CONGRESSIONAL RECORD-HOUSE. - GovInfo

-1920. CONGRESSIONAL RECORD-HOUSE. 7229 REGISTERS OF LAND OFFICES.

John L. Heffernan, Marquette, Mich. Joseph Oker, Helena, l\font. J\laek C. 'Varrington, Broken Bow, Nebr. George A. C. Rochester, Seattle, ·wash. .John L. ·wney, Spokane, Wash. Henry Alexander Porter, Vancouver, Wash. Richard Strobach, Yakima, Wash.

RECEITERs oF P"GBLIC MoNEYS.

Perry H. Ross, Marquette, Mich. Sydney S. Beggs, Waterville, Wash. Kurt A. Beyreis, Wausau, Wis.

POSTMASTERS.

MAINE. Ray C. Gary, Caribou. Gustavus A. Young, Island Falls. Wilbur L. Phoenix:, National Soldiers' Home. Lewis G. Tewksbury, Stonington. Carleton E. Young, Winterport.

NEW YORK. Henry ,V. Bowes, Bath.

OKL.AHO:MA..

Clarence D. Hull, Carnegie. Louie Garland, Fort Gibson. ·william H. Whiddon, Grandfield. 1\Iinnie. Davis, Hastings. Willard P. Morris, Hooker. Charley M. Foil, Jennings. Byron I. Skinner, Kiefer. David G. 'Voodworth, Kingfisher. Roy J. Clark, Kusa. Clifton J. Owens, Mill Creek. Ira K. Turnham, Muldrow. Henry C. De Munbrun, Oilton. Samuel A. Walker, Rocky. Freel Godard, Wellston. John 1\I. Dollarhide, Wright City (late Wright).

PEN ~ sYIXANIA.

l\Iargaret 1\1. Little, l\Iars. WASHINGTON.

Stanley A. Claflin, Elma.

HOUSE OF REPRESENTATIVES. TUEsDAY, May 18,1920.

The House met at 12 o'clock noon. The Chaplain, Rev. Henry N. Couden, D. D., offered the fol

lowing prayer:

Father in hea,en, we approach Thee with gratitude welling up in our hearts for the God-like qualities inherent in the soul of man which in times of crises lifts him out of himself and makes him a hero in the sight of men and in Thine approbat ion.

It is a glorious thing to die on the field of battle, amid the roar of shot and shell for a great principle; but it is more glorious to live to a principle in the daily acts of life. Help us therefore to think right, to live right, in accordance with the right as it has been revealed to us; after the similitude of the world 's Great Redeemer, who lived and died a hero. Amen.

The Journal of the proceedings of yesterday was read and approved.

EXTENSION OF REMARKS. l\Ir. TOW~~n. Mr. Speaker, I ask unanimous consent to ex

tend my remarks in the RECORD by printing a short report of the Commissioner of Labor for Iowa regarding labor conditions in Iowa and in the 1\liddle West. It is short, only occupying one page of t3·pewritten matter.

~'he SPEAKER. The gentleman from Iowa asks unanimous consent to extend his remarks in the RECORD as indicated. Is there objection?

1\fr. GAUD. l\Ir. Speaker, resening the right to object, is this report from the commissioner of labor of the National Government or the State of Iowa?

1\Ir. TOWNER. No, sir; it is a report from the commis!';ioner of labor for Iowa ; he is also Federal Director of the United States Employment SerYice in Iowa.

Mr. GARD. On the question of farm labor in the Middle 'Ve. t?

Mr. TOWNER. Yes, ~ir.

Mr. BL.A.l'II'"TON. Mr. Speaker, reserving the right to object. dealing with what phase of it, may I ask the gentleman?

Mr. TOWNER. The report was gi\en out and was very extensively circulated in tlle United States that 150,000 farm Jaborers were required in Iowa.

Mr. BLANTON. More than lived there? Mr. TOWNER. Yes; and this report goes to show that the

statement is very much less, in fact about 1,500 instead of 150,000 according to the report given to him officially. It has quite an interesting bearing upon labor conditions in the Central West.

l\1r. BLAl~TON. And yet it indicates, which it must do if. it indicates real conditions, that there is to-day within the t: nited States a job for e\ery man who is willing to work.

Mr. TOWNER. Certain1y, upon the farms of the 1\Iiddle West, I will say to the gentleman.

The SPEAKER. Is there objection to the request? [.After a pause.] The Chair hears none.

The matter referred to is as follows: TRt;E CONDITIONS OF FARM LA.BOR IN IOWA.

Reports are being circulated throughout the country i.rtdicating a great shortage of farm labor in Iowa. One of these reports is to the effect that the Iowa farmers are 150,000 men short of r equirements ; that as a result of this many acres of Iowa farm lands are taken out of tillage and put to pasture. These statements are said to have a serious influence with financial institutions, including banks, insurance and loan companies, in the loan of money to Iowa farmers.

These excessive figures are not true. There has been a shortage of fat·m help, as indicated by the reports

from county farm agents to the State Federal Employment Service. Every county in the State is thoroughly organized, there being one county !arm agent · for each county of the State, and Pottawattamic County, because of its size, has two agents, making 100 agents for . the State. Each of these is thoroughly familiar with the conditions of his county.

In a questionnaire sent out to these agents under date of March 1 there was indicated an unsupplied shortage or demand for 619 married farm hands and 745 single hands, making a total shortage for the early part of March of 1,464 farm hands. Under date of April 1 a second questionnaire was mailed to the agents, and the early part of .April indicated a shortage of 297 married farm hands and 1,152 single hands, making a total of 1,449. This represents the shortage, instead of 150,000, as indicated in press notices.

It is reported that Mr. J. N. Howard, president of the American Farm Bureau Federation, a resident of Iowa, should have reported the shortage of 150,000 farm workers. Mr. Howard bas been using the figures of the State Federal Employment Service, and instead ot. 150,000 has given the figures as approximately 1,500 in all of tho addresses that have come to our notice.

As to the great cut of acreage under tillage, 57 counties report a cut in acreage of approximately 10 per cent; 28 counties report a cut, but of so small proportion that the agents did not give the per cent; while 14 counties report no cut in acreage whatsoever. The reports from these also indicate the wages that are being paid and which are likewise stated in dispatches to be so excessive that it will be impossible for farmers to employ labor at the excessive rate.

The average from all reports received from county agents for the months of March and April was $73.25 for married men and $67 .. 91 tor single men. In some counties the rate being, of course, lower than this average, while in other counties because of conditions the rates are somewhat higher.

The lateness of the season has had some little effect in the acreage put under tillage, but Iowa is doing her full share and will continue to do her full share as a food-producing State; and while we can use some additional farm laborers, as indicated by the reports -of the county agents, there is no such shortage as shown in these press dispatches, which are doing a great damage to the State of Iowa and to the Nation.

Attest:

A. L. URICK, Oommi,Qsioner- for Iowa, F eder al DirectQr

United States Employment Ser 'V ice.

GEO. B. ALBEI:T, Ohief Clerk.

MESSAGE :FROM THE SENATE.

A message from the Senate, by l\fr. Crockett, one of its clerks, announced that the Senate had passed bills of the following titles, in which the concurrence of the House of Representatives was requested :

S. 1023. ~t\.n act for the relief of certain nations or tribes uf Indians in Montana;

S. 2298. An act for tlle relief of the Flathead Nation of Indians;

S. 4273. An act to amend an act entitled "An act to amend section 1, chapter 209, of the United States Statutes at Large, volume 27, entitled 'An act providing when plaintiff may .sue as a poor person and when counsel shall be assigned by the court,' and to provide for the prosecution of writs of error and appeals in forma pauperis, and for other purposes," appro\ed June 25, 1910 (36 Stat. L., p. 866) ;

S. 3998. An act authorizing any tribes or bands of Indians of California to submit claims to the Court of Claims;

S. 3210. An act for the consolidation of lands within the Jefferson National Forest;

S. 3244. An act to authorize the Secretary of the Interior to issue patent to R. L. Credille, mayor of the village of Bonita, La., in trust, for certain purposes;

[7230 CONGRESSIONAL RECORD- HOUSE.

S. 4332: An act to exchange the present Federal building and ' site at Gastonia, N. C., for a new site and building;

S. 3372. An act authorizing the Secretary of the Interior to issue a patent to Jennie Dunphy Meyer for certain lands in the State of Nevada;

S. 3992. An act authorizing the e:x:chang.e of certain lands in , the State of Nevada; and r

S. 2800. An act authorizing the Coos Bay, Umpqua, and Sinslaw Tribes of Indians in the State of Oregon to submit claims to the Court -of Claims.

The message also announced that the Senate had passed with amendments bills of the following titles, in which the concurrence of the Hou e of Representatives was requested:

H . R. 5163. An act authorizing certain tribes of Indians to submit claims to the Court of Claims, and for other purposes;

H. R. 9521. An act to prevent hoarding and deterioration of and deception with respect to cold-storage foods, to regulate shipments of cold-storage foods in interstate commerce, and for other purposes ;

H. R. 12626. An act for the relief of certain persons to whom, or their predecessors, patents were issued to public lands along the Snake River in the State of Idaho under an erroneous survey made in 1 83 ;

H. R. 10072. An act to provide for the punishment of officers -of United J3tates courts wrongfully converting moneys coming into their possession, and for other purpos.es;

H. R. 7629. An act to amend the penal laws of the United States; and

H. R. 120-:14. An act to aC'cept the cession by the State of California of exclusive juri diction over the lands embrac.ed within the Yosemite National Park, Sequoia National Park, and General Grant National Park, respectively, and for oth€r purposes.

The message also announced .that the Senate had passed without amendments bills of the following titles :

.H. n. 11024. An act to amend an act entitled "An act making appropriations for the current and contingent expenses of the Bureau of Indian Affairs, for fulfilling treaty stipulations with various Indian tribes, and for oth.er purposes, for the fiscal y.ear ending June 30, 1914," approved June 30, 1913;

H. R.13274. An act to convey to the Big Rock Stone & Construction Co. a portion of the military reservation of Fort Logan H. Roots, in the State of Arkansas;

H. n. 13576. An act authorizing th.e Secretary of War to turn over to the .Postmaster General, without charge therefor, a certain building or buildings now located at Watertown, N. Y. ;

H. R. 13157. An act authorizing the issuance of patent to John on County, Wyo., of lands for poor farm purpo es;

H. n. 8440. An act to restore to the public domain certain land. heretofore reser...-ed for a bird reservation in Siskiyou .and Modoc Counties, Calif., and Klamath County, Oreg., and for other purposes ;

H. R.10285. An act to authorize the purchase by the city of Myrtle .Point, Oreg., of certain lands formerly embraced in the grant to the Oregon & California Railroad Co., and reve ted in the United States by the act approved June 9, 1916;

H. R. 13389. An act to authorize the Secretary of the Interior to dispose of at public sale certain isolated -and fractional tracts of land formerly embraced in the grant to the Oregon & California Railroad Co. ;

H. R. 9825. An act authorizing certain railroad companies or their successors in interest to convey for public-road purposes certain part of their rights of way ; :and

H . R. 13138. An act to amend section 8 of an .act entitled "An act to supplement existing laws against unlawful restraints and monopolies, and for other purposes," approved October 15, 1914, as amended May 15, 1916.

The message also announced that the Senate had further insisted upon its amendments to the bill (H. R. 11.960) making appropriations for the "Diplomatic and Consular Service for the fi cal year ending June 30, 1921, disagreed to by the House of Representatives, had agreed to the further conference asked by the House on the disagreeing votes of the two Houses thereon, and had appointed l'Ur. LODGE, Mr. BORAH, and Mr. POMERENE as the conferees on the part of the Senate.

The mes age also announced that the Senate had agreed to the conference on the Agricultural bill (H. R. 12272), had further insisted upon its amendments, and agreed to the further conference asked by the House, and had appointed Mr. GRONNA, l\1r. NoRRis, and 1\lr. GoRE as the conferees on the part of the Senate.

SENATE BILLS R~RED.

Under clause 2, Rule XXIV, Senate bills -of the following titles were taken from the Speaker's table and referred to their appropr iate committees, as indicated below :

S. 3210. An act for the consolidation of lands within the J efferson National Forest; to the Committee on the Public Lands.

S. 3372. An act authorizing the Secretary of the Interior to issue a patent to Jennie Dunphy Meyer for certain lands in the State of Nevada ; to the Committee on the Public Lands.

S. 3992. An act authorizing the exchange of certain lands in the State of Nevada.; to the Committee on the Public Lands.

S. 4273. An act to amend an act entitled "An act to amend section 1, chapter 209, of the United States Statutes at Large, volume 27, entitled 'An act providing when plaintiff may ue as a poor person and when coun el hall be assigned by the coru·t,' and to provide for the prosecution of writs of er·ror and appeals in forma pauperis, and for other pur11oses," approved June 25, 1910 (36 Stats., p. 866) ; to the Commitee on the Judiciary.

S. 4332. An act to exchange the present Federal building and site at Gastonia, N. C., for a new site and building; to the Committee on Public Buildings and Grounds.

S. 1023. An act for the relief of certain nations or tribes of Indians in Montana; to the Committee on Indian Affair .

S. 2298. An act for the relief of the Flathead Nation of Indians; to the Committee on Indian Affairs.

S. 2800. An act authorizing the Coos Bay, Umpqua, and Siuslaw Tribes of Indians in the State of Oregon to submit claims to the Court of Claims; to the Committee on Claims.

AMENDING PE "AL LAWS OF THE UNITED STATES .

:Mr. STEENERSON. Mr. Speaker, I a k to take from the Speaker's table the bill H. R. 9781, with Senate amendments. It does not require consideration in the Committee of the Whole House, and I move to concur in the Senate amendment .

The SPEAKER. The gentleman from Minnesota calls up the bill with Senate amendments, which the Clerk will report.

The Clerk read as follows : A bill (H. R. D7 1) to amend section 217 of the .act entitled "An act

to codify, revise, and amend the penal laws of the United States,•• approved March 4, 1009.

The Senate -amendments were read. 1\Ir. STEENERSON. Mr. Speaker, I call up this bill under

Rule XXIV as .being a House bill with Senate .amendments-The SPEAKER. The gentleman is recognized. l\fr. STEENERSON. And neither the bill nor amendments

are required to be considered in the Committee of the ·whole House. It is simply a matter of legislation. The Senate amendments simply increase the penalties prescribed in the law. This is a bill that was passed by unanimous consent here on a report of the Post Office Committee, on the recommendation of the Post Office Department, and that department has recommended it for two or three successive times, but this is the first time that it ha.<; gone through both Houses.

1\fr. ANTHO~'"Y. What does the bill do? Mr. STEENERSON. It provides for permits to transmit

poisons in the mail as prescribed by the Post Office Department from manufacturers and pharmacists to dealers, denti ts, physicians, surgeons, and so forth. The necessity fot• it arises from the decision of the Federal coru·t, which ruled that the former statutes did not authorize the department to limit the transmission of these poisons from manufacturers and dealers to physicians, and so forth, and the rules and regulations to -that effect w.ere held in canfiict with the statute itself.

1\fr. CLARK of 1\Iissouri. 'Vill the .gentleman yield? 1\lr. STEENERSON. Yes. 1\Ir. CLARK. of 1\Iissouri. What is -this tl;le gentleman is

doing, raising the penalty on something from $5,000 to $10,000? ~Ir. STEENERSON. The Senate has amended the House

bill, which prescribed a penalty of $5,000 and 10 years, the same as existing law, Penal Code, section 217, by raising the maximum to $10,000 or 20 years.

Mr. CLARK of 1\Iissouri. For what? 1\Ir. STEENERSON. For transmitting poisons in the mail

with intent to kill or in anywise hurt, harm, or injure, or damage, deface, or otherwise injnre the mails or other property.

Mr. CLARK of Missouri. Well) now, does the gentleman from Minnesota believe it does any good to raise the penalty to an exorbitant degree?

1\Ir. STEENERSON. The Senate, in their report, states that inasmuch as a violation of this statute transmitting poisons through the mail with such intent might result in death, they recommended that the penalty be increased to $10,000 and 20 years.

Mr. CLARK of 1\Iissouri. What I am asking the gentleman is, if he thinks that incr easing the penalty improves the law ?

f1920. CONGRESSIONAL. RECORD-HOUSE. 723I lli. STEE!\TERSON. Well, I think it is justifiable to in·

crease the penalty as recommended by the Senate: 1\fr. CLARK of Missouri. I know, but you do not answer

my question. That is, Do you believe that increasing the penalty for a crime- to an exalted point. helps to enforce the law o-r does any good at all?

1\lr. STEENERSON. I do, because this law practically leaves the maximum to the court, and th~y can put it as low as they desire in their discretion, and in the administration of law there might be cases where the court would be justified in imposing the high penalty proposed by the Senate.

Mr. GARD. Does the penalty fix a minimum or maximum? Mr. STEENERSON. It simply fixes a maxim.nm. Mr. GA.RD. And no minimum :punishment? Mr. STEENERSON. No. Mr. GARD. What is the maximum? Ten years in prison? Mr. STEENERSON. Yes. Mr. Speaker, I move the preTious

question on the amendment? Mr. 1\IOON. Is this tile Senate amendment to the bill that

passed the House? 1\Ir. STEENERSON. Yes. It was reported by our committee

unanimously and passed unanimo-usly in the House about two months ago.

Mr. MOON. And it comes back with a Senate amendment? Mr. STEENERSON. It comes back with a Senate amendment

which increases th~ maximum penalty. 1\fr. MOON. Why does it not go to the committee? Mr. STEENERSON. Wen, under- the rules I mo"Ve to concur. Mr. MOON. I know you can do that, but I think the matter

best go to the committee for consideration. 1\fr. CANNON. What rule now is the gentleman proceeding

under? Mr. STEENERSON. Under Rule XXIV. The SPEAKER. The question is on agreeing to the Senute

amendment. · The amendment was agreed to.

·on motion of Mr. STEENERSON. a motion to reconsider the vote by which the Senate amendment was agreed to was laid on the table.

CONTESTED ELECTION C.aSE-SAL'l'S AGA1NST MAJOR.

Mr. DALLINGER. 1\Ir. Speaker, in accordance with dle notice which I gaTe on Saturday, I wish at this time to call up the contested election case of James D. Salts against Sarnu~ C. Major, of the seventh congressional district of Mlssouri, and I move the adoption of the reso-lutions contained in said report and now in the hands of the Clerk.

NAVAL APPROPRIATIO~ BU.L

Mr. KELLEY of Michigan. Will the gentleman withhold tha.t until I make a request to send the naTal IJ.ill ta conference?

l\f,r. BALLINGER. Yes. Mr. KELLEY of Michigan. I ask unanimous. consent that the

bill H. R. 13108, the naval appropriation bill, be taken from the Speaker's table, all amendments disagreed. to, and the conference asked: for by the Senate agreed to.

The SPEA.h.'ER. The gentleman ft:om Michigan asks unanimous consent to take from the Speaker's table the Naval appropriation bill, disagree to all the Senate amendments, and agree to the conference asked by the Senate. Is there objection? [After a pause.] The Chair hears none.

The SPEAKER appointed the following conferee : 1\Ir. BuT/ LER, ' Mr. KELLEY of - fichigan. Mr. Br..r.TTEN, l\1r. PADGETT, anti 1\lr. RIORDAN.

CONTESTED-ELECTIO:'f CASE-SALTS AGAINST MAJOr... Mr. DALLINGER. l\lr. Speaker, I renew my motion for the

adoption of the resolution. The SPEAKER. The gentleman from Massachusetts mo"Ves

the adoption of the r e olutions, which the Clerk \'iJ.ll report. The Clerk read us follows:

CONCI.USIO]';.

You.r committee, therefore, for the reasons hereinbefore stated, re~pectfully recommends to the Rouse of Representatives the adoption of the following resolutions :

"Resolv ed, That James D. Salts was not elected a Representative in this Congress from the seventh congre sional district of the State of Missouri and is not entitled to a seat herein.

"Resolved, That Sam C. Major was duly ele.cted a Representative in this Congress from the seventh congressional district of the State. of. Misf':'ouri and is ntitled to ret.<tin a seat herein."

JHr. DALLINGETI. 1\fr.' Speaker, I intend to occupy the time and the attention of the Members of this House only a few moments on this matter. I do wish, however, to make a brief statement, because it has been the custom in some quarteTs to adversely criticize tlte Congress of the United States in regard to its conduct of contested-election cases. I find that in many parts of the country it is the common belief among the people

that these cases are decided on partisan grounds and Mt upon their merits. This belief, whatever- may have been the case in the past, has uo longer any basis of fact, and. no bette.r proof of this can be found than the record o£ the Committee on Elections No.. 1 fo_r the last three Congresses.

1\:fr. BLANTON. Will the distinguished gentleman yield? 1\fr. DALLINGER. Certainly. -Mr. BLANTON. Has the distinguished gentleman so soon

forgotten the case of Weaver against Britt? Mr. DALLINGER. Mr. Speaker, I was referring particularly

to the Committee on Eleetio-ns No. 1. I believe the case to which the honorable gentleman has :referred was decided upon its merits, upon. the law and the facts-. But the Committee on Elections No. 1 during the last three Congresses has made a unanimous report in er-ery case submitted to it

1\fr. GOLD FOGLE. Will the gentleman kindly yield 1 1\fr. DALLINGER. Yes. fr. GOLDFOGLE. Tile gentleman very well suggested that

these cases ought to be decided on their merits, and I thorou-ghly, ao<.Tee- with him. I want to call the attention of the gentleman, ho.-weTer, to the fact that when he speaks of the past, that the Committee on Eleeti&ns No. 3, oi which I was privileged to be the eha.it~man for some years, decided not only e\ery case on its merits, but I think tl1e reco-rd would show that that committee o>e-r \Yhich I presided decided ID()re cases-it was then a Democratic comrnittee:-in favor of Republicans by fa.r than it decided in favor of the Democrats, because we had considered eaeh case upE>n its merits, and cared nothing about the political affiliations e-f either contestee m· contestant.

l\lr; D.ALLINGER. I will say, 1\!r. Speaker, that that is exactly the way these contested-election cases ought to be decided.

Now, in the last Congress the Committee on Elections No. 1 consisted of six Democrats and three Rep-ublicans, and under the letldeJ·ship of my. distinguished friend and colleague, Judge WILso~ of · Louisiana., we had three cases to decide, and in every case the committee unanimously decided in favor of the Republican candidate fo1· Congress. In this Congress this committee, of which I have the honor to- be chairman, has had two cases of a partisan cllaracter-tbe case of Reeves against Bland and the present case of Salts against l\lajor, both from the State-of l\lissouri-and although the committee in this Congress consists of six Republicans and three DemocTats, in both of those cases, after a careful consideration of the facts an<l the law·, t he committee has unanimously decided in favor of the Democrat.

In this present case your committee finus, afte.r a thorough im:e tiga.tion of all· the facts, that James D. Salts, the Republican con~estant, was not elected, but. that the sitting 1\iernber [SAJ>Iu"l!JL C. 1\iA.JoR] was elected by a p-lurality of 56 Totes over his Republican contestant. I therefore trust that these r"f'solutions, unanimously reported by your committee, wtll be nu:.mimously adopted by this House. [Applause.]

The SPEAKER. The question is on agreeing to the resolutions.

The resolutions were agree<l to. NITRATES AND ~ITRATE PLANTS.

Mr GRAHAl\I of Illinois. 1\Ir. Speaker. I ask unanimous con£ent to proceeti f<rr one minute.

The SPEAKER. The gentleman from Illinois [1\11·. GRAIIAM] asks unanimous consent to proceed for one minute. Is there objection? [After a pause.] The Chair bears none.

,1\ir. GRAHAM of Illinois. Mr. Speaker, the Select Co.mmittea on Expenditures in the War Department has a report which it is about to file in the matter of nitrates and nitrate plants. I had promised the gentleman from Tennessee [Mr. GARRETT] that when I filed the report in the basket I would so advise him, for some parliamentary steps which he desired to take at that time. I desire to state that I am now filing the report in the basket.

1\Ir. GARRETT. 1\fr. Speaker, I make the point of order on the report, and being uncertain as to whether this point of o-rder, which has no political phase whatever, may not in some form reach the House for decision under the precedents, much as I regl.'et to do. so, feeling t11at the membership • .uerhaps, should hear the discussion on it, I am constTained to make the point of no quorum, reserving the point of order.

The SPEAKER. Before the gentleman does. that, will he allow the Chair to suhmit this question to 'him?

lUr. GARRETT. Yes. The SPEAKER. To the Chair it is a novel suggestion thn.t

the gentleman can make a point of order to a report as it goes into the basket. ·

1 Mr. GARRETT. I will state to the Chair what is in· my mind very frankly. It is not my purpose to appeal from the decision

. of the Chair-! will put it that way. because I know it will be

7232 CONGRESSIONAL RECORD-HOUSE. }fAY 18,,

. a well-considered opinion-but I do not know but that the Chair himself might feel constrained under some of the precedents, with which, I think, the Chair is familiar, to submit it to the House without pa sing directly on the question.

The SPEAKER. The gentleman means the question as to whether a point of order can be made on the putting of the report in the basket?

1\Ir. GARRETT. No; as to the disposition o! the point of order to the report itself. I think there is no question but that I am in time in making the point of order and am making it at the rigbt time; but whether the Speaker will feel constrained to submit it to the House without passing upon it, I do not know.

l\lr. MANN of Illinois. 1\fr. Speaker, I make the point of order that the gentleman can not make a point of order at this time on the report submitted through the basket. He can not make the point of order until the matter coines up for consideration.

l\It·. GARRETT. The gentleman has presented the report from tlle floor of the House under an agreement.

l\lr.l\IA.NN of Illinois. Oh, no; he has not presented the report from the :floor of the House, but he has presented it through the bas))et. I ha\e no objection, so far as I am concerned, to the gentleman presenting the report from the :floor of the House.

1\Ir. GARRETT. It was my understanding that it was to be so presented, and I thought it was the understanding of the gentleman from Illinois [l\Ir. GRAHAM]. I 'think it ought to be disposeti of before the majority can dispose of the resolution.

Mr. l\IA...~N of Illinois. I do not desire to lose any rights that I may wish to preserve. The gentleman himself is seeking to protect his rights, and I am likewise seeking to protect my rights.

Mr. GARRETT. We are both within our rights. The SPEAKER. The point of order that the gentleman from

Illinois suggests is the same point that the Chair ''"ished to inquire of the gentleman from Tennessee about.

1\Ir. GRAHAl\1 of Illinois. 1\Ir. Speaker, I dislike very much to have any controversy with the gentleman about it. The relation. between the members of this committee have always been pleasant. But I have done just exactly what I told the gentleman from Te.imessee [l\Ir. GARRETT] I would do. I told him I would advise him when I dropped the report in the basket, so that he could make the point of orqer.

l\lr. GARRETT. I do not dispute the gentleman's word. I simply got the wrong impression. The resolution under which this committee was created, Mr. Speaker, gave it the right to report at any time. The language is the same as that in the certain cases of the general rules of the House. I thought the repot't was to be made from the :floor of the House, the same as in tl.le case of a privileged matter. There i~ no dispute between the gentleman from Illinois and myself on that question. There can be no question of veracity raised between us.

l\11·. l\IANN of Illinois. The gentleman from Tennessee might make the point of order that the report would have to be presented from the :floor of the House. I do not think any of these reports have been made from the floor of the House heretofore.

1\Ir. GARRETT. I think not. I ask tmanimous consent that t11e gentleman from Illinois [l\Ir. GRAHA.u] may submit this report as from the floor of the House, if that is agreeable to him, so that we may dispose of this point of order ·without fur tller trouble. ·

l\1r. GRAHAM of Illinois. M:r. Speaker, reserving the right to object, I am not a parliamentarian. The gentleman from Tennessee [1\fr. GARBETT] is a very skillfull\lember of the House and well versed in parliamentary law. I do not know the exact effect that this would have upon the procedure, and therefore I am constrained to object. · .

1\Ir. GARRETT. Then I shall have to make the point of order that the report should be presented from the floor of the House.

The SPEAKER. The Chair will be glad to hear the gentleman on that point.

1\Ir. GARRETT. The resolution under which this committee wa · created provided that it should have the right to report at any t ime. The language is the same as the language-

The SPEArillR. The Chair has just asked the parliamentary clerk to look that up. The Chair is not familiar with the language and does not recall what it was. Will the gentleman please read the language?

l\fr. GARRETT. It is provided that "the select committee shall report to the House, in one or more reports, as may be deemed advisable, the results of its investigation."

Perhaps I am in error about the matter of its providing that they should have the right to report at any time, unless it is in the former part of the resolution. I was under the impression that the resolution provided that the committee should have the right to report at any time.

Mr. 1\IANN of Illinois. The gentleman from Tennessee will recall, of course, that as to the former reports from this committee--

l\fr. GARRETT. They have been made through the basket. l\lr. MANN of Illi~is. They were not only made through the

basket, but they were not called up as privileged reports, but came up under a rule, and it seems to me that the language of the resolution .creating the committee clearly does not give the report a privileged status. I think the gentleman agrees to that since reading the language himself.

1\Ir. GARRETT. Well, the purpose of the special rules wo.s to have discussion. That was the real reason for the bringing in of those rules.

l\Ir. l\IANN of Illinols. If it had been calll!d up at any time there could have been discussion. It was of a privileged status.

1\Ir. GARRETT. I think the report could, but I do not think it was privileged for discussion under the general rules of the House.

1\Ir. MANN of Illinois. Perhaps not. 1\Ir. GARRET'!'. '\Veil, Mr. Speake1~, I suppose we shall have

to have a ruling on the question as to whether or not, it being presooted through the basket, a point of order lies.

Mr. MANN of Illinois. I have no objection, as far as I am concerned, to the gentleman proceeding with his argument and the point of order reserved.

Mr. GARRETT. Will the gentleman withdraw his point of M~? .

Mr. l\IANN of Illinois. No; I will reserve it. 1\Ir. GARRFJTT. That means two points of order pending at

once. l\lr. l\IANN of Illinois. · That frequently happens. Mr. MO:NDELL. Mr. Speaker, as to the point of order made

by the gentleman from Tennessee that reports from this committee must be made from the floor, I think the Chair has already ruled on that point.

l\lr. GARRETT. I withdraw that point, I will say to the gentleman from Wyoming. ~

The SPEAKER. The Chair will suggest that it might save the time of the House if this matter went over for a day, unless there is some particular haste. There might be some agreement a8out it.

Mr. MANN of Illinois. I am willing to reserve my point of order. ·

1\fr. GARRETT. I believe I am . within my rights in making the point of order as soon as I have official notice that the report is made. I wish to explain the situation. If the point of order I make is good, this report ought not to appear as the report of the committee and ought not to be printed as such. If the point of order should be sustained, I think it is well understood between the chairman of the select committee and myself that it will be modified to meet the situation. I do not wish it printed as the report of this committee if in fact it is subject to the point of order. That is my whole purpose in making the point of order at this time. I am perfectly willing to argue it with the point of order of the gentleman from Illinois pending. Of course, I will have to take the decision of the Chair.

Mr. l\IONDELL. The question raised, Mr. Speaker, is rather important as to whether or not a point of order can be made against a report of this kin.d when dropped in the basket. If the Chair prefers to have the matter go over for a brief time, it seems to me that is the thing to do.

The SPEAKER. This is the first time the question has been raised as far as the Chair knows. This is the t1"l"st time that the point has e\er been made.

Mr. GARRETT. I have some decisions. HoweYer. I am pet·fectly willing that it shall go over with the understanding that it shall not be printed until the point is disposed of.

l\1r. GRAHAM of rmnois. l\Ir. Speaker, if I may suggest, for the expedition of this matter, why can not the matter be taken up later to-day when the point of order of the gentleman from

· Illinois might be discussed. There are some authorities on that proposition, and I have no doubt the gentleman from Illinois is conversant with them. I have one or two mvself.

Mr. GARRETT. I ·have a brief on the subject. 1\Ir. GRAHAM of Illinois. The necessity for haste in this

matter is that we are going to adjourn shortly. This select committee has several reports yet to make and it all takes time, and we want to hurry it along as fast as we can.

The SPEAKER. If the gentlemen have investigated this question, the Chair would be glad to hear them. The Chait· understood that the point as to whethet· a polnt 6f order· could be made on a report dropped in the basket had neve1· arisen, but the Chair would be glad to hear gentlemen on tllat point.

I -

1920. .CONGRESSIONAL RECORD-HOUSE. -.7233~

Mr. BANKHEAD. 1\Ir. Speaker, I thought the gentleman from Tennessee made the point of order that there was no quorum.

:Mr. GARRETT. I withdrew that. 1\fr. 1\IANN of Tilinois. I do not know that I would insist

on the point of order, but I would like to reserve it, and perhaps I will withdraw it.

1\Ir. GARRETT. I am perfectly willing that the discussion on the point of order made by myself shall proceed with the point of order by the gentleman from Illinois reserved, if it be so desired by the Speaker. ·

The SPEAKER. Does the gentleman from Tennessee de ire to make the point that there is no quorum present?

Mr. GARRETT. I do not. 1\Ir. Speaker, I have indicated that in a certain contingency it might be desirable for the Members generally to hear the arguments. I think I made it clear to the Speaker what that contingency is. I presume the Speaker will rule on the question one way or the other.

Now, 1\Ir. Speaker, I make the point of order that the report of the Select Committee to Investigate Expenditures in the War Department is not in order. First, because parts of its findings exceed the authority of the committee under the terms of the resolution creating it; and, second, that it infringes upon the jurisdiction of another committee of the House of Representatives, and is therefore not in order under the rules of the House.

Historically, this may stated: During the progress of the war with Germany there were developed and constructed two practically completed plants for the fixation of atmospheric nitrogen, one being what may be properly characterized as the pressure process, which was a relatively small experimental plant- The other was a plant in which there was to be utilized what is known as the cyanamide process. That plant was built for a capacity of 110,000 tons of ammonium nitrate per year. It was completed and went into operation in some of its units within a few days after the signing of th~ armistice. The War Department, through the Secretary of War, has recommended to Congress-whether in an official recommendation or by inference I am unable to state-certn,in legislation touching the disposition for the future of plant No. 2. Bills, in accordance with the recommendations of the War Department, were drafted and introduced, one in the Senate .and referred to the Committee on .Agriculture of the Senate, an-d one in the House by the gentleman from California [Mr. KAHN], which was referred to the, Committ~ on Military .A.:ff.airs, it being introduced and so referred long after this Select Committee on Expenditures was created, and while it was functioning.

That bill provided in brief for the creation of a Government corporation, all the stock to be owned by the Government, and I believe the estimate is about $3,000,000, to add to this plant which is now an ammonium nitrate plant, certain mechanisms that will be required to turn a part of its units into the production of ammonium sulphate which is a fit form for fer_tilizer, and sell that product into commerce. The remainder of the fund suggested in the bill is to be operating capital.

That is the substance of what is contained in the bill now pending before the Committee on Military Affairs. Bearing that in mind, I direct th~ attention of the Chair to finding No. 30 ·of the report of the select committee now before us. Finding No. 30 of the majprity report says: · It would be unwise and contrary to the Government's best interests for the War Department or any agency of the Government acting under or through such department to build and operate a plant in conjunction with Nitrate Plant No. 2 "S.t Muscle Shoals for the manufacture of ammonium sulphate -and other nitrogenous compounds for commercial purposes. .

In other words,-1\!r. Speaker, that is a direct, specific recommendation leveled -at the very heart of a bill now peniling, and which has been for some time pending, before the Committee on Military Affairs of the House, and upon which that committee has, I am informed, held hearings. Therefore, although it does not mention the bill by name, since it involves the legislative proposition, and the only legislative proposition that is pending anywhere before any committee of the House, it infringes upon the jurisdiction of the Committee on Military Affairs. I am familiar with the line of holdings, correct in themselves, that there is double jurisdiction. That frequently arises. There might have been some question as to this particular bill, as to whether it properly belongs to the Committee on Military

·Affairs or to the Committee on Agriculture of the House. If the Committee on Agriculture or any other committee of the

•House had obtained a public bill without objection and no effective effort had been made to take that jurisdiction away from it, covering the same subject matter, either of those committees might have come in and reported upon it, and the matter ~ould not have been subject to the objection which I am now

making, but the investigating committee never had the legis..lative subject referred to it. I submit that under the-resolution appointing this select committee its jurisdiction may ·be- terselY, ' stated as follows. It has authority-

First. To investigate contracts and expenditures by the 'Var Department. ·

Second. To exercise the power and authority granted the Committee on 'Expenditures in the War Department, to which I shall hereafter refer.

Third. To send for persons and papers. Fourth. To administer oaths. It probably has that authoritY, ,

without express statements in the resolution. Fifth. To take testimony. Sixth. To sit during sessions of the House. Seventh. To appoint subcommittees. .Eighth. To report in one or more reports with recommendu ..

tions. Those recommendations m.ust, I take it, be within the scope

of the committee's powers and jurisdiction. Under the second item which I have mentioned the committee

may exercise the power and authority of the Committee on Expenditures in the War Department. We must go to the general rules of the House to see what that authority is. I submit that the jurisdiction is limited under the general rules o.f the House so that the committee has authority merely to inquire into and repo1•t upon the justness, the correctness, and economy of expenditures and into the proper application of public moneys, and into the economy and accountability of . public officials. I tl.link by no possible stretch of the general roles of the -House defining the .jurisdiction of the standing Committee on Expenditures in the War Department can its powers go beyond those I ha"fe just enumerated.

The SPEAKER. The gentleman has not read it all, has he? Mr. GARRETT. I think I have read a correct analysis of

it. There are conceivably legislative propositions with which this committee might deal, and with which it· would have the authority to deal, and that ought to be referred to it und~· the rules of the House. I do not cleny all legislative authority to this committee under J}roper cases, under a bill that may_ properly be referred, coming within the scope .()f the rule itself; but this bill has never been referred to the commiitee. It was referred, as I stated once or twice before, long after this select committee was created, and properly referred to the Committee on Military Affairs. Therefore, so far as the subject matter of tl1is bill is concerned, it is an infringement -upon the jurisdiction of that committee to attempt to make a recommendation, to be followed by a resolution, in all prObability, that would endeavor to commit this House upon that legislative act.

Mr. MANN of Illinois. 1\Ir. Speaker, will the gentleman yield? 1\Ir. GARRETT. Yes. Mr. MANN of Illinois. Does the gentleman contend that any

jurisdiction which this special committee may have acquired at the time it was created could be affected or taken away from the committee by the introduction of a bill sub equent to the creation of the committee and a reference of that bill to some other committee?

M.r. GARRETT. I would not make that contention. Mr. MANN of Illinois. I think that is just what the gentle

man said. Mr. GARRETT. I would not make that contention. I would

say this, that if this committee chose to undertake to deal with that proposition it is its duty to proceed in the regular wny to obtain jurisdiction of the bill.

Mr . .MANN of Illinois. No ; but here is the point, if the gentleman will pardon me. This committee, when it was created, was given certain jurisdiction. It either had or had not jurisdiction over the matters to which the gentleman had referred. How could the introduction of a bill subsequent to that have any effect upon the jurisdicthm of this committee?

Mr. GARRETT. I do not think--1\Ir. MANN of illinois. Oh, the gentleman has constantly re

ferred to the fact that a bill was pending before the Committee on Military Affairs which deprived this committee of certain jurisdiction when that bill was introduced long after this committee was created. If this committee had jurisdiction, the introduction of a bill had nothing to do with it, and if this committee had no jurisdiction the introduction of the bill had no effect upon it. What pertinence has the introduction and the reference of a bill to the Committee on :Military Affairs upon the jurisdiction of this committee, created before the bill was introduced? '

Mr. GARRETT. Of course, it would clearly indicate that, in the opinion of the Ohair, this committee did not have jur:'s'<liction of it when he referred the bill.

7234 CONGRESSIONAL RECORD-HOUSE. ~fAY 18 '

Mr. 1\IANN of Illinois. But this committee is not a legislative committee, and no bilL could be referred to it. It has no author· ity to report a bill. · -

Mr. GARRETT. That is precisely what I am arguing, except that !'do not go quite the length of saying that it has no legislative jurisdiction.

Mr. 1\IANN of Illinois. It has no legislative jurisdiction over a bill. It is an investigating committee. I do not think a bill could be referred to it.

Mr. GARRETT. I do not go quite that far. I think there are some legislative propositions it conceivably might h_ave jurisdiction over. It does not have jurisdiction over this. ·Will not the gentleman from illinois agree with me, that if we have no authority to report a bill we ought not to report upon the bill?

Mr. MANN of Illinois. .But there has been no report upon the bill.

Mr. GARRETT. Not mentioning it by name, but the subject matter is ·there.

Mr. MANN of Illinois. But both the title !lnd the number of a bill must be mentioned in a report upon it. Stating what ought to be done is a recommendation, which has nothing to do with that particular bill. That is outlining a policy recommended by the committee.

Mr. GARRETT. So much for the proposition of the infringement upon the jurisdiction of the other committee of the House.

Mr. JUUL. Mr. Speaker, I rise to make a parliamentary inquiry if in ·order.

The SPEAKER. It is in order if the gentleman from Tennessee will yield for that purpose.

1\lr. JUUL. Will the gentleman from Tennessee yield to enable me to make a parliamentary inquiry?

Mr. GARRETT. I will. Mr. JUUL. Mr. Speaker, the gentleman from Tennessee

seeks if I understand the point of order, to prevent the printing of a bill, or a report at least, that is part of the object. I want to ask the Speaker, as the gentleman possesses information which the Members of this House do not possess, how the Members of this House can vote intelligently upon this proposi.: tion? Suppose the matter would come up in the form of an appeal from the decision of the Chair and the gentleman possesses all the information beforehand and we possess none at all?

Mr. GARRETT. If the Chair will permit me to answer that--

The SPEAKER. The Chair will be glad for the gentleman to answer it.

Mr. GARRETT. I will say to the gentleman from Illinois that, so far as I am concerned, the ruling of the Chair is to be final on the proposition. It is not my intention to appeal if the Chair rules against me. What the intention of the gentlemen on the other side may be if the Chair should hold with me I do not know.

1\It•. JUUL. I hope the gentleman from Tennessee under ·tands I mean to be perfectly fair-- ·

1\fr. GARRETT. Surely I do. 1\Ir. JUUL. But here we are, a number of Members upon

this side, and the gentleman apparently knows all about a document that has not yet been dropped in the basket--

1\Ir. GARRETT. It has been dropped in the basket. 1\fr. JUUL. The gentleman speaks with all information con

cerning the contents of the document, and we are sitting here entirely in the dark and do not know whether or not we are in sympathy with the gentleman or oppose him.

· 1\fr. GARRETT. - I will tell the gentleman confidentially that he should sympathize with me. [Laughter.]

l\Ir. JUUL. I think so eminent a parliamentarian as the gentleman from Tennessee ought to permit the Members to find out what is in this mysterious document that he k"'llows all about and that we know nothing about; and it would seem to me that the fair thing would be to permit the document to be printed and let all of the Members become as conversant with it overnight as the gentleman is now.

l\Ir. GARRETT. 1\lr. Speaker, I stated a while ago-I do not know whether the gentleman from Illinois heard me or not-if I am correct in my contention there are, I think, excellent reasons, not of a parliamentary but of a public character, why this ought not to go to the House and the country as the solemn report of a committee, and it is for that reason that I desire to have this parliamentary proposition disposed -of at this time. Of course, if it is proper from a parliamentary standpoipt, it will be printed; and if it is improper, it ought not to be, in my 'Judgment.

I have read, I will say to my friend from Illinois, fmding No. 30, which is the very heart of the proposition. All the

other findings from 2-8 to 37 and finding 39 are directly argu. mentative in support of fi.il.ding No. 30, as are various parts of the so-called brief attached to the findings.

1\Ir. JUUL. Will the gentleman permit me again? Mr. GARRETT. I will. Mr. JUUL. I do not know of any judgment of any gentle. _

man on the other side that I would rather take than that of the gentleman from Tennessee.

1\Ir. GARRETT. I thank the gentleman. Mr. JUUL. Here, if the gentleman's point of order pre.

vails, we are sitting entirely in the dark and we do not know whether or not we ought to be with or agaiJ!St the gentleman, whether it is proper or improper. Here is the word of one gentleman who has read the bill with 400 other gentlemen who have to accept it without investigation, and I think the document ought to be printed and let us share with him the re. sponsibility of passing on whether or not it is a good or- bad document.

1\Ir. GARRETT. Of course, I have stated my ·reasons for not desiring it printed. It is a matter, I will freely and frankly state, I am willing to leave to the decision of the Chair. ·

Mr. SNELL. Will the gentleman yield for a question? Mr. GARRETT. I will. Mr. SNELL. I understand the gentleman is against the rec

ommendation as to further procedure that is contained in sec· tion 30 of the report?

1\fr. GARRETT. I prefer to state it this way, I will say to · my friend from New York. In my opinion that is Il-Ot only a recommendation, but a finding and an argument in support of

. the finding going beyond the jurisdiction of the committee. That is one of the phases of my point of order, and the other is with reference to its infringing upon the jurisdiction of another committee. •

Mr. SNELL. I would like to call the attention of the gentle· man to the further reading of section 712 which refers to Expenditures Committee. It reads :

The proper application o! public moneys and also retrenchment. It seems to be that under those two headings anything that

is contained in section 30 would be entirely in order. l\fr. GARRETT. Then the gentleman's contention would be.

of course, quite different from the contention of the gentleman ' from_ Illinois [1\Ir. MANN], if I understood both correctly, be. 1

cause the gentleman from Illinois holds that it has absolutelY, no legislative authority. I think, Mr. Speaker, that is sub· stantiaUy all that I care to say at this time, and I trust I have made clear that I rest the point of order upon two bases. namely, that the report undertakes to deal with a legislative proposition pending before another committee, and therefore infringes upon its jurisdiction, and that it exceeds the au· thority conferred upon the select committee under either the general rules of the House or under the powers given by reso· lution 78.

Mr. l\fAl\"N of Illinois. Mr. Speaker, this committee was created, as I understand it, June 4, 1919. The power given to the committee is as follows: " Which said committee is herebY, authorized to fully investigate an· contracts and expenditures made by the War Department or under its direction during the present war," and in addition, and so forth, power is con· ferred by the rules of the House upon an expenditure com· mittee, but the rules do not extend the power of the committee as to making investigation. The language in the bill gave them authority to investigate all contracts and expenditm·es made by the War Department. Then the rules further provides:

That said select committee shall report to the House, in one or more reports as it may ileem arlvlsable, the result of its investigations, .with such recommendations as it may care to make. . 1

Mr. GARRETT. \Vill the gentleman yield? Mr. l\fANN of Illinois. I will yield. Mr. GARRETT. I suppose the gentleman will agree with me

that that would mean recommendations coming within the scope of their authority under the rules? .

Mr. l\1ANN of Illinois. I doubt whether they would have authority to recommend that the Constitution be amended as to the length of term of the President.

l\Ir. HUSTED. It would include recommendations also a-:; to the future policy of the War Department.

Mr. MANN of Illinois. It would clearly- include any recom· mendation which in any way related to the expenditures of the War Department, either as to the past or as to the future, relating to the matters for which expenditures had been made in the past. Now, that is as plain as the nose on a man's face! This committee had the power to investigate the expenditures and to report its recommendation as to whether those expenditures were made for a purpose which was wise, and whether additional expenditures ought to be made to complete a project

1920. CONGRESSIO.N .A .. L RECORD-HOUSE. 7235 for which the past expenditures were made, or wh~ther the Government ought to proceed to utilize the expenditures which were made or whether the Government ought to dispose of the things that were created by the expenditures already made. The committee would have had that power, in my judgment, even if there had been no provision made giving them the power to make recommendation. But here is an express direction to. the committee that it may not only report the results of its investigations, but they make recommendations based upon· those investigations. If all the committee could do was to report upon the investigation which was made, what is the object in saying that it shall haYe the power to make recommendations? It is already gh·en the power to make the report of its investigation.

Now, l\lr. S:peaker, the gentleman from Tennessee [1\fr. GARRETT] has insisted that this· committee does not haye the right to make a report which will affect in some way a bill subsequently introduced in the House if its recommendation should be followed. Clearly the jurisdiction of this committee wa · fixed at the time it was created. No bill subsequently was introduced to take away any of that jurisdiction. · The mere dropping of a bill in the basket by a l\Iember does not affect the jurisdiction of a committee which has been created by the House. This committee has not undertaken to report upon the bill. I do not think they would have authority to report upon the bill, but they would have authority to expressly recommend that tha't particular bill be not passed. The President has no power to send a veto message to Congress in one sense and advi e that certain other legislation not in the bill yetoed ought to be reconsidered. He has no constitutional power except the right to make recommendations to Congress, yet he did that the other day. No one took exception to that exerci~c of power by the President. He specifically recommended that other legislation was improper in addition to the legislation which he vetoed.

Kow, l\lr. Speaker, in justice to myself, I doubt whether I am in consonance with the recommendations of this committee as to the nitrate plant, but as to the power of the committee to recommend, I do not think there is a particle of question that, having investigated the expenditures for the nitrate plant, they could recommend that it be dismantled, abandoned, and torn down; that it be used by the Government; that it be leased by the Government; or that the Government exercise such power as it pleased in ntrious directions. That is what the committee was for, namely, to recommend to Congress, after it made its investigation, the best course that might be pursued by Congress, making utilization of the immense sums of money which ha'\"e been expended by the War Department. ·

1\fr. GRAHA.l\1 of Illinois. Mr. Speaker, it would be futile for me to proceed further along the line of argument just concluded by the gentleman from Illinois [Mr. 1\fANN], inasmuch as he has so clearly expounded the ideas that I have on that subject. However, there is one phase of this matter that I think it worth while to call to the attention of the Chair. The gentleman from Tennessee [l\Ir. GARRETT} makes his point of order alleging that a part of the report is beyond the juri diction of the committee, and that therefore the Speaker should inspect the report, and if, on examination, he finds a part of it to be beyond the jmisdiction of the committee, by his ruling it would be made necessary that that portion be expunged.

In order to do so, of course, the Speaker must become con'\"er ant with what is in the report. He must, to a degree, know what the report is based upon, and having knowledge of what is in the report, he must then make his ruling as to the jurisdiction. He could not take the word of the gentleman from Tennessee or my word as to what the report contains, a report that contains 70 pages.

Mr. Speaker, it was never intended that the Chair should pass upon questions such as these, and we are not without authority on that proposition. In Hinds' Precedents, volume 2, section 1338, a similar question arose:

On May 2G, 1836, the llouse was considering the report of a select committee in relation to the disposition of petitions relating to the abolition of slavery in the District of Columbia, when Mr. Stephen C. Philips, of Massachusetts, submitted, in writing, the following point of order:

Can a committee, specially instructed to report two resolutions, the form of which was given by the House, report another resolution changing the rules and orders of the House in regard to the management of its business and depriving citizens of the privilege of obtain-~~fet!~~ ~u~ecoc~~~fA~2~ for petitions upon subjects other than that

The Speaker (James :K:. Polk, of Tennessee) stated that it was not within the competency of the Chair to draw within the vortex of order the question ra1sed by the gentleman from Massachusetts.

Questions relating to the JUrisdiction of the co.mmittees of the House or whether they had or had not exceeded that jurisdiction or transcendell the authority conferred upon them by the House were for the

LIX--455

House anu not the Speaker to determine. If gentlemen were of opinion that committees in their reports bad exceeded the authority gtven them by the- House there wet·e other modes of correcting what they ha~ done; as, for -example, the report might be recommittell with 1nstructlons, or the House, on that, as well as other grounds, might refuse to concur in their report.

The point now raised could not therefore be considered as a point of or.der to be llecided by the Chair. It was i.n some respects analogous to the case of inconsistent amenllments proposed, in which case it was well settled that "if an amendment be proposed inconsistent with one already agreed to it is a fit ground for its rejection by the House, but .not within the competence of the Speaker to suppress as if it were agaU?st order, for were he permitted to draw questions of consistence wfthm the vortex of , order he might usurp a negative on important mo!llficatio~s and ~uppress instead of subser~ing the legislative will."

:5o in th1s case, 1f the House should be satisfied that the committee were not clothed with authority, by the order of the House under which they were appointed, to report this resolution, "it may be a fit ground for its rejection by the House, but not within the competence of the Speaker to suppress as if it were against order."

Now, that was followed on January 12, 1888, by a ruling by Mr. Speaker Carlisle, found in section 1339. A point of order was made to a report, and the Speaker said, after debate :

The Chair can only say what has been frequently said before upon similar points-that it is not within the prdvince of the Chair to decide upon the sufficiency of a report made by a committee of the House. All that the rule Fequires is that a report shall be submitted 'in writing without specifying the nature of the report, and if that provision of the rule is complied with the Chait· must entertain the report.

Now, I have no doubt about the correctness of that position, 1\Ir. Speaker. I would be entirely willing under ordinary circumstances to have the Chair decide upon the merits of this proposition. I have some well-defined ideas as to what the jurisdiction of these committees on expenditures is. I think, 1\Ir. Speaker, that they have been allowed to fall into a di. use that is absolutely unjustified when we contemplate the original purpose for which they were formed. This committee, or the standing Committee on Expenditures in the War Department, was originally appointed in 1814 in order to supply a want felt at that time in Congress, when it was appreciated that Congress having appropriated the money, there should also be some committee of the Congress that could supervise the expenditure of it. I think that some of the duties of the committees on expenditures have been taken over by the major committees of t11e House, because the chairmen of these committees on expenditures have sat silent and inactive and permitted that to be done. In former days they were active legislative committees, and there was a broad field of activity for them.

For the CluG.r to rule now that this committee, which bas· had such excessive labors for a long period, must confine itself to a recital of what has been expended and where it has been expended is to take from the committee its principal function, which 'vas to make recommendations, so that some good might come out of the activity of the committee in regard to the future expenditure of public funds. I feel it is our duty to make such recommendations as we can in regard to the future operations of these nitrate plants. I do not think I need say anything further ·than what I have said, together with what the gentleman from Illinois [1\fr. MA.NN] has said, because that embraces practically all that I had in mind to say on the subject.

Mr. JUUI,. Mr. Speaker, a moment ago I placed a question· before the Chair . . I trust the Chair will not treat the question lightly. I consider that in this controversy a Member would have the right to appeal after the Chair has made a decision. The question I put to the Chair was, if an appeal were made from the decision of the Chair, the Chair knowing the contents of a ceTtain document before . this House, and the membership not knowing, how is the membership of this House to vote intelligently? Suppose the right of any Member of this House should be used to appeal from the decision of the Chair? How are we to vote intelligently when ""e do not know the contents of the document?

Tbe SPEAKER. The Chair will hear the gentleman from Tennessee.

Mr. GARRETT. l\Ir. Speaker, in reference to the case cited by the gentleman from Illinois [Mr. GRAHAM] I have observed that case in searching the precedents, and I felt sufficient interest in the matter to go to the Journal of the Twenty-fourth Congress itself and look that matter up to see just exactly what was involved. The principle is stated correctly, and the language of the Speaker, Mr. Speaker Polk, is quoted as given in the Journal; but it is a matter of some historical interest as well as having a direct bearing upon this question.

At that time there was great excitement throughout the country touching the matter of the receipt by Congress by petitions resped:.ing the question of slavery. 1\fr. John Quincy Adams was making the great and historic fight which he kept up for .so long a time with reference to the right of petition upon the question of slayery. Petitions were pouring in "ith

7236 CONGRESSIONAL RECORD-HOUSE. }lAY 18,

regard to the matter of the disposition of slavery in. tlie District of Columbia. The " Old 1\Ian Eloquent " had brought down upon him the ire of all those from the slave-holding sections who sympathized with the institUtion of slavery in any 'Yay, and as a result a resolution passed the House of Representatives which directed the refe£ence of all petitions to a · select committee.

That was on 1\Iay 8, 1824, and not only were those resolutions referred but the language that the committee that was appointed 'was instructed to use in reporting back to the House was in part set ~mt. They were instructed to report ba~k all the petitions affecting the question of slavery referred to them with certain langu11ge.

What the committee did was to insert the language that they had been instructed to use and then to use some of their oWil. There was committed to them in that case the duty of putting up the argument, you may say, in behalf of slavery, or that phase of it, and that was the case that was presente~.

The same question did not arise there that has ariSen herethat is, as to exceeding the jurisdiction of the committee-and that clearly distinguishes the leading case, so far as I have been able to :find, as set out in the precedents upon this matter.

.As to the- subsequent case to which the gentleman referred, the ruling of ' l\fr. Speaker Carlisle, I have not looked that up in the Jo1ll'nal, but it turned upon the questi.on not of exceeding authority but of the sufficiency of the report; that is, as to whether the committee had done enough, not as to whether it had done too much. I raise no question about the sufficiency of this report, even upon the matters that come within its jurisdiction. I shall undertake- to maintain a few days later that on the face of it it is all-sufficient, self-sufficie-nt, and in-efficient. [Laughter.] .

But I do not raise any parliamentary question about that. That Carlisle decision turned upon the question as to whether they said enough, not whether they went beyond their power and aid too much. And so I think it may be said of all the cases that are in the book.

Mr. MANN of lllinois. Mr. Speaker, I reserved a point of order on the point of order made by the gentleman from Tennessee [Mr. GA.Irn:ETT]. I think my point ot order is perfectly good. I reser\ed. it because I did not want to have ~o unc~a.llenged or conceded the idea that any Member at any time nnght make a point of order a,on.inst a report which had been filed throuO'h the basket because that would be the cause of infinite delay "'u it were ru.'led in order. But hav~g ~aid this m~ch, I withdraw the point of order~ I have no obJection to the pomt of order of the gentleman from Tennessee being passed upon.

Mr. ALMO.~:r rose. The SPEAKER. Does the gentleman wish to be heard! Mr. ALMON. Yes; just for a moment. Mr. Speaker, ·u is very clear to ll:lY mi~, althou~h I do not

pose as an expert parliamentarian, that this CoiiliD!ttee on !-nvestigation of War Expenditures under the res~lutwn crea?llg the committee is without jurisdiction to make recommendations as to the future· of the Government nitrate plant No. 2 ·at Muscle Shoals, Ala. Now, l\1r. Speaker; it is true that the resolution creating the committee authorized that committee- to :r:e-port its findings and recommendations. Of course, that is understood to mean to make findings in matters over which the committee has jurisdiction and make recommendations about matters over which the committee has juriSdiction. The very name of the committee and the very work for which the committee was assigne-d shows that the purpose of the appointment of the committee is to investigate and report upon expenditures of the War Department. And this particnla..r subcommittee is reporting on investigations of the Ordnance Department, one branch of the War Department, as to the nitrogen program during the recent war. If the committee found that Governme-nt funds had been misappropriated it would be proper for the committee to recorrimend that proper legal proceedings be instituted to protect the interest of the Government. This w~uld be ~ch a recommendation as is contemplated 'by the resolution creating ;this committee.

Of course, it is proper for the committee to report the results of the hearings and its findings, and as to the money that was

1 expended in connection with the fixation of the air-nitrogen plants. I submit, Mr. Speaker, that there is nothing in the resolution or the precedents which ha'!e been read t? t}le. S~eaker which would authorize this comm1ttee to have JUTlSdiction of the future of these Government plaats. ' I do not contend, an{l I do not wish my friend from Illinois [Mr. l\iANN] to understand that I contend that the introduction in this House of a bill by the gentleman from California [Mr. KAHN], recommend~d by the War Department and referred to the Committee on Military Affairs, would take away from Mr. GRAHAM's sub-

committee jurisdiction of any matter that the committee had jurisdiction of.

But I submit, Mr. Speaker, that the bill now pending before the committee and the two Houses of Congress having jurisdiction of these matters pertain to the future use of plant No. 2,

· viz, the manufacture of fertilizer. As has been said by the gentleman from Tennessee [Mr. GARRETT], this bill is now pending before both Houses of Congress.

Committee hearings have been had by both committees, and the records of this Congress show that extensive hearings have been had before the Committee on Agriculture in the Senate, and probably both sides have been heard. The records show that farmer organizations of this country have appeared and had hearings and favor the passage of the bilL

Mr. 1\!0NDELL.. Mr. Speaker, I do not want to interfere with the gentleman's argument, but time flies and the gentleman is not discussing the point of order.

Mr. ALMON. Very welL Mr. Speaker, I do not care to make any further reference to these hearings, but I was illustrating and ma1.."ing the point that this question of , future use of this plru;1t No. 2 is a que-stion of policy. It is a legislative question. It is a question to be determined by Congress and should be determined by the Military Oommitt'ee~ a legislative committee having jurisdiction of the matter.

I do not contend that the introduction of a bill recommended by the Secretary of War and referring it to the Committee on Military Affairs took away from this committee investigating war expenditures any right or jurisdiction it may have had. But I referred to tha.t as the gentleman from Tennessee did, to show that the future use and disposition of this Government nitrate plant is one oot to be de-termined or recommended by the Committee on Expenditures of the War Department, but by the Military Committee, which has jurisdiction of the subject mat- · ter. That is a sufficient reason, Mr. Speaker, in my opinion, why the point of order of the gentleman from Tennessee [Mr. GAimETT] should be sustained. Let the legislative committee having jurisdiction of the question have full hearings as to what shall be done with this plant, and do not let it be determined by this committee which has not had hearings and

· which has no jurisdiction. [Applause.] The SPEAKER. The Chair is ready to rule. The gentleman

from Tennessee was so courteous as to notify the Chair in advance of this point of order, so the Chair has had some oppo:r- · tunity to stndy the report and the point of order. On that account the Chair is peculiarly desirous that the case which the gentleman from Tennessee presents shall have his impartial consideration. And, of course, the statement of the gentleman that he d.oes not intend to appeal increases the desire of the Chair to give the gentleman every ben.eflt of doubt.

But it seems to the Chair very clear that this point of orcl~ is not valid. The decisions cited by the gentl-eman from Illinois [Mr. GRAHAM] had impressed the- Chair quite strongly that on that ground the Chair had no jurisdiction. What the gentleman from Tennessee read from the Journal, the Chair admits some-what weakened the force of the decisi{)n as cited in Hinds'; although the laD.oouage and reasoning of Speaker Carlisle, would, to the Chair's mind, confirm the- point that this is not really a question that the Chair should hold raises a legitimate point of order.

But it seems to the Chair very clear that the rule which O'ives the Committee on Expenditures its authority does eover tlus case. It says that the committee shall report to the House the result of its investigations.

Now there can be no question that this investigation of a nitrat~ plant was directlY within the sphere intended by this rule. The rule also says that the committee shall make recommendations. Now, of course, recommendations apply to the future;

Mr. G.ARRE'rT. 1\.Iay I ~all the attention of the Chair to the fact that committees of this kind have in the past made recommendations of impeachment growing out of expenditures? I think the record shows that..

The SPEAKER. That does not seem to the Chair to contravene the statement which the Chair has already made. The resolution gave the committee authority. to do cert~n things in addition t(} the authority which the ord1nary Comrmttee on Expenditures had, and among these is " the security of the Government against unjust and extra~agant demands ,. and " retrenchment." So this committee has the power, among other things of retrenchment. That is within the striet scope of their duty. It seems to the Chair that if the committee ~ i?vestigating the subject entirely within its spher~ finds as 1t did in this case that there is a certain course of action by the \Var Department which it thinks would bring about retrenchment,

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1920. CONGRESSIONAL R.ECORD-HOUSE .. 7237 that to recommend . that course is a proper function of the committee.

It seems to the Chair very clear that they had a right to make a recommendation in the line of retrenchment as to the further prosecution of this project. The fact that another committee had control of a bill which would continue the operation of this plant which they are investigating in. no way limits the scope of the authority of this committee. The report of this committee does not take away the jurisdiction of that committee. That committee can still consider the bill and report it to the House, which could if it desired adopt it.

So it seems to the Chair that this report is strictly within the scope of the committee's authority, and the Chair overrules the point of order.

Mr. GARRETT. l\Ir. Speaker, I do not know that I shall care to do so, and if I do not do so I trust that my failure will not be taken as any lack of respect for the ruling of the Chair, but if I should determine before this matter comes up for discussion to file minority views upon that phase of the question, which I have not done, giving my reasons in the minority report, I ask unanimous consent that I may have that privilege.

The SPEAKER. The gentleman from Tennessee asks unanimous consent to file further minority views. Is there objection?

There was no objection. . AMENDMENT TO FEDERAL FARM LOAN ACT.

l\Ir. PLATT. Mr. Speaker, under the terms of House resolution 316, I move that the House resolve itself into the Committee of the Whole House on the state of the Union for the conideration of House joint resolution 351, extending the provi

sions of an act amending section 32 of the Federal farm loan act approved July 17, 1916, to June 30, 1921.

The motion was agreed to. Accordingly the House resolved itself into the Committee of

the Whole House on the state of the Union for the consideration of House joint resolution 351, with 1\Ir. HusTED in the chair.

'l'he CHAIRMAN. The Clerk will report the resolution. The Clerk read as follows :

Joint resolution (H. J. Res. 351) extending the provisions of an act amending section 32 of the Federal farm-loan act approved July 17, 1916, to June 30, 1921.

Whereas the Supreme Court of the United States has asked for a reargument of the case involving the constitutionality of the Federal farm-loan act ; and

Whereas the reargument of the case will postpone a decision until next October at the earliest; and

Whereas the Federal land banks are now, and it is feared wlll be, unable under these circumtsances to sell bonds to meet outstanding commitments for loans to farmers pending a final decision : Therefore be it Resolvecl, etc., That the provisions of the act of Congress approved

January 8, 1918, ~ntitled "An act to amend section 32 of the Federal farm loan act approved July 17, 1916," be, and the same hereby are, extended to the fiscal years ending June 30, 1920, and June 30, 1921, to the extent that the Secretary of the Treasury be, and be hereby is, authorized, as by the terms of said act, to purchase during the fiscal years ending June 30, 1920, and June 30 ... 1921, or either of them, any bonds which he might have purchased auring the fiscal years ending June 30, l.918, and June 30, 1919, or either of them, under the provisions of the original act.

With the following committee amendments: Page 2, line 1, strike out the figure "8" and insert the figures "18.''

l'age 2, line 10, after the word " act," insert: "Provided That he shall purchase no bonds issued against loans approved after March 1, 1920."

Mr. PLATT. 1\Ir. Chairman, I desire to inquire if the g~ntleman from Massachusetts [Mr. PHELAN] will not now use some of his time.

Mr. PHELAN. l\fr. Chairman, I yield 10 minutes to the gentleman from North Carolina [Mr: STEDMAN]. [Applause.]

Mr. CALDWELL. Mr. Chairman, I make the point of order that there is no quorum present.

The CHAIRMAN. The gentleman from New York makes the point of order that there is no quorum present. The Chair will count. [.After counting.] One hundred and seven Members present, a quorum.

Mr. STEDMAN. Mr. Chairman, the stenographic reporter for the House quotes the gentleman from lllinois [Mr. MADDEN], in propounding a question to the gentleman from Georgia [Mr. UPSHAW], on Saturday last, the 15th, as using these words:

Does the gentleman complain and protest because the loyal people of the United States refuse to pay tribute to the men who were traitors to the country in the time of its greatest distress?

The gentleman from Georgia, whilst addressing the House, alluded to what he deemed to be discourtesy and injustice to the memory of Gen. Robert E. Lee in connection with the management of the .Arlington amphitheater.

The words of the gentleman from Illinois were intended to be applicable to Gen. Robert E. Lee and to the .great leaders associated with him during the era of 1861 to 1865. I did not hear the words so used by the gentleman from Illinois at the time,

nor are they reported in the proceedings of the House for Saturday, but the stenographic report was called to my attention and I can not do otherwise than notice the words so used.

During the entire unfortunate Civil War the courage and sincerity of the Confederate soldier was never questioned by his brave opponents. [Applause.] The ability and integrity of Lee, Jackson, and other great leaders of the South was never minimized. Their supreme sense of duty, their unselfish devotion to what they deemed to be the cause of right, have been recognized in every land where patriotic heroism bas a home. ·[Applause.]

I regret that the gentleman from Illinois gave expression to the language as reported by the stenographer. He stands isolated and alone in a wilderness of his own creation, where he will find neither renown nor happiness.

In the ancient Ionian city of Ephesus was the Temple of Diana, which attracted the admiration and wonder of tra\elers from every land.

In the city of Ephesus lived one Herostratus, who longed for eternal fame, and if he could not win that, at least for eternal notoriety. To achieve that result he burned down the magnificent structure before whose walls thousands gathered daily and gazed upon its wondrous beauty with rapture and delight.

The craving of Herostratus for notoriety was gratified. He destroyed the Temple of Diana 356 B. C., and for more than 2,000 years his name has been recorded upon the pages of history as the synonym of degradation and moral dep~avity.

Whosoever characterizes Gen. Robert E. Lee as a traitor may well beware lest he inherit from Herostratus his crown of infamy. [Applause on the Democratic side.]

The memory of Gen. Robert E. Lee and Stonewall Jackson will liYe, transmitted from generation to ·generation, when the costliest tombs erected by · the love of their countrymen shall have perished by decay and the walls of the Arlington amphitheater have crumbled into dust. [Applause on the Democratic side.]

Mr: Jt!A.DDEN. Mr. Chairman, will the gentleman from ~ew York yield me five minutes?

Mr. PLATT. Mr. Chairman, I yield five minutes to the gentleman from Illinois.

Mr. MADDEN. Mr. Chairman and gentlemen, I haYe no apology to make to any man for the words I uttered here on the floor a day or two ago. When the gentleman from Georgia [Mr. UPsHAw], standing in his place on this floor, protested because the names of Robert E. Lee and Gen. Gordon and others who had tried to destroy the Union were not placed on the memorial erected in commemoration of the Union soldiers who defended the flag, I simply asked the question, "Does the gentleman protest because the loyal American people refuse to pay tribute to men who were traitors to their country in its hour of need 7" I repeat that question now. Does anyone deny that they were traitors? [Cries of "Yes!" on the Democratic side.]

1\I.r. Chairman, these men were educated in the Military Academy of the United States. They wore the uniform of the Nation as soldiers of the Union. They deserted the colors of their Nation and led the forces which sought to destroy the Union. Were they traitors?

SEVERAL MEMBERS (on the Democratic side). No! Mr. :MADDEN. I say, yes; they were traitors; and I object,

Mr. Chairman and gentlemen of this Hou!*', to having their names placed beside the men's names who fought to defend the Union and to preserve its institutions. A.b, brave men; of course they were. No one denies that. But that they were trying to . destroy the Union even the gentleman from North Carolina [Mr. STEDMAN] will not deny, and I have no apology to make to any man for any words I have uttered here and which I am willing to utter elsewhere.

Mr. UPSHAW. l\Iay God have mercy on your oul. . Mr. MADDEN. Let the gentleman utter that prayer for him

self. I can take care of myself. SEVERAL MEMBERS. Regular order ! 1\fr. MONDELL. Mr. Chairman, under the rule debate must

be confined to the bill--1\lr. 1\l.A.DDEN. It was not. l\lr. MONDELL. And I shall insist on the rule---Mr. WINGO. The gentleman from Wyoming happens to be

mistaken. This is in general debate. Mr. PLA.TT. I think the gentleman is right. It was in

tended to be in the rule. Mr. WINGO. If the gentleman will refer to the rule as ap

pearing in the RECORD and re~d from the Clerk's desk, he will see that it is general debate.

Mr. PLATT. Mr. Chairman, I yield seven minutes to the gentleman from Oklahoma [Mr. MoRGAN].

7238 CONGRESSIONAL RECORD-HOUSE. MAY 18,

1\lr. MORGAN. Mr. Chairman, this 1s 'a very imi>Ortant reso- ln .ihe ·shape of a cloud tile s1ze of a man's hand arising on the lution we- ha e before ns. I suppose the most '{):f you are famil- horizon, what promises to be a movement of cyclonic proportions iar with its provisions. If not, you oug1It to give ·attentwn to is commencing, there has been formed an orgn:nization covering it at once. This is a resolution which ·extends the act of .COn- 26 Sta:tes and of man_y thousands of State and national bankers gress approved J"anuary 18, 1918, antl:rorizing the Secretary of - into· what isJmown as the National and State Bankers' Protective the Treasury during the years 1918 and 1919 to purchase 'farm- AssOciation~. consisting principally of banks in the South, West, loan bonds issued by Federal land l>anks not exceeding '$100,- and Northwest. Representatives of these banks have been here 000;000 each year. Now, if you are familiar with the fact that, and spoken before the Rules Committee in favor of this resoluowing to litigation now J)ending in the Supreme Court -()f the. fion. To-day there -are in this country-and bear this in mindUnited States, tlle Federal lana banks find that tthe1r bonds ·can nearly $4,000,000,000 worth of Federal reserve notes floating in not be sold, and hence the Federal land banks are at a stand- the mr like confetti at a street fair. The issuance of this curstill. Now, this ·resolution extends the act of "January 18 and rency is l>nsed ultimately u:pon -the hoarding of at least 75 per authorizes the Seeretary of the Treasn·ry to purChase Federa1 ' cent of foodstuffs and necessities of life. To this view has fa-rm ... 1oan bonds, but the co-J.nl¢ttee amendment embodied in recently come President Fisher, of Yale University; Dr. FEss, the last two lines-lines 11 and 12-limits tbe previsions -of this ,a .great economist himself, and -a Representative in this House; act to the ,purc:Uase of ·bonds to ·cover laans approved prior to al).d EX-Repr~esentative Charles N. Fowler., of New Jersey, a March '1, 1920. I think that would amount to, as I say, maybe former 'Chairman of the Committee on Banking and Currency $25,000,000 or $30,000,000 worth o.f bonds; but still it 1eaves in this Ho-use, and a Member of it for over 11 years. No man :those banks mutble to . ell their bonds, -at a standstill, l!nable in 'the United States ls better 1nformed on the situation than to ·do business :unbl. -perbaps '"Ilext January, Febrpazy, or March, · is 'Mr. FoWler. The situation has even gotten to that stage · because it ·is under.stoed tllat case will not be reargued until where the Federal R~e Boaxd itself, although it pooh-poohed next 'October, and we might a sume 1:hat it will ·be some months this ldea recently and denied there was any inflation of the after the ·ea:rgument :before tthe -supreme Court will render it-s c-urrency, and if -any it had no effect whatever on the high decision. I-f ihe committee amendment is adopted, these land cost of living, has called, perhaps by reason of this agitation, banks will be unable to do blrSiness probably ll:Dtil.next March. maybe not, a conference of the Federal Reserve "Board and I am tn -favor of the bill as it was introduced. i .am op:posecl the advisory council in this city. They are in session to-day. to the committee 'amendment. Of co.urse, if the House .shall The _press announces that the deflation · of the currency will adopt 'the committee ·amendment, I will vote for the bill as be 'discussed. I dare say -:there will be nothing of remedial amended. A little relief will :be betteT than no relief at aiL nature -proceed "from that conference. The matter has .gotten It will .no.t enable these 1anil banks :to ·function. They ~can not away from them like n runaway horse. It is impossible for ~cetve, ·they can not .·eonsider, they ·can not ·act upon app1ica- them under the present conditions of the law to deflate the tions from -the 1st of last 'March, perbaps, -untn the 1.st ·of next currency except by curtailing credit and requiring bor.rowers Marcb. who are hoardei:s to liquidate and thus bring down the prices

row, these banks ·a::re SlUJposed to -ac.compliSh .a good purpose. ·of necessities. One object was to reduce the interest rate to the farmers, ·but Mr. MdKEOWN. What .remedy does i:he gentleman sug.gest above this was the idea that by giving .the farmers better credit or what legislation has he to o.!Eer! facilities they would increase "food production, they would ex- , Mr. KING. If the bankers themselves will not cause the tend and help develop agriculture, and through -that they wou1d hoarders of necessities to gradually liquidate, a law preventstrengthen the very fabric of the 'Government, and to-day there ing tbe renewing of the commercial notes of holders of necesis no more important question than the reduction of the high sities will accomplish the desired result. cost of living, and we .all know that the cost of J:ood can not Mr. McKEOWN. Has the gentleman introduced that bill? he reduced 11riless the :Production ·of food is increased. So that Mr. KING. I can ·not yield longer~ for I want to get some-this is not a question simply of helping the farmer to get a thing in that I got up here for the :purpose of getting in. little lower ~·ate of interest, 1mt it is a question of ·helping the "This matter is going to be an issue in the campaign. It can farmer, helping the ftfty or sixty millions of men and wrunen not be smoth-ered "and it can not be done away with. It will be who live in our ·towns, in our ·great -centers, in our great just as importarrt :an issue as it has been in prior campaigns. Cities, so my proposition .is to ·vote ·down the committee's 'amend- It is forging to .the front to-day. 'What are you asked when ment found in lines ll and ~. which provide "that .:h-e _,.'-the _you go home.? Yau are .asked, "What .have you done to reduce Secretary of the ·Treasury-" shall purchase no ·bonds 'issued the nigh cost 0f living? " It will .not do to ..say, " Oh, well, w-e against loans approved a-fter March l, ~20." .have 'Ilot done anything about that, because the matter of s-up.

Mr. ·CL.A:SSON. Will the gent1eman yield:'l ply a-nd -demand c<JVers that, and, furthermore, these conditions Mr. MORGAN. I will eanfront us always -after a great war and therefore we are abso-l\Ir. CLASSON. Will the gentleman tell how that date -of · lutely helpless."

March 1, 1920, was ·selected? 'This agitation .has gone ·so far that a1ready there has been Mr. MORGAN. Well, after MaTch 1, '1920, the Federal land suggested to me and to a number of others that there should

banks have approved no .loans; they suspended ·business "1rt be a plank inserted in the Republican platform at the conven-that time. tian in Chicago which .I will jnsert at ·a future point.

Mr. CLASSON. Why does not that meet the situation? The CHAIRMAN. The time of the gentleman from Illin{)iS Mr. MORGAN. .Because there are millions of dollars of 'ap- has e_xpirred.

plications now pending unap_pr<JVed. If these banks do business Mr . .KING. Mr. Chairman, I ask unanimous consent to ex-there would be millions of dollars of additional applications tend my Temarks in the RECORD. made between now and next March. The CHAIRMAN. Is there objection? [After a pause."] The

1\Ir. CLASSON: Then if they have any o_p:plications that Ohair bears none. haye not been approved by the 1st of Mareh ·they can not Mr. ·wiNGO. Res-erving the right to object, does the gentle-eon ider them? man intend to insert in the RECORD information as to whether

Mr. MORGAN. They can not consider them. The committee or not Mr. Hays has approved of that proposed plank in the runendment should be voted down. Republican platform?

The CHAIRMAN. The time of the gentleman has expired. Mr. KING. I am very sorry to -say that'! do not know whether Mr. PLATT. l\1r. Chairman, I yie1d to fhe _gentleman fr-om it has been submitted to Mr. Hays or not.

Illinois [Mr. KING]. Mr. WINGO. Submitted to his committee -of one hundred. The CHAIRMAN. The gentleman from Illinois is recognized. :Mr. KING. I have received the following letter from Mr. l\Ir. KING. l\lr. Chairman, I am very much in :favor of the Fowler:

passage of this bill and I hope it will receive the unanimous vote of the House, and in that connection and in connection with the situation relative to banking in this country I wish to eall the attention of the House to the fact, with which the House is perhaps thoroughly fa,milia:r, that on the 28th day of February

_last I introduced House resolution No. 476, which is now before the Committee on Rules, and upon which a partial hearing ·has been had.

One of fhe main propositions involved in this matter ana in this resolution is the proposed inquiry with reference to the inflation of the currency as being the cau-se of the high cost of living in this country. Since that time, since that res-olution appeared, to use a figure of speech which is largely in vogue,

•

Hon. Eo-wAnD J. KI~G, ELIZABE'l'H, N. J., May 15, 1920.

House of Rept·esentativcs, WasMngton, D. 0. MY DEAR Mn. KING : "The most important, the most vital, the .real

issue of 1920 is the relation of the Federal reserve act and the management of the Federal reserve banks to high prices. The impending peril and -the way out-that is the real issue.

"Evidently alarmed and pleading their utter helplessness and hopeless· ness, the Federal Reserve Board discl(}sed in their last bulletin what they themselves declared was .an astounding state of facts. They said :

"In the 19 months when w-e were at war the expansion of nationalbank loans was 16 per cent. In the same 19 months commodity prices, Bureau of Labor index, increased .20 per cent.

" From the call for reports o:f banks March 5 last year to Fellruary 28 this year, national-bank l(}ans expanded by $2,303,000,000, or 24 per cent. This was two and one-half times the rate of growth during our participation in the war, with all the tremendous Government loan

•

1920. CONGRESSIONAL RECORD~HOUSE. .7239 issues and nearly four times the nve:x:age yearly ,rate o~ the last 30 years, including the four war year:;;. .As the nat1_on~bank loans are about 45 per cent of the total loans of all banks, this means an ex· pansion for the entire country of about $5,200,000,000, a SU:J?. that might well have been considered incredible if it llad b-een predicted a year ago." .

Thi confession confirms the now well-settled opinion tbat through the operations of the Federal reserve banks since the ar~istice was signed November, 1918, our currency has constantly depreciated until we now have a 40-cent dollar, and unless this mad inflation _is arrested we are going over Niagara Falls to the complete destruction of our credit fabric:

In 1836 one of our most bitter presidential contests occurred over the usurpation of power and political interference on the part of the Second United States Bank. But whatever charges were then made against the Second United States Bank, they were of slight consequence; indeed, they were trivial, compared with the charges against the management of the Federal reserve bank now being made before the Rules Committee of the House by the National and State Bankers' Protective Association, representing, it is said, at least 2~,000 banks, coming from every State .in the U:nion. The ~acts established before the committee by indubitable evidence are unthinkable and could have occurl'ed nowhere except tmder the Czar o:f Russia or the autocracy of the Wilson administration.

In 1 ~68 the Republican Party declared against repudiation a:nd in favor ol national honor. The first act of Congress signed by President Grant pledged the faith of the Government "to make provisions at the ea,rliest practicable period for the redemption of the United Stajes notes in coin."

National honor won. , In 1876 the Republican Party declared against "fiat money,

•• greenbackism," and for the resumption ot: specie payment. The resumption of specie payment won. . . In 1896 the Republican Party declared agamst a 50-cent s1lver

dollar~Bryanism-and for the gold standard. The gold standard won. I assert that the Federal 1·eserve act and its management involve all

that was at stake in the four presidential electio.os of 1836, 1868, 1876, and 1896.

Will the Republican Party now show the same intelligence, patriotism, and courage it display~d in 1868, 1876,. and 1896, or will ~t, through ignorance or cowardice, or both, permit the country to drift helples ly and hopelessly into the maelstrom of overwhelming commercial disaster? That is tbe question.

Let the American people note and remember that while Mr. Bryan failed to force upon us a 50-eent silver dollar in 1896, he has succeeded in giving us a 40-cent paper dollar in 1920, for Mr. Bry-an, while Secretary of State, prescribed what the Federal reserve notes must be--United States notes or greenbacks-before they were delivered to the Federal reserve banks. In other words, we are up against Bryanism in 1920 precisely as we were in 1896. The question is, Will -we meet the issue of Bryanism now as we did in 1896?

Very sincerely, yours, CHARLES N. FOWLER.

STATEMEXT OF C~ N. FOW(,EB, FORMER Rl)PRESENTATIVE FROM ~~W JERSEY AND CHAIRMAN OF THE HOUSE COMMlT'l'EE ON BANKING AND CURUENCY, PRESENTDD TO THE HOUSE AND PUBLl_SHED IN 'l'HE CO~GRESSIONAL RECORD.

The proposal is for the inclusion of a sound money plank in the Republican platform to be adopted at Chic-ago in June.

Currency inflation, due to the practice of the Federal Reserve System in making Federal-reserve notes, issued upon commercial paper available to banks as reserves, upon which further credit expansion is authorized, thus producing more commercial paper to support the issues of more Federal-reserve notes, has brought about a situation which compels the Republican P-arty again to champion the cause of sound money as it did in 1868. when it declared against repudiation ; in 1876, when it declared again.st greenbackism; and in 1896, when it declared against free silver or Bryanism.

When the Federal reserve act was passed i-n 1913 the currency amounteo to only $34 per capita~ To-day it is more than $56 per capita. Tbere b.al'! be.en constant expansion. There has never been contraction. Our currency has, in consequence of this inflation, steadily depreciated until to-day we have a 40-cent dollar, and unless this course of mad expansion is arrested we are going over Niagara Falls to the complete destruction of our credit fabric,

The adVIsory council of the Federal Reserve Board, I understand~ is meeting to-day with tho,se Federal reserve directors chosen from the active -bankin~ business world to consider ways and means of checking credit expans1on. '!'be only ef[ective way to accomplish that is to end the system which employs an evidence of credit as a bant reserve to support another larger credit extension. While this vicious cycle of currency built upon credit and credit built upon su-ch unsound currency continues, the present financial ills of the country can not be cured, p.riees can not be brought down and only overwhelming disaster can result. · W~n the Federal reserve act was placed upon the statute books

the country was told that it would provide an elastic currency, responsive to the commercial needs of the Nation. Experi~nce has shown the capacity of the Federal-reserve currency for expansion and its utter laek of power for contraction. In its last bulletin the Federal Reserve Board stated that from Marett 5, 1919, to February 28, 1920, the banks of the country had expanded their credits about $5,200,000,000, or two and one-half times the rate of expansion during the war and our bond-selling period. The Federal Resene System ean not control such expansion, but its currency issue system actually encourages it.

A nonmember bank to-day makes a loan., for example, of $100,000. It takes the commercial paper representlng that loan to the Federal reserve bank or a. member bank. rather, and reccl.ves for it $100,000 in Federal-reserve notes, on which it pays interest at the rate of 6 per cent. The bank is authorized to employ those $100.000 of Federalre erve notes, which represent a loan and not gold, which is the only sound basis of currency, as a reserve fund4 and the reserve being thus increased by $.100,000 of Federal-reserve notes, the bank proceeds to increase its loans from six to ten times that reserve. It is easily seen and understood how this system builds currency u~n credit and credit upon currency without end. The 6 per cent interest the bank pays for the Federal-reserve curency is inconsequential in comparison with the profits it can make by extending credits by using those notes a.s reserve.

While member banks can not employ Federal reserve notes as reserve, their- gold reserves, which are all held by the Federal reserve banks, are to-day not one-half of the reserves required before the passage of

the Federal reserve act. This cutting away of the reserves, it will be noted, bas doubled their extension of credit.

I.t is interesting to as.k where the national bank notes are, where the U-!llted S~ates notes are, where the ~old certificates or yellow backs are With which we were so familiar In times past. This currency has been driven out of circulation by tbe Federal reserve notes. It is an economic law, as immutable as the law of gravitation, and now long recognized, that the poorer or cheaper money always drives the better or sounder money out of circulation. Let :my man look at the bills he has in his purse or pockets now. Save for an occasional one-dollar bill, be will rarely, if ever, find anything except Federal reserve notes. Yel: there are to.day about $750,00.0,000 of national bank notes and $346,· 000,000 of United States notes outstanding.

Last year $430,000,000 gold-100-cent dollars-left the country and $560,000,000 of Fede1·al reserve notes-40-cent dollars-were added to this sodden mass of I 0 U's, making our present situation dangerously \UlSOUnd.

William J. Bryan, wbile Secretary of State, refused to allow his fol· lowing in Congress to support the Federal reserve act until the notes were made Governme-nt paper or " greenbacks ., before they were deliv· ered to the Federal reserve banks. In other words, we are up against Bryanism to-day precisely as we were in 1896. Then it was a 50-cent silver dollar, now it is a 40.-cent pa,per dollar.

There is only one way out, and that is for the Republican Party, once more to champion the cau.se of sound money, as it did in 1868, 1876, and 1896, and go before the .,country with this most important, this greatest of all issues and conduct an educational campaign, as it did on those three former occasions, end this system of fiat money, contract tbe currency, place it upon a sound basis, get credits back to a normal condition, and prices within the reach of the consumers of the land.

The warning against tbis peril is coming in increasing volume from the bankers of the country. Thousands of State and country bankers have organized and are now in the field challenging the usurpation of power and the tyranny m the Federal Reserve System; but, because that 1

system represents the greatest concentrated money power this country 1 has ever seen, the larger banks which are now dependent upon it and · the financiers of the .great industrial c~nters can not afford to risk the enmity of the administration or of the Federal Reserve Board, which can penalize and punish them in one hundred ways. For this reason, therefore, you may expect them all to remain silent, for the present at least_, out of business prudence.

As I have saM, the one and only way out of it is for the Republican Party to again champion the cause of sound money and a sound financial system. To this end I propose the following plank for the RepuP.. llcan national platform to be adopted at Chicago: ·

PLANK FOR THE REPUBLICAN NATIONAL PLATFORM,

"To the end that the business interests of this country shall cease to be the prey and football of whatever political party may happen to be in power, and that we may free ourselves from the present high prices, due to a greatly deprecJAted currency, and that we may escape the impending perils and threatening dangers due to the defects of the Federal reserve act, we declare : ·

"First. That our central banking system should be organized solely for the purpose of aiding and serving the commerce o1 the country, and therefore should be entirely free from the dictation or influence, even, of the executive department of the Government precisely as our Suprem~ Court now is, which was organized to aid and serve the ends of justice free, unafraid, and uninfluenced by the executive de-partment of the Government.

"Second. That our central banking system should not itself be the source of overexpansion and lead the way to wild in.fiation, but should be a conserving~ regulating power, checkipg the tendencies to excess beyond the safe boundaries of the demand and supply of credit, and to this end assert that the gold reserves held by our banks should be adequate and so distributed-as to guarantee the soundness of all commercial credits passing through them and all currency credits created by them.

"Third. That the currency of our country outside of our ~old coin (and its substitute, th~ gold certificates), and all our subsidiary currency, which includes all denominations below $5, should not by every conceivable legislative device be made to partake of the nature of essen· tial money (or gold, which is the only true money we have), and the .Ame:t:ican people be thereby deceived and led to believe that because a debt-a demand for gold (such as our Federal reserve notes are)-is redeemable in gold it is therefore itself gold, or as good as gold, or may be used instead of gold, and consequently is fit to be held as a rese1·ve in our banks.

'-' Fourth. That our currency outside of our gold coin (and its substitute, the gold certificates), and all our subsidiary currency, which includes all denominations below $5, should partake of- the nature of bank credit precisely as the Scotch, Irish, .Australian, Canadian, and French bank notes now do, and as the notes of the two United States banks, the notes of the banks of Louisiana. certain banks of Kentucky, 1\Ii.ssouri, and Virginia, the State Bank of Indiana, and the State Bank of Iowa, and the Suffolk System o! the six New England States -did prior to the Civil War.

"We are in favor of such a currency because it is the iOOerent right of every bank depositor to have it up-on his request, .and because it is the most economical and yet the soundest currency in the world, its equality with gold being proved every day by its redemption in gold through the clearinl?: houses, precisely as checks and drafts are, and because it always will moot the demands of trade everywhere throughout the United S-tates. but will not exeeed the demands of trade."

On March 29, 1910, Hon. Charles N. Fowler, who was for 16 years a Member of Congress from New Jersey, for 14 years a member of the Banking and Currency Committee, and for 8 years its chairman, made a speech upon the first draft of tb-e Federal reserve act, which he had drawn.

In the interest of historical truth I read from the title page as follows:

A complete financial and banking system for the United States. (H. R. 23707.)

The complete organization consists of 28 commercial Z:ones. The org-anization of each z.one consists of a bankers• council and a

board of control. The 28 commercial zones are indivi-dually as strong as all combined.

but are absolutely independent of ·eacb other commercially, and yet, economically and organically, they are all united and bound together in _the Federal reserve bank.

7240 CONGRESSIONAL RECORD- HOUSE. MAY 18,

Sl'EECH OF HO~. CHARLES N. FOWLER, OF 'EW JERSEY, IN THE HOUSE OF REPRESENTATIVES, MARCH 29, 1910.

A careful reading of this first draft made by him and the act as passed discloses certain fundamental differences which were set forth by l\fr. Fowler in some observations he took occasion to make shortly after the passage of the act and were in th~se words:

If the Federal reserve bank act is to be judged by the principles of b:lllking economics and by those approved bank practices which have been wrought out by experience, and also in the light of those demonstrated perils to both government and commercial credit wherever they h~ve been bound up together, it is fundamentally and structurally unsound and wrong.

First. It is the most gigantic, complete, and potential political machine ever constructed. A legislative enactment that makes it possible for the President to subject, dominate, or even influence the commercial interests of the country by removing every member of the Federal Reserve Board. at any time, without cause, and by empowering the Federal Reserve Board, in turn, to remove at any time without cause all the directors of the 12 Federal reserve banks, should not be tolerated.

Second. The creation of 12 ,separate, distinct reserve institutions is in utter defiance of all exper~ence, and is at variance with sound principles; and this anomalous structure is sure to break down just at the critical time whenever it may come.

Third. It can not be said that the Federal reserve act bears any natural relation whatever to our experience or conditions, but was purely a foreign device, which was already at the very point of collapse in Germany, when transferred here and superimposed upon our conglomerate situation, making our problem more complex, difficult, and ultimately far more dangerous than before.

Fourth. The Federal reserve act is the most stupendous economic blunder ever committed in the life of this Nation because, while it lays the groundwork for practically unlimited expansion of credit it also sets in motion those forces which will ultimately drive gold out of the country by the gradual substitution· of paper credit, in the form of the United States Federal reserve note, for gold coin. No better device could possibly have been contrived and constructed to put Gresham's law into operation.

Fifth. Not content with the ultimate and unerring effect of the law in !,'Tadually displacing gold coin with Government bank debts, the author·s of the act to pacify the bitter opponents of the measure, in their ignorance and desperation, greatly reduced the re.quired reserves, although the total cash bank reserves of the country were, at that time approximately 5 per cent below the average required by the law of safety long established by experience.

l:iixth. Though all experience demanded the complete separation of the functions of the United States Treasury from the banking business of the country, after cutting away the foundations of credit and imperiling the whole superstructure of our commerce, and after devising a method for still further weakening the aU too slender support of our va ·t business interests, they tied the Government around the neck of the banks, with the necessary result that both must be made to suffer the consequence of an alliance that all history has shown to be di ·a~trou .

In the light of e~-perience these observations made six: 'ears ngo hn'e now turned out to be a prophecy. · '

On the 6th dn.y of February, 1920, delegates representing 8 of the 12 Federal resen-e districts, composed mostl~-. if not entirely, of southern Democrats, met at New Orleans an<l issued the ·following protest and banking bill of rights : n esolutions adopted by assembly of National and State Bankers at

New Orleans. La., February G, 1920. Be it t·esolved by this a-ssembly of delegates t·epresentin{J the Ca1·

tJre.ssca senti.ment oh banks of 8 of 1.Z Federal t·ese1'1Je districts of the Jv~~cl States asstm led 'at Ne·w Orlea11s, La., this 6th day of February,

First. That we are in favor and heartily approve the purposes of the Federal reserve act. We disagree with certain constructions of said law and propose such changes as experience has shown are desirable aml will clarify the meaning of the, act.

econd. Be is t·esolved, That we repel anll refute all inferences and alleg~tions that we are in opposition to the Federal Reserve System.

Third. That we do deplore and disapprove most emphatically of what we charge to be serious abuses of the enormous powers granted in the Federal reserve act and in the administration thereof.

Fourth. Be it fw·ther t·esolved, That we deplore and protest most vigorously against the policy of attempted domination by the Federal Reserve Board and banks over nonmember State banks to enforce universal par clearance of checks by methods described by a Federal bank itself as embarrassing, annoying, and expensi>e to the nonmember banks is cited as an example of such methods, and we denounce the same as both illegal and wrong.

Fifth. Be it further ,·esolved, That in the opinion of the banks here repre ented the proper administration and necessary amendment of the Federal reserve act are questions for nonpartisan statesmanship and that whatever political aspects they may assume, if any, will be t'orced upon tlte banks by acts of the Federal Reserve Board.

'L~th. Be it (ut"ther resolved, That in order that light may be thrown upon th1s important law and its administration, so that its defects ma:J; he ascertained and corrected and its inequalities and . abuses ellmmated, we most respectfully and earnestlY urge upon our Congressmen af:ld Senators in particular and upon all Senators and Congt·essmen w1th~ut r~gard to party, to institute an official investiga~ion of the admimst!:ation of the Federal reserve act since its passage 1n general, and with regard specifically to the following details : '

(a) Coercive methods, if any there be, to :force nonmember State banks to become members.

(b) Substantial competition by Federal reserve banks with their own memuer banks. •

(c) Open market transactions. (d) The enormous and unexpected earnings of the Federal reserve

ban_ks. amou~ting during the year 1919 to $98,000,000 on a paid-in capital ?f a little over $~7,000,000, or 110 per cent for ~urplus alone.

(e) 'Ihe relative salanes and bonuses paid by Federal reserve banks to theit· officers and employees as compared with positions of similar requirements in privately owned institutions.

{f) (Jppressive policies toward member banks, under the guise of corrective measures, to a degree where many such members are afraid

to take any position whic~ might be construed by Federal reservP. officials as being ~n opposition to their policies in dread of punltiv~> measures and repnsals. ~

(g) Attempted destruction of the independence of the great State bank systems as such.

(h) Intimidation, if any there be, of directors of Federal reserve banks. to spch extent as to prevent many of them from performing the funcb.ons illlpos~d upon them by law, and the pt·actices employed in selectmg the duectors.

(i) Efforts, if any,_ to force the diversJ.fied business of the country, whtch varies lar~el! m character and custom from section to section, to conform to rigid rules and standards determined upon and an~ounced bl.: the Federal Reserve Board--<>ften contrary to the e tabhshed customs and channels of trade.

(j) ~he extent .to which inflation of currency by the F etleral Reserve B~ard IS responsible. for the high cost of living, as charged L>y Dr. Wiley and other emment authorities.

(k) The refusal, if any, of F ederal reserve banks to rediscount for: mem.ber banJ.<s pap~r which complied with the law in the most minute particulars, but d1d not fully comply \Tith some arbitrary ruling of the Federal Reserve Board.

(1) The refusal, if any, of Federal reserve bank to make !oaRS to member banks se~ured by Liberty bonus when requested to do so.

(m) The unwisdom and conspicuous profligacy of the announced policy of the Federal Reserve System and banks to spend any amount of money to collect checks on nonmember banks greatly in excess of a n?rmal exchange ch~rge, rather than to pay the banks for such service, and by what nght the Federal reserve banks now propose to use the surplus, which at least in part belongs to the Government and consC9uen.tl.Y to the people thereof. for the coercion anu oppression of certam citizens thereof.

(n) The method of handling clcamnce deposit accounts and the "float" connected therewith.

Seventh. Whereas for many years there was great agitation anu grave c!>ncern manift:stell throughout the country ovet· the alleged con. centratiou of financial power in the bands of a few men in Wall Street-the so-called "Money Trust" ; and

Whereas the Federal Reserve ~ystem was held out a the cut·e for this unhealthy concentration of power, by dividing such finandal power and control into 12 widely separated banks in different sections, and in the bands of 12 re ·ponsible boards of directors. where such power would be readily responsive to the varying mutations of the public needs and opinion : Therefore be it

Resolved, That Congress be further called upon to investigate the concentration of power iu the hands of the Federal Reset·ve Board to a greater degree and in the hands of fewer men than could ever bnve !Jeen the case under the old r~gime, and how and to what extent this power has been usurped and used.

Eighth. And be it ftlrthe.r resolt-ed, That adequate assurance~ be given witnes ·es testifying in this investigation that they will not be th eafter penalized by reason of such testimony, but will enjoy full immunity from prosecution or per ecution, and that such investigating committee be giyen full power to summon witnesses and compel t e::ltimony.

Ninth. And wherca. it now appears to be in the minds of certain officials of the Federal Reserve System that authority is granted by the Federal reserve act to the Federal Reserve Board to regulate the conduct of nonmember State banks a.nd to force such banks into business relations with the Fed~ral Reserve System, as is evidenced by their statements in connection with the announcements of the enforce<! universal par clearance policy. ·

The,·efor6 be it ftt?·ther resolved, That Congress is hereby petitioned to make appropriate amendment to the Federal reserve act, clarifying the provisions thereof and making it plain that nothing therein contained shall be construed as giving the Federal Reserve System, or the Federal Reserve Board, Ot the FedP.ral reserve banks any right of control over nonmember State banks, this having been clearly the original intention of the law.

Tenth. Atld be it furthet· resolved, That Congress is hereby petitioned to pass an appropriate amendment to the Feclet·al reserve law to the effect that Federal reserve banks shall be specifically prohibited from handling either from deposit or for collection checks drawn upon any bank which is not either a member of some Federal t·eserve bank, this being undoubtedly the pm·pose of the Congress in the Ia w as enacted. ::iuch prohibition, however, shall not apply to checks given in settlement of obligations due to the Government of the United :States.

Eleventh. Be it further resolved, That Congress is requested to mak such other and further amenc;lments to said Federal reserve act, as the result of the investigation herein requested may develop to be necessary and desirable, in ordet• that the said act may achieve its original purposes and be of greater benefit and usefulness· than heretofore, and so that it may be no longer possible for an instrument of great good to be used as a weapon of oppression. To this end the sentiment of member banks should be ascertained as to eliminating the entire clearing functions of the Federal reserve banks.

Twelfth. Be it further resolved, That all banks in the United States be furnished with a copy of these resolution and requested to ex-press their opinion thereof. That copies be also sent to the entire membership of the Congress of the United States.

Thirteenth. Be it further t·esolved, That the American Banket·s' Association and all State bankers' associations are hereby called upon tO" render all possible aid in this movement for ~ investigation and in securing the other relief herein suggested.

Fourteenth. Be tt further ,.esolved, That all State banking departments be requested to take this matter up officially.

National and State B~nkers' Protective Association, president, Chas. de B. Claiborne, Whitney-Central National Bank New Orleans, La. (largest bank in New Orleans) ; first vice president, Woods Cones, Cones State bank, Pierce, Nebr.; second vice pt·esident, Percy L. Lang, Waverly, N. Y.; third vice president, Martin T. Nelson, Citizens' st.at~ bank, _Ordway, Colo.; fourth vice president, John H1rmng, Pterre, S. Dak. ; secretary and treasurer L. R. Adams, Bankers' Trust Co., Atlanta, Ga.; first secretary, J. A. Ormond, Marianna, Fla.; Recond secretary, L. J. McGinity, Lebanon, S. Dak.; third secretary J. P. Palmer, Omaha, Nebr. '

There is to be an assistant secretary from each Federal reserve district.

Following the meeting of February 6 the organization was extended to cover the whole United States, and the National

1920. CONGRESS! ON AL RECORD-HOUSE. 7241}

and State Bankers' Protective Association met at Washingt.on men should carefully study the situation at once, calmly but frankly.- to see what can and should be done to prepare for these deman~s and May 3 4 5 and 6 and reaffirmed and readopted the foregomg to effect, in the meantime, not only a prevention of further credit and resolutlo~s 'and ha~e now entered upon a nation-wide campaign price inflation but a measurable reduction of both. of Protest and have gone before the Rules Committee o.f the In the 19 months when we were at war, the expansion of national

bank lo!l.ns was 16 per cent. In the same 19 months commodity prices, House of Representatives demanding that Congress shall mves- Bureau of Labor index, increased 20 per cent. tigate the whole subject from the passage of the Federal re-- From the call March 5. last year, to February 28 this yea_r national-serve act down to date. bank loans expanded by $2,303,000,000, or .24 per cent ... Th1~ WS;S two

d and one-half times tbe rate of growth dunng our partiCipation m the As we have seen, they have resolved. tha.t all Senato~s ~ war with an the tremendous Government loan issues and nearly foux: Congressmen, without regard to party, mstitute an offiCial m- times the average yearly rate of the last 30 years, including the fonr Vestl·gat1· 0n of the administration of. the Federal re.serve act war years. As the national-bank loans are about 45 per cent of the

t total loans of' all banks, this means an expansion for the entire c~nntry since its passage in general and With regard Speclfically- 0 of about $5,200,000,000, a sum that might well have been cons1dere<l the following details : . . incredible it it had been predicted a year ago.

They have brought witnesses thousands of miles from vanous Can any intelligent man read these words, to say nothing parts of the country and have established with the mo~t ~- about writing them-if any member of the board did write dubitable evidence that a rule of absolute tyranny prevails m them-without at least suspecting the cause of this mad in· many parts of the country. TJ;le facts disc~osed ~d revelations fiation? made are astounding surpassmg all posSlble behef that such Let me call your attention to the fact that the amount ot things could exist anywhere outside of Russia under the Czar. gold in the country April 1, 1919, was $3,092,000,000, and th~~

For the information of the public, I shall incorporate some on April 1, 1920, it amounted only to $2,662,000,000. In other of the testimony given before the Rules Committee. words, our loss in gold during the year was $430,000,000.

In the case of the Cones State Bank, of Pierce,. Nebr., .for The amount of Federal reserve notes in circulation April 18 .. example,. following the refu~l of the officers of that instltn- 1919, was . $2,698,000,000~ wbile now outstand~g April 16~ ~920, tion to Sign an agreement w1.th the Omaha branch of the Fed- was $3,260,000,000, or there had been an mcrease of $v61,era1 reserve bank, agents of the Federal reserve bank made. a ~00,000 during the year just passed. practice of accumulating checks ~rawn upon the bank by 1.ts In other words, we exchanged $430,000,000 of 100-cent dollars depositors until, in at least one mstance, the amount of the for $561,000,000 of 40-cent dollars, and put the greater I?art

1 checks was for $10,000 more th~ t:he total cash reserve the cf this $561,000,000 of 40-cent dollarst possibly all of them, mto. bank was required by law to mamtam, and then of demandthg the reserves of our banks. that the bank, without prior notice, pay cash across the counter Here was the reserve basis; here was the direct cause of for the full amount of the checks presented. . that astounding increase of loans amounting to over $5,000,·

The capital of this particular bank is but $50,000 ~d 1.ts 000 000 " a sum " which the Federal Reserve Board said in total deposits $750,000. On this basis !_he bank is requiTed by their b~lletin "might well have been considered incredible i.f it law to maintain a cash balance of $2o,OOO. The Federal re- had been predicted a year ago." serve bank agent presented at one time checks to the amount of And y-et ariyone who knew anything about the principles in~ $31,900 to this bank and demanded a full cash pay~ent o~ that volved could have predicted this increase in bank credit with. amount, threatening to protest the checks and to discredit the mathematical certainty. Indeed, undex: the circumstances it bank with its depositors if this were refused. could not possibly have been otherwise.

A draft upon an Omaha bank, where the Cones State Bank But will it be objected that the member banks could not use had a reserve deposit, was refused by t_he Federal reserve those notes as reserves? .. agents. '£hey demanded cash and immediate payment. And You will find upon investigation that these notes, in obedience the "hard-boiled" methods of the Feder3;l reserve ~gents. cause?- to Gresham'S-law~ are constantly crowding the gold out of the the chairman of the House Rules Comnnttee heanng thiS testi- member banks while States like New York and Pennsylvania, mony to compare their tactics to the b~g m~ers of the the leading fin~ncial and commercial ~tates of the Union, have late and notorious Jesse James, who flourished m that same already passed laws providing that their State banks may hold region. • Federal :reserve notes as reserves.. Of course, if all the State

The Federal reserve bank agents came to the bank "in a banks are using these notes as reserve, as they have a right to, high-powered automobile," according to the affidavits, "armed even without the statutes, these notes, though they may not with revolvers" and displaying them after they entered the have been declared to be legal. tender, are economically legal bank and dem~ded the $31,900. A large number of affidavits tender because used as reserves. from the officers of this and other banks were submitted. A studied attempt has been made by the Government to make

A depositor swore to an affidavit that, being a witness of the the people believe that these notes are as good as gold and.performance of these " Government men " ir;t demanding this therefore, are fit for reserves. cash payment, he had been alarmed and stampeded into the The Federal Reserve Board in its bulletin of July, 1916, recthought that the Government was. withdrawing its money from ommended that these . Federal reserve notes be made legal the bank and that there was a run upon the bank. tender, because they m·ged that they have the power to make

There are known to be hundreds of similar cases, probably them lawful reserve-s. of member banks. there are thousands of them, but most of them are afraid to Upon the appearance of that bulletin, Mr. Fowler expressed speak. himse-lf as follows. Nbw, remember that these words were ut-

We have noted also that they have asked for an investigation tered by him in a speech in 1916, now four years ago. What of the extent to which inflation of the. currency by the Federal he than said h..:'l.s more than come true: Reserve Board is responsible for the high cost of living, as charged by Dr. Wiley and other eminent authorities.

It is now generally conceded that the Federal reserve note is only a 40-cent dollar; that at least 60 per cent of our present prices have resulted from the Pt:actically unlimited issue of Federal reserve notes, amounting now to $3,300,000,000~ or upward of '30 per capita for every man, woman, and child in the United States, and the maladministration of the Federal reserve bank by the Federal Reserve Board. Of the astounding extent of the inflation sillce the armistice was signed there is no po ible doubt, according to the statement of the Federal Reserve Board itself, for in their bulletin of May 1 they say:

A review of the first tour months of 1920 indicates very little progress toward a reduction of either commodity prices or credit volume. The best that can be said is that the rate of increase in botb has been slowed down. The usual credit liquidation of January and February did not occur this year, and while during February the steadily rising indices of commodity prices halted, or eve~ showed signs of ~e~lining, they have resumed their upward course durrng March and April, accompanied by increasing bank. loans, in spite of a decreasing volume both of the Government debt and of Government securities owned or carried by the bank."l.

In sl.}ite, then, of the substantial increase in rates for both short and long credit which followed the Ja~uar:y increase in Fed~ral reserve bank 1·ates! no general improvement. 1n either price or credit expanB.lon has since oeen etl'ected. When we realize that in another few weeks southern harvests will begin, and that in. :mother four months. we shall be in the autumn period, when trade and ct.·op moving demand a.J;l- increased vQlume of credit. it is impru·t.an.t that both bankers a.n<l buSUlesa

ADDRESS ON THE. GOLD STA,... .... DARD EXDANGERED BY THE FEDERAL RESERVE BANK AC'i', BY HO:Y. CHARLES N. FOWLER, MEMBER OF CONGRESS FOR 16 YEARS AND CHAJBMAN OF THE BA:YKI.:~G AND CURRENCY COMMITTEE FOR 8 YEABS, JULY 21, 1916. Though some of the ends sought by the framers of the Federal reserve

bank act were desirable in themselves, the mistakes JI!ade !lnd the economic laws violated in the nnderotking compel the conclusiOn that it were a thousandfold better that the act bad never been passed. .

The framers o! tbe l;.ederal re. erve act pretended to seek to gi>e the country a currency that would. automaticu~y adj~st itself. to the ever-vu.rying demands of trade, rismg and falling w1th the ·tides ol commerce, as the seasons. came and went. But from the day that the act became operative to thi-s hour there bas been one constant, steady stream of circulation poured into the channels of trade, in season and out ot season. until we now have $39 per capita of circulation,. as a:minst only 34.35 January 1, 1914, when the act actually became operative. The United States Federal reserve ba.nk notes now outstanding aggregate $180,000,000.

There was only $34 per capita when the Federal reserve act was passed in 1913. It is · now $56 per capita, or $-22 more--almost double what it was when the act was passed. There is just $30 per capita of Federal :re erve notes alone now outstanding, which is more than a fulfillment of the prophetic fears expressed in this speech. ·

I! we had had such a bank currency as th~JI have in. Canada. the variation from maximum to minimum would range fi'om $300.000,000 to $400 0()0 000 dw:ing the summe.r- and fall as compared with the wixl.te.r months. tor the conditions prevailing here justif'y the concln' sion that while . in Canada the variatlou ranges- born $4 to $5 per

7242 CONGRESSIONAL RECORD-- HOUSE.

capita throughout the year, our ·variation would range from $3 to $4 per capita. However, undt>r the Federal reserve bank act there has been no contraction of our circulation whatever, but expansion, expan· sion, expansion !

He who can not see overwhelming disaster in the continuation of present conditions must be utterly blind · to . all the lessons of history.

Tragic as are the portents of this mad expansion to anY sane mind acquainted with the monetary past, the Federal Reserve Board, not couteut with the use of the United States Federal reserve notes tn 25,000 State banking institutions as reserves, recommended in their bulletin of July, 1916, that these United States Federal reserve banlt notes be made legal tender, fot· they urged an amendment of the Fede1·al reserve act in these words :

" t.:pon the affirmative vote of not less than five of its members the Federal Reserve Board shall have power from time to time by a general ruling covering all districts alike to permit-member banks-

" 1. To carry in the Federal reserve banks of their respective districts any portion of their reserves now required by section 19 of this act to be held in their own vaults.

"2. To count as part of their lawful reserve Federal reserve notes of their own district not exceedlng in the aggregate an amount equal to 5 per cent of their net demand deposits."

'l'hat is, the member banks can make these debts, these demands for gold, a part of their legal resj!rve, they therefore of necessity become a part of the legal tender of the country.

The astounding thing about this proposal of the Federal Reserve Boat·d is that it will cost the member banks just as much to carry this wind and water reserve, this false pretense of a reserve, as to carry gold itself.

Think of this just a moment. This legislation is urged in the face of the appalling fact that we now have in this country $1,100,000,000 of mere paper promises to pay, which are now being used as bank reserves, that is, there are $750,000,000 national bank notes which are being treated indiscriminately as reserves by all of our State banking institutions and $346,000,000 of United States notes or greenbacks, maki.qg a total of $1,100,000,000. In addition to these paper promises there are $500,000,000 of silver certificates, or a total of $1,600,000,000 outside of gold that can be used as reserves, not one single dollar of which is fit . to be used as a reserve.

!'ass the amendment now proposed by the Federal Reserve Board, and fhen certainly the caption of the ·Federal reserve act should be rewritten, and the title should be "An act to increase the United States notes ot· gt·eenbacks without limit." . ~'or this step is the beginning of the end.

How true these words are in the light of the operations of the Federal reserve banks since the armistice was sigried November 11, 1918.

UNITED STATES NOTES OR GREENBACKS.

The gold reserve now lodged . behind the $346,000,000 United States notes or greenbacks is $150,000,000. This is a reserve of 43.35 per cent. The amount of gold reserve required behind the United States Federal reserve bank notes is only 40 per ·cent. · An economic lie is just like any other lie in always demanding a bigger md still bigger lie to cover each preceding lie until the whole fabric of lies breaks down.

The attack upon the gold standard through the Federal reserve act !s not quite so bold, not quite so obvious; but it is the more dangerous .because more subtle and more likely· to . deceive untU it is too late, when we have paid the penalty for our folly in committing this economic rrime. This is our peril. This is our certain danger, and overwhelming disast<'r watts only upon time.

Gresham's omnipotent and never varying law, by which the poorer alway. drives out the better money, working with the certainty of the raw of gravitation, has already been put into operation, and when conditions change and the times are favorable, our gold will be drlven out of the country by shiploads, and the balloon of credit now being created by forcing the Federal reserve bank notes into circulation will explode, leaving only a sad recollection of our fools' paradise.

Could a more perfect description be given of present conditions even now?

There are some who ignorantly, and therefore foolishly, say that we do not need all the gold we now have. Note these facts and decide the question for yourself. The amount of gold now being used through the w~rlq .for monetary purpos.es is in excess of $8,000ii000,000. Our bank llabihties are now approxrmately 45 per cent of a the bank liabilities of the whole world; therefore if we had our share of the monetary gold we should have more than $3.000,000,000 of gold. But we ~;:;e.only $2,500,000,000, or we are $500,000,000 short of our proper

The trouble is that we are in the habit of comparing the gold that we have with that of Great Britain, Germany, Russia, Qr Fr-ance, when we should compare what we have with what all the rest of the world has precisely as we are now compelled to compare our bank liabilities with the· bank liabilities of all the rest of the world. SlL\'ER, GREEN!A.CKS, AXD FEDERAL RESERVE NOTES ARE ECOXOliiCALLY

IDENI'ICALLY TIUJ SAME THING.

.A 40-cent silver dollar, a United States • note or greenback with 43.35 per cent of gold behind it. and a United States Federal reserve note with 40 per cent of gold behind it are economically the same thing, arul no man by any course of sophistical reasoning can point out the slightest difference between them economically. For let it be set down as an eternal truth, that an increase in any one of them will have the same effect economically in the end as a corresponding increase of either of t:b.e other two, and that from this deadly peril there can be no possible escape except by discontinuance, as we have already learned, hoth in the case of greenbacks in 187G and in the case of free silver in 1893.

nETIREMEXT OF GREE~BACKS.

Instead of biking steps which must inevitably lead to unlimited issue of United States notes in the form of United States Federal reserve notes or Federal reserve bank notes which are to become a part of the bank reserves of the country as fast as issued, and which the Federal Reserve Board now urge as a part of our · legal tender money, we should have taken immediate .and positive steps for the retirement of all United States notes or greenbacks outstanding, not only because they are a menace in themselves but because their presence teaches an economic lie--that a debt, that a demand for money, that a demand for gold, can itself be money, can itself be gold, or can even serve J:he purpose of a gold reserve for which it is itself a demand.

Not only that, but we should have .forever fixed by statute a limltation of bank reserve to gold and gold alone.

The Bank of England act of 1844 contain('d a provision by which the bank could count silver as a part of its reserve up to 25 per cent, but the bank has never recognized anything but gold ·as fit for a · reserve, and the result has been that the Bank of England, following this important, the essential, principle, has demonstrated to tbe world beyond all possible cavil that if any country hopes ever to become the financial center of the world F.Old must always be had for the current price of its use, expressed in the rate of· interest without interference of forces set in motion by a violation of this all-important law of banking economies-that is, the absence of Gresham's law is essential to the attainment of this ambition.

England learned her lesson from 1800 to 1844, through many most bitter and seemingly never-ending experiences and, finally, overwhelming disaster.

We learned our first lesson from 1791 to 1832, when the slight differential of about 1 per cent in favor of silver drove all of our gold out of the country. We learned our second lessen from 1861 to 1879, when the United States notes or greenbacks kept us off of the gold standard for 18 years. We learned. our third lessen from 1879 to 1893, when, through the siren call of free silver, we went to the very precipice of national repudiation. · Are the American people such consummate fools as to venture once more into this malestrom of destruction? THE DJH.lANDS FOR RESERVES AND THE DE!'.IANDS FOR CURRE~CY COr.llll

FROM ENTIRiilLY DIFFERENT SOURCiilS.

The movement or increase and decrease of gold is related whollyyes, exclusively-to international commerce. Of course, there is an exception with regard to increase where a country produces gold, but I am speaking now economically of gold as a commercial commodity.

The movement or increase and decrease of currency is. relate() wholly-yes, exclusively-to the demands of domestic trade.

There may be such an expo-rt of gold as to bring about acute and rapid liquidation which in turn would call for a far much greatet• exvansiou of cash. This demand for cash should be met by a conversion of commercial credits into current credits-cash-an operation that should be left wholly-yes, exclusively-to the banks and should in no way be directly related to the institution that is organized to control the movement of gold. .

An apt illustration of the principle here announced, but cumbersome and uselessly expensive, was the conversion of $385,000,000 of commercial credits into current credits-cash-at the outbreak of the European war under the Aldrich-Vreeland .Act.

On the other hand, there may be a large import of gold which would enter immediately into the channels of trade and _primarily, if not permant!ntly, perform the function of the cash of the country, and therefore correspondingly displace or reduce the amount of cun·ency put into circulation as a natural result of the demands of trade.

The· reserves of a country and the currency of a cotmtry when strictly performing their respective functions are diametrically the opposite of each other-the one is the redeemer and the other is the redeemed, and nothing whatever should be done to change their relative natures, for by so doing you interfere with the perfect performance of their allotted functions.

NEW YORK FEDERAL RESBRVE BANK A~ ILLUSTRATION.

While I have not discu:SSM the matte1· with any member of the board of directors of the New. York lj'ederal reserve bank, the appalling danger of identifying these two entirely different elements-reserves and currency-in banking economics, I am confident, hns already impressed itself upon the management of the New York Federal re-erve bank. For, on July 7, this institution held $31,223,000 in gt·een

backs and silver certificates, demonstrating to a mathematical certainty that the banks of the country were already discriminating between real money-gold-and pretended money-greenbacks and silver certificates.

If this discrimination has already shown itself in these flush times, when gold is constantly coming into the country and more is promised, what may be expected when hundreds of millions of gold will have to be shipped out of the country-that is the que.stion?

As to the fact, ' I challenge the board of directors of the New York Federal reserve bank to deny the above allegation. And, if I have stated a fact, I assert that it is their . duty in the interest of truth and in the interest of the general welfare of the whole country to come forward at once and make confession of their trouble in keeping the poorer money of the country-greenbacks and silver certificatesfrom flooding them to the exclusion of the better money-gold.

If I have stated in the foregoing a fact, how could any intelligent man-that is, a man who is informed upon the principles and history of this question-it he is still sane, urge that we add still further to the quantity of the substitutes for gold by making the debts of the Federal reserve banks, their I 0 U's, a part of the legal tender of the country; that is, make the notes' of the Federal Reserve banks legal reserves for all member banks?

But it may be urged that the Federal reserve notes are something more than debts of the Federal reserve banks. . Yes; we well remember that William J. Bryan, then Secretary of

State, refused to give his support-that is, the votes he controlled in Congress-to the act unless the notes were issued by the United States Government. That is, that the · notes should be the obligations of the Government-greenbacks....:....before they were turned over to the banks.

Not satisfied with waterlogging the Federal reserve notes with this deadly handicap, in their ignorance Congress further limited their usefulness as currency by throwing around them all the conditions-fatal impediments-under which the notes of the Imperial Bank of Germany were issued, and finally gave them theh· death blow-as currency-by burying them under a bcdy of rules, regulations, and restrictions that uttel'ly destroyed tJ;lem for the purpose for which the public supposed they were created, an elastic currency, which would reflect the evervarying demands .of trade, instead of a sodden mass of I 0 U's ever on tbe increase, but never decreasing.

AN IRRltVOCABLJil TnUTH.

Let it be remembered as an eternal ec()nomic truth that every act, every paragraph, every sentence, every word, every • syllable, that is used to change or convert a true bank credit instrument into . paper coin, or make it perform the function of coin, correspondingly and identically to . the same · degree, destroys its virtue and usefulness as a aedit instrument and makes it to the same degree and directly in the f:lame proportion, the deadly and dei'b·uctive enemy Qf the v.ery coin whose nature it is made by statute to approximate or assume.

1920. CONGRESSIONAL RECORP-HO.USE. 7243 This is the fateful ft>ature Qf the Federal reserve notes or the Fed

f:ral reserve bank notes. And the result will be inevitably identical with the consequ~nces which followed this experiment in Great Britain from .1800 to 1844, or during a period of 44 years prior to the passage of the English bank act. · THF. THREI!l GREATEST LESSONS OF FINANCIAL A~D BANKING HISTORY.

The three most clearly demonstrated facts, the three established principles of fundamental importance in the financial and banking history of the world, are :

First. That there should be one single central reserve and that reserve should consist of gold, and gold alone, and that the function of creating currency out of credit should not be identified with or a part of the central reserve system. ·

Second. That the best and cheapest kind of currency in the world is " bank-credit currency," and that it should spring into being in the regular course of business, precisely as checks do, and be redeemed daily at the counter of the bank of issue and through the clearing houses precisely as checks are, for they are identical in principle-both are bank credit, both are I 0 U's-the one, the depositor's checK. being ordf'r credit; the other, the bank notes, being current credlt.

Third. That there should always be adequate facilities for the quickest possible redemption of all demand debts cr.eated in carrying on the trade and commerce of a country, such as the American clearing houses would constitute if located in every economic center and all perfectly coordinated.

These three demonstrated facts, these three great fundamental principles, recognized and followed to their logical conclusion, will unerringly lead us to adopt the " central gold " reserve system of England, the " bank-credit currency " system of Canada, and the clearing-house system of the United States. · These three being combined, will give us the most natural, the simplest, soundest, the most economical, and the most efficient banking system in the world, and guarantee to us every natural advantage to become the financial center of the world. '

CONVERSION OF COMMERCIAL CREDITS INTO CASH.

The ft·amers of the Federal reserve act pretended to provide for the banks of the country additional credit resources by superimposing upon conditions which were the- outgrowth of our own banking experiences a foreign scheme, an alien device wholly unsuited to our peculiar need.s which could have been completely and perfectly met bf the extension throughout the country of our clearing-house organizatwns, which are the most perfect banking instrumentalities ever yet developed.

Instead of this alien device, further involved and handicapped by 12 arbitrary locations, largely determined by political pull, where rediscounts might be obtained under the most impracticable set of rules and regulations conceivable, every bank in the United States should have been given the opportunity of obtaining at that credit center where it was in the habit of usually clearing its checks all such additional credit facilities as the exigencies of the seasons and times required, and in accordance with those banking practices which our own banking experience bad approved. The business convenience of the banks of the country and the advantages of their customers demand this natural selection of credit centers, of which there are about 50 in the country, instead of the unnatural and arbitrary selection of 12 distinct points, largely determined by political pull.

Can anything more absurd be imagined than that the banks of Louisiana should be compelled to go to Atlanta or Dallas rather than to New Orleans for rediscount accommodations? But this is only a sample of th~s conglomerate of economic follies and absurd practices.

The framers of the act pretended that they wanted to take the control of the reserves from a few · hands.

What they actually did do was to take the reserves held by 3G7 national banks located in 50 cities and acting as reserve agents for all other banks and place them in 12 banks located· in 12 cities. Not only that, but the reserves now held by the 12 Federal reserve banks are controlled by the Federal Reserve Board of seven members, appointed by the President for. a limited period of years and removable by the President at will without . cause. Again, the Federal Reserve Board of seven members is empowered to remove all the directors of thEl 12 reserve banks upon cause stated.

Prof. Edward Sherwood Meade, of the University of Pennsylvania, said in 1916 : ·

" The same party which 1\fr. Bryan led in 1896 against the money power bas erected in the Federal Reserve Board a political money power, dominated by the President of the United States, which is far more potent than the imaginary combination of the past.

" The Federal Reserve Board can expand or contract the currency at will and without limit.

"They can fix the rate of interest the country over, raising or lowerin~ it at pleasure.

' They can raise or lower the cash reserves of all the national banks. " They can expand or contract the credit of every class of business

man. ne~~J:hey hold the power of life and df'atb over every American busi-

The London Statist of July 22, 191G, used this language: "Every Government, the party in power, desires to maintain active

trade conditions, not only because active trade helps to make it popular, but also because activity of trade is of benefit to the country, and with a presidential election coming on it is obvious that the present American Government will do all that it can do reasonably to maintain active conditions. and, if necessary, will set free the cash that is accumulating and is unused in the Fe«eral reserve banks."

These certainly are nonpartisan and impartial judgments upon the political aspects of the Federal reserve bank act, and disclose the 1mminent danger always impending over the banking and business interests or the country so long as this act remains upon the statute books.

The words of the ·London Statist and Prof. Meade were largely prophetic, but the recent denunciation of the southern bankers at New Orleans was the result of observation and bitter experience and more than confirms the prophetic words of the Statist and professor,

1 . The framers or the act planned and the Federal Reserve Board are doing everything in their power to take all the reserve trom all the banks, leaving them nothing but Federal reserve bank notes in their lrtead, although during the past 25 years all the leading bankers of London, and all the English authorities in banking economics have been urging. persistently, . in season and out of season, that all banks should carry at least a 10 per cent cash reserve in gold in addition to

what they held at the Bank of England. For many years Herr Ilaveustein, president or the Imperial Bank of Germany, as a re ult of his harrowing experience . in trying to stem the tide of Gresham's law,

· has been urging identically the same thing upon all the banks or Germany. If this was a wise precaution in both Germany anti Great Britain, it is a hundredfold more im~ortant in thts country, considering oru· individual, independent bankmg system, composed as it is of about 30,000 separate units.

Since this was written an ignorant and subservient Oongress has passed laws compelling all member banks to carry theii:' reserves with the Federal reserve banks.

THE AMOUNT OF A CE.STRAL llESEllVE.

Under no circumstances should more than one-half to three-fifths or the required bank reserve, which should always be ample, be centralized, if we hope to maintain a solid foundation for our commercial credits which should be subjected to daily redemption, through our clearing houses in gold coin.

- COST OF CURRENCY.

The framers of the Federal reserve act pretended that they would furnish the United States an economic currency, but an exhaustive investigation demonstrates the fact tbat it will cost the American people twice as much as that of Canada, where, all things considered, they have the best bank currency system in the world. The Federal reserve banking scheme, if made operative throughout the United States, would cost the American people more than $100,000,000 every year than a right banking system would.

UNIFlED SYSTEM CLAlMED.

The framers of the net claimed that they had provided a truly national banking system which all banks would enter immediately -as a matter of choice. But just the reverse has happened. Antagonistic and competitive organizations have sprung up all over the country, and the number of banks organized under ~tate laws were seven times greater than those organized under the Federal Reserve System down to January 1, 1916. Down to that date, or within the two years that tht- Jaw had been in operation, 2,925 banks organized under State laws while only 505 organized with national charters and subjected themselves to the irksome rules of the Federal reserve act. Since January 1, 1916, 60 national banks have left the Federal Reserve System, while only 62 have taken national charters. But if the number of banks that have taken State charters since January 1 main- , tains the average of the two preceding years, 856 banks bave taken State charters, or upon an average of more than 15 to 1 have become State banks. In other words, our banking, instead of becoming more unified and completeli nationalized, is rapidly becoming denationalized and correspondingly uecentralized and weakened. Moreover, thousands of national banks aTe now arranging to leave the system as soon as they can do so at the least possible cost and disadvanta~e to themselves. The hatred of this foreign, this alien, device is rntense and well-nigh universal.

Through patriotism during the war, coercion, and fear of persecution many haye joined since the war. See bankers• resolutions.

BA~K REFORMS DEMANDED.

True bank reform demanded a perfectly coordinated and completely unified system, in which every bank ·should have become an economic unit of one harmonious whole.

The Federal reserve bank act has produced diametrically the opposite result; the relative number outside the system is .gaining rapidly every day by national banks leaving at great loss to themselves and fewer joining each month.

True bank reform demanded that our banking and business interests should be removed from all political influence and control as far and as completely as possible. . .

The Federal reserve bank is the most pernicious, gigantic, and potential political machine ever1 constructed through the forms of law.

See bankers' protest<:: and resolutions. True bank reform demanded that we should have a currency that

automatically adjusted itself to the every v·arying demands of trade. day in und day out, season in and season out, year in and year out, precisely as it does in Canada.

The Federal reserve bank is gradually adding to the quantity of oul' circulation and correspondingly inflating our credit, a fact that conclusively demonstrates that the Federal reserve notes bear no relation whatever to the currency demands of trade. This fact is rendered obvious since the rediscounts only amount to $20.JOOO,OOO, while the outstanding Federal reserve notes amount to $J.80,000,000. (July, 1916.)

See excerpts from bulletin of the Federal Reserve Board, May, 1920.

True bank reform demanded that we should have an adequate single central gold reserve, which should become the economic heart of our financial and banking system, adequate to meet all the extraordinary demands of credit and efficiently and effectively aid in determining the international movements of gold.

The Federal reserve banks have already exhausted the legal margin of credit.

The Federal Reserve Board, confronted with an enigma and an im~ possible task, finally, in utter disregard of the terms of the act, -created, in their desperation, by abstracting funds from the 12 banks, virtually another institution, to perform the major function of a central organism, which in th~ United States should consist of the entire central reserve, havillg $1,250,000,000 to $1,500,000,000 of gold, instead of the so-called .settlement fund of $100,000,000 for which · there is no authority in law.

True bank reform demanded that steps be taken to retire all the United States notes or greenbacks outstanding and forever fix gold alone as a fit reserve for the banks to hold. ·

~'he Federal reserve banks are addlng to our permissible reserves every day, and promise to increase them without limit if the Federal Reaerve - Board succeeds in their present legislative purposes. But whether they do or not, all history teaches that the result must be the same in the end. There can be no escape from it, because it is inherent in the very nature of the structure and in the very character or the IiQtes.

•

. 7244 CONGRESSIONAL RECORD-. HOUSE . MAY 18,

True bank reform demanded a banking llystem founded upon the eternal principles of banking economies and those bank practices which had been tested and approved by 125 years of American banking experience. .

The Federal reserve banks were organized ln utter defiance ~f the principles of banking economics and ln complete disregard of the lessons taught us by our own experience, and, contrary to the processes of .Anglo-Saxon civilization, is an attempt to superimpose upon conditions essentially peculiar to ourselves, a foreign scheme, an alien device wholly unadapted to .our particular needs.

The Imperial bank-note system was adopted, although Germany had already these notes, legal tender, as a matter of neces ity in 1911.

True bank reform demanded a simple., natural, and adequate central gold reserve, created precisely as it is created by tbe members of a clearing house and utilized with the same tacility and eliectiveness through a perfectly coordinated and completely unified national organiznti.on of all the clenring houses lo.cated at the natural credit centers of the country. ·

The Federal reserve bank organization is the most eomplica'ted, the most conglomerate, the most mixed mess, that e~er found expression tlu·ough the forms of law-a veritable economic monstrosUy, the natural olfspring of malevolence, exhibited in a legislative effort to desi:I'QY New York as our national economic center-

They put all New J rsey in the Philadelphia district and western Connecticut in the Boston district-of partisanship, exhibited by the appointment of Wilson Democrats only -on the reserve board-

Down to May, 1920, not a sing1e person bad been appointed upon the Federal Reserve Board who was not a Wilson Democrat-of sectionalism by placing 5 of the 12 banks in a section of the country doing only one-fourth of the business-

Richmond, Atlanta, Dallas, Kansas Dity, and St. Louis-of ignorance of economic 'law by issuing an unlimited amormt -.of United States Government paper; a'l!d of utter disregard o.f the vital les ons taught us throu""h our own e>..--periewe in banking by breaking do\\>--n and displacing n well-nigh perfect banking organism with a mechanism wholly at varinpce with our demonstrated needs.

True oank reform demanded that our banking system produce the mob't economical and the safest currency in the world-a currency as cheap as any other 'bank credit and always as good as gold llecause currently red~ed in gold through out clearing houses.

The Federal reserve lJank issues are the most eKpen-sive -and the most dangerous currency in the world. This currency costs awroximately twice as much as the right kind of a banking currency would, and it is .undermining the foundations of our commercial credits because it is being u ed as · bank reserves, -thereby dtiving gold out of the banks and consequently out of the country. History is only again repeating itself. Gresham's deadly law is again vindicating itself.

To-day the whole country is in actual terror because of a threatening commercial catastrophe brought on by an utter disregard of this law.

When all the questions involved are duly considered, it can not be said that there is one single right thing about the Federal reserve bank uc~ ; for, while the framers or the act sought to tlo some things that were right in themselves, through their evident ignorance of economic law and the lessons of history, they nave produced a measure which must prove the most stupendous economic plund.er ever committed in the commercial life of this Nai:iori, unless its consequences are averted by tearing it from the statute books before it is too late..

To say that the Federal reserve bank act has for the fust time in our history so mobilized bank reserves as to 1JTevent fotm·e panics is utterly false, because one .of the ·greatest difficulties ever encountered by American banking-the crisis resulting from the outbreak of the European war, August 1, 1914--was met, overcome, and successfully pas ed by the Aldrich-Vreeland law.

PRESIDENT WILSON CONTRADICTED DY FACTS..

Referring to ,this great crisis, President Wil on .said, at Detroit, Jnly 11, 1916, "U (the Federal reserve bank act) saved the countr-y from a ruinous panic when the war came on."

But hls son-in-law, Secretary of the Treasury McAdoo, in reviewing the situ~J.tion growing out of the European war, used these wards in his report to Congress, December 7, 1914: ·

" This has been accomplished notwithE>-tanding the fact that the Federal Reserve System authorized by the act of December 23, 191.3, was at that time only in process of formation, and was unable to render any service in the situation."

In thesP. words Secretary Mc.Adoo admits that the Aldrich-Vreeland law, nnaided, carried u through the crisis of 1914.

Is it possible that the President did not know the truth about so important a matter? Is it possible that if he did know the truth, desiring to take advantage of an utterly false statement, be ventured to assume that the .American people were such a lot of fools as not to know the facts in the case?

The' economic effect of the Aldrich-Vreeland law which, unaided, carried us through the greatest crisi in our history, was to mobilize our bank reserve--the ability to convert commercial credit into cash-just as co.mpletely and e.ffectively as the Federal reserve bank .could po sibly do. And, moreover, the Aldrich-Vreeland law could not have pro(]nced, if allowed to remain, any of the fatal resnlts inherent in the Federal reser"e act.

THE TWO NECESSARY RESULTS SOUGHT.

When the Democratic Party came into power the .American poop1e, thro·ugh agitation, experience, anil ·discussion, had alxeady arrived at two very distinct and very concrete conclusions.

Fir t, tba~ there should be a general centralization of 7eservcsgold re erves. 'I mean.

, eco11d, that there -sboulil be a gTe..<t.ter a(}apta'billty of our bank crertit to the ever-varying needs '()f trade.

!But the method of ecuring these t .wo important, these two .essential, ends 'had 'tlot .yet been ubjeeted to .any intelligent thinking whatever, simply because there had been no intense interest in the met:hOO .of

securing them. There had been no discussions of the subject by which errors would have been eliminated precisely as they were eliminated through the fiery furnace of debate to which the gold standard was subjected in 1896.

So general and universal was the agreement with I'ega.rd to the centralization of re.serves and the adaptation of bank credit to commer· cial needs that no one of standing who proposed remedial legislation failed to make the e two purposes the central ideas of his plan .

Broadly considered from an economic point of view, the country would have been a thousandfold better off to-day to have continued as it was under the Aldrich-Vreeland law until the great reforms demanded could have been worked out through di cussion, consideration, and due deliberation.

That necessary discussion, consideration, .and deliberation by which the dross of error is ellminat a should take place now, and the Repnhliean Party will be untrue to its tuditions if it does not join i sue wJth tbe Democratic Party by attacking the Federal re erve bank act which is only another form ot " Greenbackism," " Free sllverism,'l "Flatism," "Bryanism."

Speaking ot the Federa1 reserve act, after its. passage, William .1. Bryan said:

"The pronsion (in the Federal reserve act) in regard to the Government issue of the notes to be loaned to the banks is the .first triumph of the people in connection with currency legislation in a generation. It is hard to overestimate the value of this feature ot the bill. In the second place, the bill provides for Government control of this money (he does not know what money is) ; that is, controlled through a board composed of Government officials selected by the Pre ldent -with the appr~al of the Senate. This is another distinct triumph of the people~ one without which the Government issue of the money (as if a debt could be money) would be largely 'barren."

No one but an economic idiot or a person ·who was totnlly Ignorant of the hlstory of banking economics could have ~Uttered these words.

Correctly speaking, our gold coins are the only money we ba:ve, all other forms for circulation are lllotbing but currency w..hich must be redeemed in gold to be kept as .good as gold.

William J. Bryan was .a " Greenbacx.er" before .he was a "'Free Silverita" ;_but he was always a "Fia.tist." It is just as important to defeat william J. Bcyan, " Greenbacker," the true author of the Federal reserve bank act in 19161 as it was to deteat W. illiam J. Bryan

1 the " Free SUverite " in 1896. .and it is far more :lnlportant to defea1: him now, or bis ideas embodied .in the Federal reserve bank act, than it was to defeat him in 1900 and 1..908 when...the people repudiated him with overwhelming majorities.

The Federal reserve bank act is the same old bunco game by which. the people are to be deceived .and fooled into the belief that the Government can make money out of its debts. It is the very embodiment of the same old !a1se pretense of the Democratic Party that the Gov~ ernment can make something out of nothing by its mere fiat.

The Federal .re erve bank :act is the -very embodiment of tbat same old insane idea which has cursed the commercial world for centuriesthat a debt which must be redeemed in reserve money to prove it~ goodness is itself good enough to be used as that sel!same reserve. Certainly~_ if one debt is good enougb to be used for bank reser~ then all good acbts are good en011gh to be used for bank reserves. Tnis i.s the end ; this is .economic chaos.

If all the commercial nations of the world should enter irrto a conspiracy :tor the express purpose of devising some s.cbeme by which they intended ultimately to take away onr gold, tbey could not possibly conjure up anything that would so successfully accomJ:!llsb their purpo e as the Federal re erve act will, for in tbe end it 'Wlll literally dynamite the gold out of the country.

Shall the Federal reserve bank act, which is the most subt1e, the most ·deadly attack e~er made upon the gold standard, go unchalle-nged until it culminates in our utter undoing-complete credit destruction, •overwhelming -conu:nercial disaster'? That is the question.

The fallowing .article by Mr. Fowler appeared September 17, 1919, in The Street:

HIGH PRICES AND THE FEDERAL RESERVE SYSTEM,

(By Hon. Charles N. Fowler, "the father of the Federal reserve act.") EDt'l'On's NOTE.-Hon. Charles N. Fowler retired from banking to

enter Congress. He was a Member of the House of Representatives from New Jersey for 16 years; a member of the Committee on Bank~ ing and Currency for 14 years and its chairman for 8 years.

ln a speech in Congt·es on March 29, 1910, be proposed the establishment of_ the Federal reserve bank. His bill provided for (a) 28 individual and indepe!ldent .zones, which were all united in the Federal reserve bank; (b) departmental banking-that is1 commercial. business, savings business, and trust company business; lC) the issuance of notes according to the principle laid down by Alexander Hamilton in the charter of the First United States Bank; and (d) the centralization of 60 per cent of all our gold-just about what we have to-day.

The present article is a reply by Mr. Fowler to the recent statement made by the Hon. W. P. G. Harding. Governor of the Federal Reserve Bonrd, 'to Senator McLEAN, chairman ~f the Bankin~ and Currency Committee of the Senate, which declared that the operations of the Fed· eral reserve banks had not resulted in increasing prices.

Prices have 'been increased because of some one of the following six reasons or beeause of the combiaation of some of them, or, possibly, a combination of all of them :

First. A great demand and short supply. Second. Increase of wages. Third. Shorter hours. Fourth. Reduction of production. Fifth. Overexpansion of credit. Sixth. Inflation ·of the curl'ellcy. Passing over the first iive. I shall speak only of the sixth. the in

flation of the currency. Prices may 'be increased by an inflation of the currency socb as

they now b .ave in Russia. where infiation has nearl-y wiped out all the value currency ever had and prices are practically without ljmit. A lump of sugar costs about $5 and a pound of bread about $60 in 1·ui~tion o'f the currency bas occurred to a greater or lesser ertent in an countries .atrected by the war, even the victorious conntries-Engl::tnd, .France, Italy, and the United .states.. . . .

'Wl!at owe are- dire.ctly and more particularly mterested m, however. is to what extent prices nave been made by the intl.ation of 01.1r own currency, .or so-call.ed mon.ey.

1920. CONGRESSIONAL RECORD-HOUSE. 7245 WHAT IS MO::s'EYT

It may be well before we proceed any further to fix clearly in our mind what money is. The only true, the only real, money in the United States is the three billions of gold we now have; for gold alone is its own redeemer.

When you have in your possession a $5 gold . coin, the United States Government does not owe you anything, That gold piece, hammered into the form of a spike, is worth just as much as when it bore the Government stamp, which added absolutely nothing whatever to its value, as all it possibly could do was to certifY' to the weight and fineness of the metal, which, in the form of a spike, is worth just as much at tbe United States Treasury as the $5 gold coin was when it first tell, shining from the United States Mint, with the stamp of the Government upon it.

How different when you have in your possession a Federal reserve note. You then have a Government debt. guaranteed by the bank. You have only a debt, an I 0 U, a demand for gold which the banks !>r the Govern~ent owe you and must pay you on demand. Therefore. Jt mus t be obVIous to every intelligent person that the Federal reserve note is not money in any essential sense. It is only currency-a currency medium of e:t.:cbange-as all our other circulation iR, which must be redeemed in gold to be kept as good as gold. With this great fundamental truth constantly before our minds, let us proceed.

OUR CffiCUL.A.TlOX HAS INCREASED $2,3i6,000,000 IX FIVE YE.lllS.

When we speak of circulation we mean the amount of currency of the different forms of curency, gold, silver, and paper currency outside of the United States Treasury and in the hands of the banks' and the people. 'l'he amount of currency of different kinds in the United States, including the United States Treasury, is always much larger ::i~d- the amount of circulation, and this distinction should be kept in

On July ~. 1914, ou_r circulation amormted to only $3,402,000.000. Our per capita circulation was $34.35.

On J"!JlY ~. 1917 .. our circula,!lon amounted to $4,763,000,000. Our per capita Circulahon was $45. • 4. There bad been an increase in our circulation or $1,361 000,000.

On August 1, 1918, our circulation amormted to $5,559,000,000, or an increase or $79:1,000,000. The per capita circulation was then $52.44.

On August 1. 1919, our circulation was $(),778,000,000. or an increase of $219,000,000 and the per capita circulation was $54.40. We bad had an increase in our circulation over that of 1914 of $~ 376,-000,000, or a per capita increase of $20.05. ·

!.Ill, HARDING'S ::-.'EW METHOD.

Mr. Harding, not satisfied with the method by which the Treasury Department arrived at the amount of currency in circulation fixes a new rule for himself in these words : '

" The reset·ve money held by or for the Federal reserve banks serves, of course, as a basis of credit, but it forms no part of the currency in circulation." ·

Applying this rule, lie presents a tabulated statement showing that the per capita circulation August 1, 19)9, was only $45.16, instead of $[)4.40, the amount fixed by the Treasury Department.

But if the reserves in the Federal banks are to be deducted from the ::unount of the circulation, then the reserves held by the National and State banks in 1914 should also be deducted from the amount of circulation given by the Government. And instead of $34.35 per capita we should have had only $17.80 per capit3.4 for the reserves then held by the bar:ks amounted to $1,639;000.000 and the circulation, including- this amount, was only $3,402,000,000.

Does Mr. Harding think that reserves held by National and State banks should be included in our circulation, but when they have been transferred to the Federal reserve banks that they should be ex· eluded?

The Federal reserve banks, through the operation of the amendment of the Federal reserve act of June 21, 1917, more particularlY, have taken from the banks of the country about $1,500,000,000 of gold coin and gold certificates which otherwise would have been held by the banks as reserves. Does it make any difference who hold thl'se reserves so far as the amount of circulation is concerned?

J,e t us see. If the National and State banks should hold this $1,ri00,000,000, the circulation outside of the banks-that is, in the band.· of the people-would not inct·ease a single dollar. But if the $1,500,000,000 is held by the Federal reserve banks the circulation iu the hand of the people might in{!rease to nearly $4,000,000,000 through the i ·suance of Federal reserve notes in strict accordance with law.

And yet, in the light of this simple truth, Mr. Harding, through a course of reasoning peculiar to himself, in makin~ up his circulation statement fot' April 1, 1917. included $1,989,000,000 gold coin and gold cet·tificates held by the National and State l>anks; but wheu he made up his circulation statement for August 1. 1919. be excluded $2,100,000,000 . of gold coin and gold certificates held by the Federal reserve bank ·.

CASH RESER\ES DWIXDLIXG.

For the purpose of demonstrating (a) how slender our bank cash reserves now are, and (b) the exact amount of money in the hands of the people on July 1, 1914, and December 1, 1918, I submit the tollowiug statement:

A.mou11t of de110sits i1~ and cash held bJJ all ba11ks. J uly 1, 1914 :

Dr>posits --------------------------------- -- $17, OG6, 000. 000 Ca. b held ----- - --------------------------- 1, 639, OUO, 000

July 1. 1917 : Deposits ---------------------------------('a :-:h held ---------------------------------

July 1, 1918 : n eposits -- - --------------------------- ----Cash held ---------------------------------

24,891,000,000 1.uo~.ooo.ooo

27,808,000.000 896,000,000

T he reader should Lote the startling increase in deposits each scar :tnd t he tragic decrease in cash held.

1t will be observej, first. that the cash held on July 1, 1914. was about 10 per cent of deposits; second, that the cash held July 1, 1917, wa aiJout G pet· cent; and third, that the cash held July 1, 1918, was about 3 per cent. In the same ratio it will soon disappear alto- · gether, excepting-, of course, Federal reserve notes.

0 [ the $896.0(•0,000 held in 1918, $129,000,000 was in Federal reserve notes. But I suppose that a cash reserve of only 3 per cent in " chips and wetstones" will not arouse the slightest intere t in the minds of the manufacturers of paper currency,

CURREXCY IX THE H.A.~WS OF THE PEOPLE.

'l' lle amount of· circulation outside of the banks and in the . b~nds of the-people July 1, 1914, was only $17.80. The amount of circulation

outside of the banks and in the hands of the people July 1, 1918, was • $44 per capita, or two and one-half times as much as it was in 1914.

The total amount of our circulation August 1. 1918. was $5,559.-000,000 and the amount held by all banks July 1, 1918, was $896,-000,000, leaving $4,663,000,000 in the hands of the people, or $44 per capita. ·

EXPAXSIOX OF FEDERAL RESERIE XOTES.

That the reader may appreciate the real situation Jet him note and remember that on April 1, 1917, there were only . 357,000,000 of Federal reserve notes issued; that on August 1, 1918, $2,024,000,000 had been issued; that on August 1, 1919, $2,705,000,000 had been issued.

IXCRE.A.SE Dl TOTAL .A.lUOUNT OF CURRENCY IX THE COUXTRY.

The total amount of currency in the country Jul:v 1. 1914, was only $3,7a8,000,000. July 1, 1917, there was $.3,407.000.000. August 1, 1918, there was $6,896,000,000. August 1, 1919, there was $7,525,-000.000. Or there had been an increase in tbe period of five years $3,787,000..000, of which about $1,100,000,000 was in gold and the balance, or $2,700,000,000, was in Federal reserve notes.

The total amount of currency of all kinds in the country in 1914 was $3,738,000,000. The increase bas been $3,787,000.000, or more than 100 per cent in five year·.

}'ACTORS IXVOLVED IN CURREXCY IXFLATlOX.

The amount of currency ln any country at allY given time is of -little consequence when considered by itself.

The amount of currency in France prior to the war was upward of $50 per capita, about three times what it was in Great Britain, and yet, if anything, prices were ~enerally a tritle lower in France than they were in Great Britain. '.fbe explallation was mainly due to the fact that the people in Great Britain paid practically all their bills by check, while the people or ll'rance paid their bills with bank notes.

When considering the question of currency and its influence upon prices we must take into account-

(a) How much currency there is in a country at a given time and of what it consists.

(b) What the increase has been within a given time and of \vilat the increasf' consists. _

( r) What tile hallits of the people are. (d) What use is made of the different forms of credit currency as

distinguished from the gold currency. (e) Is gold alone being used for bank reserves: or, are debts, de

mands for gold (Federal reserve notes, etc.), being u::;ed as a basis for more. debts, more demands for gold?

(f) To what extent is gold required for re ·erves? (g) The banking system of the counti·y.

CIYIL WAR 1:-IFLA:I:IO~.

At th(> close of tile Civil War the exact amount of inflation was d(>termiued dailv by the sale of the Government credit for g-old. At one time it took $2.a.> of Goverument credit to buy $1 of gold. This difference gradually disappeared, and by January 1, 1879, we were again on the goid standard.

OCR lXFL.lTIO:-: IS FROM 25 TO 50 PER CE~T.

'l'o·day, bv agreements with foreign countries and through an arbitrary control of the movement of gold, we have prevented the. sale ~f our circulation for gold; but we are neverthele. s on a cred1t basu1, and the inflation due to this fact ranges somewhere from 2.1 to riO per cent, and thi amount, whatever it is, bas been added to the price of everything.

CAt:SES OF THE I':'IFLJ.TJO:-:.

It may lle said, with some truth. that this vast increa. e of our. c_irculation and the consequent inflation has ~ee!l due to _the nece. s1ties of the World ·war. Even if that were true, It IS no Jess Important t~at we should detlate our currency and get buck to the gold standard Jlrice

aslg~ni ~smp~~~ti~~bffiose who believe that our inflation and the con_~equent incr·ease of prices are due in a ~rge measure to the followmg reasons: . •

(a) To the structure and use of the Federal ResE>rve Banlang System. (b) To the ua ture and u e of the Federal I'P.serve notes. When the Federal reserve banl{ was established it was designed and

declared to ue a c:mservative force. ' It was to take th~ , a!De J?lace in the United States that the Dank of England occupies m Great Britain. As a matter of fact. its position in certain r espects at least, has been just the reverse of that of t~e Bank . of Elbgland. .

Instead of con. erving and controllmg credit by the exerc1;;e of a constricting influ€nce it bas from the very start been boommg and expanding credit. acting always as a power of inflation rather than a power of conservation and limitation.

The Dank of England rate of discount has always been, in normal times higher than tbe commercial rate of discount, and therefore the bank 'bas always· been the guardian and je-alous protector of commercial credit, because the bank was its last resort, and it ever stood as a. protest to overexpansion.

The Federal r eserve bank rate has always been distinctly lower than the commercial rate, and therefore a constant source of expansion and intlation of credit. '

A); E COXOlli C LIE TIIAT MUST LEAD TO COlllllERCIAL DISASTER.

But what is a still more serious matter for consideration is the nature anll growing use of the Federal reserve notes. 'l'hey at·e, primarily, United States notes. or greenbacks, issuerl by the Government, but, secondarily, guaranteed by the banks. Since the Go,·ernment never has any considerabl€ amount of liquid assets. and the banks should have little else than liquid assets, the guarantor is incomparahly better equipped for liquidation purposes than the maker. The Government's ability to pay lies in the power of taxation, which works slowly. The bank's power to pay lies in collecting current accounts, a resource which responds quickly.

Largely because of the character of these Federal reserve notes, the people have, generally. speaking, come to believe an economic lie, and that is this : That these notes are as good as gold and therefore fit for bank reserves. This fatal fallacy has already found expression ln the passage by some of the States of statutes making the Federal reserve notes· lawful reserves for their banks. New York and Pennsylvania have both passed such statutes. The economic effect of such U!';(' of these notes is to make them legal tender, even though the Federal 1aw has not yet declared them to be legal ten{ler.

According to the report of the Comptrolle_r of the Currency, on July 1, 1918, there were 7,705 national banks, with liabilities. outside of capital and surplus, of $16.038,000.000. There were 21,175 State bankin~ in~titutions, with liabilities., outside of capital and surplus, of $17,750.000,000.

7246 CONGRESSIONAL RECORD-HOUSE. MAY 18,

C(!rtainly, these 21,175 State banks will need considerable reserves~ and as time goes Qn and they become accustomed to holding the Federal reserve notes a.s reserves, and loQking to. the Federal reserve banks as. the cure-all and save-all, they will h.old nothing else~ excrept sub· sidiary coins.

The act of June 21, 1917, by which the Federal reserve banks took over practically all the gold held by the member banks (as a war measure, as. I then supp.osed), will continue to keep them stripped of all true reserves (g<>~d) and drive them to holding as cash reserves only Federal reserve notes.

Few, if any, member banks will think any further than the profits .of their institutions. So long as they can exchange their 6 per cent paper for notes and pay 4. per cent l.nter~st, thereby making 2 per cent, you will find banks working overtime and often in collusion with each othel' to keep out their notes.

I knew of several national banks years ago that arranged with trust companies ttl carry theiJr natl.onal-bank notes as reserves, although the profit on the circulation was averaging only about 1 per cent. I remember one trust company that had $3,000,000 bank notes at the bottom of its reserve, and kept them there because of an arrangement with ct-rtain national banks.

Bank notes, which are held as reserves and upon which banks can make 2 per cent interest, differ in no way from cheaper or poorer money which can be bought at 98 and the pr-oceeds used to liquidate debts. This constitutes the very- essence of Gresham's law.

Let It be remembered that all business is founded upon selfishness, anu that banking is the ultrarefinement- of business.

In the light of these facts and all the experience of the banking world for hundreds <>f years, what becomes of such idle words of Mr. Harding when he says: "Reserve notes are not legal tender, nor do they count: as reserve money for member banks"?

The member banks have been told and taught that they do not need any reserves, and what they had has been taken away from them by statute. In the light of this fact, what becomes of his words about reserve n<>tes being held as reserves by member banks? Of course~., the banks of the country must hold out cash resources for their aaily needs. But they are told that it doe. n't make any di1Ie.cence whether these cash reserves are gold or demands for gold.

BANK RESERVES ARE.. ESSENTIAL.

The unsound, the insane idea that banks need not carry any true reserves (gold) has been promulgated so long without a protest that a tragic number of bankers begin to think that it is true~ d if this thought continues and prevails, we are now sowing to the wind

an~h~hec~~t;'lc~il~~~~::n~~1c~~nicle had the following in its leading editorial July 19, 1919:

"With a gold reserve of only 35 per cent again.st deposit liabilities, the ab olute minimum allowed by law (this means, be it remembered,

, that the reserve bank is holOing the 13 per- cent reserve of the mem~ ber banks, h_as only 35 per cent of the 13· per cent in the shape of gold, cutting, therefore, the gold reserve of the member banks in the

'Federal reserve bank down to the low figure of 4.50 per cent), and a 1gold reserve of no more than 44 pex cent against the Federal reserve ·notes in · a.ctual circulation-or only 4 per cent above the- legal mini.mum-tbe New York Federal reserv~ bank is in no position to ,intervene either in aid of call-loan accommodation or of a:ny other lbranch of the money market:. It has reached the limit of its fnncitioning in that regard. And the sooner that fact is recognized and: everyone adjusts his affairs accoxilingly the better it will be all around.''

By this authoritative statement we learn that the member banks vf the New York Federal reserve bank are carrying a reserve of <>nly 4.55 per cent, and this in New York, the now boasted financial center of the world.

It is delightful to live in a fool's paradise--as long- as it lasts. '0TES OF IMPERIAL BANK OF GDR.M.ANY:.

In 1901 precisely the same use of the notes of the Imperial Bank of Germany that is now being made of the Federal reserve notes led me to prophesy that the German Government would be compelled, sooner or later, to make the notes of the Imperial Bank legal tender, and_ this was done by the- German G~vernment in 1911 just 10. years later. Identically the same fate awaits us unless we call a halt and get back to the gold standard by eliminating: the win{! now in our credit system and changing our fJI)inion of and the consequent use of the Federal reserve notes. Allusion has here bee.n made to the Imperial Bank of Germany because the note-issuing fun.ction of the Federal reserve bank is identical with that of the . Imperial Bank of Germany and because we are following in her footsteps.

GRESHAM-'S LAW.

Gresham's law, by which the poorer money always drives out the better, although temi?orarily held in sliSpense by- the arbitrary control of gold, is already in force in this country, and when the time comes for it to act-when there is untrammeled commerce in gold-it will be as certain and powerful in its operation as the law of gravitation, and no human device, though it may retard, can avert its inevitable conse:quences.

But will it: be said we need l!ltve no fear for the futw·e be'cause, forsooth, the wot'ld is our debtor in so great an amount? What would you say about a phy ician who, because his patient was in the prime ot life and in pe:ofect physical condition, told him to do whatever be pleased and if he desired break all the laws of health; or what would you think of a man who ordered a ship built to cross the ocean only on a t>mooth sea and with favo.r-ing winds, instead oi one to cross on any kind of a sea and against any kind of wind?

GRl'l.AT BRITAIN'S. POSITION.

Great Britain is studying day and. rilidlt, indeed is wo11king overtime, to find out how she can get back to the powerful and all-important position sh~ occupied prior to the war, wb.en she conducted and con-trolled the cnly free market for gold in the wo:rl<l. .

This incomparabl advantage in the world's commerce was maintained by the llpitish bankers, although the Bank of England held only a small amount of ..,.old, ranging from $200,000,000 to $250,000,-000. This was comparatively an insignificant quantity of gold, considering the position of the Bank of England in the world's commerae uut this seeming miracle was achieved because they entertained no unsound views about the demands for gold, no insane idea about the nature of a debt. They repudiated the thought that a demand for :mid could be treated and used as gold itself. They bad learned by hard experience that a strong, unassailable financial position rested more upon sound economic opinum, and what was still more to the purpose, sound economic practices, than upon an unne<?essa.rily huge quantity of gold. •

WE CAN TAK.E T.HE LEAD.

Owing to- the present condition of the European countDies and· our own relatively strong position, it would be comparatively easy for u to get this ~ominant place in the commerce of the globe and make it practkally Wlpossible for England or any other country to take it away from us for a long, a very ·long time to come, or indeed, ever, unless the world should change beyond the present 'ulliit.s of the imagination.

But this incomparable opportunity may be- frittered away and utterly lost by believing this economic lie--that forsooth, because one thing is redeemed in another, therefore they are the same thing-; in other words, that because the Federal reserve note are rede mable in gold, therefore they are fit for bank reserves :md tba t still more dismal, disastrous, fatal but certain end which u sure to follow in the wake of our present practices-fit for legal tender.

WAGE E~lll.RS ARE THlil ONLY SGFFERERS FROM INFLATION.

Let us remember that it is the 90 or 95 per cent of the people who work and toil for wages in some form who are always the real and the greatest, if indeed not the only true sufferer from an intlated currency, for they have no way of protecting themselves, a the manufacturers, merchants, and bankers have. Indeed, the last three almost invariably mrte a good profit out o.f those who work for wages. That is just what is happening to-day.

But until the increase of prices due to the inflation of our currency is 0liminated WP can not, in justice, !iSk labor to take lower wages.

WH.~T IS NECESSARY TO HOLD OUR FOREIGN TRADE?

The present industrial condition of most o! all the rest o:f the wodd is so deplorable that we may confidently expect, for a short time at least, to furnish it with a vast quantity of manufactured goods, as well as raw mate-rial. But with an inflated currency and the consequent abnormally high wages, may we hope to compete in the years to come with the other comm.ercial nations, who, as the result ot their sad experiences and vast losse , will be compelled to. :tight for every dollar's worth of business they can possibly r;et to pay their taxes alone, to say nothing of lowering their mountains of debt?

.Again~ is it not true that if we suecee<l in keepin.~or Ameri<?an labor employed we must export a large part of our manufactured product? Indeed, will it not be necessary fol! us to find outside consum r for at least one-third, possibly one-half in some lines, of our output? If this is appro.:dmately true our- continued prosperity may depend upon our success in foreign trade alone, but t.o succeed in thQ outside woxld our prices must be low enough to get the bu iness. ' After making every allowance for the greater efficiency ot the American workman, must we not also take advantage of those principle in financial and banking economics which Great Britain has long recogni>'led as ~ ential to her commercial success and progress and to her financial leadership th1·oughout the world?

WHAT IS ESSHlNTIAL TO OUR PERMANJJlNT PROSPERITY?

Without a doubt we are standing at the very thre hold of the most prosperous and progressive pedcd in the material life of this Nation. It is for that very reason that we should take St(!pS now to so stengthen tlte foundations of our financial and banking structure that the commercial fabric whieh is being built upon It may endm·e unshaken ; that it may- not, with.out any warning whatevel', in the hour- of our bi~hest hopes and fullest expectations, fall i.n. utter ruin because of the disregard:, the disobediQ.Dce of some economic law that always exacts the fullest penalty when it has been persistently and flagrantly broken.

OL'R PROSPERI~~ GfVIllN PE.R.MAN»NCB.

·our commercial arrangements with our allies and tbe present arbi· trary control of all gold movements are an absolute guaranty at tbis time that such changes as are necessary can be made in our financial and banking system as will greatly aid, ii indeed not inslll!c. the con·

· ti.nuance of our foreign trade and put our comme«ial fabrie upon a. permanent and unshakable foundation without in the slightest degree checking our present p.rospel'ity, but give it rather an in-creased, a double assurance beeause of the complete and unbounded) eonfi<lcnc.e. these very changes must inspire.

ESSENTIAL FUNDAMENTAL CHANGES.

First. We must place the Federal Feserve bank in precisely th.e position it was originally intended to occupy, o that wMn bu iness again. assumes its natural emrrse this central banking institution may become .. indeed, the guardian of our commercial credit and he able truly to conserve the business interest of the country, and, if necessary, check any t-endency to. overexpansion by the natural proces of regulating a . rate of interest that should always be higher than the commercial rate, which. in. turn, should, under all ordinary circumstances, be determined by the state of trade under the naturaL law ot supply and demand.

Second. We must completely eradicate from the minds of the American people that utterly false conception with regard to the u e of any debt, any demand for gold. as a bank reserve, even though that deht, that demand for gold· is a Uni-ted States Government note guaranteed by the banks-the Federal reserve note.

Though different in form1 in nature and principle, the Federal re erve note and the private checK are identical. Both are debts. Both are demands for gold. Both may be equally good as far as payment goes. Both are certainly equally bad in principle as far as using either ol them as a bank reserve goes.

It we shall succeed in establishing clearly and forever in the minds of the American people the radical and irreconcilable difference betweell! gold it elf and' what is diametrically the opposite-a demand for gold, in whateven form it presents itself, the private check or the Federal reserve note-we shall escape the ever constant perils and ultimate overwhelming disaster that is bound to overtake us in the end if, in fact, we have only a credit foundation upon which we have built a gigantic_. fabric upon the false assumptio.n that that foundation wa.s gold.

[From the Street, of New York, Apr. 19, 1920.1 THE FEDERAL RESERVE IX THEORY AND PRACTICE.

(By Dr. Arthur Selwyn-Brown, an eminent authority on finance.) The American currency system is proving to-day to be <>ne of the

worst in the world. It is an expansive system witho_ut any apparent capacity for contraction. Every week it rises to further pmnacles of inflation, notwithstanding the fact that Congress is being constantly appealed to by the Federal Reserve Board for increased powers for remedying the in1lation, which. all bankers recognize bangs over the American business world like a . dense thundercloud and con tantly threatens to deluge the credit structure with destructive floods of debts.

1920. OON GRESSION AL RECORn---:KOUSE.

.The enormous e:\-pan ion of Federal reserve bank notes is :reco-gnized by everyone to be a fundamental cause of all the 'high prices, ..business hard hips, and social and industrial unrest thro.ughout the United States. It is also a prime cause of the scarcity and high price o! money and the lethargic state of the country's bond markets.

llts paralyzing effects upon American business were shown •on :March 8, 1920, when Congress was ·appealed to by American business men to inquire into ·the scarcity and high cost of capital. The Senate, "On · that date, passed the following resolution :

"Resolved, That the Federal Reserve Roa:rd be, a:nd is hereby, directed to advise "the Senate what is 1:he cause a:nd justiftcation far the usurious -rates of interest on ·collateral call loans in ·the financial centers, under what law authorized, and what steps, if 'nll.Y, are .required to abate this condition.''

:These were plain questions, tersely a-nd clearly ·put. They could have been just as tersely and clearly answered. ·But "honest answers would have constituted a severe arraignment of the Federal ~eserve System.

It is evident from the answe-r supplied by the Flederal Reserve Board that the members were embarrassed by •the inquiry made by Congress. The answer, . practically. amounted to the board's ackn()-wledgment that it could not make an adequate reply. Speaking through its .governor, W. P. Harding, the board answered the Senate's 'inquiries regarding the present usnrioUfil.rates far call money as "follows: ·~:As to the 'cause and justification ' of the high rates .of interest :which it thus appears may legally be charg.ed on collateral call loans in New York, and as to 'steps • • ... required ·to abate · this eondition,' there is, as is ' W~ll known, a wide difference of opinion among persons who have .given thought and study to the question. Indeed .broad and fun-damental questions of general economic and social ~ohcy are involved-in the last analysis, the whole question of the utility o! speculative •dealings in sectu"ities and -commodities on organized exchanges is involved; antl more immediately, the question of the methods and practices of the leading speculative markets of 'the country, margining, stock m~pulation, and kindred matters also ·susceptible o! abuse. 'As to -th~e. the board has never had occasion officially to form an opinion ; the Federal reserve act specifically pre.cludes the purchase or discount by Federal reserve banks of 'notes, drafts, or billS covering merely investments or iss-ued or drawn for the purpose of -carrying ar trading in stocks, tmnds, or other inve tment sectu"ities, except bonds and notes of th~ Government of the United States.' The board could not undertake to form a judgment upon matters above referred to without study ·and 'investigation of su-ch a comprehensive na.tw:'e as would seriously inter'fere with the conduct of its regular work, and -which, had the board the requisite authority, would require the :services of experts and assistants. • ·• '*."

This amusing fallacy of confusion rmaoe with ·such •levity by -the Federal Reserve Boa1·d probably indicates the measure of its tear when it is guestioned regarding the condltion of our new currency. '"When the currency of a great nation is permitted to get into such a dangerous state that those who are t'eSJ?Onsible for its -management practice the adToit methods of answering .mconvenient questions which the Fede:cal Reserve Board has adopted in several of its replies to specltlc questions put to it by Congress, it appears to be -establishei:l prima facie that there is something fundamentallY wrong with "tbe basis ·of th-e currency. In other words, the excuses :that are being urged on behalf of our new currency but serve to condemn it. The feadul threat to investigate the stock markets and machinery of Am.eri"can finance implied in the board's evasi-ve reply appears to have had some inftuence in Congress. No further questioning .of -the board has been pursued. 1

'What are the fundamental principles of the Federal Reserve ·System and what does experience show is wrong with them? These :are -timely and important questions.

The Federal Reserve System is a bank .of issu~ . having 1.2 central banks in the United States and numerous agencies. Commercial banks are kept associated with each of these reserve banks through voluntary associations. The Federal reserve banks issue the United States currency, which consists of Federal reserve notes. These notes .are accepted as money by the American l>eOPle because they believe that they are backed by a gold cover. As a matter of fact, the notes are ·just evidences of , debt. They are just common promissory notes issu~ by the bank against collateral, which may consist of: (1) Paper indorsed by member banks and drawn for commercial, industrial, or agricliltural purposes or J'or the purpose of earrying or trading in B1:leurities of the United States Government; (2) bills of exchilllge indorsed by a member bank and bankers' .acceptances bought by the Federal reserve bank .in the open market; (3) gold and gold certificates.

A gold reserve of not less than 40 per cent must be kept by each Federal reserve bank against its ·outstanding ·notes. .:But .:means are prov.ided for obviating t'his provision under certain circumstances.

A currency, or legal-tender money, based upon notes of this character will naturally have great expansibility. Our currency now shows that, as one of the politicians responsible for this phase of -the .Reserve S:vstem very properly explained, the Federal reserve notes can be " drawn for cotton while it is being harvested or while it is in transit for Europe or while it is being manufactured into yarn or while n mel;chant who purchased the finished article continues to owe ·the manufacturer thereof, or possibly even while the finished .article is being shipped back to the same country from which the raw J)roduct originally came." If we change the numerous "ors " in that explanation of the basis of Federal reserve notes into " nnds " it will still be correct. Notes may be .freely issued against such indebtedness and renewed time and again. Such notes may also remain outstanding long after the values which caused their issuing have been consumed or destroyed.

Eh.llerience shows that Federal reserve notes may be issued aguinst I 0 U's of a much more fragile character. l:t would be interesting to trace the number of notes issued against paper drawn by promoters of speculative pools in grain, foodstuffs, and industrial corporation stocks and bonds in recent market manipulations. !rhe Federal reserve note does not represent an advance of credit or capital to merchants to enable them to carry on an exchange of goods or services. It is not simply evidence of the existence of any property of corresponding exchange value in terms of money. It is, however, an additional unit of the Nation's currency in its capa.city of standard of value. That is one of the reasons why every Federal -reserve note which is being issued js tending to force up the prices of commodities. It increases the number of notes in circulation, and every circulating note above 'the country's business needs cheapens the exchange value of the superfluous notes. As these notes consequently fall in value, prices of commodities rise. There are close reciprocal relation.g between the cheapening of paper mon~y through super:fluous note issuing and the rising of commodity prices. The correspondence between the increase of American commodity prices since 1916 and the issuing of Federal reserve circulation is most pronounced. The limit of commodity price limits app.ears to be simply the limit put upon the making of the cover paper.

A discerning -criti•:! has shown that this amazing ·state of . affai-rs :has -arisen through a 'fallacy brought about by a :faillll"e to distinguish .between an advance of capital or credit to merchants ana an addition to and consequent depreciation of the mas.s of the country's legal-tender money in its office of regulator of value. ·In other words, the ·Nation~s .standartl of value '.has been -sacrtficed in ot:der to promote the making of dlscountable commercial ·paper.

The Federal Reserve Board is -empowered to discount the negotiable instruments of corporations authorized in accordance ' with .ProviBioru; ,of. the •Fed.e~ .reserve ·act -to tlo a -roreign b~ing business, providing that ·the liabilities outstanding at any one time does not exceed "ten times th~ capital stock and surplus.

This is a new type of American banking institution, whiCh is ndt operating at l?resent. But when corporations formed for this purpose commence busmess they ·will eall fox 'further large increru>es in currency.

'The 'Federal Reserve System clearly is well provided to meet -every possible .requirement for increasin_g .the curren~;:y circulation. \Vlr:it, then, are the "'Jrovisions fo~ curtailing ·.it and 'lllaking it sufficiently flexible ·to meet the simple needs of :American business?

The reserve ·act specifies the 'following ·means for contracting circulation -~ "Any Federal reserve bank may at any time reduce its lliibllity tor ' outstanding Federal reserve -notes by depositing -with tbe ·Federal reserve agent its "'F~erlil reserve~"llotes, .gold, gola certificates, ·or lawful money of the United States. 'Federal ::reserve notes so u~osited ·-shall not be ·reissued cexcept upon compliance with the conditions ··of an o:r!gi-na11issue. .

"·The Federal reserve :agent shall hold -such .gold, gold certi:fic:rtes, ·or lawful money available exclusively for exchange for the outstanding Federal reserv~ ·notes when offered by the reserve bank of whictl lhe is a direetor. 'Upon the .request of 'the Secretary -or 'the Treasury ·the Federal Re!rerve ·Board .sh3.ll require-the Federal reserve agent to trans~ mit to the Treasure-r of ·the 'Unitea :States so mu~h of -the goZd held by him as coZlat"eraZ ''SeUUrlty for rFede-ral reserve :notes ·as ma-y .be required for the exclusive purpose of ·the r~emption of 'sm!h Federal -reserve notes • • '*/'

The writer has 'itaHcized the ·peference to gold with the .purpose rof drawing attention to the fact. that""there ·is nothing in "the act calling for the redemption of the notes in -g6ld. If the ·notes •were in point o! fact readily redeemable in gof'd :they ;would be ~more YRluable · than they are under ·present eondltions.

An elementary knowledge of -the ·Federal .ResePVe ·System -will indicate that while it provides for the easy .issuing of an .abundance of bank notes, its provisions for i.he contraction of "tbe currency .and -redemption of the bank notes i.s perllonsly cumbersome, slow, and nncer~ tain. There is little resiliency in th~ .cunency. It may -truly be defined as a ballooning, one-wa-y currency. ·n · is expansive but practiclilly inelastic. Elasticity connotes a giving and taking-a rising and subsidence. The Federal reserve currency only rises. It .gives •no evidence of contraetility. 'Here we see one of Its basic defects. It is incapable of responding !to the rhythmic fluctuations of American business.

The .references to 'the Secretary ot the Treasury in the quota lion ..referring to ·the note-redemption "proviso indicate anoth-er ·basic ·defect. The Reserve System seems an integral ,part of the Government. -u appears ·to ·be, "through its constitution, a ·political more than a financial ·institution. ll.'be appointment -of its officers is a political privilege and the .Secretary nf th~ .Treasury and Comj)troller of the CUrrency are two of the seven members. These important Government officers must exert important influences over the management of the system.

It a.J)J)ears, ' then, from -a review of the constitution, organization, ana practical. OPE:ra.?on of the Federal Reserve System that the prindples upon which It 1S based are as follows: (1) A close corporation with a go-verning board of seven members appointed and controlled by · the Governm~nt, ttwo o! the members being important Government officers ; (2) 3; senes of 12 r.eserve banks and banking centers -with affiliated commercral bank members ; ( 3) a curr.ency consisting, beyond the national me~lic money, of Federal •reserve bank ·notes based chiefly ·upon commercxal.paper; (4) a slow, inelastic method of currency redemption.

When the ,panic of 1907 drew attention to the fact that we needed a new currency system, .plans were developed for making a thoroucrh survey of the principles of a sound currency. The world's leadlng ctfrren.cy_ a~horlties -were consulted, a~d they . advised as to ·the ·soundness of prmci~les. When Congress dec~ed to .establish a new ·currency, it was proVIded .with the ..means lor giving the United £tates the best curr~cy_ in "the world. The principles of a sound currency, like all great prmc1ples, were shown to be ·extremely ·-simple. .And there was no -novelty about 'them. ' They had .been well tried out in certain sections of the United States, in Canada, and in many parts of the British .Empire. T}?ey followed what has been proved a safe and well-beaten path.

Experience has positively shown that a resilient, flexible currency can only be obtained .in one way-by "basing it on credits originating in the production of commodities and services and extinguished by their con· sumption and use.

Every nation or business community requires a certain amount of money, credit, or currency 'for its needs. This amount fluctuates seasonably with trade, indnstl'ial, and agrieultnral conditions. That is the reason why a .good currency must be quickly responsive to business demands. It must respond to business, not dominate it as ·the Federal reserve currency does.

Money has two functions. It provides the means for the legal discharge of deb-ts and provides our .standard of values. Credit and money are equally good as media of exchange. Credit may reallx be said to be the -most efficient medium of exchange. Credit is belief That admitted claims to Yalue-represent value, are as good as value and are immediately exchangeable for value. It is represented by paper which may be issued in quantities proportional to legitimate commercial .needs, and may be made in unit's of any convenient denominations. It can be made to accommodate itself automatically to every conceivable variety of conditions of exchanging, tradlng, or credit dealings. In other words, a purely banking credit currency system, like the old Scotch system, or the old New England Suffolk system which was based upon it, and like the 'British Australian, and Canadian systems, is the.ideal system for a modern highly developed ·commercial nation like the United States.

A bank credit currency like the Canadian currency was recommended by the world's 'leading experts as the best suited to the needs of the ·United States. Jt .is the cheapest..as well as the safest form of currency. It grows out of actual business tt{lnsactions, just as bank checks do, and is redeemed every business day at the banks of issue a-nd through the clearing houses.. •Indeed, a bank credit currency is simply a form of check currency. It is a current credit currency based on I 0 U's arising out of actual commercial transactions. A check is a credit order on a bank, whereas a bank credlt note, like a Canadian bank note, is a current credit order of a bank. These instruments are merely different forms of bank credit designed to meet the conveniences of business men in different ways.

7248 CONGRESSIONAL RECORD-HOUSE. ~lAY 18,

A bank credit currency calls for a small central gold reserve like those controlled by the Bank of IJ:ngland and the Bank of France.

'l'he legal requirements for the issuing of bank-note currency in Canada are as follows:

(1} Every bank must redeem its notes at its head office an.d in such commercial centers as are designated by the treasury board whenever tendered for redemption. The redemption cities are the same for all banks. ThE>y are the clearing cities Of Toronto, Montreal, Halifax, Winnipeg, Victoria, St. John, and Charlottetown.

(2) Each bank must keep on deposit with the minister of finance a Sl~m of lawful money (gold or Dominion notes) equal to 5 per cent of Its average circulation; the total so deposited ,is called the "circulation redemption fund." It is an insurance fund for use, if a case should arise in redeeming a failed bank's notes. -

(3~ Bank notes posses first lien upon the assets of a bank. (4) Bank stockholders are liable to an assessment equal to the par

The State: ,

~~~~r~~~-~~~~~=================================~=~=~ Loss------------------------------------------ - -----Eastt>rn division :

li~~r~~~-~~~=~=======~========~===~~=====~====:::::: ~SS-------------------------------------------- ~---CentrS\1 division : Cost per acre-------------------------------~--------~turn---------------------------------------------Loss- -----------------------------------------------Western division: Co t per acre _______________________________________ _

~ii~~~==============================================

$25. 20 24.77

. 43

33.75 33.60

.15

24.60 23.08 1. 52

18. 60 20. 46

1. 89 Talue of their stock. · Tb

(5) A bank must send a detailed statement of its assets and liabilities ese figures do not show the fuJI extent of the loss, because on the 15th day of each month, which covers its last business day of the in calculating costs nothing has been charge(} for the depletion preceding month. This monthly return must be signed by three of the of the soiJ, nothing has been allowed the farmer in the nature bank's general officers. - f 1

(6) The Canadian Bankers Association, of which each. bank is a o overtime pay for ong 'Torking days, and no account has been member, is given the supervision of the issue and cancellatiOn of notes taken of time lost through the seasonal character of his vocaand of the management of the affairs of a failed bank. tion. As wheat growing is carrie(} on in Kansas the. e three

(7) The notes of a failed bank draw interest at 5 per cent from the f"ctors add materially to the cost of pz·oduction, b'"It -n-ith the date fixed for their redemption by the minister of finance, who may « • .. redeem them out of a sets or the bank or out of the circulation redemp- <lata avaHable it is impracticable to express their effect in exact tion fund, or out of each. figures.

Experience has plainly shown that the first requirement is the only . . necessary one. The simple, effective daily redemption principle is what The report of the board IS based upon detmled cost statements constitutes the excellence of the Canadian banking and currency sys tem. submitted by 2,040 farmers representing every county in the

Political expediency caused Congress to ignore the advice of currency State, both landowners and tenants, and small as well as Ulrge experts respecting the adoption of a bank credit currency and the divorc-ing or banking from political control. We were given instead what now producers. Their aggregate experience in wheat growing in appears to be a perfectly unsound, unworkable, and perilous system. Kansas is 31,792 years, averaging 15~ years. The area of theil· Even at the eleventh hour, when dangers are fulld; apparent, it might be farms is 491,062 acres. The average cost and the average rechanged. A few simple modifications of the Fe eral reserve principles turn per acre for the State were derived from statements precould establish a bank credit currency.

l!'ive years' experience with the Federal Reserve ~ystem plainly_ shows pared for the eastern, central, and '"estern thirds of the Stab~ the pressin~? need of entirely taking it out of politics, and changmg the separately, allowancE:· being made for the acreage an(] yield in unsound prmciples upon whi_ch the system is obviously based. each division.

l\11·. PLATT. l\lr. Chairman, I yield five minutes to the gen- Kansas raised 16 per cent of the Nation's wheat crop la t tleman from Kansas [Mr. STRONG]. year, and the figures given are the result of the first voluntary

Mr. PHELAN. And I yield five minutes to the gentleman effort of any large class of producers, manufacturers, or dis-also. . tributors to show actual costs of service rendere<l.

l\Ir. STRONG of Kansas. 1\Ir. Chairman and gentlemen of the When war was declared it was announced that those eng-aged committee, this bill under consideration is in the interest of in agriculture, like those engaged in other indu. ·tl'ies furnishing the farmer, and I hope it will pass without amendment. It the needs of war, would be exempte<l from sen·ice; bnt this will permit the Secretary of the Treasury to purchase tile cJecision was not adhered to, and soon word was sent out to the bonds of the Federal farm loan banks in such an amount as county exemption boards to "comb the draft Usts," nnc1 thouwill enable these banks to care for and close all loans to farm- ~:mds of farmers' sons were taken. ers to which they are now committed, and is but an extension Then the high wages paid by the Government for uui !ding of one of the war. emergency acts. It is necessary now becam;e the cantonments, for work in the shipyards and on the railof the problem confronting the farm loan system by l'ea on of roads took the hired men from the farms. the litigation pending before the Supreme Court of the United Then a price was set on wheat resulting in a lo~s of the wheat States attacking the right of the issuance of tax-free bondR. on hand of 60 to 70 cents a bushel and a lo.·s c.luring thf- war Amendments will, no doubt, be offered to extend the purchase of $2 to $3 a bushel. of bonds to provide for loans applied for after March 1, 1920, Next a price was set on hogs, and when the price was taken and to which the banks are not committed ; but our Banking off bogs went up from $17 to $23 per 100 pounds. and Currency Committee, after very careful consideration nnd No price was set on anything the farmer had to buy, and the consultation 'vith the Treasury Departmel)t and Farm Loau cost of horses, harness, machinery, and clothing mounted skyCommission and Members of the House and Senate, have deter- high. mined that it will not be possible to go further than we have We offered increased profits on all industry to increase proprovided in this bill, and we are positive that any attempt to duction, except agriculture. Yet when, in spite of these unfair extend its provisio-as will result in securing no legislation what- conditions, the farmers were appealed to for an increase'l proever at this session, ·and we have therefore committed onr- duction of wheat so our Army and the world could han! brentl, sel>es to the bill -as introduced, and are bound to oppose all they loyally responded with an increase of 18 per cent. amendments. Since the war cars have been taken from the agricultural

I ,...-ish to take this opportunity to correct an erroneous im- district, which haYe prevented the farmers from marketing their pression tl1at seems to ])revail throughout the East and the products, and great quantities of wheat, which were piled on industrial sections of the country regarding the profits of the ground because there was not sufficient storage for it, was agriculture. Members of the House from city and industrial damaged and lost. districts often refer to the high cost of food products as eurich- To-day the Kansas railroads have only 80 per cent of the cars ing the farmer; and a few <lays ago, when Senator CAPPER, of belonging to them, while some eastern roads have as high as Kansas, advised the country from the floor of the Senate of I ' ISO per cent. the profiteers who were making from 100 to 300 per cent, an<l The cattlemen by the manipulation of the markets, restrica:-ke<l why they were not prosecuted and punished, one of the tion of credits U:nd car hortage, have lost from $10 to $30 per washington papers, in an editorial commenting on his astound- head on their ~attle. ing statements, refelTed to the fact that Senator CAPPER repre- Do not get the idea that because we are paying from $6 to sented an agricultural State wh?~e farmers were ~lso making $8 for potatoes in Washington that tbe farrnerll are receiving large profits from present conditions and had enJoyed great such a price. He was paid $1 per bushel last fall when the benefits during the war. potatoes were put in cold storage; and it was the same with

I would like, therefore, to have yonr attention while I give the eggs, butter, and poultry. you tile facts to show that the farmers of the Nation are not Gentlemen, this can not last. Either the farmers must make only not maldng a fair profit now but that they ere treated a fair· profit or they \Yill quit farming and land will be idle unfairly and discriminated against all <luring the war. in the 'Vest, as it is in the East. Go out 5 miles ~rom this

The following report of the Kansas State Board of Agricul- Capital and you find not over 20 per cent of the land proturc, April 21, shows that Kansas farmers suffered a loss in ducing anything. Why? Simply because it uoes not pay to tlleir " ·bent operations in 1919. The average cost of producing farm it. nn acre of wheat for the crop of 1919 and the average return In Saline County, one of the best in Kansas, there were in per acre for wheat sold to December 1--B6 per cent of the crop- the year 1916 2,341 farmers who "·ere voters, while nt the as shown by reports to the board by 2,040 wheat growers, were pre ent time there are but 1,508. Yet in the city of Salina, in a.s follows: tJ1at county, the population increa:ed from 9,688 in 1910 to

1920. CONGRESSIONAL RECORD-HOBSE. 7249 15 085 in 1920 showinO' tllat the farmers are moving to the l fact that the head· of a farm-loan b~ in Indiana ·had borto~. ' "' rowed money on his own responsibility from the banks of the

The history of the world shows that a nation begins to decljne State to the extent of about $5,000,000. Is it the purpose of this when its a(J'riculture wanes· a country must produce its own legislation to furnish funds to this man who on his own re~ food. o ' sponsibility created these obligations- which he is now unable to

·M:anufacture increases values, but what is taken fr~ the soil meet out of any moneys that may be s-upplied as- the result of or the mine creates and increases the supply. It is the "mak- this legislation? . ing of two blades of grass grow where but one grew before,. Mr. PHELAN. I know of no such situation existing. II it that counts mos-t. . does exist, I know nothing about it.

The boys can not be kept on the farms by talking of improv~ Mr. MADDEN. I think that s-uch a situation does exist, and ing environments; what farming needs is to be made profit- I understand the information upon which--able, arid the boys will not forsake the land; prosperity will Mr. PHELAN. No. This exists--create the environment desired. 1\Ir. MADDEN. Does the gentleman assert that no such situa-

Gentlemeri, I want to plead for legislation to help agriculture. tion as I have described exists? If I remain in Congress I expect to ask you to pass laws to Mr. PHELAN. Yes. make farming more profitable. Remember that about one- Mr. MADDEN. What is the situation? third of our population is engaged in agricultural pursuits and Mr. PHELAN~ It is mentioned in the letter of .Judge Lobdell that about one-fourth of all our national wealth is so invested. to the chairman of the committee. In some cases, in anticiLet us be fuir anu just to those who produce the .food that feeds pation of a decision by the Supreme Court, to meet the situation the Nation. [Applause.] existing, the banks did borrow money for a. short period of

l\fr. PLATT. Mr. Chairman, does the gentleman from Massa- time, giving mortgages as security, or using their mortgages as chu etts desire to use a little time now? security. In other words, the land banks-I think with two

1\Ir. PHELAN. I will use all the time that I am going to use. exceptions-borrow-ed from commercial banks, the o.rdinary comMr. Chairman, in the framing of this rural-credit act I was mercial loans.

always opposed to a proposition similar to what is proposed Mr. MADDEN. That is what I mean. in the amendment offered here to-?ay. I opposed it. from the Mr. PHELAN.. But it is my understanding that 1;hat wasr beginning and was glad when the bill was reported :VIthout ~Y done with the knowledge of the F.ederal Reserve Board; that such proposition in it. I think it is not the right kind·of legis- it was done simply to meet a -situation that could hardly be lation under ordinary and normal conditions. I am in favor met otherwise in their opinion. of the amendment offe.r~d here to-day, ~~d I hope it will_pass, Mr. MADDEN. Is the money to be supplied through the because we are not fa em~ no~mal conditions ; we are faCU:g a medium of this legislation to meet such cases? somewhat extraordinary situation. The farm loan act has given Mr. PHELAN. That represents only a small amount. us a s-u~ssful system of rural credits. The system has worked Mr. MADDEN. What is it? better and been more successful than its adv?ca~es hoped wi~ Mr. PHELAN. My recollection is that it is $8,000,000. No; this short time. There has been, how.eve!', w1thm a year opposi- it is $16,000,000. tion in the courts, and the allegation has been made that the Mr. MADDEN. Borrowed from commercial banks? act is unconstitutional. The matter came up last .July, and Mr. PHELAN. That is my recollection, that it is $16,000,000. finally got into the Supreme Court last January. It was rather ~II:. l\IADDK.~. Now, the question that I wanted to know hoped that some deci ion would be rendered. in February or about was whether the money was to be supnlied out of the shortly thereafter. The Supreme Court, however, recently has Treasury of the United States after this legislation is enacted asked for a reargument. so that nothing can be done· about a with which to ·enable the men w.ho .borrowed this money ro pay decision until next fall at the earliest. back the loans which they had made fr.om commercial banks?

Mr. EVANS of Nebraska. 'Vill the gentleman yield? Mr. PHli."'LAN. It is hardly accurate to say "the men who Mr. PHELAN. I wili in just one minute. . borrowed the money." It was the banks that borrowed the In January or thereabouts the Farm Loan Board, seemg what money. What we anticipate is this: As the Government takes

the situation might be, made provision, and finally s~nt. an- up the bonds and supplies the banks with funds, the banks nouncement, I think, on the 4th of Fe~ruary, to the varwus will use those funds to make loans on commibnents already farm banks not to make any_ more comm1tment;s for mortgages. made, and also to pay up the indebtedness incurred, which· in

With some question pendmg as to the ultimate r~suif:s of some cases is due on the 1st of June, to the banks-commercial the litigation as to whether or not the act was constitutiOnal, banks. the board felt-and I think rightly felt-that there would be Mr MADDEN Does the O'entleman from Massachusetts some trouble in d_isposing of the b~nds. In other words, th~y who is generally ~ery conservative and very wiSe in legislatio~ felt that the pub~c would no~ readily respon~ t~ the. purchase of this sort, think that it is good business for the Government of farm bonds wh1le the questiOn of the constitutiOnality of the of the United States to be called upon to supply money to meet act ·as unsettled. The Farm Loan Board for that ~son gave obligations thus created 1 orders t~at the banks should no lon~er make comnntm~nts to Mr. PHELAN. I think under present conditions that it is prospec~ve borrowers. There had been, however, commitmr~! the wisest and most expedient thing to do. As I told the gen~ade priOr to that. Borrowers had ~orne up and had beer: P tleman, and as the gentleman probably knows, there w.as nobody 1sed that loans would be made, and m some cases. the mortgages who was stronger in his opposition to this kind of: a proposition bad been taken and, as seems to be the ~ustom m some of file in the rural credits bill than I was and I think I had as much States, the mortgage dee~s ~ad been actua:lly recorded, although to do as anybody else in keeping {t out of the bill as enacted. the money had not b~n PID:d over. But we are in a situation to-day where I think it would work

The purpose of th1~ act lS to enable the. far~-loan ~anks to serious harm, if not disaster, not alone to the Federal loan obtain funds wherew1th to ~t those o~llgatwns which they system but to other things if we did not take care of this have to meet upon the comnntments which they can not very s·tuation ' well avoid to the men who have come to the ~s-tem to borrow I · r money. Because of the unusual an~ as I smd befo~e, the ex- lUr._. ~D~. Will the gentleman let me ask him another_ traordinary situaqon, I believe that this act ought to pass. If qu~tion · the money is not obtained in this way it seems that there is 1\fr. P~LAN. Yes; I will be glad if the gentleman would, no way in which it can be obtained. and I Will try to answer. . .

Mr. MADDEN. Mr. Chairman, will the gentleman yield? .l\fr. MADDEN. D~es not the gentleman think 1f the proper Mr. PHELAN. In one minute. Not only on aceount of the VISion had been exerCJ.sed o~ that Farm Loan Bank Board they

necessity of giving a square deal to those to whom commit- wo~ld have been able to dispose of the. $136,000,000 of ~on~s ments have been made but for the maintenance and progress' which they now have on hand and wh1ch they purchased 1D of our agriculture, I think conditions warrant this kind of leg- times g?ne h!, and t~us be ab~e t~ meet the emergencies that islation to-day, and I hope that the House will promptly pass, now exist Without further le~slation? . and that subsequently the Senate will promptly pass, this res-o- 1\lr. PHELAN. I do not believe-! doubt-:-lf the Farm Loan Iution and take care of the situation until the Supreme Court Board could have ta~en me~ures- whereby 1t could ~etO' funds has made a decision. to loan the farmer. 'Ihey m1ght have stopped the lo_anmb.

1\Ir. MADDEN. 1\Ir. Chairman, will the gentleman yield now. The CHAIRMAN. The gentl~an has used 10 mu;m_tes. 1\Ir. PHELAN. Yes. 1\IJ::. PHELAN. How much time hav:e I remammg, Mr. Mr. MADDEN. There is one thing in connectiop with which Cha.i!man 1 .

I am in some doubt· a thin (I' in connection with this legislation The CHAIRl\fAN. The gentleman has four mmutes. that r would like to' have cl~ared up. I unders-tand the investi- Mr. TL~CHER. Mr. Chairman, will the gentleman yield? gation of the Committee on Banking and Currency disclosed the 11ft. PHELAN. Yes.

7250 CONGRESSIONAL RECORD-HOUSE. }!A~ 18,

Mr. -Tli"\'"CHER. It is true, is it not, -that the only court that has passed on the constitutionality of the Federal farm loan act has held that that act is constitutional?

Mr. PHELAl'l. That· is my understanding. l\fr. TINCHER. And the question pending in the Supreme

Court is not only as to the constitutionality of the Federal farm loan act but also as to the constitutionality of the farm-loan banks?

Mr. PHELA.i'l. Yes. Mr. TINCHER. The gentleman from Illinois [Mr. MADDEN]

asked the question whether the Federal Farm Loan Board could not ba ve dispo ed of the $136,000,000 of bonds now on hand. I suppose he referred to the $136,000,000 thaf the Treasury now has on hand? I suppose the gentleman refers to the $136,000,000 worth of bonds th)lt are in the United States 'l'reasury.

1\Ir.· PHELAN. I did not go into that because I thought my time had expired. There is approximately $136,000,000 in bonds now in the United States Treasury under the farm-loan system, and the reason that they are there can hardly be charged ·up to the farm-loan system, and ought not to be. The situation is t11is: At the time the farm-loan bank desired to put out bonds constituting at least a part of the $136,000,000 the Secretary of the Treasury was interested in the floating of the Liberty loans and was very anxious that the farm-loan bonds should not be put on the market, because he wanted no competition with the Liberty bonds. Indeed, I think the Treasury Department was absolutely right. Therefore it held back on the farm-loan system from issuing bonds in the ordinary busine s way. The policy was pursued to help the Liperty-bond sales-and not to help the farm-loan system. Inasmuch as that had been done for the welfare of the country, the temporary measure heretofore referred to was put on the statute books whereby the Secretary of the Treasury could buy a limited number of bonds for a year or two years and hold them up to a certain time.

Mr. FESS. Will the gentleman yiel<l? :Mr. PHELAN. Yes. ?tir. FESS. The gentleman from North Carolina [Mr. Pou],

when before the Rules Committee asking for this rule, stated that he tried to buy some bonds of the Treasury Department and they explained that they would not sell them because they were not elling them in competition with the Liberty bonds. Has the gentleman ' found any conflict of law between the activities of the Farm Loan Board and the Federal Resen-e Board? .

Mr. PHELA..L.'l. The gentleman means in administration? Mr. FESS. Yes. l\Ir. PHELAl'l. None that I know of. Mr. FESS. The Federal Reserve Board controls the whole

bnnking situation. l\Ir. PHELAN. No. The Federal Reserve Board has no -juris

diction over the farm-loan system. They are separate and independent.

1\Ir. FESS. What was the significance of the remark of the gentleman from Massachusetts a moment ago that it was done under permission of the Federal Reserve Board?

l\Ir. PHELAN. If I said the Federal Reserve Board it was a slip of the tongue. These bonds ·were held back at the reque. t of the Secretary of the Treasury and suosequently Congre s passed a law permitting the Secretary to buy these bonds in limited numbers.

Mr. FESS. Are we suffering any inconvenience by having two om·ces of authority, one the general banking business and the other the farm-loan banks?

l\lr. PHELAN. No; it is better that we have the two. Tbe CHAIRMAN. The time of the gentleman from Ma sachu

setts has expired. Mr. PLATJ.r. 1\Ir. Chairman, the report on this resolution in

clmles a letter from Judge Lobdell, the farm loan commissioner, and also one from the Secretary of the Treasury, giving full information as to what the purpose of this joint resolution is. The Federal farm-loan system is not a Government system. That matter ought to be put into everybody's head. A great mt.my people talk about it as if it were and say that they can not get loans from the Government banks. There are no Government banks. The Government, it is true, furnished most ot the revolving fund or original capital for the Federal land banks, but they are not Government banks; they are privately owned, cooperatively owned. The original Government capital will be paid back in the course of a few years, if the Supreme Court does not decide the act unconstitutional. Judge Lobdell's letter gi>es a brief history of the litigation, showing that the court of original juri..diction dedared the act constitutional, from whiC'h U!JPNll was taken. He also tells about the last

issue of farm-loan bonds, which were sold out in 10 days in July, before the suit to test the constitutionality of the act was brought, and states that the bonds sold then produced enough money to last the system until about the 1st of February.

On the 4th of February the Federal Farm Loan Board directed the land banks not to approve any more loans except· subject to the determination of the Supreme Court; but it was supposed then that the Supreme Court would decide in the course of a short_ time, and they had already approved several millions of loans and had actually taken over some $8,000,000 of mortgages. 'Yeek after week went along, and finally, on the 26th of April, the court, instead of deciding the case, asked for a

·reargument of the case, which made it practically impossible to sell any ruore bonds.

Mr. l\IANN of Illinois. Will the "'entleman yield? l\Ir. PLATT. Yes. Mr. l\1ANN of Illinois. Does the aentleman have any t1ouht

whatever as to the effect of the decision of the Supreme Court on the payment ·of the bonds?

1\lr. PLATT. No. Mr. :\!ANN of Illinois. If the Supreme Court should declare

the act unconstitutional, would that mean that the men " 'ho have borro,ved money will not }.lave to pay it or can not be sued for its return?

Mr. PLATT. Oh, no. I suppo e i~ the act should be dedareil unconstitutional the Federal land banks will imply be coq orations in liquidation.

Mr. MAl'lN of Illinois. And if they sell bonds now they will b~ paid. Suppose some one wanted to buy some of the.-e bonus, how can they do it?

Mr. PLA'l'T. The bonds outstanding have just this difference: They are included in the revenue act as exempt from taxation, and their exemption from taxation does not depend on the farmloan act.

Mr. MA.1"\"'N of Illinois. Bond sold now would have the same status and legaiity as the bonds issued and sold heretofore. The mere fact that the matter is pending in the Supreme Coul't would not affect the validity of the bonds now issued any more than it would affect bonds issued heretofore. I would like to know how, if anyone wanted to buy these bonds, they could buy them? Sometimes I have had a dollar I would lil~e to invest in these bonds, but I did not know bow to get them.

Mr. PLATT. They are held pretty closely. The la t i sue was all sold out in 10 days.

l\Ir. l\IANN of Illinois. That sale wa carried on by bon1l brokers, and not by the Government, and you could not buy except at a higher rate of interest than the overnment \Yas paying.

Mr. PLATT. The gentleman means a higher price. Mr. MANN of Illinois. A higher price, because, of course,

the nominal rate of interest would be the arne. Mr. PLATT. · They can occa ionally be purchased in the open

market. Mr. ~'iN of Illinois. Yes; by paying more than par for

them. Mr. PL4~TT. No; below pur now, I think. I have een quo

tations, I think, a little below par, but they hold up well under the circumstances.

Mr. M.Al\TN of Illinois. It would be interesting to know whether, if the Government buys these bonds, it is an entire contribution not to be returned or whether the Government can enforce the collection of the bond~; and that applies al. o to the bonds now in the hands of the public, if the Supreme Court should declare the act unconstitutional. If the committee has not given consideration to the subject, they have not given consideration to the most important question involved.

Mr. PLATT. As I have said to the gentleman, the Fe<lerul land banks would be considered corporations in liquidation, unquestionably, and the security is good.

Ur. MANN of Illinois. They would not be any more corporations as to bonds already issued than as to bonds that will be issued now or hereafter. There is no distinction in the law between one kind and the other. If tl1ey are good, they are good ; if they are not good, they are not valid.

Mr. PLATT. The marketability of the bond is ruined by the decision or lack of decision.

Mr. MANN of Illinois. That is upon the theory that the bonds may never be paid; that they would pot be able to collect the money which has been loaned to the farmer from the fa~·mer. If you will dispel that theory, there will be no trouble iu selling the bonds.

Mr. PLATT. Oh, I think that is not the theory at all. I think that the theory is that any bonds old hereafter might be taxable, whereas t110se already sold are exempt from taxation.

19'20. CONGRESSIONAL RECORD-HOUSE. 72511

:Mr. MORGAN. Would not the revenue act apply to bonds issued from now on?

1\Ir. PLATT. I do not believe it would. l\lr. MANN of Illinois. The mere fact that the case is pend

ing in the Supreme Court does not change the law. The law is the same with respect to the bonds already issued and the bonds now to be issued. There is no change in the law. An argument in the Supreme Court does not decide the matter.

Mr. WINGO. Mr. Chairman, will the gentleman yield? Mr. PLATT. Yes. Mr. WINGO. But the fact that the Supreme Court of the

United States some weeks ago ordered a reargument closed the market, so far as the investor is concerned, because he said that he will not buy the bonds until he finds. out- what their legal status is.

1\!r. PLATT. That is the point. Mr. WINGO. It is not a question of the law; it is a question

of the mind of the man who is in the investment market. 1\!r. 1\IANN of Illinois. If you will satisfy his mind that these

bonds will be eventually paid, he will be satisfied and he will tluy the bonds. That applies to bonds already in existence and to bonds issued now. There is no difference in legal status.

1\Ir. WINGO. I have never heard of any lawyer vr investor who declines to purchase them because he thinks he might not ue able to collect on them. I have never heard of any lawyer who do.ubts at all but that the courts of equity would hold, if the Supreme Court should hold the act to be unconstitutional, other than they have always decided in similar cases, and permit the holders of the bonds to collect them.

1\Ir. l\1ANN of Illinois. The Committee on Banking and Currency by reporting this resolution throws doubt on the whole thing. Instead of saying that these bonds are good nnd will ue collected, you propose to· say to the people who already have them, "Your bonds probably are not good, but the Government is going to buy these bonds and stand the loss, if there is any." This action casts a cloud upon them.

1\lr. PLATT. I suppose the Federal land banks could sell bonds on a high enough rate of interest to take the risk into consideration.

1\Ir. 1\IANN of Tilinois. This does not change the rate of interest. · 1\lr. PLATT. The Supreme Court's action changes the rate of

interest. 1\fr. 1\IA.r~ of Illinois. Not 'at all. 1\fr. PLATT. It changes public sentiment so that 4! per cent

bonds which you could sell at par you can not sell now. Mr. MANN of Illinois. But this very action throws doubt

upon the collection of the bond. 1\lr. PLATT. It does not seem so to me. The matter in

<loubt is the tax exemption. Mr. 1\lANN of Illinois. These bonds now to be issued will be

in the same position as to tax exemption as bonds already issued. Wby not try to have that question met?

1\lr. PLATT. But those already out have been purchased upon the assumption that they are exempt, and from now on nobody knows whether they will be.

1\lr. Chairman, for the information of the House, and in connection with the question of the stability of the Federal land banks, I want to present a few figures. The banks had made mortgage loans up to April 30 of $336,240,586. That was an increase over the loans of March 31 of only $1,453,000, while the normal growth, or at least the growth shown last fall and up to about January 31 was about $16,000,000 each month. Amortization payments on April 30 had amounted to $3,876,732, and about $250,000 is coming back to the land banks each month in these payments on the mortgages. Delinquent amortization payments in all amounted to only $211,662. Outstand-

. ing bonds amount to about $296,000,000, and there are $19,355,-100 of farm loan bonds carried in the April statement as unsold. It would appear as if a few had been sold to somebody in some way, for the March 31 statement shows $21,764,000 on hand and unsold, and if an issue of 5 per cent bonds were made I am not altogether sure that investors could not be found who would buy a considerable number of them. I. hope that will be tried, for I do not personally think the Treasury of the United States should buy these bonds if it can possibly be avoided.

The CHAIRMAN. The time of the gentleman from New York has expired. All time has expired and the Clerk will read . .

. The Clerk read as follows: · Whereas the Supreme Court of the United States bas asked for a re

argument of the case involving the constitutionality of the Federal · farm-loan act; and

Whereas the reargument of the case will postpone a decision until next · October at the earliest ; and

LIX-456

Whereas the Federal land banks are now and it is ·feared will be unable under these circumstances to sell bonds to meet outstanding commitments for loans to farmers pending a final decision : 'l'herefore be it Resolved, etc~ That the provisions of the act of Congress approved

January 8, 191~:~, entitled "An act to amend section 32 of the Federal farm loan act approved July 17, 1916," be, and the same hereby are, extended to the fiscal yenrs ending June 30, 1920, and June 30, 1921, to the extent that the Secretary of the ~'-reasury be, and he hereby is, authorized, as by the terms of said act, to purchase during the fiscal 1 years ending June 30, 1920, and June 30, Hl21, or either of them, any bonds which he might have purchased during the fiscal years ending June 30, 1918, and June 30, 1919, or either of them, under the provisions of the original act.

Mr. 1\IADDE~. 1\lr. Chairman, I move to strike out the preamble.

1\Ir. 1\l.Al\TN of Illinois. 1\Ir. Chairman, I suggest that the question on the preamble will come after the consideration of the resolution.

1\Ir. WINGO. Is not the first question upon the comm1ttee amendments?

The CHAIRMAl~. The Chair thinks that the motion of the gentleman from Illinois is not now in order.

Mr. MADDEN. 1\lr. Chairman, I withdraw my amendment. The CHAIRl\1Ar~. The Clerk will report the committee

amendments. The Clerk read as follows: Page 2, line 1, strike out the figure " 8 " and insert the figures " 18." Page 2, line 11, insert: "Providedt,That he shall purchase no bonds

issued against loans approved after March 1, 1920." 1\.lr. WINGO. 1\fr. Chairman, just a word. I fear that the

remarks of the gentleman from Illinois [Mr. 1\.lANN] that the action of the committee throws some doubt on whether or not the bonds could ever be collected if the Supreme Court should decide adversely the case that is now pending will create a wrong impression, and I do not want that impression to go abroad. The committee does not do that. The committee in the preamble sets out that the board is unable to sell the bonds. An investor does not want to buy anything when he does not know exactly what is going to be the law covering the investment, when it is challenged and pending in the Supreme Court. Naturally he will say, "I will buy some other investment; I wiU not invest my money in this particular class of bonds." The last sale of bonds was about last July. The board then thought that that sale of bonds would take care of all of the business for one year, but we find that the business is such that the funds expired along in February or March. At that time we found that there were several classes of commitments. First, there were mortgages that had been given by farmers whose loans had been approved-the farmers had given a mortgage, which is of record-and yet the banks are without funds to give the farmer the money. Next, loans that have been finally approved, the farmers hm-e relied upon them, the bank itself had approved the loan, and all that remains is to put the mortgage on record and pay the money.

Next, where the banks-and that is what the gentleman from Illinois [:Mr. MADDEN] was referring to awhile ago-are controlled by hard-headed business men-and that is true of every one of these land banks ; there is not a better class of men in America than the men the board selected as t~e head of the banks, some Republicans and some Democrats, no politics permitted to enter into it-these hard-headed business men, instead of asking the board to sell bonds in dribs, what did they do? · They arranged a line of credit with commercial banks to take care of their current needs, and it is contemplated they would clean them up at the next bond issue. That is a practical thing that every hard-headed business man in this House will approve instead of condemning. Now, they ran out of funds in 1\larch. Here is the Supreme Court hanging fire upon this decision, and they found themselves without a market for the bonus. What did the board do? They immediately declined to take any further business, or, that i_s, ordered the banks not to take any new business. Now, the board comes before the committee and says, " Here we have stopped as soon as we found we could not sell the bonds on account of the uncertainty of the bond market by reason of this pending case, but we have made certain commitments which the banks are in honor bound to clean up.'' Now, it is a good, sound proposition, and they asked the committee to clean up the coinmitments. Now, the committee does not come and ask you to go into the proposition of the United States Treasury financing these Federal land banks. We simply authorize the Secretary of the Treasury, under the emergency war act which permitted· him to purchase bonds and under the act we present here, while the total amount that the Secretary of the Treasury might )my would be $64,000,000, yet the total amount that he will buy under another limitation which say~ that he is not permitted to purchase a single bond that is issued against loans appron~d

tl252 CON.GRESSIONAE RECORD-· ROUSE. 1\f.Li.Y 18,

afte1· March 1, will limit it to between $32,000,000 and $40,000,--000, so as to tide them over until the Supreme Court decides.

Suppose the Su~reme Court should hold some parts of the act or the whole act to be invalid 'l I will not stop to discussthe legal proposition. Every lawyer on the floor of this Rouse knows that you can collect these bonds. He knows there are deci ions that are on all fours by- which the taxpayers of a county have been compelled by a Federal court to meet the _obligations under similal· cincumstances, and it is not a question of whether the bonds will be finally paid. It is a question of tiding these banks over the hiatus after March 1, 1920, until the law is settled and they will have a market for their bonds. It is simply a businesslike proposition.

Mr. BARKLEY. Will the gentleman yield 'l Mr. WINGO. I will yield. Mr. BARKLEY. As I understand, the effect of this legisla

tion will not be to permit these land banks to continue the ordinary course of their business in the future pending the decision of this case, but it will only permit the Treasury to buy cer.· tain bonds-as were based upon loans made prior to March 1.

:Mr. WINGO. That is all. The CHAIRMAN. The time of the gentleman has expired. Mr. WINGO. I ask for two minutes more only. The CHAIRMAN. Is there objection? [After a pause.]

The Chair hears none. 1\Ir. WINGO. Here is the proposition: The committee tried

to reflect the sentiment of the House. I will be frank with you and say that personally I am willing to authorize the continuance of the business by the farm land banks and purchase of their bonds by the Treasury. The committee knew the sentiment of the House and they decided that the House had recog· nized the Treasury is in a straitened condition, and they said that all the House would support is a proposition to clean up the commitments of the banks where farmers had their mortgage already on. record, where the commercial banks relied upon the credit of the e banks for maturing paper, where they had made loans approved and given which wer& relied upon ; in other words, clean up the commitments and not do any more new business. That is the view the committee took simply because. we thought we reflected the sentiment of the House.

Mr. BARKLEY. But will not the effect of this postponement by the Supreme Court of this decision be practically to disband the organization of all these land banks scattered throughout the country which will remain idle---

Mr. WINGO. Yes; because they have already disbanded and they have already discharged some of their forces.

1\Ir. BROOKS of Illinois. Will the gentleman yield? Mr. ·wiNGO. I wilL Mt~. BROOKS of illinois. Why do some of these bonds draw

4t and the others 5 per cent? Mr. WINGO. The act covers the question of bond issues

very clear-, if the gentleman will get it. I do not recall just now why it was unles it was- the market; but as I recall, it was the market that fixed it, and the provision of law required them to let- the farmer:- have it at ~ per cent less than the last bond sale rate of interest.

l\fr: MORGAN. My under&'tanding is the Federal land bank bonds have. been all issued at 4t per cent; while the joint-stock bonds are issued at 5 pe1~ cent.

Mr. PLATT. There is one 5 per cent Federal land bank issue. Mr. WINGO. My mind is not clear at the moment, but as I

recollect we first issued, and the gentleman from New York can correct me, 4! Federal land. bank bonds. Then we had one other Federal loan issue---

Mr. PLATT. One was about a year ago, before the Victory loan, and that was at 5 per cent.

Mr. WINGO. Right before the Victory loan. The gentleman from Illinois is referring, I think, to th& joint-stock land bank bonds.

Mr. OLIVER. 'Vill the gentlenian yield? · Mr. WINGO. I will. . l\Ir. OLI.VER. This bill is not intended to authorize the

purchase of bonds issued by th& joint-stock banks? Mr. \VINGO. No ; it does not include that. The CHAIRM....ili. The time of the gentleman has again

expired. ~Ir. EVANS of Nebraska. I ask that the gentleman's time

be xtended two minutes. The CHAIRMAN. Is there objection? [After a pause.]

The Chair hears none. Mr. EJV ANS of Nebraska. I would like to ask the gentleman_

if he will yield? Mr. WINGO. I will yield. 1\lr. EVANS of Nebraska. Is there a:ny necessity for the

issuance of any more bonds than have been suggested by the gentleman under the proviso limiting it to March 1, 19201

Mr. WINGO. Well, it is- owing to the gentleman's . vie.w· point. If you simply want to clean up the commitments, why of course the amendment_ of the committee will do that: If you want to sustain these bankso and permit them to con·

tinue their business in their individual capacity> pending_ the decision, then you would throw it: wide open and authorize the Secretary of the Treasury to go on and purchase bonds just as much as is necessary to meet the business.

Mr. EVANS of Nebraska. If the condition of the market' i!'! such as we think it is now with reference to these bonds, and if such a condition should continue, it would require the Secretary of the Treasury; to carry all of the loans that should be made through these banks which were necessary to be financed by boo.ds. Is that correct?

l\Ir. WINGO. I do not anticipate that. Mr. EVANS of Nebraska. Is this correct from the gentle·

man's standpoint? Mr. WINGO. Possibly I do not grasp the gentleman's ques·

tion. Mr. EVANS of Nebraska. I will get back the other way. If

this condition as to the decision should continue for an addi· tional year, the gentleman states that still the bonds that should be sold if they become due in that time-which, of course, is impossible by their terms-could be collected in the ordinary course?

Mr. WINGO. I think the equity side of any Federal cow·t in the United States would enforce the collection of these bonds against the farmers who gav-e their mortgages and against their stock in the banks, and if they attempted to raise the question of the validity of the act, having received the benefit of the act, they would have to pay their note for which they had received the cash and benefits.

The CHAIRMAN. The time of. the gentleman has expired. The question is on agreeing to the first committee amend· ment

The question was taken, and the amendment was agreed to. l\Ir. l\IORGAN. l\1r. Chairman, I o.ffer an amendment. The CHAIIU'riAN. The gentleman from Oklahoma offers an

amendment, which the Clerk will report. The Clerk read as follows : 1\ir. MonGAN moves to amend the committee amendment on page 2,

line 12, by striking out the period and inserting in lieu thereof a semicolon and inserting the following :

"And provided. furthe-r, That the Secretary of the Treasury is hereby authorized and directed, at any time during the fiscal year ending June 30, 1922, to purchase at par and accrued interest, at the option and offer of the owner thereof, any farm loan bond or lfonds issued by any F ederal land bank during the- fiscal year ending June 30, 1921, not exceeding in the aggregate $100,000,000, and issued against loans ap· proved subsequent to March 1, 1920.

"Every Federal land bank, whose bonds have been purchased by the Secretary oi the Treasury under the foregoing provisiOn, shall, at the request of the Secretary of the Treasury, redeem the bonds so purchased by delivering to the Secretary of the Treasury in exchange for such bond or bonds other farm-loan bonds of equal amount par value, bearinoo such rate or rates of interest ::md payable at such time and on such terms ::md conditions as shall be prescribed by the Secretary of the Treasury, and the bonds so redeemed by any Federal land bank shall be canceled .

l\Ir. BLANTON. l\Ir. Chairman, I reserve a point of order on that.

Mr. PLATT. I make a point of order against that, Mr. Chairman.

The CHAIRl\I.Al'l. Will the gentleman state the point of order?

Mr. ELATT. The amendment goes far beyond the purposes of the bill and is not germane. It undertakes to sustain the value of bonds, and provides fOl" the purchase of bonds by the Treasury Department from any persons that own them. For instance, if I happen to have some farm-loan bonds and they go down in price, I am privileged to sell them to the Treasury.

l\.Ir. MORGAN. I beg. the- gentleman's pardon. It only applies to bonds issued during the year 1921.

Mr. PLATT. Even 1::l:la fiscal year 1920 has not ended yet. Mr. MORGAN. This applies only to bonds issued during the

fiscal year ending .Tune 30, 1921. It does not apply to anY, other bonds at all.

Mr. PLATT. It applies to the. purchase of bonds from private owne1'Sf just the same.

l\Ir. MORGAN. The gentleman is mistaken. It does not go that far. It just applies to bonds issued during the fiscal year 1921.

1\Ir. PLATT. It says "at the option and offer of the owner thereof." Who is the owner?

Mr. BLANTON. l\lr. Chairman, I make the additional point of order that it introduces a new subject entirely that was not embraced in the provisions of the bill, and not germane either to the section of the bill to which it is offered as a part or to the bill itself.

1920. '" ·CONGRESSIONAL R.ECORD-HOUSE. 7253 The CHAIR~IA.t.'\f. That is practically the same point of

order as made by the gentleman from New Yoi·k [Mr. PLATT]. l\Ir. PLA.TT. This amendment provides for the issuance of

bond . The resolution itself does not provide for the issuance of any Federal land-bank bonds. It simply provides for the purchase by the Treasury of bonds already issued. The gentleman 's amendment provides for the continuing of the issuance of bonds and keeping up their · value. It goes way beyond anything contemplated in the joint resolution offered. Also the second pamgraph of this amendment seems to authorize the issue of United States Government bonds-two series of United States Government bonds, if I understand it. ·

l\Ir. MORGAN. No; it does not. Mr. PLATT. Where is the money to come from? l\Ir. MORGAN. Where is the money to come from in your

bill? It comes out of the Treasury of the United States. l\Ir. PLA'l"'T. It speaks of redeeming bonds. Mr. ~ORGA.J..'\f. Of Federal land banks. The second para

graph only applies to Federal land banks issuing bonds. I know the gentleman wants to be fair. As to the second section, the a sumption is this: We will suppose that during the year 1922, which is the second year, it turns out that the Secretary of the Treasury has to buy some of these bonds that have been sold under this provision, if presented. That bond which the Government buys may be a bond that may sell under par by reason of the interest rate. So the Federal land bank, on the request of the Secretary of the Treasury, under the second paragraph, would issue a new bond and exchange for the old bond that the Secretary already under the provision of your act--

_Mr. PLATT. Who is going to issue those bonds? Mr. MORGAN. The Federal land bank issues a new ex

change for the Federal land bank bond which the Secretary buys under paragraph 1, and it is to be issued at the rate of interest provided for by the Secretary of the Treasury, and the Secretary of the Treasury will have authority to ask that those Federal land banks issue new bonds on such terms and conditions and at such rate of interest as will make the Government good and whole.

l\Ir. PLATT. It is perfectly evident, 1\lr. Chairman, that the purpose of this amendment is to issue new bonds and exchange bonds, and apparently to keep up the market price, as near as I can make out. It goes way beyond the purposes of the joint resolution, not only in extending it to 1922 and providing that new bonds may be purchased by the Treasury, but in authorizing the issues of bonds, something which, in order to do, you would have to amend an entirely different section of the Federal farm loan act.

The CHAIRMAN. Will the gentleman from New York [Mr. PLATT] state the section of the farm-loan act to which he refers, the one \vhich it would be necessary to amend in order that this provision might be germane?

Mr. PLATT. I have not the Federal farm-loall act with me, not expecting any such question as that, and can not recall t11e numbers of the bond sections.

1\Ir. PHELAN. 1\Ir. Chairman, may I be heard on the point of order?

The CHAIRMA:N. The Chair will be glad to hear the gentleman.

1\Ir. PHELAN. I think it is clear the amendment is not germane, and is entirely beyond the scope of the bill now pending before the committee. The resolution provides means whereby the Secretary of the Treasury may purchase bonds from the Federal land banks. He may purchase bonds from the Federal land banks. In contemplation these are bonds tllat' are to be issued by the land banks. In the :first paragraph of the gentleman's amendment provision is made whereby bonds are to be purchased from the owners of the bonds. That means, I presume, and certainly includes, everybody all over the United States who has a bond. It refers to bonds which have already been issued and not, as the original resolution pending before the House provides, the land banks, on bonds to be issued. The :first distinction, therefore, is that in the case of the resolution pending before the House the bonds are to be ·bought from the land banks on bonds hereafter to be issued. In the gentleman's amendment they are to be bought froL. the owner of the bonds, and they are bonds which have already been issued.

Mr. GREEN o: Iowa. And it is mandatory, too. Mr. PHELAN. Yes. In addition to that, some light will be

thrown on the subject if you examine the purposes of the resolution now pending before the House. The purpose of the resolution before the House is to enable the lapd banks to meet their obligations, or at any rate to meet their promises and commitments, whereas the purpose contained in the :first paragraph of the amendment offered by the gentleman from Oklahoma is

not to take care of any commitments, but to take care of owners of bonds who perhaps desire to dispose of them.

So much for the first paragraph. Now, the second paragraph introduces an entirely new proposition. In the act passed two or three years ago and extended by the resolution now before the House provision is made for the redemption of the e bonds by the ordinary redemption process, namely, that the farmland banks, after a certain period of time or at a certain point of time, shall buy back these bonds, and it is provided in the act what they shall pay. They are supposed to pay back money, or currency, or something that operates as money or currency, whereas in the amendment offered by the gentleman from Oklahoma, as I stated, an entirely new element appears. Payment may be made not by the use of cash or money or currency but by other bonds. I think, therefore, Mr. Chairman, it is clear that the gentleman's amendment is entirely out of order. .And I make the additional point of orde that this amendment has been offered, I think, as an amendment to an amendment already pending, and hence is not in order, for that reason, as an amend- . ment to the pending resolution.

Mr. MORQAN. 1\Ir. Chairman, I think my amendment to the committee amendment is clearly germane and in order, and it is in order because it is in harmony with the purpose of this act, as shown by the "whereases."

The gentleman's resolution is introduced by a number of "whereases," which indicate that at the present time, by reason of certain litigation, the Federal land banks are unable to sell their bonds.

Now, then, the object of paragraph ·1 of my amendment is to enact a provision which 'vill enable the Federal -land bank's to sell their bonds. Now, what does it do? It is an amendment to the committee amendment. The committee amendment limit~ the purchase of bonds to the bonds issued against loans approved March 1last. l\ly amendment is an amendment to that amendment and provides that under certain circumstances bonds may be issued. It provides that during the fiscal year of 1922 the owner of bonds issued and purchased during the fiscal year 1921 may, at his option, have the same redeemed or purchased at the Treasury at par value with accrued . interest. A bond issued by Federal land banks with this privilege woultl sell at this time, without regard to the .uncertainty of penuing litigation. This would enable the land banks to function. Of course, that carries out the very purpose of this act, to bring Federal land-bank bonds to a position where the Federal lano banks can sell them. There could be no demands on the Treasury until during the fiscal year of 1922.

Now, then, investors would buy those bonds if my amendment would become a law.

The CHAIRM.AN'. The Chair would like to ask the gentleman a question.

l\lr. MORGAN. I shall be glad if the Chair will. The CHAIRMAN. The question is if under the Federal farm

loan act the Secretary of the Treasury had any jurisdiction to purchase from anybody except the farm loan banks themselves any of fhe bonds that he might have purchased during the fiscal year ending June 30, 1918, and during the fiscal year ending June 30, 1919? I think that the Federal land bank act and the act of January 18, 1918, apply only to authorize the Secretary to purchase bonds issued from the Federal land banks.

Mr. MORGAN. I think that is true. The CHAIRMAN. Now, will the gentleman address hinrelf

to that particular point, and give to the Chair the reasons for his contention that the authorization of the purchase from owners generally is germane to a provision of law allowing purchases only from one source, namely, the Federal land banks?

Mr. MORGAN. Yes. Now, then, it seems to me there is nothing illogical in the claim that if you authorize the .Secretary of the Treasury to buy bonds of one city, an amendment authorizing him to buy bonds of another city would be germane. If you authorize the Secretary of the Treasury to buy the bonds of England, it seems to me germane to authorize the Secretary of the Treasury to buy the bonds of France; and much more so if you authorize the Secretary to buy the bonds of the Federal land banks, a bond that has been issued by the Federal land bank, it would be germane to authorize the Secretary to buy the bond of the individual to whom the Federal land bank sold that bond.

Mr. 'VINGO. l\lr. Chairman, will the gentleman yield? Mr. :MORGAN. In a moment; and e ·pecially so, l\fr. Chair

man, when the object and purpose to be accomplished are iu absolute harmony.

Now I yield. Mr. WINGO. The gentleman is familiar with the long line

of decisions by Speakers of the House to the effect that where a bill pro"\"ides for one building in one city you can not offer au

7254 CONGRESSIONAL RECORD-:HOUSE. ~fAY 18,

amendment for a building in another .city, but .if it .contains two , .The _preamble sets .forth the purpose of the Tesolution in the or more an amendment would be in order; ·so ·that "his conten- , following .language: tion is unsound in his claim that if it weTe ·in order to ..author- 'Wllerens the Federal land b3llks are now and it is feared will be ize an issue of English bonus it would also be in order to unable under Lthese circumstances to sell bonds to meet outstanding comauthorize an issue of FrenCh bonds. Ann, besides that, the mttments i:or loans to farmers pending the-tinal decision: Therefore be gentleman overlooks the fact that the original act authorizes , it ,resolved-the purchase from the Federal land bank, wnereas :the gentle- 1 .And so forth. man's amendment authorizes the Secretary of ihe .:Treasury to So the _preamble itself shows that the purpose of this resolu-purchase these bonds Irom the _public. ' ti.on is to autho:rize the Secretary of the Treasury to purchase

l\f.r. MORGAN. I insist that that would be germane, because, ·these bonds from the land banks in order to relieve the land if you pass an act or amendment ·authorizing the -secretary of ' banks, and the purpose as set .forth in the preamble and the the Treasury to _purchase bonds of the Federal land banks, the resolution is not apparently to relieve the owners. There is not object being to provide the means whereby 'these .Federal 'land any very close precedent which the Chair has been able to find baiiks might function in the interest of the Government ana on this proposition, but the Chair does think that the argument in the intere t of agriculture, then an amendment which wou1Q advanced by the .gentleman from Oklahoma is not in accordance modify it so that it would add to 't the power to _purchase of with the -precedents that exist, namely, that where legislation individuals the samB bonds issued by the :Feder:H 'land bank is authorizes the purchase o'foonds of one city an amendment au· not only, it seems to .me, germane according to the wording of thorizing the purchase of bonus of another city would be gerthe provision but absolutely and "certainly in ha1·mony with the mane, because that, in the Chair's view, is directly contrary to spirit of the resolution and the object to be attained thereby. existing precedents. "The Chair thinks that Jn this amendment

Mr. WINGO. 1\fr. Chairman, will the Chair hear me for just the gentleman nom Oklahoma seeks to go beyond the scope of a word on this! the resol.ntion and to introduce in it a new purpose not set forth

The CHAIRMAN. "The Chair will be glad to bear the gen- in the preamble and not set forth in any part of the resolution, tleman. anil that the pro-vision to authorize the Secretary of the T.reas-

1\fr. W.INGO. I think the gentleman irom Oklahoma has over· · ury to buy bonds generally in i;he open .market is not germane to looked the whole philosophy of the bill .and his own amendment. the provision authorizing the Secretary .of the Treasury to _purThe bill is what? "Jt does not seek to ameno existing law,. chase from a ]}articular .source, and therefore the Chair sustains because that law has expired. This bill is a pecuUarly worded the potnt of order. · bill. It undertakes to say that the Secretary of the Treasury Mr. 1\.ldKEOWN . .Mr. Chairman, I move to strike out .the be, and he is hereby, authorized to do something in a manner last word. provided by nn act that has already expirea. l\Ir. BARKLEY. .A_parliamenta.ry inquiry, Mr. Chairman.

' It undertakes to say that the .Secretary of the Treasur_y be, The CHAIRMAN. The gentleman will state it. ana he is hereby, authorized to ao $Omething with -reference to . Mr. BARKLEY. ~desire to offer an amendment to the com· an act that has nlready expired. So 'it can ·not be said that mittee amendment . . If a:point of order should be made that the anything is in order if it ·seeks 'to Rmend a statute i:hat "has •time bas expired on this _particular amendment, would I be :peralready .eA!)iTed. The ·l!lending bill does not ~eek to amend ~a t -mitted to do that .after the gentleman .concludes"? statute. irhe CHAIRMAN. The Chair thinks the gentleman would be

Let us see what ·is the pur.pose, the letter, .a.nd spirit .of the i:n order in offering the amendment to the committee amendpendjng bilL It is to extend ·the 'Federal farm loan nd to ·ment. Jpne 30, 1921 ; the -preamble states that it is feared that the Mr. McKEOWN. Mr. Chairman fl.nd .gentlemen of the com. Federal land banks will he unable to sell bonds to meet the mittee, I think this ,Jegislation ouglrt to be passed, but I do not outstanding commitments for "loans to "the farmers pending the think the resolution ·goes far eno-qgh. This law relieves a final decision of the ·supreme Court. -The bill authorizes the sii::u.rrtion that is very pressing and a situation that confronts Secretary of the Trea nry 'to buy bonds :from the land banks the -farmers who have R.RPlied fo1· lo.a.n.s and put on record their to a certain extent 'to meet .these -payments under certain e- mortgages and .are unable to .get the -money or to have their strictions. ' ·mortgages rclro-sed. But 'here .is what it will do if you do not

Now, in the first section of the gentleman's amendment, does go ;further -with the legislation: Those that are ·op_posed to the it provide for the relief of ·farmers for the sale of bonds! No; farm-loan legislation are going to accomplish the thing they it authorizes the _purchase by the Secretar.y of the Treasnry started out ,to no ,when they started this litigation. ~hey •do of bonds in the open market, ana that might defeat the very !Dot .h<we to win ±his lawsuit, but they are doing what they purposes of the .bill. A man owning $100,000t000 worth ~ot . bonds started out to do. In the .first place, ·some of ,these private might go to the Secretary of the Treasury .and . ay that "this loan agents go over the country telling the farmer when he authorization is a mandate of Congress, and l>efare the urederal , mentions borrowing money .:from the farm-loan bank·that he can land ·oanks could offer theh· bands fie migbt compel the Secre- ' never get .his money, that there is so much red ta_pe about tt, tary of the· Treasury "to ·buy .his bonus. ' ana why does he want to make an application :for money when

Mr. MORGAN. 'The gentleman wants to .be fair, I hope. ""The · 'the agent can give him his .money in 30 days or 3 weeks or entire issue is limited to $100,000,000. as soon as the papers are fixed up, while if he goes to the farm-

1\Ir. WINGO. ~ am fair. It is a J.ogical conClusion uf -the · loan bank·he will not .get his money for a year. language ol' the gentleman's amendment. He tlo~s not ·fntend "This legislation is good so far as it goes. You are going to it, but the Chair can not take the intention of the .gentleman take care of the loans that have been approved of up to l\Iarch, from Oklahoma. Be must 'take .the la:nguage as ..it .is. 3:n the 1920, but you ·are going to close down on loans from theTe on, first section it _provides for the _purchase of bonds in 'the u_pen and yon are going to demoralize the organization of your farmmarket. loan ba:n1.--s, and let the public tllen become the .prey of the

The second section -proviaes what? That it auth{)rizes the !Iellows who have been charging the excessively ffiEh -rates of redemption of the bonds in cash to the original holder? "No; interest. This 'farm-loan legislation has reduced the interest it authorizes exchange of bonds. ~here is no such provision in rates. "The mere fact that it is -on the statute books has rethe emergency law which 'has expired, and no such _provision in duccil the interest 1·ates in Oklahoma from 10 per cent to o the pending bill. So I say for these two reasons the amend- and 7•per cent. I thirlk this~egislation ought to go furtheT. As ment of the gentleman from Oklahoma .is .not germane ·either 'the gentleman .from illinois [:1\fr. MANN] said, i:his statute has to the _pending amendment or to the__pending bill, and it fails on not "b.een dedar.ed unconstitutional. The Government bas won both points. its -sutt so far. The Con.,<>Tess of the United States ought to

The CHAIJU\1Al~. The Chair is reaqy to .mle. The pending back up ·its own legislation, --and you ought not to permit these resolution, .for certain .reasons set forth in the preamble, seeks :men, by bringing -this litigation, to tlo the very thing that you to extend the life of the "Federal farm 1oan act ..and to authorize want to avoid having don-e. the Secretary of the Treasury to puTchase certain "farm loan -:Mr. PL~. 1tfr. Chairman, will the .gentleman yield? bonds. The gentleman from Oklahoma .offers an amendment ..Mr. '·:McKEOWN. Yes. to the amendment of the committee to -authorize the Secretary Mr. 'PLATT. The gentleman knows that the Treasury _is of ,the Treasury to purchase certain farm .loan bonds in the borrowing money at o! per cent. Would the gentleman want open market and not from the Eederal farm loan bank, as -pro- -the Treasury to ·borrow money at 5! per cent and buy farm-loan vided by existing legislation and by the resolution now pending .bonds that yield only 41 per 'Cent? before the committee. Mr. McKEOWN. The gentleman cun J:egulate that 'by legis-

The point of order has been made that the amendment of the Jation. :n the Trensury of .the 'United ·States has to pay .51 gentleman from Oklahoma is not germane. The amendment,- of per -cent for its money, of course the _private individual is going course, must be germane to the subject of the resolution ..itself, to Jlave -to -pay more 'for his money. ·rnterest rates are going and it must also be ge:rmane to the section to which it is offered. ..to .rise all over 'the countzy, and the man who could get money

•

1:920. CONGRESSIONAL RECORD--HOUSE. 7255. for 6! per cent from the farm-loan banks would have to pay the private individual 10 per cent, if they keep up their rates and commissions as they have in the past prior to the enactment of" the farm-loan act.

Mr. PLA'l'T. But the gentleman has not yet answ&ed my question.

Mr. l\1cKEOW"N. Does not the gentleman think it is to the ·better interest <?! th~ - Goye.rnmen_t t.9_ take care of this s~tuation now, rather tlum let the entire business be demoraltzed,. and pay out these large sums in salaries down here for these men with noEwng for them to do?

Mr. PLATT. I do not think the Government can borrow money at a higher rate of interest and loan it to some plivate individual at a lower rate of interest.

Mr. 1.\f.cKEOWN. I do not think that that would be good business, but tile gentleman. knows that that could be corrected.

Mr. PLATT. How could i± be corrected? Does the gentleman mean that we can make people loan money to the Government at a lower rate?

Mr. McKEOWN. We can raise our rate to the borrower, can - we not?

The CHAIRMAN. The time of the gentleman from Oklahoma has expired.

Mr. McKEOWN. l\fr. Chairman, I ask unanimous consent to proceed for two minutes more.

The CHAIRMAN. Is there objection? . There was no objection. l\lr. FAIRFIELD. Mr. Chairman, will the gentleman yield? :Mr. McKEOWN. Yes. Mr. FAIRFIELD. ;Has the gentleman any idea of the vol

ume of applications that will not be taken care of? 1\fr. McKEOWN. I do not know the volume of applications,

but I say this, that the farm-loan banks and associations are just beginning to get into operation in my country, and in my district the farmers are just getting hold and organizing, and now they will be absolutely demoralized, and you will have to go in there and do all of this work over again. You give this farm-loan act the black eye and it will take years and years to recover from it. The farmer will lose absolute confidence in it.

Mr. FAIRFIELD. Would not the joint-stock land banks in any way help the situation?

l\1r. 1.\fcKEOWN. They do n-ot seem to be able to help the situation. One thing that is the trouble now and that has been the trouble right along is the delay in getting the money. The farmers will come in and. organize their associations and send off their papers and wait u long time to get a return on their loans. That is demoralizing, because there is no good business

. in that. Mr. MORGAN. Mr. Chairman, as I understand it~ the com

mittee amendment is now pending. The CHAIRMAN. The committee amendment and any ger

mane amendment to the committee amendment would be in order.

1.\fr. MORGAN. I rise to oppose the committee amendment. The CHAIRMAN. The gentleman is recognized for five

minutes. 1.\fr. MORGAN. Mr. Chairman, if the committee will vote down

this committee amendment, of course they will accomplish some-, thing really worth while for the Federal land banks and for

the farmers who need these loans. The bill as introduced by the chairman of the committee is all right. It authorizes the Secretary of the Treasury, within the limit of $200,000,000 and at his discretion, to buy these bonds, issu.ed by the Federal land banks, but the committee has amended the bill as introduced by placing a proviso, found in. lines- 11 and 12,. to the effect that the Secretary of the Treasury shaH purchase no bonds issued against loans approved after March 1,, 1920. That only provides relief for a comparatively few men, who were fortunate enough to have their applications approved prior to March 1, but in principle, if you can authorize, and do authorize, the Secretary of the Treasury to purchase $80,000,000 worth of these bonds,· where the appliaations came in before March l-in principle you authorize the purchase of ~onds necessary for these banks to do business through the next six or eight or nine months. If it is wrong to purchase bonds on applications issued after March 1, it is wrong to purchase them on applications received and acted upon before March 1.

If you will vote down this committee amendment, you. will have passed a law through this Rouse that is worth while to the farmers of the country, and you will have done something that will tend to increase the credit facilities sufficiently to in a measure add to the productive power of the farmers. 1\lore than that, unless you give these banks power to make loans,

the private mortgage companies will raise their rates during the next nine months. Therefore, you ought to do this to prot-ect onr farmers from the increased rates which will have to be paid by those whose mortgages are expiring between now and the next nine months. and with the high rates of interest prevailing those mortgages will not be renewed at the old rates. If you want to help the farmer ; if you really desire to expand agriculture ; if it is your real purpose to increase food production and reduce the cost of food to people \Vho live in the cities and towns1 then vote down this committee amendment, which restricts the purchase Qf bonds issued against loans approved prior to March 1, 1920.

l\lr. BARKLEY. Mr. Chairman, I offer an amendment to change the figures " 1920," in line 12, page 2, to " 1921."

The CHAIRMAN. The Clerk will report the amendment. The Clerk read as follows : Page 2, line 12, strike out tbe figures " 1920 " and insert in lieu

thereof the figures "1921.." Mr. BARKLEY. Mr. Chairman, my reason for offering this

amendment is based upon the difficulty which has just been alluded to by the gentleman from Oklahoma [Mr~ MoRGAN].

, The Supreme Court of the United States has postponed unt-il next October the reargument of this case involving the legality of the farm loan act. In all probability the court will have rendered its decision by the 1st of March, 1921; but if the

. amendment as offered by the committee shall be adopted it will be utterly impossible for these Federal farm loan baD.k;; or Federal land b.anks to f1.metion with respect to any new business whatever between now and the time the decision of the court shall be rendered.

Mr. PLATT. Will the gentleman yi-eld? Mr. BARKLEY. Just for a brief question. Mr. PLATT. The gentleman knows that the Federal land

banks have been instnucted to t:a1re no business since the 4th of February pending the determination of the Supreme Court. They can not make any more loans.

l\lr. BARKLEY. Those instructions can be withdrawn. They do not operate as unchangeably as the laws of the Medes and Persians. The authorities which give the instruetions can withdraw the instructions. But so far as I personally am concerned, I can see no difference between the obligation of the Government to those who applied for loans of money prior to l\Iarch 1, 1920, and to those who may seek to borrow money between 1.\iarch 1, 1920, and l\Iarch 1, 1921.

1.\Ir. PHELAN. If the gentleman wiU yield, does the gentleman see any difference between an obligation I owa to a man to whom I have made a promise and an obligation to a man to whom I have made no promise?

1.\fr. BARKLEY. Well, the obligation. in these tw.o instances is moraL There is no binding legal oblig:ation on the land banks to loan money unless they have it, and what I want them to do is to loan money to those who have applied and to those who may apply from now {)U.

Now, unless this amendment shall be adopted, as I suggested in my question to the gentleman from Arkansas [M:r: WINGO], the result will be that these Federal land banks, sca.tte~;ed all over the United States, will cease to operate. A few days ago the president of the Federal land bank of Louisville, Ky., was in the city of "\Vashington, and he said that unle s some relief came to him tile Federal land bank system would be compelled to discharge practically ,all of its f.or·ce, all of its paid agents, all of its investigators, ·all the officers of the Federal land banks, pending the decision of the Supreme Court on th& constitutionality of this law. Now, if that result shall come about, it will not only demoralize the present activities of the Federal land banks, but compel them to begin from the very bottom when the court does decide the case and start in again to do business of loaning money to the farmers of this country, and it will be extremely unfortunate, as I believe, for the Federal land banks to be compelled to go out of business from now until the date when the Supreme Court shall determine this case by rea on of any failure on the part of Congress to give them any authority or the Treasury any authority to cover the period between now: and the date of the decision.

1.\fr. PLATT. I want to say to the gentleman this proviso was put in here at the very urgent solicitation of the Secretary of the Treasury and of the Federal Farm Lo.an Board, and the Secretary of the Treasury is a. member of the gentleman's own party--

l\1r. BARKLEY. I have very great respect for those authori· ties, but it does not change my opinion as to this amendment.

1\Ir. PLATT. And wanted a more stringent one. The CHAIRMAN. The time of the gentleman has expired.

. Mr. MORGAN. Will the gentleman yield? I ask that the gentleman have five . minutes more.

7256 CONGRESSIONAL ltECORD-HOUSE. J llAY 18,

The CHAIRMA~. Is there objection? [After a pause.] ~'h e 'hair hears none.

1\fr. ::\IORGA-~.'1". I did not quite get the amendment offered by the ~f'ntleman, and I wish he would repeat it.

M1·. BAUKLEY. 'l'he amendment which I offered simply extenrl:o: the period from l\Iarch 1, 1920, which has already gone b~:. to :March 1, 1921, basing that amendment upon the probability of the court deciding the case between · now and the 1st of n~xt :March.

Mr. 1\IORGAX In other words, in line 12 the amendment is to . trike out" 192.0 '' and to insert "1921 "?

l\Ir. BARKLEY. Yes, sir. Mr . .i\IORGA......~. Well, that is a very good amendment, and

I hope it will be carried. . 1\lr. BARKLEY. In certain sections of the country, and

particularly in that section of the country from which I come, the product of the farm is very largely exported. The money crop of large sections of Kentucky, Tennessee, Virginia, and some parts of Ohio and other States depends largely upon the foreign market in order that it may bring a price sufficient to enable the farmer to live. Now, on acco1.mt of the fall in foreign exchange, the market has absolutely gone to pieces. The bottom has dropped out of the market, and there is no sale at the present time for farm products that found their market in the countries of Europe, and those farmers are compelled to borrow money in order that they may hold their crop until the ptices go up, or until they can make a different crop out of which they can obtain the necessaries of life.

1\Ir. PLATT. Will the gentleman yield? 1\Ir. BARKLEY. Of course, if they are compeUed to go to

l>an.ks or private lenders of money and pay exorbitant rates of intere&t, they are put not only to a disadYantage on that account but at a double disadvantage on account of the cheapness of their product, and this amendment will enable these Federal farm land banks to extend assistance to those farmers who a·re thus situated between now and the 1st of next 1\Iru.·ch; aud I can not see, either legally or morally, where we are under any gt·eater obligation to those who got in prior to l\larch 1, 19~0. than to those who come in hereafter. I want them all protected.

l\lr. PLATT. The gentleman knows the Federal board here in Washington instructed the land bank-s to make no commitments after 1\Iarch 1, or a little before that, and that those who are in before that are in in good faith. If you allow them to get in now they may be doing a business which may be nocon. ·titutional.

Mr. BARKLEY. It will not be any more uncon ·titutional than that which has been authorized. They will either go up together or' down together.

l\lr. PLATT. There is no authority here for the Treasury to buy bonds. If an outsider wants to do it and take the risk, it is all right.

l\lr. BARKLEY. The very reason wby thi bill is brought in is becau e private investors will not buy tllo e that have already been committed.

l\lr. PLATT. There is no obligation on the Treasury in any legal way, then, to take care of those who went in in good faith before notice was given, but they should not go on and continue it indefinitely after the notice is given. ·

l\11·. BARKLEY. I assume that anyone who comes in under the Federal farm loan act comes in in good faith.

l\Ir. PLATT. Those who come in now do not. Mr. BARKLEY. If we extend the time until next March,

they will not have notice, becau e the time will have been extended in which the Treasury will come to their assistance or purchn.se these bonds that will be issued between now and next :March.

1\Ir. PLATT. If the court declare · the law unconstitutional between now and next March, what then?

l\lr. BARKLEY. Then the law and the amendments to it and everything done under them would go along together.

'l'he CHAIR~l.A.l~. The time of the gentleman from Kentucky has ngain expired.

1\lr. TINCHER 1\Ir. Chairman, I desire to oppose the amendment.

I hope the committee will not -rote on the amendments without giving them a moment's con ideration as to their seriousne_, s. Thi amendment offered by the gentleman from Kentucky, who i. usually careful in offering amendments and careful in con~ iflering legi lation, appeals to me as a departure from his u ual rule. For instance, the amendment to section 32, that we are reenacting to-clay. authorized the purchase on the part of the Government _of $200,000,000 worth of bonds, $100,000,000 a year for two :rears. Now, under that act we ha~e purchased ovet· $136,000,000 worth of bonds. So we have something like

$60,000,000 with which to purchase bonds. It is shown in the report on this bill, and it is a fact, that practically that amount of money will be required to make good our obligations up to the 1st of March of this year.

·Now, what would be the idea in extending the provisions to the 1st of March, 1921? We would not have any money. The amendment carried here would not prov-ide a dollar to carry out the provisions next year. The banks decided last January, the Federal farm loan banks, that they would not be hypocrites about this thing, and that they would not do bu$ess until the court decided as to whether they were within the Constitution or not. So they practically suspended. But there is an obligation outstanding. The appropriation was authot·ized by a former Congress, and this committee hns simply brought in a bi~l here to authorize the closing up of that propo ·ition. I say that to strike out the amendment itself or to amend it by extending it untill'rlarch, 1921, would l>e the height of folly. That would not accomplish the operating of these bank~ . You can not operate them for a year on less than $10,000,000.

Mr. BARKLEY. 'Vill the gentleman yield? 1\Ir. TINCHER. I will. 1\lr. BARKLEY. Replying to the gentleman' first sugges

tion, it wo'uld not be germane to this committee amendment to offer, an amendment to increase tile amount m·ailable for this purpose, and therefore could not be offered in connection with my amendment, but if my amendment should be adopted H would be an authorization which could hereafter be taken care of by Congress.

1\Ir. TI~CHER. If you go ahead and adopt that legislntion, . that would be for this Government to finance the Federal farmloan banks for another year. I tell you what would happen : The Secretary of the Treasury, who is not overly friendly to even this, will not do a thing. He has practically said so in his letter which appears in the report on this bill. So we may as well be candid with the farmers, of whom · we are friend~, and say to them that this is all the help we can give them. The banks haye been practically suspended since la ·t January. The next amendment, according to your statement, would be to authorize the Secretary of the Trea ·ury to buy $200,000,000 or more bonds so that they could operate until next 1\larch, nnd that legislation, according to the report here, would not only meet with the disapproval of the Secretary of the Trea ·nry but would meet \\'ith a veto, and we would not do what we want to do for these farmers. As for the farmer, I do not belieYe in praying for him and then not giving llim anything-. This is all we cnn do for him under the present circumstances.· I;f we follow the advice of the Federal Farm Loan Board and tile Secretary of the Treasury, I think the org-anization will l>e maintainPd, and if the law i~ upllelrl we will till ba YP tho e banks.

l\1r. Chail·man, I have worked hard for tbis bill. I have b~d conferences with 1\lr. Lobdell and 1\Ir. Lever of the Farm Loan Board. I have gone to the different committees of the Hous ; was l>efore the Rules Committee to help get the rule. If thi · bill passes tilere wUl be $60,000,000 aYailable. This will clean up the loans that the banks ha-re made, and it will l>e a help. If the gentleman from Kentucky [l\Ir. BARKLEY] is really in favor of appropriating money and llaving the banks go ahend for the next year, I will vote for this measure, but to adopt hi! amendment to this bill would not help one bit, as we ";rould not have the money, as he admits himself, to carry it out. The thing I am afraid of is that if \Ye adopt his amendment we will displease the Secretary of the Treasury. His statement is here with the report, which is plain and concise. He brieliy says he will use the balance of the 200,000,000 but no more. I believe in taking this $60,000,000, and then I will go as far as the gentleman from Kentucky [1\fr. BARKLEY], or the gentleman from Oklahoma [Mr. l\foRGA.N], or anyone else in tryino- to get an appropriation so that these banks can function while the case is pending; but the officers of the Federal farm-loan bank tell n:ie, and the Secretary of the Treasury ays in this report, that they do not consider that good policy. ~r. Chairman, I know that the officers of the Federal farm

loan bank are friendly to it. I know when they ask us to do stmething for the bank that they are trying to preserve it. But when it comes to the amendments offered here on the floor by 1\lembers who are not in touch wi tll the matter, I can not always tell whether they are friendly or unfriendly to the Federal farm-loan bank. However, anyone can see at a glance that this amendment changing the time without adding money is an unfriendly amendment, and could haYe no other effect than to complicate the matter, make gt·ief for the bill in the other branch of Congress, and make grief for it witb the Secretary of the Treasury, who will have to furnish the money to buy the bonds. And it seems to me that it is very plain that

1920. CONGRESSIONAL RECORD-HOUSE.

the real friends of the Federal farm-loan bank that want ro see it continue to succeed will not vote to make the bill impracticable when it is passed. ,

1\Ir. PLATT. Mr. Chairman, I ask unanimous consent that the debate on this amendment be now closed.

The CHAIRMAN. The gentleman from New. York ask.s unanimous consent that debate on this amendment be now closed.

Mr. MORGAN. I object. I would like to have two minutes. Mr. PLATT. I move that the debate on this amendment be

now closed.. ~ The CHAIRMAN. The gentleman from New York moves that

the debate on this amendment be now closed. Mr. PLATT. I ,will amend that by saying five minutes. Mr. WINGO. By whom is it to be used? Certainly not by

the gentleman from Oklahoma [Mr. MoRGAN]. He has made three speeches. .

Mr. MORGAN. I suppose you are getting tired of my speeches.

Mr. 'VINGO. I am not; bu.t I think the House may get tired of them.

Mr. MORGAN. I would not be surprised, but this is a matter of very great importance to thousands of farmers.

The CHAIRMAN. The question is on the motion of the gentleman from New York [Mr. PLA:rr] that aU debate on this amendment close in five minutes.

The motion was agreed to. Mr. MORGAN. 1\Ir. Chairman, a parlirunenta-:ry i.nqulry. The CHAIRMAN. The gentleman will state it. Mr. MORGAN. The motion for closing the debate in five

minutes applies to the amendment of the gentleman from Kentucky, does it not?

The CHAIR~IA.N. It applies only, the Chair thinks, to the pending amendment o'ffered by the gentleman from Kentucky.

Mr. MORGAN. Well. then, lli.. Chairman, I do· not want to detain the committee.

Mr. 1\IONDELL. Let us vote. The CHAIRMAN. The question is on the amendment of the

gentleman from Kentucky. Mr. MORGAN. Was not I recognized? The CHAIRMAN. The gentleman was ree.ognized1 but the

Chair understood the gentleman to say he did not care to use his time.

Mr. MORGAN. I said I did not like to detain the oommittee. The CHAIRMAN. The Chair begs the gentleman's pardon.

The gentleman from Oklahoma is recognized. Mr. MORGAN. I know that I have occupied ~onsiderable

time on this bill, but I feel like I a.D;1 discharging my duty. A few minutes ago I spoke against the committee amendment. Since that time the gentleman from Kentucky [Mr. BARKLEY] has moved to amend it by striking ou.t " 1920 " and inserting "1921." Of com"Se, if the amendment of the gentleman from Kentucky can be carried, then I would have no objection to the committee amendment as ameruied. I think there is no danger of doing any great harm by carrying this amendment offered by the gentleman from Kentucky.

Mr. PHELAN. Mr. Chairman, •will the gentleman yield? :Mr. MORGAN. Yes. Mr. PHELAN. There is one thing that I would like to have

the gentleman explain to the House. The Government to-day, as I understand it, is obliged to pay 5! per cent on what money it borrows.

Mr. MORGAN. That is on short-time certificates; yes. Mr. PHELAN. The Government bonds are selling on the

open market at-- • Mr. MORGAN. That has been repeated several times. It

has been repeated here that the- Gov-ernment is paying 5!' per cent interest, but that is on short-time bonds and short-time certificates. The Government is not paying 5! per cent on any long-time bonds. But even if it were, that has nothing to do with this question.

Mr. PHELAN. 'Why not? -Mr. MORGAN. Simply because the object of this amend

ment, the whole object of the resolution brought in, is to help agriculture, and if you do not have that purpose in view you ought not to have brought it in here. If you can help agriculture a little you can help it more, and you can not make a sound argument in fav<;~r of the resolution that you have reported that does not apply to the amendment offered by the gentleman from Kentucky [Mr. BARKLEY]. You can not say you can help a little but what you can say you can help a little more, and especially that you can help in a substantial manner. This your resolution will.. not do. You are illogical and inconsistent and unfair in your argument.

1\fr. PHELAN. Does the gentleman recall that in the Fed· era! farm-loan act there was an absolute prohibition on the part of the system to issuing a bond carrying greater than 5 per cent interest, so that no bank can issue to the Government even a bond which will pay more than 5 per cent?

Mr. MORGAN. 'Veil, I am not asking that. The amendment of the gentleman from Kentuclry does not ask that.

Mr. PHELAN. I am asking you. Mr. MORGA.l"'f. The objection I have to the resolution re

ported by the committee is that it does not go far enough. It covers only loans closed and appro-ved prior to March 1, 1920. If it is right to take money out of the Treasury to help those whose loans were a-pproved prior to March 1, 1920, it is not wrong to help those applying thereafter. I want, if possible, to make some arrangement to enable these banks to go on and transact business.

The CHAIRMAN. The question is on agreeing to the amendment offei·ed by the gentleman from Kentucky [Mr, BARKLEY] to the committee amendment.

The question was taken, and the amendment to the amendment was rejected.

Mr. PLATT. Mr. Chairman, I mo-ve that all debate on the committee amendment be now closed.

The CHAIRMAN. The gentleman moves that all debate on the pending committee amendment do now close. The question is on agreeing to that motion.

The motion was agreed to. The CHAIRMAN. The question now recurs on agreeing to

the committee amendment. The committee amendment was agreed to. Mr. PLATT. Mr. Chairman, I move that the committee do

now rise and report the resolution to· the House with the. amendments, with the recommendation that the amendments be agreed to and that the resolution as- amended do pass.

The motion was agreed to. Accordingly the committee rose; and the Speaker having re

sumed the chair, Mr. HusTED, Chairman of the Committee of the Whole Honse on the state of the Union, reported that that committee, having had under consideration the joint resolution (H. J. Res. 351) extending the provisions of an act amending section 32 of the Federal farm loan act approved July 17, 1916, to June 30, 1921, had directed him to report the same back to the House with sundry amendments, with the recommendation that the amendments be agreed to and that the resolution as amended do pass.

Mr. BARKLEY. 1\fr. Speaker, a parliamentary inquiry. The SPEAKER. The gentleman will state it. Mr. BARKLEY. I desire to move to recommit with instruc

tions to amend the provision which is known as the committee amendment. At what time will that motion be in order?

The SPEAKER. After the engrossment of the bill. The question is on agreeing to the amendments.

The amendments were agreed to. Mr. PLATT. I ask unanimous consent, Mr. Speaker, that the

preamble be· stricken out. The SPEAKER. The gentleman from New York asks unani

mous consent that the preamble be stricken out. Is there objection?

There was no objection. The SPEAKER. The question is on the engrossment and

third reading of the joint resolution. The joint resolution was ordered to be engrossed and read a

third time, and was read the third time. Mr. BARKLEY. Mr. Speaker, I move to recommit this reso

lution to the qommittee on Banking and Currency, with instructions to report it back to the House forthwith, with an amendment changing the figures from "1920" to "1921," in line 12 on page 2.

The SPEAKER. The gentleman from Kentucky offers a motion to recommit, which the Clerk will report.

The Clerk read as follows : Mr. BARKLEY offers a motion to recommit the joint resolution to

the Committee on Banking and Currency with instructions to report it back to the House :forthwith, with the following amendment : On page 2, line 12, strike out the figures "1920" and insert the figures "1921."

Mr. PLATT. Mr. Speaker, that identical amendment was just voted down in committee. Is it in order to move that in a mo· tion to recommit?

The SPEAKER. It is in the House. Mr. BARKLEY. On that motion to recommit, I move the

previous question. The previous question was ordered.

CONGRESSIONAL .RECORD-HOUSE~

The SPEAKER. The question is · on the motion of the · gentleman from Kentucky to recommit the resolution;

The q«estion was taken, and the Speaker announced that the r_wes seemed to have it.

l\Ir. B.A.Rb..'LEY. Mr. Speaker, I ask for a divi ion. The SPEAKER A division is demanded. The House divided; and there were-ayes 24, noes 57. l\Ir. BARKLEY. l\1r. Speaker, I make the poirit ·of order that

there is no quorum pre ent. The SPEAKER. The gentleman from Kentucky makes the

point of order that there is no quorum present. The Chair will count. [After counting.] Obviously there is no quorum . present. Tile Doorkeep~r will close the doors, the Sergeant at ·Arms will notify the absentees, and the Clerk will call the roll. As many as are in favor of the motion to recommit will; when t11eir nalll'E:'s are called, answer " yea " ; those opposed will answer " nay.' ·~

The question was taken ; and there were-yeas 120, nays 151, nnswered "pre ent" 1, not voting 155, as foll9ws:

Almon Ashbrook Ayres Rarbour Barkley Bee B~l Bland, Ind. Bland, Mo. Bland, Va. Blanton nox Briggs Buchanan Byrns, Tenn. Caldwell Candler Can trill C1.arlc, Mo. Collier ConnaUy Cramton Crisp Davey Davis. Minn. Davis, Tenn. Dent Dickinson, Mo. Dough ton Dupr~

Anderson Andrews, Md. Andrews, Nebr. Anthony llaiJka Baer II egg nenham Black

' Boies Br·ooks, Ill. Browne Burclick Burroughs CampiJell, Kans. Cannon Carew CarsR Cllincli.Jlom Clas on Cleary Coady Copley Ct·owther CullE'n Currie, Mich. Dale Dalliuger Deni. on Dickinson, Iowa Dunbar Dunn Dye r Echols Elliott Em!'rson :ruvans, Nebr. lJ'ref'man

Acltfrman AswE>II Bacharach BankhE'ad nenson Blackmon Doohet· Rowers Brand nrinson Britten Brooks, Pa.

YEAS-120. Evans, Mont. Evans, Nev. Fairfield Fisher Foster Gandy Garnet• Garrett Goodwin, Ark. Griffin . Hardy, Tex. Harreld Hawley Hersman lloey Hudspeth HuH, T(lnn. Humphrey~ Igoe Jacoway Johnson, Ky. Johnson, Miss. Keller Kincheloe Kinkaid Lanham Larsen Lazaro Lee, Ga. Lesht-r

McClintic McDuffie McKeown Major Mann, S.C. Mansfield Martin Mays Moon

· Morgan Murphy Neely Nelson, Mo. Newton, Minn. O'Connof Oldfield Oliver Overstreet Padgett Park Parri h Pou Quin Rainey, Ala. Rainey, ll. T. Raket· Randall, Callf. Rayburn Ricketts Robsion, Ky.

NAYS-lGL

Romjue House · Rubey Rucker Sanders, La. Sanford Sherwood Sims Sinnott ~isson Smith, Ill. Stedman Steenerson Stephens, Miss. Stoll Sumners, Tex. Swope -Taylor, ·Ark. _ Thomas Thompson Upshaw Vinson Volstead Watkins Weaver Welty Whaley Wilson, La. Wingo • Young, Tex.

French Lehlbach Radcliffe Fuller, Ill. Little Rainey, J. W. Gallagher· Lonergan Randall. Wis. • Ganly Luce Ueed, W. Va. Gard Luhring Rodenberg Glynn McAndrews Rogers Goldfogle McArthur Rowe -Goodall McClennon ~anders, Ind. Goodykoontz McKenzie Sanders, N. Y. Graham, Ill. McKinh·y Scott Green, Iowa McKinley Sells t:reene, Mass. McLaughlin, Micb.Siegel Greene, Vt. McLaughlin, Nebr.Sinclair IIadley MacCrate Slemp Hamilton Madden Smith, Mich. Hardy, Colo. Magee Snell Haugen :Mapes Stiness Hays Mason Strong, Kans. Hersey Michener Summers, Wash. Hickey Miller Sweet Hicks Minahan, N.J. Tilson IIoch Monahan, \Vis. Timberlake Holland Mondell Tincher Houghton Montague Tinkham Hull, Iowa Moore, Ohio Townet· Husted Mott Vaile Hutchi11 on Model Voigt James Newton, Mo. Walsh Johnson, Wash. O'Connell Wason Juul Ogden Webster Kuhn Olney Wheeler Kennedy, R. I. Paige White, 1\Ie. King Parker Williams Kleczka Pel L Wilson, Ill. Kraus Peters 'Winslow Lampert Phelan Wood, Ind. Layton Platt Young, N.Dak. Lea, Calif. Purnell

A •• SWERED "PRESENT "-1. Johnson, S. Dak.

NOT VOTING-1:5G. Brumbaugh Burke Butler Byrnes, S.C. Campbell, Pa. Caraway Carter Casey Chri ·topberson Clark, Fla. Cole Cooper

Costello Crago Curry, <:alif. Darrow Dempsey Dewalt Dominick Donovan Dooling Doremus Dowell Drane

Drewt·y . Eagan. Eagle Edmonds Ellsworth Elston Esch Ferris Fess Fields .Flood Focht

Fordney Frear Fuller, Mass. Gallivan Garlan-d. Godwin, N.C. Good Gould Graham, Pa. Griest Hamill Ilarrlson Hastings IIayilen 1Ie11in Hernandez Hill Howard Huddleston Hulings Ireland Jefferis Johnston, N.Y. JQnes, Pa. Jones, 'l'ex. Kearns Kelley, l\fich.

Kelly, Po. K~dall_ . Keun dy, Iowa Kettner Kiess Kitchin Knutson Kreider Langley Lankford Linthicum Longworth L1:1f.l.dn McCulloch McFadden McLane

. Mcl'het·son MacOt·egot· Maher Mann, Ill. Mead Merritt Milligan Mooney Moore, Va.

• Moores, Ind. Morin

Nelson, Wis: Nicholls Nolan Os~orne · Port('r · namfley Hamseyt-r Reavis ReiJer Reed, N.Y. Rhodes Riddick Riordan Robinson~ N. C. Rose Rowan Rabat b. Schall HcuUy Rears Hhreve Hmall Hmith, !dab() Hmitb, N.Y. Smithwick ~nyder Steagall

So the ·motion to recommit was rejected. The Clerk announced the following pait·s: 1\Ir. RHODES With Mr. TILLMAN. .Mr. SNYDER with Mr. CARTER.. Mr. CorE with 1\Ir. HAYDEN. Mr. HERNANDEZ with Mr. HASTINGS. 1\lr. ELSTON With Mr. DRANE. Mr. OsBORNE wtth Mr. McLANE.

Steele 'tepht-ns, Ohio

Htcveuson Strong, l'a. ~ulllvun Tague Taylot·, Colo. Taylot·, 'l'enn. Temple •.rmmau 1.'reaclw y Vare Venable

- Vestal WaltE>rS Warcl Watson Welling White, Kans. ·wnson, PR. Wise Woods, Va. Woodyard Wright Yates Zihlman

Mr. MoRIN with Mr. BrnNES of South Carolina. Mr. FOCHT with Mr. BANKHEAD. Mr. Sl\UTH of Idaho with Mr. Do:P.rrNICK. Mr. JoHNSON of South Dakota with Mr. FLoon. Mr. LoNGWORTH with Mr. KrTCHI.N. Mr. LANGLEY with Mr. CLARK of ·Flotida. Mr. BUTLER with Mr. STEELE. Mr. KIEss with Mr. CasEY. . Mr. GRAHAM of Pennsylvania with Mr. Di:WALT. Mr. JoNEs of Penn~ylvania with Mr. CAMPBF.LL of Pennsyl-

vania. Mr. GRIEST with Mr. WILSON of Pennsylvania. Mr. CURRY of California with Mr. BooHER. Mr. DowELL with Mr. l\iAHER. Mr. DARROW with Mr. MEAD. Mr. KENDALL with l\fr. HowARD. Mr. KNUTSON with 1\fr. LINTHICUM. Mr. KENNEDY of Iowa with Mr .. HUDDLESTON. Mr. ACKERMAN with Mr. WISE. Mr. REED of New York with Mr. RowAN. l\It'. ZIHLl\[AN with Mr. NICHOLLS. Mr. TRE.ADWAY with Mr. MooRE of Virginia. Mr. KELLY of Pennsylvania with Mr. SMITHWICK. Mr. YATES with Mr. HEFLIN. Mr. WATSON with 1\Ir. DOOLING. Mr. FREAR with Mr. 1\f.rLLIGAN. 1\lr. Scm ·with Mr. Br.ACKMON. Mr. CosTELLO with Mr. ASWELL. Mr. 'V ALTERS with Mr. ScuriY. 1\Ir. RIDDICK with l\Ir. TAGUE. 1\Ir. McFADDEN with Mr. MOONEY. 1.\fr. EDMONDS with Mr. BRAND. Mr. LUFKIN With 1\fr. HARRISON. l\Ir. NOLAN with Mr. EAGAN. 1\Ir. FESS with Mr. KETTNER. Mr. RAMSEY with Mr. LANKFORD. Mr. STEPHENS of Ohio with Mr. EAGLE. Mr. EscH with Mr. FERRIS. Mr. NELSON of Wisconsin with Mr. SMALL. Mr. STRONG of Pennsylvania with Mr. BRINSON. Mr. CooPER with Mr. BRUJ.IBAUGH. Mr. McPHERSON with Mr. WRIGHT. Mr. DEMPSEY with Mr. JoHNSTON of New York. Mr. SHREVE with Mr. RIORDAN. 1\Ir. TAYLOR of Tennessee with Mr. GoDWIN of North Carolina. Mr. 'KREIDER with Mr. WELLING. Mr. ROSE with Mr. SULLIVAN. Mr. VESTAL with Mr. CARAWAY. Mr. BACHARACH with Mr. FIELDS. Mr. GARLAND with J\llr. STEAGALL. l\Ir. REAviS with Mr. VENABLE. Mr. CRAGO with Mr. DONOVAN. Mr. BROOKS of Pennsylvania with Mr. JoNES of Texas. Mr. Goon With Mr. TAYLOR of Colorado. Mr. VARE with Mr. DOREMUS . Mr. BURKE with Mr. DREWRY.

1920. CONGRESSIONAL RECORD-HOUSE. 7259 Mr. HILL with 1\Ir. BENSON. Mr. CHRISTOPHERSON With Mr. SEARS. Mr. l\IEBRITT with Mr. SMITH of New York. Mr. MANN of Illinois with ·Mr. GALLIVAN. Mr. HULINGS with Mr. SABATH. Mr. PoRTER with Mr. STEVENSON. l\It•. RERER with l\fr, ROBINSON of North Carolina. Mr. FoRDNEY with Mr. WooDs of Virginia. l\lr. BOWERS with Mr. HAMILL. .

•

·.

The result of the vQte was announced as above recorded. A quorum being present, the doors were opened. The SPEAKER. The question is on passing the joint resolu

tion. The question was taken, and the joint resolution was passed. On motion of Mr. PLATT, a motion to reconsider the vote

wJaereby the joint resolution was passed was laid on the table. COLD-STORAGE BILL.

l\1r. HA .. UGEN. Mr. Speaker, I ask unanimous consent to take from the Speaker's table the bill H. R~ 9521, disagree to the Senate amendments, and ask for a conference.

The SPEAKER. The gentleman from Iowa asks unanimous consent to take from the Speaker's table and disagree to all the Sennte amendments and ask for a conference on the bill of which the Clerk will report the title.

The Clerk read as follows : A bill (H. R. 9521) to prevent boarding and deterioration of and de

ception with resp~:-ct to cold-storage foods, to regulate shipments or--coldstorage foods in interstate commerce, and for other purposes-.

The SPEAKER. Is there objection? 1\ft'. WALSH.- Reserving the right to object, is this the bill

where the Senate struck out all after t11e· enacting clause? l\lr. HAUGEN. Yes. l\11·. ·wALSH. And there is but one amendment? 1\lr. HAUGEN. Yes. The SPEAKER. Is there objection? Mr. JUUL. Reserving the right to object, I would like to

ask the chairman of the committee whether or not a. certain amendment in which I am vitally interested is still in the bill. · l\Ir. HAUGEN. No; because everything after the enacting clan~ e is stricken out.

lHt·. JUUL. Is the substance, of the amendment in the bill? 1\Ir. HAUGEN. It will be in conference. The SPEAKER. Is there objection? There was no objection. The Chair appointed as conferees on the part of the House

l\Ir. HAUGEN, l\Ir. McLAUGHLIN of Michigan, and Mr. YOUNG of Texas.

MUSCLE SHOA.I.S NITRATE PLANT NO. 2.

1\Ir. ALl\lON. l\fr. Speaker, I ask unanimous consent to address the House for one minute.

The SPEAKER. The gentleman from Alabama asks unanimous consent to address the House for one minute. Is there objection?

rr'here was no objection. l\lr. ALMON. Gentlemen of the House, I haYe askeO. a minute

to read a special invitation to the l\Iembers of the House of Representatives, as follows: SPECIAL INVITATION TO MEMBERS OF THE HOUSE OF REPRESENTATIVES

AND MEMBERS OF THEIR FAMILIES,'

The American Farm Bureau Federation, the National Board of Farm Organizations, the National Grange, and the Farmers Educational and Cooperative Union of America, through their Washington representatives. cordially invite you to see a motion picture of the Muscle Shoals nitrate plant No. 2, showing the plant from the beginning of construction to the period of its operation in the production of cyanamide and ammonium nitrate for explosives.

This motion picture was taken and made available by the Bureau of Economics and approved by the officials of the War Department.

Col. Burns and Maj. Gaillard, of the Nitrate Division of the War Depar tment, have kindlr consented to be present each evening and explain the military siue of nitrate plant No. 2, and answet• any questions Members of the House may ask.

Washington representatives of the farmers' organizations will be pt·e ent each evening to explain the agricultural an<f fertilizer side of the nitrate plant at Muscle Shoals.

There will also be shown an interesting motion picture of the Roosevelt Dam and growing crops in the Salt River Valley, Ariz., illustrating what this dam has done for arid lacds in contrast with what nitrate plant No. 2 may do for lands requiring fertilizer.

These motion pictures will be displayed in the majority caucus room of the Ilouse Office Building at 8 p. m. on the evenings of May 17, 18. !lDd 19.

EXTENSION OF RElfARKS. Mr. MoRGAN and Mr. PLATT were granted leuye to extend

their remarks in the RECORD. Mt·. SMITH of Michigan. 1\fr. Speaker, I ask unanimous con

sent to exte~d my remarks in the RECORD on the Agricultural bill. 'l'he SPEAKER. Is there objection to the· request of the gen

tleman from 1\Iicbigan? There was no objection.

The extension of remarks by 1\fr. SMITH of Michigan is as follows: [Michigan Cooperative Crop Reporting_ Service. Michigan Department

of -State, Division of Agriculture. United States Department of Agriculture, Bureau of Crop Estimates. Offices: Rooms 201-207, Post Office Building.] ·

LANSING, l\fiCH., May 11, 19!0. The number of men that have left the farms of Jirbigan during

the past three years is tllree times as great as the number of Michigan men that died or were killed in the Civil War. It would require the present m:lle population over 15 years of age of Lansing and Flint to replace them. There are enough vacant farmhouses in Michigan to conveniently bouse the population of Grand Rapids. 'l'be number of farmhouses vacated within the past 12 months could easily a ccommodate all of the people in the city of Jac·kson with homes.

Eight and seventy-four one hundredths per cent of the farms of the State are wholly idle this year, an area of approximately 1,668,000 acres, equal to about five ordinary counties. The total men and boys over 15 years of age on the farms of the State is 230,000, or 8~.5 acres to be worked by each man or boy.

These figures are based upon a complete survey made during the past four weeks by the Michigan Crop Reporting Service, under -the joint supervision of Mr. Coleman C. ''augban, secretary of state, and Verne II. Church, field agent, United States Bureau of Crop Estimates, and aided by the office of the superintendent of public instruction. A blank was mailed to each rural school director asking for a report upon the farms o1: his school district. The compilation of these reports shows that 181232 farms are idle this year, as compared with 11,831 last year. While the abandonment, which in many cases is temporary because of the lack of tenant farmers, is least in the be t farming sections, it is found to be a community movement. Many districts show no abandonment, but where families began leaving the act seems to be contagious until, in some cases, one-third to one-half of the school district had migrated to the city. In the south-central district only 4.7 per cent of the farms are idle, and in some counties only 3 per cent. In the northwest dist:r:ict of the Lower Peninsula 19.4 pt>r cent are idle, and occasional counties report 25 per cent or more.

This abandonment does not tell the whole 'story. A large percentage of men on farms are ~ast 50 years of age and without help. The average size of farms 1s 91.5 acres, and there are but 11 men and boys to each 10 farms, o:: but one man or boy to each 82.5 acres, with many of these unable to do a full man's work. There are 30,300 vacant houses on farms, 10,000 of which have been vacated within the last year.

Of the 276,000 nien on farms three years ago, 46,000 have since left; 20 000 of them during the past year. This unprecedented exodus from fa'rms indicates that city and industrial life have become more profitable and satisfactory than farm llte. A recent preliminary survey conducted by the State farm bureau shows similar and comparable results, and that there would be a decrease of 15.8 per cent in the acreage of cultivated crops this year as a result. Its report also shows that the number of dairy cattle has decreased 11.3 per cent during the past year.

As Michigan is only typical of the condition found in most of the other States, it is evident that the production of farm crops will decline as long as the present situation continues, and as long as the cost of producing these crops follows so closely the price the farmer receives. With a steadily decreasing supply and increasing demand, the price of food will continue to advance.

The only remedy is a reversal of present conditions through an increase in the number of food producers and a corresponding decrease in the number of nonproducers of food. This reversal will only come when the remuneration for growing food crops becomes as great 1n proportion, taking into account investm~nt, risk, and labor, . as that of other occupations, and when farm life takes on attractiveness ~qual to that of city life.

ARMY REORGANIZATION BILL--cONFERENCE REPORT. Mr. KAHN. Mr. Speaker, I desire to report a disagreement

on the Army reorganization bill. The SPEAKER. The Clerk will read the conference report. The Clerk rea<l as follows : ·

The committee of conference on the disagreeing votes of the two Houses on the amendments of the Senate to the bill (H. R. 12775) to amend an act entitled "An act for making further and more effectual provision for the national defense, and for other purposes," approved June 3, 1916, having met, after full and free conference haYe been unable to reach an agreement thereon.

Mr. KAIL~. 1\lr. Speaker, I move that the House recede fro:U its disagreement to sections 59 to 68, inclusive, of the Senate amendments to .the House bill and concur in the same with an amendment to read as follows:

SEc. -. Strength of the National Guard of the United States: The maximum strength of the National Guard of the United States, as establi ·bed tmder the provisions of this act, and that may be organized in any State in time of peace shall be equal to 800 officers and enlisted men for each Senator and Representative in Congress and a number, to be determined by the President, for each Territory and the District of Columbia: Provided, That in States which have but one Representative in Congress the maximum strength of the National Guard of the United States therein organized shall be determined by the President: Provided (ut·ther, That the word Territory, as used in this act relative to the National Guard of the United States, shall include and apply to Hawaii, Alaska, Porto Rico, and the Canal Zone. Except as otherwise specifically prescribed herein, the organization of the National Guard of the United States, including the composition of all units thereof, the location of such units, and the assignment of such units to the brigades, divisions, and corps of the Army of the United States, shall be as provided in sections - and ·- of this act.

SEC. -. Enlistment in the National Guard of the United States: Whenever any State _or Territory shall have provided by law for en:listment in the. troops of such State or Territory of all persons resident in s·ucb State or Territory who enlist in the National Guard · of the

7260 CONGRESS! ON AL RECORD-HOUSE. J\fAY 18,

United States, and shall have otherwise complied with the conditions of this act for the keeping of State or Territorial troops, any person resident in such State or Territory, and liable for military service in time of wa.r, except enlisted men of the Regular Army and the enlisted Reserve Corps, may, within the limit~ as to number provided by section - of this act, be voluntarily enlisted in the National Guard of the United States, and while serving therein shall be exempted' from other military service: Pt·oviclecl, That such person shall at the same time and by the s:une enlistment contract enlist in the troops of. the State or Territory of his residence : P.ro1Jicled. tm·ther, That the period' for which such person enlists in the troops of the State or Territory shall be such that his State or '.renitory enlistment will terminam concurrently with his Federal enlistment. Such enlistment in the- Na"" tional Guard of the United States shall be- for .a period of three years, except as specifically provided for in section - ot this act, with the privilege of reenlisting for additional periods of not less than one noll more than three years. The qualifications for enlistment in the. National Guard of the United States shall be the same as those PN.scribed for enlistm nt in the Regular Army, subject to such modifications as the President may direct. Enlisted men in the National Guard of the se>eral States, Territories~ and the Distri-ct oll Columbia Rhall, with theit consent, i>e reaognizea as members on the· National Guard of the United States under the pronsions of this act for the unexpired portion of their present- enlistment contracts~ All persons nli ting for service in the National Guard of the Uniteu ~tates shall

Rign an enli tment contract and take and ubscxibe to an oath ill the following form :

" I do he:teby acknowledge to have voluntarily enlisted' th.i:s. -- day of ---. 19-, as a soldier in the National Guard of the United State and in the troop of the (Sta.te) (Territory) of --- fon the pel!iod of. thee year und r conditions prescribed by la-w, unlessRooner di charg d by proper authority, and I do solemnly swear thai: I will bear tr11e falt:hl and allegiance to the United St:Ltes of- A.merlc3J, and that I will rve them honestty and faitllfully against all their enemies whom oeYer, and that I wtll obey th ord rs· of the PTesident ~f the· United States and of the officers appointed over me according to law and the rnlqs and Articles ot War. And I do solemnly swear to bear true faith and allegiance tO' the (State-) (Te-rritorJ) of ---. and to obey the orders of the governor thereof subject to the Constitur tion and laws o.f the United State ."

An elisted man discha~ from service in the National Guardr of the United States shalL receive a discharge in writing, in such !orm and with such cia ification a is, or shall be, prescribed for enlisted men of thil Regular A.l'my. In time of peace diseharges may be given prior to the expiratiQD of terms o! enlistm nt under such regulations a the President may prescribe.

S-Ec. -. Officers of' the National Guard o:l: the nit d States: The Secxetary of Wa:r: may detail o1r assign officer or the Regular AI:IDy to duty with the National Guru:d of the nited Sta:tes according to the nquirements o€ the ser..vice. and in time of peace shal1 assign officers of the :r ~rve pei!Sonnel with their consent, to duty with organizations o:ft the National Guard of the United States in each State or Territory upon the recommenda.tion of the gove:Fno:c ot the. State or Territory concerned, and upon the grant to such officers: of Stn.te or TerritOJdal. commission in their respective grades by the gov mOl: of su:ch State: or Territory, when such State o.t Territory shall by law hn.ve- duly a.uthorized sncb actio upoDJ the part of th'E! governor thereof and shalL ha.ve otherwise complied with: the. conditio..ns of this act fo~ the kee-ping of State or Territorial! troops. lin the District of Columbia. such ofiicers shaH be as igned upon. till! reeommendation. of the command'ing general of the National Gllalrd o:t! the. United States in said District~ Provided, That no offi.cer of the: Begula.tr Ar1liJr .shall be assigned to tbe comm.a:rul of anll' organizati'On of tb.e National Guatrdi o:ll the United, States, entirely compri ed within the limits oJ any State except with the approval of th" gove:rnOl' the:teoi. The commanding:- ofiicers- anxl st~ of OJI'ganiza:tions of the• Nationa1 Guartl o:f the- United State compose<L of. troops from two or more States shall be assigned from theRegular Army or reserve personnel of the Army . under ragulations prepared as prescribed in section - of this act. Officers so detailed or assigned may accept- such State or Territorial commissiens, with the permls ion of the l?r ident and terminable in his discretion, without vacating their commissions in the Regular Al'my or Officers' Reserve Corps or being prejudiced in their relative or lineal standing therein. No person shall be commission~tdl as an officer of the National Guard of the nited States unless such person holds a commission in the Regular Army or Officers' Reserve Corps. All persons hereafter to be commissioned as officers in the National Guard of the United States shall upon being commissklned under the provisions of thls act, take and 'nbseri.be- to the following o::.ti1. :_

" I, --- ---, having been appointed a --- m the Nafumar Guard of the "United. State , do soiemnly swea:r tbat I will support and defend the Constitution. of the liJntted. States against all enemies,. foreign and domestic; that l will beau true faith and allegiance to the United States of America.; that I will obey tb;e orders of the President of the United S-tates; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office of --- in the National Guard of the United Sta.tes upon which I am about to enter. I do fur-ther solemnly swear to beal' true faith and allegiance to the State of --- and tOJ obey tlie orders of the- governor thereof, subject to the ~onstitution and laws of tire United Sta.tes1. so help me God."

SEC. -. Discipline and training of the National Guard of the United: States: The discipline and training of the National Guard of the United States shall conform. to the system which is now or may herea.ttec be prescribed fo17 the Regular Army. Each comp.a.n.y, troop,, battery and detachment in the National Guard of the United States shalL asseini>Ie for drill and. instruction, includin~ indooc trurget pi'actice, not less than. 48 times each yeax~ a.nd shall, lill addition theueto; participate in encampments, maneuvers, or other exercises, including outdoor target praatice, at least 15 days in training each yeax, inclu-ding' target practice unless such compu.n:y~ troop, battery, or detaehment shall have been excused from participation in any part thereof by the Secretaey of Wn.r or shall at the time presnribed therefor be under· the orders of the "'overnor of the State or Territory ru; provided for in section - of this act. •

All offices. and employees of the United States and of the Di.stt1ct of Columbia who. shall be members oii the National Guard o:f the. United State shall be entitled to leave of. absence from their respective. duties, without loss of pay, time, or efficiency rating, on all d'ays. during whleb they shall be engao-ed in .field or c~·st--defcn:se training ordered o-r autll.ot·ized under the. proviswns ·of thiS a..ct.

SEc. -. Liability of the National Guard of the United States. for service : When Congress shall ha.ve authorized the use of tlle land

! forces of the United States for any pu.rpo. e requ.iring the use of troops in excess of the Regular Al'my, the President may, under such re-gulations as he may prescribe, c311 into active ser.viee for the period of the emergency, unless sooner relieved, the whole or any part of the National Guard of the United State : Provided,. Tllat when neeessary in order to execute the laws of the Union. to suppr~ss. insurrections,_ ar · to repel invasions, the President may~ in his diseretion and under. the same conditions as permit the calling out of the Nationnl Guard of the several States 011 'l'erntol!ies, eall into active se.rvice> ~he wJ!role or any part of the National Guard: of the lJnited States to serve solel'y within the nited States, for such period as he may direct. Offi.ceJ:s and enlisted men called into active service under the terms of this section shall have the same. pay and allowan.ee as officers and enlisted men of the Regular Army ot tbe arne grades and sam~ prioor servtce. · -

SEc. -. Maintenance of. other troops by the State : The consent of Congress is l'lere)Jy given to each of the States- to maintain troops in time of peace : Pro'Videcl, That the State concerned shall first make pl'ovision therefor by legislative enactment in no respeet contrary to, and in all respects in harmony with, the provisions of this ad : J?ro'Uiclecl further, That no troops shall be thus maintained except such as belong to the units ot the · Nationa1 Guard of the United tates comprised within the limits of such State: Provided further, That the States and Territories in time of peace, and subject to such re~lations as to expense> and J:~r()-perty a.cC()untability as may i>e prescnbed by the President, shall be entitled to use as State or Terrltori:ll troops under the direct orders o:f the g-overnor of the State or Territory, and for such

· purpose as State 011 'IerrUodd militia might legally be used, much of the National Gnud of the United States within' their respective borders as. has be.eH enlisted in the troops of the State or Territory and commissioned by the governot• thereof in accordance with the terms of this Mt and as is not at the time in adive service unde-r a call by th-e Pr·esident: P1·ovidecl t"rtlter, Tho.t nothing contained in thi a..ct shall prevent the organization and maintenan.ce by the States and Territories of State or Territorial militia,~.. State police, or State constabulary.

SEC. -. Pay foil the Na.tionar uu:llld of tll:e 'Unit d States: 'aptuins an.d lieute-n:.tnts belonging to ox;ganiza.tions of the National' Guard of the' United Sta.tes' shall receiv · compensation at the rate of one-thirtiC<th of the monthly base pay prescribed far officers of the Regular A.rm:y of their· grades, for each regular drill or other period of instruction au-

, th.o.rized by the Secretary of War; not exceeding- five in any o~ ealendar month at wD.idt they shall have been officially p:rese:nt for th.e required period, and at which not less than 50 peP cent of th~ commissioned strength and at least 60 per cent of the enlisted trength attend and participate for at least one an.d one-half hours. apta.i.ns' commanding organizations shall receive 240 per annum. in addition to the drill pay herein prescribed. Officers above the grade of C::t:Ptaln shall receive not more than $500 per annum ::rn.d officers below the grade. of major, not belonging- to organizations, shall receive no.t m'Ore Ulan four-thirtiC<ths ot the- month} base pay of their grades, for- atisiactory perfo~t:ru~.nce o! theiu appropriate duties, under sll.'Ch I:'egulations. as. the Secretary of. Wnr may prescribe.

EaeJi, enlisted man bel'Onging- to- an organtzn'tioB o1! th-e- National 1 Guard of the United States shall receive compensation at the mte at one-thirtieth of the initia,l mo.nthl;y pay of his grade in the- RP.gular Army for each drill ordered for his organization at which he. is officially present, and in- which he participates for not less than one- and one-naif hours, not exceeding five in any. one· calendar month." but n01 enlisted man shall receive any pay under the provi ions of ttlis section for any month in which he shall have attended less than GO per ceJ;~.t of. the drills or othe¥ exercise prescn'bed for hi ol'gani-z'ation. Pe-riods· of

· actual m:iliuuy duty equivalent to the dri.l:ls herein prescribed may be accepted in lieu of such drills when so p-rovided by the Secretary ot. War. Pay under the provisions of this section shall not accrue to any person during ::. period when he shall be lawfully entitled to the same pay as a member of the Rep;ulru: Army of corresponding grade.

SEC. -. The- National Guard of the United States subject to laws governing the Regular Army : The National GuarcL of the 'United States, except when on, dutY' a.s. State tro~s pm ~lnt to ord rs from competent State authority, shall be suhject to the laws and regulations go.veruing theo Regular Army, o far as uelr laws a:nd regulation are applieable to officers and enlisted men whose permanent retention in active military service is not contemplated by existing law~

M.u. BL..~OX Mr. Spefl1ke1·, may we have rf?ad seetions 59 t(:) 68,. which are sought to be- amen{}: d by thi ame»dment?

l\1r. KAHN. l\1r. Speaker, while this va>f>ia"e seems t()\ be rather long--

The SPEAKER. The- gen tlemarr from Texas asks that tha sections 59 to 68 be repol'ted.

l\Ir. BLANTON. We would. lii.ke t01 fuav.e t.Jlem read so that we can unde-rstand what ·we ::rre votiBg on. ~he SPEAKER. Is there objeetron to· the request o:li th gen

tleman from Texas? Mr. KA.BN. Reserving the, right to object, o~ course the bill

has been printed, and I imagine- most of' the 1\lembers of the Hou e m:e familiar with tho e sections. The language of th~ pl'oposed amendment is rather long, and yet the principle involved is very short, and the entire- matter- can be elq>la.ined il1' fi-ve minutes.

Mr. {~~TO~. Will the ge.n.tlem:an; yield~ Mr. N. Yes. · lUr. BLAl\'TON. Does the gentlem.:m think: it is right and

proper for the membership o:1i tbis House to be ealled upon to vote upODi matt~s of such e::rtensive preparation as are embraced in these propo ed amendments, especialTy when we have- no-t l'l.acl sections 59 to 68 read~ and to knew wlillt we are voting upon?

Mr. KAHN. The bill has been printed for several weeks. Mr. BLANTON. Yes; but we do not know at this time wlmt

those sections are without looking them up~ 1\lr. KAHN. If the gentleman will allow me.. and i.E the

House will bear with me for five minutes and• let me explain the amendment, and after that if the House uesires and still wants the sections read, I will have no objection.

1920. CONGRESSIONAL RECORD-HOUSE. 726l l\h·. BLANTOX. It has taken 15 minutes to read the pro-

posed amendment. l\fr. DENT. Will the gentleman yield? :Mr. KA.B:N .. Yes. l\Ir. DENT. I want to say that I think the substance can be

explained in a v-ery few minutes, but there are many Members who would like to study the proposition as it llas been read here from the Clerk's desk. I do not think that we will save any time by proceeding here to-night. I am willing to expedite the matter, but I suggest to the gentleman that if he will ask to suspend with business in order on Calendar Wednesday, tomorrow, and take this matter up at an earlier hour even, it will suit me, and I think tllat we can dispose of it very quickly.

l\Ir. KAHN. l\Ir. Speaker, would this matter be in order tlle first thing to-morrow, after the reading of the Journal, if further consideration of it is dispensed ·with now? To-morrow is Calendar Wednesday and ordinarily t~at would inten-ene. The conferees hav-e been in session for four weeks. If we can dispose of this matter this evening, we can probably get a complete agreement upon the bill so that the reorganization measure may be brought before the House and passed before the end· of this week.

Mr. CRAl\ITOl'. 1\lr. Speaker, a parliamentary inquiry. Tlte SPEA.KER. The gentleman will state it. l\Ir. CUA..l\ITOX Has unanimous con ·ent been gi,·en . for

tlle consideration of this conference report without its being first printed?

The SPEAKER. The Cllair supposed that it llad been printed, but the Chair thinks that no consent has been given. Deuate, however, has proceeded.

l\Ir. CRAMTON. The Chair has not given any opportunity for objection.

The SPEAKER. Anyone can raise the point at any moment. l\Ir. CR.Al\ITO:X. I make the point now. The SPEAKER. The Ct:air i of opinion that it is too late

now. The Chair thinks that debate has commenced. l\Ir. CRAMTON. But there was no opportunity given by the

Chair. l\IL·. BLA.NTO:X. l\Ir. Speaker, a point of order--The SPEAKER. The Chair will ask the gentleman from

Texas to withl.wld his point of order for the moment. l\lr. CRAl\ITOX Mr. Speaker, I say that tl1e Chair has not

submitted the question at any time to the House. The SPEAKER. The Chair supposed that the conference

report had been printed. It has recently been called to his attention that it has not been printed. Of course, no point of order was raised against its being considered at this time.

Mr. BLANTOX. Mr. Speaker, a point of order. The SPEAKER. The Chair thinks that he should first hear

tl1e gentleman from Michigan. M1·. BLANTON. I thought a point of order would take

precedence over the parliamentary inquiry. l\Ir. CRAMTOX l\Ir. Speaker, the matter can ouly be taken

up by suspension of the rules. The Speaker has not ·asked unanimous consent for that purpose. Hence the proceedings up to this point have simply been out of order, to which objection could have been made at any time. I now make the point of order that the report not having been printed its consideration, without unanimous consent, is out of order. It is a matter of the very greate ·t importance.

The SPEAKER. The only question in the mind of the Chair is as to whether debate having proceeded, it is not now too late to make the point of order.

1.\fr. BLANTON. l\Ir. Speaker, a point-of order. The SPEAKER Two points of order can not be pending at

the same time. Mr. BARKLEY. l\Ir. Speaker, a parliamentary inquiry. The SPEAKER. The gentleman will state it. Mr. BARKLEY. Mr. Speaker, if it should develop that the

Honse was under the misapprehension that the Speaker was under, that this conference report had been printed, would the point of order be barred against its consideration at this time' merely because some men bad asked questions about it?

The SPEA.KER. The only question in the miml of the Chair is as to whether debate having proc('{'ded, it is now subject to the point of order.

l\lr. CLARK of l\iissouri. l\lr. Speaker, I suggest to tlle Chair that the recollection of the Chair is faulty a~out whether debate has been begun. There has been some miscella.neous talk back and forth about something or other, but there never has been a \YOrd said about the matter pending in the House.

l\Ir. GARRETT. 1.\fr. Speaker, the gentleman from California merely presented the report.

Mr. \V ALSH. Mr. Speaker, the gent1e111an from California presented a conference report which reports a disagreement. Ordinarily under the rule that report should have been ordered printed, but the gentleman from California was recognized to offer a motion to recede and concur with an amendment. Consideration of that motion bas ah·eady been begun. It would seem that if the point was not raised prior to the consideration of some motion on a conference report that should proper!~· hav-e been printed under the rules, after consideration begins, it is then too late to rai e the question that it has not been printed under the rule.

l\Ir. GARRETT. l\Ir. Speaker, will the gentleman yiel<l. Mr. 'YALSH. Yes. Mr. GARRETT. Does tlle gentleman think it would be fair

to the House? The House was under the same impression t11at the Speaker was, that this is a conference report called up in the regular way-that is, that it had been heretofore presented and printed under the rules. The Members of the House generally were of that opinion-certainly I was-and I submit that it is not fair to the House to hav-e it considered in thi's way at this time. Without charging that there is any intention at all to do so, it amounts to the same thing as sllarp practice to call this matter up against objection.

:\-Ir . .KAHN rose. l\fr. CRA::\lTON. 1\:lr. Speak~r, may I make this further

statement--The SPEAKER. The Chair will hear the gentleman fL·om

California. 1\Ir. KA.HX. Mr. Speaker, of course in submitting the motion

it is equivalent to a request f<Jr instruction. Such a. request does not require to be printed before it can be taken up. As chairman of the Committee on Military Affairs I felt that tilis matter could be explained in a v-ery short time. It is equivalent to a request for instruction.

l\Ir. GREE::\'E of Yermont. l\Ir. Speaker, will the gentleman yield?

1\Ir. KA.HX Yes. 1\Ir. GREE:XE of Yermont. Is it not a fact that notwith

l'tanding all the verbiage that ha.s been read here as a part of this report a large part of it is existing law?

l\fr. KAH....""\'". Exactly. 1\Ir. GREE~"'E of Vermont. And the change that is proposed

i simply a small part, and the other part, the larger part, is giv-en \\-ith it so a to make the places where the changes come understandable.

1\lr. CR..-uiTO:X. 1\Ir. Speaker--1\Ir. 1\.fO~DELL. · l\Ir. Speaker, I ask for recognition in order

to make a request for unanimous consent. The SPE.lliER. The Clmir recognizes the gentleman. Mr. l\IONDELL. l\lr. Speaker, I am of opinion that the

committee was within its rights in submitting the matter as it has pre ented it. I think there is very little question as to that; but ev-idently the gentlemen of the House do not understand the amendments, and I am of the opinion that the matter ought to go over. It is v-ery important, however, that the conference report be agreed to as soon as possible, because the passage of the Army appropriation bill depends upon the agre~ ment upon this bill. I therefore ask unanimous consent that the matter rna~· be taken up in the morning immediately after the reading of the Journal.

l\Ir. 1\IASON. l\lr. Speaker, reserving the right to object--1\Ir. RAYBURN. l\Ir. Speaker, reserving the right to ob4

ject--1\lr. MASO:X. What objection could there be if we were to

take it up in the morning after now having the chairman ot the Committee on Military Affairs explain the amendment? I think it would be very useful.

l\lr. MONDELL. Well, I think we would prefer to hear that explanation after we have had an opportunity to read the amendment.

The SPEAKER. Is there objection to the request? l\lr. RAYBURX. l\Ir. Speaker, reserving the right to ob

ject--1\fr. GREE:~"'E of Massachusetts. l\lr. Speaker, I object. l\fr. RAYBUR:X. Calendar Wednesday has been set aside

especially--The SPEA..KER. Objection is made. l\lr. BLANTOX. Mr. Speaker, I think we ought to have a

quorum. l\Ir. CLARK of l\lissourL ~ :Mr. Speaker, I mov-e that the

House do now adjourn. The SPEAKER. The gentleman from Texas makes the point

of order that there is no quorum present . .

CONGRESSIONAL RECORD-HOUSE. MAY 18,

Mr. 1\101\TDELL. Will the :gentleman withhold it f-or just a moment--

Mr. BLANT01. r. I will withhold it. l\11:. MONDELL. Until I malre a unanimous-consent request?

Does the gentleman from Missouri withhold his motion? 1r. OLARK of Missouri. Yes.

Mr. MONDELL. 1\lr. Speaker, a ·pa-rliamentary inquiry. The SPEAKER. The gentleman will state it. Mr. MONDELL. If this matter were to go over at this time, "

would it be in order on Thur day? The SPEAKER. The Ohair sees no reason why it would not

be in order at any moment on Thursday. 1\fr. 1\101\TDELL. It would be the business on Thursday? The SPEAKER. The Ohair thinks so. Mr. OLARK of Missouri. Mr. Speaker, I renew my motion

to adjourn. The SPEAKER The gentleman from Missouri moves that

the House do now adjourn. The question was taken, and the Speaker announced the

noes appeare<l to ha~e it. On a division (demanded by J\ir. BLANTON) there were-ayes

65, noes 132. 1\fr. OLARK of Mi ouri. Mr. Speaker, I ask for the yeas

and nays. The SPEAKER. The gentleman from Missouri demands the

yeas and nays. Evidently a sufficient number, and the yeas and nays are ordered.

The question wa~ taken; and there were-yeas 114, nays 154., answered "present , 1, not voting 158, as follows:

Almon Ashbrook .Ayres Babka Barkley Bee Bell Bland, Mo. Bland, Va. Blanton Box Brand

N~~~~an ByrllB, Tenn. Caldwell Candler Ca:ntrill Carew Carss Clark, Mo. Cleary Connally Crisp Cullen Thrvey Davis, Tenn. Dent Dickinson, Mo.

.Andrews, Md. Andrews, Nebr. Anthony Baer Bar.bour Begg Benham Bland, Ind. .Boies Brooks,m B~owne Burdick Burroughs Campbell, Kans. Cannon Chindblom Classon Coady Cooper Cxamton Crowther Currie, Mich. Dale Dallinger Denison Dick-inson, Iowa Dowell Dunbar Dunn Dyer Echols Elliott Emerson Evans, Nebr. Fairfield Foster Freeman French Fuller,Ill.

YE~114. Doughton .McClintic Dupr~ McDuffie Evans, Mont. McGlenrum Fisher McKeown Gallagher McKiniry Gandy Major Ganly Mann, S. C. Garner Mansfield Garrett Martin Goldfogle l\fays Goodwin, .Ark. Minahan, N.J. GreP.ne, .Mass. Montague GrliDn Moon Hardy, Tex. Neely Hersman Nelson, Mo. Hoey O'Connell Hudspeth O'Cormor Hull, Tenn. Oldfield Humphreys Oliver Jacoway Overstreet Johnson, Ky. Padgett Kincheloe Park Lanham Parrish Larsen Pe11 Lazaro Phelan Lea, Calif.. Pou Lee,Ga.. QuiD Lonergan Rainey, .Ala. McAndrews Rainey, H. T.

N.AYS-154.

Rainey, J. W. Raker Rayburn Robinson, N.C. Romjue Rouse Rubey Rucker Sanders, Ln. Sherwood Sisson Steele ~~~Bbens, Miss.

Sumners. Tex. Taylor, ·Colo. Thomas Upshaw Vinson Watkins Weaver Welty Whaley Wilson, La. Wingo WI·*" Young, Tex.

Glynn McArthur Sanders, Ind. ·Goodall McKenzie Sanders, N. Y. G-raham, Ill. 'McKinley Sanford Green, Iowa McLaughlin, Mich. Sells Greene~ Vt. McLaughlin, Nebr. Siegel ~ruey M~~a~ ffi~ili Hardy, Colo. Madden Sinnott Harreld Magee Slemp Haugen Mai:tn, m. Smith,, Ill . Hawley Mal}eS Smith, Mich. Hays Mas011 Snell Hersey Michener Stiness Hickey Miller Strong, Kans. Hicks Monahan, Wis. Summers, Wru.h.-Hill Mondell Sweet Hoch .Moo~e. Ohio Swope Houglrton Morgan Taylor, Tenn. Hull, Iowa Mott -Thompson Husted 'Mudd 'Til on Hutchinson Murphy Timberlake 1reland Newton, Minn. Tincher .Tames Newton, Mo. Tinkham .Johnson, Wash. Nolan Vaile .J"uul Ogden Ve tal Kahn "Olney Vo1gt Keller Osborne Volstead Kennedy, R.I. !Paige Walsh King Parker Wason Kinkaid Peters Webster Kleczka Platt Wheeler Kraus Purnell White, Kans. Lampert Radcliffe White, Me. Layton Randall, Wis. Williams Lehlbach Reed, W. Va. Winslow Little Ricketts Wood, Ind. Longworth Robsian, Ky. Yates Luce Rodenberg Young, N. Dak. Lufkin Rogers Luhring Rowe

ANSWERED "PRESENT "-1. Johnson, S. Dak.

.Ackerman

.Anderson A swell Bacharach Bankhead Benson Black Blackmon Booher Bowers Brinson Britten Brooks, Pa. Brumbaugh Burke Butler Byrnes, 8. C. Campbell, Pa. Caraway Carter Casey Christopherson Clark, Fla. Cole Collier Copley Costello Crago Curry, Cali!. Darrow Davis, Minn. Demp ey Dewalt Dominick Donovan Dooling Doremus Drane Drewry Eagan

NOT V.OTThl.Q-158. Eagle Edmonds Ellsworth Elston Esch Evans, Nev. Ferris Fess Fields Flood Focht Fordney F~ear Fuller, Mass. Gallivan Gard Garland Godwin, N. C. Good Goodykoontz Gould ' Gra:ha.m, Ea. Griest Hamill Hami1ton Harrison Hastings Hayden Heflin Hernandez Holland 'Howard Huddleston Hulings Igoe Jefferis J ohnso~ Miss.

· Johnston, N.Y. Jones, Pa. Jones, Tex.

Kearns Kelley, Mich. Kelly, Pa. K-endall Kennedy, Iowa Kettner Kiess Kitchin Knutson Kreider Langley Lankford Lesber Linthicum McCulloch McFadden McLane McPherson MacGregor Maher Mead Merritt l\filliga.n Mooney Moore, Va. Mo-ores, Ind. Morin Nelson, Wis. Ni-cholls Porter .Ramsey Ramseyer Randall, Calif. Reavis Reber Reed, N.Y. Rhodes Riddick Riordan Rose

· So the motion to adjourn was rejected.

.Rowan Sabath Schall Scott Scully Sea.rs ShreiVe Sims Small

mitb, Idaho Smith. N.Y. Smithwick Snyder · tea."'all • tedman l:'teenerson Stephens, Ohio Steven on Strong, Pa. .Su:lliva.n Tague 1.'aylor, Ark. Temple Tillman Towner 'l'rea-dway Vare Venable Walters Ward Watson Welling wnson,m Wilson, Pa. Woods, Va. WtOOdyard Wright Zlhl.man

The Clerk announced the following additional pairs: Until further notice: 1\fr. SCOTT with Mr. BENSON. Mr. TEMPLE with Mr. GALLIVAN. 1\fr. BUTLER with Mr. HARRISON, Mr. TOWNER with 1\lr. KITCH,IN. l\1r. REBER with Mr. LESHER. Mr. WOODYARD with Mr. EvANS -of Nevada. Mr. ACKERMAN with 1\fr. CA.RA w A. y. Mr. Goon with Mr. SIMS. · 1\fr. 1\looRES of Indiana with Mr. HoLLAND. Mr. STEENERSON with 1\fr. BLACK. Mr. ANDERSON with Mr. EA.G.AN. 1\fr. GoULD with Mr. JoHNSON of 1\fis issippi. Mr. 1\fcOuLLoc-H with Mr. IGOE. l\1r. KELLEY of l\fichigan with Mr. M.AHER. Mr. Emro -ns with Mr. GARD. l\Ir. BRITTEN with Mr. GonwrN of North Carolina., Mr. DAVIS of Minnesota with Mr. McLANE. M.r. HAMILTON with Mr. RANDALL of California. Mr. FULLER of Massachusetts with Mr. HEFLIN. Mr. Om•LEY with Mr. BLAcKMON. :Mr. ELLSWORTH with Mr. CoLLIER. Mr. GODDYKOONTZ with Mr. BBUMRAUGH. Mr. WILSON of Illinois with Mr. STEDMAN. Mr. J"O.HNSON of Sou.th Dakota. Mr. Speaker, how am I

recorded? The SPEAKER. In the negative. Mr. JOHNSON <>f South Dakota. I have a pair with the

gentleman from Virginia, Mr. Fwon, and I withdraw my vote of "nay" and answer "present."

The result of the vote was announced as .above recorded. ORDER OF BUSINESS.

1\lr. MONDELL. Mr. Speaker, I ask unanimous eonsent that business in order on Calendar Wednesday may be transferred from W'ednesday to Thursday .

The SPEAKER. The gentleman asks unanimous consent that business in order to-morrow, Calendar Wednesday, be transferred until Thursday. Is there objection?

Mr. MONDELL. . And that Calendar Wednesday busine s be di pe.Med with for to-morrow. ·

Mr. GDLDFOGLE. Reserving the right to object, does the gentleman contemplate any other business than this conference report to-morrow in case he obtains unanimous consent?

Mr. MONDELL. There are some other matters that will come up. One is the purchase of a hospital site on Wisconsin A venue, and, i think, following that -another rule, providing for ·some Hawaiian land matters.

Mr. GOLDFOGLE. Is that practically all the gentleman thinks of?

Mr. 1\IONDELL. That is all I have in mind now.

1920. CONGRESSIONAL RECORD-HOUSE. 7263 Mr. BLA.i'\TTON. ·Mr. Speaker, reserving the Tight to object;

was it not at one time held that you can not do away with Calendar \V ednesday by unanimous consent?

Mr. MO~'DELL. Oh, no; we have done that frequently. Mr. BLAN.TON. I understood that there was once such a

ruling. The SPEAKER. If it can be done ·away with by a two

thirds vote, the Ohair thinks much more it can be done away with by unanimous consent. Is there objection? [After a pause.] The Chair hears none. •

Mr. CLARK of Missouri. Mr. Speaker, I would ·like to .ask the gentleman from Wyoming a question. Is this Army bill coming up to-morrow?

1\Ir. MONDELL. It is. Mr. CLARK of Missouri. ~he .first thing? ~1r. 1rfO~'DELL. Yes, sir. 1\lr. l\IORGAN. Mr. S_peaker, my colleague from Oklahoma,

1\lr. How ABD, informed me last night that he could not be here on account of important matters, and asked me to say that if he were here he would have voted for House joint resolution 27.1, authorizing 'the purchase of Federal land-bank bonds.

EXTENSION OF 'REMARKS.

lli. ANTHONY. .1\fr. Speaker, I ask unanimous consent to print in the REcORD two memoranda, one prepared .for the Senate in advocacy of the Senate clauses of the military measure 1ID.d another memorandum :prepat:ed by an officer of the .Army against the Senate provisions which are prqposed here. It will set both sides or the pToposition fairly befoTe the House.

The SPEAXER. The gentleman from Kansas asks unanimous consent to -extend' his remarks in the .RECORD for the purpose indicated. Is there objection?

Mr. CRAMTON. Reserving the .right to object, 'I would like to ask wh-ether either of the statements will set .forth the _point af ·view of the National Guard of 'tM cmmtry?

1\Ir. ~ONY. .I think one of them will set it forth frilly. 1\lr. OR.A.MTON. Is it by a .National GuaTd officer? ·1\lr . ..ANTHONY. They ,are both by Regular .Anny officers, but

one of them is friendly to the organization of the National Guard under the .militia Clause of the Constitution.

Mr. CRAMTON. 1: object, Mr. S_pealrer. ~he SPEAKER. The gentleman from 1\lichigan objects. Mr. CRAMTON. I withdraw the objection. ~.be SPEAKER. The gentleman withdraws the objection. Is

there objection! [After .a _pause.] T.he ·Chair hears none. Mr. ANTHONY. Mr. Speaker, 'I insert herewith the memo

randa Teferred 'to : MEMORANDUM •OF >rHJl ·SENATE AMEND'MJlNT TO 'H. 'R. 1.2.77.5, TO .AMEND

!t'IIE "N:ATIONAL DEF'ENSil .ACT," R»LATI'NG .TO THE NATID.NA..L GUARD AS ..A PART OF ~ C!TizllN ARMY IN Tntal OF PEACE.

"'Xhe object of the National Guard provisions in the Senate bill is to make the National Guard a part of the .A:rm:y of ·the United fltates. organized and trained in time of .peace under uniform Federal authority, so that it can be mobilized as such immediately in the e-vent of a natwnal emergency '\Uth:out change of status, at the same time -preserving its use by the States under the oriiers of 'the governor as State troops nnd not as militia.

A further object of the bill is to establish a national military policy which will enab1e tlle War Department iu time of peace to organize all of those military units which will be required immediately upon mobilization in the event of a .national emergency prCJclaimed by Congress. It is the conception of the bill. based upon our traditional military policy, that only a limited number of these units can be formed from the authorized personnel of the Relmlar .Army, ana that the bulk of them mu5t be composed of citizen so1diers. Such of 'these citizeD soldiers as may voluntarily assume an obligation to serve their :respective States as ·well as the Federal Government (an obligation identical with that now assumed by all National Guard meD) will be organized in the new National Guard, while the remainder of the ~its required for immediate mobilization will be 'formed in i:he Organized Reserve-s and will be composed of those citizen soldiers who obligate themselves to serve only in a serious national .emergency.

The Army of the "United States as a whole, including the Regular Army, the National Guard, and the Ox:ganized Reserves. will thus be organized in time of peace ana officers and men of the Citizen Army will l>e definitely assi~ned to local units formed at or near their homes, either in the National Guard or the Organized .Reserves, depending upon the character of their obligation.

In ot·der to facilitate the initial organization of the Citizen Army veterans of the war may enroll voluntarily under liberal terms, as to length of service and discharge, either in the Nati<mal Guard of the United States or in the Organized .Reserves, and it is provided that the war-time divisions and other units of the National ·Gulll'd and the National Army shall be preserved and "Perpetuated so far as practicable in the Citizen Army.

In order to solve the complicated problems of OI:ganlzation, ~adjustment, and distribution involved in the initial establishment of the Citizen Army ·the bill provides that selected veteran officers of the National Guard, the National Army and the Officers' Reserve Corps shall participate with the Genera1 Staff in the solution of these problems. The effect of these measures will be to .establish in time of peace a military organization sufficient for initial mobilization, territorially distributed, and provided even in the Organized Reserves with a corps of officers and noncommissioned officers assigned to their several local units and prepared to receive the man power of the Nation in the event of national emergency.

This constitutes a settled national military policy and a complete organization established in time of peace. But it can not be carried into etrect so long as the "National Guard retainB its present status under the militia clauses of the Constitution. This is true for thl) following reasons:

L In its p-resent constitutiomll status the National Guard can be used only to execute the laws of the Union, to suppress insurrections, and to repel invasions. It can not be used for .general military pur .. poses, and therefore can not be included as such in general plans for the national defense. Its inoividual members were used in the Spanish-American War, the Philippine insurrection, and the reeent World War, but only after a change of status involving a rupture of peace-time organization and the delay incidental to a com1>lete reorganization and readjustment of personnel. It is fair to assume that in the future, as in the past, we will generally need citizen soldiers for purposes other than those authorized by the Constitution for the militia.

2. It can not be given the uniform training r equired in an efficient national military force because under the Constitution the authority to train it is expressly reserved -to 'the s:everal States.

3. It can not be provided with nn officer corps trained under uniform standard-s and imbued with a uniform tactical aoctrine, because the appointment and training of its dfficers is expressly reserved to the several States. Congress may -prescribe standards as a qualitication for armory pay, but until the ~ederal Government has the power to train, it can -:not ascertain whether these standards ha-ve actually been attained.

4. It can noi: be organized :in higher tactical units such as the division ereept in a few very large States, because as a rule the components of the National Guard divisions must include contingents 1rom severnl States. So long as these contingents remain militia there can be 'DO authority, either Federal or State, for the appointment of a divisional commander or headquarters. The State .of New York ·can Pe:I1?etuate the Twenty-seventh Titvision and the State of Pennsyl

. van1a can perpetuate the Twenty-eighth Division, but under the militia status i:here can be no effective means oi perpetuating the Twentysixth Divisi(}n of New England, because none of the New England States is populous enough to maintain a complete division. Under the reconstitution ·of the N.ational Guara, Illinois and ·Ohio a:nd perhaps one or two other States may be able to maintain divisions, but the National Guard of most States, such as Delaware, Maryland, Virginia, the Carolinas, .Kentucky, Tennessee, Louisiana, Colorado, WftBhing:ton, and Oregon, can never be incorporated into effective divisional teams in time of peace so long as the National Guard ·remxin~ under the militia status. This means not only that they can not perpetuate their relation to their war-time diviBions, but also that -they can not be effectively organized or trained -tor full military service in time of peace.

.5. Ii:s officers in their capacity as militia officers ca:il 'llot be called into active service in time ~f -peace in order to perfect their ·JDilital'Y training through frt±enda:nce at the special or general service -schools. Under the Constitution they can be called into the servic~ only in order to execute the law~ of the Union, to suppress insurrection or to ·repel invasion. And it is (}nly under such circumstances that they axe subject to the Presideni: as Commander in Chief or to any of his military subordinates. They would not be bound to obey the orders of Army officers of superior rank and they would have no right to issue orders to Army officers of inferior rank or to enlisted men. They might reeeive instruction at such institutions under a sort of .gentlemen's agr-eement, but they would not be subject to military discipline. .Though bearing military commissions from their .respective governors, .they W(}Uld not belong to the officer corps of the .Ar.my. They would be bouno by no military qbligations and entitled to no 'Illilitary rights, as wotild a reserve officer in the -same circumstances.

It is competent for Congress to make quaillication at ,-appropriate military schools a -requirement for the promotion of reserve .ofil.cers of high .ra:nk. But it ean impose no such condition upon -miUtia officers, because the c-onstitutional Commander in Chief .has no power to require their attendance at such schools; and ev-~n if he had such a 1>ower with reference to a mi1itia officer, its exercise would curtail 'the a-p1>ointing power of the governor.

6. Notwit:hstanding the importance ol giving 'National Guard officers a representation on the GeDeral Stafl', if the National Guard iB to be reorganized as an important element in the peace organization of our national defense system, their detail to the General Stair as· such would ha-ve no constitutional sanction. The National Guard .Militia is a part of the .Army of the United States only w1len called into the Federal service for certain specified purposes. and none of its individuals can be called into the military service of the United States except for 'Such purposes. National Guard Militia officers if attached to the General Staff could not be so attached as such. They would be ·civilian employees without any military status. Under the unlimited powers "to raise and support armies" and "to make rul-es for the government and regulation of the lana forces ,. it W(}Uld be quite com-petent 1or ·Congress, in its discretion, to ·attach 'Tepresentatives o! the Boy Scouts or the Women's Cbrlstian Temperance Union or the Salvation Army to the General Staff or -to place a representative of the Knights of Pythias at the head of a bureau -oi' the War Department, bui: it is speci1ieally denied the power under the Constitution to make any .such disposition oi militia officers, except when the militia is constitutionally in the 'Service of the United States.

7. Even when the Militia National Guard is calleil out for the limited purpo es specified in the Constitution, its passage into the Federal service involves a transfer from 50 separate jurisdictions to a single Federal jurisdiction. Though trained, organized, officered, governed, and disciplined under many different standards, it must now suddenly and without any -preparation therefor come under the command of the President as Commander in Chief, a command which must be exercised through a military hieraxahy eni:irely J.LDac.customed to deal with the practical difficulties that confro:nt .the citizen soldier.

8. Under the existing system the .National Guard is trained and governeo under .50 separate and independent jurisdictions. When called into ·Federal service on the outbreak of war it .must not only change its constitutional status but its officers and men must come under a new and unaccustomed single standard of administration, discipline, and training. This is necessary in order to jncorP<Jrate it as a component of an effective national army. This not only -requires reorganization. but must always involve a serious hardship on officers who have bad no opportunity to qualify for military command under uniform Federal standards in time of peace. If the National Guard were organized as a part of the Army in time of peace, its training would be standardized and its officers of all grades would be qualified under uniform Federal

r7264 CONGRESSION .A_Ij RECORD-HOUSE. ~fAY 18,

requirPments which would be recognized upon mobilization. Under rmch circumstances all officers would be recognized as qualified when commissioned in their respective grades and a progressive system of promotion based on tested qualification for each successive step would be developed. This would avoid the necessity of eliminating many officers, especially in the higher grades, who under the existing system can not be subjected to authoritative tests of efficiency until a sudden Pmergency brings them the full responsibility of high command in the Army of the United States in war.

In review of the above considerations it may be said that a dtizen army formed under the militia <:)auses of the Constitution can not be prepared in peace for effective service in war. This is true for the following principal reasons :

(a) It can not be used for general military purposes as such, but must be reorganized in a new constitutional status before it can be employed as a war force.

(b) Its officers and men can not be trained in peace under uniform Federal standards.

(c) Its officers can not be recognized as a part of the Army in time of peace and therefore can not participate as such in determining their

_ proper relation to the national military policy. These defects in the national military organization can be corrected

only by relieving the National Guard of its militia status and by reorgR;Dizjng it as !1 citizen force under the. power to raise and support arlllles. It remarns to be seen whether this can be accomplished without depriving the States of the right to use the National Guard for State purposes.

Under the Senate bill the National Guard is to be organized and trained under the power to raise and support armies. It thus becomes a national force but Congress authorizes the States to use it precisely as they may now use it under the direct orders of the several governors, but as State troop and not as militia. The power of Congress to make such a disposition is implied in Article I, section 10 of the Constitution, which says: "No State shall, without the consent of Congress • • • keep troops, or ships of war in time of peace."

As the force thus becomes a Federal force, all details of its organization and training and all rules and rt'gulations governing the appointment of its officers are under complete Federal control, except in so far as Congress may deem it wise to delegate any portion of this authority to the States. But recognizing that the National Guard within any State is to be under the orders of the governor as State troops, the bill very properly provides that no officer shall be assigned to any unit of the National Guard within the limits of any State except with the approval of the governor. The National Guard is to be a part of the citizen army and all of its officers must qualify as reserve officers of the Army of the United States. All officers of the National Guard are made eligible for appointment as reserve officers, as are all veterans of the war, and provisions are included for enabling all other qualified persons, whether members of the National Guard or not, to become reserve officers. This will create a large corps of reserve officers within each State. Any of these will be eligible for appointment in the National Guard, but none of them can be so appointed except with the approval of the governor. This assures a uniform standard of military efficiency, at the same time preserving the reasonable right of the governor to control the selection of these re t>rve officet·s who, under the terms of the bill, are to command State troops under his orders. •

It has been suggested that the adoption of the Senate plan would bring the National Guard completely under the control of the War Department, and that this in practice would mean an antagonistic and un ympathetic control by officers of the Regular Army. Policies affecting the organization, training, and mobilization of the National Guard as an integral part of the Army of the United State must, indeed, be based upon recommendations of the General Staff. which is charged by law with the preparation of plans for the national defense. But under the Senate plan National Guard and other reserve officers will participate with the General Staff in the preparation of all poUcies and regulations affecting the organization, distribution. and training of the citizen ariny and all policies and regulations affecting the appointment, promotion, assignment, and discharge of reserve officers, including National Guard officers. This will assure the solution of the great problem of national defense by profe sional and citizen officers working together at the same table with full appreciation of every aspect of the problem.

COMMENTS ON THE ARMY REORGA"'IZATIO::-l BILL, REFERUIXG TO MEMORANDUM ON THE SENATE AMENDMEXT TO H. R. 12775, TO AMEND THE NATIONAL DEFr.NSE ACT, RELATI::-lG TO THE NATIONAL GUARD AS A PART OF THE CITIZEN ARMY IN TIME OF PEACE.

This memorandum has been read with considerable interest, and is a very clever misstatement of facts, evidently framed by some one ignorant of the provisions of the act of June 3, 1916, and with ideas prejudiced against the National Guard as it now exists. It is fair to assume that whoever framed this memorandum bas been very much imIlressed with the part played by the National Guard as it now exists in the military forces of this Nation. It perhaps is the result of some Regular officer's observation, who has been able to grasp the wonderful development in the National Guard since 1898, as shown in tbe mobilization of 1916 and the great World War through which we have just passed. Without doubt be is convinced that the great part of our military forces will never be found in the Regular Army, but must come through our citizen soldiery. He, therefore, is striving to absorb into our Regular forces the National Guard which heretofore, previous to the present World War, has been held by Regular officers in disrepute; in other words, he is striving to steal their glory.

The first paragraph shows ignorance of present law, because the National Guard to-day is a constituent part of the military force of the United States, just as much as the Permanent Establishment, and he assumes to state therein that it is not. The change of status to which he refers results from the application of section 111 of the present act, which, under the Constitution, is by no means a necessity. Furthermore, the Kahn bill provides a change in this section of the law which will remove the objections raised in the memoraudum. There is not :i point raised throughout this entire memorandum which can not be met by a modification of the act of June 3, 1916, except the base upon which it is raised, namely, the present National Guard is maintained under the militia provisions of the Constitution, whereas the force which he is advocating would be maintained under the provisions to raise and support armies.

On page 2, in paragraph No. 1, the statements are erroneous, because the National Guard can be used by the governor, as the commander in

chief,. for all trouble within the State for which the governor is rcsponsJble or accountable to the citizen ' of tbe State. In framin"' this paragraph he has started upon an erroneous basis which it is regi~tted has prevailed for many years in this country, namely,' the limitations upon .the use of the National Guard or Organized Militia. The onstitutwn will allow the use of this force for any purpose for which the Regul~r Army can. be. used i~ the Presi.dent so desires. There is not a word m .the Constitution which would JUStify the sending of a Regular ~my beyond the limits of the United States which would not apply Wlth equal force to the National Guard, and if the Commandet· in Chief can send a ReguJar Army to foreign territory in the interests of our common defense, there is no doubt whatever that he has similar power with respect to the Orgll'llized Militia. The use of military forces as contemplated in our Constitution is for no other purpose than for our common defense. The best defense of a nation in case of war is to attack the enemy on his own territory.

I.n paragt:aph No. 2 he omits to state in this paragraph that the ~ai!Jing whici?- the States must carry out shall be according to the disciplme prescnbed by Congress. Therefore there are no 50 separate systems of training-there is one, and that one is the one prescribed by Cong:r~s. There are, !Jf course, 50 separate States carrying out this trammg, but the entire control of training is in the hands of Congress aJ?-d not in the hand~ .of tbe States. There can be- no more compreb~nsive term used foT givmg over to Congress the instruction of the N!ltional Guard than the terms that appear in the Constitution resernng to the States the training of the militia according to the discipline prescribed by Congress.

With respect to paragraph No. 3, the only thing which is exclusively reserved to the States is the appointment of the officer yet the right of the. Federal Governm~nt to prescribe the organization, arming, and eqmpment of the NatiOnal Guard has been so interpreted in the act of June 3, 1916, without protest from tbe States, as to convey to the Federal Government the right to see that unfit officers shall not be members of the National Guard and only fit officers shall be members. Because the National Guard is not fully developed, or even approximately developed, under the act of June 3, 1916, is no reason for condemning the act of June 3, 1916, particularly by officers or citizens who are ignorant of the splendid provisions of that act.

Paragraph No. 4. This statement is erroneous because under the militia clause of the Constit1Ition it is an established fact that tactical units of divisions have been formed from the National Guard, and the[ have been formed into the divisions required by the War Departmen namely, 16 divisions, and they fought in France with great credit: Furthermore, the National Guard furnished more divisions than was origipally contemplated by the War Department in that the Fortysecond Division was formed, and also the nucleus for a colored division; yet the War Department originaly contemplated only 16 divisions from that force. The statement that divisions can not be formed from troops of more than one State is absolutely absurd and disproved by our experience of the recent war, and is being disproved at the present time by the reorganization of the National Guard under the act of June 3, 1916. Whenever a division is called together, formerl from numerous States, there certainly are sufficient regular officers with war experience to control and command the division thus formed, and perhaps to much greater advantage than could occur if the division commander was an officer of the National Guard of any particular State. It is possible the commander might be more efficient.

On page 3, numbered paragraph 5, the President can call any portion of the Organized Militia which he desires into service, or all of it, and if he desires to call officers of the National Guard for duty this can be done. The attendance at schools at the present time is left optional with the student officer and perhaps properly so. The despotic power of seizing a citizen soldier from his usual vocation at any time which may be dictated by the policy of the General Staff is believed inadvisable during times of · peace. Such a policy would render military training absolutely obnoxious and distasteful to the great mass of our American citizens, and certainly would not be an American institution. It would partake of Prusslan methods. Under the present law any National Guard officer who desires to attend a service school and is fitted therefor and is able to spare the time from his usual vocation, can be ~t for such instruction so far as the appropriations made by Congress will permit. This is the present law, and it is in direct accord with American principles. It bas been strongly advocated by the people interested in the development of the National Guard that National Guard officers be aJ?pointed from officers of the Federal Reserve Corps, and the objectiOns to this procedure has emanated from the permanent establishment rather than from the National Guard. It is the permanent establishment which raises the great cry of "incompatibility," yet in the next voice they are crying, "Let us have one Army." The barriers which are erected by the interpretations of the Judge Advocate General's Department are more or less artificial, and they are not in the interest of developing one Army. They are more properly intended to create obstacles in the federalization of our National Guard units and to guide our military forces in divergent channels. If this policy is changed there need be no cbange in our present law of any Importance in this regard.

There have been furnished to members of the military committee provisions of law which would so amend the act of June 3, 1916, as to make it necessary for all officers of the National Guard to pa. s the examinations required for Federal Reserve officers. All it needs is passage by Congress to correct the <.::onditions mentioned in this paragraph.

With respect to paragraph numbered 6, the President, if he sees fit, can call a National Guard officer for duty, and without doubt the patriotism in the National Guard officer would never let him hesitate in replying to a call for duty upon the General Staff. The contentions in this paragraph is a bugaboo which can be dismissed with almost a smile.

On :page 4, paragraph 7, the points raised in this paragraph emanate from Ignorance of the law and the handling of the National Guard at the present time. Under the act of June 3, 1916, as has been suggested 1n the Kahn bill. the transfer from 50 separate States or juri -dictions to a single Federal jurisdiction, is effected by tbe issuance of an order-not a very difficult method at the present time. Furthermore, as has been brought forth before in these comments, every one of these organizations, even though under 50 Reparate jurisdictions, must be trained according to one discipline. There was no trouble whatever in providing organizations at the beginning of the recent World War; there was no particular trouble in throwing them into divisions and brigades other than the troubles which were required by the General Staff, because the entire divisional organization wa·s changed upon the eve of war. Thi was no fault of the National

1920. 00NGRESSION_._t\_L REOO~D-- ROUSE~ 726.5 Guard, but rather th~ fault of the wisa men in- the War Department who · should. have had a proper divisional or.ganization devised during times of .Peace for the organization of the National Guard. The delayin orgamzation of National Guard divisions was due almost entirely to the · breaking up of the divisions originally p1.anned and forming· therefrom an entirely different divisional organization. This was the confusion; this was the delay, and the fault, if any, rests on the Generai Staff or War Department.

With respect to page 4, paragraph No. 8; the change into a single standar.d of administration was accomplished in a satisfactory manner at the beginning of the World War, and it will be very much easier done on future occasions. The writer here attempts to belittle the act ot June 3, 1.916, and he does not realize that the act was never app~ied. There was too limited a time intervening between the J:)aBSage of that act and the draft for the Wru:. Department: to perfect the act in its application. The ignorance ofi the author of this memorandum is shown by the following- argument: " If the National .Guard were organized as a part of the Army in time of peace its training would be standardized and its officers of all grades would be qualified under uhlform FederaL requirements which would be recognized upon mobilization." This · is exactly what is contemplated and laid down in law by the act of June 3, 1916, and yet the author desires to change that law. The whole attention of the 11lilitia Bureau is being concentrated upon the very subjects which be brings forth on page 4. · ·

In connection with his following n.rinei{lal reasons, with respect to "(a)"-can any sane American agree to this statement when. they consider the {lart played in the 1·ecen.t World War by the National Guard? It was reorganized, but on account of the unexpected demands by the War Department a new constitutionaL status under section 111 of the act of June 3, 1916, was assumed, which status was assumed by the issue of a proclamation on the muster of the troops and inspection of the equipment. The provisions already suggested to Congress to be inserted in a new section 1.11 will absolutely cut out the inspection of men and equipment. The change in the constitutional status will be simply by a proclamation of the President. With respect to reason. "(b)," this- is absurd, because it is being accomplished at the present time. The only reason that a. defect" can be claimed in this respect is due to the tact that Federal standards are not uniform; they are constantly changing, and the National Guar.d in many cases are trained as near Federal standards as any human intellect can devise. In reason " (c)" the man, citizen, or Regular officer who fails to recogniz.e officers of the National Gua~d in time of peace as a part of our national military force needs education ; he is groping away back. in the times, perhaps of the Revolution, and needs to be informed' as to the progress made in this force. Every one of the defects. men.tioned can be met squarely by the act of .Tune 3, 1916, when modified as has been suggested to several members of the Military Committee.

Attention is again called to the fact that the National Guard and all our forces in the Senate bill becolllo'l federalized, and, so far as our system of government is concerned, this is a.. dangerous procedure. It is a procedure which anyone who is thoroughly familiar with our form of government will protest against, because it is following closely along

,the lines of despotism, Prussianism, and autocracy, which ·are the deadly enemies of Americanism. Tbe nrovision' in the Senate bill for the· governor of a State to issue orders ¢o Federal troops is certainly unconstitutional, even though it be placed upon the l;ltatute books in the form of: law.

On page 5 a discussion occurs. "This assures a unifurm standard of military efficiency, at the same time {~reserving the reasonable right of the governor to control the selection of these reserve officers who, under the terms of the bill, are to command State troops under his orders." A uniform standard of military efficiency is already assured under the ,present law, and if the War Department would remove the artificial barriers maintained by decisions of the .Judge .Advocate General between the Regular Army and the National Guard, which is a constituent part of our national forces, the present bill can readily be modified to insure a uniform stan.dard oi military efficiency by limiting the appointment of officers by the governor to those officers who duly qualify under the examinations prescribed for the Federal Reserve Officers' Corps. This change is. desired by those interested. in the development of the National. Guard and is frustrated. by the attitude of. the War Department. _

With respect to the last para&Taph in this memorandum, at- the present time there can be no denyrng that there is a. strong antagonism among the citizens toward the Regular Army. It is an open secret that certain infiuential members of the Regular Army believed that section 111 of the act of June 3, 1916, as interpreted, if put in force, would absolutely destroy the National Guard at the termination of the World War; perhaps they were animated by sympathy. and affection; but if so, they bad a very peculiar way of showing such feelings. The training of the National Guard is now based upon recommendations of the General Staff,. but unfortunately such recommendations are not always in the best interests of our national force nor of. the National Guard. It appears frequently that the recommendations are uf such a nature as to render it almost impossible for the proper development of a National Guard in this country, and until - the General St!Uf receives some education concerning the National Guard and information upon. its present status and the laws which govern. it ana the problems which confront it, there will never be a sympathetic handling <Jf the National Guard problem of this country by the General Staff. By the calling of officers of the National Guard into conference with the General Staif for certain periods of time when. National Guard matters are to be con-

1sidered, no doubt far better results can be obtained than have been obtained in the pas4 provided the members of the General Staff are in a receptive mO'od. This condition arid mixture of National Guard officers and professional officers can be secured without a bit of trouble under the J?resent laws, provided Congress makes the necessary apprupriations.

ARMY REOlWANIZATION BILL--cONFERENCE REPORT.

Mr. KAHN. Mr. Speaker, I ask that the report be withdrawn so thal it may be printed under the. rules.

The SPEAKER. The gentleman from California submits the report on H. R. 12775, to be printed· under the rules.

The following is the conference report :

The committee of·. conference on the disagreeing votes of the two Houses on the ainendments of the Senate to the bill (H. R. 12775) to amend an act entitled UAn act for making further and· more effectual provision for the national defense, and for other

r

purposes," approved June 30, 1916, having met, after full and free- conference, have been unable to reach an agreement thereon.

JULIUS KAHN, D. R. ANTHON'Z', Jr., JoHN C. McKENziE, S. H. DENT, Jr.,

Managers ow tlt.e part ot the· Ho1ue; J. W. WADS WORTH, Jr., Gro. E. CHAMBERLAIN, C. S. THOMAS,

!J:f'anagers on the part of the Senate.

STATEMENT.

The managers on the part of the House of Representatives at a conference on the disagreeing votes of the two· Houses on the amendment of the Senate to H. R. 12175, to amend an aCt entitled '<An act for making further and more effectual provision for the national defense, and for other purposes," approved June 3, 1916, submit the following statement:

The two Houses were unable to come to an agreement on the Senate amendment. The particular points of disagreement are the provisions regarding the reorganization of the National Guard. The National Guard provisions of the bill as it passed the House are those contained in the national defense act of June 3, 1916, amended at the suggestion of officers of the National Guard and the· Militia Bur-eau to remedy certain defects- which four ·years of operation under the said national defense act had developed. The Senate amendment to the House bill, H. R. 12775, relating to tfie National Guard pTovides for its organization under the Army clauses of the Constitution of the lJnited State&.

After a full and free discussion, the Senate conferees proposed to the House- conferees· that the former would accept practically the s-nostance of the House provisions of H. R. 1.2775 relating to the National Guard~ provided; the House conferees- would add to the bill the substance of the Senate provisions· relating to the National Guard amended as hereinafter stated, so as to authorize each State to determine for itself whether its National Guard' should nemain as now organized under the national defense act or by an affirmative act of its legislature adopt the National Guard organized under the Army clauses- as provided in the amendments hereinafter stated. In other words, the language of the proposed compromise would· allow the legislature in each State to determine whether its National Guard should remain as now provided by law under the militia clause or the Constitution or whether it should be reorganized under the Army clauses as provided in th~ amendment hereinafter pToposed, with the distinct understanding that no feature of the change should be ca·rrie-d into effect until the· necessary enabling Iegislataion has been passed by the State.

The language of the proposed compromise is· as follows, to wit:

"SEC'. -; Strength of the National Guard of the United States-: The maximum strength of the National Guard' of the United States, as- established. under tfie provisions of this act, and that may be- organized in any State fn time of peace, shall be equal to 800 officers and enlisted men for each Senator and Representative in Congress, and a number to be-determined by the President for each Territony and· the District of Columbia: Provided, That in States which have but one Representative iii €ongress the maximum strength of the National Guard of the- United States therein organized shall be determined by the President: Provided further, That the word Territory as used in this act 1·elative to the National Guard o:f the United States shall include and apply to Hawaii, Alaska, Porto Rico, and the Canal Zone. Ex-cept as otherwise specifically preseribed herein, the organization of the National Guard of the United States, includin·g the composition of all1 units thereo~ the location of such units, and the assignment of such units to the brigades, divisions~ and corps of the Army of the United States shall be as provided in sections - and - of this act.

" SEC. -. Enlistments in tlie National Guard or the United States: Whenever any State or Territory shall have provided' by law for enlistment in the troops of such State or Territory, of' all persons resident in such State or Territory who enlist in the National Guard' of the· United States, and shall haveotherwise complied with the conditions of this act for the keeping of State or Territorial' troops, any person, resident in such State or Territory, and liable for military service iil time of war, except enlisted men of the Reguiar Army and' the enlisted reserve corps, may, within the limits as to number provided by 'section .i...;_ of this act, be voluntarily enlisted in the National Guar<f of the United States, and, while serving therein, shall be exempted from other military service: Pro'Vided. That

• I

7266 . CONGRESSIO:N AL RECORD-HOUSE. }lAY 18, .

such person shall at the same time and by the same enlistment contract enlist in the troops of the State or Territory of his residence: Pro'd<led {zwther, That the period for which such person enlists in the troops of the State or Territory shall be ~mch that his State or Territory enlistment will terminate concurrently with hi Federal enlistment. Such enlistment in the National Guard of the United States shall be for a period of three years, except as specifically provided for in section - of this act, with tile privilege of reenlisting for additional periods of not less than one or more than three years. The qualifications for enlistment in the National Guard of the United States shall be the same as those prescribed for enlistment in the Regular Army subject to such modifications as the President may direct. Enlisted men in the National Guard of the several States, Territorie , and the District of Columbia shall, with their consent, be recognized as members of the National Guard of the United States under the provisions of this act for the unexpired portion of their present enlistment contracts. .All persons ·enlisting for service in the National Guard of the United States shall sign an enlistment contract and take and subscribe to an oath in the following form :

"'I do hereby acknowledge to have voluntarily enlisted this --day of---, 19--, as a soldier in the National Guard of the United States and in the troops of the (State) (Territory) of --- for the period of three years under conditions· prescribed by law, unless sooner discharged by proper authority; and I do solemnly swear that I will bear true faith and allegiance to the United States of America, and that I will ~erve them honestly and faithfully against all their enemies whomsoever, and that I will obey the orders of the President of the United States and of the officers appointed over me according to law and the rules and .Articles of War; and I do solemnly swear to bear true faith and allegiance to the (State) (Territory) of --- and to obey the orders of the governor thereof subject to the Constitution and laws of the United States.'

"An enlisted man discharged from service in the National Guard of the United States shall receive a discharge in writing, in such form and with such classification as is or shall be prescribed for enlisted men of the Regular Army. In time of peace discharges may be given prior to the expiration of terms of enlistment under such regulations as the President may prescribe.

"SEc. -. Officers of the National Guard of the "Gnited States: The Secretary of War may detail or assign officers of the Regular Army to duty with the National Guard of the United States according to the requirements of the service, and, in time of peace, shall assign officers of the reserve personnel, with their consent, to duty with organizations of the National Guard of the United States in each State or Territory upon the recommendation of the governor of the State or Territory concerned and upon the grant to such officers of State or Territorial commission in their respective grades by the governor of such State or Territory, when such State or Territory shall by law have duly authorized such action upon the part of the governor thereof and shall have otherwise complied with the conditions of this act for the keeping of State or Territorial troops. In the District of Columbia such officers shall be as· signed upon the recommendation of the commanding general · of the National Guard of the United States in said District: Pro·t:i<led, That no officer of the Regular Army shall be assigned to the command of any organization of the National Guard of the United States entirely comprised within the limits of any State except with the approval of the governor thereof. The commanding officers and staffs of organizations of the National Guard of the United States composed of troops from · two or more States shall be assigned from the Regular Army or reserve personnel of the Army under regulations prepared as prescribed in section - of this act. Officers so detailed or assigned may accept such State or Territorial commissions, with the permission of the President and terminable in his discretion, without vacating their commis· sions in the Regular ·Army or Officers' Reserve Corps or being prejudiced in their relative or lineal standing therein. No person shall be commissioned as an officer of the National

·Guard of the United States unless such person holds a commission in the Regular Army or Officers' Reserve Corps. All persons hereafter to be commissioned as officers in the National Gua:.:d of the United States shall, upon being commissioned under the proYisions of this act, take and subscribe to the following oath:

" 'I, --- ---, haYing been appointed a --- in the National Guard of the United States, do solemnly swear that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and a11egi~nce to the United States of America;

that I will obey the · orders of the President of the United · States; that I take this obligation freely without any mental re ervation or purpose of evasion; and that I will wen and faithfully discharge the duties of the office of --- in the National Guard of the United States upon which I am about to enter. I do further solemnly swear to bear true faith and allegiance to the State of --- and to obey the orders of the governor thereof, subject to the Constitution and laws of the United States, so help me God.'

"SEc.-. Discipline and training of the National Guard of the United States: The discipline and training of the National Guard of the United States shall conform to the system which is now or may hereafter be prescribed for the Regular Army. Each company, troop, battery, and detachment in the National Guard of the United States shall assemble for drill and instruction, including indoor target practice, not less than forty-eight times each year, and shall, in addition thereto, participate in encampments, maneuvers, or other exercises, including outdoor target practice, at least fifteen days in training each year, including target practice, unless such company, troop, battery, or detachment shall have been excused from participation in any part thereof by the Secretary of War, or shall at the time prescribed therefor be under the orders of the governor of the State or Territory, as provided for in section- of this act.

"All officers and employees of the United States and of the District of Columbia who shall be members of the National Guard of the United States shall be entitled to leave of absence from their respective duties, without loss of pay, time, or efficiency rating, on all days during which they shall be engaged in field or coast-defe~se training ordered or authorizeu under the provisions of this act.

"SEc.-. Liability of the National Guard of the United States for service: When Congress shall have authorized the use of the land forces of the United States for any purpose requiring the use of troops in excess of the Regular Army, the President may, under such regulations as he may prescribe, call into active service for the period of the emergency, unless sooner relieved, the whole or any part of the National Guaru of the United States: Provided, That when necessary in order to execute the laws- of the Union, to suppress insurrections, or to repel invasions, the Presi'dent may, in his discretion and unuer the same conditions as permit the calling out of the National Guard of the several States or Territories, call into ~ctiye service the whole or any part of the National Guard of the United States to serve solely within the United States, for such period as he may direct. Officers and enlisted men called into active service under the terms of this section shall have the same pay and allowances as officers and enli. ted men of the ~egular Army of the same grades and same prior service.

" SEC.-. Maintenance of troops by the States: The consent of Congress is hereby given to each of the States to maintain troops in time of ·peace: Provided, That the State concerned shall first make provision therefor by legislative enactment in no respect contrary to, and in all respects in harmony with, the provisions of this act: Provided tu'rther, That no troops shall be thus maintained except such as belong to the units of the National Guard of the United States comprised within the limits of such State: Provided further, That the States and Territories in time of peace, and subject to such regulations as . to expense and property accountability .as may be prescribed by the President, shall be entitled to use as State or Territorial troops under the direct orders of the governor of the State or Territory, and for such purpose as State or Territorial militia might legally be used, so much of the National Guard of the United States within their respective borders as has been enlisted in the troops of the State or Territory and commissioned by the governor thereof in accordance with the terms of this act and as is not at the time in active service under a call by the President: Provided f'urther, That nothing contained in this act shall prevent the organization and maintenance by the States and '.rerritories of State or J'erritorial militia, State police, or State constabulary.

" SEc. -. Pay for the National Guaru of the United States: Captains and lieutenants belonging to organizations of the National Guard of the United States shall receiYe compensation at the rate of one-thirtieth of the monthly ba e pay prescribed for officers of the Regular Army of their grades for each regular drill or other period of instruction authorized by the Secretary of War, not exceeding five in any one calendar month, at which they shall have been officially present for the required period, and at which not less than 50 per centum of the commissioned strength and at least 60 per centum of the enlisted strength attend and participate for at least one and one-half hours. Captains commanding organizations shall re-

1920. CONGR.ESSION AL RECORD-HOUSE. · 7267 ceive $240 per annum in addition to the drill pay hei·eill prescribed. Officers above the grade of captain shall receive not more than $500 per annum, and officers below the grade of major not belonging to organizations shall receive not more than four-thirtieths of the monthly base pay of their grades for satisfactory performance of their appropriate duties, under. such regulations as the Secretary of War may prescribe~

" Each enlisted man belonging to an organization of the National Guard of the United States shall receive compensation at the rate of one-thirtieth of the initial monthly pay of his grade in the Regular Army for each drill ordered for his organization at which he is officially present, and in which he participates for not leSs than orie and one-half hours, not exceeding five in any one calendar month; but no enlisted man shall receive any pay under the provisions of this section for any month in which he shall have attended less than 60 per centum of the drills or other exercises prescribed l for his organization . . Periods of actual military duty equivalent to the drills herein pre~ribed may be accepted in lieu of such drills when so provided by the Secretary ' of "War. Pay under the provisions of this section shall not accrue to any person during a period when he shall be lawfully entitled to the same pay as a member of the Regular Army of corresponding grade.

"HEc. -. The National Guard of the United States subject to laws· governing the Regtilar Army: The National Guard of the United States, except when on duty as State troops pursuant to orders from competent ·State authority, shall be subject to the laws and regulations ·governing the Regular Army, so far as such laws and regulati(Jns are applicable to officers and enlisted men whose permanent retention in active military service is not contemplated by existing law."

. JULIUS KAHN, D. R. ANTHONY, Jr., JoHN C. McKENziE, S. HUBERT DENT, Jt·.,

Managers on the part of the House.

1\lr. KAHN. l\Ir. Speaker, I '\\ithdraw my motion to recede and concur in the Senate amendment.

The SPEAKER. The gentleman from California withdraws his motion to recede and concur in the Senate amendment.

~:\."'TENSION OF _ BEMARKS.

Mr. TINCHER. Mr. Speaker, I ask leaYe to revise and extend the remarks which I made on the farm-loan bill this afternoon.

The SPEAKER. Is there objection? [After a pause.] The Chair hears none.

Mr. JOHNSON of South Dakota. 1\lr. Speaker, I ask .unanimous consent to extend my remarks in the REcono on vocational training in the Marine Corps.

The SPEAKER. Is there objection? [After a pause.] The Chair heai·s none.

Mr. CRAMTON. Mr .. Speaker, a parliamentary inquiry. The SPEAKER. The gentleman will state it. Mr. CRAMTON. Do I understand that the motion submitted

some time ago by the gentleman from California [Mr. KAHN] will appear in the REconD, notwithstanding it has now been withdrawn by him?

The SPEAKER. Yes. -· Mr. JUUL. Mr. Speaker, a parliamentary inquiry.

The SPEAKER. -The gentleman will state it. : Mr. JUUL. Can a request for unanimous consent be repeated after it has been denied, within a reasonable time?

The SPEAKER. Certainly. . Mr. J'UUL. Then I make a unanimous-consent request that

the gentleman from Kansas [l\1r. ANTHONY] be permitted to print the two documents he referred to. _ The SPEAKER. That has already been granted.

Mt._ JUUL. I beg the Chair's pardon ; I did not know that.

ENBOLLED B'Q:,L SIGNED.

The SPEAKER announced his signature to enrolled bill of the following title : · S. 1699. An act for the retirement of emplo~·ees in the classified civil service, and for other purposes.

ADJOURNMENT.

Mr. 1\IONDELL. l\Ir. Speaker, I move that the House do now adjourn.

The motion was agreed to ; accordingly ; (at 5 o'clock and 20 minutes p. m.) the House adjourned until Wednesday, May 19, 1920, at 12 o'clock noon.

LIX--457

EXECUTIVE COl\Il\IUNICATIONS, ETC. Under clause 2 of Rule XXIV, executive communications were

taken from the Speaker's table and referred as follows: 1. A letter from the Secretary of the Treasury, transmitting

supplemental estimate of appropriation required by the Civil Service Commission during the period l\1ay 1G, 1920, to June 30, i921, to maintain and keep current the records of the Joint Commission on Reclassification of Salaries (H. Doc. No. 768) ; to the Committee on Appropriations and ordered to be printed.

2. A letter from the Secretary of the Treasury, transmitting a copy of a communication from the Secretary of War, submitting a supplemev-tal estimate of appropriation required by the Ordnance Department of the Army for construction of permanent storage facilities on the Fort Wingate Military ReserYation, N. Mex. (H. Doc. No. 769) ; to the Committee on Appropriations and ordered to be printed.

3. A letter from the Secretary of the Treasury, transmitting a supplemental estimate of appropriation required by the Tt·easury Department for expenses of collecting the revenue from customs during tlte fiscal year 1920 (H. Doc. No. 770) ; to the Committee on Appropriations and ordered to be printed.

4. A letter from the Secretary of the Treasury, transmitting a list of judgments rendered by the Court of Claims, which have been presented to this department and require an appropriation for their payment (H. Doc. No. 771) ; to the Committee on Appropriations and ordered to be printed.

5. A letter from the Secretar·y of Commerce, transmitting report in connection with useless papers to be sold for waste ; to the Committee on Disposition of Useless Executi.ve Papers.

6. A letter from the Secretary of 'Var, transmitting, witll a letter from the Chief of Engineers, report on preliminary examination of Waccamaw River, N. C. and S. C.; to the Committee on Ri ''ers and Harbors.

REPORTS OF COMMITTEES ON PUBLIC BILLS .AJ'..l) RESOLUTIONS.

Under clause 2 of Rule XIII, bills and resolutions were se\'erally reported from committees, delivered to the Clerk, anti referred to the several calendars therein named, · as follow::;:

Mr. GRAHAM of Illinois, from the Select Committee on Expenditures in the 'Var Department, submitted a report (No. 998) on war expenditures-ordnance, which said ·report was referred to the House Calendar. ·

Mr. SMITH of Michigan, from the Committee on Labor, to which was referred the bill (H. R. 544) to proYide for the establishment of a national employment bureau in the Departm{mt ·of Labor, reported the same with amendments; accompanied by a report (No. 999), which said bill and report were referred to the Committee of the Whole House on the state of the Union.

CHANGE OF REFERKL'iCE. Under clause 2 of Rule XXII, the Committee on Invalid Pen

sions was discharged from the consideration of the bill (H. It. H079) granting a pEmsion to l\Irs. A. 1\I. Hughes and the same was referred to the Committee on Pensions.

PUBLIC BILLS, RESOLUTIONS, AND l\IEMORIALS. Under clause 3 of Rule XXII, bills, resolutions, and memorials

were introduced and severally referred as follows: ·ny Mr. SUMMERS of \Vashington: A bill (H. R. 14119) fix:

ing rates of postage on certain kinds of printed matter; to the Committee on the Post Office and Post Roads.

By 1\fr. 1\."'REIDER: A bill (H. R. 14120) authorizing the Secretary of War to donate to the city of Lykens, Pa., one German cannon or fieldpiece; to the Committee on Military Affairs.

Also, a bill (H. R. 14121) authorizing the Secretary of w·ar to donate to the town of Wiconisco, Pa., one. German cannon or fieldpiece to the Committee on Military Affairs.

By 1\Ir. JAMES: A bill (H. R. 14122) to authorize the sale of a portion of the Copper Harbor Range Lighthouse ReserYation, Mich., to Houghton and Keweenaw Counties, l\lich.; to the Committee on Interstate and Foreign Commerce.

By Mr. HICKS: A bill (H. R: 14123) to create a bureau of aeronautics in the Department of the Navy; to the Committee on Naval Affairs.

By Mr. O'CONNELL: A bill (H. R. 14124) to amend·. the Judicial Code, being the ·act approved March 3, 1911, an net to modify, revise, and amend-the laws relating to ~ht: -judiciary, bY, inserting therein a new section, to be numbered 24-a, in relation to the original jurisdiction of district courts; to the Com-mittee on the Judiciary. ·

7268 CON.GRESSION AL RECORD-SEN ATR ~fAy 19,

PRIVATE BILLS AND RESOLUTIONS. Under clause 1 of Rule XXII. private bills and resolutions

were introdueed and severally referred as follows: By Mr. BEGG ~ A. bill (H. R. 14125) granting a pension to

George Swa!Ser; to the Comm.ittee on Pensions. By 1\fr. CALDWELL: A bill (H. R. 14126) for the relief of

James J. Shea ; to the Committee on Claims. · By 1\lr. CRAMTON: A bill (H. R. 14127) granting an increase

of pension to Emma M. H. Haas; to the Committee on Pensions. By Mr. HUSTED: A bill (H. R. 14128) granting a pension to

Mary Margaret Horton ; to the Committee on Invalid Pensions. By JUr. KLECZKA.: A. bill (H. R 14129) for the relief of

Bill Vassel; to the Committee on Claims. 1

By Mr. LONERGAN: A. bill (H. R. 14130) grap.ting an in· crease of .pensiqn to Margaret Moorehead; to the Committee on Pensions.

By 1\lr. McARTHUR: A. bill (H. R. 14131) granting an in· crease of pension to Harry L. Wilson; to the Committee on Pensions.

By Mr. RAINEY of Alabama: A bill (H. R. 14132) granting a pension to Wilburn. Doyle; to the Committee on Pensions.

By Mr. ROMJUE: A bill (H. R. 14133) for the~ relief of Erasmus J. Booth; to the Committee on Military Affairs.

By 1\fr. TAYLOR of Tennessee: A bill (H. R. 14134) granting a pension to William H. ·waggoner; to the Committee on Pensions.

PETITIONS, ETC. Under clause 1 of Rule XXII, petitions and .papers were laid

on the Clerk's desk and referred as follows: 3698. By 1\1r. BABKA: Petition of Lodge No. 439, Interna

tional Association of Machinists, of Cleveland, Ohio, fav.oring amnesty for political prisoners; to the Committee on the Judiciary.

3699. By Mr. COPLEY: Petition of Private Soldiers and Sailors' Legion, Washington, D. C., favoring bonus of $500 for ex-soldiers; to the Committee on Ways and Means.

3700. By Mr. CULLEN: Petition of Parents' Association of the Public Schools, Brooklyn, N. Y., favoring increased salaries for postal employees; to the Committee on the Post Office and Post Roads.

3701. By 1\Ir. FULLER of Illinois: Petition of Jackson Bros. & Co., of Chicago, Ill., protesting against the proposed tax on sale of bonds and stocks; to the Committee on Ways and Means.

3702. Also, petition of the Malone Shoe Co., of La Salle, ill, opposing the passage of the McNary bill, to stamp the price on the sole of each pair of shoes; to the Committee on Interstate and Foreign Commerce.

3703. Also, petition of Friends of Irish Freedom, of Rockford, Ill., favoring the passage of the 1\Iason bill for the recognition of the Irish republic; to the Committee on Foreign Affairs.

3704. By _rr. HERSEY: Petition of George E. Cooper and 17 other residents of Bangor, Me., representing the Private Sol<liers and Sailor ' Legion of Maine, urging a cash bonus of $500 for ex-service men, to be paid according to terms of House bill 10373; to the Committee on Ways ancl Means.

3705. By 1\fr. JOHNSTON of New York: Three petitions of citizens of New York, favoring increased salaries for postal employee ; to the Committee on Ways and Means.

3706. By 1\olr. LINTHICUl\1: Petition of Tidewater Portland Cement Co., R. E. L. Russell, and E. F. Kirwan, all of Baltimore, Md., re soldier bonus and proposed. sales ta:s:.; to the Committee on Ways and Means.

3707. ALso, petition of Arthur E- Poultney, of Baltimore, Md., re Senate bill 40 9; to the Committee on Interstate and Foreign Commerce.

3708. Also, petition of residents of Baltimore, Md., favoring postal increase; to the Committee on the Post Office and Post Roads.

3709. Also, petition of residents of Baltimore, Md..:, favoring passage of l\Iason bill ; to the Committee on Foreign Affairs.

3710. By Mr. MONAHAN of ·wisconsin: Resolution of Woman's Club, Madison, Wis.,. favoring the Smith-Towner educational bill; to the Committee on Education.

3711. By l\lr. O'CONNELL: Petition of International Wood Carvers' A ociation, fa-voring granting of bonus to relatives of soldiers who have died since discharge; to the Committee on Ways and l\1ean .

3712. Also, pe_tition of the R.oessler & Has Iach€1' Chemical Co., of New York, in connection. wii;h postal zone rat-es for advertising matter; to the Committee on the Post Office and Post Roads. · . .

3713. By ~lr. RAKER: Petition of National . O>uncil of the Frilmds of Irish Freedom, favoring freedom of Ireland; to the Committee on Foreign Affairs.

3714. Also, petition of the Fishing Gazette, of New York, protesting against the cutting of the appropriation for the :fisheriesindustry work in the Bureau of Fisheries, and urging adequate a:I)propriation_ for same ; to the Committee on the Merchant Marine and Fisheries.

3715. Also, petition of sundry citizens of Houston, Tex., favoring the passage of House bill 1112 ; to the Committee on the Judiciary . .

3716. By Mr. RANDALL of California: Petition of Private Soldiers a'::ld Sailors' Union, of Los Angeles, Calif., favoring the passage of House bill 10373, soldiers' benefit legislation; to the Committee on Ways and Means.

3717. By Mr. ROGERS : Petition of Littleton Post, No. 249, Department of l\1assach1L'5etts, favoring immediate passage of veterans' beneficial legislation at this session of Congress; to the Committee on Ways and Means. .

3718. By Mr. ROW AN: Resolution adopted by the Holy Name Parish of the city of New York favoring the recognition of the Irish Republic ; to the Committee on Foreign Affairs.

3719. Also, resolutions adopted by the Central Republican Club of nineteenth assembly district of New York, urging Congress to increase the salruies of postal employees and that this action be taken before Congress recesses ; to the Committee on the Post Office and Post Roads.

3720. Also, resolutions adopted by the Republican Clnb of the thirteenth assembly district of New York urging Congress to increase the salaries of postal employees and that this action be taken before Congress recesses; to the Committee on the

· Po t Office and Post Roads. 3721. ~Y Mr. TINKHAl\1: Petition of Irving W. Adams Post,

No. 36, American Legion, Roslindale, Mass., favoring soldierbonus legislation; to the Committee on Ways and M:eans.

3722. Also, petition of national council of Friends of Irish Freedom, of New York, favoring the freedom of Ireland; to the Committee on Foreign Affairs.

3723. Also-, petition of Pilgrim Publicity Association of Massachusetts opposing the passage of House bill 12976, for a tax on advertising; to the Committee on Ways and Means.

SENATE. WEDNESDA-Y, May 19, f9~0.

The Senate met at 11 o'clock a.. m. The Chaplain, Rev. Forrest J'. Prettyman, D. D., offeredJ the.

following prayer :

Almighty God, we come to face the new spiritual problems of to-day. While our thoughts will be engaged in the routine matters of our daily task there shall be within us, as in every day, the conflicts, the aspirations, and th~ decisions of great spiritual events in our spirits. We pray that Thy hand may guide us, that Thy truth may be our law, Thy honor our glory, that to-day we may follow the light of Thy truth as it shines upon our pathway. For Christ's sake. Amen.

NAMING A PRESIDING O...'i'FICER.

The Secretary (George A. Sanderson) read the follo"ring communication:

To the Senate:

UNITED STATES Smi.ATE, PRESIDENT PRO TEMI'OR'E,

TVa:sh·i·ngton, D. 0., May 19, 1920.

Being temporarily absent from the Senate, I appoint Hon. THOMAS STERLING, a Senator from the State of South Dakota, to perform tlle duties of the Chair this legislative day.

ALBERT B. CUMMINS, President pro tempore.

Mr. STERLING thereupon took the chair as Presiding Officer for the legislative day.

The Reading Clerk proceeded to read the Journal of yesterday's proceedings, when, on request of 1\:Ir. McCuMBER and by unanimous consent, the further reading was dispensed with and the Journal was approved.

CALLING THE ROT..L~

Mr. KING. Mr. President, I suggest the absence of a quorum. The PRESIDING OFFICER. The Secretary will call the roll. The Reading Clerk called the roll, and the following Senators

answered to their names : Ball .r ones, N. Mex. Calder .Tones, Wash. Chamberlain Kellogg Comer Kenyon Dial Keyes Fernald King Gay Knox Hale McCumber Harris McNary Harrison Nelson

New Overman. Page Phipps Pittman Ransdell Robinson Sheppard Sherman Simmons

Smith,Md. Smoot Spencer Sterling Underwood Wadsworth. Walsh, Mass. Warren Watson Williams

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