For instance, the department of water and power in the city of Los Angeles can enter into a contract for the purchase of any kind of material necessary or useful in the conduct of its business, but it can not negotiate a loan. It can enter into a contract and agree to pay for material on deferred payments, conducting a self-liquidating and revenue-producing utility, water and power. The CHAIRMAN. Thank you for being so brief and to the point. We are glad to get your suggestions. Senator GORE. I would like to put one remark on the record. If Los Angeles is knocking at the door of the Federal Government, asking for millions of dollars, and San Francisco asking for $75,000,000, every other city and every other community will be here. Oklahoma City had a flood the other day, rendering 3,000 people homeless. I want Oklahoma to get in on this also, and I reserve the right for Tulsa to get in if she should by any chance or possibility desire to get in. I just wanted to illustrate the door that we are opening here. If you open it an inch, it will be taken off the hinges. The CHAIRMAN. The committee will now go into executive session. Mr. MARSH. May I ask a question, Mr. Chairman? The CHAIRMAN. Is it pertinent to this measure? Mr. MARSH. Yes. Would the committee hear Mayor Curley, the mayor of Boston? The CHAIRMAN. It is very difficult to open up that question. I have already had requests from other mayors and have had to turn them down because of the limited time. Mayor Curley is a friend of mine, and I would like to grant him a hearing if I could. There are a good many mayors in town Mr. MARSH. They do not feel responsible for the occasion which brings them here. The CHAIRMAN. The committee will now go into executive session. (Whereupon, at 4.10 o'clock p. m., the committee proceeded to the consideration of other matters in executive session.) UNEMPLOYMENT RELIEF SATURDAY, JUNE 11, 1932 UNITED STATES SENATE, COMMITTEE ON BANKING AND CURRENCY, Washington, D. C. The committee met at 10.30 o'clock a. m., pursuant to call, in the Interstate Commerce Committee room, Capitol, Senator Peter Norbeck presiding. Present: Senators Norbeck (chairman), Brookhart, Goldsborough, Couzens, Townsend, Blaine, Fletcher, Wagner, Barkley, and Bulkley. The CHAIRMAN. The committee will come to order. We will hear Mr. George H. Houston. STATEMENT OF GEORGE H. HOUSTON, PRESIDENT BALDWIN LOCOMOTIVE WORKS, PHILADELPHIA, PA. The CHAIRMAN. Mr. Houston is here in the interest of a certain section of the Barbour bill, as I understand it, and he may proceed in his own way to state his case. The understanding was that each of two witnesses here would require half an hour. The other witness is Mr. Muir, who will follow Mr. Houston. Will you state your name, address, and occupation for the record, please? Mr. HOUSTON. My name is George H. Houston; I am president of the Baldwin Locomotive Works, Philadelphia, Pa. The Secretary of the Treasury presented a memorandum in his testimony to this committee some days ago in which the source of unemployment was discussed and in which it was endeavored to show that the greater part of the unemployment existing in the United States to-day arises from the practical cessation of capital goods production. This memorandum defined capital goods as those products of industry that enter into the facilities for industrial production, transportation, power generation and transmission, together with materials for building construction, commercial and residential. In that discussion the Secretary did not mention the origin of the memorandum, because it had come to him through channels that did not leave him entirely free to state that I had prepared it; but he asked me to appear to-day and give you any additional information with regard to it that would be of interest to you. Senator COUZENS. What do I understand your position is? 119 Mr. HOUSTON. President of the Baldwin Locomotive Works, and chairman of the Philadelphia Banking and Industrial Committee of the Third Federal Reserve District which has been organized to cooperate with the Federal Reserve Bank in that district. I first wish to present a schedule of the products entering into the item of machinery in this memorandum, which are given at $7,043.000,000 total output for the year 1929. These products include agricultural implements, $258,000,000; cash registers, adding machines, and similar equipment, $110,000,000; electrical equipment, apparatus, and supplies, $2,301,000,000; engines, turbines, tractors, and water wheels, $457,000,000; foundry and machine shop equipment, not classified elsewhere, $2,791,000,000; gas machines, gas meters, water and other liquid meters, $41,000,000; machine tool accessories, $144,000,000; machine tools, $245,000,000; pumps, $164,000,000; refrigerators, mechanical, $162,000,000; scales and balances, $30,000,000; sewing machines and attachments, $45,000,000; textile machinery and parts, $122,000,000; typewriters and parts, $62,000,000; washing machines, ringers, driers, and ironing machines for household use, $82,000,000; windmills and windmill towers, $9,000,000. It will be noticed that some of these might be classified as consumption goods, but most of them are of the class that I have mentioned as going directly into the facilities of production, distribution, and housing. These figures were taken from the statistical abstract of the United States Department of Commerce, pages 835 and 836. I am just presenting the statement to verify those figures. (The statement referred to, headed "Value of Machinery Products of all United States Factories, Year 1929," as reported by the Bureau of the Census was marked Exhibit 1, see appendix page 203.) Mr. HOUSTON. I also wish to present a schedule of construction contracts, mentioned in the memorandum, in the sum of $5,751,000,000, constituted as follows: Residential, $1,916,000,000; commercial, $929,000,000; factories, $546,000,000; public works and utilities, $1,459,000,000; educational, $328,000,000; hospitals and institutions, $152,000,000; public buildings, $121,000,000; religious and memorial, $106,000,000; social and recreational, $140,000,000. These figures are also taken from the Statistical Abstract, 1931, of the Department of Commerce, pages 835-836. The other figures of capital goods production are self-evident and are taken from the Bureau of the Census Reports. (The statement referred to, headed "Construction Contracts Awarded in 37 States as reported by the F. W. Dodge Corporation,' was marked "Exhibt No. 2," see appendix page 203.) Mr. HOUSTON. I next wish to present for your consideration a chart of the index of factory employment in the United States from 1919 to date. It will show the market reduction in employment as compared with the normal. I think it was in terms, Mr. Chairman, of about 70 per cent of normal shortly after the turn of the year. It is now below that. In my studies of the source of unemployment Senator BROOKHART. How do you obtain that normal? Mr. HOUSTON. Those are all established by the Federal Reserve Bank of New York from their own statistics, and I am not prepared to tell you at this moment, although I can get it if you wish it, the origin of that normal; but you will note that the normal line from 1923 through 1928 very closely bisects the line of actual employment. Senator FLETCHER. What is the normal-100? Mr. HOUSTON. One hundred; and it is now down to about 70 per cent of normal. (The chart showing index of factory employment in the United States, referred to and submitted by the witness, was marked “Exhibit No. 3." Mr. HOUSTON. In my study of the unemployment situation I am continually impressed with the fact that certain types of consumption goods show very little reduction in volume Senator FLETCHER. You might mention those types. Mr. HOUSTON. I have mentioned them in this paper, giving 10 or 15 examples and showing the percentage of normal at which the latest records of the Federal Reserve Bank of New York show them now to be operating; and I have here charts of the Federal reserve bank showing the history of these commodities back to the beginning of 1919. I have one here for wholesale grocery sales which are now 105 per cent of normal. It dropped to a low of 88 in the latter part of 1931, and then after the first of the year moved up above normal again. I have called to your attention the very uniform movement of those commodities. (The chart referred to and submitted by the witness, showing wholesale grocery sales in the second Federal reserve district, was marked Exhibit No. 4.” 66 Mr. HOUSTON. The next chart that I would like to present is that for livestock slaughtered. Senator BULKLEY. Did you say that these are all Standard Statistics? Mr. HOUSTON. No, sir; Federal Reserve of New York. Senator FLETCHER. If they are going in, they had better be marked. The CHAIRMAN. You would like to have these in the record, would you not? Mr. HOUSTON. Yes sir; I think it would be well to do so. This chart for livestock shows a ratio of 90 per cent of normal. I am reflecting the latest percentages when I say present. They are some weeks behind at the present moment, but they indicate clearly the trend. (The chart referred to and submitted by the witness, showing index of composite livestock slaughtered, was marked "Exhibit No. 5." Mr. HOUSTON. I would next like to submit a chart showing farm produce, shown to be 97 per cent of normal. Senator COUZENS. What year do you constitute as normal? Mr. HOUSTON. As established by the Federal reserve bank. Here [indicating] is the normal line, and this [indicating] is the fact. You can see how accurately the actual volume was bisected by the normal line. Senator COUZENS. Yes; but what year did that normal take place? Mr. HOUSTON. I am not prepared to define the normal. I have accepted the Federal reserve definition of normal. Senator COUZENS. But they have not stated what year that took place? Mr. HOUSTON. No. I do not think it was established at any one year; I think it is a moving normal. Senator FLETCHER. You mean to say, the price level of agricultural products now Mr. HOUSTON. This has not to do with prices; it has to do with volume. In some of these commodities it has to do with prices. I am not prepared to say which they are, but all of these are expressed in percentages. I was dealing with the volume of business now being carried on in the United States. Senator BROOKHART. About 95 per cent of volume and about 30 per cent of price? Mr. HOUSTON. Yes, sir. Senator BROOKHART. That is, in agriculture, I mean. (The chart showing index of farm produce, referred to and submitted by the witness, was marked " Exhibit No. 6.") Mr. HOUSTON. Here [exhibiting] is a chart of wholesale trade, showing a present volume of 81 per cent. Senator COUZENS. Is that all consumptive articles? Mr. HOUSTON. There is practically no wholesale trade so defined in capital goods, because they do not go through the wholesale channels. Senator COUZENS. They are probably all necessities of life? Senator BULKLEY. It states on the chart, "Grocery, drug, hardware, silk goods, cotton goods." (The chart referred to and submitted by the witness, showing index of wholesale trade, was marked "Exhibit No. 7.") Mr. HOUSTON. The next is a chart of consumption of wheat flour, shown at present to be 82 per cent of normal. Senator BROOKHART. If it were normal there would be no surplus wheat at all? Mr. HOUSTON. I am not prepared to go into that or to answer that.. I do not know. (The chart referred to and submitted by the witness, showing index of wheat flour production, was marked "Exhibit No. 8.") Mr. HOUSTON. The next chart shows newsprint paper at 89 percent of normal. (The chart referred to and submitted by the witness, showing pro-. duction of newsprint paper, was marked "Exhibit No. 9.") Mr. HOUSTON. The next chart shows tobacco, at 77 per cent. (The chart referred to and submitted by the witness, showing index of tobacco products, was marked "Exhibit No. 10.") Mr. HOUSTON. The next chart shows gasoline consumption, 72 per cent, and the next chart shows petroleum refining products 67 per cent. (The chart referred to and submitted by the witness, showing gasoline consumption, domestic demand, was marked "Exhibit No. 11."). |