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JUNE 3, 1916.--Ordered to be printed
PRESENTED BY MR. SIMMONS
1.
PROGRESS AND PRO
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HO
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THE U
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1st Session
PROSPERITY AND THE FUTURE
64TH CONGRESS
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PROSPERITY AND THE FUTURE.
BY HON. WILLIAM G. McADOO,
Secretary of the Treasury
The United States is enjoying the greatest era of prosperity in its
history, and the outlook for the future of the country was never so
bright. Unlike all previous periods of great business activity, the
present ascendency in all lines of industrial endeavor possesses all the
elements of permanence, provided we avail of the opportunities,
which are being literally thrust into our hands, with that intelligence,
energy, and enterprise so characteristic of the spirit of the American
people.
Prosperity has permeated every corner of the country. Every line
of business is pulsating with it. Every industry is driving at top
speed of profitable activity. Labor is employed throughout the land
at the highest wages ever known, and the demand for labor in all parts
of the country seems to be in excess of the supply. Never in American
history have conditions been so favorable to American labor, Ameri-
can business, and American industry. We have not alone the full
dinner pail but the overflowing dinner pail.
RURAL CREDITS.
Agriculture, which is the basis of all prosperity, is experiencing a
most wholesome growth. The farmers of the United States in all
their history have never enjoyed such splendid rewards for their toil,
and never before have the economic conditions and the laws already
enacted by a Democratic administration so justly favored them.
The rural-credits bill, which will soon be passed and approved by the
President, will emancipate the farmer from many of the most serious
ills he has so long endured and provide the long-time credits, at low
rates of interest, so essential to the remunerative and productive
development of the farming industry.
THE FEDERAL RESERVE ACT.
Money and credit are abundant; the ghost of panic has been
securely laid. In the midst of a war-torn and war-worn world, with
adversity crumbling the economic foundation of almost every other
great power, the financial, commercial, and industrial conditions in
the United States are phenomenally sound and exceptionally strong.
This is due not to transitory war orders, or ephemeral trade, but to
the amazing economic strength of the United States.
The Federal reserve act, which is now generally conceded to be
the most constructive measure placed upon our statute books in a
half century, is the greatest contributing factor in this happy con-
dition. The Federal Reserve System has been in operation }º. than
two years, during which time the Nation has passed through the
reatest crisis and strain the world has ever seen. We have success-
ully withstood the shock of the European cataclysm, and have
rebounded into the most unexampled prosperity any nation has ever
known. The Federal Reserve System has provided the elastic and
º 3
3{}} 452

4 PROSPERITY AND THE FUTURE.
responsive credit resources required for the expansion and growth
of business and for the development of our country. ---
The strait-jacket in which the business and industry of the
United States have been cramped and limited by the old financial
laws of the Republican party has been shattered and the country
may now grow without restriction to the full limit of healthful and legit-
innate expansion. Not only has the reserve system provided ample
credit resources and strengthened the financial structure of the
country immeasurably, but it has caused a more equitable diffusion
of credits; has reduced rates of interest and has mitigated already,
and in great measure, the abuses of usury in those parts of the
country where usury has been a serious handicap to business and
cnterprise. What this means to business men and all classes of our
people is too obvious to describe.
THE NATION SAVED FROM A PANIC.
It is a significant fact, and it is an achievement of which the
administration may well boast, that when the country was on the
verge of appalling panic at the outbreak of the £uropean War in 1914,
it was the decisive and adequate measures taken by the Government
at Washington that prevented this panic and laid a secure foundation
for the great prosperity we are now enjoying. It was the leadership
and action of the Government at Washington that saved the country
in this great crisis. This is said in no spirit of depreciation of the
important cooperation the leading bankers and business men of the
country gave to the Government in that critical time.
What a contrast this is to the ineffectiveness of the Roosevelt-
Republican administration at Washington during the panic of 1907,
which left the country prostrate for many years and brought immeas-
urable disaster upon the American people.
RESOURCES OF THE NATIONAL BAN KS $13,838,000,000.
Nothing is more indicative of the amazing growth of the country
than the condition of the banks. The Comptroller of the Currency
states that in March, 1916, the resources of the national banks
amounted to $13,838,000,000, exceeding by $370,000,000 the greatest
resources ever known in the history of the national banking system.
The resources of the national banks were $2,271,000,000 greater in
March, 1916, than in March, 1915.
This marvelous increase in one year exceeds, the Comptroller
states, the entire resources of the Reichsbank of Germany, as reported
in February, 1916.
The aggregate resources of the national banks of the United
States now exceed by approximately $3,000,000,000 the combined
resources of the Bank of England, the Bank of France, the Bank of
Tºussia, the Reichsbank of Germany, the Bank of the Netherlands,
the Swiss National Bank, and the Bank of Japan.
The total deposits of the national banks in March, 1916, amounted
to $10,790,000,000, an increase in three months of $411,000,000, and
an increase over March, 1915 (one year), of $2,198,000,000. *
These figures are so prodigious as to be almost unbelievable. They
reflect infallibly a degree of prosperity as wide and deep as it is
amazing and gratifying. One can not speak of this record without
superlatives. Even the infallible and sanctified Republican Party



PROSPERITY AND THE FUTURE. 5
could not have done better! Perhaps it is heresy to say this, but may
the IDemocrats not reasonably claim that since the Republican Party
never did anything like so well as this for the country during the many
years it had control of the Government, it certainly could not have
done better than the Democratic Party has done, as shown by these
impressive figures and by the results which are visible to every man,
woman, and child in America to-day. Has the Republican Party ever
done even as well ?
Tj} E TARIFE”.
Judge Gary, head of the United States Steel Trust, and a leading
Republican statesman, in a recent speech in New York, bewailed the
fact that the high protective tariff, which is the sanctified doctrine
and cure-all remedy of the Republican Party, has not been in force all
this time, and he almost weeps as he appeals to the country to restore
this Republican system of subsidies, conferring upon the great manu-
facturers of this country, the right to tax the people for their own
benefit. If this is a sample of Republican statesmanship, then it may
well be asked whether or not the Republican Party could have managed
the affairs of the country as well as the Democratic Party has man-
aged them during the past three years.
In the face of the greatest prosperity ever known in the history of
the iron and steel industry—prosperity brought about under the
Democratic tariff law enacted in 1913—and with the coffers of every
iron and steel industry in the country overflowing with plenty, Judge
Gary seriously asks the people of this country to restore the high pro-
tective policy and subsidy system of the Republican Party. What is
there in present conditions to justify such an appeal . How can the
people be convinced that the iron and steel industry should be given
new advantages and additional subsidies and privileges in the light
of the huge profits they are now earning 2
The present tariff law—the Underwood-Simmons Act—made a
reasonable reduction in the customs duties, transferring a part of the
burdens of taxation from the backs of the masses of the people to
the ample shoulders of wealth, which have never, under the Repub-
lican system, borne its just proportion of the burdens of government.
The Democratic system is the just system. The Republican system
is the privilege system. The people will not repudiate the former
and ădºi. readopt the latter in view of the demonstrated
fallacy of the claim of the protected industries that they need to tax
the people for their own benefit in order to make a profit. Every
reasonable man wants industry to thrive and prosper, and every
reasonable American citizen is willing that enterprise shall have a
just and fair opportunity, but while conceding this to enterprise and
business, democracy claims that like treatment should be accorded
to the masses of the American people.
OPPORTUNITY AND RESPONSIBILITY.
The prosperity of the country is strikingly reflected in the surplus
reserves of the national banks. These reserves are now so great
that they give the national banks a further loaning power of three
to four billion dollars. If we add to this the loaning power of the
State banks and trust companies of the country, we have an aggre-
gate approximating the astounding total of $6,000,000,000.
:
;
i

PROSPERITY AND THE FUTURE.
These great resources carry with them both opportunity and respon-
sibility—opportunity to serve the Nation's needs in the highest degree
and to extend assistance to Europe and the Orient and to our splendid
neighbors of South and Central America who are suffering severely for
the resources needed for their own development; responsibility to
so use these resources that they will be employed in legitimate and
wholesome enterprise and development, and not for speculation or
inflation.
The duty devolves upon the bankers of the United States, because
the responsibility rests primarily upon them, to curb speculation and
restrain inflationary tendencies. The Federal Reserve Board at
Washington will use its power to assist in the wholesome use of the
great credit resources of the country and to prevent unhealthful
tendencies; but the banks themselves have the chief power and
responsibility; the Federal Reserve Board can only contribute toward
this result to the extent that the law gives it the necessary authority.
ANTI-D'UMPING LEGISLATION.
When i speak this word of caution about speculation and inflation
I must at the same time express my lack of sympathy with the views
so strenuously put forward, and I think for selfish motives primarily,
by some people, and for political purposes by many partisans, that the
United States must face a period of serious depression, if not possible
disaster, upon the conclusion of peace in Europe. Some people are
undoubtedly honestly impressed by these claims and are genuinely
apprehensive about the future. Aside from the partisan purpose of
#. propaganda, unreasonable fear alone seems to me to be at the
base of all honest apprehension on this score.
An analysis of the conditions in the United States and of the pos-
sible economic effects of the war in Europe does not, in my opinion,
give the slightest justification for any fear for our prosperity. A
Democratic Congress, however, out of deference to any honest appre-
hension that may exist in the minds of business men, will enact
legislation against the dumping of cheap European goods in our mar-
kcts and will prohibit by law unfair competition by foreign competi-
tors with American business men and manufacturers. While I do
not believe these measures are essential, I favor them simply as a
precaution and as an assurance to the timid and hesitating.
When I contrast the enormous financial and economic strength of
the United States and the extraordinary skill and creative genius of
its people with the depleted resources and the weakened economic
power of the great European nations and the destruction of so much
of their skilled labor and manhood, I feel somewhat ashamed of the
fright and timidity manifested by some people of the United States
whom we have been accustomed to regard as really strong.
When peace is restored to Europe the belligerent nations will find
themselves burdened with an almost insupportable load of debt.
Taxation, both oppressive and excessive, must be borne to pay the
interest on these debts. Taxation is an important factor in, and
adds materially to, the cost of production, and will seriously affect
the competitive capacity of Germany, France, England, and the other
industrial nations of Europe. Many of their skilled workmen have
been lost and new ones must be created; many of their industries
have been destroyed and must be reconstructed. Their credit re-
sources are seriously impaired. Other serious difficulties must be
:

PROSPERITY AND THE FUTURE.
7
overcome if they are to regain their foreign markets. Against these
formidable handicaps and terrible conditions is it believable that the
American people, with their highly developed industrics and skilled
labor, matchless resources, exceptional Creative genius, and produc-
tive capacity are unable to sustain themselves in a fair contest for
their share of the world's markets' Can it be truthfully said that
our economic safety and prosperity will have to face any real peril?
It is almost discreditable to our intelligence to have to argue such a
proposition.
A TARIFF COMIMISSION.
We are also going to pass a bill for the establishment of a non-
partisan tariff commission in order that the tariff may, as far as
possible, be taken out of politics. Through careful investigation
and study by this commission, reliable facts and data will be obtained
for the intelligent consideration of the Congress. The Democratic
Party is keeping abreast of the times, and, through the instrumen-
tality of this commission, the Congress will be able to consider all
tariff questions in the light of changed and changing world conditions.
WHEN THE EUROPEAN WAIR ENDS.
There are those who say that the loss of war orders after peace
comes in Europe will seriously affect the industries of our country.
This is absurd. The percentage of war orders, contrasted with the
entire domestic and foreign commerce of the United States, is insig-
nificant. When war orders cease—and God grant that the necessity
for them may cease soon—we shall receive orders, even from Europe,
for the restorative purposes of peace, for the reconstruction of ruined
industries and cities, and for the relief of the stricken markets of Ger–
many and Austria, which have been closed to us for the full period
of the war. Our trade to Austria and Germany alone for the last
year prior to the outbreak of the war amounted to $367,500,000. All
this trade will be regained, and in addition to that, if we are in the
least intelligent and enterprising, the great markets of South and
Central America, which have been seeking us for the past two years,
will more than offset any possible loss of war trade. The total im-
ports of South America alone, exclusive of those received from the
United States during the last year of available statistics prior to
the outbreak of the lºuropean war, were something like $700,000,000.
The great oriental trade is also before us.
AN AMERICAN MERCHANT MARINE.
Here is a wonderful field for American enterprise and business—a
field which we would already have securely occupied if it had not been
for the disastrous action of the Republican Members of the Senate,
aided, I regret to say, by a few Democrats, in filibustering to death
the bill introduced by the administration in September, 1914, for
the purchase of $40,000,000 worth of merchant ships to be used by the
Government of the United States for the protection of our commerce
with all the nations of the world. The failure to buy these ships was
a fatal and irretrievable mistake. It is a striking example of narrow
partisanism. If we had bought in the fall of 1914 or the early days
of 1915 $40,000,000 worth of merchant vessels, which could have
been had at that time at the low prices of from $40 to $60 per gross
ton, those same vessels could be sold to-day by the Government for

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8 PROSPERITY AND THE FU TURF. #
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at least 380,000,000. In one year these same vessels could havé;#
earned fifty to one hundred million dollars of net revenue, while a i
the same time carrying American products for the farmer, the manu:
facturer, and the business man at one-third of the existing extor;
tionate ocean freight rates. i
When the historian of the future studies this period, he will say;
that the failure of the United States Government in the fall of 1914;
was one of the monumental and inexplicable blunders of the time. §
The necessity for the creation of an American merchant marind
for the regulation of ocean freight rates and for the establishment of
a shipping board is just as imperative now as it was then. A Demo
cratic House has passed such a bill, carrying with it an appropriation
of $50,000,000 for the construction and purchase by the Government
-I
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of a merchant marine, to be utilized both as an essential naval aux
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is so much talk and in which our Republican friends profess such ari
interest, how can they justify their vote against this measure, whichiji;
is just as essential to a strong and effective Navy as the guns on the
decks of our battleships or the coal in the bunkers of our war vessels:
#!!!
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And yet most of the Republicans voted against this essential measuri
when it was passed recently in the House of Representatives. #
I believe this bill will soon pass the Senate of the United States and;
|
receive the approval of the President. When this happens, another
great constructive measure for the prosperity and prestige of our be
loved country, second only in importance to that of the Federal re-
serve act itself, will have been secured for the American people. Th
Stars and Stripes will again be seen upon the high seas. The safety o:
|
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our commerce will no longer be jeopardized by reliance upon foreign;
flags. The lives of American citizens who must travel upon the higli
seas will no longer be endangered on ships of belligerent flags bei
cause there are no American ships to protect them; and the efficiency;
of our Navy will no longer be imperiled for want of the necessary
* . . . . . ;
* : *
naval auxiliaries to supply our ſighting units with the coal and proviš
- * ... - ** - C- -- - - - #:
sions and ammunition which can not be supplied to them in case of:
war except through an efficient auxiliary merchant marine. º
|
TIIE FILA G. #
ſ
The flag of our country, whether we wish it or not, has a meaning;
beyond our own territorial limits. By the decree of God and by des#
tiny we have been thrust into a position of power, carrying with it;
world-wide responsibilities and forcing upon us in all probability ºft
measure at least of world dominance. That flag must never stand;
for a failure to meet any domestic or international responsibility;
that flag must forever continue to represent the true spirit and cour;
age and genius and ideals of the American people, and, above all, it
must stand for truth and justice and fair dealing with all the world;
It must stand for peace—peace which reflects the Heaven-given light:
of truth and justice; a peace we shall never be willing to disturb except;
.
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in a cause whose shield is truth and honor—emblazoned by a light off
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such radiance and purity that every American citizen will be eager for:
the glorious privilege of shedding his blood in defense of it. w
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