[S. Rept. 583, 79th Cong., 1st Sess.] ASSURING FULL EMPLOYMENT IN A FREE SEPTEMBER 22, 1945.-Ordered to be printed Mr. WAGNER (for himself and Mr. TOBEY), from the Committee on Banking and Currency, submitted the following REPORT [To accompany S. 380] The Committee on Banking and Currency, to whom was referred the bill (S. 380) to establish a national policy and program for assuring continuing full employment in a free competitive economy through the concerted efforts of industry, agriculture, labor, State and local governments, and the Federal Government, having considered the same, report favorably thereon with an amendment in the nature of a substitute, and recommend that the bill as amended do pass. I. INTRODUCTORY STATEMENT In reporting the full employment bill, we are fully conscious of the historic character of this legislation The full employment bill deals with the central economic problem of our time-the problem of providing employment opportunities for all Americans able to work and desiring to work. Failure to solve this problem, as pointed out in part II of this report, would shatter our social and political institutions, undermine the health and wellbeing of our people, and wreck our hopes for avoiding a Third World War. Part II explains the basic principles of the full employment bill and indicates how they are designed to meet our fundamental needs for an intelligent and cooperative attack upon the problem of unemployment. Like the San Francisco Charter, the bill cannot be effective without continuous and conscientious implementation-for, like the Charter, it is limited to the enunciation of general policy and the creation of machinery and procedures. This question is discussed in part IV. As indicated in part V, the principles of the bill have received the enthusiastic support and endorsement of leaders and individuals in all walks of life. As outlined in part VI, the major opposition to the bill comes from those who believe that continuing full employment cannot be achieved under our system, who are afraid of the effects of sustained full employment, and who think that the Government's responsibility should be limited to the relief of distress. A number of proposals for weakening amendments to the bill are discussed in part VII. If the bill is not to be converted into a meaningless scrap of paper, it is essential that such amendments be rejected. The bill, as reported, adequately meets all valid criticisms. The changes that have been made are explained in part VIII. No further changes are needed. Accordingly, we strongly urge the early enactment of this bill. We are convinced that its passage, without crippling amendments, will inspire business, labor, agriculture, and above all, the men and women who fought and won the war, with a new confidence in America's ability to fight and win the peace. II. THE NEED FOR THE FULL EMPLOYMENT BILL A. THE UNEMPLOYMENT DANGER The history of employment and production in the United States is a record of boom and bust. It is a record of brief periods of growth and development culminating in peaks of prosperity that gave way to disastrous collapse. The shift from an agrarian economy where each family was largely self-sufficient to a modern industrialized economy has brought greater vulnerability to economic storms. The very wealth of our modern industrial state with its comforts and luxuries has made us more susceptible to recurrent collapse. Witnesses before the subcommittee and correspondents whose letters are in the Record emphasized that the present postwar outlook is as unstable as our past experience. Some of them expect an immediate postwar boom. Some think we will not immediately recover from the dislocation period but will slip into an undertow of deflation. Almost all agree that unless appropriate Government action is taken, there is a prospect of ultimate collapse. Temporary dislocation, of course, cannot be avoided; it can hardly result in less than 6 or 7 million unemployed toward the end of the coming winter. But within a few months there will be a critical point at which we shall face (1) the danger of boom and bust, or (2) the danger of stagnation. In contrast to these two dangers, there is the possibility of rapid recovery during 1946 and 1947 and a steadily expanding level of production, based upon full employment, during the following years. This is the goal toward which we must strive. This is the road that we can, and must, travel. Yet in the absence of conscious, rational action, it is to be expected that we shall have either a recurrence of boom and bust or that we shall sink steadily into stagnation. These twin dangers cannot be coped with merely by a program dealing with the immediate transitional problems of conversion from war to peace. In fact, the transitional problems cannot be adequately handled unless, at the same time, we come to grips with the long-range problem of maintaining full employment and full production. It was for these reasons that the Honorable John W. Snyder, Director of War Mobilization and Reconversion, appeared before your committee and called for the enactment of the full employment bill as a means of helping the immediate reconversion program. Stated Mr. Snyder: My task is the one of redirecting from war to peace the four main resources from which the health of our economy springs-our manpower, our raw materials, our plant and equipment, and our managerial know-how. It would be a useless task if it did not have as its goal full production and employment— a high standard of living and long-range stability. Therefore, the mechanism by which we will attain our long-range goal should be established now. If this is done, present policies can readily be integrated with long-term measures and the new machinery can be functioning effectively by the time we have finished our immediate task of reconversion. B. THE THREAT TO OUR INSTITUTIONS Unemployment and the fear of unemployment are deadly threats to American social institutions and to the American way of life. Witnesses before the subcommittee emphasized this from many viewpoints-religious, social, economic, and political. They stated gravely and emphatically that such intolerable conditions of indignity and frustration, if they occur again, may produce drastic changes in our economic and social institutions. Ten years ago it would have been superfluous to state these things. Today it appears that many have forgotten the sheer, stark misery and despair that stalked our land during the last depression. It seems therefore pertinent to restate these somewhat unpalatable truths as they have been set before us in recent weeks by men and women whose counsel commands our respectful attention. 1. Mass misery, frustration, despair The memory of the 1930's is fresh in the minds of those who are in close contact with the people and especially those who know the minds and hearts of youth. Boys and girls who were 10 years old at the time of the collapse of 1929 are now young men and women of 26, many of them members or veterans of the armed services. They have not forgotten that their formative years were spent in a condition where there were not enough opportunities to go around. Witnesses in responsible positions recalled experiences that dramatized this living memory of depression. Spokesmen for veterans recalled the bonus march of 1932. Farm-organized people recalled foreclosures where the sheriff was intimidated by embattled neighbors. Businessmen recalled the bankruptcies. Public officials concerned with the problems of youth reiterated the impossible situation they faced when they could not convey to their young people a feeling of confidence and hope. 2. 15.000.000 veterans During World War II there have been 15,000,000 Americans who have served their country in the armed services-about one-fourth of the total postwar labor force. In the Selective Training and Service Act (sec. 8) Congress took action to guarantee the right of any drafted worker to return to his former employment. It has been brought to the attention of your subcommittee that this congressional guarany is in danger of being frustrated because of the lack of confidence, on the part of veterans and civilians alike, that there will be jobs for all. Already, there are the makings of a sharp conflict over a dwindling supply of jobs. The former Administrator of Retraining and Reemployment, Brig. Gen. Frank T. Hines, in his report to the committee of April 30, 1945, endorsing the full employment bill, warned of "the potentiality of difficult and grave consequences of cleavage along this line **** In the same report, he also pointed out that, "continuing full employment would very largely dissipate or entirely eliminate this risk." But our obligation to returning veterans cannot be limited to guaranties of return to their former employment. Many jobs formerly held by veterans have vanished. Many veterans will be newcomers to the labor force. This means that all veterans must have job opportunities-if not at former jobs, then at new jobs. Yet if we attempted to provide jobs for all veterans without providing jobs for civilians as well, we would sow the seeds of conflicts between veterans and nonveterans, and would also frustrate the objective of jobs for veterans. Our obligation to veterans can be discharged only by assuring all our people that the American economy will avoid the twin dangers of boom and bust and economic stagnation. It can be discharged only by the assurance of sustained employment opportunities for all who are able and willing to work. 3. The family Unemployment and the fear of unemployment are deadly threats to family life which is the very foundation of a civilized society. Where the head of the family, the principal breadwinner, is driven by a feeling of frustration, harmonious family life becomes impossible. The homemaker and her children are forced to seek employment. Young people cannot marry or cannot maintain a proper household with children brought into the world under conditions that will build sound citizenship. 4. Group conflict When there are too few jobs to go around, bitter conflict develops between groups and individuals. Under these conditions, human virtues lose significance. The ethics of society recede to the ethics of the jungle, where "dog eats dog." Racial and personal hates emerge. Group is set against group and class against class. The forces of intolerance and fear come forth in racial and religious conflict. That these grim threats were present in the 1930's and will stalk the land again if we have another depression was stated soberly by responsible witnesses before the subcommittee. 5. Social and political institutions In despair and frustration the people lose their ability to weigh social and political values. What price tradition to a starving man? We cannot expect unwanted youth to respect our cherished institutions. No group or class is exempt from the gnawing attrition of a realization that society has no place for it. Unemployment, therefore, has always been looked upon as a golden opportunity for demagogs and for enemies of our established order. In Germany the rise of the Nazi Party during the 1920's and early 1930's closely paralleled the growth of unemployment. In 1928 unemployment in Germany amounted to less than 2,000,000, and Hitler had only 108,000 followers. By 1933, when unemployment had soared to more than 4,733,000, membership in the Nazi Party had leaped to 3,500,000. It was in that fateful year that Hitler assumed power in Germany and initiated his program for world conquest. In this connection, we respectfully call attention to the statement submitted to the committee by Prof. James H. Sheldon, administrative chairman of the Nonsectarian Anti-Nazi League. In his statement, Professor Sheldon pointed out that Every evidence indicates that the known leaders of Nationalist, anti-Semitic, anti-Catholic, Ku Klux Klan-like and other subversive movements in this country are looking forward to a possible period of unemployed defense workers and jobless veterans as a time for reaping a golden harvest and as Der Tag at which these vile manipulators may fasten their influence upon the American Nation. *** The Nazi or "Nationalist" agitator finds a fertile field for his activities in any group of jobless men or women-and he is always at pains, as his first move toward ensnaring their minds, to promise them money, jobs, and security. His next move is to blame their unhappy condition upon the shortcomings of democracy, or upon some minority or different religious or racial group-whether Jews, Catholics, Negroes, Italians, Mexicans, or whatever group will most conveniently serve as a scapegoat. This propaganda pattern was very clear in the first days of Benito Mussolini's rise to power, and it was developed to its ultimate extreme in Adolf Hitler's climb to the dictatorship of Germany. C. THE THREAT TO OUR ECONOMIC HEALTH 1. The money cost The depression of the 1930's cost in money more than the war debt of World War II. In business volume the depression of the 1930's cost 350 billion dollars; in business profits, corporate and other, it cost 106 billion. In farmers' net income it cost 24 billion. In wage and salary income to workers it cost 175 billion. In the early 1930's banks, railroads, States, and cities were bankrupt. The Federal Government was compelled to step in with money and with guaranty of credit. The RFC loaned billions to private concerns and to States and cities. Huge outlays were made to save the banks, the railroads, and State and local governments. Revenue collections dropped and the national debt increased. There is only one thing that this rich Nation cannot afford-another major depression. The war has left the Federal Government with a huge financial liability in the claims of millions of bondholders. The taxes needed to finance these payments can be collected without hardship only from a full-employment national income. They will be oppressive if income and employment are permitted to drop. 2. The cost in human resources There are various estimates of the number of millions of man-hours lost through unemployment during the depression of the 1930's. Concealed in the unemployment figures are unknown losses through par |