Frozen political assets

JAY FRANKLIN

Showing that it is our own National Government which, even more than our banks, needs a good thaw

The third year of the Great Depression began with the No Sale sign ringing gaily on the national cash-register, while in every city flew the Red Flag, not of the Revolutionist but of the Auctioneer. Evictions and foreclosures were playing the devil's tattoo with the Spirit of '32 (reduced from the Spirit of '76) and our political bob-sled racers were applying the blow-torch of credit inflation to the bank-runners of the Reconstruction Finance Corporation, as we hit the economic toboggan-slide prepared to get a run for our money. Mr. Morgan was reported suffering from chillblains due to his failure to don mittens when examining his credit department, and the cashier of every large bank had standing orders to wear an electrically heated waistcoat whenever he opened the vaults.

Frozen assets had been the disorder of the day ever since the Great Moratorium, and poor indeed was the banker who could not show the scars of frostbite from a flyer in Central European bond issues or who could not tell how he had to rub his balance with a lump of Cities Service for hours before he could restore circulation after prolonged exposure to discounting "sound industrial stocks". Wall Street had frankly stopped being the financial Olympus and had devoted itself to Olympic winter sports, with the Bank of America still holding the record for the broad financial ski-jump and the Chase National and the National City running neck-and-neck with the cat-and-dog teams. Country bankers had been falling through the ice and hoarding had become so common that home was where the hoard was and the mint was known as the National Hoard House. Ogden Mills moved into his new office at the Treasury and promptly announced that the national 1932-33 deficit would be half a billion dollars bigger than anyone had anticipated. The whole financial world had gone way back and sat down on its frozen assets, hoping to hatch them into prosperity without the use of anaesthetics or a socialistic incubator. Then somebody compared Hoover to Lincoln, the Stock Market reached for the cocktail shaker and a little warming up practice on Wall Street added five billion dollars to the "values" of American securities. Nobody expected it to last but everybody began to hope that perhaps we could get away with it this time as the Senate started wrestling with a $375,000,000 measure to feed the unemployed.

While this sort of thing has been going on so long that it is no longer regarded as funny, even in Moscow, our politicians have been sitting on some frozen assets of their own which deserve to he thawed out of a state of suspended animation. After eleven years of uninterrupted power at Washington, the Republican Party finds itself brooding on a setting of the most uncompromising and unpromising door-knobs that ever wore the feathers off a Rhode Island Red or sublimated the maternal instinct of a Plymouth Rock pullet. They have policies which they are bored with, policies they don't really like and policies which frankly disgust them; and yet they cannot conquer the great mother urge which pins them on the nest of public office.

In both foreign and domestic politics, there are at least a dozen sane and simple things which everybody knows could and should he done. But the Party in Power—and, for that matter, the Party in Opposition—has no more intention of doing them than it has of setting up a Soviet form of government. Where a wise change of political investments (anti of metaphors) would save the bacon of our stupefied statesmen, all they can do is to watch the ticker and make pointed references to the Federal Constitution and the need for rugged individualism.

First and foremost, there is the Prohibition mess. A measure which is losing us a billion dollars a year in revenue and which is costing hundreds of millions to enforce, is an expensive luxury in this age of deficits. Besides, even if it was good, we wouldn't like a measure which has enthroned Bishop Cannon and the Methodist Board of Temperance, Prohibition and Public Morals as the American Inquisition. Every politician knows that large masses of our people are sick and tired of the Volstead Act, the Jones Act, the Eighteenth Amendment and all its works. There are several simple and practical things we could do. We could amend the law to give Congress the power to regulate or to prohibit the liquor traffic. We could repeal the law and restore to the States their police power over liquor. We could adopt the Raskob "Home Rule Amendment" and let the Government enforce Prohibition in those States which like it and let the States which don't like it make an honest woman out of the great American corkscrew.

Then there is the Tariff. Everyone knows that it is too high, everyone knows that it can never he seriously revised downward by the Tariff Commission, everyone knows that it has been the excuse and in part the cause for foreign discrimination against our trade, and everyone knows that there is a good reason for maintaining protection. During the War we had a good system of import and export licenses, which gave our Government so much power that we practically did what we liked with the neutrals. Why not reestablish this system and give protection to our industries and farmers by regulating the volume rather than the price of imported goods? With many countries already using a quota system against us, why not fight foreign discrimination and protect our own production by applying the quota system to our own imports? If we ever started it, the bargaining-power which such a system would give us would let us take a large section of the world by the well-known short hairs.

The need for reform of our tax system is so obvious that it scarcely required three big deficits in a row to persuade people that it was possibly a mistake to gear the Treasury to the stock-ticker. There is work here for a financial Hercules who will define the separate spheres of Federal, State and local taxation; who will end tax-free bonds; who will tax incomes at their source; who will frame the tariff schedules to bring in revenue rather than to bolster private profits; who will see that the Government, rather than the bootleggers, gets the profit from the liquor trade; and who will tax boldly, where it will bring the most money with the least trouble.

Again, our old Federal system of government badly needs to be overhauled. We must abolish the "rotten boroughs" of the depopulated sheep-ranch and bad-lands States, which give to the five million people of Arizona, Delaware, Idaho, Montana, Nevada, New Hampshire, New Mexico, the Dakotas, Utah, Vermont and Wyoming, twelve times as much power at Washington as to New York State's twelve and a half million inhabitants; and by which these States, with 4% of our population, can block the Constitutional will of the remaining 96 per cent. The perfectly obvious remedy of establishing popular representation in the Senate and preserving the federal idea by instituting a National Council, which will give equal representation to the major geographical divisions of the country and which will also include the President's Cabinet, has never even been considered by our Constitution-worshipping statesmen.

In the field of foreign affairs, it is equally obvious that certain policies which were very sweet when we were young and girlish in our international point of view, are of no practical value in a world in which the sky is the diplomatic limit and table-stakes and deuces wild are the rule of the game. Our original Russian policy, for example, was pretty hot stuff when we believed that we had only to breathe and lo! the land would be divided from the waters, but our failure to recognize the Soviets does not seem to have prostrated the Kremlin and after twelve years of it, our diplomatic panic whenever Russian recognition is in the air resembles the attitude of the aging lady who looks for a man under her bed every night, rather than the attitude of the sternly righteous husband who searches his wife's bedroom with a revolver in one hand and a Bible in the other. In any case, either role is a little ridiculous for a great nation, and the luckless coolies of Manchuria and Shanghai have recently been paying with their lives as a result of our refusal to recognize the only nation which could have done a Joshua to the Rising Sun and kept the door open in Eastern Asia.

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On war debts and reparations, we are equally mutton-minded. Whether cancellation, collection or reduction is the wisest policy for us to follow is immaterial. Our failure to regard the war debts as political assets has turned them into political liabilities.

Even our devotion to disarmament and world peace has become crystallized in a form calculated to send cold chills down the spine of every American who wants to keep his country out of trouble. A willingness to build a few cruisers between 1922 and 1927, the strength of mind to hold out for a few more inches and a few more tons at London, the nerve to start building a Treaty Navy after the Naval Conference of 1930, would have done more to make peace possible than all of our great gestures and noble words. If naval budgets go up, up, up, from now onwards, we can only thank ourselves for having been so hopelessly committed to the reduction and limitation of armaments that every other nation knew we would never seriously consider the alternative of making ourselves stronger.

The question is not whether we need a big navy or a small one, whether we should cancel or collect the war debts, or whether we should or should not recognize Russia. The question is whether a nation which has closed its mind to every alternative in foreign policy can achieve even the policies which it has adopted, if it advertises its unwillingness to budge an inch in any other direction. In politics, as in geography, the longest way round is frequently the shortest way home; in diplomacy, as in poker, the game is to the man who knows when and how to bluff; and in a world which is afflicted with St. Vitus's dance in all the major fields of international and national policy, it is a great handicap for this country to insist on dancing the diplomatic minuet.

The pity of it is that, when we actually come to study our own problems with a view to change, we may not need to change very much, but we do need to get the idea that a change of policy—that is to say, a change of method—is neither unnatural, unAmerican, blasphemous or obscene. We need the sort of Government and the sort of public opinion which will not regard a flexible viewpoint or a shift in attitude as requiring either a major operation or a professional exorcist. We are running into a great political danger-zone and we shall need to be quick-witted and nimble-fingered if we are going to get through without some very ugly difficulties. The British Empire is organizing itself economically against us; Japan is establishing herself as a great as well as a powerful empire in Eastern Asia; Russian communism has come through the depression rather better than did European capitalism; the Open Door, the Monroe Doctrine, the Freedom of the Seas, Isolation are all becoming more difficult to maintain.

There's a feeling of change in the air and the American people are preparing to make their own changes at home. Our population is getting uneasy and the slow, terrible patience of the American masses is yielding to the mood in which the cry "Take him out!" is followed by a barrage of pop-bottles. It is about time that our politicians stopped trying to thaw the plumbing of our banking system, ceased their parrot-cries of "No hoarding!" and "No dole!" and took a good long look at the contents of our national safe-deposit box. Much of its contents is still sound stuff, but some of it isn't worth wall-paper. All of it would benefit from a little intensive work by the actuary and the sooner we get rid of some of it the better for us all. In the decade that lies ahead of us we cannot afford to interrupt the elephantine amble of American political progress to answer margin-calls on the no-par policies assembled by twelve years of muscle-bound administration and opposition in the political Stock Exchange at Washington.