xt7wwp9t2q46_25 https://exploreuk.uky.edu/dips/xt7wwp9t2q46/data/mets.xml https://exploreuk.uky.edu/dips/xt7wwp9t2q46/data/59m61.dao.xml American Liberty League 37 linear feet archival material English University of Kentucky This digital resource may be freely searched and displayed.  Permission must be received for subsequent distribution in print or electronically.  Physical rights are retained by the owning repository.  Copyright is retained in accordance with U. S. copyright laws.  For information about permissions to reproduce or publish, contact the Special Collections Research Center. Jouett Shouse Collection (American Liberty League Pamphlets), No. 28 "Government by Experiment" Speech by Dr. Neil Carothers, Professor of Economics and Director of the College of Business Administration, Lehigh University, April 17, 1935 text No. 28 "Government by Experiment" Speech by Dr. Neil Carothers, Professor of Economics and Director of the College of Business Administration, Lehigh University, April 17, 1935 2013 https://exploreuk.uky.edu/dips/xt7wwp9t2q46/data/59m61/59m61_28/Am_Lib_Lg_28_001/Am_Lib_Lg_28_001.pdf section false xt7wwp9t2q46_25 xt7wwp9t2q46 dict is in. There are vital responsibilities to be ····‘·‘*"""‘""""_‘—’
met by our government without trying further * *
experiments. There is much to do in undoing
what has already been done. Our money should
be stabilized before it is too late. Plans should  
be made for the abandonment of the A.A.A.
as soon as it is practicable. The N.R.A. should V I]
be abandoned, unless it be possible to devise y
some provisions to prevent exploitation of labor ·
and of the consumer.  
As for legislation now pending, some of it is -
distinctly evil, and none of it in its present form -
is wholly satisfactory. None of it is likely to
contribute to recovery. All banking legislation * * *
should be postponed until conditions are more
stable. There shou.ld be devised a way to con-
trol the utilities without destroying them. The Speech af
economic security measures in their present
form will not serve any immediate good. DR. NEIL CAROTHERS,
At this time the government should concen- Professor of Economics and Director
trate on two objectives. One is the balancing f h C H fB , Ad ,
of the budget. It should reduce expenditures to Q t c_ 0 age? uSln€SS_ mln-
the lowest possible level. The other is the eco- 1Su`°u°n’ Lchlgh Un1v°rS1ty’ and
nomical and non4political administration of re- Member °f the N¤ti<>¤¤l AdViS01`Y
lief. There is now at the disposition of the ad- Council of the American Liberty
ministration an almost inconceivable sum of four League, ever the Red Network
billion, eight hundred million dollars for relief. of the National Broadcash
This sum represents $8,000 for every minute . .
, mg Company, April 17,
of every hour of every day for an entire year.
With the grant of this appropriation the last 1935
shadow of an excuse for further experiments is
gone. All that the people of this country need .
now is the assurance that they will be permitted
to do the job of bringing recovery from depres- QE IC4
. . Y  ·, *9
s1on. They have not had this assurance for two yi    
years. That assurance is all they need. E,   »_;;_ 3*
Qpry Wvo
AMERICAN LIBERTY LEAGUE
National Headquarters
.%,4 NATIONAL PRESS BUILDING
WASHINGTON, D. C.
* ir
12
Document No. 28

 QQVERNMENT BY EXPERIMENT t a time of popular confusion and muddled gov-
ernmental policy.
* I want to say a word to you about the subject
of economics. You have been told that there is
I HAVE been invited to talk to you a little no science of economics. The statement is false.
While this evening about ggme very serious It is true that no man has ever lived who was
matters. They concern the welfare of every one able to understand completely the operation of
s of you and the welfare of the nation as a who]e_ economic forces. Our economic system is too
The issues we discuss are cgmplexs they are een, complex for complete understanding, and there
troversial, and they are personal. For they are many unsolved problems. When any man,
aiiect the wages and the jobs and the husinesses whoever he may be, tells you that he has a plan
and the savings upon whieh you and your funn that will solve all our economic problems you
ilies depend. And sinee these matters are so can be sure that he knows very little about our
deeply personal and so highly eontroversis] you economic system and you can reasonably suspect
are entitled to know who it is that undertakes that hs wants semeththg here v°“’ veur vete or
to talk to you about them_ In these days of your influence or your dollar. But there is a
partisan discussion and political propaganda, it setehee et eeehemtesi and there are khewh and
is well for you to End out who it is that Speaks proved principles that govern the operation of
to you about your economic problems, what he our industrial system,_ that fix the wages you
represents, whether he has a persona] purpose receive, the profits in your business, the value
in his discussion. V of your savings.
Your speaker here, who is unknown to you, is For example, you have been told that shorten-
a college professor, an economist, who has de_ ing hours by law in time of depression increases
voted his life to the study of economic forces. ethplevrhehh Eeeherhtes Preves that tt dees het
He is a salaried man, with no interest of any do this. It increases unemployment. You have
kind in stocks or bonds or corporations. All his heeh tetd that ratsthg Wages by law th dePres'
life he has had a deep sympathy for those who sion promotes recovery. Economic science will
suffer economic hardship, for the victims of tell you that it merely gives a minority an un-
economic distress, for the under-privileged and fair advahtage ever the rest ahd thsrsbv Pre'
the under-dog. He has no political ambitions, metes hhemptevthehh Yeh have heeh tetd that
H0, partisan motives. He is a Democrat, and if what the eehhtrv needs is m°t° °um`°ncY' But V
he has occasion to criticize the Administration eeehemtes eah shew Yeh that we strssdy have
he does so regretfully, as a citizen who is inter. mics as much mehev and credit available t°*t=*Y
ested in his country first and his political party as W6 have ever had th the greatest heerh
second. And finally, his views are his own, un_ periods in our history. You have been told that
influenced by those of any interest or oreeniZe_ inflating the currency relieves the debtor classes.
tion. Economics tells you that inflation never helps
l speak to you tonight et any class, unless it be the class of gamblers,
League Stands the invitation of th e , speculators, and monopolizers. You have been
For Sanity Ameriean Liherty League repeatedly told that this is an age of limitless
In Government I have aeeentet] tneii. in_ plenty and that poverty is due solely to unfair
s vitation heeeuse I believe “ distribution of wealth. But economic science
their organization is serving a patriotio nui.nese_ proves that we have not yet solved the problem
F0t1¤d€d as a non-political organisation hy of ample production for all and that there is
leaders of both political Parties, the Liberty a not for our time any other system of production
League. more than any other organization that and distribution that promises to give the
I know, stands for sanity and ooo] judgment in people even as good a living as we have now.
2 3

 Nor is it true that ecc. economic forces at work, even in depression, to
Economists nomists do not agree. give the plain man higher wages, shorter hours,
Agree On Some wit has said that if and greater social and political opportunity.
Fundamentals all the economists in Fifthly, this system cannot be greatly improved
America should be laid by artificial interference. All that you have
end to end they would not reach a conclusion. t heard abvut inc collapse of inc sYsicin is nYs'
You have been given the impression that the tcria oi` propaganda- it is sctnoiiY growing
economists of the country have been responsible bcttclo and thc imPr<>V·=m¢¤* is constant But
for the policies of our government. All these y it csnnoi be gi`oat1Y hurried' Wagcs and h°urB’
notions are incorrect. Economists do agree. Production and °°uSumPti°n’ am dctcrmiucd by E
They do reach conclusions, and correct conclu- PnYsicsi and bioiogicsi laws ncYon*i inc iniinc‘
sions· A11 overwhelming majority gf the ecc. diate control of men. There is no short cut
noniists of the Country have opposed some cf route to high wages or luxury or ease. Inter-
the major policies of the government from the icrcncc with our “°°u°mi° System by law may
beginning ami oppose them now, They Pre. improve it somewhat. It is very likely to dam-
iiicicti the failure of these policies and have “ age it and reduce its productivity. Sixthly and
seen their predictions come true. finally, there is no other system possible at this
Before we consider these various policies it iiinc which Wiii Work os Wcii· For 3»000 Ycors
is necessary to say a word about this puzzling men have talked about an ideal economic
cconomic $YStcm of ours. It is a vast, complex system. For 3,000 years men have at intervals
machine, a complicated co-operative mechanism tried to set up better systems, from Sparta 800
of land, labor and capital, of wages and inter- years before Christ to Russia in 1917. Not one
est and profits, of currency and credit and in- has succeeded. Every one before Russia was a
vestmcnt. We cannot stop to analyze its opera- comPict° i“i1“""’* t° bs mplaccd by thc Prcscnt
tion, but we can point out certain of its char- system of private property. The Russian system,
ocici`istics· » born in violence, has so far developed nation-
In the first place, it grew up spontanecucbg wide starvation under a bloody tyranny.
of itself, out of man°s own nature. It was not     »‘·l w  et.-   at ..
discovered or invented. It has changed its i i V 0 V I W Our existing system is the
oquipmerlt through the ages, hut has heen ‘ Existing most Protinciivc snti most
essentially the same for 8,000 years. Secondly, SySten1 Best equitable in the history
it runs itself, providing its own motor force. It V Yet DeViSe(l of man. But it is far
is automatic. It requires no directicn by gow from satisfactory. It is
ernment. It guides itself. It requires no com- gravely defective, and it contains major evils.
pulsion. Under it men are not driven to labor In the first place, it breaks down at intervals in
by threat of the lash or exile or execution, tragic depressions that cause universal distress
Thirdly, this economic system is unbelievably and heart-ache. In the second place, it is at-
productive. It has supported unnumbered mil- tended by anxiety and insecurity. All of us live
l1ons through history. In America it gives the in the shadow of risk and insecurity. ·Thirdly,
people a standard of living undreamed of in the some of our people lead lives of poverty, inade-
past and unknown to other peoples in our time. quate wages, and over-work. Fourthly, there is
Fourthly, this system improves all the time. still in the system a certain amount of unde-
This statement may seem to you an offensive served failure and unmerited success, of unjust
`ilypocrisy when everywhere in the nation there cnfichm€nt and   distribution, of uu'
18 unemployment and distress. But it is true. equal opportunity and unearned privilege.
It 18 not true that the rich are growing richer These are the major charges against our pres-
and the poor poorer. There are irresistible ent economic order. It is guilty on every one
4 5

 of the counts. But these grave evils are being redueing the burden of taxation, to helping in.
· cured. slowly but surely. by time- They cennot dustry that is sick, to protecting the credit of
be removed, all at once, by government. A wise the banks, to eering for the unemployed and
€tI1Cl. C0l11`3g€0l1B government Call do much to I`€' destitute. II1.0thB1‘ W01’dS, 1llB p1`0p€1` g0V€1`I1II1CI1ll
duce them now, andin time can remove them. polioy is to eushion the shocks, to aid the
Of these evils 011lY ¢lep1‘6ssi011 will be dis- · victims, to encourage those who still hang on,
Cl1SSCd h€1`C. DBI)1’(5SSl0I1S l.I1flZl.Ct thCII1S€l.VCS 011   and to join in any movgmgnt to Promote inter-
us simply because 0111' macllillc sYs16111 of P1‘0· ni national trade and stability of international
duction is so new that we do not yet know how , currencies,
to control it. Our present depression grew out From theebeginning, under both the Hoover
01 the c0H€li1i011s 61‘6316€l by 3 11`3€10 W01’l1l W313 and the Roosevelt Administrations, our govern-
which ate the heart out of the capital of Euro- ment did these very things, in large measure.
P6311 113110111% d1s01'g3111Z6d 1`01'61g11 113116, 31111 The loans to mortgaged farmers, the loans to
demoralized the credit and currency systems of home-owners, the tremendous efforts to care for
all the world. We do not yet know enough to the unemployed, the work of the R.F.C. in aid- _
control the economic consequences of a world ing the railroads and the banks, all these and
war. many other activities of the government were
This depression is 1101 due to 1lle c0ll3ps6 of wise and useful. But also from the beginning
the capitalistic system, or to the exploitation of our government adopted unsound policies which
1be W01'l€61`s by 1l16 03P113l1s1s» 01‘ to 1116 111is13l<6s attempted economic impossibilities. The effort
of the banks, 01* even 10 the 01*gY of speculation to maintain high wages and salaries after prices
which swept 0Ve1‘ 0111* c011I111‘Y· l1 is due to 1lle had collapsed, the passage of a high-tariff act in
World War. It is not an American depression the midst of depression, and the attempt to
· but a world depression. lt did not begin in the maintain inflated prices for agricultural prod-
United States, but in foreign countries. ucts through the Farm Board were unwise and
All depressions are the consequences of years unsound. These attempts to end depression at
of accumulation of economic poisons in our its beginning were doomed to failure.
economic system. Depression is the process of . Two years ago a rival Administration was
eliminating these poisons. There is no way in overwhelmingly approved bythe people because
which this process of elimination of poisons can i A it promised to do by the very same methods the
be stopped, once the collapse has come upon us. ,,. very thing the other had found impossible, that
This depression could end only when industry is, to end a world-wide depression by act of
had been purged of uneconomic and extrava- Congress. The present Administration came
gant methods, when bloated valuations had been into power because it guaranteed by open
cut down, when reckless consumption of re- promise to do the impossible, to end depression
sources had been stopped, when unnatural by passing laws. Everything that has happened
wages and salaries had been reduced, and when to our country since is a direct consequence. In
currency demoralization throughout the world its feverish effort to fulfill this promise this
had been cured. government has passed a bewildering succession
This does not mean that of temporary, unsystematic, self-contradictory
Govornrnont a government should do and experimental measures that have disturbed
Can Cushion nothing in time of de- and disorganized the economic life of every
The Shookg pression. It can do a business and every individual in this nation.
tremendous good in de- Among many other things, these measures have
pression. The intelligent procedure of govern- debased the currency and the obligations of the
ment in depression is to give all its energies to United States, terrorized the banking system,
alleviating the hardships that are inevitable, to > increased the cost of doing business for every
` 6 ‘ 7

 enterprise, Pl1111g0d i11duSu'Y um) labor wurfurcv tion to this N.R.A. experiment. And today the
taxed one section of the people for the benefit government is groping obont in the ruins or
of another, destroyed food and clothing mate- N_R_A_, trying to End in the wreckage somo_
rials in a hungry world, increased the costs of thing Worth Preserving.
relief, and squandered the 1110116)* of the people The A.A.A. was going to end depression hy
like a drunken sailor.   restoring parity of incomes for the farmers. It
The results of these 6XP61`im011tS srs 119W uP‘ has not ended depression. But it has increased
parent. One of the results is 8 {¥01:lditi011 in Our the cost of living, disorganized the textile indus-
currency and banking that may ea to a ruinous   try, injured the reeovery or the roiiwo s and
inflation. Another is a succession of mounting the banks, thrown thousands of form rgorkers
Treasury deficits that must be met by crushing out of employment, dcmoralizcd our foreign
taxation or by ,i1iilatior11.llAnothel1i is the addi- trade, and enormously increased the costs of re-
tion of some 7 i ion 0 afs to t 6 P01`111¤11011t lief. And at the present moment that ex eri-
government debt. Still ¤110tl1€1’ i;ti10 ri10¤t1'i10• ment has reached an incredible stage. The iilan
tion of our greatest export mar et, t at or of A.A.A. is to tax the food of the eo le to
cotton, at the very time when we see ahead the pay farmers to reduee production. urn;) eon_
necessity for importing foodstuiis. Still anothler sequences now being clear, the government has
result is a universal fear which prevents t e [Old the S rin wheat farmers to ow all the
creation of credit by the banks and dries up the wheat theyiicangbut that they will rgdeive a cash
s rings of investment upon which recovery de- dole `ust the same. The overnment is oin to
plbnds. Still another is a disorganization of the tax the people to raise gash gifts for Tarniers
international exchanges wghicih basl retarded rc; for producing what they were originally to be
covery abroad. And a na resu t is a muc paid for not roducin . When an ex eriment
larger volume of unemployment than we had a V reaches this siiage it might to go into Iieceiver-
year ago, with 22 million people, one in every ship.
six of our population, dependent for subsistence The monetary program was to restore pros-
on public relief. perity by raising prices to the 1926 level. Eco-
In the nnst period or sn nomic science Shows that artificial price-raising
Gnoping frantic nnorts to nnd dn   . cplegcnpgccure eplressmn. Rising pripes do, not
Among Ruins nnnssion by statute our   overy. ecovery causes rising prices.
Or Ex nnimnntn Con mss Snnnnndnrnd its   Our two years of monetary manipulation have
P g. not ended depression have not restored 1926
function as law-maker _ ’ _ _
and the country was turned over to experiment puccB’ and have no? rcvwed foreign trade'
and experimenters. Our economic system was They have left us u.1th°ut a Stablc m°u°tm`Y
subjected to n half dozen major surgical 0per,,_ system, ,have mdeiimtely delayed the stabiliza-
tions at the some time, all basod on some Pan t1on of international exchanges on which recov-
ticular theory of economics. The N.R.A. was cry Partly u°P°udS¤ anu have Set the Stagc i01`
to restore Prosperity by restoring eonsnrner unpredictable money and banking developments
power, and this was to be accomplished by in thc future-
arbitrary reductions in hours and arbitrary in- The P·W·A· was t° I`°St°1`° P1'0$P01`itY by P1'im·
creases of wages. Such arbitrary increases of ing uw P11111P of P1'iV8t6 business. Public
wages and shortening of hours in depression do W91`k$ at H10 i10ii0111 Pit of depression do not
not increase consumer power. They reduce it. rcstum Private i11d11St1`Y· Tl1eY are merely an
They do not increase employment. They in- expensive method of relief of the unemployed
crease unemployment. lf you are one of the l0 Ti1eY increase the burden of taxation or create
million unemployed, you may owe your situa· government deucits.
8 9

 Another result of g0V' and traded by inexpert legislators cannot cure
Self-Seeking ¤r¤m¢¤¢ by cxlicrimcnt depression hut may delay irecovery. Conserva-
Minorities is cf snmhsr k1nd· In tive economists estimate that these two years of
Reap Harvest the mnfusion of 6xP°H' experimentation have retarded the progress of
V mentation and t1¤stY ls? recovery in this country from six months to one
islation it is possible for self-seeking minorities t Yoon
to rush through by lobbying, l0g·1‘0]ii¤g» and n This frank discussion is not an attack on eco-
propaganda, legislation injurious to the country. i noinio planning. We have had economic Phm_
Thus the conscienceless silver interests have suc- , ning in this oounti-y Sinoo its foundation. The
oooded in edulterating and weakening what is i greatest economic planner the country has had
left gf our monetary standard- Some other was Alexander Hamilton, a hundred and forty
measures of this kind have na1’1‘0WiY missed years ago. There is a place in our country for
passage. Still others are now pending- The wise economic planning. This nation should and
patman bonus bill, u had measure, has passed will plan to reduce the tragedies of poverty and
the House under the whip of political P1‘essu1°e» unemployment and destitution in old age. It
despite the disapproval of the President- The should plan to reduce manipulation and sharp
, 30 hour week bill passed the Senate last year. practice in business and predatory acquisition
It is a had proposal. lts passage Would merely gf weultln Tliooo economic evils can he at_
for u time give an unfair advantage to 8 small ` tacked and defeated by intelligent and scientific
minority of workers. ln the end it would injure legislation. We muy ooniidontly hope that in
all working people. time we may by wise planning prevent both
Still another result of government €‘»XP€I‘iI¤€Ht wars and depressions, But these ages.old prob.
is most unhappy. It has created a nation-wide lgmg cannot be Solved bv guosgworkg bv. lggislw
impression that government will Surrender to tion concocted overnight by economic planners.
whatever demands may be made upon it. In
consequence candidates for oiiice have played This country is certainly
upon this popular error, and in the lest eleetitm Nation and inevitably coming ’
those oandidates were in the main elected Wi'10 “ Needs out of depression. What _
promised most. At the present time 0111‘ C0¤· A Rest it needs now is rest from
gress is definitely lower in economic understand- experiments and eco- `
ing and devotion to principle above personal ad- pt nomic sleight-of-hand. The great need of the
vancement than previous Congresses. And that I country today is not more tricks, but assurance
way lies grave injury to the country. of freedom from further interference. On every
And one final result. The unsound philos- hand the prophets of doom tell us that the gov-
ophy that all economic problems can be solved ernment has embarked on a policy of squander-
by government has led to cruel deception of the ing its way out of depression, that a serious in-
people. It has encouraged great numbers of our iiation is inevitable, that the banks will be taken
citizens to accept and embrace visionary and over, that the public utilities will be destroyed,
impossible proposals by ranting demagogues and that the government is creating a permanent I
economic simpletons both in and out of govern- and uncontrollable class of unemployed and
ment circles. dependents. There is no solid basis for these
When we consider in all fairness the results ‘ gloomy forebodings. Our economic system is
of two years of government by experiment we too strong to break down under depression, and
are forced to the conclusion that it is not jus- with recovery unsound policies will be aban-
tified by its works. It has only demonstrated doned. .
what should have been recognized in the begin- But it is high time for experiments to stop.
ning, that reckless interference with industry They have been given a full trial, ·and the ver-
10 ~ 11