The Atlantic Report on the World Today: Washington


THE Wallace fight has thrown into sharp focus the second issue of our times after world peace: full employment. It is generally agreed that full employment is one of the guarantees of world peace. Time after time in Washington, foreign representatives have declared that the salvation of their countries depends on the maintenance of full employment in this country. The reason? More than half of the world’s realized economic power is located in America.

Both Republicans and Democrats are committed by their party platforms to working toward the goal of full employment. The great debate is over methods. The key point in the program Mr. Wallace left with Congress is a vast system of government loan guarantees. “I propose,” he told the Senate Commerce Committee, “that the government guarantee the lender against the special and abnormal risks which may be involved in achieving our objective” — sixty million jobs. Mr. Wallace would thus take risk-taking out of private enterprise. Presumably he would have the government determine who could have credit.

There will be an opportunity to examine these and kindred ideas after the forthcoming hearings on the Murray “jobs for all” bill. The bill owes a good deal of its sponsorship to James Patton, president of the Farmers’ Union. Under this bill the President at the beginning of every year would estimate the amount of private expenditure for the coming twelve months. The statisticians would then figure out the amount necessary to achieve full employment. The balance would be spent for public works or be otherwise invested by the government.

Ideas like this were bound to be at issue in Mr. Roosevelt’s fourth term. The hope of people who are opposed to all forms of economic planning is that the government will encourage those who can provide jobs. They think that a revamping of the tax system would do wonders. Regional development of river basins on the TVA model has likewise been suggested.

Emperor Jones

It is often said that Jesse Jones is the antithesis of Henry Wallace. He is supposed to be the symbol of free enterprise and the unplanned state. The notion is far from accurate. For the last decade Jones has built up the banking sinews of state control. He was head of the Reconstruction Finance Corporation, from which stemmed all manner of corporations, as, for instance, the Defense Plant Corporation and the much criticized Rubber Development Corporation.

All told, his Federal government enterprises command assets totaling 40 billion dollars. He could raise money at any time merely by floating bond issues. He was immune from control by the Comptroller General. In other words, Congress had virtually passed on to Mr. Jones the legislative power of the purse.

Mr. Wallace himself calls the RFC “the most tremendous financial power the world has ever seen.” No wonder Mr. Jones for the past decade has been called “Emperor” Jones. He has been practically a law unto himself.

The amazing thing about the Jones power is that Congress had lost track of its own responsibility for it. It took Jones’s power for granted, and readily fell in with his insistence in 1940, when the President offered him the post of Secretary of Commerce, that he should retain his loan empire as well.

But Mr. Jones ran afoul of some powers in the Administration and of a section of the American press in connection with war financing. In his pre-war purchases of essential materials his virtues as a cautious banker became vices. He haggled over price; he procrastinated. The result was that when Pearl Harbor came, this country was lamentably short of such things as tin, rubber, and quinine. But Mr. Jones continued to dillydally over wartime purchases, some of which we needed for war industry, others just to keep them out of enemy hands.

Stories used to circulate in the Capital about Mr. Jones’s unhurried financing. He was told, so rumor had it, that the Germans were buying up Turkish chrome at a fabulous price. “Let them do it,” he responded, with a chuckle. “That’s the way they’ll go broke.” At last Mr. Wallace, who was the operating buyer as head of the Board of Economic Warfare, blew up. He denounced Mr. Jones as an obstructionist. The row became the most notable in the Capital, and the President decided against Mr. Wallace, at the same time banning public feuds.

OPA is in the news with the long-deferred decision to apportion the nation’s cloth to manufacturers in a way that will get low-priced clothing to the consumers. The luxury business in clothing has been a wartime scandal. The mothers of America, observing the varieties of expensive clothes in the shopwindows, have been assailing OPA for neglecting children’s clothes. Workers, unable to get work clothes, have been equally indignant. Congress has become restive.

Whether the new allocation, when it comes, will meet the need is a question. There are those who feel that if the war lasts through this year, rationing at retail cannot be avoided. The present order should have gone into effect long ago. We should have had standardized shoes as well as standardized clothes, to save materials and labor, as we did in the last war.

Mr. Baruch tells the story of the experiment. He asked the manufacturers to confer in Washington on ways and means of grading a few shoe styles. After a long deliberation they came to Mr. Baruch and confessed that they could do nothing. “Too bad,” said Mr. Baruch. “I had depended on your expert knowledge. I shall now have to do it myself. Too bad — I know nothing about shoes.”Agreement was soon attained.

The new Congress

Fifteen newcomers are sitting in the Senate out of ninety-six. All of them except Senator Capehart of Indiana are pronounced internationalists, the opposites of their predecessors. Among those who won their spurs in the states, the advance reports are as favorable as the records. Moses of North Dakota, Saltonstall of Massachusetts, and McMahon of Connecticut have a chance to make their mark. The chance is increased by the voters’ repudiation of the old Republican leadership.

On the House side the noteworthy change is that the egregious Hamilton Fish and the equally egregious Dies are out. The fact that the House set up a new “Dies” Committee, however, is not indicative of a sense of responsibility. It was done by a combination of Northern Republicans and Southern reactionaries. Even the minority leader, Joe Martin, had a hand in it, and those Republicans who refused to follow the party lead felt the weight of his censure. For instance, Mr. Herter of Massachusetts was dropped from consideration for the Ways and Means Committee for the reason, apparently, that he had voted against the “Dies” group.

The South speaks up

Should the Federal government be allowed to assume the main burden of government aid? The states can do a great deal. A pioneer in the assumption of state responsibility for prosperity, Governor Ellis Arnall of Georgia, is leading the fight with the railroads over rate discrimination against Southern states. California, among the Western states, may join Georgia. The fight, which has come before the Supreme Court, is of immense significance to the future of the South and to economic development generally.

Arnall is preaching to the states that they have responsibilities as well as rights. In his own state his program is: For agriculture, diversification; for industry, encouragement and growth; for state government, a role of active inspiration of state development. “Why must we always be running to the RFC?” he says. “Why not have an RFC of our own? Let us be a compensatory spender.” Arnall has become a voice in the aroused South.


The mood of the Capital supports Mr. Roosevelt’s commitments in Europe. Senator Vandenberg’s speech made a deep impression. His plea for the prompt signature of an inter-Allied pledge to keep our enemies demilitarized had a tonic effect. The Capital had been waiting for a lead.

The Big Three talk in the Crimea is still in the spotlight. A demilitarization treaty, it is felt, would be acceptable to Congress, especially now that the Russians have reconsidered the issue on Poland. And in other respects the Crimea agreement is hailed with satisfaction by leaders of both parties. Of course, much of it still lacks clarity, but an understanding to appoint a central control commission in Berlin puts an end to the doubts that Stalin would not cooperate in a common occupation policy in Germany. Perhaps the item that has aroused most curiosity and hope is the promise to continue military and political consultation.

How can we ward off post-war inflation? Men as far apart as Bernard Baruch and James G. Patton say that inflation is our number one problem. Washington thinks that the approaching end of organized Nazi resistance may be only the beginning of our troubles, political and economic.