"For Dynamic America"
After Seven Years of New Deal Control. The American depression struck bottom in 1932. The United States could reasonably have been expected to accompany the other major nations of the world into a steady recovery if a drastic political overturn had not then subjected American enterprise to an unpredictable politics and an unworkable economics.
The New Deal Prospectus. The New Deal leadership took over the Government with an air of certainty regarding what our troubles were and what to do about them which, at the moment, raised the hopes and expectations of the people.
The New Deal leadership said we had been drifting. It would give us a planned direction. We were in the grip of depression. It would give us a planned recovery. We were unstable. It would give us a planned stability. We were haunted by widespread unemployment. It would give us a planned re-employment. The living standards of part of our population were indefensibly low. It would give us a planned abundance.
In the light of this prospectus issued to the American people in 1932, the Program Committee has conscientiously audited the actual "state of the nation" after nearly seven years of New Deal control and before the abnormal stimulus of war demands began to blur the evidence of the basic soundness or unsoundness of the Administration's domestic policies.
A Look at the Balance Sheet. Here are typical items in the balance sheet of actual results as they stood in the late Summer of 1939, when conditions reflected the effect of New Deal policies instead of the war-induced upswing.
1) More than 10,000,000 American unemployed.
2) A lower standard of living than a decade ago.
3) The creation of new enterprises virtually at a standstill, the modernization and expansion of existing enterprises deferred.
4) Labor involved in extensive and costly disputes, with its organized ranks torn by civil war, and its annual income lower despite higher hourly wage rates.
5) Farm prices neither stable nor satisfactory, and the basic problems of agriculture no nearer solution than before the Administration's exercise of sweeping controls over farms and farmers.
6) The doors of economic opportunity barricaded to youth by the sluggish condition of American enterprise.
7) Government expenditures, excluding postal receipts and debt retirement, of $9,210,091,000 in 1939 against $3,863,544,000 in 1933.
8) The heaviest tax burden in the nation's history.
9) A national debt doubled by the end of 1939--increased from less than 21 billions at the beginning of the New Deal administration to approximately 42 billion dollars, not including nearly 6 billion dollars of obligations guaranteed by the Federal Government. . . .
The New Deal Misunderstands Economic America. There are many reasons why the New Deal has failed to stimulate, if it has not actually prevented, a sustained revival and healthy expansion of American enterprise. Immaturity of judgment in the timing and drafting of legislation. Inexperienced and inept administration. The use by the executive department of persons, with apparently decisive influence on policy, who clearly, even if honestly, disbelieve in the political system of balanced powers and the economic system of regulated free enterprise. An intolerant and vindictive temper on the part of the New Deal leadership that has depressed the morale of the productive forces of the nation's enterprise. But, important as these factors have been, they are relatively secondary.
The primary reason for the economic failure of the New Deal goes beyond detailed errors in legislation, administration, and the selection of Federal personnel. It lies in the fact that, despite the ideals it has expressed for Social America, the New Deal leadership has almost completely misunderstood Economic America.
It Tried to Promote Social Liberalism with Economic Reaction. It has sought to advance its social liberalism through economic policies which, historically and in their current effect on American enterprise, are profoundly reactionary. In defining certain central policies of the New Deal as reactionary, this Committee is neither juggling words nor attempting to coin an artificial campaign slogan. The record speaks for itself. . . .
It Applied the Brakes to Production. . . . The reason these (New Deal) policies have not worked, and will not work, is that they violate the nature of the productive system we have built up in the United States. This productive system is built for large quantity production. It cannot be run in low gear. It is a system that must be operated for large-volume production, wide distribution, and mass consumption. When either industrial management or government imposes upon it a scarcity policy of fewer goods at higher prices . . . the whole machine stalls. . . . The New Deal leadership began with the assumption that, as far as the private enterprises of its people are concerned, the once expanding dynamic enterprise of America is maturing towards a static economy. . .
It Thought America Was Running Down. When it took over the Government in 1933, the New Deal leadership assumed . . . that, by 1929, the possibility of sustained expansion of the private enterprise of the United States had come to an end.
It based this assumption on four grounds: 1) that the frontier, with its free lands was gone, 2) that the rate of our population growth was slowing down, 3) that the economic plant of the nation was built if not overbuilt, and 4) that there were no new industries in sight of enough potential size to provide the basis for a new phase of prosperity.
This assumption was stated frankly by Mr. Roosevelt, in his Commonwealth Club speech, in San Francisco, on September 23, 1932. . . . "Our task now is not discovery or exploitation of natural resources or necessarily producing more goods. It is the soberer, less dramatic business of administering resources and plants already in hand. . . ."
Defeatism and Reaction in the New Deal. The New Deal leadership has persistently defined its program as one of hope and liberalism. And its propagandizing of its program as hopeful and liberal was sweepingly effective until the actual results of its control of the nation began to be so plainly visible. Now, however, the record shows that, whatever may be said of its ventures in social fields, in the economic field, it has been defeatist in its philosophy and reactionary in its policies. . . .
The Republican Position. The New Deal conception of a limited and lessening outlook for American enterprise and the reactionary policies of economic restriction with which it has sought to implement this conception should be decisively rejected.
Its own economic inquiries and the results of responsible research available to it have convinced the Program Committee that there are no defensible grounds for the New Deal assumption that our private economy has struck a permanent decline in the volume of investment and employment. . . .
The Committee is convinced, not by wishful thinking or blind optimism but by the facts it has assembled and analyzed, that American enterprise can expand more, offer more investment opportunities for savings, provide more jobs for workers in factories and on farms, and create more profitable outlets for the energies of the people generally in the next twenty-five years than it did in the twenty-five years before 1929. . . .
Better Frontiers Than Ever. In the first instance, it is not true that the passing of our western frontier means an inevitable shrinkage of our enterprise. For more than half a century our economic frontiers have been more fruitful than our geographical frontier in providing investment opportunities for savings, jobs for workers, markets for the products of our farms, and outlets for the energies and genius of the people generally. . . . And there are still millions of acres in the United States that could support from twice to ten times the number of people now settled upon them if and when the need for their more intensive use arises. We still have this frontier. The passing of the frontier is a much overworked factor in a much over-simplified political thinking.
Slower Population Growth Does Not Mean Stagnation. . . . The rate of our population growth is slowing down, but . . . through all the rise and fall of rate of population growth, an actual growth of population has taken place. . . . The National Resources Committee of the present Administration estimates that from 1930 to 1940 we have realized a 7.5% increase in population. This is an increase of 9,218,000. Whatever may be happening to the rate of population growth, here are over nine million more human beings American enterprise must service than we had ten years ago.
... As far as a spur to economic expansion is concerned, the unsatisfied wants of an existing population are just as real as the elementary needs of a new population being born. . . .
To assume that a slow growing population heads the national economy towards stagnation has no justification in fact. It is significant that the most impressive housing developments of recent years have taken place in nations with slow growing or almost static population--notably Great Britain and Holland. This is significant for us because housing can mean to American economic life, in the next twenty-five years, what the automobile industry meant to the last twenty-five years. And better housing is but one of a long array of unsatisfied wants that we can take steps to meet if we can only unfreeze the fountains of investment and enterprise.
The Nation's Plant is Underbuilt. . . . Even when operating at its highest level of production, our industrial plant was not producing enough goods and services to provide a uniformly high standard of living for 130,000,000 Americans.
... A large part of our industrial plant is today obsolete as a result of the rapid technological advance since 1929.
We have not made the normal replacements to offset ordinary wear and tear.
We have more than 9,000,000 more people for whom goods and services must be produced than we had in 1929. There is already stored up and waiting to be applied a mass of technological improvements which call for the wholesale construction of new buildings and manufacture of new machines. The fact is that our industrial plant is actually underbuilt for the expansion of productive activity which alone can bring us full employment of our manpower, our technical skill, and our economic resources.
If, furthermore, we consider not merely our plant for working but our plant for living, we have in the building and equipping of more than 4,000,000 modern homes in the next five years a field of new enterprise fully equivalent in its possibilities to any which has ever been offered as a challenge to the energy of the American people.
New Enterprise is in Sight. . . . Except in the minds of their creators, great new industries, great enough to write a new chapter in a nation's economic life, are never in sight until their development is well under way. In, say, 1905, the automobile industry was not "in sight" in the sense that political leaders were consciously counting on it as a major factor in the next big industrial expansion.
. . . Scientific and technological results, now awaiting translation into production and distribution, are found in the fields of foods, clothing, plastics, motion pictures, agriculture, chemicals, rubber, transportation, communication, automobiles, airplanes, fuels, housing, lighting, metals, and so on.
On all four counts just examined, the conception which the New Deal leadership has of a limited and lessening future for the enterprises of the American people is defeatist and in defiance of the facts. If this conception of the American future is permitted to go on dominating our national policy, a sense of frustration and futility will increasingly dull the venturesomeness of millions of Americans who are normally courageous and eager to take the risks of pioneering economic developments.
Expansion is Possible If We Do Not Block It. ... Republicans are convinced that a sustained expansion of our enterprise is not only possible but inevitable if public policy does not throw too many obstacles in the way. There are no assignable limits to the possibilities of American enterprise except the limitations we create by our own lack of intelligence and will, or by falling into a fatalism of outlook as the New Deal leadership has done through its misunderstanding of Economic America.
In 1929 we had a national income somewhat in excess of 80 billion dollars. This income, which we once had, is now a goal of which the New Deal talks. But, for 130,000,000 people, a national income of 80 billion dollars is only a little better than $600 per capita. That, in the judgment of the Committee, is no place to stop. Clearly there is room for expansion of our enterprise.
Our Private Economy is Not at a Dead-End. . . . The persistent emphasis of this Committee on the necessity for a free, creative, and expanding life rests upon the conviction that it is the only kind of economic system under which a people has a decent chance to realize a sustained high standard of living. Our economy of free enterprise may not always have distributed justly the relative abundance it has created, but the politically dominated economies have created no abundance to distribute.
The Committee undertakes, in the sections to follow, to chart the course of policy in varied fields of national life in terms of this basic position.
The program then elaborates the Republican position under the heads of FOREIGN RELATIONS, LABOR, FARM, FISCAL, SOCIAL--see p. 17.
The Forgotten Man and the Forgotten Factor. The New Deal leadership has talked much of the Forgotten Man. But, unless Government pays attention to what for seven years, under the New Deal, has been the Forgotten Factor in the national problem, the factor of full recovery, the Forgotten Man will be worse than forgotten--he will be betrayed by a Government that has led him to expect all sorts of social benefits which Government will, in time, find that it simply cannot provide, because it has neglected to make Economic America a going concern producing enough wealth annually to foot the bills. This is the blind alley into which the New Deal has led and is still leading America. And this is the basic blunder which the Republican Party must, in the interest of the social welfare of the American people, set itself boldly to correct. This is the first step towards a sound and permanently feasible social program. . . .
Conclusion. . . . For a time we grew impatient. . . . The cry was for short cuts. Leaders with adroit capacity for capitalizing such moods of urgency began to say that men could not eat liberty or wear constitutions or be sheltered by bills of rights, that action and immediate results were what really mattered. The pressures of need led us to think, to act, and to vote in forgetfulness of the fact that the hasty actions of political expediency, on the hunt for quick remedies, can wreck a nation if its remedies ignore the inviolable principles that underlie the stability and productive efficiency of life and enterprise. . . .
The four principles by which the conclusions of this report have been tested are: 1) a balanced representative government, 2) a protectively regulated system of free enterprise, 3) a workable economics of plenty, and 4) an inviolate code of civil liberties supported by political and economic circumstances which will make the practice of these liberties possible.
These principles have long been the cornerstones of the American tradition. The Committee has not made them the guiding principles of its report because they are traditional, but because it is convinced that, on the basis of these principles, the well-being and happiness of the American people can be most surely advanced.
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