Statement on Emergency Relief and Construction Legislation

July 6, 1932. The President said: "I regnet that the conferences in endeavor to arrive at a basis of a workable relief bill did not succeed. It is all the more re- grettable since the deliberations this morning made it clear that it was possible to harmonize conflicting views and so reach an agreement were it not for the insistence of the Speaker on one point. The Bill as reported by the Conferees provides: "First, provision for expanding the borrowing authority of the Reconstruction Corporation by $1,500,000,000 to be used for temporary financing of self-liquidating construction projects of public and semi- public character to increase employment. "Second, Speaker Garner insists that the Corporation shall also make loans to any individual, any private corporation, any partnership, any state, or any municipality on any conceivable kind of security and for any conceivable purpose. "Third, provision of a fund by the Reconstruction Corporation of $100,000,000 for the President, to be disposed of either as charity or as loans, and one of $200,000,00 to be loaned to state governments who are unable to finance themselves to care for distress, but such loans to be apportioned amongst the states on a percapita basis of population. "Fourth, $322,000,000 of additional public works beyond the $500,000,000 of construction work now provided for in the budget. "As to the first provision, the Reconstruction Corporation authority to make loans today is practically limited to ins titutions under state and federal regulation, that is - banks, savings banks, building and loan associations, agricultural credit corporations and railways. It is serving to protect the credit structure of the nation whose collapse would mean the complete disaster to all and the savings of all the people that directly or indirectly are in the safekeeping of the great fiduciary institutions, savings banks, insurance companies, building and loan asso- ciations. That is, the whole people. "The provision to finance $1,500,000,000 self-liquidating construc- tion projects for relief of unemploymert comprised part of the proposals I had already made to the Congress. "The fatal difficulty is the Speaker's insistence upon provision that loans should also be made to individuals, private corporations, partnerships, states and municipalities on any conceivable security and for every purpose. Such an undertaking by the United States Government makes the Reconstruction Corporation the most gigantic banking and pawn- broking business in all history. "There are 48 nstates and 16,000 municipalities who could under its terms dump their responsibilities upon the Federal government. The purpose to take care of unemployment distress in such centers is provided for in the proposals'of enploymert and loans. to the states. The Speaker's proposal in no sense contributes to relieve such distress. It would compel the Reconstruction Corporation to attempt to deal with millions of people in terms of hundreds of thousands or small and large loans. It would result in dumping a vast amount of doubtful private and corporation debts on the federal treasury to no national purpose of relieving unemployment. It would require the extension of branch offices in every town and county in the United States and set up a huge bureaucracy able to dictate the welfare of millions of people and at the will of its agents deal favor and disaster amongst them. No group of seven men can so organize as not to discriminate unfairly between competitive enterprises. There is no body of men who could physically administer such a gigantic project. The Board of the Reconstruction Corporation, except one absent member, informs me unanimously that the making of loans to individuals is totally unworkable. It would undermine federal credit and bring a vast increase in unemploy- ment. 617