possible.

In this spirit we embarked upon the national recovery measure. Please absolve me from an implication that all aspects of recovery must go the way of the prohibition amendment. I do not think so. There are new and enduring relations between capital and labour, given spirit and meaning by the National Labour Board. Restrictions have been set upon capital expenditure to increase long-standing surpluses, arid these will continue to be applied. Hours and wages, benefitted by N.R.A. will hold those benefits very long, and I feel sure that we shall grow excellent fruits from the uses of our new leisure.

For half a century workers and humanitarians sought vainly to abolish child labour. N.R.A. has eliminated it. N.R.A. has induced labour to accept the idea of minimum wages for men. Industry, as in the textile branch, has been led to limit wasteful overproduction by accepting control of the working hours of machinery, and this limitation has given the smaller manufacturers their chance. The New Deal has also done way with the old inefficient Federal employment bureau system and is forging an efficient, nation-wide chain of employment exchanges. State conferences are for the first time seriously working out the problem of unemployment insurance.

Strikes are complicating these social reforms in industry. But whenever prices and employment rise in the United States, it has been our experience that human nature comes to the front, seeking to improve the chance of getting wider concessions. But, even though the collective bargaining section (Seven A) of the Recovery Act is a strong temptation in this direction, the National Labour Board is making progress in improving the relations between employer and employee. These illustrations may serve to illuminate the social aspect of our newest adventure in what its expeditionary forces hope will prove to be practical idealism.

After the banking crisis that was acute when we changed President last March, economies were effected it the great and growing costs of government. Anticipating the repeal of prohibition, Congress legalized beer. This was also more a budgetary matter than anything else. At that point the President's conservative adviser wanted Congress to adjourn. They wanted the President, with his new emergency powers over the capital, gold and credit and over the costs of government, to set about the work of administering these and let the old economic laws, plus the obvious signs of approaching natural recovery, take their course. They wanted international action ors trade, currency and tariffs, and in that spirit and with that hope we proceeded to London--with what result, you know. That was the situation when those who knew what they meant by the New Deal and believed the President meant the same thing, insisted upon the enactment of the empowering legislation.

They contended that the public, despoiled by greedy and unmoral bankers and industrialists, should have the protection of the Securities Act. They evolved the farm adjustment act, which in an effort to raise farm prices has levied or will levy a sales tax in the form of processing taxes and other imposts of more than a billion dollars on the consuming group, and still the farmers are quite dissatisfied and are the real enemies of the N.R.A. at the moment.

They set up the home and farm loan boards, providing money from general taxation to preserve mortgaged homes and farms. They made into law an insurance arrangement for bank deposits. They saw to it that the President was left free to work out his own currency program by having permissive powers to inflate or not as he chose.

As you know, this has gone forward in slow steps and we are now engaged in the experiment of gold purchases. A great deal has been said about this but I hesitate to follow Sir Henry Drayton who spoke on that subject yesterday, and speak extemporaneously on it today. But I feel that you might believe that this gold purchase plan is not so much to reduce the dollar particularly far down, but to put a fence around it which would provide a limited field of devaluation so that it wouldn't go up higher than X or down lower than Y. And that has been the purpose of the British Stabilization Fund. If my analysis of this is correct, I do not believe that we shall see a monetary war between the United States and Great Britain. While I must leave to financiers the question of whether manipulating the price of gold has any effect on the prices of commodities, that at least is not behind the act itself.

The President's advisers arranged for the redistribution of property and income in the country and set barriers against the operations of those financiers whom the President scornfully referred to as "money changers" in his inaugural address. At the present, most of these form the investigation committees of Congress.

The theory back of all these actions was the same--that compassionate rulers of a people can aid, accelerate and improve the slow workings of the classic economic laws. But the greatest product of the theory was still to come--what you know as N.R.A.

For years many leaders of thought in the United States have been urging the expenditure of from two to five billions of dollars on public works as an unemployment relief measure. The idea behind this was that the government could easily borrow the money and arrange that it be spent in a way to add to the purchasing power of everybody; that otherwise the money would stay in hiding. Opponents of the plan insisted primarily that government red tape and legal obstacles in the states and cities would send the money out so slowly that it would not substantially increase purchasing power. But they were over ridden, and all they have at this moment is the satisfaction of knowing that thus far their prediction has proves true.

They were over-ridden and the great public wont program was agreed upon. But then in the Administrations's councils it was insisted that there must be corollary measures to provide a market for this purchasing power The first suggestion was a vast scheme of government stimulation and regimentation of the manufacture of commodities in normal demand. If the new billions were to flow among all citizens, there must be enough things to buy and sell. Industry, however, was to regulate itself with the government as a benevolent distant partner.

From this simple formula has grown the gigantic experiment known as the National Industrial Recovery Act, with its codes, its prescriptions, its temporary check on individual liberty and with the government standing behind the counter in every shop. From this simple formula has grown a bureaucracy which, while the law stands, prescribes what minimum wage shall be paid, what hours of labour there shall be, the maxima and minima of certain prices and what investments and expansions shall be made in industry on the test of the communal benefit. A plan, economic in form, has been enlarged and fashioned into an instrument of social welfare. Its precise aim is to restore the normal flow of trade, raise prices and reduce unemployment. But its larger objective is to bring comfort and living security to the greatest number of people.

Whether or not you believe that it is wise, just or can work, you should judge it on that basis. It is a proposed method of accomplishing Mr. Hoover's ambitious dream in 1928 when he spoke of ending poverty in the United States forever. He never went about it this way, but the ideal is the same. I repeat, we are a nation of idealists.

Our great enterprise is nationalistic, and we have put barriers around our country in an effort to work out the plan without the hindrance of foreign action. Manifestly, once committed to this idea, the President could not stabilize the currency by international agreement, lower tariffs by pacts with other countries or permit equivalent goods to be imported at lower prices. It means that we must try to do everything for ourselves by ourselves. That fact, if other nations do not imitate us, is one of the great evils of the scheme in a time when the perils of war and economic conflict threaten the whole world.

Your Chairman has said that observations from me on the political prospect in Europe would be welcomed, since I have recently been there. I am aware that, though you are our best customer, and our social economics are of deep interest in Canada, what happens in Europe is perhaps of even nearer concern to you. To my disclaimer of being an economist, may I add that I am in no degree an expert on international affairs. But it may be that if, as a journalist, I report what seemed to be in October to me the political state of Europe, I shall not be assuming too much.

The impression I gained from conversations in several foreign countries is that war is distant, perhaps even remote. There must be two parties to a fight. Among the powers whose interests just now are acutely conflicting, I cannot see any pair which would be anything like well-matched. Suppose Germany, under the impulse of its new nationalism, and smarting under a sense of injustice and humiliation growing out of the Versailles Treaty, should attack France. How long could Germany, in its weak state, withstand the armament of France? On the eastern boundaries, the Polish army is strong and watchful, and Poland is bound by treaty with powerful nations. So long as the Corridor is not threatened, so long as Alsace-Lorraine is safe, do you believe that Poland or France will provoke a war with Germany?

You do not need the assurance of a citizen of the United States that your own Empire has no warlike designs. You have heard with increasing iteration the voice of the peacemaker at Rome. Russia's front is toward the Pacific, not the Baltic, and Russia and Spain, in my opinion, are more interested now in their social and economic development than in any of those acquisitions which can be gained only by war.

If there is a war spirit in any nation able to respond to it, or soon likely to be able, I did not detect it abroad. Certainly the United States is more pacific than it ever was. The slight impression, persisting for only a few hours, that our delegate at Geneva might mix in the disarmament disputes among Great Britain, France and Germany brought a wave of disapproval throughout the United States. We were never more aloof than now from the political quarrels of Europe.

The only break that was envisaged in the iron ring now set to keep peace in Europe is Austria. It is not unlikely that a Nazi government may come to power there. Through the cooperation with Germany which this will permit, and through other possible gains among suppressed minorities to the southward, a semblance of wheat we used to call Mittel Europa might come. But if it seems to be coming, what of the great power on the South? Will Mussolini be disposed to permit it to grow to a size he deems dangerous to Italy? With Great Britain and France both anxious to keep peace, in a mediating position as between the Fascist and the Nazi Government, it is difficult to see war.

This was the prevailing belief in the capitals I visited. Experience has taught Europe that war is always possible and probably no statesman denies it as a prospect of the distant future. There are acute age-old ethnic discords anal undying memories of losses and humiliations. But also there have been long periods of peace, and that is particularly true when no one can name two parties to a war--a great war, I mean.

Hitler's persecution of minorities has aroused the French Left, which used to be the pacific political group in that country. It has alienated Great Britain and the United States and made not a friend anywhere thus far. But most Germans seem to like it and if it endures and Austria joins in the concept, and the minorities grow restless in the Balkans and Central Europe, some sort of conflagration may come. But even so it would be, I should think, a fire that could quickly be put out by the great powers that are determined to keep the peace of the world.

If in this picture at this time we could put the figure of international economic peace, we might feel that at last we had commissioned the architects of a happier future. But until the experiments in nationalism have run their course and adjustments in ancient systems have been made in the light of results, the group of builders must remain incomplete. Each of us for a while must follow his own path as best he can and hope that soon these will converge into that open place of friendly assembly, the interdependent world. (Hearty Applause.)