xt7wwp9t2q46_53 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. 56 "Recovery by Statute" Speech of Dr. Neil Carothers, Professor of Economics and Director of the College of Business Administration, Lehigh University, July 9, 1935 text No. 56 "Recovery by Statute" Speech of Dr. Neil Carothers, Professor of Economics and Director of the College of Business Administration, Lehigh University, July 9, 1935 2013 https://exploreuk.uky.edu/dips/xt7wwp9t2q46/data/59m61/59m61_56/Am_Lib_Leag_56_001/Am_Lib_Leag_56_001.pdf section false xt7wwp9t2q46_53 xt7wwp9t2q46 Pamphlets Ava1lable * V *
*
Copies of the following pamphlets and
other League literature may be obtained  
upon application to the League’s national
headquarters:  
Statement £fbPrinc§-lples andIPul1_;po;es
Am rican i erty eague— ts at orm
An iAnalysis of the President’s Budget Message S t 3, t u t 0
Economic Security
The Bonus
Iniiation
The Thirty Hour Week
The Pending Banking Bill *   *
The Holding Company Bill
“What is the Constitution Between Friends?”-— I
Speech by James M. Beck
V Where Are We G0ing?—Speech by James W.
Wadiszworthl SP€€€h of
Price ontro
Yesterday, Today and Tomorrow q DR· NEIL CAROTHERS
The Labor Relations Bill P f f E . d D.
_ Government by Experiment—Speech by Dr. Y0 cssor 0 conomlcs an Hector
N eil Cafvfhefs _ of the College of Business Adminis-
How Inflation Affects the Average Family- . L h. h U . .t d
Speech by Dr. Ray Bert Westerfield u`at1°n¤ E lg nlvcrsl y’ an
The AAA Aniqndmgnts b D W I E Member of the National Advi-
Pogggggl Ban me Pm y r- G   · soryCounci1of a...A......-.......
The Bituminous Coal Bill V Liberty League
Reigimenting the Farmers—Speech by Dr. G. W.
yer
Extension of the NRA · _ at thc
Hgglia  lgggveggglethc Coustltutlonépeech Institute of Public Affairs
The Farmers’ Home Bil] University of Virginia
The TVA Amendments
‘ The New Deal, Its Unsound Theories and Ir- July 9, 1935
A reconcilable Policies—Speech by Ralph M.
Shaw
Is the Constitution for Sale?—Speech by Capt.
William H. Stayton '
How to Meet the Issue—Speech by William E.
Borah »
The Supreme Court and the New Deal ’ Jg ic
The Duty of the Church to the Social Order- ? Y  
Speech by S. Wells Utley  
An Open Letter to the President—By Dr. Neil _r;   u
Carothers 6*   ¤
The Revised AAA Amendments Cp, VQ
The Return to Democracy—Speech by Jouett Y he
Shouse
The President’s Tax Program
The American Bar-—The Trustee of American '_
Institutions——Speech by Albert C. Ritchie A
Two lAmazing Years—Speech by Nicholas Roose-
ve t ` ·
Fabian Socialism in the New Deal——Speech by AMERICAN LIBERTY LEAGUE
Demaresz·Lloyd National Headquarters
* NATIONAL PRESS BUILDING
AMERICAN LIBERTY LEAGUE wAsmNcToN, D. c.
NATIONAL PRESS BUILDING
WASHINGTON, D. C. * *
  4 Document N0. 56

 Z
Recovery by Statute
MANY able and informed men see in recent
developments the collapse of our civilization,
the destruction of all those institutions upon
which men have built for 5,000 years. Many
other able and informed men see in the present
j situation the elevation to power of some in-
i credible demagogue, who will destroy every-
V   j thing we know under the term liberty. Still
l others see in the present situation the revolu-
I tionary establishment of some communistic
`   order, bringing iwith it the destruction of the
j political, economic, moral, and religious institu- `
‘   tions we live by. Still others see in the present
situation a fascist regimentation of the lives
and freedom of all the people. Still others see
in the present situation a chaos of blundering
legislation ending in universal bankruptcy and
social disintegration. Still others see in the
present situation an era of mob rule, with
militant minorities obtaining special privilege
from a cowardly and servile government. On
the other hand, there are those who see in
recent developments the dawn of a new era
of economic security and justice, the righting
of old wrongs and the elimination of age-old
· i problems of poverty and injustice.
_ We are undertaking tonight to find some
explanation of the kaleidoscopic developments `
of recent years. Is there ground for the gloomy
_ fears that now distress thoughtful people? It
is a sad fact that there is an element of truth
in all these forebodings. There is some basis
in existing conditions for all these fears. lf we
look in one direction we see where our existing
· competitive economic system has been seriously
undermined. If we look in another we see
where guaranteed rights of property and con-
tract have been deliberately destroyed. If we
look in another we see where government has
t exercised a ruthless dictatorship over persons

 and r ert. If-wel kin an ther we see , . . . .
whaa;) Ogvaaimam has Oailrrandargd to wamah dental social order created the cap1tal1st1c 1n-
minaaigaa If Wa laak in amathaa Wa aaa Wham dustrial economy we have today. It revolution-
aavamamaat has Yialdad ta thc Visionary Ia ized the methods of industrial production and
. . . . . ' . It lt] ° d the
former urging fantastic and impractical exper1- trmilsportauoli _ comp 6 C Y morgamzc .
mam And avar all tha land tha raucous Vaiaa political, soc1al, intellectual, and educational
Of [th.; damaaaaua raaaunda praaahina 1_aVa1u_ institutions of humanity. It created the public
tionary destruction of existing institutions Sch001’ mass Cducatiom universal SuErag€° the
i capitalist class, and a wage-earning urban popu-
V lation. It gave the common man a political
EBU-Y rw man k¤¤WS what ¤ day may brms powon unknown before in history.
forth. But the sober and thoughtful student of
social evolution can take a long time view of · .
h th l t of all
these developments. Strange as they are, they IN THIS fact We ave B exp ana mn
. . ;, that has happened. There was a World War,
have an explanation. They fall 1nto a pattern _ _ _ . .
of historical evolution Recently I attended a Whlch d*S°*`g‘“*‘“‘Z€d curr€nc1€S° rumcd tradm
araat meeting in tha Middle Waat at which a I and destroyed capital all over the world. For
diatin uished Canadian S Oka for ihia Caumr ; a time there was a false stability and a fictitious
H g · P yo prosperity. And then the bubble burst, and the
e was steeped 1n gloom. He thought that con- _ _ _
ditions in his Own Country wara avan mam 1nev1table depression came upon the world, the
. . . o. most severe, most prolonged, and most tragic
depressing and menacing than 1n this country. _ h_ t E h a ,a tha aiviliaad Waald
. , 1
And he sa1d that he hoped the speaker who m 1S my Véryw er , . .
was to follow him would not be like the En the maSScS’ dmvcn by then, m1SBry° msc m
lishman who was Sitting laaaida the Thamga rebellion. In Italy this mass movement resulted
. . ‘ ‘ ‘, ‘ 1 ° t d ‘
River at Waterloo Bridge when he saw a man m_ Mussohm In germany It cu mma 6 m
preparing to jump (War Ha daahad avaa ta Hitler. In England it engendered a labor gov-
him and asked him to Wait a mamam and talk ernment, a national dole, and a narrow escape
. . . . . ° 'k . I t 't -
it over with him, that perhaps conditions were from Tumvmiszil stm, C H ,0,ur coun ry 1 lic
not S0 hopeless aa he than ht And tha man sulted 1n a nation-wide political upheaval, 1n
b . g ` which the people evicted the government in
egan w1th the World War and came on down ,
through the dapraaaima and tha dala and tha office and installed a new government, both ex-
aamaral Strike and whan hc was dana tha bath ecutive and legislative, which promised to re-
jumpad OH- taaathaa But Whan I fauawid tha lieve distress and satisfy the demands of the
speaker I told him that I not only was not maSS€S° , . .
ready to jump (Nar with him but that I waa Everything that has happened in this country
going to pull him out in the past two years has grown out of this
Them is no Oaaaaiaaa far paaaimiam Tha aa simple fact. Many men see in the present situ-
. . `   ' d't‘tt‘ tdt th t'-
planation of our present economic and political aimu a HCC m an mil 0 CS my .€ (Tmpc 1
situation is found in the laws of economic UVB SyStcm° to nulhfy the Consutuuom to
avolutian Everything that haa ha aaad ta ua · scuttle the existing social order. They are mis-
was Suaaaatad by Load Ba aa Haag? 50 aa taken. An impartial and cool-headed analysis
rs . .
aaa and was dafinitaly yaadiatadyb {lard of governmental policy in the past two years ~
v M . . P Y * will disclose no plot, no economic planning of
acaulay 1n a pr1vate letter 75 years ago. The al f d- 1 t
. . . . , ¢>· ·
present situation has its roots 1n the Industrial a. new or 613 no pm°Iam O ra ma Ruins nw
R 1 . tion of our economic system. What lt does
evo ut1on of more than a century ago. That . . . .
.,......;,1.,... ......n..m.n... ofthe wno1o ooo dlsdm is a b*md»¤¤P1a¤¤¤d~*1>’S*·=¤·=·€·’» and
self-contradictory series of economic experi-
4
5

 ments and interferences. The entire program try by arbitrary political action in defiance of
represented a desperate effort by government economic science and the advice of competent
- to please the masses, to satisfy popular preju- authority. It has been forced upon the country
dices, and to placate importunate and self-seek- in violation of individual rights of free contract,
ing minorities. free enterprise, private property, and constitu-
When all the extraordinary measures are tional protection.
analyzed, we see that they resolve themselves I do not undertake here the impossible task
into three groups, measures aimed at relief, of analysis of the more than fifty separate
measures aimed at reform, measures aimed at measures included in this recovery program.
recovery. Although certain of the measures They fall roughly into four categories. In the
over-lap and have a double purpose, every first group we find those measures that were
measure has been aimed fundamentally at relief aimed at an arbitrary increase of wages and
or reform or recovery, with the exception of a reduction of hours. In this group there was
few measures that were merely a surrender to if the N.R.A. In the second group we find the
some special interest, such as the silver sub-   measures aimed at an artificial and arbitrary
sidies. We are not concerned here with the relief   increase of commodity prices. Chief among
or reform measures. But it may be said in sl these measures is the A.A.A. In the third group
passing that the relief measures have been we find those measures which were aimed at an
necessary and unavoidable. They have been in s arbitrary rise of general prices. In this group
some degree unscientific, wasteful, extravagant, we find all the monetary and banking measures,
and tainted with political motive. But they including abrogation of gold obligations, de-
have been inevitable. The reform measures basement of the currency, and adulteration of
have been hastily drawn and arbitrarily passed, credit. And in the fourth group we find those
and not one has been free from serious error. _ measures which were aimed at artificial stimula-
They have discouraged enterprise and retarded tion of business, or pump-priming. In this
recovery. But it must be admitted that they group there is the P.W.A. and associated proj-
were aimed at definite evils. It would have been ects for stimulation of enterprise and extension
wiser to postpone them. But here again it of credit to business. l
might be conceded that some reform measures
were m°V1tabl°' THIS entire program is founded on economic
error. It rested first on the profound error
OUR concern here is with the recovery meas- that artificial raising of wages in depression
ures. And about them I speak frankly, first as promotes prosperity. The truth of the matter
an economist who sees the matter scientifically is that a major factor in prolonging depression
and secondly as a citizen who urgently prays is the continuance of high wages and high V
for an end of the distress and privstion of the salaries in certain industrial lines. A horizontal
people. And as an economist I reject and con- reduction of the higher wage and higher salary
demn the entire recovery program, For many ~ levels of prosperous times is the first essential
months I made an effort to justify it in part, y of recovery.
to condone its mistakes and to find in it some ` The program rested on a second fundamental
merit. I had to abandon the effort, The whole j, error that restriction of production increases
recovery program has been unsound in prin. prices and promotes recovery. Recovery comes 4
ciple, impractical in operation, and harmful in from increased consumption due to reduced.
result. It has consisted of a bewildering mass costs, this increase in consumption encouraging
of experimental measures forced upon the coun- production and employment.
6 · 7

 . . ing and adulterating the mixture behind the
The program rested on a third basic error ,
. 1 . . irredeemable paper that we use. The banks
that private enterpr1se can be forced to an arti- _ _
. . . . . . have been forced to absorb nearly 15 b1ll1on
ficial act1v1ty by squandermg public funds 1n _
, _ . dollars of government bonds. They are ceasing
unnecessary public works. The truth 1S that _ _ _ _
. . . . to be prov1ders of cred1t for private enterprise
such enterpr1ses discourage private enterprise _ _
. . and becoming agencies for government spend-
and create fiscal problems that frighten private , _ _ _ _
_ 1ng. The mater1als for a d1sastrous 1nflat1on of
V investment. . .
y . curre11cy and cred1t have been bu1lt up, and
And the program rested on a final econom1c _ _
. no one knows when these mflammable materials
error that debasement of the comage auto- .
. . . . . W111 set ablaze. Our currency measures have
mat1cally ra1ses prices and stimulates foreign . . .
_ d1sorgan1zed fore1gn trade, cruelly embarrassed
trade. The truth 1S that debasement of the _
. . . the gold standard countr1es of Europe, deepened
coinage operates to ra1se pr1ces only when con- . .
_ _ the m1sery of China, and retarded recovery the
d1t1ons are favorable and normally only after _ World Over
many months or years have elapsed, while the " . ` . . ,
. . . . _ This orgy of manipulation and experiment
st1mulat1on of fore1gn trade 1S merely tempo- y _ _ _
_ , and waste has gone under the euphem1st1c t1tle
rary and 1n the long run tends to discourage { . . ,
_ ; o economic plann1ng. I have no quarrel w1th
both imports and exports and to retard re- Economic lamlin what I dc 10 , th t
. re 1S a we
cover? have had xilo econcfmic planning? What we have
had is guesswork, and blind experiment, and
THE consequences of these errors are now vacillating and mutually destructive economic
apparent. Recovery has been definitely re- policies. And the excuse for these disastrous
tarded. Production has been restricted. Unem- errors has been emergency. lt was obvious from
ployment has grown worse. The population on the beginning that there never was an emer-
relief has grown to 22% millions, 1 in every gency which justified abrogation of contract
six of the population. The debt of the govern- and confiscation of property and violation ‘of
ment has increased by 8 billion dollars, with the Constitution. It is now clear that the one
many more billions already appropriated for emergency of any material character, the bank
the future. The South has lost a large part moratorium in 1933, was due to the widespread
of the cotton market on which the ros erit fear of debasement of the currenc b the i -
P P Y y y n
of both the South and the nation depends. coming government, and that emergency, which
Nearl a billion dollars has been collected in should never have develo ed was over `
Y p , 1n a
taxes on the bread and meat and clothes of ,few weeks and in no way justihed any sub-
the people to pay a cash dole to farmers for sequent measures.
destroying food and textiles in a hungry world,
d t th t t' th t ‘ . .
an_ a C Plzeécn mm C governmcn 1S F ROM the beginning the government admitted
guilty of the v1c1ous and unexcusable blunder . . . , ,
_ _ that lt was experimenting, and 1t promised that
of taxing the bread of the people to pay th1s .f . . , , _
_ _ _ 1 1tS experiments should fail 1t would desist.
same cash dole to farmers for ra1s1ng all the •- B . _
_ _ ut 1n the face of two years of complete failure
wheat they can. We are already 1mport1ng . h .
{ _ _ lt as never once admitted error. On the con-
ood from fore1gn countries. _ . .
_   t1 ary 1t has through 1ts spokesmen venomously
Our monetary system has become an mde- <* . . , _ _
_ _ . attacked 1mpart1al and honest cr1t1cs of the1r
scribable and unnameable m1xture of debased 1. . . . _ _
_ _ _ po 1C16S even while the POIICICS themselves were
gold coin, debased s1lver coin, and paper, and b . . . . .
» e1ng abandoned 1n hum1l1at1on and rout.
every day a useless and dangerous mass of dead And Hmm these Olicic h 1 d 1
. . . . . s
s1lver IS pumped 1nto the vaults, further d1lut- y° P ave 6 to Crue
9
  _

 deception of the people. It has encouraged there are things that government can do to
millions to embrace the absurd doctrines that improve our economic order. I want to see an
government can create and distribute wealth end of exploitation and overwork and under- -
and comfort without work, that all economic pay and manipulation and unjust enrichment
hardship is due to exploitation and unjust dis- quite as sincerely as any parlor pink in the
tribution. And we see the consequences here land. These evils can be in part removed by
in social bitterness, visionary and ludicrous government in due time. lBut what we need
economic schemes, and the rise of sinister and now is recovery from depression. I am a con-
dangerous demagogues. firmed optimist about our country, but I tell
This disapproval of the recovery program is you in all seriousness that a continuatioii of the
not presented to you with bitterness of spirit. present policy of interference, waste, and de-
I make no charges against the various men basement may bring economic disaster and
responsible for these measures. Perhaps we social revolution to a people that should be the
» can find in the Bible the best explanation of Q happiest and most prosperous people on earth.
their record: “they know not what they do.” »
This unfavorable view is presented to you in
the interest of recovery. I am not one of those e
prophets of doom who believe that disaster is
inevitable. It is not too late to applythe simple
economic principles that should have been
applied in the beginning. Recovery from de-
pression comes automatically, of itself. It de-
velops when the inevitable processes of defla-
tion and liquidation are complete. There is
some reason to believe that these processes had
worked themselves out by the summer of 1932.
However that may be, they had certainly been
completed by the summer of 1933. Recovery,
once in motion, is irresistible. But it can be .
promoted, and it can be retarded. It is pro-
moted by encouragement to private enterprise,
by reduction of tax burdens, by assurance of
sound currency, by economy and efficiency in
fiscal policy. It is retarded by fear- and un-
certainty and discouragement of private enter-
prise. For two years past recovery has been
at the door, begging admittance. All it asks now
is assurance that there will be no more experi- _ s
ments, no more interference, no more regimen- l
tation, no more waste, no more restriction of
production, no more debasement, no more re- A
covery by act of Congress. I speak to you 1 l I
tonight in the interest of recovery only. I want
to see an end of unemployment and privation
and charity doles in this nation. I know that
10 11 j