Darrow Report

Like sentinels at a munition plant in wartime, guards stood watch before the locked doors of the printing office at the Department of Commerce for 18 hours one day last week. Behind the doors political dynamite was in manufacture, the long-awaited report by Clarence Darrow and his special board on the operations of NRA as they affected the small industrialist and businessman was being mimeographed. Also being mimeographed under guard were the dissenting report of John F. Sinclair of Manhattan, newspaper financial columnist and member of the Darrow board, and the caustic retort of General Johnson.

At the zero hour 150,000 words of controversy were dumped upon the public. Vitriolic bomb shells of recrimination burst in the camps of Johnson and Darrow while Sinclair's trench mortar added to the loud discord. By and large the U. S. took the bombardment without flinching.

Focus of the fight was: 1) a mass of detailed criticism of particular NRA codes from the Darrow artillery; 2) an equally detailed counter-volley from NRA's Counsel, Donald Richberg. Mr. Darrow was for a strong Leftward swing by NRA toward Socialism. General Johnson stoutly defended the patchwork job he had done for Capitalism. Mr. Sinclair engaged in a flanking fire upon the Darrow board's methods and conclusions. The gist of their viewpoints:

Mr. Darrow: The choice is between monopoly sustained by government, which Is clearly the trend in the National Recovery Administration, and a planned economy, which demands socialized ownership and control, since only by collective ownership can the inevitable conflict of separately owned units for the market be eliminated in favor of planned production. There is no hope for the small businessman or for complete recovery in America in enforced restriction upon production for the purpose of maintaining higher prices. The hope for the American people . . . lies in the planned use of America's resources following socialization.

General Johnson: Stripped of shadowy verbiage, this means that the choice of the American people is between Fascism and Communism, neither of which can be espoused by any one who believes in our democratic institutions of self-govern-ment; nor can any public official who has taken an oath to defend the Constitution of the United States adopt or officially advocate such a program.

Mr. Sinclair: We have heard largely one side of the controversy--that of the complainant. . . . The fatal weakness of our Work up to this time . . . centres in not having secured at the very start of our investigation, a thoroughly competent professional staff of men--experts in code law and economic research. . . . But the majority of the Board has not seen fit to approach this investigation from the point of view of careful research and analysis. . . . We have received several thousand complaints . . . from small businessmen who claim they are being strangled under Various codes. . . . Most of the questions raised by the vast majority of complainants do not present a fundamental question which concerns monopoly. . . . Such complaints in our opinion could and should be handled within NRA itself.

Typical of the controversy over a dozen codes on which the Darrow board heard complaints of "the little fellow'' was that concerning the cinema industry.

Darrow Criticism: Small producers were not allowed to share in making the code. Large producers make small exhibitors agree to take short films and newsreels in order to get the feature pictures from which most profits are made. Large producers demand a big share of small exhibitors' gross receipts, sometimes 35% for popular pictures, and dictate the days on which pictures shall be shown. The code gives distributors the right to fix admission prices. Many independent theatres cannot get popular pictures until their competitors have largely exhausted such pictures' drawing powers.

Richberg Answer: The code was assented to in writing by 9,039 members of the industry. Twenty-one complaining witnesses were heard by the [Darrow] board, including 15 out of 7,500 theatre operators. In contrast to 14 hours and 20 minutes of "hearings" by the board, NRA spent over 1,200 hours on the drafting of the code, heard 206 witnesses and obtained a code acceptable, not only to the industry, but approved by all the advisory boards of NRA. The board acted solely on the basis of a disorderly mass of unsworn and largely false testimony of a few malcontents, covering only eight out of 288 subdivisions of the code, and arrived at sweeping conclusions founded on obvious ignorance of the code, of the industry and the law. In sending the report to the White House General Johnson used his best invective in a parting shot:

". . . A more superficial, intemperate and inaccurate document than the report, I have never seen. . . . This board is not in good faith. It assumes, after a few hours of cavalier inquiry and prejudiced and one-sided testimony, to pass on codes upon which we have spent days and weeks of inquiry and negotiation. . . . This board has missed a great opportunity for a real public service. As it is now acting, it is of no service to anybody--it is a political sounding board. . . . I recommend that it be abolished forthwith."

Next day as General Johnson made public a letter he had written to Senator Borah last December promising to welcome and heed the Review Board's findings, the Board served notice that it would issue another report this week showing "even worse" conditions.

What the result of this biggest NRA fire and counterfire to date would be, Washington had to wait and see. How the President felt about the Darrow report was quickly demonstrated. The White House disclosed that the Darrow board will soon cease to exist because when the board was created the President. Mr. Darrow and General Johnson agreed that it should finish its work by May 31. This announcement was a surprise to some members of the Board. No surprise was it to most politicians. Since President Roosevelt could not suppress the Darrow report without inviting charges that he was treating it as President Hoover had treated the Wickersham report on Prohibition, he had but two choices: 1) to dissolve the Darrow Board or 2) to continue providing Mr. Darrow with a free forum from which to attack the Administration's Recovery program and expound his own Socialistic ideals.

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