TMTs Volume is for
REEZKENCE USE ONLY
* * a
Intercollegike ;
(Volume XIV) ?v
THE YEAR BOOK OF COLLEGE DEBATING
YALE- OXFORD PRINCETON UNIVERSITY OF WISCONSIN
UNIVERSITY OF MICHIGAN UNIVERSITY OF SOUTHERN
CALIFORNIA UNIVERSITY OF GEORGIA UNIVERSITY OF
ARIZONA NEW YORK UNIVERSITY MARQUETTE UNIVER
SITY BELOXT WOOSTKR BUCKNELL COLGATE
OCCIDENTAL FRESNO STATE TEACHERS COLLEGE DELTA
SIGMA RUO
EGBERT RAY NICHOLS
Professor of English langmge and Literature
University of Redtands, California
T
NOBLE AND NOBLE, Publishers
76 FIFTH AVBNUB NEW YORK CITY
Copyright, 1933
By NOBLE AND NOBLE
PRINTED M
EDITOR S FOREWORD
THE title of this little dissertation might be "De
bating under the Depression," or perhaps it should
be, "Debating Surmounting the Depression/ for, after
all, that is what it seems to be doing. The testing point
is, of course, the debate trip. If the colleges have no
money for debate, there can be no trips, and, as is
generally known, all of the colleges have been forced
to retrench during the past two years. It is a good
testimony to the value placed upon debating that the
colleges have not sacrificed it in these difficult times.
There has been ? during the past season a surprisingly
large number of debate trips on a commensurate scale
with those of the prosperous days before 1929, Lack
of money did not prevent or gainsay them, and these
trips were in addition to the regular debate schedule
maintained with neighboring colleges.
Perhaps one of the interesting episodes arising out
of the lack of funds for came when the Weber
College team from Ogden, Utah, scheduled a trip to
Southern California on they called "official hitch
hiking." The tracking interviewed
and for the debate team to
travel to its on freight tracks.
The trip to Los was made on an
Los side trips
ii
vi EDITOR S FOREWORD
ing. Those who have entered the tournaments are
enthusiastic for this new form of debating, and the
possibility of getting so many debates concentrated in
one place has encouraged trips in spite of the depres
sion.
When the first big tournaments were introduced by
Pi Kappa Delta the conservative debate world held its
breath and said, "Impossible." However, the move
ment succeeded. The more aggressive colleges sent
teams, liked their experience, and the tournament was
ushered in to stay. Now, all sorts and types of tourna
ments are being conducted. First, there is the Practice
Tournament. This type is held early in the debate sea
son before any of the colleges have solidified their de
bate cases. In fact, the tournaments following one
upon another during the season have encouraged teams
to keep their cases in a growing and developing state
until the very end of the season. Tournaments of this
type originated at Southwestern College, Wmfield,
Kansas, where an annual meet is held in December
when the teams are beginning to study the seasons
debate question seriously. They learn much from one
another, and as the season progresses are ready for
other debates and tournaments with re-constructed
arguments and cases. This idea has spread over the
country and several colleges are holding annual Prac
tice Meets.
- Second, there is the Novices Tournament Only
inexperienced debaters who have never competed In
league and conference contests are eligible to part.
The prime motive of this tournament is to train and
EDITOR S FOREWORD vii
develop new debaters. It was first used by the Los
Angeles Junior College during the last debate season.
Third, The League or Conference Tournaments.
These meets are designed to take the place of the old
schedule of debates maintained by colleges associated
together. Holding a tournament to decide the League
winner Is more economic in time and money and is
growing in popularity. The meeting promotes good
fellowship and sportsmanship.
Fourth!, there is the Mixed Tournament, In this
type Junior colleges, and four year colleges send both
men s and women s teams to compete in the same meet.
The usual thing is to separate the two types of colleges
and to allow no mixed competition,
Fifth, Regional Invitational Tournaments. These
meets, open to all comers, usually divided into classes
of competition^ are held toward the end of the debate
as a sort of climax or goal to work toward*
and arguments are pointed toward such meets
unless there is a National in the offing in which,
they are a part of the, program of preparation.
Sixth and final! the National Convention Tourna
ments* These meets are held annually by some organ
isations and biennially by others the high school and
junior favoring the annual tournament and the
the biennial meeting. As many as a hundred
have met in one division of these National Con-
notably that held by Pi Kappa Delta*
The tournament may use any type of de-
Plan, University Plan, Non-decision
or or you will In several instances the
viii EDITOR S FOREWORD
first part of the tournament has been non-decision fol
lowed by a decision meet. Various plans of rounds and
eliminations have been tried. Usually the coaches do
the judging assisted by persons available where the
tournament is held. The adaptability of the tourna
ment plan has been demonstrated. It serves a small
group and a large group of teams equally welt
The tournament has taken the emphasis off of win
ning to a very great extent and has placed the stress
on training received by competition and on good sports
manship. These large meetings generate considerable
enthusiasm, extend acquaintanceship, and teach the
debaters very rapidly many things they could not ob
tain from their coaches. The economy of the move
ment enables the coaches to enter a much larger squad
on the same amount of money, an amount spent a few
years ago on a single intensively trained varsity team*
It has become the practice of many colleges and junior
colleges to enter as many teams as the rules permit,
and to beg for a chance for more debaters to attend*
This, in itself, takes the emphasis off of winning. The
whole squad goes now, debates and learns what it ca%
while in the past only the champion gladiators of the
platform were allowed to travel or to compete with
rival colleges. This extension of the benefits of debate
training to more students at no additional cost is an
other of the explanations why the tournament is popu
lar and is here to stay. For these many reasons the
educational value of the tournament is now unques
tioned.
The depression has, of course, hastened the aban-
EDITOR S FOREWORD ix
donment of that older aid to the debate trip the
guarantee. Now, as a rule, no cash guarantees are
given; only twenty- four hours entertainment is offered,
the entertaining school defraying the other expenses of
the debate. It was felt that the contract involving
guarantees amounted to paying one s own expenses
anyway, when a return debate was agreed upon for the
succeeding season on the same terms. The only ad
vantage was that the traveling team had the use of
the money when it was needed. This slight advantage
was given up on the thought that each college should
pay the expenses of its own traveling teams. The
frequency and the generality of the long trip made the
interstate debate or the inter-sectional debate so com
mon that no college would pay any longer for the
privilege of entertaining a team from a distance* The
novelty of receiving the far travelers wore off ? and the
demand centered on obtaining the most debates for the
money* More training could be gained for more people
on the same expenditure with less cost per debate. The
depression was not entirely responsible for this atti
tude* Debate managers were forced to economize.
At best their account was only grudgingly tol
erated on the balance of the Associated Students,
and graduate and the demands for larger
athletic programs the debaters to get the most
out of the allotment them. The influence of
Scotch blood in student was evident before the
and restriction of funds since the
an growing tendency.
It to be this economy attitude
x EDITOR S FOREWORD
is going to have on the international debate. It has
not destroyed the debate schedule or the debate trip,
so perhaps it will not greatly affect the international
debate schedules.
The depression has had a marked effect also on the
subjects under discussion. A few years ago debate
subjects became scarce that is good ones. The
process of collecting debates for a book such as this
forced one to take note of that fact. In addition the
custom of naming a single subject for almost the entire
country by such large organizations as the Pi Kappa
Delta Forensic Honor Society and the National Foren
sic League of the high schools reduced the available
debates considerably. The depression has brought in
a considerable number of new subjects, some of which
will be found in this volume, and has re-popularized
many old subjects such as Socialism, and Government
Ownership. Among the new subjects are Limitation of
Wealth (by income and inheritance taxes), Controlled
Inflation of Currency, Control of Industry, Unemploy
ment Insurance, Reduction of Wages, Capitalism, Con
trol of Banks, Domestic Allotment Plan of Farm
Relief, Dictatorship, and Methods of Taxation. Most
of these discussions bear a direct relationship to depres
sion problems, and are bora of hard times.
The survey of the debate season taken last fall
(1932) indicated that approximately fifty subjects
would be discussed among the American colleges. This
was a larger number of different subjects than had been
used during the immediate preceding years. It Is true,
of course, that more different subjects are used in years
EDITOR S FOREWORD xi
when the large conventions of the National Forensic
Societies are not held. On years when the National
Conventions meet the colleges concentrate more on the
main or National subject chosen. When there are no
National Conventions in the debate season, the local
conferences break away from the National choice of
subject more freely. The many interesting subjects
arising because of depression conditions added to the
tendency to break away from the National Subject this
year.
The leading subjects debated the past season have
been Taxation of Invisible or Intangible Property by
the High Schools ? and Cancellation of War Debts by
the Colleges and Junior Colleges. Control of the
Banks, the Mid-West subject, was perhaps ne%t in
popularity with the colleges. Some of the Universities
in the Middle West debated the Taxation question.
The Ohio colleges discussed Limitation of Wealth
through Inheritance and Income Taxes. A Third
Party Movement was debated in Illinois and Occupa
tional Representation in Legislatures and in Congress
was used in Michigan, Also State Police Force was
discussed in Michigan. The other subjects had only
scattering adherentSj and were used as additional or
supplementary subjects to the main one Cancellation
of War Debts which was almost universally discussed.
Next year the conventions of the National Forensic
honor are due again* The National subjects
are either chosen or by preliminary vote. The
National Forensic or the National High School
question Is concerned with Radio Broadcasting for next
xii EDITOR S FOREWORD
season. Pi Kappa Delta and Phi Rho Pi will probably
discuss Control of the Banking System. At least this
subject has won in the spring vote, with Currency In**
flation in second place.
Since the depression has not stopped the debate trip,
the sectional tournaments, nor dulled debate enthusi
asm, the prospect for next year s conventions is good.
In 1932 all agreed that the conventions would be poorly
attended but that did not prove to be the case* This
past season the National High School and Junior Col
lege organizations held successful conventions and
tournaments. It is likely that the conventions sched
uled for next year will be largely attended, and much
more successful than the times warrant. The virility
of debating must be quite a shock to the howling Cas-
sandras who have been heralding its death for lo these
many years! Much has been written concerning de
bate that has not been abreast of the times. The
debating activity has just marched off and left some
unobserving people marooned with an outlook ten
years out of date. One of the marked things about
college debating since it began in the early nineties at
Harvard and Yale has been its constant change, growth^
and development. Each decade it presents an entirely
new face. Some persons have mistaken, change for
decay, transition for demise, and new forms for the
final abandonment of the entire activity, but the true
story is one of progress and improvement, and the
future is full of hope hope guaranteed by
realization and vigor*
B0BIBT RAY NICHOLS
TABLE OF CONTENTS
PAGE
FOREWORD iii
REVENUES FROM INTANGIBLE PROPERTY (Western
Conference Debate) ......... 3
University of Wisconsin vs. University of Michigan.
Bibliography
SOCIALISM (An International Debate) . * . . . 77
Yale University Oxford University (England)
Bibliography
CANCELLATION OP WAR DEBTS (Pacific Coast Pi
Kappa Delta Province Tournament Champion*
ship) 121
Fresno State College vs. University of Southern
California
Bibliography
WAE DEBTS .............. 167
Delta Sigma Rho Public Discussion
AMERICAN LEGION SHOULD BE CONDEMNED * . , 203
Princeton University vs University of Georgia
Bibliography
GOVERNMENT CONTROL OF THE BANKING SYSTEM , 25 1
Beloit College vs* Marquctte University
Bibliography
LIMITATION OF WRAITH * * . 32 S
of Wooster Affirnmttve and Negative
Bibliography
Potter w ....... 369
Bucknei! University Affirmative and Negative
Bibliography
XIV CONTENTS
PAGE
A PRESIDENTIAL DICTATORSHIP 419
Colgate University vs. New York University
Bibliography
RADIO BROADCASTING 467
Occidental College vs. University of Arizona
Bibliography
APPENDIX I 507
List of Subjects covered in Intercollegiate De
bates, Volumes I-XIV
APPENDIX II . 517
List of Colleges represented in Intercollegiate De
bates, Volumes I-XIV
INDEX 521
REVENUES FROM INTANGIBLE
PROPERTY
Western Conference Debate
REVENUES FROM INTANGIBLE
PROPERTY
UNIVERSITY OF WISCONSIN AFFIRMATIVE
VS. UNIVERSITY OF MICHIGAN NEGATIVE
The Western Conference Debates, held in December, were upon a
question much discussed throughout both Colleges and High Schools
in the 1932-33 Debating Season. The question was stated: Resolved,
that at least one half of all state und local revenues should be derived
from sources other than tangible property,
The speakers for the Affirmative in this debate were David August,
0. Glenn Stahl and Harry L. Cole of the University of Wisconsin.
Negative speakers were James Moore, Victor Rabinowitt and Nathan
Levy of the University of Michigan. Dean G. C, Sellery of the
University of Wisconsin presided at the debate and introduced the
speakers.
Professor Reiford Mitchell, of Lawrence College, acted as Critic
Judge and gave his decision to the University of Wisconsin Affirm
ative Team.
These were contributed by Professor H* L Ewbank,
Coach of Debate at the University of Wisconsin.
Introduction, Dean G. C. Sellery
It gives me very pleasure as a member of the
faculty of the University of Wisconsin to play the
honorary rdle of presiding officer. It gives me also
great as a Professor of Medieval History to
see still strong. Debating under the
medieval of was the most character
istic activity, the pedagogical device, of
medieval A his degree by
I
4 THE YEAR BOOK OF COLLEGE DEBATING
debating, by arguing, by demonstrating a thesis. Un
fortunately, debating no longer occupies the central
curricular position it had in the medieval ages, al
though it still survives in connection with the doctor s
degree, when the candidate has to defend his thesis
before the presiding judges or professors.
That the debate was very important in the medieval
ages I think I can illustrate rather neatly by referring
to a circular sent out by the University of Toulouse in
1229, a trifle over 700 years ago. The University of
Toulouse had been recently founded in the old Al-
bigensian territory. Its sponsors were very anxious to
secure a good attendance, so they sent a circular out
among the European Universities advertising the ad
vantages at Toulouse. After explaining that the wine
was very good there, that the rents were low, that the
girls were pretty, they said, "Moreover disputations
are held at Toulouse twice as frequently as they are
held at the University of Paris." That was supposed
to demonstrate to every one, that if he was an up and
coming student he should come to the University of
Toulouse.
I have been asked, before calling upon the first
speaker to make two announcements to the audience.
First, that the coaches and members of the debating
squads of the nearby high schools are invited to attend
a meeting of these debaters and other interested
persons in Tripp Commons in the Memorial Union
Building immediately after the conclusion of this con
test. The judge and a number of the varsity
will discuss the details of the question*
REVENUES FROM INTANGIBLE PROPERTY 5
The second notice relates to the ballots which are
appended to the program. There are two types- Don t
be worried if you haven t both; you are supposed to
have only one. On one of these ballots you are re
quested to mark your decision as to the successful
team. Those who receive the second type are asked
to decide and record their judgment as to the relative
success of the debaters, to rank the six debaters in
the order of their merit.
Ladies and Gentlemen, I have the honor to call upon
Mr. David August to open for the Affirmative,
First Affirmative, David August
University of Wisconsin
LADIES AND GENTLEMEN: Today marks exactly one
month since you went to the polls in the presiden
tial election, and in that campaign no issue was so
widely discussed as the question of taxation. We have
been particularly anxious to have the privilege of dis
cussing the subject with the Gentlemen from Michigan.
It has been well said that the power to tax is the power
to destroy. Obviously no nation deliberately uses tax-
ation as a method of destruction, but rather as an
instrument to encourage industry and initiative among
its people. In working out a satisfactory tax system,
we face the difficult problem of finding the fairest and
most enlightened of meeting the cost of govern-
ment y a plan which will not overburden those least able
to pay. It is this consideration which moves us to
that at one-half of all state and local rev-
6 THE YEAR BOOK OF COLLEGE DEBATING
enues should be derived from sources other than tan
gible property.
At present, state and local governments are making
a futile attempt to raise three-fourths of all their rev
enue from a single source, namely tangible property;
whereas they collect only one-fourth from sources
other than tangible property, including income taxes,
inheritance taxes, motor vehicle and gasoline taxes,
and the like. What we are proposing here tonight is
that we should redistribute the tax burden and so pro
portion it as to lighten the heavy load which now rests
upon the owners of tangible property and thus raise
a proportionate share from other sources. At present,
by consulting expenditures on state and local budgets,
we find that public welfare and public education costs
fifty-eight per cent of the total revenue collected. The
construction and maintenance of public highways
represents twenty-four per cent, and protection only
eighteen per cent.
Our proposal is that we should raise the fifty-eight
per cent needed for state and local education and wel
fare by means of a state income tax. We also propose
to maintain our highways, twenty-four per cent, by
means of a motor vehicle and gasoline tax. Thus we
would rely on real estate for the eighteen pet
needed for protection. Now, this is a rather
plicated proposal; so that we may perfectly
on this, I will furnish the opposition with a copy of
this plan. We urge this ^apportionment, first of all
because the present situation is intolerable;
because the proposed shift is perfectly feasible; and
REVENUES FROM INTANGIBLE PROPERTY 7
third, because It will produce a more equitable situ
ation than at the present time; a situation which is
overburdening the farmers and the home owners and
the business men.
At one time in our nation s history tangible property
was the only form of taxable wealth, but the latest
report from the Minnesota Tax Commission gives this
statement: "The rapid growth of intangible wealth in
recent years in the form of stocks, bonds and other
credits, affords new opportunities for the investment of
the salaried group who contribute but little to the ex
penses of the government under which they live and
prosper," Now, this failure to extend the tax base to
meet new social and economic conditions has resulted
in a long list of flagrant inequities, a list so long we are
forced to bring in a general indictment of the property
tax* In one case here we have four Wisconsin, fanners
who barely made ends meet m 1930. This is a Wis
consin example but it applies to the precise situations
in Michigan, in Minnesota, and other states of the
union. On the other hand we have twenty-five Wis
consin residents who sat at home and did nothing but
clip coupons* The farmers were taxed twelve hundred
dollar8,the combined bill of those four farmers; but
what did the twenty-five Wisconsin coupon clippers
who clipped three million dollars worth of coupons
pay? They paid forty-one less than the com
bined tax bill of the four farmers. Situations of this
nature compel us to say that there is an unjust and
unequal burden upon the farmer and home
owner.
8 THE YEAR BOOK OF COLLEGE DEBATING
Here again we have the situation of a Green County
farmer who made little or no net income from the
farm in the year 1930 but was taxed two hundred
seventy dollars. Then we have the case of a Wisconsin
newspaper man who in the year 1930 received a half
million dollars in dividends. What did he pay? He
paid not one cent toward the cost of state and local
government on those stock dividends. Is it fair to tax
a farmer who toils on his land two hundred seventy
dollars, so that we can exempt a man with a half mil
lion dollars of dividends? This is precisely the reason
why economic authorities condemn the property tax
as being unjust and intolerable. To point out the in
tolerable conditions imposed by a property tax I need
merely point southward to the city of Chicago. In this
municipality they have been unable to pay school
teachers for the past two years, and yet the city does
not hesitate to sue the teachers on delinquent property
. taxes. No wonder President Hutchins of the Uni
versity of Chicago called the property tax "prepos
terous and unjust."
The Michigan Committee for Inquiry Into Taxation
gives a very interesting piece of evidence on tax de
linquency. They say, "Tax delinquency is not tax
delinquency, but represents an levy of
beyond the ability of the people to pay." Let us look
at the tax delinquent situation In Detroit, Michigan-
The City of Detroit is twenty-seven per cent delin
quent in its property taxes. Buffalo is thirty-two p*r
cent delinquent, and In rural districts the rate
from thirty per cent to sixty per cent. Only recently
REVENUES FHOM INTANGIBLE PROPERTY 9
the State of Mississippi took over twenty-five per cent
of all its farm lands for delinquent property taxes.
This is the work of property tax that is being upheld
by the Negative this evening.
There is good reason for this: the whole theory be
hind the property tax is erroneous. All economists lay
down two fundamental doctrines which should be ap
plied to systems of taxation. These are, first, that
citizens should be assessed according to their respec
tive abilities to pay; second, citizens should be assessed
according to the amount of benefit they receive from
the government.
But let us see what the National Industrial Con
ference Board said in its latest study of the relation
between the rate of the property tax levy and these
two fundamental doctrines. They say, "Usually there
can be found no such direct relationship between the
performance of the governmental functions and the
market values of property, and it is only to the extent
that such direct relationships do exist, that the prop
erty tax satisfies the benefit principle of taxation."
Secondly, "As regards the ability principle, the de
ficiencies of the property tax are more evident and
more serious* In the final analysis there can be only
one source of tax payments, namely, income, and the
usual meaning of the ability principle of taxation Is
that with some minor exceptions taxes should be ap
portioned according to the income received by differ
ent taxpayers/*
This is from the most authoritative source on this
subject f the report of the National Industrial
10 THE YEAR BOOK OF COLLEGE DEBATING
Conference Board. When President Hoover addressed
the twenty-fifth annual conference of the National Tax
Association last October, he said, "Along with the
necessity for drastic tax reduction, the most pressing
fiscal problem of the day is to adjust the state and
local taxes to modern conditions so as to relieve the
burden which now presses so inequitably upon the
farmer and small home owner/ 7 and this is what we are
trying to do with our proposal, to reapportion the tax
burden so as to get a greater and greater proportion of
taxes from intangible property.
You all want your tax burden to be as light as pos
sible. Naturally tax reduction is imperative. It is a
thing which must come. At the last election you went
to the polls and voted for that party that promised
a twenty-five per cent cut in taxes. If every time we
have a cut in taxes we apply that to the property tax,
we achieve a double purpose. We relieve the owners
of tangible property from an unfair burden, and auto
matically approach the goal of raising a fair amount
which should be levied from sources other than tan
gible property.
Before this debate continues much further you will
want to know precisely how the opposition stands on
certain fundamental Issues* We should like to ask,
first of all, do our opponents favor tax reduction^ aacl
if so, what taxes do they propose to cut? Second, do
they accept the principles of ability to pay and
fits received? If so, do they maintain that the owner
ship of tangible property is a fair and accurate
REVENUES FROM INTANGIBLE PROPERTY 11
of either a person s ability to pay or the benefits re
ceived from the government? If they do not accept
these fundamental principles, how do they answer the
unanimous testimony of economic authorities which
substantiates these two fundamental doctrines, and
last, do our opponents favor a state income tax?
Ladies and Gentlemen, we have come here tonight
to discuss one of the most pressing problems of the
day. We have come here not to cry our eyes out and
tell you of the sufferings of the poor farmers and home
owners, but the fact remains, that they are now bear
ing an unfair and intolerable burden which is demand
ing more than they can possibly produce. We have
come here tonight to ask you to put into the back
ground a system which has been found to be deficient
in every respect. We come here to condemn a system
which was tried in all European countries and entirely
discarded. Now, we ask you to put the present system
into the discard and to take the proposition which we
are presenting tonight^ which would place a fair and
equitable amount of taxes upon those people who are
best able to pay.
First Negative, James Moore
University of Michigan
LADIES AND GENTLEMEN: First permit me to ex
press the gratification of both Coach McBurney and
the team of the University of Michigan on being able
to come up here this evening to debate the University
of Wisconsin. We have had the most wonderful treat-*
12 THE YEAR BOOK OF COLLEGE DEBATING
ment and we hope we will see our opponents down in
Ann Arbor in the near future. ^
In so far as the efforts of the Affirmative this eve- J
ning are directed toward modernizing or perfecting the C^
status quo, in so far as their tax suggestions are made, ^
I think they had an idea of curing administrative dif
ficulties, or revising existing systems, of classifying
property according to type; in short, of bringing more ^
order into the entire state and local government. So far
the Negative is willing and even anxious to go. If the
Gentlemen of the Affirmative are interested in clearing P
out the graft, the extravagance and the waste that is so
much an apparent part of the difficulties of state and-
local government, here too they will find willing
acquiescence on the part of the Negative. Efforts
along these lines will do much to decrease the diffi
culties complained of by the preceding speaker, but, (*,
not only has he failed to take proper cognizance of y
these matters, but he has, in his zealous efforts to por- *
tray a picture of present conditions^ overstated their
importance. Of the fourteen billion dollars tax burden
raised in this country every year, thirty per cent is
raised by the federal government, and the federal gov- ,
ernment raises all of its taxes from intangible property.
This is a significant fact. It is so significant that any ,
tax suggestion or any tax analysis which fails to take * *
it into consideration is not only incomplete, but most m
misleading. The suggestions which I point out might
go y together with this fact, to put the picture in a
brighter light and undoubtedly in a more
manner.
REVENUES FROM INTANGIBLE PROPERTY 13
"9 The Gentlemen of the Affirmative have given us
t4 certain questions asking whether we wish to lighten the
(Ntax burden, whether we favor tax reduction, what taxes
|0we wish to have reduced, whether we accept ability to
<J\pay and the benefit theory. The Negative wishes to
fvmake perfectly clear its stand on the use and adoption
...of taxes designed to broaden the tax base. The Neg-
^4 ative admits the tax base can be broadened in some
^ states and in some manner, but that any system or any
tax suggestion made with that idea in mind must be
^ffioroughly tested in the light of local conditions, pos
sible future needs, and strong scientific tax principles.
^We of the Negative admit there are many scientific
tax principles; fiscal adequacy, equity, simplicity,
diversity, and many others. But obviously the proper
order to take them up is fiscal adequacy first and equity
q; for it is merely theorizing to talk about equity
if a tax does not meet the primary object of every tax,
;o raise sufficient money to run the government. It is
on this line that we will draw issue this evening.
For we feel that the Affirmative tax suggestion as
presented to you does not meet the first real test of
any tax, fiscal adequacy. We are not alone in our
nion. Professor Lutz, noted Professor of Princeton,
who wrote his book on public finance, says on page
l65; "This requirement (fiscal adequacy) is of such
supreme importance from the practical viewpoint of
Cr the treasury that it should be placed first. To be sure
mere fiscal adequacy or productivity is not enough. A
tax system to be thoroughly sound and enduring must
be something than productive of sufficient rev-
14 THE YEAR BOOK OF COLLEGE DEBATING
enue to meet the needs of the state. But there is little
practical advantage in considering any other qualifi
cations either of a specific tax or the tax system as a
whole, unless it will produce revenue. Many beautiful
schemes have been formulated on paper for the satis
faction of the states 7 financial needs, and some of these
have attained to quite dizzy heights of idealism in the
theoretical justice and equity of their provisions for
the distribution of the burden of taxation, But some
of these schemes have never had a chance from the out
set for the simple reason that they have clearly been
incapable of producing a sufficient revenue."
We feel that the Affirmative tax suggestion in the
first place can not provide sufficient revenue. In the
second place it can not provide a satisfactory method of
distribution of the revenue, and in the third place it
can not provide for a certain and reliable revenue.
In support of the first contention 1 am going to dis
cuss a group of states geographically situated around
the United States, all of them with a different propor
tion of intangible wealth, all of them drawing wealth
from different sources, all of them with different local
problems; but they have one thing in common and
that is they make use of all the tax suggestions which
the Gentlemen of the Affirmative have advocated this
evening. The first state I will discuss is New York,
the greatest industrial state in the Union, aocl the
with the greatest pile up of intangible wealth in the
Union or in the civilized world. Of New Y0rk f s com
bined state and local revenue, seventy per Is
derived from a tax on tangible property; twenty per
REVENUES FROM INTANGIBLE PROPERTY 15
cent from intangibles, and nine per cent from licenses
and permits. Applying the Affirmative s tax sugges
tion this evening, which says they are only going to
raise eighteen per cent of the taxes, combined state and
local taxes from tangible property, we will deduct from
the seventy per cent which is now raised in the city of
New York the eighteen per cent, which means a shift
of fifty-two per cent over to the intangible column.
The Affirmative, by their various tax systems, are go
ing to raise seventy-two per cent of their income in
New York from intangible sources. New York today
has all the taxes you can think of, but the Affirmative
hopes to raise over four times as much by taxation of
intangibles as has been done heretofore. This would
mean, among other things, a sixteen cents a gallon tax
on gasoline.
1 bring up the State of New York for one other
reason. In 1930, according to the Federal Income
Statistics, we find New York paid thirty-four per cent
of all money which the Federal Government raised on
income tax in the United States. This income is in
easily available form; it is in stocks; it is in mortgages;
it is in banks; and you can get at it to tax. Contrast
this, however, with the State of North Dakota, which is
ninety-five per cent rural. Ninety-five per cent of their
income is derived from tangible property; ninety-five
per cent of their wealth is in tangible property; and,
in 1929^ eighty- four per cent of their taxes, combined
state and local, came from tangible property* three
and thirty-six hundredths from intangibles, and twelve
and fifty-two hundredths from licenses and permits*
16 THE YEAR BOOK OF COLLEGE DEBATING
Here we have a different local situation. They don t
have any high incomes in North Dakota. By Federal
Statistics we find they paid two hundredths of one pej
cent of the Federal taxes in 1930, one seventeen hun-.
dredth as much as New York. According to the
National Industrial Conference Board, the per capita
current income of the farmers in North Dakota is
lower than that of the New York farmers, A sub
stantial portion of the farmer s income is received in
most cases in items consumed by the farmer s family
and therefore never reported as taxable income. Re
member in New York they could get their taxes because
they could find the sources of intangible wealth^ but
in the agricultural states you can not do that because
the wealth is represented in bags of potatoes, bushels
of wheat, and shocks of com. The farmer may use it
in his family or to feed his stock. At any rate it isn t
available for taxing under the Affirmative plan.
Let us apply their plan to North Dakota. To sub
tract eighteen per cent from the present seventy per
cent means a shift of fifty-two per cent over to the
intangible column. Sixty-nine per cent is the total now
to be raised on the intangibles^ nineteen times as much
as is raised today. They have a three per cent corpo
ration tax in North Dakota, Under their tax it will
mean a fifty-seven per cent corporation tax. It will
mean a fifty-seven cent tax on gasoline. And remem
ber the farmers are going to evade it as much as they
can. Here is a local condition which the Affirmative 1 *
arbitrary plan can not meet.
Going down to the State of Mississippi we find an-
EEVENUES FROM INTANGIBLE PROPERTY 17
other condition. Mississippi is seventy-five per cent
rural; seventy-three per cent of their income comes
from tangible property; five per cent from intangibles,
and twenty per cent from licenses and permits. They
contributed seven hundredths of one per cent to the
Federal income tax. According to Governor Connor,
"We have a local condition of few large incomes and
no great industry. In order to get the Negroes, who
constitute fifty-two per cent of our population to con
tribute anything we have had to adopt a general busi
ness tax."
This is another local condition. Applying the Af
firmative s plan in the State of Mississippi, we find
they would have to raise all taxes by from eight to
twelve times their present amount. If they add on the
taxes they contemplate, it would mean a twenty-four
per cent sales tax, and a seventy-two cent tax on
gasoline, where they now pay six cents. That is an
other local condition. Who bears the burden there?
The colored people can ? t The poor white man must.
I can take you out to the State of Utah. The same
condition is true out there, Who will bear the burden
there? The miners, because the farmers can evade
the income tax. The miner can t evade and he only
works one hundred days a year. Obviously the Affirm
ative s plan could not work in the state of Utah.
North Carolina is another example. North Carolina,
by means of their income tax, supplies thirty per cent
of their school fund. If they were going to supply the
entire school fund they would have to their in
come tax three hundred per cent. To adopt the entire
18 THE YEAR BOOK OF COLLEGE DEBATING
Affirmative plan, they would have to raise the tax rates
on intangibles twelve hundred per cent. So we con
clude from a survey of our states around the Union
that the Affirmative plan can not work because it can
not get sufficient revenue; because these intangibles
can not be taxed in such a manner as to assure collec
tion of the tax.
We of the Negative in presenting our analysis have
propounded a question for the Affirmative. We wish
the Gentlemen would explain to us what substantial
reasons they can give for setting fifty per cent as the
maximum amount to be derived from tangible property
in each of the forty-eight states? Why must a state
like North Dakota be allowed no opportunity to obtain
no more than fifty per cent from tangible property^
why not sixty per cent, or seventy per cent? Why do
they have any maximum of any per cent? We wish the
next Affirmative speaker to answer this question : what
substantial reasons can the Affirmative give for setting
fifty per cent of revenue as the maximum to be derived
from tangible property in each of the forty-eight
states?
Second Affirmative* O. Glenn Stall!
University of Wisconsin
LADIES AND GENTLEMEN: The preceding
has just propounded the question^ "What substantial
reasons do we present for setting fifty per cent as the
maximum revenue to be derived from prop
erty in each of the forty-eight states?" That is like
asking us why we are debating the Affirmative of
REVENUES FROM INTANGIBLE PROPERTY 19
this question. In the course of my speech it is my
purpose to point out just exactly what the opposition
seems to want. They want to know how our plan is
going to work; is it going to be practical? First of
all, you notice they went over every state they could
possibly find that they thought might be a good illus
tration of where our plan would not work, and among
these was North Dakota. They forgot to pick out
another agricultural state, North Carolina. North
Carolina is an agricultural state as much as North
Dakota, as much as the rest of these are, and yet it
has been able within the last year to get forty-eight
per cent of its state and local revenue from sources
other than tangible property. It happens that North
Dakota has three times the per capita wealth of North
Carolina and four times the per capita income of North
Carolina, according to the World Almanac,
The Gentleman of the Opposition very casually
mentioned our questions but he did not answer them,
He did not say whether or not they actually agreed
with these fundamental principles of ability to pay or
benefits received* He said nothing about how the pres
ent property tax is bearing too heavily on property
owners, and leading to tax delinquency and the ex
emption of many forms of taxable ability.
Our program, already explained to you by my col
league, calls for a little more amplification. We are
approaching this from the standpoint of where the
state and local costs go, what they are being expended
for. First of all, we found that the governmental
services going to people In general; education, public
20 THE YEAR BOOK OF COLLEGE DEBATING
welfare, publicly owned utilities and the like, repre
sent fifty-eight per cent of state and local costs. High
ways represent twenty-four per cent of the state and
local costs, while general government and personal
protection to property represent only eighteen per cent.
On the basis of this we have arranged our program,
and that my opponents may be perfectly clear as to
what this program is, I present them with the copy
which my colleague promised.
The first item is to retain the real estate tax, as my
colleague pointed out, to the extent of eighteen per
cent, to cover the last group of costs. The second item
is motor vehicle taxes, gasoline and auto licenses, to
cover the cost of highways. Highways represent
twenty-four per cent of state and local costs. The
third item is to cover those wider costs of government,
education and public welfare, fifty-eight per cent, with
a direct tax on the people. The authors of the Model
Plan of the National Tax Association, the greatest body
of experts on taxes in this country, speak of the per
sonal income tax in this regard as a direct tax on the
people: "It is better fitted than any other to carry out
the principle that every person having taxable ability
shall make a reasonable contribution to the govern
ment" The business and personal income tax, sup
plemented by the inheritance tax, is our of
supporting those general costs of government which go
to people In general It would mean, then, that in the
average state at least eighty-two per cent of the rev
enue would be derived from sources other than
REVENUES FROM INTANGIBLE PROPERTY 21
property. Of course, within each state this could be
varied to fit particular conditions.
But what about the productivity, what about the
sufficiency of the revenues of which the Gentleman of
the Opposition speaks? Motor vehicle taxes at the
present time are already supporting highway systems
in several states. North Carolina, for example, with a
six cent gasoline tax, is supporting every highway in
the state; county, state and local The gas tax has
particularly shown itself to be an easy and cheaply
administered source of revenue. The gas tax through
out the United States costs for administration only
three tenths of one per cent of its total yield. The
State of Virginia is getting twenty-one and one-half
per cent of its revenue from motor vehicle taxes; South
Carolina is getting twenty-five and one-half per cent
of its state and local revenue from motor vehicle taxes.
Obviously, gas and auto licenses are perfectly adequate
to be applied in any state to cover their entire highway
program. In this respect our program has shown itself
capable of raising sufficient revenue in any state in the
union, whether agricultural or industrial
The income tax requires a little more explanation.
The Gentleman of the Opposition who has just spoken
has confused you by seeming to think that when we
take the burden off property, we can t get the income
in any other way. May I remind you that in the long
run, no matter what kind of tax is assessed, the tax
has to be paid out of income. The North Carolina Tax
Commission says, "In the ultimate analysis it is in
come which circumscribes the limits of taxation and
22 THE YEAR BOOK OF COLLEGE DEBATING
determines tax paying capacity." Richard T. Ely, the
famous economist whose textbook Is used in all parts
of the country, says, "Nearly all taxes must be paid
out of income. The specific tax employed is merely a
device for distributing the tax." Why, then, should
we employ a poor method of distribution? Why meas*
ure the capacity of a person to pay according to the
so-called "market value" of a piece of property he
happens to own? If there is any income from that
property the income tax will gef it; if there is no in
come, the income tax will get the revenue where Income
is being derived. If there is any income in the com
munity at all the income tax can get it, since practically
all taxes have to be paid out of Income. The income
tax can get at the Income as well as, if not better than,
any other tax,
Our proposal, then, would Involve the extension of
the income tax base further than It is now being used in
the several states. It would mean two things: lower
ing the exemption from income tax, and bringing In
other forms of income not now used* If we lower the
exemption in accordance with the Model Plan of the
National Tax Association, we will have this extension,
The Model Plan brings exemption down to six hundred
dollars for a single man, twelve hundred dollars for
the head of a family, or two hundred dollars for each
dependent. There are only one or two in the
entire union which have even approached ex
emptions. It would widen the base to a sufficient
extent so we could get revenue. Many
dividends from domestic corporations, and yet divi-
REVENUES FROM INTANGIBLE PROPERTY 23
dends and Interest throughout the United States repre
sented twenty-four per cent of the total taxable
personal incomes in 1928, the latest year for which the
figures were available. Incomes from copyrights and
patents have been made taxable by a decision of the
Supreme Court, and this could be included as a form
of income, and, may I remind you, the Model Plan
says: "The personal income tax shall be levied in
respect of the citizen s entire income from all sources. 77
Again to summarize our program, it means we will
support those actual protection and general govern
ment costs, eighteen per cent of the state and local
revenue throughout the country, with a real estate tax;
secondly, to cover support of highways, twenty-four
per cent of state and local revenue, with gasoline and
auto license taxes; and third, to cover expenditures
going to the people in general, like education, social
welfare, sanitation, fifty-eight per cent of the state and
local costs, chiefly with business and personal income
taxes supplemented by the inheritance tax* As I al
ready pointed out, the program which we are uphold
ing is not only practicable from the standpoint of what
it could do. It is already being done. I have men
tioned that the State of North Carolina is getting forty-
eight per cent of all state and local revenue from
sources other than tangible property.
Governor Gardner in 1931 pointed out; a An impor
tant consideration is the fact that the greatest relief is
given where relief is needed, that is to agricultural
lands/ North Carolina, a predominantly agricultural
state, is not the only example. There are other states.
24 THE YEAR BOOK OF COLLEGE DEBATING
South Carolina has gone to the extent of getting forty-
five per cent of state and local revenue from sources
other than tangible property, and it is even more of an
agricultural state. That was true in 1930, and yet at
the end of December 1931 South Carolina had a cash
balance on hand of six million five hundred thousand
dollars. This plan is certainly bringing in the revenue
in South Carolina.
Here is the State of Virginia. At the end of 1931
it was getting fifty-two and one-half per cent of its
state and local revenue from sources other than tan
gible property, and finally we come to the State of Del
aware, which in 1930 already was getting seventy- two
per cent of its state and local revenue from these
sources other than tangible property. It is clear then,
that our program not only by all indications would be
practicable* It is already being put into actual oper
ation and is producing the sufficient revenue of which
the Gentleman of the Opposition has spoken*
The State of Wisconsin raises only thirty per cent of
its state and local taxes from sources other than tan
gible property. The State of Michigan gets not quite
twenty per cent from those sources. The new program
might well be extended here as elsewhere.
Now, in view of the fact, as my colleague has pointed
out, that the, present system has resulted in an Intol
erable burden on property owners; has resulted la this
tax delinquency, which the opposition has so far not
mentioned; and has resulted also in the of
many forms of taxable ability: in view of the fact that
this program is already practicable and put into
REVENUES FROM: INTANGIBLE PROPERTY 25
atlon In several states of the union, it is only right to
assume that it is time for recognition of the soundness
of the program we are advocating, as well as the justice
of that program, of the practicability of that pro
gram, the feasibility of getting at least fifty per cent,
if not as much as eighty-two per cent, although we are
willing to go that far, at least fifty per cent of all state
and local revenues from sources other than tangible
property.
Second Negative, Victor Rabinowitz
University of Michigan
LADIES AND GENTLEMEN: There seems to be a num
ber of questions flying back and forth here. I would
like first to repeat our question which the Gentlemen
of the Opposition stated by saying or suggesting I
will read the question again first: "What substantial
reasons can the Affirmative give for setting fifty per
cent of revenue as the maximum to be derived from
tangible property in each of the forty-eight states?"
The Gentlemen answered the question by saying they
were debating the Affirmative, What reason is that
for believing fifty per cent of revenue can be raised
from tangible property? Is it merely because they
have to do this ? because they were assigned to the
Affirmative side of this proposition?
Their questions, there are quite a number of them
and we didn t get all of them, but they can be all
answered finally as my colleague answered them, by
saying that all of those questions depend on local con-
26 THE YEAR BOOK OF COLLEGE DEBATING
ditions, depend on conditions In the state. A blanket
answer can not be given to any of those questions. We
favor a state income tax where a state income tax, in
view of local conditions, is desirable. In New York
state, for instance, a state income tax is desirable. It
has been working to some extent for some time. It
has not been working nearly to the extent the Gentle
men of the Opposition advocate, but it has been work
ing there for some time. In the State of Wisconsin you
have your income tax. In the State of North Dakota
we believe any substantial increase in their present in
come tax would be highly inadvisable. They have also
spent quite a bit of time on North Carolina. North
Carolina is getting forty-eight per cent of their income
from tangible property. Well, in the first place that is
North Carolina s plan for the next year. They have
not collected that yet. In the second place I might
point out the state debt in the State of North Carolina
has increased from ten million to one hundred seventy
million in the last ten years, so perhaps North Carolina
has not an ideal tax system at the present time,
They quoted a number of other states, 1 believe
some of these states were raising seventy*two per cent
from sources other than tangible property. If the
Gentlemen of the Opposition will either add their fig
ures over again, or give a bit more detail we will dis
cuss it, but the figures we have down do not anywhere
approach that. Finally, the Gentlemen, of the Affirm
ative have cheerfully assumed all the way through that
an income tax and an ability-to-pay tax was
ymous. They have made no attempt to an in-
REVENUES FROM INTANGIBLE PROPERTY 27
come tax is a tax on ability to pay. It is quite obvious
a man with an income of two thousand dollars living
in the city of Madison has less ability to pay than a
man with an income of two thousand dollars living in
a rural community where the cost of living is much
lower. That is one of the many problems.
This problem of shifting taxes is another problem
that must be considered in deciding that an income
tax and tax on ability to pay are synonymous. The
Gentlemen of the Opposition should spend a bit of time
in proving this assumption.
Our first speaker pointed out that the Affirmative tax
suggestion can not provide a sufficient amount of
money in all forty-eight states. He showed how high
the income tax would have to be increased in the States
of North Carolina and North Dakota. They want to
raise fifty-eight per cent of their taxation from an in
come tax. At the present time North Carolina raises
one per cent of its taxes from an income tax. They
suggested a minimum exemption of six hundred
dollars. That means, if the income tax was increased
in North Carolina fifty-eight times, as it would have to
be at the least, they would have a rate of fifty-eight
per cent on an income of six hundred dollars. We be
lieve that a tax as high as that in an agricultural com
munity where taxes are easily evaded can not possibly
be collected. There is no way of checking how much
a farmer uses every year. There is no way of check
ing what a farmer s income is, and throughout the
entire middle west everywhere from the Mississippi
River to the Rocky Mountains those are all agricultural
28 THE YEAR BOOK OF COLLEGE DEBATING
states where your incomes are farm incomes and they
can not be checked. Attempting to place such an ex
orbitant tax on farm incomes will result in evasion. I
will proceed to prove that the Affirmative tax sugges
tion can not provide a satisfactory method of dis
position of whatever revenue they do collect,
It is quite obvious a tax must not only collect enough
money, but must collect money in a form that it can
easily be used. Mere collection of money is not suf
ficient. At the present time the states collect on an
average of thirty per cent of the total state and local
government. Under the Affirmative proposal they
would collect on the average, eighty-four per cent of
the state and local revenue. That means the states will
be collecting fifty-four per cent more than they are
collecting at the present time. Now, one of two things
must happen to that fifty-four per cent. Either the
money must be redistributed to the localities so that
they can use it, or it is used by the state, resulting in an
increased centralization of state and local functions,
We would like to point out that this problem has
risen in two or three states at the present time where
an attempt is made to redistribute funds* We would
like to point out no state has solved that problem at
the present time, and no state attempts to redistribute
more than ten per cent of the state and local revenue.
The Gentlemen of the Opposition are increasing that
ten per cent to eighty-four per cent. The problem has
not been solved at the present time. New York and
Wisconsin both have the problem and both tax com
missions complain that the problem has not been
REVENUES FROM INTANGIBLE PROPERTY 29
solved. The Gentlemen of the Opposition in propos
ing this tremendous increase must propose some satis
factory method of solution. There are two possibilities
here. Either the state will redistribute this eighty-four
per cent to the local units, or the state will use the
additional fifty-four per cent itself. I will discuss both
of those possibilities briefly.
If the state redistributes this additional fifty-four
per cent to the localities, some method of redistribution
must be devised. There are three methods of redis
tribution in common practice today: redistribution
according to the amount received, redistribution ac
cording to the population of the community, and redis
tribution according to the need of the community. We
believe that none of these methods has proved satis
factory. In the first place, redistribution according to
the amount received from the locality it is impossible
to set a rate that will provide both rural and urban
units with enough money. If your rate is large enough
to supply the rural unit with enough money from the
income tax, it will be so large you will have a tremen
dous surplus in the cities; on the other hand, if the rate
is small enough to get the cities what they need, the
rural units will have nothing. As regards the income
tax, the State of Wisconsin has found this method
results in unsolved administrative difficulties, since it
is impossible to tell where any large corporation or in
dividual his income In what locality, for instance,
a railroad or public utility get its income. Fi
nally, it will afford no relief to the rural areas because
most of these will come from the cities* and, as
30 THE YEAR BOOK OF COLLEGE DEBATING
the Gentlemen of the Opposition have pointed out, the
difficulties and alleged evils are greatest in the rural
areas.
Secondly, since population bears no constant relation
to the need of the community or amount received,
redistribution according to the population is wholly
irrational. Finally, redistribution according to need
would seem at first sight to be the most likely; each
community to get what it needed. There are, however,
some very fundamental difficulties. It involves en
tirely too great an amount of discretion on the part of
the distributing official, whether that be the governor,
the budget commission, tax commission, or legislature.
Whoever they may be, some person or group of persons
must decide on the needs of each community. Grant
ing the most favorable conditions possible assuming
that these men are honest and capable and sincere, it
is impossible for a rural legislator or rural adminis
trator to estimate the needs of an urban community.
He can not do it. His point of view is different. Like
wise an urban administrator can not say what a local
unit needs. He doesn t know what the needs of a rural
unit are. And when we realize that in some the
administrators are not always perfectly sincere and not
always perfectly capable, and in some not honest,
this difficulty increases a thousand fold.
The second difficulty is that the communities get
money they don t raise and don j t get money they
That has been found to be true in communities
large communities raising a great deal of money get
very little, while poorer communities contributing little
REVENUES FROM INTANGIBLE PROPERTY 31
get a great deal back. And finally the increasing rural-
urban conflict in the legislature, a problem very great
in all states at the present time, a problem that will be
increased many times by the Affirmative s proposition.
The other possibility is that the state take on some
of the local governmental functions. We believe that
the Gentlemen of the Opposition have not advocated
this and we are not going into it in great detail until
they do so, but it results in increased centralization, a
dogged backing away from the present principle of
home rule which has been growing so rapidly in the
United States for the last fifty or sixty years.
It results in all the evils of increased centralization,
the evils of log rolling in the legislature, deciding what
the salary of the dog catcher or school teacher shall
be. All of these difficulties will be increased many
times by a revision of our present policy, a backing
away from home rule. This problem, even where the
state distributes so small an amount as ten per cent,
has not been satisfactorily solved in any state in the
United States today. The Gentlemen of the Oppo
sition are proposing to return not ten per cent, but
fifty-four per cent, The problem will obviously be
greatly increased. What is your solution?
Third Affirmative, Harry L. Cole
University of Wisconsin
LADIES AND GENTLEMEN: The first Negative
speaker began by saying there were certain improve
ments needed in tax administration, and they would
32 THE YEAR BOOK OF COLLEGE DEBATING
not object to certain improvements which would go a
long way to correct the injustices of the present sit
uation, and then he proceeded to object to the chief
improvements which have been made in the last two
years and are being made now in the tax system. In
the States of North Carolina, Virginia and Delaware
they have already worked out these problems of ad
ministration which the Gentlemen of the Opposition
are telling you can not be worked out. Moreover, in
European countries, where they take a much larger
proportion of the people s income in taxes, they have
for years successfully taken that large share through
the process of taxation of intangibles and not through
the use of the property tax.
The whole argument of the Negative so far in this
debate, their whole objection to our program of rais
ing eighteen per cent of the taxes needed for local
revenue from real estate taxes, our proposal to raise
twenty-four per cent for highways from a motor ve
hicle and gas tax, and the fifty-eight per cent for
general welfare and educational activities from income
and inheritance taxes, their whole objection has been
a matter of administrative impracticability , and our
answer to this is that it can be done because it is being
done. It is being done in Delaware, Virginia, and
North Carolina. But the Gentlemen say it isn t being
done in North Carolina. Your statistics are not right
on that. Our authority for our statistics on the per
centage of revenue raised or derived from tangible
property in these states is the work on am!
State Tax Systems by the Tax Research Foundation
REVENUES FROM INTANGIBLE PROPERTY 33
published by the Commerce Clearing House of Chicago
in January, 1932. All of these statistics for all the
states may be found in this document.
However, that is not the only source of this infor
mation which is generally known throughout the whole
world of people who are at all informed on this tax
question. For instance, in the Saturday Evening Post,
Governor Gardner of North Carolina discusses in some
detail tax reforms and centralization and lifting the
burden from tangible property in North Carolina.
Governor Gardner discussed in some detail what they
accomplished in 1931. In 1931 they raised forty-eight
per cent of their total state and local revenue from
sources other than tangible property, and since that
time they have increased their gas tax and they have
reduced their property taxes so there is no doubt at all
but that today North Carolina has taken its place
with Delaware and Virginia and is already raising more
than half of its state and local revenue from sources
other than tangible property. And this centralization,
this reform in taxation procedure which the first
speaker said they were going to agree to, and the
second speaker objected to, this reform in North
Carolina has resulted in a total tax reduction and total
saving to the people of seven million dollars and has
resulted in a reduction in the levy on real estate of
twelve million dollars.
We asked the Gentlemen some questions and they
said they must interpret them in the light of local
conditions, and that they couldn t make a blanket
answer. We are perfectly willing that they interpret
34 THE YEAR BOOK OF COLLEGE DEBATING
them in the light of local conditions. We don t require
a blanket answer. We would be glad to have them
answer each one separately, and they are of matters
where the Negative stand on fundamental issues which
should be considered. First, we ask, do they favor
tax reduction? They have not told us. We asked
them, do they accept ability to pay as the test of a
just tax system and they have not answered. And
we say, do they favor a state income tax? The Com
mission appointed in Michigan to investigate the status
of taxation in that state recommended a state income
tax. The people in the State of Michigan a month ago
today voted for a limit of one and one-half per cent on
their property levy, and with that limitation the com
munities of Michigan are going to be faced with very -
drastic reduction of revenue, and their schools are go
ing to be closed, as they are in Indiana with a similar
limitation in effect, and if the Gentlemen don t adopt
this which their State Commission recommends they
are going to be in pretty hard financial straitsJust as
they are this winter but not so badly as they will be
next.
They have asked us a question Why do we favor a
fifty per cent limit, why do we believe that more than
half of all state and local revenues should be derived
from sources other than tangible property? We
this because the present burden on tangible property
is intolerably unjust and can not be in
theory or by the way it works out IE practice* We be-
lieve it should be more than fifty per cent
such a plan is feasible and practical as
REVENUES FROM INTANGIBLE PROPERTY 35
it is already working, and we believe this should be
done because we will have a more equitable tax system
when it is done.
I will now consider the comparative equity or justice
of the tax apportionment defended by the Negative
and the tax apportionment which we advocate. Pro
fessor F. G. Crawford of Syracuse says, "Relief from
the burden on realty is imperative. All tax commis
sions without exception agree to this statement." Now,
this lopsided apportionment stands indicted by the
grand jury of the world economists and tax experts on
four counts: First, injustice in share of income taken;
second, injustice to the farmer; third, injustice of tax
delinquency; and fourth, injustice to home owners.
Let us consider the evidence upon these four indict
ments and see what way our program would eliminate
these injustices.
Indictment Number One: Injustice in the share of in
come taken* You recall the instance of the four Wis
consin farmers with practically no net income who
were taxed more than twenty-five coupon clippers.
That is an example of the inequity in the share of
income taken when you compare those who derive their
incomes from intangible property as compared with
those who derive their incomes from tangible property.
Professor Jens Peter Jensen, Professor of Economics
at Syracuse University, says: "The property tax often
requires contributions where there is no income but
fails to reach a great deal of income capable of paying
taxes/
The National Industrial Conference Board in its
36 THE YEAR BOOK OF COLLEGE DEBATING
impartial study of the State and Local Taxation
System, page 6, says, "Studies of taxation invariably
indicate that property taxes take widely varying pro
portions of the income from different types of prop
erty." In 1931 the percentage of the rent taken in
taxes varied from nineteen to ninety per cent, a vari
ation of sixty-one per cent, and in the State of North
Carolina, before the reform which we advocate was
put into effect, in one county, the percentage of the
rent taken was five per cent. In another county^ two
hundred seventy-seven per cent, a variation of two
hundred seventy-two per cent in the percentage of rent
was taken in taxes. Is an injustice like that going to
be remedied by the reformed administration such as
the first Speaker of the Opposition suggested?
We submit there is no correction for such injustice
as this without a fundamental reapportionment of the
whole burden such as we advocate,
Indictment Number Two: The injustice to the
farmer. President Hoover said, "The farm relief most
needed is tax relief." The farmer with one-tenth of the
national income pays one-fifth of the national taxes.
In the middle west there have been mortgage fore
closures by hundreds of thousands of dollars, robbing
farm families of their homes and livelihood, and send-
ing them to join the ranks of our cities* unemployed,
feeding on charity in the cities,
Henry I Harriman, president of the United
Chamber of Commerce, to the American
Farm Bureau Federation in Chicago, day yes
terday, said taxes take more than the net
income in many fertile areas today. Sixty per cent of
REVENUES FROM INTANGIBLE PROPERTY 37
agricultural land has been forfeited In one state. In
1914, agricultural taxes took one-third of the value of
the total wheat crop. In 1931 they took twice the
value of the total wheat crop. Will an injustice like
that be corrected by a technical administration in the
reform of the property tax? The reform we advocate
would lift half the burden from the backs of the
farmer.
Indictment Number Three: Tax delinquency. Tax
delinquency is simply a result of demanding taxes from
people who are unable to pay them. When we redis
tribute the major part of the burden according to the
people s ability to pay each year by their income, we
will have done away with that.
Indictment Number Four: Injustice to property
holders and home owners. According to the committee
on taxation of President Hoover s Conference on Home
Building and Home Ownership, the overburdening
tax on real estate discourages and materially restricts
home ownership,
Now, by readjusting the major portion of the tax
burden on the basis of ability to pay as indicated by
income, we do away with a great portion of these in
justices, and we take a great burden from the farmer s
back.
We do away with tax delinquency and protect the
home owners, thus facing the four injustices which
tax experts have condemned, the overburdening of the
property tax, injustice of share of income taken, injus
tice to the farmer, and injustice of tax delinquency,
and Injustice to the home owner,
In conclusion I will * again state the fundamental
38 THE YEAR BOOK OF COLLEGE DEBATING
propositions of the Affirmative case. They are these:
First, the heavy tax burden on tangible property is
unjust, both in theory and practice. It is not justified
by the benefit theory or the ability-to-pay principle of
taxation. It is condemned by our leading tax author
ities and in practice it puts an intolerable burden upon
certain incomes, and during a period of economic stress
there are a large number of tax delinquencies, and a
serious curtailment of government service when it is
most desperately needed. Second, the plan is adequate
and practicable as proven by the fact that in Europe
larger proportions are taken by income tax, and by the
fact that in America during the past two years nearly
every state has come to derive an increased share of
its revenue from income tax. Third, the apportion
ment of the tax burden we advocate is more equitable
than the apportionment defended by our opponents as
evidenced by the fact that we would reapportion the
tax burden according to the income of the citizens by
their ability to pay, as indicated by their income. For
these reasons we advocate at least a fifty per cent limit
in an effort to get at a more just tax system.
Third Negative,, Nathan Levy
University of Michigan
LADIES AND GENTLEMEN: It would offhand
that the questions are running around here without any
owners, without any backers, without any
Both sides are trying to give the that the other
side has not answered the questions. Do to
REVENUES FROM INTANGIBLE PROPERTY 39
reduce the taxes? Is there anybody who would say,
"Increase them right away. Let s step this trouble up
about one hundred per cent." I wish to point out, as
did my colleague the first speaker, as far as the Oppo
sition wish to do away with waste and extravagance
they will find us hand in hand with them. They say,
do you recognize the ability to pay? We have been
demonstrating first of all you have got to place a good
share of the burden upon those able to pay. There
fore, I would conclude from that we are in some
measure backing up the benefit theory.
If the Gentlemen of the Opposition remember, my
colleague said, that we advocate a state income tax,
which by the way they have not proved is an ability-
to-pay tax, in a state if it can use it and to that degree
in which it seems wise to use it.
So much for these questions. And will the Gentle
men please tell us what substantial reasons I don t
want them to say the reasons are equity and adequacy,
those are words we would like to know the reasons
they have for advocating fifty per cent as the maximum
of dependence to be placed on intangible property as a
source of revenue in each of the forty-eight states.
Well, the Gentlemen of the Opposition in the first
speech told you about how troubled the times were,
and how heavy the tax burden is on certain people,
We thought after they had finished that talk of that
matter we would be through with that part, but no, the
third speech also was devoted to telling you about the
injustices of these various things. Two speeches have
now been devoted in full, and the other speaker got
40 THE YEAR BOOK OF COLLEGE DEBATING
in a good many mentions of the injustices of this tax
burden.
We have been trying to talk to you about fiscal
adequacy. When they can show you they collected in
1932 a gas tax in the State of Utah on this eighty-two
per cent basis that may vary from state to state, but
they didn t tell us because they don t know, but ap
proximately eighty-two per cent in Utah for 1932 on
each and every gallon of gasoline sold in that state
they will say we can t do that, we will have just a little
tax on gasoline. If they do they will put it on some
other tax that will approach fifty per cent, or sixty per
cent, or seventy per cent on income. It has to be
gotten from some place.
They have quoted the National Industrial Confer
ence Board so much perhaps it would not be a bad idea
for us to do that. The National Industrial Conference
Board published that book on that table. That book
concerns doing away with a burden of four million
dollars additional revenue in Missouri. That whole
book is a fight. The experts are weighing the pos
sibilities, the probabilities, the practicalities, and the
injustice of making out of increase of income tax
enough to collect four million dollars more, which is
about eight per cent of the total state and local revenue
in the State of Missouri. They don t say you can do it*
They say, no, you can t, just by increasing Income tax.
Evasion in Missouri is too great and too easy, so we
will try in part, little by little, and find out if we can,
If we can and we find it is fair, perhaps we will in
crease it. But "equity" has been before you so
REVENUES FROM INTANGIBLE PROPERTY 41
much you probably think by this time that the Neg
ative has no care we don t care about how fair, how
just, how equitable a tax system is, and that the farmer
who pays two hundred seventy-seven per cent of his
income from land in taxes gets no sympathy from us.
We told you first of all the Gentlemen overstated
their case. They didn t tell you about the Federal tax
burden of four billion dollars a year. If I only had a
portion of it, I would be willing to pay taxes on it any
time. The Gentlemen of the Opposition have now set
up their scheme and they are committed to this much,
at least fifty per cent, but their scheme says eighty-
two per cent. They have got to prove that is fair and
just. They have said ability to pay is a good basis.
The benefit theory is a good basis. We are going to
consider just a few taxes that amount to eighteen per
cent or less on ability to pay, on motor vehicle taxes
and gas taxes. In other words, they have reduced the
problems of taxes by a snap of the fingers. The
ability-to-pay tax is a simple thing. All you do
is tax incomes taxes on all kinds of income but
how tax them; how make any allowance for differ
ence in purchasing power? They talk about the dif
ficulty we are having at the present time about the
farmer whose wheat is not worth anything. Do they
forget in the income tax you are not paying this year s
money, you are paying last year s tax this year, and if
you haven t got any income this year and last year
you had a good one, where are you going to get the
money to pay that* You have got to borrow.
The point is this. You can demonstrate cases of
42 THE YEAR BOOK OF COLLEGE DEBATING
hardship tinder peculiar and stressing circumstances in
any tax system for the simple reason that perfection is
not as easy to obtain as the Gentlemen would have you
believe. You simply can t wiggle waggle your hands at
two theories and say, "We will prove it," and I am go
ing to prove that to you in the state most favorable to
the Gentlemen of the Opposition, the State of New
York. If their proposition of fifty per cent or more on
intangible property is not just in the state of New York
where the greatest pile up of intangibles known in the
history of the human being is to be found, then it ian ? t
equitable, fair or just anywhere in the country, in any
single state in this Union, And so we turn to the re
port of the New York State Commission for the revision
of the tax laws published in 1932. May I point out
that on this Commission was the man recognized as the
greatest authority in the United States, Professor
Seligman of Columbia, Commissioner Haig, the gentle
man who draws up most of these reports, and other
men of equal caliber in the State of New York, Before
I go into this report I want to quote this Model Plan
of state taxation they have referred to so much* I
wish to point out this Model Plan is based on three
kinds of taxes, tangible property tax ? personal net in
come tax, and business tax,
The experts did not attempt to set any percentage
of dependence which should be placed on those
in all states because they recognized the divergence of
local conditions. However, our Friends have
putting specific percentages on each one of those
I quoted from the report of this Tax Commission In
REVENUES FROM INTANGIBLE PROPERTY 43
New York to demonstrate exactly how the Gentlemen
of the Opposition approached this question in discuss
ing the proposition of inequity and injustice, and to
give you the idea the experts have with respect to that
approach. "If it can be shown that the owners of real
estate pay heavier taxes than owners of other property,
is this to be considered a demonstration that the
burden on real estate is disproportionate?" The Com
mission goes on, "The answer to this question seems to
be definitely no. 7 An affirmative answer to this ques
tion seems to assume that the equitable tax system is
one which imposes a levy at a uniform rate on all
classes of property. It ignores the shifting of taxes,
which may distort completely the initial appearance of
equity. It denies the validity of benefit as a test for
certain forms of taxes. It does not take into account
the possible funding or capitalization of taxes. It
leaves no place for the introduction of progression. An
indictment based on any one of these points would be
sufficient to discredit the use of this test of dispropor
tion. 7
The single norm of property or income is not the
only norm for approximate ability to pay. A com
bination of several norms is superior to the use of any
single norm.
So when this Tax Commission set to work out what
would be equitable distribution in the State of New
York, they came to this conclusion. The majority felt
that real property in the State of New York, tangible
property, should bear a burden of fifty-three and two
tenths per cent in order to have an equitable distribu-
44 THE YEAR BOOK OF COLLEGE DEBATING
tion of a tax in that state. The minority in that state
felt real estate should pay fifty-five and six tenths per
cent fifty-three and two tenths per cent the majority,
fifty-five and six tenths per cent the minority ,~
among whom was Professor Seligman of Columbia.
Professor Seligman goes on further to say if any real
appreciation were had of the shifting of taxes in that
state the percentage of the dependence of the tax on
real estate would be greater than that. That is the
situation in the State of New York, the state most
favorable to the Opposition.
I am not arguing about fifty-three and two tenths
per cent or fifty-five and six tenths per cent. My point
is that if the percentage is in favor of taxes on tangible
property in the State of New York, the percentage in
creases and increases in other states of the Union. If
the Gentlemen can not show its equity in that state,
they can not show its equity in any one of the forty*
eight states. If we admit this five per cent is not the
thing we are basing our case on, we do not admit any
thing at all, because in the other forty-seven states,
the pile up of intangibles is not nearly as great as
in the State of New York,
I did not get around to my constructive speech, but
since you all read the Saturday Evening Post you know
how far behind the Federal Government Is in their tax
collection, placing their full dependence upon the
sources which the Gentlemen of the Opposition advo
cate.
REVENUES FROM INTANGIBLE PROPERTY 45
First Negative Rebuttal, James Moore
University of Michigan
LADIES AND GENTLEMEN: The debate has developed
along very interesting lines this evening. We attempted
in our first speech to lay out what we thought was the
cardinal principle for any system of taxation, fiscal
adequacy. The Affirmative have failed to meet us on
any portion of it, but have been talking about equity
or ability or anything else but fiscal adequacy. My
colleague, the second speaker, brought before you for
your attention, a very vital portion of the tax situation
facing the states today, involving the disposition of
all revenue collected. The Gentlemen of the Affirm
ative passed it off as a mere detail. Yes, it was a mere
detaill It is a mere detail which involves an expend
iture of fifty-four per cent of all tax money. It is a
mere detail but it has not been solved by a single state
in the Union today. We do wish the Gentlemen would
get a little further down into the details of the matter
because it is a vital fact that must be answered,
Now, the Gentlemen have been talking about two
things. On one side they have told you about income
tax. They have not yet shown income tax to be cor
related with ability to pay, and on the other hand they
have been advocating a very heavy gas tax, or a gas
tax which amounts to fifty-eight per cent of the state
revenue. They say we pick out just a few states where
it might seem bad. If you will recall my words, these
states are representative of different geographical
groups throughout the United States. I took them
46 THE YEAR BOOK OF COLLEGE DEBATING
because they were states favorable to the Affirmative.
They are representative states from each group. The
State of New York by their plan will put in a tax of
forty-four cents a gallon on gasoline. They now have
a tax of seventeen dollars upon motor vehicles. Under
the Affirmative plan it would be sixty dollars per motor
vehicle. Is this an ability-to-pay tax or is this equity?
The State of North Dakota would pay fifty-seven cents
gas tax. They would charge you one hundred ninety
dollars a year to run a motor vehicle in the State of
North Dakota. In Illinois it would cost two hundred
fifty-eight dollars a year. In Utah it would cost two
hundred dollars a year, in Mississippi one hundred
fifty dollars a year, and in Oregon one hundred fifty-
two dollars a year,
Now, the Gentlemen also told you they were going
to raise a given proportion of the income by income
taxes, and apply this to education. Just think of it.
Education is the one thing that we "can t fool with m
any state and local government- It is the one thing
you must safeguard; it is the one thing for which you
must guarantee money, so that the children can be
educated, so that schools can go along. The Gentle
men, are going to put education at the mercy of a tax
in North Dakota which will be fifty-eight per cent OB
an income of six hundred dollars, ant! they expect to
raise the money that way to run the school system.
Not only the State of North Dakota* but I can give you
twenty states which are In situations, where
the twenty states together only contributed per
cent into the total Federal income in the 1930.
REVENUES FROM INTANGIBLE PROPERTY 47
Therefore we know that in those twenty states they do
not have large incomes. The Gentlemen have set their
own arbitrary mark as to the exemption of the income
six hundred dollars. In the State of North Dakota
it would be taxed fifty-eight per cent, a correspondingly
heavy tax in the others, and they expect to gain the
money in spite of the fact that the door is open for
evasion. They are going to use taxes that the Federal
Government regards as extremely problematical, and
put the education system at the mercy of it.
They say some of our system would not work. They
were mere details too, and yet Governor Connor of the
State of Missouri in the Saturday Evening Post of
July 27 says that at a single legislative session, with
out disturbing any governmental function or legislative
function, we cut our budget and reduced our expenses
thirty-three and one-third per cent. Now, I think
there is probably a pretty big point in sitting down
and paying attention to correcting a little bit of the
waste and graft and extravagance rampant in most
state and local governments. We do wish the Gentle
men would give us an answer to our first question,
would pay a little more attention to my colleague, the
second speaker, regarding the distribution of the rev
enue,
First Affirmative Rebuttal, David August
University of Wisconsin
LADIES AND GENTLEMEN: Our opponents have
asked the question why, with a slight change and re
adjustment can we not maintain a sufficiently good tax
48 THE YEAR BOOK OF COLLEGE DEBATING
system to remedy the present evils without going over
to the plan presented by our side of raising at least
one-half of all state and local revenues from sources
other than tangible property. Would a slight change
improve the situation of four Wisconsin farmers who
have to pay forty-one cents more than the combined
tax bill of twenty-five coupon clippers who sit at home
and clip three million dollars of coupons? Would a
slight change remedy that situation?
They have accused us of overstating the case, of
making an emotional appeal. Ladies and Gentlemen,
I have understated the case. If 1 could only tell you of
the suffering that goes on in our country, not merely be
cause of an inadequate tax system, but also because of
the vicious circle of tax delinquency! If you will be
so kind as to remember as far back as my first speech,
I want to point out again the fact of tax delinquency,
which the Gentlemen have failed to answer, which is
twenty-seven per cent In Detroit, thirty-two per cent
in Buffalo, and in rural districts from thirty per cent to
sixty per cent. And they come to us and say the mam
issue in this debate is fiscal adequacy how are you go
ing to raise sufficient revenue? We answer by saying
this, "You are not raising sufficient revenue at the
present time, and we have proposed to you a system
which will work out as is shown by the state of Dela
ware, which is now raising seventy-two per cent of Its
revenue from sources other than tangible property;
Virginia, fifty-two per cent; North Carolina, forty-
eight per cent; and South Carolina, forty-five per
cent."
REVENUES FROM INTANGIBLE PROPERTY 49
Ladies and Gentlemen, the third speaker came be
fore you and said we are coming before you and (snap
ping fingers) just like that settling all the questions.
No, not just like that! (snapping fingers). We have
taken a thorough and careful analysis of this situation,
and have shown you first of all that the present situa
tion is intolerable, that tax delinquency is eating a hole
out of the revenue which the Gentlemen of the Op
position want to get from the property tax, a system
which has been discarded by every single European
nation. Then we went on to show the feasibility of our
plan; the states in which it is working, and proved it is
producing a more equitable situation.
What are the objections which the Gentlemen raise
to our fundamental proposition? They say that in
come taxes can be shifted. Let us see what the Min
nesota State Tax Commission says about this after
a thorough analysis and study. The Commission says:
"Can an income tax be shifted? While some hold to the
view that such taxes cast a burden on the consuming public,
most students of taxation hold to the theory that the burden
of a general income tax ordinarily rests upon the taxpayer
upon whom the tax was first imposed. Only in very rare
cases can the burden of an income tax be shifted to others.
This conclusion is quite generally concurred in by tax ad
ministrators in states having effective income tax laws."
(Minnesota Tax Commission 1930. Page 137.)
This conclusion is quite generally concurred in by tax
administrators in states having effective income tax
laws/
50 THE YEAR BOOK OF COLLEGE DEBATING
Ladies and Gentlemen, I can not help stressing the
fact of the vicious circle of tax delinquency. If you
have tax delinquency such as Detroit and Buffalo
you necessarily impose a heavier share upon the people
who must pay the taxes, and the higher the taxes the
more tax delinquency and the bigger the hole you put
in the revenue. Gentlemen, I will say again, we have
not come here tonight to overstate the case or to make
an emotional appeal to you, to say, "This Is a wonder
ful tax, a good tax, and you should take it." No,
Gentlemen, we are not coming with a Utopia* We are
not saying we are going to cast aside all evils, but I
will say this, and this is not an overstatement: if we
can present a system which will through the progress
of the years bring us a little further toward our goal;
come a little closer to fundamental doctrines and
principles, and bring about a more equitable situation
of the burden, I feel that we can rightfully ask you to
vote "Yes" on the motion before the house.
Second Negative Rebuttal* Victor Rabinowitg
University of Michigan
LADIES AND GENTLEMEN: I would like to say one
or two things about these coupon clippers in Wisconsin
who are sitting at home clipping coupons and are not
paying any money to the upkeep of the government.
They cut, according to the first speaker, a total of three
million dollars and didn t pay a cent for it. Those
twenty-four coupon clippers paid hundred thirty-
one thousand four hundred sixty dollars to the
REVENUES FROM INTANGIBLE PROPERTY 51
Government In federal income tax alone; a total of,
well a bit over twenty-five per cent of their total in
come went to the Federal Government. The Gentle
men of the Opposition have said they don t pay
anything at all to the state government, we are going
to plaster another twenty-five per cent on them. Well,
then, you are taking entirely too much from these poor
coupon clippers and perhaps next year the Opposition
will come up here and say, why, the farmers in Wis
consin are paying so much money on their property,
and the poor coupon clippers are paying fifty per cent
of their income in income tax, let us reduce the income
tax, we are putting too much on intangibles.
The Gentlemen have completely failed to take into
consideration the federal situation. They have as
sumed all the way through that the only taxes we pay
are to the state and local governments yet the Federal
Government levied not a cent on taxable property, and
these coupon clippers pay now twenty-five per cent of
their income to the Federal Government. Do the
Gentlemen of the Opposition favor increasing this
burden to a considerable extent in Wisconsin? Obvi
ously, your tax burden on the intangible property
would then be too heavy.
I would like you to note that the National Indus
trial Conference Board pointed out that a tax as high
as thirty per cent on an income to three hundred thou
sand dollars is too high because it results in evasion;
yet the Gentlemen of the Opposition are going to levy
a fifty-eight per cent tax on an income of six hundred
dollars in North Dakota, and make it pay the expenses
52 THE YEAR BOOK OF COLLEGE DEBATING
of education in that state. If thirty per cent on three
hundred thousand dollars leads to evasion, what about
fifty-eight per cent on six hundred dollars in an agri
cultural state?
The Gentlemen of the Opposition have said a great
deal about fiscal adequacy. They have spoken about
the tremendous delinquency in the State of Michigan.
Arthur W. Bromage, who is a present member of the
Michigan State Tax Commission discusses the problem
of tax delinquency. Does he say the amount of tax de
linquency in Michigan is due to too heavy a tax? No.
He says it is due to waste and extravagance in county
government. That is the reason for the tremendous
tax delinquency in the State of Michigan.
Whereas in the beginning the Gentlemen of the Op
position were moving with tremendous strides toward
this Utopian plan, they are now beginning to weaken
in their claims. My colleague pointed to the State of
New York, certainly a state most favorable to the
Gentlemen of the Opposition; certainly the state with
the greatest amount of taxable intangible wealth, and
showed that there the Tax Commission, composed of
the best talent available finds that at the most, fifty-
five per cent, or at the least fifty-three per cent should
be raised from tangible property. That leaves only
forty-seven per cent from intangibles, and not eighty-
four or eighty-five per cent as the Gentlemen of the Op
position have advocated this evening. That Is the
equitable situation in the State of New York*
What about the State of North Dakota? What
about all of those between the Mississippi Elver
REVENUES FROM INTANGIBLE PROPERTY 53
and the west coast; all of the southern cotton and
agricultural states?
In addition the Gentlemen have continued to ignore
completely those "little details" of the distribution of
several hundred millions of dollars a year; several
billions of dollars a year it would amount to, redis
tributing that to the local units or using by the state
governments themselves. They have one more speech
in which to do that. It isn t a mere detail It is a
problem that no state in the Union has satisfactorily
solved when those states are redistributing only ten
per cent to the local governments. The Gentlemen of
the Opposition would have them redistribute fifty-four
per cent.
Second Affirmative Rebuttal, (X Glenn Stahl
University of Wisconsin
LADIES AND GENTLEMEN : The speaker has claimed
we paid no attention to their statement as to how we
stand on the distribution argument; how we will dis
tribute the amount of revenue we derive. As a matter
of fact it is not necessary for us to present an exact
program of distribution for every state, but we cer
tainly do favor any method of state centralization of
tax administration or state centralization of locally-
shared taxes; and when they keep on contending it
isn t being done successfully, how do they answer the
fact that North Carolina is supporting all highways
with a motor vehicle and gas tax, and all schools with
a state income and state inheritance tax? How do the
54 THE YEAR BOOK OF COLLEGE DEBATING
Gentlemen meet this? Virginia is doing it even more
than North Carolina, and Delaware even more than
Virginia. In our own State of Wisconsin they redis
tribute income taxes in this way: ten per cent to the
counties, fifty per cent back to the community it comes
from, and the other forty per cent goes to the state.
The state redistributes that forty per cent according to
need, and the system seems to be working very nicely.
The speaker quoted one man s opinion on this tax
delinquency argument. They have avoided it all dur
ing the debate and finally quote one man who says that
tax delinquency is due to graft and extravagance. The
inability of a person to pay taxes because he has got
property and no income here s what the State Com
mission of Michigan on Tax Inquiry says: "Tax delin
quency is not tax delinquency, but represents an excels
levy of taxes beyond the ability of the people, to pay! 9
That is exactly the situation In the city of Detroit with
twenty-seven per cent of Its property tax delinquent at
the present time,
He says twenty-five coupon clippers getting over
three millions of dollars paid seven hundred thirty-one
thousand dollars to the Federal Government and the
poor coupon clippers should not be taxed any more,
Do we favor increasing the tax? You bet we do. If
those twenty-five coupon clippers pay only that to the
Federal Government they still have two million three
hundred thousand left, and still the Gentlemen claim
they should not be taxed, In face of the fact that four
farmers, on the other hand t are
REVENUES FROM INTANGIBLE PROPERTY 55
hundred dollars, when they have practically no income
at all and can barely scrape enough together to pay
these taxes.
They claim the Federal Government is pre-empting
all these sources of revenue. Richard T. Ely answers
this, and I will read the direct statement:
"We see no reason why the states should renounce the
income tax and use substitutes which are manifestly inferior,
merely because the Federal Government is employing the
same tax. Nearly all taxes must be paid out of income.
The specific tax employed is merely a device for distribut
ing the tax. Why, then, should the state employ a poor
method of distribution, such as that embodied in the per
sonal property tax, when it might employ a tax which with
substantial accuracy lays the burden in accordance with
ability to pay?"
The Gentlemen refer to the Model Plan of the
National Tax Association as not being in favor of our
program. They admit it presents three main types:
first, real estate, second, personal property; third, busi
ness income. This quotation is from the Model Plan.
It says: "Under a system by which the same amount of
revenue is collected from separate taxes levied upon
income, property, and business, it is clear that such
inevitable inequalities as arise in the working of any
one tax may be , . . offset or mitigated by inequalities
arising under the others." Clearly, the Model Plan
contemplated getting approximately the same revenue
from each of these three forms of revenue, and since
business income and personal income are two-thirds
56 THE YEAR BOOK OF COLLEGE DEBATING
of the program, then it favors getting at least two-
thirds from sources other than tangible property,
The Gentlemen of the Opposition have misconstrued
our case by trying to claim that you would have to
multiply gas and income tax so much in order to get
the revenue, but have they taken into consideration the
lowering of exemption and inclusion of other forms?
They take the income tax as it is now being applied
under the present exemption and multiply that by so
much to reach the proportions we are advocating,
They don t consider the extension of the income tax
base so that it would cover more people and tax accord
ing to a personal income. In the State of New York
they claim it can t be done and yet the income tax in
that state is only one and one-half per cent on the first
ten thousand dollars above a four thousand dollar ex
emption and finally gets up to four and one-half per
cent on incomes above forty thousand dollars. What
an income taxi They could lower that and include
other forms of income and get the revenue,
Third Negative Rebuttal* Nathan ,
University of Michigan
LADIES AND GENTLEMEN: The preceding speaker
says we are wrong. All you have to do is extern! in
come. In Mississippi they are down to seven hundred
fifty dollar incomes, in North Dakota they are down
to one thousand dollars. Extend the and go
to fifty dollar incomes, or ten dollar incomes, I don t
care where you go on the income. You can t go up
REVENUES FROM INTANGIBLE PROPERTY 57
because there are not very many higher. Even if you
took the coupon clippers of North Dakota for every
thing they got, you would not have enough to run even
a small share of the government. You can run a tax as
low as you want. You have still got to get a tremen
dous portion of that, and that money happens to be in
a form that is easily hidden, and every single addition
of dependence upon that type of income adds an in
centive to evasion, with an income that is easy to use
and evade the tax.
It isn t so simple. Just saying, "Broaden the tax
base," does not increase returns by ten per cent, or
twenty per cent, or thirty per cent, or even with the
Gentlemen s two or three hundred per cent increase on
the returns of some of those taxes. You can t get that
much of an increase merely by saying "broaden the
base." As to the Model Plan because it names three
types of taxes to be used, the Gentlemen assumed the
planners were going to place one-third equal depend
ence on each. You can t find the state, and this has
been pointed out by many authorities, where they are
agreed as to what percentage dependence shall be
placed upon each one of those taxes because they
frankly admit they don t know and couldn t figure it
out until they had local situations in mind and knew
first what would be equitable and correct in meeting
tax principles of simplicity and diversity. In Wis
consin, after nineteen years of thus distributing income
taxes, the Wisconsin Tax Commission is advocating a
change.
The Gentlemen of the Opposition say, "Sure, you can
58 THE YEAR BOOK OF COLLEGE DEBATING
pass it back," but they are doing It in ways that they
are not satisfied with. They are doing it with ten per
cent of state and local taxes, and the Gentlemen of the
Opposition want to increase that to handle a distribu
tion of state and local taxes of about five billions of
dollars a year in the United States, and they have not
demonstrated to you any means we don t want just a
general means, we want to know a general method that
can be used that will be satisfactory, and they have
not brought one out.
Now, the Gentlemen of the Opposition have talked
about this delinquency. This man we quoted happens
to be a member of the State Tax Commission who was
put on the Commission for the purpose of getting his
particular information in that particular line, because
he happens to be the outstanding authority on state
and local taxes in the United States, and has made
special studies of counties of the State of Michigan.
That is the conclusion he reaches, that the waste and
extravagance we spoke of in our first speech is the
thing that causes delinquency. They quote the Mich
igan Tax Report, "Tax delinquency h not tax de
linquency. It represents an excess of taxation over
ability to pay/ 7 That does not mean what they think
it means. It represents an over what the county
should get and not an on any particular source
too much money, not too much with respect to those
particular sources. Counties in the State of Michigan
waste money "high, wide and handsome," because of
their particular organization. And so far the Gentle
men have not attempted to up and the
REVENUES FROM INTANGIBLE PROPERTY 59
findings of the New York State Tax Commission, a
Commission which has studied the problem more care
fully than any group of men has ever studied it.
That happens to be the state most favorable to the
Gentlemen of the Opposition. The conclusion there of
the tax authorities, giving attention to the ability to
pay and benefit theory, is that a tax in New York to be
equitable must have at least fifty-three and two-tenths
per cent of the total revenue s dependence placed on a
tax on tangible property. That, as we have said, is in
the state most favorable to the Gentlemen of the Op
position. The equity about which they complain so
bitterly would be more and more apparent in each of
the other states of the Union as they applied this
proposition of theirs to new states,
Third Affirmative Rebuttal, Harry L. Cole
University of Wisconsin
LADIES AND GENTLEMEN: The preceding speaker
has closed with a reference to the special report of the
New York Commission on Tax Revision. That report
is very important because it represents the findings of
a body of experts who were called together specifically
to study this question, and it should be given great
weight in deciding this matter. The Gentlemen who
just preceded me said that the Tax Commission did not
presume to set definite percentages upon this sort of
tax or upon that sort of tax, but proposed it should be
adjusted to local communities. As I said before, we
are in favor of adjustments to local conditions, and
60 THE YEAR BOOK OF COLLEGE DEBATING
agree with the Gentlemen of the Negative and the
New York Tax Commission that the percentages will
need to be adjusted to the differences in different com
munities. But we do not agree with them that if you
keep the large part of the burden on tangible property
the situation will be met. We contend you must have
a large part of the burden distributed according to
ability to pay if you are going to have a more equitable
tax system.
Now, the New York Commission, as they have in
dicated, advocates various substantial increases in the
revenue derived from intangibles and advocates these
increases shall be applied to reduce levies on property.
We are also in accord with the New York Tax Com
mission in that respect. They unanimously report in
favor of increased revenue to the amount of one hun
dred twenty-seven million dollars in a normal year in
order that the taxes on property should be lightened,
but a majority of the committee said to lighten it one
hundred twenty-seven millions was not enough. To
quote the exact words of the Commission, whose report
I hold in my hand. Part 1, page 48:
"The majority submits that, whether one takes property
values or income as the test of fairness in the distribution of
the tax burden, the portion of the aggregate 1 tax burden
which falls upon real estate Is so that the inequity will
not be eliminated by the adoption of the revenue proposals
listed in Class A. J)
The revenue proposals listed in Class A are to
property taxes one hundred twenty-seven million dol-
REVENUES FROM INTANGIBLE PROPERTY 61
lars by an increase chiefly in income taxes, and these
income taxes are not anything like the rates they
think would be necessary to raise revenue from in
tangibles : one per cent up to five thousand dollars, and
a rate of two per cent on incomes up to ten thousand
dollars. These are the terrific rates which they are so
afraid of on the incomes! We have not begun to
scratch the surface of the possibilities of raising rev
enue from income tax in this country.
The Gentlemen made the statement that there isn t
sufficient revenue in the State of North Dakota to pay
the income tax. According to the United States Gov
ernment return, total revenue in the State of North
Dakota was over one hundred forty million dollars in
1930. The expenses of the government were some
thing like thirty million dollars, and yet they tell you
there isn t sufficient income to pay their government
costs- That is an absurdity. In any state the total
expenses of government have to be a small percentage
of the income of the people. Our fundamental conten
tion is that we can readjust the major part of the tax
burden and apportion it upon people in proportion to
their incomes. And when you do that you will be
getting at the ability to pay, you will be putting your
tax system on a foundation of justice, and you will be
curing these inequities whose existence the Gentlemen
have not denied but which they have proposed noth
ing to correct. In conclusion, if we are to accomplish
anything constructive in the way of improving our tax
system, and doing away with the inequities which the
Gentlemen have not denied, we must work out a pro-
62 THE YEAR BOOK OF COLLEGE DEBATING
gram in every state as It is already worked out for
Delaware, Virginia, and North Carolina, and thereby
raise more than half of the state and local revenues
from sources other than tangible property.
Decision, Professor Rexford Mitchell
Critic Judge
LADIES AND GENTLEMEN: Debaters are often told
that they should regard the judge as one of the au
dience, and judges are frequently admonished to re
member that they are one of that group. I am going to
assume, therefore, this evening that you are willing
to accept me as one of the group, and since I am the
only member of the audience who has a chance to talk,
I am going to presume to speak for you in saying to
these men from Michigan and these men from Wis
consin that we have enjoyed this splendid discussion
of this timely question, I think you will all agree that
it has been an interesting and profitable evening,
I think you understand what 1 am asked to do. 1
am not asked, fortunately, to decide who is right, and
I am not asked to decide the tax problem. We are
going to let the Democratic Governors and Legislators
which the State of Michigan and State of Wisconsin
have elected so recently deal with that matter, I am
simply asked to tell you which of the two teams 1
think has done the better debating, and I sura that-
after listening to the debate you don t envy me that
task because it is a rather difficult one, 1 think.
Those of you who are In educational are
REVENUES FROM INTANGIBLE PROPERTY 63
familiar with the phenomena known as questionnaires.
Some of you have been deluged with them from time
to time. In order to be up-to-date and in step with
the times, I have devised a questionnaire for use in
analyzing this debate and in explaining the basis for
my decision. But unlike most perpetrators of ques
tionnaires, I am going to make myself the victim of the
device and try to answer the questions. I think as the
process proceeds you will discern what my decision is,
and the basis for it. May I say further in disparage
ment of this questionnaire that in it I have separated
factors that I know are inseparable.
The first question is this: Which team showed
throughout the debate greater skill in analysis? My
answer is that there was no perceptible difference.
Second: Which team showed a more complete knowl
edge of the question? Again I will have to say that
to the best of my judgment there wasn t much dif
ference.
The third question is: Which team showed superior
skill in using argument backed up by evidence in build
ing up a logical case? There I am going to fool you by
having an opinion as to difference, I say the Affirm
ative had a slight edge in that respect. I felt that
they had a little more closely knit case and that it was
a little easier to follow them all the way through their
argument.
The fourth question: Which team was superior in
refutation and rebuttal? My answer is that 1 think
the Affirmative had a slight edge*
I listed the questions that it seemed to me had de-
64 THE YEAR BOOK OF COLLEGE DEBATING
veloped out of the clash of argument as a result of the
constructive speeches, the matters I felt each side must
deal with, and I felt that the Affirmative followed the
ball, so to speak, that is, kept their eye on the main
issues, just a little bit better than the Negative did.
Fifth: Which team was superior in rhetorical organ
ization? I think the Affirmative had the edge.
Which team was superior in delivery? I say the
Negative was.
Which team was superior in persuasiveness? I say
the Negative was.
Where did the weight of evidence seem to rest at the
close of the debate? 1 felt it was with the Affirmative.
The last question: Which team on the whole did the
more effective debating? My answer is the Affirmative,
and thus ends the questionnaire.
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72 THE YEAR BOOK OF COLLEGE DEBATING
augurated by Oklahoma. May 7, 1931. Tax on Incomes
Thought Best. February 14, 1931.
Citizens Bureau, Milwaukee.- Comparative Tax Burden on $1,000,000
Manufacturing Corporation. May 30, 1931.
Congressional Record. Vol. 66, Part 5:5510, Duplication of Taxes,
March 4, 1925. Vol. 66, Part 2:1189. Income Taxes and the
Price Level January 3, 1925.
Current History. 34:448-50. Land Taxation in Great Britain.
June 1931. 33:244-6. A New Source of State Revenue. No
vember 1930.
Forbes Magazine. How Racketeers Steal Millions in Bootlegging of
Gasoline. December 15, 1931.
Forum. Pittsburgh Has a Plan, April 1928.
Gas Tax News. Gasoline Tax Payments Soar and Make New
Record I No. 7, 1932. American Petroleum Institute, New
York.
Harlows Weekly. 38 No. 10:4-6. Humphrey Briefs New Tax
Theory. September 5, 193 L Taxation In Oklahoma. Septem
ber 26, 1931.
Illinois Journal of Commerce. Reorganisation oj Local Govern
ment. November 1931.
Journal of Political Economy, The General Property Tax and the
Farmer. January 1930,
Manufacturers News. We Save at Washington and Waste in the
States, November 1926.
Manufacturers Record. -Gas Tax Diversion and Evasion. January
7, 1932,
Nation.- 134:484-6. Toward a New Tax Program. April 27, 1932.
National Municipal Review. -20 No. 9:518-522. Brain Muddle in
Chicago. September 1931. 20 No. 10:584-8. County-
Municipal Segregation Plan Proposed for New Jersey, October
1931. 21 No. 2:101-6. Has the Indiana Plan Been a Success?
February 1932. 20 No. 6:328-334, North Carolina s New Plan
for Controlling Local Fiscal Ajalrs. June 1<WI, 20 No, <^:S27-
530. State Centralization in North Carolina, September 1031.
20 No. 9:523-7. Tax Investigations in Twenty $tx States.
September 1931. 20 No. 3:136-8. Tux Reforms in Tennessee.
March 1931.
National Petroleum News, 24 No, 26:16.
Broker Accmed in Gasoline Tax Evasion COM, June 29, 1932,
REVENUES FROM INTANGIBLE PROPERTY 73
24 No. 17. Tax Evasion is Menace to Government. April 27,
1932. 24 No. 26:13-4. Taxoline, a Fitting Name. June 29,
1932.
Nation s Business. 19 No. 2:29. Chicago Teaches a Tax Lesson.
February 1931. 19 No. 10:31-3. How North Carolina Cut Its
Cost. October 1931. 20 No. 2:46-50. It s the Poor Who Pay
a Sales Tax. February 1932. 19 No. 7:46. Taxes Threaten
Retail Growth. July 1931. 20 No. 6:33. Ten Governors Dis
cuss Taxes. June 1932. 19 No. 5:31. Throwing Light on the
Sales Tax. May 1931. 20 No. 5:25-7. Your Part in Tax Re
duction. May 1932.
New York Times. -Use Here of British Tax Plan. May 1, 1932.
Excessive Cost of Local Government. July 7, 1931. Mississippi
Giving Sales Tax a Trial May 8, 1932. State Legislatures Con
sider Income Tax. March 22, 1931.
Nineteenth Century. 109:637-47. The Taxation of Land Values.
June 1931,
North American Review. 232:33-42. The Landowner s Lot. July
1931.
North Carolina Law Review. 9:108-10. Tax Reform in North
Carolina. December 1930.
Oklahoma Municipal Review.- 6 No. 6:128-130. Reducing Govern
mental Costs. June 1932.
Oregon Voter. Are Intangibles Property? April 18, 1931. In
tangibles Tax. March 28, 1931. Only 50% of Tax Paid by
Realty. April 18, 1931.
Public Dollar. -Public Expenditures. June- July 1931.
Public Management. 14 No. 1:11-2. Taxes and Assessments.
January 1932.
Review of Reviews. 82:57-8. A Battle over Taxes in Illinois.
November 1930. 84:86. Canada s Sales Tax. October 1931.
82:120-2. How West Virginia Found New Revenue. October
1930. 85:25. A Manufacturers Tax for the States, April
1932. 83:86-7. A Postscript in the Sales Tax. January 1931.
84:67-8. Taxation in Hard Times. August 1931.
Saturday Evening Post. -204 No. 23. One State Cleans Home.
January 2, 1932.
Tax Digest^- 455**sme* Procedure. April 1931. Control of Public
Expenditures August 1931, 8 No, 6: 193-6. Effect of Taxa
tion on Real Estate. June 1930, 10 No. 3: 76-9. Public Finance
74 THE YEAR BOOK OF COLLEGE DEBATING
and Taxation. March 1932. The Sales Tax. February 1931.
Special Assessment Dangers. July 1930. State and Local Tax
System of California. 10 No. 6:195-9. June 1932. What is a
Good Budget? November 1931.
Tax Magazine. Basic Principles Which Should Guide in Tax Legis
lation. January 1931. The Gross Sales Tax in Kentucky.
March-April 1932. The Taxation of Intangible Property. April
1931. 10 No. 6:211-5. The Turnover or Sales Tax in Prance.
June 1932. Unlimited Earnings and Tax Evasion. November
1931. 10 No. 6:216-222. Why Pay Property Taxes? June
1932.
United States Daily. The Income Tax in South Carolina, July 9,
1930. Tax Reduction is Advocated on Realty in Iowa. De
cember 11, 1931. Tax Reductions are Foreseen in Farm Prop
erty. December 29, 1931. 7 No. 72:8. Tax-Relief for Farmer
by Levy on Intangible Property. May 26, 1932.
Utah Taxpayer. Organized Effort Its Accomplishment in Tax
Control. October 1931.
Woman s Journal. The High Cost of Inheriting, September 1928.
World s Work. 6Q:30~t Hands Off Our Tax Laws. March 1931.
SOCIALISM
An International Debate
Between Oxford (England) and Yale
Universities
SOCIALISM
OXFORD UNIVERSITY VS. YALE UNIVERSITY
The Yale-Oxford Debate was held at Yale s Sterling Law Audi
torium. The subject was stated, Resolved: That Socialism offers no
remedy for the present economic disorder.
Oxford University was represented by A. J. Irvine and G. M. Wil
son and Yale by F. Vinton Lindley and Eugene V. Rostow. In the
debate, both Affirmative and Negative sides included one Oxford and
one Yale debater. The Presiding Officer was Franklin Ferriss, 2d.,
who introduced the speakers.
These speeches were collected and contributed through the courtesy
of Professor J. C. Adams of Yale University.
Introduction, Franklin Ferriss, 2<L,
Chairman
LADIES AND GENTLEMEN: I am tremendously
pleased to see the Yale Sterling Law Auditorium full
to its capacity. I think it is the first time in four years
at Yale that I have witnessed such an event. I cer
tainly agree with you all, and if I were to come to only
one debate in the four years at Yale, I think it would
be this one. We are very much honored to have the
Oxford men with us this evening and I extend a cordial
welcome to them. I cannot lean to one side or the
other. The Oxford team feel they must say what they
honestly feel, and consequently they are splitting with
the Yale team and one Oxford man and one Yale man
77
78 THE YEAR BOOK OF COLLEGE DEBATING
will take the Affirmative while the other two men will
take the Negative side.
Each man, I understand, will speak about twenty
minutes, and there ought to be no rebuttals. However,
the men are willing to answer any questions anyone is
willing to propose, and I will recognize people in the
audience for that purpose.
Mr. Rostow and Mr, Wilson will uphold the Nega
tive, and Mr. Lindley and Mr. Irvine will uphold the
Affirmative. The subject is, Resolved: That Socialism
offers no remedy for the present economic disorder.
First Affirmative, P. Vinton Lindley
Yale University
LADIES AND GENTLEMEN: I predict tragedy. We
are rushing toward chaos. We are rushing toward
destruction. I predict tragedy.
It is not the tragedy of economic collapse. It is the
tragedy that for the first time in the history of de
bating, and in the history of the world two debating
teams may come to complete and entire agreement. I
am going to be, if I may, quite personal through this
debate. Socialism is a fairly hopeless subject to dis
cuss in the abstract* Gene Rostow, who Bits there, and
myself, for four years In college have eaten many meals
together and have discussed this question so constantly
that we have ? alas, arrived disgustingly enough at com
plete agreement^ informally if not before you; and
after discussion the same thing was practically true
this evening with the Englishmen at dinner. When
SOCIALISM 79
more or less intelligent people get together and discuss
subjects of this kind, it is apt to end in agreement.
We have with us tonight two gentlemen from a na
tion of globe-trotters, from the far-flung British Em
pire. We are delighted that they have been "flung"
across the Atlantic Ocean to us I
The extent of our agreement, I think, is disgusting.
That is the only word we can use. We are all agreed
that there is present economic disorder. If I may read
from a magazine, whose editor sits on my right, I think
I can give you as good a summary as any there is of the
situation: "With surprising community of judgment/
he says, "the economists see America clearly in her
dual position. As a business unit, first, whose internal
arrangements for production and distribution as they
exist are wasteful, self-destructive, incapable of sus
tained operation at an efficient level; as an inter
national unit in the second place, turned creditor, and
seeking nevertheless to maintain the tariff apparatus,
which if unrevised must ultimately do away with
American foreign trade. The world s monetary struc
ture will fall, and in the phrase of Keyne s, destroy
America with the curse of Midas. "
I have not debated this subject as many times as
these Englishmen but I have done so four times and it
seems a little senseless to go into a long list of common
place arguments against Socialism, because we all have
complete knowledge of them. On both sides we agree
that in America there is over-production and under
consumption, that the existence of business cycles Is
80 THE YEAR BOOK OF COLLEGE DEBATING
unfortunate, that tariffs should be gradually scaled
down and that there is a great deal of unemployment.
The whole thing is pretty successfully summed up in
an article in the November New Outlook, the only good
article on "Technocracy" which I have read. "The
rate of replacement of men by machines exceeds the
rate of expansion of industry. You hear a good many
plans these days for bringing about industrial recovery.
Some so-called leaders are talking about developing
new industries without realizing Technology provides
absorption in that line. Some are still speaking glibly
about developing foreign markets, without knowing
what they are talking about. To those who are pre
senting these plans, Technocracy/ a group of engineers
which has been studying production and consumption
for the last ten years, offers a few fundamental ques
tions: *Can we re-employ ever again under a price
system all those of employment age to get production
capacity? 7 Is recovery just around the corner with
one to two years ? supply of wheat, corn, copper, rubber,
and other commodities in our warehouses? >?
It seems to me that the proper indictment against
capitalist civilization has been made by "Technocracy,"
this group of engineers* It is very curious they should
go out of their way to state that they do not think that
Socialism is a remedy for these disorders. We are,
nevertheless, I think, agreed once more on the general
remedies for economic disorder. We all want more
centralized control We differ merely in degreeas to
how much we want. We all want more planning; we
all want more of a of social responsibility; we
SOCIALISM 81
all want the rest of that which the intelligent Socialists
mildly espouse.
There is one final tragedy in this tragic sequence I
have been talking about; a tragic question that must
have been in the minds of all of you as you came here
tonight: "What is Socialism?" To fancify an Ameri
can expression, I might Anglicize it by saying: "I ll be
jolly well damned if I know!"
I have been studying for four years in Fabian Clubs,
Liberal Clubs, in courses in Economics and Govern
ment and History and all the rest of it, and there is no
agreement of any kind at all, as you all well know.
Nevertheless, one has to get at some sort of definition
of Socialism. The general description which is given
in one of the "bibles" of the Yale Economics courses
by Messrs. Fairchild, Furness and Buck is: "Socialism
is a complex and many-sided movement." It neverthe
less goes on to give some sort of definition in typical
economic lingo. "Socialism is a program of reform
which deprives private ownership of the means of pro
duction and competitive control of industry, and pro
poses a type of system in which productive capital will
be owned collectively and economic activity will be
controlled by authority."
Well, that is the typical school-boy Websterian
definition. It is the definition I happen to know per
sonally. Mr. Rostow does not agree with it. He thinks
it is out-moded, old-fashioned. But, in order to arrive
at some conception of what anything is, of any defini
tion, of any kind, I think we have to take two points
of view: First, the regular, Websterian type in italics,
82 THE YEAR BOOK OF COLLEGE DEBATING
and then a general conception, and finally a cross be
tween the two.
I should say the general conception of Socialism in
America was one of unbounded revolution and complete
Communism. How are we going to find a mean be
tween these two? The only possible answer is, grant
ing all these meanings, that Socialism is a sort of point
of view. It is a state of mind. It is a personal philos
ophy, which includes all time and all existence. That
is why this has been described, perhaps wrongly, in
the papers, as a debate. It is really an expression of
personal philosophy on the part of individuals.
I do not think it is a fair debating trick to attempt
to foresee what your opponent is going to say, and in
that respect I have an unfair advantage over Mr. Ros-
tow, but he has an unfair advantage in speaking after
me and in my not being able to rebut I Mr. Rostow
will give you an excellent economic plan, I think I
can say with surety beforehand that we shall agree
with practically everything in that plan. I have read
his economic plans before, and have been in hearty
agreement with every single one of them, There is a
type of general unfairness which comes out most
clearly in arguments about religion. Somebody comes
to you and says, u Are you religious? and you say,
"No J> ; and they say, "Do you believe in God?", and
you say, "No"; and they say, "Well," after a long
period of argument^ u -surely you believe that there is
a certain amount of good In every one* don t you?",
and you say, "Yes, I suppose there is n ; and then
say, "Ah I you are religious!"
SOCIALISM 83
I think when you use a term, you have to use it in
practically its extreme sense. I think when you speak
of religion, you have to use it as meaning a belief in a
God of some kind and a belief in some sort of church
worship. It isn t fair to jump around in the argument,
change your position all the time, the way people who
argue for religion in that fashion do. And that, it
seems to me, is exactly what most modern, intelligent
Socialists are doing. And here we come upon a mild
beginning disagreement. I arn not going to indict So
cialism in detail, because I think the arguments have
been rehearsed too many times; because I think there
is too general an agreement on what should be done to
remedy economic difficulties.
My main disagreement would be that it is simply a
mistake to call this Socialism. It is a gigantic mistake,
because most people in America, as I pointed out, do
not understand what Socialism means. This, too, is all
part of the old debating paraphernalia. Why not have
enlightened Capitalism instead of Socialism? Why not
carry out mild reforms? Our opponents do not want
the extreme of government ownership. We all want
certain small fundamental improvements. Why not
simply make them and not label them "Socialism," and
then not drive people away from those changes by
calling them Socialism?
A second, tiny point of disagreement would be that
our opponents exaggerate the present evils. There is
no point in carrying out this line of argument to great
detail. The Englishmen have observed that while there
is a great deal of talk about depression over here, the
84 THE YEAR BOOK OF COLLEGE DEBATING
depression itself does not seem so terribly severe. The
difference between us, then, appears to be a question of
a difference in approach.
I like to approach these questions and from what
I learned of my partner, he does too from a human
rather than an economic point of view. In the last
analysis all this originates in humanity, in the mind;
it does not originate the other way around. Mr. Ros-
tow is scientific, if you like, and I am psychological.
He would vote for Norman Thomas more hastily than
I would. I think Norman Thomas was unquestionably
the most intelligent of the three candidates. Also, un
questionably, he is an idealist. We have seen a good
deal of him at Yale, in connection with the Liberal
Club and other activities. I think he and Remold
Niebuhr, second in command, have been conducting a
sort of progressive abandonment of idealist thinking.
First they were pacifists, and saw that was a pretty
untenable position, and then they came, through vari
ous religious feelings, finally to Socialism, and now they
are beginning to compromise more and more on
Socialism.
I shall be accused, I am afraid, of being superficial,
dilettante, emotional If anything rests upon emo
tionality, I think it is Socialistic feeling. While Mr.
Niebuhr was talking about unemployment here, to see
what effect it would have on him, I asked from the
audience whether it wouldn t be better to have the un
employed die and reduce the surplus population an
old phrase from Dickens which has been used a good
many times. I don t believe that! but It had its effect.
SOCIALISM 85
He hit the ceiling. Pure emotion. Lost his temper
completely.
I do not think our point of view is any more emo
tional than the Socialist s, Both sides agree Marxian
Socialism is old-fashioned, and is not the solution.
Both sides agree in general on the steps to be taken.
Why on earth, then, call it Socialism? It is simply a
psychological mistake.
I have brought out the arguments myself many times
in this place against classical Socialism. I think it
would be better to bring them out in somebody else s
words for once. You will forgive me for reading so
much it is a school-boy trick that I have never done
before but I think in the last year of debating at Yale
one may be happy to find out the things one has been
saying for four years have been expressed far better
by somebody else.
This is an entire chapter; it is not a long chapter,
however, and I feel able to read it to you because al
though you might have read it at home, I do not think
many of you would. It is from a book by a Yale Pro
fessor, a great figure around here, William Graham
Sumner. The Socialists in this body here tonight are
squirming in their seats because "he is old-fashioned."
It is true; he is old-fashioned; he did not live among
present economic problems. Nevertheless, his remarks
on the subject are so trenchant that they strike at the
root of classical Socialism, (Mr. Lindley here quoted
Chapter 1 of Professor Sumner s book What Social
Classes Owe to Each Other.)
The psychological approach of which Sumner speaks
86 THE YEAR BOOK OF COLLEGE DEBATING
is so obvious it might be well illustrated by a little in
cident which occurred tonight. We went down to meet
the English debaters and did not have enough money
to pay the taxi so we borrowed and said, "Oh, the De
bating Society will pay." The State will pay; the State
will do everything! It is an utter impossibility.
If Socialism is not the remedy, what is? I think the
remedy is "man" or "men/ 7 not systems. A man like
Sumner; put him into a position of power, and then let
him do all the theorizing he wants to and make all the
practical applications he would like to make. The
solution is "man" and not systems. A man like Sum
ner, or possibly, or preferably, a coalition government
of these four gentlemen here tonight!
First Negative, Eugene V. Rostow
Yale University
LADIES AND GENTLEMEN: As you noticed^ Mr, Lind-
ley and I came into this debate agreed to insult each
other. I, for one, propose to avail myself of the op
portunity. He has presented to you an elaborate, a
charming, a plausible, but unfortunately an entirely
irrelevant anthology of rosy theory. His speech is
persuasive, his art laudable, his wit soothingbut his
doctrine is shot through with a series of loose and mis
leading platitudes which refuse to be classified into
order or coherence, . I wish 1 had brought a book
along with which to confound Mr. Lindley 1
There is a little volume, also by a distinguished
Professor, Mr, Becker of Cornell, President of the
SOCIALISM 87
American Historical Association. In twenty pages he
describes his concept of climates of opinion, and speaks
of men being conditioned in certain lines conditioned
by the circumstances of their lives to refuse certain
terms, certain words, certain ideas. Mr. Lindley has
been conditioned to reject the word "Socialism." He
finds it peculiarly, irresistibly abhorrent. Mr. Wilson
and I do not find "Socialism" a peculiarly abhorrent
word. And if that is to be the distinction on which this
debate rests, we might as well call it off now. Mr.
Lindley has been conditioned by Sumner and I by
more contemporary Socialists, and we disagree.
We are all accustomed, both from Socialists and
their enemies, to this pleasant and pointless specula
tion about justice, ideals, and mankind; general state
ments about honesty, workmen, and historical princi
ples; sweeping generalizations about man, God, and
society. The very word "Socialism" seems a license
for the inexplicit and the inexact. Beating the bosom
and proclaiming the glory of the word is thrilling drama
for both sides. The advocates of Socialism and their
opponents are both often romantic, and given over
much to the vague and the emotional.
Socialism is, of course, a crusade, and a class move
ment. It is a religion, and a philosophy of history and
a doctrine of social organization. It can make an
appeal to ethics, morality, political principles, concepts
of the virtuous, the true, and the good. Socialism is
distorted by the frequency and the poverty of the popu
lar appeals directed in its favor and in opposition to
its poMcy. But if the emphasis on economic determin-
88 THE YEAR BOOK OF COLLEGE DEBATING
ism which is constant in the Socialist literature means
anything, it implies that the central point of all discus
sions of Socialism should be the economic program, the
practical plan for immediate procedure which distin
guishes the Socialist movement here and in England.
Let us then, in this discussion of Socialism and Capi
talism, confine ourselves as exactly as possible to the
evidence of experience, to what is in the world, not to
what once was, what might have been, or what should
be, ideally, some day. The exciting generalizations to
which Socialists and non-Socialists are addicted are
useful in debate, in the pulpit, and in politics, but they
cannot be confirmed in experience and they are of little
use in defining specific economic ends,
I am not going to attempt a brilliant emotional plea
in the interests of a Socialist program for two excellent
reasons: in the first place, I do not like to preach; in
the second, you do not enjoy being preached to* In
stead I shall limit this speech to the relationship of the
Socialist policy to the industrial mess in which a non-
Socialist world finds itself, to the concrete economics
that make Socialism into a pertinent, a realistic, and a
practicable program for sane resolution of the chaos
which lies everywhere around us.
Accepting this limitation, one perceives that the sim
ple, obvious definitions of Socialism and Capitalism
correspond to nothing in the realm of experience.
Neither the touching vision of Capitalism that the
speaker from the conservative bench evoked, nor his
red beast Socialism bears substantial reference to the
facts of a contemporary world* Classic Capitalism
SOCIALISM 89
ceased to exist long before tariffs and Reconstruction
Finance Corporations, trusts and holding companies
and Federal restrictions denied significance to the Capi
talist boasts of rugged individualism and untrammeled
economic initiative. The Socialism of easy formulae,
of nationalization, and bureaucracy, and equal income,
and single-tax dissolves like so much fog when brought
into contact with the actualities of a complicated eco
nomic system.
Confronting that system, one is impressed by two
things: its contradictory formlessness and its collapse
as an effective instrument for providing goods, services,
and support to the society.
It is formless because it gives promise of being
mechanized and efficient in its aspects as producer, but
continues to be chaotic and disruptive as a means of
distribution. It shows every sign of skill in the organ
ization of individual business units, but has failed dis
mally to integrate and coordinate them upon a basis of
stabilized growth. It has failed because there does not
exist a background of security in which the technical
developments of the engineers can work themselves
out. It has failed to provide the balances of intelligent
planning without which technical advances are a social
menace, not a social aid.
Let us approach the problem of stabilization in a
pragmatic manner. Let us consider in a practical way
just what is required by the economy as it exists. In
vestigate the measures which are consistent with the
actual need of the industrial order. Attempt to satisfy
the requirements of a permanent, a stabilized, eco-
90 THE YEAR BOOK OF COLLEGE DEBATING
nomic efficiency. To fulfill these concrete needs must
be the primary obligation of any social program.
Any organism depending upon exact demands re
quires systematic provision of those demands; social
systems as well as vertical trusts. Contemporary so
ciety consists essentially of large corporate units, which
are advancing rapidly towards an all-inclusive balance
of interlocking parts. They are based upon a variety
of engineering developments, and are approaching a
condition of technological equilibrium. Any society in
1932 must use factories and machines and corporate
financing; must organize itself Into moderately large
units, deal with the problems of an essentially stable
market.
The world in 1932 is a static world with a reasonably
static population and a highly developed economic sys
tem whose interdependence demands a stable market.
Heaven knows that the limits of production have not
been approached. Natural resources remain to be
exploited, inventions to be applied, the standard of life
raised enormously in a hundred ways* But, In the
nature of the productive system, that essential ex
ploitation of resources cannot be free and unlimited in
the tradition of the frontier, and the Jay Goulds,
Fiskes, and Morgans to whom the dynamic growing
frontier society gave full license. The cut-throat com
petition of the great days of an expanding Capitalism
led to an efficient development of the procedures of
production, but failed to provide for adequate dis
tribution of profits, goods, and consumer purchasing
power. To simplify the issue, than the of
SOCIALISM 91
machines, factories, and trusts demands one basic
condition for efficient operation: a wide, a permanent,
and a prosperous consumer market. The equipment
of Capitalism is already geared for production on a
scale enormously higher than any yet known. There
are inventions so revolutionary that their proprietors
do not dare use them. There are means of eliminating
the wastes of Capitalism and obvious steps towards
rationalization of industry in coal, steel, wood-pulp,
power and textiles here; and in coal, chemicals, and
textiles in England. There are hundreds of minor
steps which may be taken to eliminate minor sources
of inefficiency. They are all corollary to the basic
problem of revising our medieval and haphazard meth
ods of distribution.
If one is to proceed with the development of natural
resources, of industrial techniques, of national wealth,
there must be an adequate and a permanently prosper
ous market for consumer goods. The problem of pro
duction cannot be solved if the problem of distribution
is not solved with it, and all other phases of the econo
mists 5 disputes their jargon of capital goods and sav
ings and cycles and all the rest of it are to be grouped
naturally around the basic equation of production and
distribution.
To create and to guarantee a wide, a permanently
increasing market for consumer goods is possible only
if labor is given a higher proportionate return for its
services, in the form of high real wages. It is possible
only if that market is protected exactly as the industrial
structure on which it depends and which, also in its
92 THE YEAR BOOK OF COLLEGE DEBATING
turn depends on it, is protected. There must be
parallel and integrated control of both classes of eco
nomic phenomena the productive and the distributive.
Industry must set about the basic problems of supply
ing existing markets and exploiting its natural and
technological resources with the secure background of
a stabilized market for its goods.
It follows from this primary condition in the eco
nomic world, this practical, empirical necessity for
planning and coordination, that secondary steps in the
shape of reforms in the speculative credit structure, in
the procedures of farming, of industrial management,
of rigid controls in a dozen relationships are impera
tive. They follow logically from the basic industrial
necessity for balanced highly developed techniques of
production with a prosperous and a permanently pros
perous consumer market,
To achieve this equation of production and consump
tion, predicated by the nature of a machine economy,
there must be added to the existing forms of society a
mechanism of planning. The existing forms must be
modified and realigned to fit into a more sensible and
more efficient series of trusts, but that realignment will
lose its only opportunity for permanence if the crea
tion of policy is not given over increasingly to trained
men. Lippmannls phrase Is "planning through disin
terested minds." It is a good phrase. The control of
a highly mechanized industrial balance cannot be left
to chance or to automatic law or to .necessarily acquisi
tive business men. The fate of the worker and his
adequate payment stand too basically at the foundation
SOCIALISM 93
of all Industrial progress to permit chance control for
industry. The running of industry, all extraneous is
sues being neglected, is essentially an affair of experts.
"Big questions of policy must indeed be decided in
behalf of society as a whole, in the light of relevant
expert advice," but actual administration is the expert s
problem. It is essential to endow a group of experts
with wide discretionary authority and to confine their
functions to determination of directions and the exer
cise of general controls. The negative contribution of
Socialism as such to policy is the guarantee of con
sistent general interest in the planning authority.
Tributary to this planning authority are the eco
nomic units, the trusts, in various forms, of various
sizes, depending upon the industry and its conditions.
In a practical analysis of business conditions then, two
things are necessary: the creation of a planning au
thority, the center of disinterested technical control;
the second, a recognition of the variety of forms which
changes within this general unifying control of the
economy will permit. There must be latitude in ex
periment, in procedure, in organization. Essential con
formity to the rationale of planning, to the end of
efficient stabilized industry, is the only constant. No
single formula of public ownership can suffice. The
basic fact is the equilibrium of planning which must
underly the Socialist society.
If these are the conditions of efficient operation for
any society that intends to use the mechanical tools
which we inherit, what is their relationship to those
curiously misleading words about which we have agreed
94 THE YEAR BOOK OF COLLEGE DEBATING
to debate. What is Socialism in relation to this out
line of "economic next-steps"?
Socialism is certainly not an easy concept of national
ism, or of little clerks and their government civil serv
ices, extended indefinitely into a gray and bureaucratic
mist of unrelieved dullness. Socialism accepts the
necessity of dealing with issues of organization in a
realistic, even an opportunistic manner. It recognises
the trends toward collectivism which have revolution
ized the Capitalistic world. It proposes to utilize and
adapt its industrial development into a coherent struc
ture of regularized growth. It proposes that the
mechanism of control, the planning body, the center of
an articulated economic structure, be in reality a dis
interested and scientific group. This is in truth a
Socialist nucleus; it is enough. Problems of national
ization, confiscation, private ownership itself, become
relatively insignificant. Granted stringent control and
realistic manipulation of the economy by trained men,
Socialism a stable social order in which economic
security based on recognition for labor- -is defined
Socialism is the closest public approximation of this
trend in economic life and, even for liberals who agree
with some points,, is the inevitable title for this policy.
It is not Communism because it predicates the use of
existing forms, It is not Capitalism because it, is set
clearly against unrestrained private exploitation of
wealth. Socialism is the policy for realists who breathe
in the same collectivist climate of opinion. Socialism
is planning: Socialism is the only permanent program
for prosperity* Socialism, 1 should even go so far as
SOCIALISM 95
to say, is the program for those recalcitrant and ra
tionalizing liberals, Mr. Lindley and Mr. Irvine.
Second Affirmative, A. J. Irvine
Oxford University
LADIES AND GENTLEMEN: Let me first of all express
to you the great pleasure which we of Oxford Uni
versity feel in being able to come here and debate this
question with Yale. Mr. Wilson and I are trying to
get inside that exciting entity called "The American
Mind." The addresses of Mr. Lindley and Mr. Ros-
tow enlarge that field somewhat. I became, as I lis
tened to them, more excited than ever about the future
of the human race. Mr. Wilson and I are foreigners,
of course. Coming from England, which you will see
on the map behind me at the top left-hand corner, our
only hope is that you will be able to understand the
language we speak.
When I arrived in New York City they took me up
to what I think was the thirtieth floor of my hotel, and
I was overcome by grave apprehension of what I saw.
I returned to the ground and went into a restaurant on
Lexington Avenue. Because I was lonely, I entered
into conversation with a girl who was serving me. I
said to her, "You know, I have just arrived in America
today; I have just come to your country/ 7 and she
looked at me with astonishment, and said, "Well, I
must say you speak English extraordinarily well."
That was the kind of encouragement I wanted.
Now we have gathered here to discuss Socialism, and
96 THE YEAR BOOK OF COLLEGE DEBATING
of course the chief difficulty about Socialism is to
know what it really means. I have listened to Mr.
Rostow s lecture, and still I don t want to be guilty
of any discourtesy still, to be honest, I do not quite
know what he means by Socialism. As we are dealing
with realities, we had better first of all try to agree
about that. Quite clearly, it is not the Christian So
cialism which excited England and America eighty
years ago. The doctrines of Kingsley and Morris and
even of Ruskin have undergone a sad eclipse. No one,
I feel, pays them attention not even sufficient atten
tion.
The fact we have got to face in dealing with Social
ism is surely that Karl Marx has won the day. For
intelligent electors in the United States or in Great
Britain in discussing Socialism there is only one final
doctrine to be dealt with, and it is Marxism, Marxism
has won the day ? if you are dealing with realities, and
there is about as much resemblance between Ruskin
and Karl Marx as there is betweensay, Cambridge
and the stockyards in Chicago, Marxism is the enemy
to which my colleague and 1 are opposed. It means,
as I say, the virtual annulment of private property or
private enterprise.
Now on the table which the Affirmative is using,
along with other learned books, there is a book entitled
Elementary Economics. To that book I have had re
course and it is on that basis that I make my plea.
For I have listened to all the criticisms of private enter
prise, and the Capitalist society, and 1 have listened to
endless harrowing accounts of the depression, and 1
SOCIALISM 97
have never yet been able to discover any defect pointed
out which was inherent in a system of private enter
prise.
It is suggested on the one hand that there is no cen
tralized organization in the present system; that there
is no control; that too great free play is given to eco
nomic forces without proper regard being given for the
consumer and producer and the wage earner. In other
words, the claim is made by the Socialists, that they
alone support what they call "planning" and they re
peat the word in their sleep "planning," "planning,"
"planning!"
Well, there is nothing whatsoever in a policy of eco
nomic planning which is incompatible with a system of
private enterprise. Nothing whatsoever. You have in
England already, I think, the germ of a central eco
nomic advisory council which will be able to influence
government observe, growing up within a Capitalist
system of economics an advisory council consisting of
experts in their own field who have time to spend in
making inquiry and investigation, and who, having
done so, can convey their conclusions to the Executive
and the Executive can act upon them. And if that
isn t economic planning, I don t know what isl And
you observe there an example of centralized planning
growing up in what is admittedly a system of private
enterprise.
All this endless talk about planning is not relevant
so far as I can discover, to Socialism, at all There is
nothing incompatible in planning within a system of
private enterprise.
98 THE YEAR BOOK. OF COLLEGE DEBATING
Again, they stand up with all their talk about depres
sion and point out the ghastly inequality of wealth.
Well, we of the Affirmative recognize that is true. But
that is not an evil inherent in a system of private enter
prise. In most countries, in Europe and in America,,
taxation of inheritance and taxation of large incomes
has already reached the point where the problems of
inequality are being met.
You have witnessed in England before the War an
extension of social legislation in the way of insurance
and education at a time when the profits of industry
and agriculture were already actually on the decline.
I do not say Capitalists are actually on the decline. I
do not say Capitalists are always altruistic. But falling
profits have in this instance coincided with extensive
social reforms. You had the two together; that s why
it is so absurd for the other side to say that the phi
lanthropy of the Capitalists is traceable only to the
profits they are making*
Let me point out in this connection that wages in
these countries where private enterprise has held sway
have always been high or low ia proportion to the cal
culated efficiency of the worker. And though we would
all like to see a general rise in wages f we must admit the
rectitude of a system which does at any rate pay wages
in proportion to efficiency so far as that can be calcu-
lated. I can see nothing about inequality of wealth
which is relevant only to Socialism.
They talk about international cooperation, Aad the
best anyone can do is to consider their own history.
International cooperation indeed! In 1914 the British
SOCIALISM 99
Labor Party, that gloomy body, abandoned its leader,
Mr. Ramsay MacDonald, because he was opposed to
the War. Mr. MacDonald was driven into exile by
these novel idealists who talk about technicological
equilibrium was that it? driven out of the party by
the British Socialists.
In France, Jaures, one of the greatest Socialists who
ever lived, and who a Socialist I was talking with
recently thought was a medieval artist from the Abbey
of Chuny-Jaur6s, at the time he was assassinated in
Paris, was well aware that he was deserted by the
French Labor Party and French Socialists.
And in Germany, almost at the same time, the Ger
man Socialists were with surprising harmony a har
mony that has not always been so evident in other
regards, passing the War Estimates. Well, that is the
record of that Socialist Party!
I can see no hope there, frankly, of greater inter
national cooperation, and I do complain about the per
sistent categories of the evils in the present system
which are made to pass as arguments for Socialism.
They are no more arguments for Socialism than they
are for polygamy. The evils are there, we admit. Our
claim is that they are not inherent in a system of pri
vate enterprise.
And, of course, perhaps I need hardly in such an
august assembly as this put forward a humble but
fundamental defense of private enterprise. It is that
it gives full play to the initiative and the drive and am
bition of the individual. It gives full play to these
forces which in a hundred years, in spite of many
100 THE YEAR BOOK OF COLLEGE DEBATING
errors and mistakes, have accomplished the miracle
of the present industrial organization of Europe and
America.
If a laborer says to himself, "I desire to become a
leader of industry; I desire to influence my generation
and plan out a new plant and develop new economic
ideas 7 if he says that as an individual, I do not see
that it is due for him to face all the arsenals of Hell.
I do not say that. 1 say he is displaying once again
the great motive power which has created our present
industrial system in a surprisingly short number of
years; a system, which with all its defects is a standing
monument to indicate wh^t the human estate and hu
man mind can do. And whether public committees
could have accomplished the same thing, 1 greatly
doubt, I do not like public committees. JEsthetically
they are unattractive. Deplorably so. And intellec
tually they have not the worth of the normal individual
saying what he thinks.
Consider the crises which have faced Great Britain
since the War, and 1 do not believe in any one crisis a
public committee could have dealt with the situation
better and wiser than the private bankers and indus
trialists did.
In 1925 when we went back to the gold standard and
embarked upon a policy of deflation, which has been
since proved to be a mistake, I da not think a public
committee would have done any better or any wiser,
For this reason, to take a concrete example; At the
time we were a huge creditor country, to whom was
owed vast amounts of money in pounds sterling, and to
SOCIALISM 101
devaluate at that time appeared on the face of it, tak
ing the short view, the height of folly. Any kind of
popularly controlled body, if it is really popularly con
trolled, is forced to take the short view; it cannot take
the long view. It is always a temptation to adopt the
course which in the public mind brings immediate ap
parent benefits, even if with the passage of years it is
a policy which proves disastrous. The body which has
any element of popular control cannot be expected to
take the long view when questions arise in economic
organization or fiscal policy.
My friend, Mr. Wilson, whom I know well almost
as well as Mr. Lindley knows Mr. Rostow, and Mr.
Rostow knows Mr. Lindley will probably mention to
you he always does the subject of Russia, for he
has been in Russia. Then, indeed, one is apparently
well equipped to face the judgment of all eternity.
And it so happens, and I am proud of it, that I also
have been in Russia. Well, what did I discover there?
I tried ever so hard to be an impartial observer. I ran
away from guides who were trying to show me the right
things. I tried to discover what it was really like, and
I discovered a community of delightful but subservient
people, about as remote in every characteristic from the
American or Englishman as it is possible to imagine.
Subservient, I say, and accustomed to control. And,
of course, no liberty. The right to strike does not
exist in Russia, and it does seem to me, especially in
relation to Russia, that Socialism if it ever should be
introduced into this country or England, would mean
simply the annihilation of the political liberties which
102 THE YEAR BOOK OF COLLEGE DEBATING
we have spent so long a time in trying to win. I know
in England, dock laborers in Plymouth, where there is
a measure of State Control, have less freedom of direct
action than any other workers in the State, and I can
not understand how any transition can be made from
the present state of society to a Socialistic state with
out such a measure of confiscation, such a measure of
penalization of thrift and savings, as would constitute
the annihilation of liberty. I cannot see how transition
can be made without the reasonable rights of property
being destroyed.
And it is all very well to talk about theory and point
to Russia and say "I have been there/* But we have,
after all, on this globe examples of Socialism, not in
theory but in fact. Mention Socialism and Socialistic
control to any self-respecting Australian and see what
he will say!
You can, if you will, look at England. England
made the error of returning to power a Labor Govern
ment. It ran away; just ran away. Its leaders de
serted it, or it deserted its leadersit doesn t matter
very muchit broke up, and Great Britain was forced
off the gold standard and the Socialist party received
such a blow as it will not very readily recover from,
and rightly so. For during these two years the Social
ist party sent to the British House of Commons com
placent men, the prodigious extent of whose paunches
was only equalled by the diminutive area of their
minds, I do not wish to be merely flippant upon this
thing, because it so happens it is a matter on which my
optimistic colleague feels keenly, but it is the
SOCIALISM: 103
opinion of myself and other men that the Labor Party
was sending to the House of Commons men who, when
they had a great chance, failed to take it. They did
not truly and effectively represent the working class,
and the rise of the Labor Party coincided with the
cessation of social legislation. They divided on the
smallest partisan matters. They had a great majority
in the House of Commons willing to put through an
Act which would nationalize the mining royalties, and
transfer them to the State. It was a distinctly Social
istic measure and there was a majority of people, Lib
erals and Socialists, in the House to put it through.
The Government failed to act. The Liberals urged
them to deal with those matters, and the Government
did nothing. It is such a pitiful record that I cannot
be blamed for being a little skeptical about Socialistic
idealism and Socialistic methods.
And then, finally, because Socialism if we are go
ing to discuss realities at all is so inevitably con
nected with Marxism that we must realize it is a
materialistic movement. In Europe that is undoubt
edly so, A materialistic movement a skeptical move
ment and it is just that kind of movement which is
least wanted at the present time. What are the char
acteristics of our present age? It is a big question,
but we can agree upon it. There is an absence of any
sense of loyalty and authority, and what is needed is
just the opposite of what Socialism promises. What is
needed, after all, fundamentally, is surely the spiritual-
ization and intellectualization of the machine. What is
wanted is some kind of authority, some kind of central
104 THE YEAR BOOK OF COLLEGE DEBATING
belief which can inspire men to diligence and labor.
Surely we all agree that what is wanted now by each
one of us and by all is leadership. And if we want
leadership there is only one direction in which we can
look we must get a man. If we want leadership, we
must get a man an individual given full scope to
exercise his gifts. Socialism will not give it to us.
Second Negative, G. M. Wilson
Oxford University
LADIES AND GENTLEMAN: I should like to begin by
agreeing with my friend, Mr. Irvine, in saying how
glad we are to be here this evening. Owing to the fact
that I am descended from one of the Pilgrim Fathers
who had the misfortune to oversleep and miss the May-
flower, I feel considerably more at home in this coun
try than Mr, Irvine apparently has done. In fact, I
have actually been taken for an American.
There seems to be a most unfortunate tendency in
this debate for the various sides to try to agree with
each other. The Affirmative seems to be going out of
its way to agree with what we are saying. Personally,
after the speech which the first speaker delivered, in
which he pointed out how much we agreed in what we
were saying, I feel doubtful about the validity of our
case. It is one of those where we have to be
delivered from our friends, and 1 think part of the
difficulty arises from the fact that Mr, Lindley appears
to have spent his time studying Socialism In Liberal
Clubs, of all places, instead of in Socialist Societies.
SOCIALISM 105
If he insists on going to Liberal Clubs in order to study
Socialism, it would be doubtful what Socialism is. And
I have something of a grudge against the way Mr.
Irvine tried to treat this debate. He says that what
he is discussing tonight is Karl Marx, and that what
all intelligent electors in this country and Great Britain
mean by Socialism is the theory of Karl Marx. Now
I presume even a man who cannot pronounce Tech
nocracy may still be intelligent, and I also assume that
the audience here is at any rate moderately intelligent,
and therefore I suggest that they have already found
themselves as disgusted as I have when Mr. Irvine
tries to disprove the Socialist theories of Karl Marx by
reference to Labor Parties in Great Britain and Aus
tralia. They are two things that cannot be connected.
Take one example of it. He talked about inter
nationalism, and the attitude of the Socialist parties in
Europe in the beginning of the War, and said they all
agreed with the policy of their countries. I wonder
whether or not he is aware of the fact that the Third
International was formed during the days of the War
by the followers of Karl Marx in order to expound
their doctrines against war? The Marxists in Europe
were the only organized international body in Europe
at that time who opposed the War, yet Mr. Irvine says
that Marxism has no international ideals whatsoever.
Take again the question of Socialistic legislation by
the Liberal Party in the pre-war days, and the fact that
such legislation has declined in England since the rise
of the Labor Party. Mr. Irvine omitted to mention the
fact that we have today to pay two-fifths of the annual
106 THE YEAR BOOK OF COLLEGE DEBATING
budget revenue In paying off the internal debt incurred
during the Capitalist war.
Another curious fact is that the Liberal Government
which was in power in 1910 relied for its support on
the votes of sixty Labor members of the House of
Commons, and the votes of sixty Irishmen, and in order
to retain the votes of these Labor members they had
to adopt the Socialistic legislation policy which was
advocated and supported by the Socialist members.
I am perfectly willing to grant that Mr. Lloyd George
wanted that put through but it was put through In spite
of the official leaders of the Liberal Party who did not
want it. There you have an example of the fact that it
was due to the Socialist party that sound legislation
came about.
Another great difficulty of Mr, Irvine is that he
agrees with practically all of the Socialist contentions
practically all of their economic policy in relation to
the present depression, which, by the way, was not
mentioned by the first speaker although It happens to
come into the motion. And he said none of these things
were really incompatible with Capitalism, He took as
an example the Economic Advisory Council in England
and he actually was able, through some physical feat
or other> to mention that Economic Advisory Council
without a glimmer of a smile* In England when it in
mentioned, it raises hoots of mirthful laughter, purely
from the fact that It is a body of whose opinions no
body any notice whatsoever and which every
body ignores completely at the present time.
What are we to think of this entire Advisory Body
SOCIALISM 107
without any powers of any sort as the instrument which
will put through Socialism against the claims of thou
sands of angry, petulant shareholders?
Mr. Irvine failed to find any inherent difficulty with
the Capitalist system. The real reason why such a
system is a ghastly failure, and in fact positively inde
cent, is because it contains such a contradiction that
no reasonable person could possibly accept it. You
have the curious fact that industry is controlled by
shareholders whose interest is to draw profits from it.
You have on the other side, the workers in industry,
and the cost of their labor and the cost of labor of the
workers in industry is regarded by the shareholders
simply and purely as one of the costs of production,
just like raw material or machinery or anything of
that sort. Therefore, you have the constant tendency
to reduce wages in order to reduce costs of production
in order that profits may be increased. And so long as
you have industry organized not in the interests of the
workers or consumers but in the interests of the share
holders, you have a contradiction which you cannot get
rid of.
Mr. Irvine suggested that wealth is becoming more
and more equalized. I had the good fortune the other
day to see the following figures published by Paul
Blanchard in July of this year: In 1930, the wage loss
in the United States was ten billions of dollars. Dur
ing the same year, dividends in the United States in
creased by nine hundred million dollars. Mr. Irvine
says that wealth is gradually being equalized 1 Here
you have a plain, an obvious case a plain example of
108 THE YEAR BOOK OF COLLEGE DEBATING
what I said a moment ago. Total wages are steadily
decreasing; the technical efficiency of industry is just
as steadily increasing ? and therefore productive ca
pacity is ever growing faster. And you have ten billion
dollars fewer with which to buy these goods. The
shareholders desire for profits acts like a boomerang
which destroys first the workers and finally the share
holders. So long as Capital employs Labor as it does
at present in the interests of Capital, that is bound to
happen. The alternative is for Labor to employ Capi
tal in the interests of Labor. That is Socialism.
I wish they would explain just how it all works out.
I cannot see anything very dependable coming from a
situation like the present and that is simply for the
reason that capital has the largest importance at the
present moment and aims in the first place at scarcity
of goods and in the second place at cheapness of labor.
Scarcity of goods and cheapness of labor these are
the Gods which Capitalism worships and it is for that
reason that Capitalism has broken down at the present
time^ and is bound to break down in a similar way in
the future,
Now neither of "the speakers on the other side seems
to be able to get a very clear impression of just what
Socialism is. If they had conducted their studies In
the proper quarters, they would have realized that this
idea of schematic planning is the central point so far
as the economic system of Socialism Is concerned. In
England, at any rate, that means that we want to have
under democratic ownership and control what we con
sider to be the three essential services of the country;
SOCIALISM 109
First, the banks; second, the land; and third, power
and transportation. And we want to do that because we
must convert these services, and especially the banks,
from the range of a narrow financial group into re
sponsible instruments of national policy.
Let me take as an example of the narrow interests of
a small financial group, the same example Mr. Irvine
just mentioned as proving his case against Socialism.
When England returned to the gold standard eight
years ago, the people who advised the government to
return to it were the bankers in London. The only
people who have gained financially in England through
that return to the gold standard have been the bankers
of the City of London; and there you have a plain and
obvious case that so long as the Government takes its
instructions from the bankers, the bankers are going
to profit to the detriment of the rest of the community.
And I suggest, if you have a community representa
tive of industry and consumers and workers, that would
not have been able to occur because the interests of the
other sections of the community would have been taken
into account.
The objects of the planned economy haveJbeen al
ready stated by the first speaker on this side. The
most important of them to my mind is that production
and consumption may in some way be coordinated.
I came across a very delightful little item in the
financial column of a London paper before I left Eng
land. It sums up the matter admirably. It was this:
"The position of tea and petroleum is satisfactory, be
cause there has been an appreciable shrinkage of sup-
110 THE YEAR BOOK OF COLLEGE DEBATING
plies." There has been an appreciable shrinkage of
supplies in tea and petroleum, so everything is going on
finel What sort of a system is that which we have got,
when the less we have of these things rubber, steel,
wheat, cotton, tea and so on the better everything is?
And that at a time when millions of people are starving
because they cannot get hold of these things 1 It is
just as well to consider that in relation to what I said a
few moments ago, about one of the Gods of Capitalism
being scarcity of goods. The less and less there are
of these things, the more and more certain private
people make from their sale,
Let us take the other side, and suppose these things
were democratically owned and controlled Who,
exactly, would lose when there is lots and lots of tea
and petroleum, if the whole community owned that
stuff? It seems to me perfectly plain and obvious that
under democratic control the more we have of these
things, the more the community would gain, and that
is a condition we have not got at the present time.
Therefore, increase in production of any sort whatso
ever is a gain to a socialized community, while at the
moment It stands as a dead loss.
In the second place we hope to be able, and in fact
we shall be able, to cure unemployment by this coordi
nated system of economic planning, because treating
labor as a cost of production, it is only natural to get
rid of it at the first possible opportunity and increase
the hours of labor.
It is estimated that the steel mills in Germany and
the United States of America have a capacity far
SOCIALISM 111
greater than is likely to be wanted by the whole world
in the immediate future. Yet, what do we see? Com
petition of the most drastic sort, to increase hours of
labor and cut wages. At the present time these mills
are producing more than they know what to do with.
Surely, the obvious thing to do under the circum
stances, is to cut down the laborer s hours and produce
less. And, at the time when it all belongs to the whole
community, nobody will lose by that course being
taken.
Technical improvements or rationalization benefit at
the moment mainly the shareholders, and cause wide
spread unemployment. Socialism, by eliminating the
shareholders, will make it possible for the full benefits
of rationalization to be passed on to the consumer in
the form of lower prices and to the worker in the form
of shorter hours. It is the worker who should benefit
from rationalization, not the owner.
In the third place, take this question of speculation
which is largely responsible for what is happening in
America at the present moment. Last year there was
published in England the findings of the MacMillan
Commission on Finance and Industry; published by a
set of men who by no stretch of the imagination could
be deemed to be Socialists, and they find that in the
average year in England, fifty per cent of money in
vested on the Stock Market was lost in the space of
two years. Here you have a fine structure, which has
a few cracks in it which could be repaired, losing fifty
per cent of the investors money every year I By this
planned economy we should be able to get the investors
112 THE YEAR BOOK OF COLLEGE DEBATING
money, at a fixed rate of interest, and put it into those
industries where it is needed, and not necessarily those
which happen to give the highest rates of return.
Mr. Irvine announced that I was going to speak
about Russia and then, after his own delightful way,
he proceeded to speak about it himself. Since he has
spoken about it, I shall speak about it also, and I would
point out to him, and to you, that I am not going to
discuss Communism, but the pure Socialism which is
characteristic of her economic system. It is just as
well to keep those two departments strictly apart, be
cause the Socialism of her economic system can be
completely isolated from the depression and terror
which Mr. Irvine seemed to experience when he was
there. He said they were living under a system, which
completely denied them any sort of liberty, Tt is true
that that explanation is often given of the fact that
there is no unemployment in Russia at the present time
and that there is actually a shortage of labor. But the
actual fact of the matter is that one of the greatest
difficulties the Russian Government has to face at the
present time is the constant shift of labor from one
industry to another. They explain that on the basis
of slave labor. How do they explain the fact that the
Russian Government itself cannot check this drifting
of labor from one part of the country to another?
There is an actual shortage of labor.
The second fact is that during the last three years
when production slewed up in every other place ? it has
gone on increasing in Soviet Russia.
In the third place, the standard of living has
SOCIALISM 113
increasing during the last three years, although now,
due to difficulties with agriculture, it may fail to main
tain that standard during the coming winter; but that
is recognized as more or less temporary.
There you have these three facts in a Socialist system
the one system in the world built under the Marxian
system which Mr. Irvine deplores. No unemployment,
increased production, and up to the present time at any
rate, an increase in the standard of living. And in
addition to those you have the fact that Russia again
the one Marxian State in the world is the one State
in the world which has proposed total disarmament on
condition that other countries will do the same. Where
does this cry of the "materialism" of Marxianism,
about its being blatantly materialistic and not having
internationalism, come in with Russia?
And again, Mr. Irvine talks about private enterprise;
about initiative; about drive; and says they are notori
ously absent from any sort of Socialism. Now, whether
you agree with Russia or whether you do not, I do not
think there are any people in this audience who will
deny that whatever Russia lacks, she does not lack
enterprise, initiative, and drive. And if the workers
in that country have not got the liberty to strike, which
they have in the other countries, they also lack the
incentive to strike, in that they are producing for the
benefit of themselves and not for the benefit of others.
If Mr. Irvine wants another example of how Social
ism works out in practice, I would refer to a city out in
Kansas, which is getting its gas and electricity under
a municipally owned proposition, at just one-half the
114 THE YEAR BOOK OF COLLEGE DEBATING
price it would cost for a private company to supply it
and, in addition, there are no taxes in that city because
they are being paid out of the receipts of the gas and
electricity. Presumably, that is managed by some in
significant clerk who has somebody above him, and yet
he seems to be able to perform the amazing feat of
producing electricity and gas at just one-half the price
charged by these enterprising individuals Mr. Irvine
likes so much.
Then again, I might refer to the city of Milwaukee
which I gather is the one socially controlled city in this
country, and which is about the only city in the coun
try which is in moderately healthy condition finan
cially.
Mr. Llndley referred to the fact that what really
matters in this connection is man and not systems, and
I should be almost inclined to agree with him, but what
I do maintain, very strongly indeed is thisThat in
order that those men may function properly and effi
ciently they want a system which helps and not a sys
tem which hinders them. At the present moment you
have a system which gives encouragement to every sort
of greed and rapacity they can properly put across.
If Al Capone of Chicago retired from business early
enough and gave enough money to founding libraries
and educational institutions, and so on, he would be
come as honored and respected a member of this com
munity as John D. Rockefeller or Andrew Carnegie,
That is my complaint the system we have at
the present time. So long as these men can get away
with the accumulation of their wealth* they are honored
SOCIALISM 115
and respected members of their community, and they
are encouraged by the system. I admit, as in the case
of some doctors, teachers, clergy and so on, there are
people who can get away from the damning effects of
the system under which they live and I am perfectly
willing to admit that under a Socialist system which
essentially encourages the virtues of a public and com
munity service as against those of private interests I
admit that under such a system you will get cases like
Andrew Carnegie and John D. Rockefeller. I admit
there will be people more influenced, in its early years
at any rate, by greed than by public service, but even
so you have a system which encourages the social vir
tues that there may be in a man instead of the purely
selfish and individualistic virtues. Therefore, I support
Socialism, not only on the ground it is the only system
that will properly work, but on the same ground as Mr.
Lindley it gives humanity a far better chance than
under the system we have at the present time.
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SOCIALISM 117
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118 THE YEAR BOOK OF COLLEGE DEBATING
British Debate. 341:388, January, 1932. J. Goebbets. What
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Nation. 135:82, July 27, 1932. A, Templar. / Teach Socialism.
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What Is & for
CANCELLATION OF WAR DEBTS
Pacific Coast Pi Kappa Delta Province
Tournament Championship
CANCELLATION OF WAR DEBTS
FRESNO STATE TEACHERS COLLEGE AF
FIRMATIVE VS. UNIVERSITY OF SOUTHERN
CALIFORNIA NEGATIVE
The Pacific Coast Province of Pi Kappa Delta held its second
annual Invitational Tournament at the College of the Pacific, Stock
ton, California, March 23-24-25, 1933, All colleges west of the
Rocky Mountains were invited to send debate teams and orators by
the four Pi Kappa Delta Colleges in California which sponsored the
meet. About twenty-five colleges and several Junior Colleges sent
teams. Contests for men and women were separate and the Junior
College debaters met Freshmen debaters from the four year colleges
in a separate tournament.
In Women s Debate two Pi Kappa Delta colleges reached the
finals, College of the Pacific and College of Puget Sound, the latter
taking first honors. California Christian College won first in
Oratory.
In the Junior College Meet, Glendale Junior College defeated
Weber College/ of Ogden, Utah, in the finals.
In Men s Varsity, Fresno State College won both the Oratory and
Debate, with the University of Southern California competing in the
finals in Debate.
The Cancellation of War Debts was the Pi Kappa Delta National
subject for the debate season of 1932-33 and was widely debated.
The Question was stated, Resolved: That the United States should
agree to the Cancellation of the inter-attied war debts.
The speeches in this debate were written out by the four contest
ants after the final contest, and submitted to the Editor of Intercol
legiate Debates in behalf of the debaters by the coaches of the two
colleges, Professor J. Fred McGrew of Fresno and Professor Alan
Nichols of University of Southern California.
121
122 THE YEAR BOOK OF COLLEGE DEBATING
First Affirmative, Spurgeon Avakian
Fresno State Teachers College
LADIES AND GENTLEMEN : We are here this morning
to discuss the inter-allied war debts that came into
existence as a result of loans made to our allies during
and immediately following the World War. These
loans were made in the form of credits totaling eleven
billions of dollars placed at the disposal of the borrow
ing nations in the Federal Reserve Banks in this coun
try. These credits were used in buying food and war
supplies from American producers.
Soon after the war, the United States concluded
funding agreements with each of the debtor nations,
with the total amount principal and interest to be
repaid to the United States aggregating twenty-two
billions of dollars. Up to the present time, about two
billions of this amount have been paid, leaving some
twenty billions still to be paid; and there remain ap
proximately fifty-five years in which payment shall
be made, which means that the average payment will
exceed three hundred and fifty millions of dollars
annually.
There can be no doubt that these loans were made In
good faith and that they constitute just and legal
debts; so we of the Affirmative, realizing that our time
is limited, and wishing to deal with more important
matters, are admitting at the outset that the debtor
nations are morally obligated to pay the United State%
If the United States to be paid. Furthermore, we
are going to waive without admitting, of course the
CANCELLATION OF WAR DEBTS 123
matter of whether or not the debtor nations are able to
gather up enough wealth of one kind or another to
make payment. Rather than spend our time on that
matter, we are going to devote our attention to what
we believe is a far more vital question. To our way of
thinking, the fundamental Issue in this debate the
answer to the war debt question is found in the effect
cancellation will have upon the United States; and it
is our purpose to show you that the United States will
be economically benefited by cancelling the war debts.
We realize, of course, that it seems strange that we
should be telling you that payment will harm the credi
tor nation; possibly an Illustration will clarify the
problem. If you pay your groceryman five dollars that
you owe him, the transfer of the five dollars from your
pocket to his does not affect the total currency and
credit and wealth of the nation; the labor and industry
of the country are not affected by this purely domestic
transaction. But when a payment on the war debts is
made, there is a transfer across international borders;
and the currency and credit and wealth, not only of the
two nations, but of the whole world, is affected; and
there is a reaction upon industry and labor. These
war debt payments involve economic complications
and it is with these complications that we shall deal
this morning.
Economists are in accord that there are but three
basic methods by which international payments can be
made. These are loans, gold, and goods and services.
Payment by loans means that the debtor borrows from
some other source to pay the creditor; but obviously
124 THE YEAR BOOK OF COLLEGE DEBATING
this borrowing from one party to pay another is nothing
more than a postponement of the actual payment to
some later date, so let us pass on to the other two
methods,
As I have told you ? the debts still owed the United
States approximate twenty billions of dollars. On the
other hand, there is only about eleven billions of dollars
worth of gold in the world; and over four billion of this
amount is already in the United States, Thus, if the
debtor nations used up all the gold outside of the
United States, they would be able to pay us only a por
tion of the debt, which means that the bulk of the pay
ment can be made only through a transfer of goods
and services. But my colleague, Mr. Wiens 3 will show
you that if we withdraw any appreciable amount of
gold from the rest of the world in collecting the debts,
the United States will be injured, since a nation can
enjoy the maximum benefits of being on the gold stand
ard only if the gold supply m evenly distributed
throughout the important commercial nations of the
world- Mr. Wiens will develop this point later on.
And now, in order to understand how payment in
goods and services will affect the United States, let us
see how international trade h carried on*
When an American exporter sends one hundred dol
lars worth of goods to some foreign countryHay Eng
landhe creates in that country one hundred dollars
worth of credit owned by himself. Conversely, when an
English exporter sends one hundred dollars worth of
goods to the United States, there h created in the
United States one hundred dollars worth of credit
CANCELLATION OF WAR DEBTS 125
owned by the English exporter. The two exporters are
paid by what amounts to a trading of the credits which
each owns in the other s country: the American ex
changes the credits which -he owns in England for the
credits which the Englishman owns in the United
States. The total amount of credit created abroad,
and owned by Americans, is determined by the amount
of goods and services which we sell to our foreign cus
tomers. The total amount of credit created in the
United States, and owned by foreign exporters, is de
termined by the amount of goods and services which
we buy, or import, from foreign producers. If we
export more than we import, then we create a surplus
of credits, owned by our exporters, in foreign countries.
In such a case, if the owners of these surplus credits
are to be paid, the foreign customers who have bought
this export surplus must either send gold to the Ameri
can exporter or pay him by borrowing from some other
source.
On the other hand, if we import more than we export,
then the surplus of credits is in this country, owned by
foreign exporters. Here again, the balance is settled
either in gold or in loans. While the balance fluctuates
from year to year, these variations are self-correcting
and self-adjusting, so that over a long period of years
and over the period of fifty-five years in which pay
ment is to be made to the United States we will export
approximately as much as we import, we will sell about
as much as we buy, and there will exist an even balance
of trade under the normal channels of trade.
But if any payment is to be made by this method,
126 THE YEAR BOOK OF COLLEGE DEBATING
then It will be necessary for us to continually Import
more than we export for the next fifty-five years; for
the payment can be made only If there Is created In the
United States, and owned by -foreign exporters, a sur
plus amount of credit over and above the amount of
credit created abroad by our exporters. When there Is
a surplus of credits herein other words, when we
import more than we export then the debtor nations
can buy up these surplus credits with their own cur
rency from the foreign exporters who own these credits
in the United States, and then transfer the title of these
credits to the United States government, which will
now have received payment through credits created by
an Import surplus of goods and services. But remem
ber, the payment can be made only If we Import more
than we export and therein lies the detriment to
American labor and Industry.
If we collect the debts, it will mean that every year,
for the next half a century, we will have to accept an
import surplus, or unfavorable balance of trade, aver
aging three hundred and fifty millions of dollars and
totaling twenty billions of dollars. If we collect the
debts, it will mean that we will have to divert an aver
age of three hundred and fifty million dollars of our
annual purchasing power from buying the products of
our own labor to buying the products of foreign labor
industry. Collection of the debts means that
American industry will have to sacrifice thm* hundred
and fifty millions of dollars of track* to industry.
Now understand, we do not object to buying the
of foreign industry; but we do object to buying
CANCELLATION OF WAR DEBTS 127
more from them than we sell to them; for if we do
collect the debts in this way, then we will throw out of
work the number of American laborers necessary to
produce three hundred and fifty millions of dollars
worth of goods every year. And if we throw more men
out of work, then we decrease their purchasing power,
which will further decrease employment and drag us
down deeper into the rut of industrial stagnation.
But to offset this drawback of collection, the Gentle
men of the Negative, if they run true to form, will tell
you that Cancellation will raise taxes in this country.
Of course, if we cancel, then it will be necessary for the
United States treasury to collect a slightly larger
amount of revenue each year. However, this does not
mean that the rate of taxation will be raised.
The prosperity of the United States treasury is de
pendent directly on the prosperity of the nation s busi
ness. When business is healthy, there is a large amount
of taxable property and taxable income, and the rev
enue of the treasury is correspondingly large. When
business is depressed, there is less property and less
income to tax, and the Treasury Department goes into
the red. In other words, if Cancellation will stimulate
business, the government will automatically collect
more money without raising the rate of taxation
because there will be a greater amount of taxable prop
erty and taxable incomes.
We of the Affirmative have shown you thus far that
if the United States collects the war debts, American
industry and American labor will be damaged for the
next fifty-five years. We have shown you that if we
128 THE YEAR BOOK OF COLLEGE DEBATING
collect the debts in goods -and all but a small portion
cannot possibly be collected in any other way we will
throw our own men out of work. On that basis, we
believe that the United States should cancel the inter
allied war debts.
First Negative, F. Clinton Jones
University of Southern California
LADIES AND GENTLEMEN: At the very outset, we
wish to make it clear that the question debated this
morning is one of complete and outright Cancellation.
The Affirmative in this contest is obliged to offer proof
that the inter-allied war debts should be completely
cancelled, and unconditionally cancelled as well. No
other stand, such as Cancellation with reservations,
can be* taken by the opposition in this debate if they
wish to be successful in establishing their case.
Also, we would like to clear up the question of moral
obligation in this argument. The Gentleman who just
concluded his constructive speech told us that the
Affirmative admits that the debtor nations are morally
obligated to make payment to the United States, but
that this is not: essential or relevant to the discussion
this morning. Now let me point out that any argument
which tends to prove that the war debts should be can
celled is a valid argument in this debate, and also, that
any argument which tends to show that these debts
should not be cancelled is a valid argument in this con
test as well Now the Gentleman has admitted that
the debtor countries are morally obliged to pay us the
CANCELLATION OF WAR DEBTS 129
debts. We say, furthermore, that the United States is
morally justified in demanding payment of these obliga
tions, and that therefore they should not be cancelled.
Now in order to understand the moral aspects of the
problem, it is necessary to review briefly the historical
setting of these debts. During the decades prior to
the outbreak of the war, economic rivalries and racial
hatreds had been mounting throughout Europe. Ger
many, with a constantly expanding colonial empire and
merchant marine, and a battle fleet second only to that
of Great Britain, was challenging England s supremacy
in the world market. France was brooding over 1870
and Alsace-Lorraine. Russia, thwarted in her war
with Japan, sought an outlet to the open sea around
Constantinople, and came into collision with ancient
interests of England and Austria as well as the more
recent German undertaking in the Bagdad railway.
Italy was in alliance with the central powers, but not
whole-heartedly, because Austria held the city of
Fiume and other concessions which Italy wanted. This
was the situation, a veritable powderhouse, when the
assassination of Archduke Ferdinand of Austria
touched it off in 1914. In the language of H. G. Wells:
"All the great states of Europe before 1914 were suffer
ing from the common disease of Imperialism, of aggres
sive nationalism, and drifting toward war."
And so the struggle for economic conquest began.
But at the end of two and a half years it seemed that
the best the Allies could hope for would be a draw.
Throughout this period the German armies had main
tained positions within fifty miles of Paris. Russia
130 THE YEAR BOOK OF COLLEGE DEBATING
had been rolled back at the battle of Tannenberg and
the revolution in the March of 1917, had eliminated
her from the contest. The unrestricted submarine
campaign of Germany during February, 1917, alone
had sunk one hundred thirty-four ships, and the Allies
for the first time faced the prospect of starvation. It
was in this emergency that the United States entered
the war, and there can be little doubt that we furnished
the additional force necessary to insure the ultimate
victory of the allied cause. Germany could never have
been so completely crushed had it not been for the
men, money, and supplies which we poured into the
conflict. For proof of this we have the statement of
none other than Marshal Foch, Commander-in-chief of
all the allied armies who, after the close of the war,
stated: "The American people can feel justifiably
proud for having brought to bear such powerful aid at
the decisive moment of the war, and to have made vic
tory possible by going straight into the conflict without
hesitation and in accomplishing an end absolutely with
out parallel*" So we stepped in and pulled the allied
chestnuts out of the fire; and now let us see just how
many chestnuts there turned out to be.
We fought the war on the basis of no annexations
and no indemnities, future disarmament, and a war to
end war. President Wilson went to Versailles with
these objectives Jn mind -and what happened? Ger
many was absolutely stripped of her colonial posses
sions, her shipping interests, and portions of her
European territory* Great Britain received an aggre
gate of over a million thirty-five
CANCELLATION OF WAR DEBTS 131
million inhabitants. France got a total territory of
over four hundred thousand square miles and ten mil
lion inhabitants. Italy received substantial territories
in Southeastern Europe. It is clear that these huge
gains through the Treaty of Versailles far surpass the
amount of the war debts.
So we must remember that when the United States
entered the struggle, about the best the allied cause
could expect was a peace without victory. It was
through our assistance that England, France, and Italy
were able to so prostrate the Central Powers as to strip
them completely of their territories and possessions.
And yet these debtor nations are today asking that we
cancel the loans. Why in reality, instead of cancelling
the debts, they should pay us a bonus for helping them
out.
Second, the United States is morally justified in
demanding payment because these debts can in no way
be considered as contributions to a common cause.
France spent two hundred eighty-nine millions to pay
off loans made privately before we entered the war
why shouldn t they pay back this amount? She spent
one hundred eighty millions for public works why
shouldn t this be repaid? She used two hundred mil
lions to purchase food after peace was declared and
an additional twelve millions for French agriculture
why shouldn t these amounts be paid back? England
spent three hundred twenty-five millions to pay a grain
debt in Canada, two hundred sixty-one millions to sup
port silver currency in India, and three hundred
fifty-three more millions to redeem pawned British
132 THE YEAR BOOK OF COLLEGE DEBATING
securities. If England could devote our loans to such
purposes, why shouldn t she pay them back? And
England and France together spend two billion six
hundred eighty-three million dollars one-fourth of
the total borrowings to support on the world market
at high, artificial prices, the value of the franc and the
pound sterling; why shouldn t this huge amount be
repaid to us?
And now let us see what the United States was doing
during this time. We paid cash to Great Britain for
transporting our troops to France, If we paid her cash
for such services, why shouldn t she pay us back the
money she borrowed? We paid cash for British wool,
jute, tin, and other materials used for war purposes-
We paid for the privilege of landing our troops in
French harbors. We recompensed France for the dam
age done in building military roads and railroads. We
paid customs duties upon our war supplies carried into
France. In al! ? we paid our allies over four billions of
dollars in cash for goods and services utilized in the
war. If we did all this, why shouldn t they repay us
the dollars which they borrowed?
Third, we are morally obligated to the American citi
zens to demand payment, so that they will not be sad
dled with an unfair burden of twenty billions of dollars.
Now the total amount of the war debt installments
which remain to be paid under the funding agreements,
approximates twenty billions. If they are paid* It
means that we have the twenty billions of dollars in the
United States; if they are cancelled, the twenty bil
lions will stay in Europe, It Is obvious that the Ameri-
CANCELLATION OF WAR DEBTS 133
can taxpayer will have to make up the loss if these
debts are cancelled. But the evil effects of Cancella
tion do not stop there. If the American people must
assume an additional tax burden of twenty billions, it
means that they will have just that much less purchas
ing power with which to buy the products of American
industry, and hence our industries will continue to
suffer unfairly. Furthermore, relieve a burden of
twenty billions from the debtor nations, and their in
dustries will have that much less taxation to meet.
This will lower their production costs and permit them
to outsell our industries in the world market, and often
in the American market itself. Hence an additional
depression will be unfairly forced upon American in
dustry and the American people.
In summarizing the Negative case thus far, then, we
see that in 1914 the nations of Europe entered upon a
war of economic imperialism. We see that in 1917
their situation was desperate, and it was only the as
sistance of the United States which enabled them to
crush completely the Central Powers. We see that, as
a result, the debtor nations stripped Germany of spoils
valued far in excess of the war debts.; and that, instead
of demanding Cancellation, they should pay us a bonus
for helping them out. We see that large portions of
the loans were spent for purely domestic purposes hav
ing no relation to the conflict; and that while the United
States was thus loaning them money, she was paying
cash to France and England for all supplies and serv
ices. And finally, we see that if the debts are cancelled,
the American people and the American industries will
134 THE YEAR BOOK OF COLLEGE DEBATING
be saddled with an unfair burden of some twenty bil
lion dollars. Based upon this evidence, we assert that
the United States is morally justified in demanding
payment, because we enabled the Allies to win the war
and reap the spoils therefrom, because these debts can
in no way be considered as contributions to a common
cause, and because we are morally obligated to the
American people to demand payment of the debts.
Second Affirmative, Henry W. Wiens
Fresno State Teachers College
LADIES AND GENTLEMEN: Although my colleague,
Mr. Avakian, admitted at the outset of his speech that
there is a just and legal obligation and also waived the
question of whether Europe is able to pay, the Gentle
man who just left the platform spent his whole time or
most of it upon this irrelevant subject- He said that
America is morally justified in demanding payment.
Again we admit that but at the same time rule it out as
irrelevant. We are not interested in whether Europe
can or is morally obligated to pay, for certainly even
the Gentlemen of the Negative would not maintain
that we in the United States were morally obligated to
accept payment if that hurt us.
Let me illustrate what 1 mean. Suppose Mr.
Avakian is indebted to me and he is supposed to pay in
goods tomatoes, let us say. But 1 wait a while and
find out these tomatoes are slightly and conse
quently would do me no good. In fact, they
might have a strong odor* it would not be to my best
CANCELLATION OF WAR DEBTS 135
interest if Mr. Avakian dumped them into my back
yard. Now certainly, Mr. Avakian would be morally
obligated to pay me those tomatoes that would be a
just and legal obligation. And of course I would be
morally justified in demanding such payment, but if I
did, you would call me a fool.
Mr. Jones also tells us that the American taxpayer
will have to bear this burden if the debts are cancelled.
But my colleague already showed that if prosperity
were restored to any appreciable degree, this problem
would care for itself since the amount of revenue col
lected by the government depends directly upon the
prosperity of the people. When the people are pros
perous and there is much taxable property the govern
ment receives much more revenue than when the peo
ple are in a depression, even though the same tax-rate
is used. Let me further illustrate this. In two years
of this depression the annual income of our government
fell off by over two and one-half billions of dollars,
which is about seven times the size of the annual pay
ments of the war debts. In other words, if we can show
that prosperity will be restored by only one-seventh of
what it has fallen off since 1928, then we will have
shown that there need be no additional burden upon
the taxpayer. Any increase in business above that will
definitely lighten and not increase the burden of the
so-called "over burdened American taxpayer."
In fact, Mr, Jones has really admitted that if there
is a return to normal business conditions, then there
would not be any additional tax burden. So the crux
of this debate is: will Cancellation bring back pros-
136 THE YEAR BOOK OF COLLEGE DEBATING
perity? Perhaps we should rather say, can there be
any return to prosperity without Cancellation?
Now my colleague already pointed out how the pay
ment of these debts would necessitate an unfavorable
balance of trade for the United States for the next
fifty-five years and how this constituted an impediment
in the way of business recovery, I will show how Can
cellation will remove some other obstacles on the road
to recovery.
It is generally admitted today that there can be no
resumption of normal business activities unless there
is an improvement in our international trade. Such is
the opinion of President Roosevelt and ex-President
Hoover and of our leading economists. About ten per
cent of all our business is clone during normal times for
the world market and this constitutes the difference
between prosperity and depression.
One of the chief impediments to international trade
is the instability of foreign currencies, largely caused
by the payment of these debts. During the past couple
of years forty-five nations have left the gold standard
and when a currency no longer has gold backing it
inevitably fluctuates in value in relation to other cur
rencies. For instance, the British Found Sterling was
at par worth $4-86 but it lias depreciated to approxi
mately $3,30, However, It does not stay there but is
continually changing one week it up three or
four cents, the next it drops five cents in value. This
Is disastrous to international trade. An American ex
porting goodswheat, let us saynever knows what
he will get for it and the buyer doesn t know what he
CANCELLATION OF WAR DEBTS 137
will have to pay. It s like buying cloth and measuring
it with a rubber yard stick. Confidence in international
trade has been shaken to such a degree that business
has been seriously throttled. It is especially important
to the American farmer since the majority of his prod
ucts are exported in terms of the fluctuating Pound
Sterling. It is ruinous to all international trade.
Do not misunderstand me, however. I do not say
the payment of the war debts caused all these countries
to go off the gold standard. The World War and the
chaos resulting from it really did the damage and
brought about the maldistribution of gold. But once
the economic and financial strength of the world has
been weakened, the burden of the war debts is suffi
cient to keep these currencies down. It is like a man
who has been knocked out in a prize fight and then a
burden is thrown upon him. He was not and probably
could not have been crushed to the ground by the bur
den, but once he has been knocked down and weakened,
he is unable to rise as long as the burden remains upon
him.
Both payment in gold and goods tend to cause the
currencies of the foreign countries to depreciate in
value. If payment is to be made in gold, then it means
that we will drain the gold from Europe as we have
done in the past and a return to the gold standard is
impossible. However, this also affects other nations
not indebted to us. These European creditors of ours
draw their gold supply from Oriental and South Ameri
can countries. In turn our government drains it to
America, causing permanent maldistribution of the
138 THE YEAR BOOK OF COLLEGE DEBATING
gold supply. As a result of this process the United
States already holds about four and one-half billions
of the leven billion dollars worth of gold bullion in the
word.
Let me also illustrate how payment in goods tends to
depreciate these currencies. You will remember that
originally Great Britain had planned to make her De
cember 15th payment to us by a triangular method of
trade with Brazil, namely, by buying up her coffee
credits in the United States amounting to ninety-five
million dollars. But this necessitated the offering of
British Pound Sterling upon the American money ex
change market in other words, buying American dol
lar exchanges with Pounds Sterling. When this policy
was announced early in November, the Pound stood at
$3.47. The mere prospect of having so many Pounds
offered upon the money market made an immediate
decline in their value. The Pound dropped to $3.30,
to $3.20 and down until on November 27th, fully a half
month before the payment would be made, it fell to the
lowest point in its history, namely, $3.14#. Seeing
this, the English government decided upon temporarily
saving the situation by sending us gold from, her al
ready almost depleted supply.
Many Americans say, "Well, that s too bad, but
why should we be interested?" The answer in appar
ent* Because of their depreciated currencies the cost
of production in these countries has gone clown and
they can undersell us. For instance, 1 was recently
near the Canadian boundary. They told me there, that
if an American went the border and threw an
CANCELLATION OF WAR DEBTS 139
American dollar on a Canadian counter, he got ap
proximately $1.15 worth of goods, because the Cana
dian dollar has depreciated about fifteen per cent. It
is quite apparent then that our customers will buy
from these other countries where they can get more for
their money. The Canadian dollar has depreciated
only fifteen per cent but the British Pound has gone
down about thirty per cent and the Japanese Yen fifty-
five per cent. These countries can and do undersell us.
Here is an example. From 1931 to 1932, the year
when these countries suspended the gold standard, the
exports of American wheat fell off by one-third, a loss
amounting to fifty million bushels of wheat exports.
While this wheat was molding in American warehouses,
Canadian exporters, due to depreciated costs of produc
tion, increased their wheat exports by one-third or
about fifty million bushels. In other words, Canada
simply took away our foreign wheat markets and
brought unprecedented hardship to our wheat farmer.
Now remember the same thing applies to cotton, lum
ber, canned fruits, raisins and other products. We say,
cancel these debts, remove this obstacle and permit the
American farmer to sell his produce.
Not only are the depreciated currencies ruining our
foreign market, but they are demoralizing our domestic
industries as well. They lower the cost of production
abroad to such an extent that the foreign producers can
jump over our tariff barriers and undersell us in our
own markets. The Japanese, for instance, through their
depreciated currency, can sell electric light bulbs at
three dollars and twelve cents per hundred on the
140 THE YEAR BOOK OF COLLEGE DEBATING
American market while the General Electric Company
cannot produce them, for less than three dollars and
seventy-two cents. In other words, the Japanese can
produce them, ship them to the United States, pay the
tariff duties, make a good profit and still sell them for
fifty cents per hundred cheaper than the American
manufacturer can even produce them. The Literary
Digest makes an estimate a thing which it seldom
hazards doing, but when it does it is usually right that
through this method of underselling us, a million men
have been put out of employment in the United States.
Let me remind you of one thing: these nations are
not wilfully off the gold standard but have largely been
kept off through these unnatural war obligations. Re
cently the Board of Directors of the Bank of England
had a meeting and they voted almost unanimously that
England should return to the gold standard whenever
such a course is possible. We read in the January
news-letter of the National City Bank bulletin, "All of
the countries whose currencies arc depreciated and
fluctuating * . are anxious for some constructive ac
tion to stabilize the exchanges, but there is no denying
the fact that the war debt payments are everywhere
regarded as a menace to all efforts of this kind." We
find, therefore, all evidence indicating that these na
tions will return to their stabilized currencies if we
will only make that possible through the Cancellation
of the war debts.
To review, the collection of these debts is placing
three big obstacles on the road to recovery; (1) the
United States must have annually an unfavorable bal-
CANCELLATION OF WAR DEBTS 141
ance of trade of three hundred fifty million dollars for
the next fifty-five years; (2) the fluctuations in foreign
currencies throttle all international business; and (3)
the depreciated foreign currencies are demoralizing
both our foreign and domestic markets. We submit
that if these impediments are removed, business will
resume its normal activity. We, therefore, ask you to
favor the proposition that the United States should
agree to the Cancellation of the inter-allied war debts.
Second Negative, James K. Jacobs
University of Southern California
LADIES AND GENTLEMEN: Now the entire Affirma
tive case has been presented, and we find that the Gen
tlemen are interested entirely in the economics of the
question. In fact, Mr. Wiens has told us, to quote his
exact words: "We are interested primarily in the
United States, and in whether or not it would hurt us
to receive payment." Then the Gentlemen went on
and attempted to show us that we would be harmed by
payment; they told us that there are only three ways
of paying these debts.
In the first place, they told us that they could pay if
they received more loans from the United States, but
they said that this method was, of course, undesirable.
In the second place, they told us that the nations could
not pay us in gold, because there wasn t enough gold
in the world, and because gold payment would further
depreciate Europe s currencies, and so this method of
payment was invalid. In the third place, they declared
142 THE YEAR BOOK OF COLLEGE DEBATING
that the only other method of payment was in goods,
and that we would have to Import more than we export,
and that this certainly would be undesirable. In short
they asserted that the only three methods of payment
were loans, gold, and goods, and then they proceeded
to tell us how none of these methods would work.
Well now, payment in loans certainly is undesirable.
The Gentlemen are perfectly right and we most heartily
agree with them. Secondly, there isn t enough gold in
the world to pay the entire debt, so the Gentlemen are
right again, and we agree with them. In the third
place, payment in goods certainly would be harmful
to the United States. The Gentlemen are right again,
and here again we agree with them. But these are not
the only methods of payment. Ladies and Gentlemen.
What our opponents have done is simply this: Mr.
Avakian has come out upon the platform and given us
three methods of payment, and then he proceeded to
tell us how each method was invalid; in other words,
what he really did was to builcl up a Negative case,
and then turn around and tear it down. In short, Mr.
Avakian built up a straw man for himself, and then
proceeded to knock it clown. He might just as logically
have argued that there were only two methods of pay
ment: canary birds and goldfish; and that they couldn t
pay in canary birds because they couldn t fly across the
ocean, and they couldn t pay In goldfish because they
couldn t swim that far. And so Mr, Jones and I have
enjoyed refereeing the debate between Mr. Avakian
and himself* and now we would to have him debate
us for a change*
CANCELLATION OF WAR DEBTS 143
Now then, as a matter of fact, the debtor nations can
pay us without any of the evils which Mr. Avakian
has suggested. Now the Gentleman has given you as
proof of his statement that the nations can t pay, the
fact that we have a favorable balance of trade. Well
now, of course we have a favorable balance of trade,
but that is not the point. The Gentlemen are only tell
ing you half of the story by talking about the balance
of trade, for the ability of a debtor nation to pay is not
alone dependent upon the balance of trade as the Af
firmative would have you believe. Now we should like
to tell you the whole story.
The ability of a debtor nation to pay is dependent
upon the balance of payments of that debtor, as is the
ability of a creditor nation to receive. Now the balance
of payments is composed of all the financial trans
actions between the nations and the United States. In
other words, it includes such items as commodities,
tourist expenditures, immigrant remittances, move
ments of capital, and so on. Now in order for a debtor
nation to pay, she must have a favorable balance of
international payments, while a creditor nation must
have an unfavorable balance. With these facts in
mind, let us examine the United States Balance of
Payments for the past several years. We have here
Bulletin 803 of the United States Department of Com
merce for 1931, giving the balance of international pay
ments for the past ten years. Turning to page 77, we
find that in 1931 we had an unfavorable balance of
one hundred twenty-four millions, in 1930 an unfavor
able balance of three hundred twenty-three millions,
144 THE YEAR BOOK OF COLLEGE DEBATING
1929 unfavorable one hundred seventeen millions, 1928
unfavorable three hundred twenty millions, and so on
back through the years. Now let us look at the other
side of the picture, the debtor nations.
On page 583 of the World Almanac of 1933 we find
that in 1930 Great Britain, one of our two major
debtors, had a favorable balance of payments amount
ing to twenty-eight million pounds; in 1929 a favorable
balance of one hundred three million pounds, and so
forth on back through the years, while Moody s Index
of Investments states that the other debtors, France,
Belgium, and Italy, have all had a favorable balance
of payments for the past several years. So we find
that in the first place, the United States has an un
favorable balance of payments, and the debtor nations
have a favorable balance. In short, all of the condi
tions needed to pay these debts exist at the present
time, and the nations can pay without the harm which
the Affirmative has suggested. For example, the debts
may be paid in this manner.
At the present time, the United States buys certain
goods from Europe, and invests a certain amount In
factories in Europe. In order to pay for these goods
and factories now ? we must secure dollar credits in
Europe; briefly, we must transfer dollar credits from
the United States to Europe. But if the nations pay
us, we already have the credits in Europe to pay for
these factories and goods which we already arc buying
regardless of the debt situation, HO all we have to do is
simply use our credits which are already over there
instead of transferring more dollar credits from the
CANCELLATION OF WAR DEBTS 145
United States to Europe. In other words, we can be
paid without loans, without gold, and without import
ing any more foreign goods than we are now receiving;
that is, we can receive payments without any of the
evils suggested by the Affirmative.
Now there is another perfectly good method of pay
ment which also was overlooked by Mr. Avakian and
Mr. Wiens in building their Negative case. This is the
proposal of ex-President Hoover, President Roosevelt,
and ex-Secretary of the Treasury Ogden Mills, a pro
posal sometimes known as the Hoover-Mills Plan. Un
der this plan, foreign currencies would be deposited in
foreign banks to the credit of the United States to be
used by American tourists, investors, merchants, and
so on. For example, if Mr. Avakian were going to
travel in England, instead of taking over American
money, having it transferred, and spending it, he would
buy notes from our government which would entitle
him to use an equal amount of our credit which is al
ready in Europe. So you see, we have given you defi
nite statistics and facts showing you exactly how these
debts can be paid without any subsequent evils.
But even if Mr. Jones and I had come out and ad
mitted that the nations couldn t pay; even if we hadn t
mentioned the Gentlemen s objections to payment, the
Affirmative case would still fall for the following rea
sons. You will recall that the Affirmative admitted
that we are debating complete and outright Cancella
tion. In other words, the opposition must prove that
all of the debts should be cancelled in the near future.
So if we can show you that any of this debt can be paid,
146 THE YEAR BOOK OF COLLEGE DEBATING
the Affirmative case, since it must support complete
Cancellation, will be invalid. Well now, as a matter of
fact, Europe has already offered to make a two billion
dollar cash payment, thus settling for a dime on the
dollar. She has admitted she can pay, she can transfer,
she will pay, and we can receive. Now if Mr. Jones
and I hadn t even given you any method of paying the
whole debt as we did; even if we hadn t touched upon
the point, the Affirmative case in supporting complete
Cancellation would still be invalid until they proved
very definitely why we should not receive the cash
payment of two billion dollars that has been offered
and that can admittedly be paid without harm. Until
the Affirmative proves just exactly why we should not
accept the two billion dollars in the face of a huge
treasury deficit, their case for complete Cancellation
will not be substantiated, and we await evidence that
the two billions should be refused.
Furthermore, even if we hadn t given any method of
payment and had also neglected the cash payment, the
debts should not be cancelled just as long as there is a
chance that the nations might be able to pay some day
and that we might be able to receive, . . Just that
long we should not cancel the debts. In other words,
if we had admitted that the debts could not possibly
be paid today, the debts still should not be cancelled,
because we have no way of telling that at future
date conditions would not be favorable to payment.
For instance, we may have a war with Japan sometime
and need materials from Europe; conditions may be
such that we will need gold services; or, far more
CANCELLATION OF WAR DEBTS 147
probable, trade balances may be reversed. At least
we must all admit the possibility, and just as long as
this possibility remains, we should not cancel the debts
for we are just throwing away twenty billions of dollars.
Instead, we could have an indefinite moratorium on
all principal and interest until such time as they could
pay. In this way we would at least have a good chance
of repayment, and in the meantime satisfy the Affirma
tive by giving them all the so-called benefits they have
claimed for Cancellation, and by removing the asserted
evils of collection. So, even if we disregarded the
definite methods of payment we have given you, and
the two billion dollar cash payment, the Affirmative has
still not proved its case until it shows exactly how
Cancellation is preferable to this indefinite moratorium.
We await the Affirmative s proof on this point.
In conclusion we have shown you that the United
States has an unfavorable balance of payments and
the debtors have a favorable balance, thus allowing
payment without any of the Affirmative s asserted evils
which they brought out in answer to their own model
of what the well made Negative case should be. We
have shown how we could be paid under the Hoover-
Mills proposal. We have shown that the Affirmative
has not substantiated its case until it proves exactly
why we should not accept the two billions of cash pay
ment already offered. And finally we have demon
strated that until the Gentlemen prove why Cancella
tion is preferable to an Indefinite moratorium, they
have not fully upheld the Affirmative burden of com
plete and outright Cancellation,
148 THE YEAR BOOK OF COLLEGE DEBATING
First Negative Rebuttal, F. Clinton Jones
University of Southern California
LADIES AND GENTLEMEN; Now let us take up the
arguments presented by Mr. Avakian and Mr. Wiens,
and see just where and how they have been met by the
Negative case, or how they fall invalid when analyzed.
Mr. Avakian in his constructive argument, took up
in detail three methods by which the debts might be
paid, and showed you how each of these three was un
desirable or impracticable. And then Mr. Jacobs, my
colleague, in answering his speech, showed you that
we need not accept loans, gold, or goods as the only
methods of payment. As he told you, of course to
continue the policy of loaning Europe money with
which to pay is a foolish and undesirable plan; of
course there is not enough gold In the world with which
to pay; and of course payment in goods would flood
our markets with cheap foreign products, and bring
further disaster to American industry*
But then my colleague went on to show you that
there are other ways by which the debts may be paid
without these detriments suggested by the Affirmative.
He presented you with the figures of the United States
Department of Commerce, showing that the United
States has had an unfavorable balance of international
payments for the past ten years, that is, she yearly
owes Europe more then Europe owes her, and that
therefore, the debtor nations already have the credits
with which to make the debt installments. Then he
offered the Hoover-Mills proposal for payment!
CANCELLATION OF WAR DEBTS 149
whereby foreign currencies could be deposited in for
eign banks to the credit of the United States, and could
be drawn upon by American tourists, or used to satisfy
business transactions in the debtor nations, thus form
ing another means by which the war debt obligations
could be met. Following that, Mr. Jacobs pointed out
that the debtor nations had already offered to make a
lump sum payment of two billion dollars to the United
States, and that we certainly should not cancel the
debts when they had made such an offer, which shows
that they must be able to pay. Thus we see that there
are several ways that may be used in paying the war
debts, and therefore the arguments of Mr. Avakian
fail to establish his point that the transfer problem can
not be solved.
Mr. Wiens then came upon the platform and pro
ceeded to answer my constructive argument by declar
ing that the main consideration in this contest is that
of economic laws, and that my argument proving we
are morally justified in demanding payment is not a
valid or relevant point in this debate. Now if the
judges will examine their ballots they will find a sen
tence in the instructions reading: "It is the duty of the
two teams in the debate to meet each other s argu
ments, and they have performed their duties when they
have done so." Now we of the Negative brought forth
the argument that the United States is morally justified
in demanding payment of the war debts. This is an
argument against Cancellation, and it is the duty of
the Affirmative to meet this argument, according to
the judge s instructions. But the Gentlemen of the
ISO THE YEAH BOOK OF COLLEGE DEBATING
Opposition have failed to do so, and therefore our first
issue still stands. Of course we have to meet the Af
firmative points, but that is no reason why we cannot
bring up Negative arguments as well.
To continue In meeting the Affirmative s arguments,
now, we find that Mr. Wiens painted for us a picture
of a world of unstable and depreciated currencies. He
told us that due to instability of foreign currencies, con
fidence was being lost; that American tariff walls were
being evaded through depreciated currencies; that pay
ments in gold were aiding instability. He said, "If we
can remove the impediments of unstable currencies, de
preciated currencies, we can revive our world trade.
The war debts act as a burden; remove them, and
world trade will increase/ 3 Now this whole argument
is based on the false assumption that the war debts
constitute some huge colossus which is completely dis
rupting world trade. In 1929 world trade aggregated
sixty-eight billions; in 1930, some fifty-five billions; in
1931, thirty-nine billions, The foreign trade of the
United States in 1930 amounted to four billions. Now
the annual war debt installments amount to only about
two hundred fifty millions. Thus the Gentlemen tell
us that the war debts, not even a drop in the bucket in
comparison with our foreign trade, or world trade, if
cancelled, will bring back a great increase In world
trade. Obviously, the war debts are too small a part
of that trade to make any material difference, and
therefore, the second Affirmative argument is found in
valid upon examination* We have taken up the argu
CANCELLATION OE WAR DEBTS 151
ments of the Affirmative, one by one, and shown you
that they are unsound in this debate.
First Affirmative Rebuttal, Henry W. Wiens
Fresno State Teachers College
LADIES AND GENTLEMEN: The Gentlemen of the
Negative tell us that these war debts constitute but a
very small part of all our international trade and thus
could not affect our international commerce to any
appreciable degree. If they are really so small, we are
surprised that the Negative is so vehemently opposed
to cancelling them. However, we will admit that rela
tively they are pretty small, but even at that they do
have a vital effect upon our international and domestic
trade. Most of you have read lumberjack stories.
While logs were floated down a river, they would occa
sionally jam. It was often found that the whole jam
was caused by two or three insignificant logs in key
positions which got stuck. When they were removed
the whole mass would float down the river again. An
other illustration. You remember the Battle of Ther
mopylae in which a handful of Spartans held back a
whole army. Why? Because they were in a narrow
pass a key position* Even so the war debts consti
tute but a small item of the total international trade,
but they are obstacles in key positions on the road to
recovery. If you remove these obstacles you make
possible a return to normal business activity.
Now it seems that the Gentlemen of the Negative
have taken it upon themselves to instruct the judges
152 THE YEAR BOOK OF COLLEGE DEBATING
how to vote In this contest. We, however, have no
instructions for the judges we believe they have
enough intelligence of their own to take care of that.
Furthermore, the Gentlemen from Southern Cali
fornia told us we have set up three straw men and then
proceeded to knock them down. In other words, they
assert there are other methods of payment besides
loans, gold ? and goods and services, but let us examine
these methods of payment and see how they would
affect the United States.
Their first method is through the crossing off of sur
plus credits which these nations have with us. They
told you that figures on Page 77 of Bulletin. 808 issued
by the Department of Commerce show that the United
States has had an unfavorable balance of trade with
these debtors ever since 192L We wish to direct your
attention to the fact that considering all visible and in
visible items of trade, the United States actually had a
favorable balance of trade in all these years, Moulton
and Pasvolski in their book on the war debts say that
in eight years of this period we had a favorable balance
amounting to four billion dollars. It was only through
the tremendously large private loans made by Ameri
cans to these nations which make those figures which
they quoted appear as If we had an unfavorable bal
ance of trade. And so ? if our debtors paid us through
this method, namely, by crossing off surplus credits,
they would actually be paying by making further loans
from us, which would, of course, be harmful.
Now let us consider their second proposal, the
Hoover-Mills method. Through this means, although
CANCELLATION OF WAR DEBTS 153
the Negative has not fully explained it, these nations
would create credits in their countries for our use at
some future time. That s rather indefinite. But even
this must be paid in gold, goods or services. Now if
this money is kept in their countries for some future
use, they must either pay interest upon the debt or
compound the interest. If they pay interest, it must
be paid in gold, goods or services. And if they com
pound it well, I guess you all know that compound
interest will kill anything in time. Perhaps you have
heard of the fact that if a penny had been deposited at
four per cent interest at the birth of Christ, the com
pound interest would today amount to a lump of gold
several times the size of this world. So, the Hoover-
Mills method of payment means that the principal plus
interest must be paid in gold, goods or services.
Finally, they tell us that if all other methods fail,
then we should not cancel because we might need the
money or goods in some future emergency such as a
war with Japan or a disaster. It seems the Negative
is going to be sitting around waiting for a national
disaster. Remember, however, that if our debtors kept
this money the same problem of how to pay the interest
or compound it would arise as it would under the
Hoover-Mills method of payment and this would defeat
their whole plan. It would inevitably lead to the pay
ment of gold, goods or services. Furthermore, by using
such an argument they have virtually admitted that
their other methods would not work and that they are
suggesting this as a means of last resort.
Since there is no method of payment which would
154 THE YEAR BOOK OF COLLEGE DEBATING
not be harmful to the United States and since Cancella
tion would remove some of the obstacles in the way of
recovery, we ask you to agree with us that the United
States should cancel these debts.
Second Negative Rebuttal, James 1C Jacobs
University of Southern California
LADIES AND GENTLEMEN; Mr. Jones and I have
taken the major contentions of the Affirmative in this
debate and have shown you that they cannot be con
sidered valid arguments in favor of Cancellation, Now
let us consider the Negative s case in the light of the
attacks which the Gentlemen have made upon it.
In the first place, you will remember that Mr. Jones
first point was that these debtor nations are morally
obligated to pay us* Then Mr. Avakian came upon the
scene and said, to quote him exactly: "We wish to
admit that they are morally and legally obligated to
pay; whether they are or not h entirely irrelevant in
this debate." Well, Mr. Jones already has told you
that just because the Affirmative does not wish to dis
cuss the moral issue is no logical reason why it is not a
valid point in opposition to Cancellation. Obviously,
any argument tending to show that the debts should not
be cancelled is a perfectly sound point until the Gentle
men of the Affirmative answer it, and Mr. Wiens and
Mr, Avakian cannot refute it simply by telling us that
they aren t interested and that they admit It, Const***
quently, this point still stands unrelated in favor of
the Negative.
CANCELLATION OF WAR DEBTS 155
In the second place, Mr. Jones showed you that
Cancellation would transfer a burden of twenty billions
of dollars to the American taxpayer. In answer to this
point, the first Gentleman said: "Of course we will lose
twenty billion dollars, but if Cancellation will remove
the impediments of trade recovery, there need be no
increase in taxes." // Cancellation will remove the
impediments of trade recovery! You see, Ladies and
Gentlemen, the Affirmative answer to this point is
based entirely on the word "if" Now when we cancel,
we lose the twenty billions, as Mr. Jones has told you.
There is no "if" about this. But how do we know that
foreign trade will increase suddenly if we cancel the
debts? Of this we have no assurance, and as a matter
of fact, all of the evidence tends to prove that the re
sult will be the very opposite. For this we have the
very best of precedents. In 1932, the year following
the Hoover moratorium, which virtually amounted to a
one year Cancellation, our foreign trade, instead of
increasing as the Affirmative contend it would, actually
decreased three hundred twenty-five million dollars.
Europe, instead of using the money we had released to
purchase our goods, immediately rushed over to Russia,
the cut-rate store of Europe, and used our money to
buy Russian goods.
Now we know we are going to lose twenty billions if
we cancel; the Affirmative has admitted this. Since
we know we will lose this amount, we must likewise
know that we will gain the amount back in increased
trade profits if the Gentlemen s claim of a benefit is to
be valid. And so, the fact remains, admitted by the
1S6 THE YEAR BOOK OF COLLEGE DEBATING
Affirmative, that Cancellation will impose a twenty
billion dollar burden on the American taxpayer.
In the third place, I showed you that the debtor
nations have a favorable balance of payments and that
the United States has an unfavorable one, so that the
nations already have at their disposal the credits with
which to pay us, so that we could receive without any
harm. The Gentlemen have answered this point by
saying that we have "told them something vague about
the balance of payments," and that Moulton and Pas-
volsky say that we have a favorable balance of trade.
Well of course we have a favorable balance of trade;
the Gentlemen are only considering one-half of the story
and are leaving out the invisible items such as tourist
expenditures, immigrant remittances, interest pay
ments, etc. When we Include these Items, we have an
unfavorable balance of payments, and this is what we
must consider, not merely one item, trade. So we see
that this fact that the debtors can pay has not been
touched and hence still stands In this debate.
Then 1 showed you another feasible means of pay
ment, namely the Hoover-Mills proposal The gentle
men have totally ignored the point, and so this method
also stands untouched by the Affirmative speakers.
In the fifth place, you will recall that I pointed out
that the European nations already have agreed to settle
by paying us two billion dollars in cash, and that In
order to establish complete Cancellation, the Affirma
tive would have to show why we should not receive
this payment. Mr. Wicns answered tlih fact by in
forming us that our arguments were becoming weaker,
CANCELLATION OF WAR DEBTS 157
but while he was telling us that this was a weak point,
he overlooked refuting it; in fact, he failed to say any
thing else about it. So this payment of two billion
dollars still stands valid in this debate, a challenge to
the Affirmative to prove why we shouldn t accept it.
Finally, we pointed out that even if we hadn t given
any feasible methods of payment, just as long as there
is ever a chance of payment, we should have an in
definite moratorium in lieu of Cancellation. All Mr.
Wiens said about this point was that we would "have
to prove that we will have prosperity some day." Well
now, obviously, Ladies and Gentlemen, if the speakers
on the other side insist that Cancellation is preferable
to this indefinite moratorium, it is their duty to show
that we will never have prosperity, not that we will
have it. Besides, we pointed out emergencies in which
we could be paid, such as wars, floods, or changed
balances of trade, depleted gold reserves, etc. So the
Gentlemen have not yet proved wherein Cancellation is
preferable to the indefinite moratorium, and the Af
firmative must show us exactly wherein Cancellation is
preferable to the indefinite moratorium.
So we find that the moral argument has been ad
mitted; we find that the Gentlemen s only answer to
the twenty billion dollar burden, which they admitted,
was based upon an "if"; we find that the two methods
of payment which we have advanced have not been
answered; the Gentlemen t have not yet told us why we
should not receive the two billion dollars which already
has been offered, and please remember that they must
show this in meeting the burden of complete Cancella-
158 THE YEAR BOOK OF COLLEGE DEBATING
tion. Finally, they have not shown wherein Cancella
tion is preferable to an indefinite moratorium, a
proposal which also stands as a challenge to Mr. Ava-
Man. So we have taken the Affirmative case point by
point, and the Negative case has been reset point by
point; and these now stand as a challenge to Mr.
Avakian to answer them.
Second Affirmative Rebuttal, Spurgeon Avakian
Fresno State Teachers College
LADIES AND GENTLEMEN: If you will not be bored
by further reference to Department of Commerce
Bulletin No. 803 ? I would like to correct the statements
made by the Gentleman who just left the floor. The
figures to which he has referred on page 77 making
a balance of international payments against the United
States deal with loans and investments; and we do not
see why he has mentioned them, since he has admitted
his opposition to payment through loans.
However^ on Page 76, which IB just opposite Page
77 3 are given the balances of trade for the United
States for every year since 1922* The table shows a
favorable balance of trade for each of the years from
1922 to 1931, The totals given represent all of the
visible and invisible items which enter into the balance
of trade; and, if the Gentlemen will follow me in their
copy of the bulletin, 1 will read to you the amount of
the favorable balance for each year in order, starting
with 1922: 557 million, 208 million, 802 million, S13
million, 20S million, 588 million, 658 million, 277 mil-
CANCELLATION OF WAR DEBTS 159
lion, 713 million, 2 57 million. Now how can the Gen
tlemen conclude from this bulletin that the United
States has had an unfavorable balance of trade during
any of these years or an unfavorable balance of inter
national payments when that is accomplished only by
including our loans to Europe?
You will remember that Mr. Jacobs told you that
"of course, payment through loans will hurt us," and
"of course, payment through gold will hurt us," and
"of course, payment through goods will hurt us." He
then proposed the Hoover-Mills plan, with which I
shall deal in just a moment.
Since he has so emphatically made all these state
ments, then all that remains for us to show is that the
debts can be paid only in these three ways which he
has admitted are injurious to the United States. All
of the economists in the world with the possible ex
ception of the Gentlemen of the Negative are agreed
that, basically, there are but three methods of payment.
These are, as we have said, loans, gold, and goods and
services.
Now let us consider the Hoover-Mills plan and see
just where it leads us. This plan would allow the
debtor nations to pay us by establishing credits in their
own countries and placing these credits at the disposal
of the United States Government. As Mr. Wiens has
.pointed out already, if we are to collect interest on
these debts, we can do so only by shipping either gold
or goods into this country but the Gentlemen have
admitted that payment in either gold or goods will be
harmful to the United States.
160 THE YEAR BOOK OF COLLEGE DEBATING
Furthermore, if we are to use these credits, the only
thing we can do with them is to use them in buying
goods in the foreign countries but this is payment in
goods, a thing which the Gentlemen have admitted to
be detrimental to the United States.
Mr. Jacobs has suggested that the United States
government sell these credits to American tourists who
travel abroad. Let us see what this would mean- At
the present time, the expenditures which our tourists
make abroad are recorded on the balance sheet of
international trade as an invisible import into the
United States. Remember that over a long period of
years, our exports and imports have to balance each
other. If our tourists use these credits, then they will
no longer meet their expenses by buying up inter
national exchange; which is just another way of say
ing that tourist expenditures will no longer be recorded
as one of our invisible imports. In other words, this
plan would extract one of the items from the Import
side of our trade balance*
But when we decrease the import side of the ledger
by pulling out one of the items, then one of two things
must happen; either we must increase our imports
among the other import items, or we must decrease our
exports, so that the trade balance will be even again.
If we decrease our exports^ then we injure our own
industry by curtailing trade; if we Increase our Im
ports along other llne% then we have received payment
in goods. No matter whether you decrease exports or
increase imports, the payment h through an
Import surplus of goodsa thing which we
CANCELLATION OF WAR DEBTS 161
and the Gentlemen have admitted, to be detrimental to
the United States.
Thus we see that the Hoover-Mills plan reduces itself
to nothing more than a payment in goods. And since
the Gentlemen of the Negative have so definitely and
emphatically agreed that payment in goods will harm
us, we submit that the United States should cancel the
debts.
Now we have disposed of all the Negative arguments
advanced in this debate with the exception of the point
made by Mr. Jones that these nations are morally
obligated to pay the United States. Mr. Jones saw fit
to spend seven minutes in proving this, despite the fact
that we had admitted the point before the debate was
two minutes old. Obviously, even though we may be
morally justified in demanding payment, we should not
collect the debts if we can gain more by cancelling
them.
Thus, we of the Affirmative, having shown you that
collection will injure our own industry and labor, and
having pointed out that Cancellation will remove one
of the important barriers impeding the stabilization of
world currencies and the revival of world trade, believe,
not because we are philanthropists, not because we
wish to bestow charity upon Europe, but because en
lightened self-interest demands it, and because the
United States will gain by it, that the war debts should
be cancelled.
162 THE YEAR BOOK OF COLLEGE DEBATING
BIBLIOGRAPHY: CANCELLATION OF WAR DEBTS
BOOKS
Chew, Oswald. The Stroke of the Moment, 1928. Lippincott. $3,
Dexter, P. and Sedgwick, J. R. War Debts, Macmillan. $1.50
Gerould, J. T. and Turnbull, L. S. (Comp.) .Selected Articles on
Interallied Debts and Revision of the Debt Settlements, 1928.
H. W.Wilson. $2.40.
Johnson, J. E. (Comp.). Cancellation of the Allied Debt. 1922. H.
W. Wilson. (Reference Shelf.) pa. 7Sc.
Kuczynskl, R. "R., American Loans to Germany. 1027. Breakings
Institute. $3,
League of Nations.- Statistical Ytar Book. 1931-32. Geneva. 1032.
World Peace Foundation. $3.
Lloyd George, David. -The Truth About Reparations and War Debts.
Doubleday. $1.50.
Moulton, H. G. and Pasvolsky, L. War Debts and World Prosperity*
1932. Brookings Institute. Century Co,
Nichols, R. R, (Editor) ^Intercollt^mtf Debates. Vol. 13. Noble
and Noble, N. Y. 1932. (Oxford Harvard Debate,)
Phelps, E, M.Un*w.rsity Dtbatts Annual. IW^O. H. W. Wilson,
N. Y. (Debate on Foreign Debts and the Tariff, p. II,)
Phillips, A^&c&nomlc Aspects 0} Reparations and Interallied Debts.
1930. Stechert pa* $1,HO.
Taylor, Horace. Good md the W&r Debts* 10.12. Colum
bia University Press, pa, 25c
World s Almanac, 1932. 1933,
U, S. Dept, of Commerce, Tratlr tnforwattion Kuiktin No, 803,
Supt of Documents, Washington, D. C. (Gov t Printing Office.)
pa. lOc.
AK
Catholic World, -135:620, 1*131 Rthfin of iMumnnt Confer*
Christian Century .-~4Q:80Q t July 20, 19^2. WiU Cooperate*
49:1057, August Al^ !W2. Friers and JMftt
Commonwealth. 16:261, July ft t IQ.W, MM Is HI lo:*^,
16;,IW t July 27, 1032. Ifar 11$ Ntw I6:.*6l,
10, 1932,
CANCELLATION OF WAR DEBTS 163
Contemporary Review. 141:791, June 1932. United States and the
Real Problem. 142:1113, July 1932. Chain of Debts.
Foreign Affairs. 10:529, July 1932. Great Depression. 10:688, July
1932. American Interests at Lausanne. 11:146, October 1932.
Balance Sheet of the War Debts.
Fortnightly Review. 138:137, August 1932. Turn of the Tide.
Literary Digest. 114:5, July 2, 1932, 114:3, July 23, 1932. 114:7,
July 30, 1932.
Living Age. 343:186, October 1932. Tory to Yank.
Nation. 135:68, July 27, 1932. President Warns Europe. 135:48,
July 20, 1932. Settlement of Lausanne.
National Republic. 20:12, June 1932. Cancellation or Chaos. 20:10,
August 1932.
New Republic. 71:247, July 20, 1932. End of Reparations. 71:273,
July 27, 1932. Franco-British Accord.
North American Review. 234:327, October 1932. Can Europe Pay
Us?
Review of Reviews. 86:21, August 1932. Lausanne and Debts to
America.
Saturday Evening Post. 204: 23ff., June 25, 1932, What Europe
Wants. 205:20, July 16, 1932. The Way Back. 205:20, August
6, 1932. Repudiation or Disarmament. 205:22, August 13, 1932.
Whose Capacity to Pay? 205:20, September 10, 1932. No Blanket
Settlement.
World Tomorrow. 15:222, August 1932. Is It Now Our Move?
15:273, September 21, 1932. As Brailsford Sees It.
Yale Review. 22:78, September 1932. American Stake in the War
Debts.
WAR DEBTS
Delta Sigma Rho Public Discussion
Contest
WAR DEBTS
THE DELTA SIGMA RHO PUBLIC
DISCUSSION CONTEST
The public discussion contest is an interesting combination of the
debate and the contest in extemporaneous speaking. It differs from
the usual extemporaneous speaking contest in that all of the speakers
discuss the same topic. Since the topic is known for some weeks in
advance, there is opportunity for study of the problem and a more
careful preparation of the speeches. The fact that all speaking is on
the same topic also makes possible some testing of the speaker s
ability to adapt his arguments to those made by the preceding
speakers.
This contest differs from the debate in that, instead of taking the
Affirmative or the Negative of a motion, each speaker is free to take
any position in which he believes. Thus, a discussion team of three
speakers may have representatives of as many differing points of view.
The originators of this contest are not attempting to supplant the
debate. Rather, they are attempting to reproduce the mass-meeting
stage in the development of public opinion before sides have been
taken and definite measures have been proposed. The debate stage
naturally comes later when the group is trying to decide upon some
course of action. Then it is necessary to frame a definite proposal,
present Its merits and demerits, and have it adopted or rejected by
the group.
The following contest rules may be of interest. Teams consist of
three speakers. Each speaker has seven minutes in which to state
his position and argue for its adoption and three minutes which he
may use to refute some opposing argument or to restate Ms position.
The speaking order for the first speeches is decided by lot just before
the discussion begins. The three-minute speeches may be made when
ever the speaker wishes and can get the floor. The chairman at
tempts to focus the attention of the audience on the problem itself.
167
168 THE YEAR BOOK OF COLLEGE DEBATING
At the conclusion of the hour members of the audience often join in
an informal discussion.
The judges for the contest are asked to rate the speakers from
first to sixth on the basis of their general effectiveness. If it is de
sired to eliminate teams, rather than individuals, the team having the
low point score remains in the competition. In the Delta Sigma Rho
tournament, the speakers receiving first, second, and third places in
each discussion are retained and constitute a team for the next round
of speeches. The six speakers who appear in the contest here re
ported, were chosen as the finalists in a tournament in which there
were thirty entries.
The judges decision gave first place to Mr. Wirtz of Bcloit; second
to Mr. Kluss of the University of Iowa and third to Mr. Hanson of
Carleton College,
First Speaker, Mr. Hanson
Carleton College
LADIES AND GENTLEMEN: We may safely assume, I
believe, that any audience which has shown sufficient
interest to come knows quite well the fundamental
facts; but just to renew our minds briefly let us con
sider the origin of this problem. While the United
States was in the war we sent to Europe about ten
billion dollars in food, ammunition, and clothing, and
in return the warring nations gave us a promissory
note to repay at five per cent Interest. Payments were
made very satisfactorily until we came to the present
world wide depression. Now payments are so difficult
that European Governments have called for recon
sideration of the entire problem. We do not believe
cancellation of the war debts will bring back prosperity s
as the chairman has suggested it might, But I believe
that, regardless of whether "Europe is in prosperity or
WAR DEBTS 169
depression, or regardless of the condition, the United
States is bound to lose more money by collection of the
war debts than she gains by the face value of payments*
Allow me to illustrate in the fashion of Mr. Jsop.
On the island of Borneo is a tropical stream, on one
side of which is a wooded area in which live the orang
outangs, the wisest of all the animal kingdom. On the
other side of the stream are rolling hills in which live
the rhinoceroses, and in the stream which flows down
the center we have the hippopotami. Now, at one time
the rhinoceroses declared war on "the hippopotami be
cause one of their princesses had been killed. The
rhinoceroses began running short of ammunition and
clothing and went over to the orang-outangs and said,
"Won t you send us over some supplies," and the
orang-outangs gladly consented upon this one condi
tion, that all loans be repaid in cocoanuts, their medium
of exchange. The war was soon over and the rhinoc
eroses began to look around for cocoanuts. To their
embarrassment they discovered that all the cocoanuts
on their side had been destroyed by the war, and the
remainder were in the land of the orang-outangs. So
they organized foraging parties to go across the river
and take cocoanuts and use them in payment of their
debts. Unfortunately, the orang-outangs, being the
wisest animals on earth, built a high stone wall to pro
tect those cocoanuts. Can you imagine a more ago
nizing situation than being forced to pay ten thousand
cocoanuts to the other side when virtually all the cocoa-
nuts are over there already, protected by a high stone
Wall? Fortunately, the orang-outangs, realizing those
170 THE YEAR BOOK OF COLLEGE DEBATING
cocoanuts could not be paid, and valuing the friendship
of the rhinoceroses, cancelled the war debts.
The United States today is a tribe of orang-outangs
troubled with the collection of ten billion cocoanuts.
We went to the debtor countries to state specifically
that all debts must be repaid in gold, which is our
medium of exchange. Each of our European debtor
nations, except France, finding it did not have the gold
with which to meet the payments, organized a policy
of foreign trade. But the United States, not lacking in
the cleverness of the orang-outangs, has built a high
tariff wall to protect our gold, so we have placed Eu
rope in the impossible position of having to pay ten
billion dollars in gold to the United States, while prac
tically all the gold is over here already and can not be
got without doing economic harm to the United States.
Great Britain is our largest debtor nation. She is
off the gold standard and yet is required to pay the
United States one hundred million dollars in gold every
six months for sixty-two years. To get that gold Great
Britain has adopted two abnormal policies. First, she
has tried to create a favorable balance of trade with the
United States by refusing to buy American products
and forcing us to buy British products. In 1920 Great
Britain was buying one-fifth of our surplus, today she
buys less than one-tenth. Thus, in attempting to get
the gold Great Britain is depriving us of our foreign
markets. The foreign producer has cut his prices and
is selling through the Smoot-Hawley tariff bill. This
is throwing American men out of employment.
Nor is Great Britain s influence upon foreign trade
WAR DEBTS 171
the only injury to the United States, We find when
she could not get enough gold, she started selling her
silver reserves to the French Government. Thus by
selling and by flooding the silver market Great Britain
was forcing down foreign prices on wheat and cotton,
to mention two American products. The American
farmer has to cut his prices in order to meet foreign
competition, and the United States suffers again.
We have only to look at a recent issue of the Busi
ness Week which estimated the United States is losing
one dollar for every ten cents collected. You throw up
your hands and say, "That is obviously exaggerated,"
but we find upon consulting statements of such econo
mists as T. E. Gregory of Cambridge, Norman Angell
of London, and H. G. Hjalmar Schacht of Berlin, these
losses are three or four times the size of the payments
on the war debts. Mark Twain affords an illustration
of the utter folly of demanding the impossible by tell
ing the story of two darky boys who tied a donkey s
tail to a fence post and then held a carrot out to see the
donkey wince when he pulled his tail With all due
respect to the United States and the ordinary horse
senge of the American people, it seems to me we have
tied our tail to a fence post and are jumping impa
tiently at a twenty billion dollar carrot in Europe.
And I should say not a single carrot of it is 24-karat
material.
In conclusion, Shylock demonstrated that you can
not take a pound of flesh without taking some of the
life blood along with it. Our experience with the war
debts has shown we cannot take gold from Europe
172 THE YEAR BOOK OP COLLEGE DEBATING
without sacrificing some of the life blood correlated
with throwing men out of employment, depriving us of
our foreign markets, and lowering the prices of our
products. The logical step is to follow the example of
the orang-outangs and cancel the war debts.
Second Speaker, Mr. Elmer
Northwestern University
LADIES AND GENTLEMEN: With a certain brusque-
ness and with an old Roman contempt for the super
fluous, I am coming right to the subject matter at
hand and say I am a cancellationist, and if you like,
upward and onward forever cancellationistl
When a person of ordinary intelligence comes face
to face with the problem of war debts he find a con
fusing scene. In the first place he find facts which
are complicated in themselves. In many cases they
are contradictory. He find these facts of such com
plex nature that their implications are not often obvious
and they do not float lightly on life like ducks on a
pond. He finds there has been shot through the whole
scheme of war debts, sordid motives and purposes
which are obviously not for the common good. What
does he do? I would recommend to him, if I saw him
in that ordeal, that it would be the best thing for him
to step boldly onto the scene, plant his legs widely
apart and ask, What can you tell me that is not dis
agreed upon by competent authorities? In other
words, what debated subject is concerned with the war
debts that is*not debatable?
WAR DEBTS 173
And if he asked that question seriously I think there
is one answer that must be given first of all, because it
has behind it the weight of all authorities who have
studied the problem. That answer is: If these debts
are paid they must be paid in the form either of goods
or of services, and mostly in the former. That then is
given to him as something not disputable. After he
has the fact he wants to go and ask certain questions
which bump into him and demand answering. Among
those questions are, Can they be paid? Can the war
debts be paid? Should they be paid? If they can and
should be paid, what would be the effect if they were
paid? I propose to consider a possible answer that
might be given to him to show what would happen if
these war debts could be paid and to try to show that
it would be detrimental to the creditor nation to receive
them.
In adopting my suggestion I say with unashamed
simplicity it is a nai ve attitude, the attitude of the old
proverb, "Join the naivians and see the world." The
only way you can get anywhere is, as I said before, to
have your feet planted solidly on the ground and con
sider the problems which are not disputable. We find
in examining world trade much complex material.
When I first tried to find out how world trade acted
in order to find out whether or not it would be detri
mental for the creditor nation to receive these goods, I
sat down and read volumes and excerpts from volumes,
and made very little progress. Then I went to a gen
tleman who was formerly foreign representative of the
American Express. He is a real kind of gentleman, a
174 THE YEAR BOOK OF COLLEGE DEBATING
fine old fellow that smokes a pipe and sits in a chair
and does everything an old man does when he grows
old gracefully. I said to him, "Can you tell me how
foreign trade works?" "Well/ 7 he said, "I don t know
what they teach you over at school, and I don t know
what the textbooks say, but I can tell you how it actu
ally works." He used this example: "Here is a single
English exporter who wants to ship goods to the United
States. How does he do it? He receives orders and
ships goods over here. We ll assume that he ships
one thousand dollars worth of goods. That one thou
sand dollars is deposited to his account in a New York
bank. He, in turn, can sell this credit to an English
importer who wants to buy goods from us. Now, if an
Englishman wants to buy one thousand dollars of cot
ton or wheat he does so by buying credits in the New
York bank and applying them on the purchase of
cotton or wheat. You can readily see that trade moves
in healthy circulation, which finds an affinity in the
whirling wheels of every factory on both sides of the
big pond. That is how it works without the artificial
atmosphere or the artificial injecting of the war debts
into the whole scheme of world trade.
"When you get war debts, here is the situation. This
English exporter ships over one thousand dollars worth
of goods and he gets credit in the New York bank.
What does he do with his credit? Instead of selling to
an English importer who would buy goods from us, he
sells his credit to the English Government to apply on
war debts."
I must confess a light dawned upon me. The whole
WAR DEBTS 175
thing seemed absurdly simple for so much speculation,
and I saw therein an explanation to my questions. It
answers among other things the problem of whether or
not we should cut down war debts and collect as much
as we can, because it is a simple fact even if you do cut
them down, every dollar you collect which is used to
pay off the war debt is not a dollar which can be used
to buy goods from us. Here is another thing that may
not be minimized in importance: our export trade may
not be considered an insignificant factor of the world
trade picture. If you were to ask me today what, in
my opinion, constitutes the greatest single phenomenon
of the industrial depression, I would be bold enough
to say those unprecedented means of production and
equally unprecedented limited means of consumption.
There is only one solution I am again being naive
to get rid of over-production. How are we going to
do that? By demanding that we use every dollar which
an Englishman gives in return for goods he buys from
us? It will never happen that way, obviously. What
we have to do is to sell our goods for the dollar he
wants to pay. Now we are producing in this country
eight hundred million bushels of wheat every year.
Domestic consumption is six hundred million. We have
two hundred million bushels of wheat that we must
get rid of or glut the market. The only way we can
do that is to remember the truth of that statement
which I wish could be emblazoned across the sky so
that every politician could see it, and that is : A dollar
used for payment of war debts is not a dollar that can
be used to buy goods from us.
176 THE YEAR BOOK OF COLLEGE DEBATING
Third Speaker, Mr. Vogel
University of North Dakota
LADIES AND GENTLEMEN: The gentlemen have set
forth their proposition for the cancellation of war notes
in a very business-like manner. In doing that it has
seemed to me very unlike the European nations. There
has been a lot of agitation for the cancellation of the
war debts during the last three or four years. Most of
this has come from Europe. It has always seemed to
me that the European nations in asking for the can
cellation of the war debts, have gone at this business in
the wrong way. They have said to the Americans,
"Well, the debts were not owed after all. We fought
your battles for you. The war was fought in common
cause," and American taxpayers and American citizens
remember that during the war fifty thousand American
lives were lost over there. They remember that forty-
two billion dollars of American money was spent dur
ing that war. But Europe goes on and says, "You
loaned us the money, but the money was spent in your
country and you got profits from that money." The
American people remember that during the war six
billion dollars of American money was spent in Euro
pean nations and European nations asked exorbitant
prices for their products. European nations go further
and say, "You are bound to cancel the war debts be
cause of the Hoover Moratorium." But the American
people remember that when the Hoover Moratorium
was declared, the Senate of the United States, in sanc
tioning that moratorium, specifically told the European
WAR DEBTS 177
nations that the United States would not agree to out
right cancellation of the war debts.
The European nations have set forth these argu
ments, arguments which today appear illogical, argu
ments which the American people have answered.
These arguments have created lots of animosity and
hatred toward Europe; and Europe in turn has hated
America. I sometimes wish the European nations
might have been like the first two Speakers tonight and
set forth the proposition in a business-like manner that
should appeal to the taxpayers, and say, "It is better
business to cancel war debts; it is good economics to
cancel war debts." It is the thing to do, and to under
stand that we must remember that something of great
economic importance happened in 1914 and up to 1920.
Between 1914 and 1920 the United States was
changed from a debtor nation to a creditor nation.
During those six years the United States was changed
from a nation which had been paying out five hundred
million dollars every year to a nation which was to
receive twenty-two billion dollars in the form of war
notes. And not only that. At the same time, America
was maintaining a favorable balance of trade. Imagine
that economically! Here were these nations shipping
gold to the United States in payment for the war debts.
On the other hand here were these nations shipping
gold to the United States to make up the unfavorable
balance of trade in favor of the United States. Obvi
ously such a situation cannot go on economically. The
European nations have tried to pay, they have paid in
part, but they cannot go on doing that indefinitely.
178 THE YEAR BOOK OF COLLEGE DEBATING
Just as soon as the American taxpayer, just as soon as
the American people realize that America cannot be a
creditor nation and at the same time have a favorable
balance of trade, just that soon the American people
will say, we are willing to cancel the war debts. There
fore these alternatives are up to the American people.
Either we are to become a creditor nation and have an
unfavorable balance of trade or we are to become a
debtor nation and have a favorable balance of trade.
That is the proposition up before the American people
today. For my part I say it is far better economically,
it is far better from a business standpoint for the
American people to cancel those war notes, to give
those war notes back to Europe and maintain the
favorable balance of trade by keeping American manu
facturing men working in this country, by keeping
American laboring men working in this country, and by
selling our goods to Europe. Under the situation to
day we find America is trying to sell to Europe and
Europe will not buy.
The first speaker told you that England, as far as
buying products from the United States is concerned,
finds that its buying power has dropped off from one-
fifth to one-tenth. France last week erected more
tariff barriers against the United States.
We are finding out it is a pretty hard proposition to
sell to someone who owes you money. If you don t
believe that, try it yourself. Go down the street and
meet a man who owes you five dollars and try to sell
him something and increase that debt. It is a lot easier
to go to a man to whom you owe money and sell him
WAR DEBTS 179
something and thereby have something cut away from
the debt you owe him. And so I say, in consideration
of these economic facts, the American people should
cancel the war notes; the American people should take
the view that they should maintain a favorable balance
of trade and at the same time be a debtor nation.
Fourth Speaker, Mr. Bury
University of Wyoming
LADIES AND GENTLEMEN: In opening my part in
this question of war debts I want to say how very glad
I am that we are discussing this question and not de
bating it. If this had been a debate it would probably
have been stated, "Resolved; that America should can
cel the war debts." Now, as a theoretical proposition it
may be all very well that we should cancel the war
debts. But, when something must be done between
now and June 15, and that something can t be done as
a practical matter, it makes very little difference
whether we should do it or not. In this discussion I
am going to consider American public opinion and
American politics as facts. In a debate we would not
be allowed to do that. They would tell us we were
discussing this question in order to form public opinion,
but I believe that public opinion and politics do have to
be considered just as much facts as, for example, the
capacity of Germany to pay. Recently in my college
work I circulated a questionnaire and one of the ques
tions was, Do you believe that war debts should be
cancelled? The answer was decidedly, No. American
180 THE YEAR BOOK OF COLLEGE DEBATING
public opinion is set against the cancellation of war
debts.
The present war debt set-up then is very briefly this.
Germany can t pay. Various economists studies prove
that quite conclusively. The preceding speakers have
elaborated on that contention. Germany can t pay.
The Allies won t pay unless Germany pays, and
America won t cancel. Public opinion in the United
States being what it is and American politics being
what it is, America can t cancel the war debts. Politics
and public opinion being what they are, America is just
as powerless to cancel war debts as is an unarmed
individual or an armless individual to throw a stone.
There are two alternatives. We can repudiate the
war debts or we can extend them. We can extend the
debts until such time as Germany can pay, or we can
extend the debts until such time as American public
opinion would shift. There is that possibility, until
such time as we can cancel. After all, today, the time
of depression, is a very poor time to judge the capacity
of Germany to pay. We know in 1824, over one hun
dred years ago, Mexico borrowed six million pounds
from Great Britain. In those days six million pounds
was a lot of money and meant a great deal more than
it does now. For forty years Mexico paid scarcely a
dime upon those English bonds. They were adjusted
and refunded and extended until finally, in 1864, forty
years after the debt was contracted, Mexico paid her
bonds. As a result of that experience English investors
are still hoping that the confederate bonds contracted
and defaulted around the time of the Civil War may
WAR DEBTS 181
yet be paid, and according to a recent writer, if condi
tions in the southern states should pick up in the next
half century, English investors may yet see their hopes
realized. Mexico could not pay for forty years. She
was a new country just getting set up. She had a small
population. Like Germany in recent years, she had a
war, a war with the United States in which one-half of
her richest territory, California included, was torn
away from her. She couldn t pay her war debts then.
She was as helpless to pay them as Germany is today.
But other things happened in that forty years. The
Civil War took place in the United States. It smiled
on Mexico. Mexico profited by the Civil War in the
United States just as America profited by the World
War, and finally she was enabled to pay her debts.
If we are ever to have a world in which nations har
monize, contracts must be made just as binding and
inviolable as contracts between you and me in private
life. In private life if an individual defaults for a short
time in his contracts, we allow him to take a bank
ruptcy. His debts are cancelled and he is given a new
start in life. However, a nation can scarcely be com
pared to a man. A nation goes on for hundreds of
years. Its affairs fluctuate and vary. There may be
a condition of prosperity, a condition of depression.
Today is a very poor time in which to judge the ca
pacity of Germany to pay. In 1914 we were a nation
with an unfavorable trade balance. We could not fore
see the World War. We could not foresee that we
would have a favorable trade balance with all the gold
in the United States, that there would be no possibility
182 THE YEAR BOOK OF COLLEGE DEBATING
of Germany and the Allies paying their debts. Just a
few years ago we could not see the present depression.
We refund Germany s debts on the basis of inflated
prices and a depression comes along and turns the
tables on our refunding work. It is hard to say just
what economic international factors may happen within
a few years to change the capacity of the Allies and
Germany to pay. Debts should be extended until such
time as debts can be paid, or until such time as Ameri
can public opinion can shift to the point where debts
can be cancelled. That is, as I see it, the only solution
extension.
Refutation, Mr. Elmer
Northwestern University
LADIES AND GENTLEMEN: The gentleman who has
just spoken to you raised a very interesting point that
I think should be dealt with and considered whether or
not it was a sound condition. I believe it is within the
province of a discussion of this kind to say it is a factor
whether or not the debtor nations will pay. Now, ordi
narily in a debate or discussing a proposition of this
kind we say that does not matter, we are arguing
whether or not they should pay. But in any communi
cation between the governments or in the councils
which the President holds, that is a problem: whether
or not the debtor nations will pay.
Mr. Bury, in elaborating that point, said that public
opinion in the United States is definitely against the
cancellation of war debts. How did he prove that?
He quoted to us. He said, "We have conducted a re-
WAR DEBTS 183
search among the housewives of America and they have
been," I think he said, "overwhelmingly in favor of
collecting the war debts." Now, it seems to me that if
any group of housewives could get any unanimity on a
question of this sort, that if the allied housewives of
America would ever move in a solid block behind some
gesture involving international trade, I would be in
clined to decide that they were wrong. Because, after
all, they bring to this problem and I have tried in my
first speech to show you some of the complexities that
arise out of it they strike boldly and bring to it their
experience with the milk man in bickerings over the
amount of cream that is consumed. In other words,
they have taken the dangerous attitude towards the
whole affair of the man who says, "I loaned you ten
dollars last week, now, hang you, pay it." But we can
show you the situation is not analogous at all. The real
solution is, "I loaned you ten dollars last week, and it is
going to hurt me a lot to receive that ten dollars, I
don t want it." That would be a closer analogy, if
there were ever any such thing.
His premise, of course, is valid. That should be
considered but not in the light he means. I noticed
especially his point. I think that the whole thing
centers down to approximately this, that the war debts
should be extended until such time as public opinion
will finally assent to cancellation, But is that the solu
tion? If you had a nation of people who were des
perately united against an action which you firmly
believed was the right thing, is the correct policy for
you to sit back and calmly wait until they are edu-
184 THE YEAR BOOK OF COLLEGE DEBATING
cated? There has not been a book written on de
mocracy In the last one hundred fifty years that has
not ended with that theory. Or should you try to con
vince them that they are wrong and that it would be
actually to their detriment to receive these war debts?
It has been the experience of political questions that
the minority is almost always wrong, but, at the same
time, that any progress is made by the enlightened
few. Therefore, the solution is not to collect the debts
I mean reduce them and collect them when public
opinion is molded but to convince the men enough to
swing over to our side and see the thing carried through
because it would be desirable to cancel the debts.
Fifth Speaker, Mr. Wirtz
Beloit College
LADIES AND GENTLEMEN: We have heard some com
ments on the matter of questionnaires. If the keynote
of this discussion is informality, I would like to ask
how many of this audience are in favor of cancellation.
I am going to ask all those opposed to cancellation to
raise their hands. I compliment you on your bravery.
Now, I want to see the hands of those in favor of
cancellation. I want to compliment you on agreeing
with me. That is my position. I compliment you on
your intelligence. But, presuming on my intelligence,
I am going to address my remarks to you goats on the
opposite side of the fence from my sheep pasture. I
would like to sell my idea to you.
I am trying to diagnose your trouble as one of two
WAR DEBTS 185
things, either a bad case of misunderstanding peri
tonitis, or of "ununderstanding" hallucinations. Those
are heavy terms. Let us cut out the last, either mis
understanding of the situation or "ununderstanding"
of it. Briefly, I mean this. I am afraid if it is mis
understanding, you have been called Shylocks until you
are becoming so impregnated with anti-European atti
tude that you have lost your perspective. They have
been telling you, you do not have to cancel. You
fought in the European war; you know these debts
should be paid. And the Republicans have built up
that anti-continental attitude until your sense of judg
ment is distorted. That is what I would call misunder
standing, but I do not believe that is the principle that
may cause the flush in your face. I am afraid it is
"ununderstanding." You do> not understand the situa
tion. The second speaker, I think it was, told you
that these debts cannot be paid; that the European
nations cannot pay them. I did not understand that at
all until I started to investigate, and I doubt if you
realize the fact that European nations are not in posi
tion to pay. I think a good deal harder to understand
is the fact that the United States is not in position to
accept payment. That seems absolutely foolish. I
am sure it is not although I know every magazine I
pick up tells me that is the very situation. It is a para
doxical situation when the housewives are opposed to
cancellation, and all magazines are in favor of it, and
all senators are opposed to cancellation, and the Presi
dent will not even consider the proposition!
You cannot realize that the economic welfare of the
186 THE YEAR BOOK OF COLLEGE DEBATING
world is so interdependent between the nations today
that our business cannot prosper until England and
France prosper. I cannot fathom it, myself. My point
is this the question is so complex that the man in the
street cannot understand it and neither can the Con
gressmen.
I have one little proposition I would like to throw
out to you to see what the rest of you think about it.
You have read of this plan of Mr. Levinson, Chicago
business man whom you might know as the originator
of the Kellogg-Briand pact. His plan briefly is this:
to correlate the cancellation of these debts and reduc
tion of international armaments. I cannot go into that
in detail but the proposition is this. We say to France,
"You owe us two hundred million dollars this year.
We will cancel that, cross it off and reduce our arma
ments two hundred million dollars if you in turn will
reduce your armaments two hundred million dollars."
The result is a saving to France of two hundred million
dollars in debts and a reduction of two hundred million
dollars in armaments. The saving to us is two hundred
million dollars we will not have to spend on armaments,
so our position remains the same and France benefits.
It sounds like snake oil and I am afraid it is Utopian. I
think it will not work out, but theoretically it is a good
plan.
I think the United States should be ashamed of itself
for taking no position of leadership in this matter. I
think all we need to start the disarmament ball rolling
is some kind of a lever and we have that lever in our
hands if we will use it. We can solve the international
WAR DEBTS 187
economic situation and at the same time take a for-
waid step in the matter of international cooperation
and peace.
Now, I present to you that President Roosevelt s
biggest problem is debunking and disinfecting Ameri
can public opinion. If we will extend our perspectives
beyond the limits of our own noses, we may get some
where. If we stop consulting our emotions and our
rights and turn to our interests and see where they lie,
we may find a solution to this whole situation.
Sixth Speaker, Mr. Kluss
University of Iowa
LADIES AND GENTLEMEN: It seems we are involved
in a discussion of a subject, which, with all of its rami
fications, is something far beyond the comprehension of
the average individual. I am sure I do not understand
it, and a good many of these men who profess intelli
gence on the question do not understand it as thor
oughly as they seem. It seems to me these people who
are saying war debts should be cancelled because they
cannot be paid should have some thesis by which they
prove that assertion.
I have tried to study the subject a little and it seems
there is a definite, logical way that the reason Europe
cannot pay can be explained so that everyone can
understand it. Before we go into this very intricate
explanation, let u$ consider this fact. We do not want
to deal with the ideals of the situation. We want to
deal with the realities. There are people who say if
188 THE YEAR BOOK OF COLLEGE DEBATING
Europe should cut down her armaments she could pay
the United States, or If Europe should make certain
budgetary reductions she could pay the United States.
Instead of dealing with the things that should be done,
or with whether or not they should be done, I feel it
would be better if we temporarily would project our
selves into the realm of reality; take the facts as we
see them; discuss them in simple terms that everybody
can understand; and then draw our own conclusions.
Now, it would be absurd for anybody to stand before
an audience and assert that Europe with her vast re
sources, with her energetic people, her manufacturing
industries, could not pay a sum approximating ten bil
lion dollars a year. If Europe were to pay the entire
debt tomorrow it might cause considerable distress, but
we cannot argue that Europe does not have the ability
to pay that. I am going to use a very unfortunate
term which I feel may be disputed by some of you when
I say Europe does not have the capacity to pay that.
What do I mean by capacity as distinguished from
ability? Let us project ourselves into another Utopian
realm and assume that each of us has a ten dollar bill
in his pocket, and each a debt of ten dollars to be paid.
Certainly no one can dispute our ability to pay that
debt because here is a ten dollar bill and there is a like
amount we owe, so we have the ability to pay. Now,
assume we have to live for the next two weeks board,
room, clothing and other expenses are going to cost us
approximately ten dollars. Now, what is our capacity
to pay that debt? The sheer necessities of life cannot
be purchased and still render us able to pay a cent
WAR DEBTS 189
toward the debt we owe. That is what I mean by the
capacity of anybody, whether It be an individual, a na
tion, or a corporation, to pay a debt. It depends upon
the excess of your income over your outgo.
Now, in dealing with that capacity there are two
means by which the debt might be paid. The United
States says, "We will accept payment only in gold,"
and economists warn that we will pay in goods and
services eventually. Everything will reduce to that.
Let us consider gold. Again we come back to eco
nomics. What is gold anyway? We have heard it
called thelife blood of a nation; we have heard it called
cocoanuts and various other things during this discus
sion. But, in reality, it is just a material thing in which
people have an unlimited amount of confidence. What
part does this gold play in a nation s entire monetary
and financial system? I think the best illustration of
the nation s financial system is an inverted pyramid.
Let us assume this pyramid is turned upside down and
at the peak on which the pyramid is resting is a gold
reserve. Following up as the pyramid expands is cur
rency, and beyond that is credit, the checks we use,
and so on. It seems everybody abhors the word "in
flation." We call it reflation. We do anything so that
the people will not feel we are inflating currency, and
certainly Europe has an innate abhorrence of the term.
But what is inflation? It is issuing more currency on
this little piece of gold until your inverted pyramid
becomes top heavy and begins to wobble and eventually
crashes on one side. The point is this. If Europe pays
in gold, she is going to subtract from that base upon
190 THE YEAR BOOK OF COLLEGE DEBATING
which the pyramid is resting. So what is the difference
whether Europe issues more currency or whether she
subtracts from that pyramid as to whether or not it is
going to be top heavy and crash? That is the predica
ment of Europe. All I can say is this, economists and
men acquainted with the subject assert that Europe has
expanded credit facilities far beyond the ability of the
gold reserve. France has developed enormous credit
facilities throughout Europe, and subtracting from that
is going to imperil the value of that credit, so Europe
feels she has not the capacity to pay in gold.
Now, the other medium, goods and services. Europe
has seen during the past ten years what has happened
to Germany. Let us again go back to the old ten dollar
analogy, We have ten dollars in our pocket. Let us
assume each year for the last ten years we had sub
tracted one dollar and given it to another individual
for nothing in exchange. Eventually our resources
would be exhausted, if we had no more than those ten
dollars. That is what happened to Germany. The
other nations have seen what happened when she began
pouring her resources, coal and chemicals into allied
nations. It resulted in complete exhaustion and eco
nomic collapse for the German nation, so the Germans
will not pay in services because they realize they can
not. Now, realizing the fact that they have not the
capacity, they tell the rest of the world, especially the
United States, "We will not pay." The United States
says, "I am going to collect." France defaulted and we
did not collect.
These people who advocate anti-cancellation have
WAR DEBTS 191
not as yet given us any concrete way by which the war
debts can be paid. So I contend that unless they can
give us some definite medium by which they can be
paid that we should cancel the war debts.
Refutation, Mr. Bury
University of Wyoming
LADIES AND GENTLEMEN: I find myself in the very
delicate position of defending the American housewife,
and on top of that I am going to bring relativity into
the matter! Let us consider this matter of public
opinion. The Gentleman, who objected to my conten
tion that public opinion and politics should be con
sidered as just as much of a fact as Germany s capacity
to pay, argued that we should be trying to form public
opinion here, but, Ladies and Gentlemen, this war
debts question is something which must be settled be
fore June IS. We cannot change public opinion in
America. It might be desirable. True, housewives
probably do not know what they are talking about, but
that fact of what the housewife thinks exists and our
Congress is not going to cancel war debts so long as
the American public, the American housewife if you
like, says, No.
Now, this matter of relativity. The other speakers
in this discussion take this war debts question at the
present time. They look at it in sort of a cross section.
They say, Germany can t pay now. All right, let s
cancel. What would happen if I was your debtor, in
bed, on crutches, broke? I could not pay my debts.
192 THE YEAR BOOK OF COLLEGE DEBATING
Would you cancel them or would you wait until my
legs or limbs or lungs or whatever it was that was
wrong mended themselves and I could meet my obliga
tions? I believe you would do the latter. I mentioned
Mexico. They contracted their debts in 1824. They
were extended and adjusted and defaulted and one
thing and another until 1864, forty years later, when
the debts were paid.
These international problems are something which
cannot be considered as a cross section, they must be
considered in relativity. Bring the time element in.
We cannot tell what is going to happen in the world in
the next few years. There may be a war between
Russia and Japan. Then Germany would profit as
Mexico profited by the Civil War, and America by the
World War. Germany could pay her debts in that
condition.
Refutation, Mr. Hanson
Carleton College
LADIES AND GENTLEMEN: We started out this dis
cussion this afternoon with considerable monkey busi
ness, but we would like to get down to the plain facts
of the case. It is unfortunate, as the preceding speaker
has said, that only one out of the six of us defends
even a partial payment or an eventual payment of war
debts, so the only thing for the rest of us to do is to
contrast ourselves with him and I am sure you will
pardon me for making reference to his statement.
He says we are only considering a cross section of
the present area when we say we want war debts can-
WAR DEBTS 193
celled, that we must consider a longer period of his
tory, consider possible changes in the economic situa
tion. We know as far back as the Phoenicians the law
of supply and demand and many other economic laws
were in effect. Obviously, if the laws of supply and
demand are in permanent effect and according to the
laws of supply and demand or any other law we are
going to lose more by collecting than we can gain by
the face value of the payments, we would not try to
collect any of them for we lose money.
What I should like to do is consider an historical
prospectus of this problem. I should like to take as
an example Germany in 1871. You remember Ger
many tried to collect one billion dollars indemnity from
France in that year. Of course, indemnity is not con
tracted in the same way as war debts, but nevertheless
we have two parallel countries trying to collect from
another country a large sura of money in time of peace
to pay for expense in time of war. During 1880 and
1890 and thereabouts war authorities were saying,
"Germany has proven to the world that you can have a
war and make a profit because they collected one bil
lion dollars after fighting six weeks. 3 But the facts
were not brought out until 1910, when Sir Norman
Angell, eminent British economist, published a book
called The Great Illusion and showed that for every
dollar Germany collected on her indemnity she lost two
dollars in foreign trade and had to spend a third dollar
on her army a three dollar loss for every dollar
gained. It sounds like the balance of the farm board
today and we certainly would not want the interna-
194 THE YEAR BOOK OF COLLEGE DEBATING
tional finances of the United States in the same cate
gory with the farm board financial status.
Now, since I am nearing the end of my time I should
like to reiterate since we cannot hope for a payment
without losing more money than we can gain by the
face value, the logical step is to cancel the war debts.
Refutation, Mr. Vogel
University of North Dakota
LADIES AND GENTLEMEN: The speaker who advo
cated suspension of payment took into consideration
the attitude of the American people and the opinion of
the American housewife. I wonder in advocating his
plan for suspension of payment if he did not also take
into consideration the opinion of the European nations.
I believe in this discussion thus far we are assuming as
the third gentleman pointed out, that the European
nations are willing to pay for the war debt. I believe
the contrary is true.
We know last December IS, many of these nations
defaulted in payment and so when we talk about war
debts I think we are assuming those war debts are of
real value as far as the American people are concerned.
I can say in the past they have not been of value be
cause no gold has been transferred to the United States,
I was very much interested in a proposition set forth
by one of the gentlemen in the discussion who advo
cated another method of payment, whereby the Euro
pean nations were to pay for the war notes by an
agreement to disarm, such an agreement to be consid-
WAR DEBTS 195
eration for the giving up of the war notes. I think it is
a fine idea. I think it is an ideal way to deal with the
war debts, for not only would it be a forward step to
peace, not only lift the burden of taxation from the
backs of the American people and European people, but
at the same time take the money spent in armaments
and release it for domestic and foreign trade. It is a
fine idea but I believe it is just a bit Utopian. I do not
believe it is going to work. We look at Europe today
and find France watching Germany like a hawk; we find
the threat of the Hohenzollerns coming back; we find
Mussolini in Italy, and in the far east we see Japan
carrying on a warless war in China. In the light of
these circumstances with these European nations, and
Japan armed, and Japan not owing the United States a
cent, we have no reason to believe Japan would come
under the plan. If they did not, probably the rest of
the nations would not. I say much as the idea is right,
much as it would solve economic difficulties connected
with the war debts, it is not practical.
Refutation, Mr, Wirtz
Beloit College
LADIES AND GENTLEMEN: I have been interested in
these requests that we consider these matters from a
political standpoint. I think we have to and I would
like to pursue that political line a little more deeply.
Where does the start of all this political sentiment
against cancellation begin? I propose it started in the
election of 1921 when the Republicans swept into
196 THE YEAR BOOK OF COLLEGE DEBATING
power on a platform whose plank was stirring up a
sentiment against cooperation with European nations.
Wilson was defeated upon that. The Republicans
played upon the emotions of the American people to
develop that pathetic anti-continental attitude and
since then the Republicans have felt obligated to defend
those principles upon which they were swept into
power. You cannot possibly get Congress today to go
on record as being in favor of cancellation. They are
afraid to do it because the principles of their party
make it impossible. That is the reason the United
States has failed to take a position in world peace.
They conjured up these goblins and were forced to deal
with them.
I propose to you this ridiculous situation. Some
body is going to jump on me hand and foot but I am in
favor of default right now for the reason that I think
it is the only possible solution of this problem. Con
gress is not going to change its mind, and you are not
going to be able to educate the housewives and you are
not going to be able to get Europe to pay. If they
default, Congress will be forced to take a new position
and until they default they cannot possibly take a new
position. You are going to tell me a default will gen
erate a lot of hatred, but we might as well make up
our minds to accept that hatred. We have stepped in
quicksand and cannot get out of it. The sooner they
actually default the sooner this matter comes to a head,
and the sooner we will be able to find some solution.
When we stop discussing this problem in terms of
WAR DEBTS 197
"should" and "could" and "would" and start discussing
it in terms of actual "won t," we will find a solution.
Refutation, Mr. Kluss
University of Iowa
LADIES AND GENTLEMEN: One time this afternoon
some of us were referred to as goats. Now, I don t
think that was meant in a derogatory sense, just in a
discriminatory way to distinguish us who favored anti-
cancellation. I raised my hand with the cancellation-*
ists but at the same time I was going to place myself
in the position of the goat. I have the greatest respect
for these people who feel war debts should be paid.
They are typically Americans and justly so. I am
going to try to answer questions that came into my
mind as one of those who thought war debts should not
be cancelled. I stood up here and said Europe cannot
pay and we cannot collect and as one who favored pay
ment I said, doesn t it seem absurd we should cancel
because they cannot pay? As individuals we can go
into court and secure redress if an individual does not
pay a debt.
My only reply to that would be this: Those nations
have said they will not pay because they cannot. That
is the reason they won t. How are you going about
collecting? You insist upon payment. No economist,
no authority in the world has given you any method
of payment. How are you going to do it? Probably
they will make no reply. I sat there for one minute
wondering what the reply might be. You could take
198 THE YEAR BOOK OF COLLEGE DEBATING
the army and navy to Europe and demand payment
No, you say, the losses would be too severe, and too
great That is the way I feel about it Then you might
come back with this. I am an American taxpayer. If
Europe does not pay I will have to, and you must give
me some remedy. The only way I can see is, if I can
show you any way you might possibly benefit, probably
you will accept my argument. This is the way I would
go about it.
Today everyone wants money the currency of
America in banks. It is a theory that money in a
bank will result in ten times that much credit. During
the last several years we have lost three billion dollars
in banks and at the same time our National income has
decreased thirty billion dollars. Assume that Europe
would leave two hundred fifty million in gold in that
country every year. Two hundred fifty million multi
plied by ten would mean two billion five hundred mil
lion in actual credit. Credit means that the purchasing
power of the people of Europe would be increased to
two billion five hundred million dollars. Again we
revert to authorities and say for the last ten years
America has secured forty per cent of Europe s pur
chasing power. That seems tremendous but the sta
tistical abstracts in the Statesman s Year Book support
that. Assume we secured forty per cent of Europe s
income, one billion of American commodities being
purchased, it would put men back to work, start the
wheels of industry turning, and bring back the thirty
billion dollars lost in the last few years. It seems to
WAR DEBTS 199
me America would profit regardless, if we did lose that
two hundred fifty million dollars.
Closing Remarks, Chairman
LADIES AND GENTLEMEN: I think all of you will
agree if a speech is boiled down it isn t nearly so dry.
I am going to boil my speech down. I think confession,
as most psychologists admit, is good for the soul, but
possibly bad for one s standing in the community. I
am going to make a little confession. I feel, for myself
and practically every person here in this assembly, we
must admit there has been a lot of fruitful discussion of
this topic here today. There have been at least sug
gestions of many sound and scientific plans and poli
cies which might be worked out for the successful re
adjustment of this debt problem. We cannot hope for
too much in an hour s time but I believe what has been
accomplished has been very notable.
I think most of us will agree with the Editor of the
Columbus Democrat who recently, referring to the
propaganda that had been circulated on both sides of
a question, said something like this, speaking editorially
of this problem of war debts. "It has recently come to
the notice of the editor of this paper that one of the
fastidious newly-weds of this town kneads bread with
her gloves on. This incident may seem somewhat
peculiar but there are others equally strange. For
example, the Editor of this paper needs bread with his
gloves on, he needs bread with his pants on, and he
needs bread with his hat on, but unless some of the
200 THE YEAR BOOK OF COLLEGE DEBATING
subscribers to this paper pay me up, he is going to need
bread without a dog-gone thing on, and Wisconsin is no
Garden of Eden in the winter time."
I am sure every one will say Wisconsin is no Garden
of Eden in the summer to say nothing of the winter and
judging by the expression of you folks from Wyoming
and Pittsburgh I am sure you will agree with the Editor
of the Columbus Democrat who made those remarks
that this particular piece of humor is in no way per
tinent in so far as European debts are concerned. He
says, however, that most of the senatorial objections
and most of the discussions and editorials have been
equally impertinent and it is for that reason it is neces
sary for the people of America who are informed upon
this particular problem to get together in just such
discussions as this and try to arrive at a sane and scien
tific understanding of the issue involved.
THE AMERICAN LEGION SHOULD
BE CONDEMNED
A Discussion of the Bonus
THE AMERICAN LEGION SHOULD
BE CONDEMNED
PRINCETON UNIVERSITY AFFIRMATIVE VS.
UNIVERSITY OF GEORGIA NEGATIVE
The presence in the United States of such a large body of voting
citizens united for a common political purpose, whether or not that
is the ostensible purpose stated in their constitution, has aroused con
siderable comment and much unfavorable opinion, especially since
the agitation for the Bonus payment began, and the Bonus Expedi
tionary Force marched on Washington and encamped within the city
limits of the National Capital until forcibly ejected.
The debate on this subject presented here is one between Princeton
and the University of Georgia held in the historic Whig Hall on the
Princeton Campus, and is one of the debates held by Georgia while
on a debate trip which included in addition to Princeton University
the following: Columbia University, New York University, Swarth-
more College, and the University of North Carolina.
The Question was stated, Resolved: That the American Legion
should be condemned. Princeton upheld the < Affirmative and Georgia
the Negative. The decision went to the Affirmative. Mr. W. J.
Montgomery, debate manager at Princeton, presided.
The speeches were assembled by Professor George G, Connelly,
Director of Debate at the University of Georgia, and contributed by
him to this Volume,
First Affirmative, Noel Hemmendinger
Princeton University
LADIES AND GENTLEMEN: There are two American
Legions. One is what it purports to be ? what it might
be ? and what, if it has any right of existence at all, it
203
204 THE YEAR BOOK OF COLLEGE DEBATING
ought to be. The other is what it is. Let us first
sider the ideal American Legion.
The ideal American Legion is a spontaneous organ
ization of overseas veterans, banded together for the
purpose of preserving the comradeship and ideals of
the American Forces in the World War. Nothing I
can say is half so expressive as the preamble to the
Legion Constitution, which despite a tendency to
rhetorical catch-phrases of indefinite meaning, is none
the less an admirable declaration: "For God and coun
try we associate ourselves together for the following
purposes: to uphold and defend the Constitution of
the United States of America; to maintain law and
order; to foster and perpetuate a one hundred per cent
Americanism; to preserve the memories and incidents
of our association in the great war; to inculcate a sense
of individual obligation to the community, state, and
nation; to combat the autocracy of both the classes and
the masses; to make right the master of might; to
promote peace and good will on earth; to safeguard
and transmit to posterity the principles of justice,
freedom and democracy; to consecrate and sanctify
our comradeship by our devotion to mutual helpful
ness." The addition to this of part of Article II of the
constitution makes the picture complete: "The Ameri
can Legion shall be absolutely non-political, and shall
not be used for the dissemination of partisan principles
nor for the promotion of the candidacy of any persons
seeking public office or preferment." An organization
faithful to this spirit and these principles would deserve
our hearty approval.
AMERICAN LEGION SHOULD BE CONDEMNED 205
Unfortunately that organization does not exist. For
the real American Legion, about one-third of whose
members, according to General Butler, saw shell fire,
is a million dollar chartered corporation, with a large
efficient permanent business organization, its emblem
division, its film division, and its publishing corpora
tion, and with branches in every section of the country.
The real American Legion is far from spontaneous.
It was fathered by prominent men, with contributions
of money by various corporations, all of whom were
concerned about the possible radicalism of returned
soldiers and desired to lead them in paths of conserva
tism. Having such a huge overhead in its permanent
organization, the real Legion is dependent on large
membership and is continually exerting its efforts in
that direction. A bond salesman could learn from an
American Legion organizer. The real American Le
gion represents, with its million members, between a
fourth and a fifth of our veterans of the World War.
There are three activities that the man on the street
associates with the American Legion. They are, in the
order in which he would probably think of them: raid
ing the treasury, holding conventions, and red-baiting.
Red-baiting, the means which the Legion has adopted
for "safe-guarding and transmitting to posterity the
principles of justice, freedom and democracy," is one
of the things I want to talk about. Of how the legion
naires "maintain law and order" at their conventions
little needs be said. The treasury raids, which the
man in the street is not mistaken in considering their
outstanding activity, will be described by my colleague.
206 THE YEAR BOOK OF COLLEGE DEBATING
With whatever energy survives its annual convention
and bonus grab, the American Legion is accustomed
to act as the self-appointed guardian of Americanism.
Of course, being a patriotic organization, the Legion
has a prior right to the definition of Americanism over
ministers and college professors, and other igno
ramuses, who, since they probably never fought for
their country, have no way of knowing what their coun
try stands for.
The Legion creed is not based on the principles of
Americanism; Americanism is that which agrees with
the Legion s creed. I don t mean by the Legion creed
that fine-sounding statement I read a while ago. That s
just the preamble to their constitution. No, the Legion
creed, were it in black and white, would go something
like this: "Anyone who believes in disarmament, who
believes that any American institutions could be
changed for the better, or is associated with people
who believe these things, is a Red or a Pink and takes
his orders from Moscow." That sounds like exaggera
tion. Let s have some details. Organizations branded
as dangerous by the Legion are: the Foreign Policy
Association, the National Council for the Prevention
of War, the Woman s International League for Peace
and Freedom to say nothing of the American Civil
Liberties Union and the Federal Council of Churches.
Subversive persons are Carrie Chapman Catt, James
Harvey Robinson, John Dewey, Stephen S. Wise and
John Haynes Holmes, to single out a few. Here s how
Legionnaires practice their convictions. Frederick J.
Libby, a gentle-spoken Quaker who heads the National
AMERICAN LEGION SHOULD BE CONDEMNED 207
Council for the Prevention of War, once a Congrega
tional minister, and a Red Cross worker during the
war, has been prevented by the Legion from speaking
in many cities, by a campaign of lies and defamations.
Mrs. Lucia Ames Mead, a gray-haired worker for
peace, especially through the agency of a league of na
tions, scheduled a speaking tour through the South.
The Legion forced cancellation of three of her engage
ments. Sherwood Eddy, a nationally known Y.M.C.A.
worker, has often been prevented from speaking by the
Legion. The attempt by the Los Angeles Legion to
prevent the visit of that vicious pacifist Albert Einstein,
aroused much amusement. A Legion speaker said he
didn t think much of the theory of relativity, but he did
know that Einstein was a propagandist against the
best interests of the country.
Rampant Legionnaire patriotism has not stopped
short of our schools. After many attempts, often suc
cessful, to get schools to discard such inadequate texts
as those by David Muzzey, Albert Bushnell Hart and
William West, the Legion decided to write its own text
book. School children who read it have no doubt a
glorious conception of the country they live in. The
only question is whether they can recognize it! With
a fine insight into fundamentals, twelve pages are de
voted to the Mexican War, one to American literature
and one to Economic History.
It wouldn t matter much if members of the Legion
were content with making fools of themselves. A little
comedy does no harm. But we do think it is a pretty
bad state of affairs when an organization that sup-
208 THE YEAR BOOK OF COLLEGE DEBATING
posedly represents America s war veterans, can wage a
continual and rather effective campaign against some
of the nation s finest leaders. The Legion has not
always used peaceful methods, either, in its curtailment
of constitutional guarantees. In Wilkes-Barre an
armed group of Legionnaires forcibly broke up a meet
ing where Lenin s memory was being honored. At
Centralia, Washington, parading Legionnaires were
fired upon, rioting and bloodshed ensued, and several
labor leaders were railroaded to jail by a court ad
mittedly packed by Legionnaires.
Every beneficent action that the Legion has ever
performed is not sufficient to offset the acts of criminal
intolerance I have mentioned, and yet they are a small
part of its activities. You have seen how it upholds
and defends the Constitution, and safeguards the prin
ciples of justice, freedom, and democracy in domestic
affairs. Now let us see how the Legion promotes peace
and good will on earth.
The American Legion promotes peace and good will
by a campaign of war-preparedness that is sometimes
frankly pro-war, and by an anti-foreign policy which
threatens international friendship. The Legion, it is
true, no longer prevents concerts by Fritz Kreisler or
bans German opera, but it still conducts a campaign
for the expulsion of aliens which makes Secretary of
Labor Doak appear a liberal. I do not know whether
the Legion still insists that every alien in this country
who did not fight in the war should be deported, but in
1923 it demanded that all immigration should be pro
hibited, and it is still an advocate of drastic curtail-
AMERICAN LEGION SHOULD BE CONDEMNED 209
ment of immigration. The Legion s attitude lias
aroused much resentment abroad, and if, early in the
last decade, the Legion had had to fight another war
against Japan, it would have been largely the result of
its own efforts.
We do not doubt that members of the Legion are
sincere in their desire that this country should be pre
eminent in military strength, and, being more tolerant
than the Legion, we acknowledge their right to an
opinion on the subject. But we do insist that that
opinion is not worth two cents, and that the Legion s
attempt to force it on the country is inimical to the
country s welfare. The Legion not only is not espe
cially qualified to determine our policy in respect to
war, but is emotionally unfit to judge on the subject.
The counsels on war of men who had hate and fear
drilled into them, who became inured to bloodshed and
murder, who were taught to consider war inevitable and
even desirable, should be shunned rather than sought.
In view of which, and of the large number of worthy
ex-service men who hold aloof from the Legion, we be
lieve no more confidence can be reposed in the Legion s
opinion on war than in the paranoiac s on the subject
of his delusion.
This is the organization which maintains at Wash
ington the most efficient lobby, probably, that that
haven of lobbyists knows a lobby whose head esti
mates he has written between fifteen hundred and two
thousand bills, originating in the Legion, no small num
ber of which have been passed by Congress. Of course,
the Legion is a non-political organization, and so all
210 THE YEAR BOOK OF COLLEGE DEBATING
these bills are introduced for non-partisan and patriotic
motives. They are chiefly of two kinds. The most
important one of those two kinds will be discussed by
my colleague. The other relates to national defense
and preparedness. Disregarding the many drives of
the Legion lobby which have failed, I shall mention
just a few of its accomplishments in the field of legisla
tion. The Legion has fathered a plan for universal
draft in wartime by which there would be immediately
delivered to the government not only man power for
fighting, but all the Capital and Labor of the nation.
That bill was passed, minus the Capital and Labor
provision. The Legion has prevented a cut in the
number of reserve officers, and a decrease in the appro
priation for rifle matches. When Congress declined to
increase the appropriations for Citizens Military
Training Camps, the Legion, by a campaign of propa
ganda, procured so many applications that Congress
was forced to act. The Legion has consistently op
posed every attempt to abolish the Reserve Officers
Training Corps, or make it optional where it is com
pulsory. The Legion has been a continual big navy
advocate, and has deplored with huge lament every
disarmament move or suspension of naval construction.
A bill designed to outlaw poison gas, in accord with
our treaty obligations, was killed by the Legion. It
did not bother the Legion that their lobbyists who
blocked that bill also received a salary from the chemi
cal manufacturers lobby. Theodore Burton s resolu
tion to prohibit the exportation of munitions or imple-
AMERICAN LEGION SHOULD BE CONDEMNED 211
ments of war was likewise killed, on the ground that
our arms manufacturers had to keep their hand in.
To those of us who believe that the path to peace
lies along the road of increased international under
standing, making possible armament reduction, these
activities are most highly reprehensible. To those who
believe that preparedness prevents war, despite the
lesson of history that preparedness for war and the
martial spirit invariably cause war, they may be praise
worthy. In any case, whatever our convictions, no
intelligent person can fail to condemn a powerful or
ganization of a million voters, which uses every method
known to paid persuaders, and holds a club over the
head of every Congressman to defeat him if he does
not vote its way, in order to force through Congress
measures which it happens to favor. No matter for
what purpose such an organization acted, it would be a
dangerous threat to the integrity of our democratic
institutions. In this case it is a far more serious threat
because it is acting for purposes which millions of re
sponsible people believe contrary to the national wel
fare.
Gentlemen, the American Legion should be con^
demned because it has been false to its ideals because
it has declared itself a non-political organization, and
for its ends has done everything possible in a political
way except to ally itself with a political party. It
should be condemned because it has sworn to uphold
the Constitution and has trampled it underfoot. It
should be condemned because it has sworn to maintain
law and order and has indulged in drunken riots. It
212 THE YEAR BOOK OF COLLEGE DEBATING
should be condemned because it has sworn to foster a
one hundred per cent Americanism and has fostered a
narrow-minded chauvinism. It should be condemned
because it has sworn to combat the autocracy of the
classes and is itself a glaring example of class domina
tion, compelling class legislation. It should be con
demned because it has sworn to make right the master
of might, and has acted with strong-arm methods in
utter defiance of law. It should be condemned because
it has sworn to promote peace and good will, and has
promoted a bigoted nationalism provocative of inter
national hatred. The American Legion should be con
demned because it has sworn to safeguard the princi
ples of justice, freedom, and democracy and has done
more to undermine them than any organized body in
the history of the American nation.
First Negative, M. S. Hodgson
University of Georgia
LADIES AND GENTLEMEN: We feel that there is so
much that public discussion has left in the background,
that we shall attempt to show you the constructive side
of the Legion, its good works which are quietly and
unobtrusively done.
I shall read the Preamble to the Constitution of the
American Legion, "For God and Country, we associate
ourselves together for the following purposes:
"To uphold and defend the Constitution of the
United States of America, to maintain law and order;
to foster and perpetuate a one hundred per cent
AMERICAN LEGION SHOULD BE CONDEMNED 213
Americanism; to preserve the memories and incidents
of our association in the Great War; to inculcate a
sense of individual obligation to the community, state,
and nation; to combat the autocracy of both the classes
and the masses; to make right the master of might; to
promote peace and good will on earth; to safeguard
and transmit to posterity the principles of justice, free
dom, and democracy; to consecrate and sanctify our
comradeship by our devotion to mutual helpfulness."
I shall also quote two excerpts from the Second Arti
cle of the Constitution: "The American Legion is a
civilian organization" and "The American Legion shall
be absolutely non-political and shall not be used for
the dissemination of partisan principles nor for the
promotion of the candidacy of any person seeking pub-
lice office or preferment."
Now, 111 take the most important parts of this pre
amble which points out the purposes and aims of the
organization and attempt to show you that the Legion
has lived up to its ideals and has been of great benefit
to this country.
"To maintain law and order." In a vast number of
cases, in times of trouble and disaster, the American
Legion has organized for the purpose of keeping law
and order until the proper authorities had arrived.
When such times arrive, a call is sounded and the
Legionnaires gather, ready to meet any crisis.
You people in New Jersey cannot appreciate the
necessity for some organized force working for law
and order in certain emergencies. In small communi
ties we do not have the necessary protection that can be
214 THE YEAR BOOK OF COLLEGE DEBATING
called forth. For instance, In floods and other catas
trophes, the Legion is a God-send to the small unorgan
ized community, and fills a real need.
"To foster and perpetuate a one hundred per cent
Americanism." Their campaign of propaganda to
combat Socialism and Communism through the public
schools has been criticized as snooping interference and
as Un-American. However, it is in accord with the
general principles laid down by our Government to
promote Americanism in educating the coming genera
tion as regards democracy. There is no use denying
that the Communists and Socialists have their propa
ganda; yet for some strange reason the so-called Lib
erals put up a great cry as soon as one of our patriotic
organizations sees fit to teach Americanism. Their
fight to combat the spread of Communistic and Social
istic propaganda in the public schools, is part of their
desire to have a government in which neither the masses
nor the classes will have control. They want a govern
ment in which both the lower and upper classes have a
hand. This desire comes under that part of their pur
pose, "To combat the autocracy of both the classes and
the masses."
Then the education of immigrants who come to this
country forms an important phase of their Americanism
work. They also advocated legislation for the quicker
naturalization and citizenship for those immigrants
who fought in the war, attributing their patriotism as
shown by their fighting for our country.
"To promote peace and good will on earth and to
make right the master of might." I should like to dis-
AMERICAN LEGION SHOULD BE CONDEMNED 215
cuss this purpose under three headings. First, their
plan of Home defense. The men composing the Legion
have all been through this last Great War, and they,
more than any other group of men, are desirous of
peace. Their conception is that peace is maintained
by the upkeep of an adequate Home Defense. There
is nothing in the record which justifies the much talked
of criticism of the Legion that they are a group of war
lords. What they seek is simply an adequate national
defense. This is nothing new or radical. Every active
and well-informed organization is advocating the same
preparedness program as a guarantee of world peace.
And you people here in the East should be particularly
interested and quick to agree with the Legion, since
you would be the first and greatest sufferers in case of
foreign invasion. They do not mean that every nation
should go armed to the teeth, but merely that we should
have forces that can be mobilized and be made ready
for action in a short length of time. Every nation
would then have a healthy respect for every other na
tion and would be rather hesitant about trying to over
come it by war.
Second, the plan the Legion presented to the War
Policies Commission. Under this proposed plan, uni
versal conscription would be practiced, with no im
munities allowed. Every man, woman, and child would
be subject to draft, to do whatever he was needed for.
Every corporation, in fact, all industry, all transporta
tion facilities would be conscripted for the common
cause. Under a plan of this kind, no one would be safe
in thinking he could escape being drafted, and no one
216 THE YEAR BOOK OF COLLEGE DEBATING
could possibly make any financial gain from the war.
With personal freedom and the making of profit abso
lutely removed from the realm of possibility, the desire
for war would be minimized to the lowest degree. This
very program calling for the conscription of private
wealth and industry for the public good proves that
the Legion is not dogmatically opposed to Socialism as
its critics would have us believe. It is broad enough
to take one of its principles and use it when the ulti
mate end is world peace.
Third, the relation of the Legion with Fidac, which
is an organization of the veterans of every nation which
participated in the wan By their association with this
organization, by the erection abroad of monuments to
celebrate our deeds and theirs, by sending yearly
groups of Legionnaires to visit these countries, the Le
gion is helping tremendously in creating a universal
attitude of peace. By a recent act of the Legion, the
relations we have with this international group are
being spread among the school children of the country,
thus instilling in them the idea of world peace. The
very existence of this organization, founded for the
purposes of maintaining peace, is another indication
that the Legion is not the belligerent group of war lords
that their critics have made them out to be.
The last point I want to discuss with you is their
Welfare Work. The Legion has an Endowment Fund
of practically five million dollars. This fund was raised
by subscription in the Legion for the purpose of use in
welfare work. The interest from this fund amounts
to a little over two hundred thousand dollars a year
AMERICAN LEGION SHOULD BE CONDEMNED 217
and is divided equally between their National Rehabili
tation Work and their Child Welfare Work.
The National Rehabilitation Committee sits in
Washington. It has probably carried on one of the
most important services of the Legion these past few
years. Veterans who feel that they have received an
injustice in the matter of compensations and pensions,
bring their pleas and complaints to this committee
which has a tremendous staff to handle such matters.
Money recoveries to the extent of seven million five
hundred thousand dollars were made during the past
year, which figure exceeds that of the preceding year
by about one million dollars. Then, too, the cases of
disabled and needy veterans who either have not
needed help before or who just were not able to get it
before, are brought to the attention of this committee
and given prompt service. This Rehabilitation Work
acts as a go-between for the veterans and their just
dues.
The Child Welfare program also comes under this
Endowment Fund. The object of this Child Welfare
work is that of training good citizens. To do this, they
strive to keep the family ties intact, to help fathers and
mothers in their work of raising children, and to afford
them the pleasure of securing and enjoying the normal
necessities of life. This work is carried on separately
in each state, which in turn is in one of five districts,
which report to the National Welfare office. These
state agents investigate worthy cases in order to de
termine who shall receive aid from the Endowment
Fund. This organization is a member of the Child
218 THE YEAR BOOK OF COLLEGE DEBATING
Welfare League of America and cooperates with them
in every possible way.
The care of the widows and orphans of the veterans
is a part of the creation of individual obligation to the
community. During the first six months of 1932,
forty-three thousand dollars was spent in caring for
orphans of veterans. This was done through the Na
tional Organization and there is no way of estimating
how much was spent through the local posts individ
ually.
Then through their Unemployment Commission,
much valuable work has been done in securing and
creating jobs for the unemployed. During the Fall
and Winter of 1930 and the year 1931, over two hun
dred thousand people were employed through the ef
forts of the Legion. Thousands of others were helped
through the individual efforts of the Legionnaires. If
every one of us could apply ourselves with the same
interest and enthusiasm, how much sooner would this
present economic situation grow brighter and easier to
bear?
Now this review of how the Legion has lived up to
its principles as expressed in its constitution may seem
a bit prosaic to my Opponents. The recitation of its
constructive program may seem a bit elementary. But
we feel it is a worthwhile program well-executed by the
Legion, and far more important for discussion purposes
than a squabble over the bonus question.
AMERICAN LEGION SHOULD BE CONDEMNED 219
Second Affirmative, Arthur Northwood, Jr.
Princeton University
LADIES AND GENTLEMEN: The American Legion is
to be condemned for its hypocrisy, its conventions, its
bigoted conservatism, and its militaristic attitude*
These facts my colleague has already clearly shown to
you. I wish to prove that the American Legion de
serves our condemnation because of its stand on the
bonus, and allied issues.
The American soldier was not badly treated in com
parison with the soldiers of other countries or with the
men back home. He received thirty dollars a month
salary. The French infantryman received one dollar
and fifty cents. The American got food, clothing, and
shelter worth two dollars a day, giving him a real wage
of ninety dollars a month, whereas the average worker
here received only eighty-nine dollars a month. The
soldier s physical, mental, and moral needs were taken
care of as well as conditions would permit. So we ask,
"Why is the Legion raising a row about the debt this
country owes the veterans?"
It must be admitted that the pension tradition has
always been strong in this country, but just because an
unholy tradition is strong, it does not mean that we
should not fight back with every ounce of energy that
we have, and that we shouldn t condemn every organ
ization that is trying to have these scandals recur.
In 1917 Congress did everything in its power to take
care of the soldiers, and to prevent a recurrence of the
scandals. It inaugurated a War Risk Insurance Plan,
220 THE YEAR BOOK OF COLLEGE DEBATING
which made it possible for all the soldiers to insure
their lives for ten thousand dollars on a very liberal
basis, so liberal in fact that this plan alone has already
cost the government nine hundred twenty-four million
dollars. Provisions of this act said that the government
would see that adequate care was taken of the families
of veterans. It did so, at a cost so far of two hundred
ninety-eight million dollars.
When the soldiers returned from France they were
each given sixty dollars, and if they had been hurt,
generous care was provided for them in the form of
pensions, hospitals, and vocational training. This
treatment of the soldiers was bountiful enough, and
most of the army thought so at the time. Then, the
American Legion was formed, with avowedly patriotic,
non-political, unselfish aims. But if its attitude ever
was that way, it soon changed, for its members almost
immediately started a policy of grabbing what they
could get. As early as 1920 their speaker, Manuel,
boasted that in one year they had "extracted" from
Congress extracted, the word is theirs, not mine I
use it to show their attitude; in one year they had
extracted from Congress more than had the Civil War
Veterans in thirty years.
I have shown thus far that the American soldier was
treated generously. By a quotation we have seen that
the attitude of the American Legion practically from
the start, was to grab all it could get. To aid in the
grabbing, the Legion built up one of the most powerful
lobbies in existence. In the next few minutes I would
like to show you what this lobby has accomplished in
AMERICAN LEGION SHOULD BE CONDEMNED 221
six different fields; in other words, I will give you the
various accomplishments of the Legion, and the various
counts upon which it is to be condemned.
Soon after its inception, the Legion started a drive
which culminated in 1924 in the passage of the Ad
justed Service Compensation Act, a pension in disguise.
This act was passed over the President s veto, who said
at the time, "We must either stop this bill, or reverse
our theory of patriotism." His words have proved
true, but we did not stop the bill. This bill states that
the government owes each veteran a dollar or a dollar
and a quarter a day more for his services than he has
already received; takes the figure which these calcula
tions give, adds to it interest on the basis of a twenty-
year endowment plan, and gives the veteran a certifi
cate with the final figure on it which certificate the
government promises to redeem in 1945. Its efforts to
get this bill passed to give the veterans an undeserved
pension constitute Count One against the Legion. Its
recent demand that these certificates should be immedi
ately redeemed fortheir face value, giving each veteran
forty-five cents on the dollar, unaccrued interest, is
Count Two.
With the passage of this bill in 1924 as a starter the
Legion has gone from glory unto glory. It has been
so successful in its efforts that it is no longer a question
of what the country will do with the veterans, but what
the veterans will do with the country!
Having seen why the veterans are to be condemned
for their stand in the realm of the pensions themselves,
222 THE YEAR BOOK OF COLLEGE DEBATING
let us turn to another field, the one known as the "medi
cal racket."
The government assumed responsibility for, and took
care of veterans who got sick after the war, when it
could be presumed that the sickness was caused by war
service. But this presumption was stretched so far that
in 1924, Congress threw open the government hospitals
to any veteran who was sick for any cause whatsoever,
except wilful misconduct. The attitude of the Legion
on this bill is somewhat questionable, but at least it did
not oppose its passage. Last year more than half of
the admissions to veterans hospitals were for causes
absolutely unrelated to the war. The veteran is given
his traveling expenses, and two dollars and sixty-five
cents a day while he is in the hospital. For these pro
visions, the American Legion is responsible. To show
how far veterans are taking advantage of the govern
ment for free treatment, it need only be stated that
while our war casualties were one-eighth those of Great
Britain, we have three times as many men under treat
ment as she has. Yet the Legion is clamoring for more
free service, more hospitals! It is now supporting a
bill in Congress for the outlay of twelve million dollars
for these. General Hines, head of the Veterans Bu
reau, has said that this hospitalization service alone
will eventually cost the government one hundred forty
million dollars a year. Do you wonder that this is
called a racket? The Legion s present aim is to have
the clause removed from the statute books which keeps
veterans from our hospitals who are suffering on ac
count of wilful misconduct, I suppose so that a larger
AMERICAN LEGION SHOtJLB BE CONDEMNED 223
percentage of its law-abiding members will be able to
use the hospital facilities.
Now, let us turn to a third field in which the Legion
has been active getting big pensions for Retired
Emergency Officers. The Legion fought for eight years
to have this undemocratic, unjust, bill passed, fought
against the opposition of such organizations as the
Veterans of Foreign Wars and the Private Soldiers
Legion. The bill provided that an Emergency Army
officer, whose service might consist of ten months at a
desk at Washington, should receive seventy-five per
cent of his salary upon retirement, if he could show
thirty per cent disability which it might be presumed
had been caused by the war. Under this law, a certain
man who enlisted thirteen days before the Armistice,
and who went back to civil life in 1922 with no wound,
injury, or disease, is now drawing one hundred eighty-
seven dollars and fifty cents a month as a retirement
fee, at the same time that he receives nine thousand
dollars a year as a counsel for the Veterans Administra
tion. Under this act the government is now paying
eleven million dollars a year.
I have not the time to go into the disability allow
ances, which the Legion put through Congress in 1930,
which permit a man whose sole service to his country
was spending five weeks at government expense in
Camp Dix to draw twelve dollars a month from the
government because he has a cold in his head.
The American Legion has been equally successful in
its efforts to get its members into government jobs.
Whereas, the passing grade in the Civil Service Exam-
224 THE YEAR BOOK OF COLLEGE DEBATING
ination is seventy per cent for the ordinary citizen, for
the veteran it is sixty per cent. And once a veteran has
passed, he must be given preferment over all the others.
There is an instance recorded of where one hundred
and forty-four people were taking examinations for
three posts. Everyone passed, some with marks in the
high nineties, except three veterans who were in the
sixties, a flunking grade for ordinary people. But
veterans are not ordinary people, and so these three
also passed and it was they who received the jobs. The
disastrous effects of this arrangement upon our Civil
Service is apparent. The American Legion claims, and
must be given, the responsibility for this.
We have now finished condemning the Legion on
specific counts. They are: first, pushing through the
Adjusted Service Compensation; second, demanding
full payment now of something that does not come due
till 1945; third, forcing the building of government
hospitals, and trying to have the laws so liberalized
that the government would become the greatest treater
of venereal diseases in the world; fourth, forcing the
government to give to Emergency Officers fees far out
of proportion to their services; fifth, making it possible
for soldiers to secure disability allowances for peace
time injuries; sixth, disrupting our Civil Service Sys
tem. For all of these activities, the Legion is to be
condemned.
Now, I should like to have you investigate with me
the present condition of the Legion. If its members
are poor, if they have been unable to fit themselves
back into civil life, perhaps there is some excuse for
AMERICAN LEGION SHOULD BE CONDEMNED 225
the policy of grab. But are they poor? I will go to
their own magazine, The American Legion Monthly,
for my answer. It records that the salary of the aver
age Legionnaire is three thousand four hundred twelve
dollars a year. We all know that the average citizen
makes less than one thousand dollars. Now if these
are facts, and they are, what is the excuse for the Le
gion s policy of taxing the latter group to aid the
former? There is none. It is bald-faced robbery. It
can t even be excused as a reward for patriotism, for
less than half of the veterans ever fought for their
country. Yet at a time when every penny counts, this
class is taking twenty-five per cent of the government
income, nine hundred twenty-eight million dollars.
Does not the organization which is responsible for this
travesty on justice deserve our condemnation?
Let us compare our policy toward our veterans with
that of other nations. We find that we have been
extremely liberal. France, who had eleven times as
many casualties as we had, is paying benefits to one
hundred and fifty thousand fewer men. Other nations
give pensions only to those who did some real fighting.
The United States gives pensions to those who received
free board in our army camps, and ran no risk, other
than falling off trolley cars and contracting social dis
eases.
Great Britain pays five hundred twenty dollars a
year for disability. The United States pays up to
two thousand four hundred dollars.
Foreign countries had thirty-four million men under
arms, a good many of whom fought for the duration
226 THE YEAR BOOK OF COLLEGE DEBATING
of the war, four and a quarter years. The United
States had five million men mobilized, half of whom
never fought at all, and the other half did not fight
more than six months. Yet the United States paid in
the past year in pensions, fifty million dollars more
than all the other countries put together. In view of
these figures, can anyone doubt that the policy of the
United States has been so liberal to the veterans that
it has absolutely disregarded the rights of the other
citizens of this country?
Now, let us see how these Legion-made laws work
out in practice. Are they fair or just? First, we must
consider the ex-soldier, who, in a fit of drunkenness,
falls down and breaks his leg. He may obtain care at
government expense, and then get a pension of twelve
to forty dollars a month, even though his service con
sisted of three months of fresh air at Camp Upton.
If he has a pain in his stomach, he can go to the
nearest veteran s hospital at government expense, draw
his pension and an extra allowance of two dollars and
sixty-five cents a day while undergoing observation,
and then, discharged as cured, collect from the gov
ernment for his fare home.
A widow who lost her only son and support on the
battlefield gets twenty dollars a month. The man
whose sole service to his country was to catch mumps
at Camp Spartanburg gets twenty-five dollars.
Among those who are receiving anywhere up to one
hundred fifty dollars a month as full retirement, be
cause they have a thirty per cent disability, are pro
fessional athletes, police captains in New York City,
AMERICAN LEGION SHOULD BE CONDEMNED 227
and business men with a regular salary of four thou
sand to ten thousand dollars a year.
A retired Emergency Captain can get one hundred
fifty dollars a month. A dead Emergency Captain s
widow who has to support a child gets forty dollars.
You see, the Legion is so busy grabbing for the un
deserving living, that it has forgotten the deserving
dead.
I have tried to show you that our soldiers were gen
erously treated during the war, that the Legion from
the very first had the policy of grab, that this policy
worked out unfairly in six specific fields, that our coun
try in comparison with other countries has been more
than lavish with its veterans, that the present condi
tion of the veterans does not warrant their receiving
such a share of the national income as they are getting,
and, finally, that the laws which they have enacted are
manifestly unjust.
I close with a word to the future. Under the existing
laws the veterans will soon be costing the country three
billion dollars a year. Yet the Legion is clamoring for
more. Is it not the duty of every citizen to oppose this
organized minority? Should not every honest man
fight it with all his energy and condemn it with all his
force?
Second Negative, Aaron Hardy Ulm
University of Georgia
LADIES AND GENTLEMEN: If you are going to con
demn the American Legion on the grounds offered by
the Gentlemen of the Opposition, you could never deny
228 THE YEAR BOOK OF COLLEGE DEBATING
being violent iconoclasts. They have eloquently de
manded that we condemn the Legion for what any
large organization may always be criticized, and in
doing so, they have unconsciously demanded that
nearly every institution which we possess be likewise
condemned. Now, I do not think that we are going to
remodel the entire system of life in this world, not
tonight at least, and yet to abolish the American Legion
on the charges supported by the Gentlemen of Prince
ton would entail quite similar procedure.
Let us start where every reasonable discussion should
start, at the beginning, and ask the question: Was there
really any need for such an organization as the Ameri
can Legion? Possibly such a need is not recognized by
many of my audience tonight, but it was recognized
and emphasized by the leaders of the army in France
and the administration of that day, headed by no other
than your own Woodrow Wilson. In fact, the original
idea of this association of veterans was proposed and
developed by these men, for they, having history to
convince them, readily realized that returning soldiers
are much less dangerous when they are organized in
patriotic groups. They had the records of Hannibal,
of Caesar, of Cromwell, to urge them in this decision.
But in late wars it has been customary for veterans
to form themselves into some kind of political party,
and until the American Legion was formed, not one of
these groups has much considered the welfare of the
country. Nearly in our own time we have the disgust
ing spectacle of the Grand Army of the Republic,
which fifty years ago was practically running the entire
AMERICAN LEGION SHOULD BE CONDEMNED 229
government. Four men went to the White House
elected by the G.A.R., and more than half of the Na
tional Legislature owed their seats to the support of
these ex-soldiers. Why in Washington in those days,
the citizens spoke of the Capitol as the old soldiers
home. There you have an example of the power which
these men in the Legion might exercise if they were not
restricted by the principles of their organization. You
accuse them of selfishness. Here I offer you the possi
bility of what they might do if they did not have a
purer interest in this nation than the opposition has
described.
Furthermore, the Legion, unlike the G.A.R., has
never purposely tried to make raids on the Treasury
under the claim of patriotism. The entire subject of
the bonus originated in the platforms of campaigning
congressmen. These demagogues encouraged the vet
erans to ask for the payment of their compensation
certificates, and, finally, such men as Congressman
Patman of Texas urged them to march on the Capital.
Thousands of veterans swarmed to Washington when
the House passed the bonus this summer. The Legion
realized that this was a false hope and tried to discour
age these men. What happened when they arrived in
the city at the behest of their congressmen? They
were in the midst of exercising their constitutional
right of assembly and petition, and possibly that of
pursuing happiness when they were driven from the
city by the regular army at the command of President
Hoover. Only when their comrades had been outraged
in this fashion did the Legion enter the picture. Every
230 THE YEAR BOOK OF COLLEGE DEBATING
past convention of the Legion had defeated motion for
payment of the bonus, and only after they were in
censed against the administration by the brutal action
at Washington, did the Legion declare for immediate
payment.
They tell us the Legion is begging and is trying to
force the American people to pay for what has been
described as their patriotism. That is false. The Le
gion is simply asking that the soldiers who were in the
late army be paid for what they lost while defending
this nation. World War veterans have actually re
ceived less than any of the veterans of American wars.
The opposition may quote large figures in dollars, but
no mention is made of the enormous tracts of land
which were given to Revolutionary, Mexican, and Civil
War veterans. Why, I have an ancestor, of whom I
am justly proud, who fought in the war against Eng
land and was given as a reward six hundred acres of
land in the state of Georgia. You might not think so,
but it was worth something.
Everyone in this country during the last war could
ask for and get just about any salary he desired, while
the men in the army were being paid one dollar per
day, of which they actually got one half. Why is it,
then, that these people who have had their share of the
profits, refuse the ex-soldiers a bit of money which
would increase their wages to about two dollars a day
for the time they spent in service?
Thus you are not paying a man because he risked
his life, and if you were it would be rather cheap pay
ment, but you are compensating him for the loss he
AMERICAN LEGION SHOULD BE CONDEMNED 231
sustained while making the world safe for democracy,
and to you smug Americans that must be a valuable
service.
Possibly you may say that the Legion is making an
exorbitant demand when they know that the United
States is nearly bankrupt. How strange it is, then,
that the Reconstruction Finance Corporation can easily
distribute millions of dollars to defunct railroads and
shaky banks all over the country. Speculator Dawes
can get ninety million dollars for his bank a few days
after he resigns as president of the Reconstruction
Finance Corporation, but veteran John Smith can t
get the few hundred dollars which the government ac
tually owes to him for services rendered.
Then there is the argument that the government has
been very generous to the veterans by lending them
half the value of their certificates. To you it might
seem to be a gallant concession, but in practice it was
an excellent business transaction, and on it the govern
ment profited to the extent of twenty million dollars.
And, furthermore, the interest is so arranged, that by
the time the payment of the balance is due, the balance
will hardly exist. That is, if the certificates are per
mitted to run their agreed time the government will
practically escape ever paying them.
Probably the chief objection to the Legion is the
mistaken idea that it is opposed to liberalism. Now,
from my own investigations I can assure you that the
Legion as a unit has no enmity for Socialists or even
Communists as political groups, but it does fight
against, and for this it deserves commendation, the
232 THE YEAR BOOK OF COLLEGE DEBATING
subversive tendencies of these parties. And how could
you condemn them for this action. Why, according to
all election predictions the citizens of this nation are
almost thoroughly opposed to any radical change in the
government. Most of the audience tonight feel exactly
the same way. Now, isn t patriotism the support of
your nation s accepted customs and government?
Consequently, are you going to denounce the Legion
for patriotism?
Gentlemen, you have heard a great deal about how
dangerous this large organization of young men is;
that it is a menace with its great potential strength.
Now this may be good propaganda to frighten tax
payers with, but it is readily discounted by a few facts.
Whatever power has been thrust into the hands of the
Legion by congressmen, greedy for the Legion vote,
has been most conservatively used.
Has this so-called powerful lobby of the Legion in
Washington been pictured to you in its true circum
stances? Lobbies in Washington cover two complete
pages in the phone book; nearly every organization of
any importance at all maintains one there, for as a
matter of fact, it is the only way minority groups can
be represented under our system of legislation. Now,
if the Navy League, The Manufacturers Association,
The American Federation of Labor, and hundreds of
others are to have this privilege, shall we refuse it to
the Legion? Don t condemn the Legion for this, con
demn the nation.
I am afraid that the opposition has made the com
mon mistake of accusing the Legion of many things
AMERICAN LEGION SHOULD BE CONDEMNED 233
which are really faults of veterans in general, not the
American Legion. Of course, it is a convenient thing
for critics to point to the Legion as a target for abuse
of all veteran activities which Eave not met with their
approval. There may be graft in pensions, rehabilita
tion, and bonus payments, but none of this has been
sought for, or encouraged by the Legion. Why the
fact is, Gentlemen, that the Legion maintains in Wash
ington an investigating bureau simply for the purpose
of preventing fraud, and to see to it that none but the
deserving get aid from the government.
I do not propose tonight to white-wash the American
Legion, nor do I think such action is at all neces
sary. The truth is that the Legion is a decent group of
typical American young men, and if you are going to
condemn them, you must at the same time condemn the
entire population of America, which is a large order.
There is only one way to judge the Legion, and that is
by contrasting it with veteran organizations of other
wars. When it is put to that test, I think it shall always
receive a favorable verdict.
You all told them back in 1918 that they were the
flower of the nation. Have they so sunk beneath you
in fourteen years that you are to rise up now in an
holier than thou manner and condemn them?
First Negative Rebuttal, Morton Hodgson, Jr.
University of Georgia
LADIES AND GENTLEMEN: The first speaker for the
Affirmative has probably overcome you with a maze
234 THE YEAR BOOK OF COLLEGE DEBATING
of inconsistencies and dogmatic assertions; his flow of
oratory was superb; but his facts I must point out to
you as being of little value in proving that the American
Legion as an organization should be condemned as
having been more of a bad influence than a good.
He admits that the Legion and its purposes are good
but tries to show you that the real Legion is a sinister,
underhand organization composed of blackguards and
thieves, just after which I spent fifteen minutes of your
valuable time showing how the Legion in every par
ticular has actually, concretely, and fully lived up to
its many fine ain^s. He has thrown his opinions out as
the final word to be had on these rather important
questions of the day, supporting these opinions of his
by facts of wrong-doing in isolated cases, quite possi
ble to be found among so many men.
The Legion is blamed for drunken behavior at con
ventions, for brow-beating gray-headed old ladies
working for promotion of peace, for preventing old
men with different views from speaking publicly, for
advocating wars with anyone and everyone, for making
the United States an almshouse for all its pauper citi
zens, and for being an all-round bad-boy organization.
Most of these charges are self -evidently childish; the
others are easily answered. The Legion gets credit for
much that it is not responsible for as an organization;
for instance, the Legion was blamed for the Bonus
Expeditionary Force march on Washington. As a
matter of fact, there were only a few Legionnaires in
the group. The Legion voted against the bonus in
every national convention until after the outrageous
AMERICAN LEGION SHOULD BE CONDEMNED 235
treatment accorded the few Legionnaires in Washing
ton infuriated most of its members. The Legion gets
the blame for any action of veterans when according
to my Opponent s figures the chances are five to one it
is not a Legionnaire.
In every large organization there is bound to be a
certain low element. This low element with many other
veterans and spongers is responsible for the bad repu
tation given to Legion conventions.
If the Legion is so all powerful, why doesn t it carry
into effect some of its terrible intolerances? In spite
of one feeble protest against Einstein, I notice that he
came into the country and was welcomed most heartily.
Why isn t every school made to use Legion books and
have its children taught about the terrible Reds? I
have attended rather representative grammar schools
and high schools, and I do not recall a single instance
of having been taught anti-socialism.
My Opponent says in one place that not one-third of
the Legionnaires saw action and then again wants to
know how this great body of men inured to bloodshed
and murder are competent to judge of peace? If these
seven hundred thousand men in the Legion did not
fight, I ask you how should they be acquainted with
the horrors of war? And should not the opinions of
this large number of middle-aged men who saw the
other war through, backed by some of our country s
ablest statement and finest brains, be accorded more
attention and respect than those of my Opponent?
The plan of universal conscription which he so
heartily condemned as being advocated by the Legion,
236 THE YEAR BOOK OF COLLEGE DEBATING
in the opinion of quite a number of learned men, would
be the cause for the abolition of all war if adopted by
every nation in the world. As I have tried before to
show you, no one is going to have the slightest desire for
war if he knows that he will be drafted for some hard
service, no matter what his age or station in life. The
forwarding of this plan is in reality one of the finest
services rendered by the Legion. When the evidence
is weighed, for or against the Legion, we find the bal
ance tipping in favor of the Legion. Of course, it is not
perfect in many respects and we are not attempting to
prove it is so, but the Negative does contend that in
view of the fact that all the good works of the Legion
outweigh its bad effects, the Legion should not be con
demned as a bad influence on the United States as a
nation.
First Affirmative Rebuttal, Noel Hemmendinger
Princeton University
LADIES AND GENTLEMEN: The picture of the Ameri
can Legion which the Gentleman of the Negative who
spoke first has painted is a very pleasant one. He has
taken at face value the purposes of the Legion as ex
pressed in the preamble to its constitution, and has
portrayed an organization prepared to maintain law
and order in times of emergencies and to combat sub
versive radicalism; an organization supporting ade
quate national defense and encouraging the idea of
world peace; an organization aiding its members
through rehabilitation and welfare work. The only
AMERICAN LEGION SHOULD BE CONDEMNED 237
trouble with, this organization presented in such a
favorable light is that it does not exist. As I showed
in my previous speech, there is a wide gap between the
ideal and the real American Legion. Some of the
activities, which have been so eloquently described are
performed by the Legion, but they are either social
functions of value only to the Legion, or they are acts
with an ulterior motive contrary to the interests of the
American people.
You will note that the Gentlemen of the Negative
gave few or no specific examples of public services per
formed by the Legion. They spoke in the same agree
able generalities used in the preamble to the Legion
constitution, and they were grievously misled by them.
The Legion is not to be judged by fine-sounding
declarations of purpose; it is to be judged by its acts,
and we have already told you how in reality it has vio
lated both in letter and in spirit its most fundamental
principles. We ask you to consider not what the
American Legion says it is, which is the Legion de
scribed by the Negative, but what the Legion really is.
You cannot then fail to condemn it, for the American
Legion is condemned by its own acts.
Let us consider the examples of public service ad
vanced by the Negative in behalf of the Legion. They
have said that the Legion maintains law and order, and
is a valuable reserve in such disasters as flood and fire.
Perhaps so, and yet the Legion does no more in this
regard than should be expected of all public-spirited
citizens whether affiliated with any organization or not.
It remains to be shown that particular credit should
238 THE YEAR BOOK OF COLLEGE DEBATING
be given the Legion on this score, but there is much on
this score to its discredit. As we have shown, the Le
gion has frequently indulged, as an organization, in
drunken rioting and criminal violence. When the bal
ance sheet is added up, the Legion has done more to
destroy law and order than to maintain it.
The Negative has lauded the Legion for its patriotic
propaganda against radicalism. They gave us no spe
cific examples, whereas we have cited cases, and can
cite many more, in which the Legion has acted with
vicious intolerance and has denied by both violent and
underhand means the right of free speech to some of
our country s finest leaders. The Legion has con
demned itself by elevating its own bigoted views to the
rank of sacred dogma.
The Negative has praised the Legion, in the same
breath, for its policy of war preparedness and for its
work for world peace, entirely ignoring the fact that
such a policy of preparedness as advocated by the
Legion has never, in the history of the world, led to
anything but war. The fact is that these ex-soldiers
are militarists with no breadth of vision, who use the
political strength of their numbers to force on the na
tion a militarism which now costs dearly in money and
may in the future cost dearly in lives. The Legion s
peace activities can be discovered only under a micro
scope; like its other noble purposes they consist only in
words and conflict with the actual deeds of the Legion.
The first speaker of the Negative discussed the work
of the Legion s Rehabilitation Committee with much
naivet6. Veterans who think they have been unjustly
AMERICAN LEGION SHOULD BE CONDEMNED 239
treated in the matter of compensation, he said, come to
this committee, which made recoveries in the past year
to the extent of seven million five hundred thousand
dollars. Precisely what we complain of! The Federal
Government has the proper channels for the adjustment
of veterans claims. The American Legion has set up a
powerful political organization which loots the Ameri
can Treasury of many millions a year, and the Nega
tive say it should be commended for it!
You see, Gentlemen, that the activities of the Le
gion suggested as being praiseworthy are actually either
negligible or reprehensible, while on the other hand the
American Legion, by its violence, its intolerance, its
militarism, and its greed has forfeited the confidence of
all thoughtful Americans,
Second Negative Rebuttal, A. H. Ulm
University of Georgia
LADIES AND GENTLEMEN: If what has been said by
these Princeton speakers is as truthful as it is vehe
ment, I must confess that to defend the American Le
gion would be a foolish way to waste time, I am afraid,
though, that their remarks have been tempered more
with the rashness of crusading reformers than with the
discretion of just investigators. I trust that I shall be
able to convince you of the frequent inaccuracy and
also the not infrequent fallacy of their many pleas for
condemnation of the Legion,
Throughout their argument, despite repeated denial,
the mistake of confusing the actions of veterans in gen-
240 THE YEAR BOOK OF COLLEGE DEBATING
eral with those of the organized American Legion has
composed the large part of their case against the party
on trial. Furthermore, they have been more or less
inclined to attribute the sins of the government to the-
Legion. We must, you know, most carefully distin
guish between the abuses for which the Legion is re
sponsible and the abuses for which the government in
Washington is responsible. Only by law can public
monies be dispensed, and if they are dispensed waste-
fully, which I do not altogether admit in the case of
war veterans, then the responsibility for such misuse
devolves upon the legislators, and through them, upon
their supporters, the people.
Now if these two Gentlemen of Princeton will con
demn the latter for their consummate bigotry and self
ishness, why then I shall be most glad to join them in
concerted denunciation. But when they lay the blame
for this waste on the door-step of the Legion, I am
afraid I shall be forced to seek more honest company.
The second speaker has remarked on the fashion in
which returning soldiers were so generously cared for in
the form of pensions, hospitals, and vocational train
ing. In that one statement is contained the essence of
the entire veteran question. To a man who goes to
war, and doubly so to a man who is forced to go to
war, the citizens of the nation owe a debt which is
enormous, and so what curious reason might they have
for expecting the cost of veterans to be low?
The kind Gentleman who spoke last for Princeton
has concisely indicted the Legion on two bonus counts.
First their success in getting the bill passed, and second
AMERICAN LEGION SHOULD BE CONDEMNED 241
their demand for immediate payment of these certifi
cates. I think it has been economically proved that
the incidental sum, which these notes represent, is
justly owing to all men who were in the army as com
pensation for their actual time. As to the second
charge, I can think of no better way to practically
inflate the currency than by paying these notes im
mediately. If farmers, bankers, and crooked city
corporations are getting their share of the pork-barrel,
why deny this truly deserving group their well-earned
portion?
Constantly the Opposition has drawn our attention
to isolated examples of rather startling conditions
which have developed as a result of the actions of the
Legion. Do these Gentlemen expect all veteran legisla
tion to be infallible? Simply because abuses have
occurred in scattered instances, there exists no justifica
tion for condemning the entire principle or the entire
result. Possibly a few indolent plutocrats are drawing
government pensions, but what reason have we for
saying that that unfortunate result was, the seeking of
the Legion. I say it most positively is notl
The Legion has been denounced tonight on the
amazing charge that it has persistently striven for in
creased hospital facilities and more liberal treatment of
veterans. Of course this is expensive but will anyone
for a moment declare that any expenditure by a gov
ernment in the cause of the health of any of its subjects
is a bad practice? If, as the second speaker has men
tioned, the United States government is to become the
242 THE YEAR BOOK OF COLLEGE DEBATING
"world s greatest treater of venereal diseases," may
we not boast with pride that we have taken a great
forward step in the path of progress? And if the
Legion is responsible for this therapeutic expansion,
does not that indebt us all to this altruistic organiza
tion, which seeks the suppression of one of life s great
est horrors?
Some rather startling facts have been thrown at you
concerning the great wealth of the average Legionnaire.
I happened to be in Washington during the disastrous
bonus conflict last summer, and what I saw of veterans
would never lead me to the conclusions of the Opposi
tion. I saw men living in hovels not fit for my dog,
and eating food which I am definitely certain I would
never risk on myself, let along my dog.
Gentlemen, thank you for the kind reception you
have afforded myself and my colleague tonight, and in
closing, let me ask you to accept these facts openly and
calmly, and not to permit yourselves to be carried
away by the anger and impetuosity which seems to be
in the air tonight.
Second Affirmative Rebuttal, Arthur Northwood, Jr.
Princeton University
LADIES AND GENTLEMEN: The Negative has praised
the Legion because it is, they say, trying to build up an
adequate national defense, and to prepare the country
for war. We do not necessarily condemn them for
this. What we do condemn them for is their blocking
of every constructive effort for world peace. They do
AMERICAN LEGION SHOULD BE CONDEMNED 243
not even give those whose views differ from their own a
chance to speak on the subject.
The Negative has said that the government has
treated the veterans in a niggardly fashion. Allow me
to repeat to you some figures that I gave in my original
speech. All the other countries engaged in the war
had thirty-four million men fighting, some of them for
the whole time, four and a quarter years. The United
States had only five million men under arms, half of
whom never fought at all, and the other half for not
more than six months. Yet the United States is paying
in pensions fifty million dollars more than all the other
countries put together. Is not our policy more than
generous?
I feel that our Opponents are doing a grave injustice
to the memory of Woodrow Wilson when they say that
he was one who oppressed liberalism. Wilson delighted
to be called an enlightened liberal. Particularly is their
assertion untrue in the light of the fact that John
Haynes Holmes, one of those whom the Legion opposes,
spoke in the Princeton Chapel last Sunday.
Our Opponents have said that the government was
doing nothing for the soldiers in setting up the War
Risk Insurance Plan, for insurance is a regular busi
ness. That s just the point. This insurance was not;
its terms were so liberal that the government has al
ready lost nine hundred twenty-four million dollars
in it.
Our Opponents have sought to excuse the Legion on
the grounds that abuses have occurred before, and that
they are occurring now in other fields. I fail to see
244 THE YEAR BOOK OF COLLEGE DEBATING
their reasoning here. Merely because an evil has been,
and is, prevalent, there exists no reason why we should
condone it. On the contrary, the more widespread an
abuse is, the more is it the duty of every citizen to rise
up and condemn that abuse. But our Opponents have
gone farther. Admitting that the pension scandals
connected with the history of the G.A.R. have been
terrible, they have asserted that the Legion is lily-white
in comparison. I doubt that, for the G.A.R. , in its
whole history, succeeded in getting only seven billion
dollars, while the American Legion has already filched
five billions from the government. Is there any course
left to us but to condemn this organization?
One of our Opponents asserted that what I said ap
plied to veterans in general, rather than to the Legion.
I resent that, for most of my remarks were directed
explicitly against the Legion. With your permission,
I shall read a summary of my speech to prove this. I
said that we should condemn the American Legion be
cause it had pushed through the Adjusted Service
Compensation Act; because it demands the full pay
ment now of something that does not fall due until
1945; because it has forced the building of govern
ment hospitals, and has tried to have the laws so modi
fied that the United States shall become the greatest
treater of venereal diseases in the world; because it is
responsible for the government giving Emergency Offi
cers retirement fees far out of proportion to their serv
ices; because it has secured for veterans disability
allowances for peace-time injuries; and finally, because
it has disrupted our Civil Service system. For all of
AMERICAN LEGION SHOULD BE CONDEMNED 245
these things the American Legion is responsible, and it
has very often secured these things against the opposi
tion of other veterans. I am convinced that it is the
American Legion that is to be condemned.
Furthermore, if there were any doubt on the matter,
the Legion lobby would soon dispel it, for it claims
credit for all of this legislation. It is proud of what it
has done. It boasts that it is the most powerful lobby
in Washington. And I don t see how it can be excused
merely because other lobbies exist. Our Opponent,
when he mentioned the Anti-Saloon League Lobby,
condemned it. Let him in like manner condemn the
Legion Lobby. And then let him condemn the Legion,
which is responsible for this lobby.
Our Opponents have said that after all, the Legion
is not very important in our national life. President
Hooker thought it was so important that he made a
special trip to Detroit just to speak to it.
It has been asserted that veterans received nothing
in this recent loan on their Adjusted Service Certifi
cates. Well, if they did not deserve it in the first place,
I do not see that they have any complaint coming.
Ladies and Gentlemen, we have shown the American
Legion to be both chauvinistic and unpatriotic, we have
shown it to be bigoted and selfish. I think that you
will agree with us that it is to be condemned.
246 THE YEAR BOOK OF COLLEGE DEBATING
BIBLIOGRAPHY: AMERICAN, LEGION SHOULD BE
CONDEMNED
BOOKS
Minton, R. Brulingame. Peace Veterans. 1932.
Moody, H. G.Meet the King. Winwick Co., 240 W. 40th St.,
N. Y. C. 1931.
White, W. C. and Walters, W. W.The Whole Story of the Bonus
Army. Day. 1933.
Hapgood, Norman. Professional Patriots. Boni and Liveright. 1927.
American Legion National Headquarters, Indianapolis, Indiana. Will
furnish the following material: The American Legion, Its Ideals,
Accomplishments, and Purposes. May 1931. Same. October
1932. The National Constitution and By-Laws of the American
Legion. Proceedings of Conventions. Pamphlets on Educational
and Welfare Activities. Speakers Information Service. A Plan
to Perpetuate Peace. Americanism Handbook,
MAGAZINES AND PERIODICALS
American City. 25:505, December 1921. American Legion Serves
the Community. 32:160-61, February 1925. Civic Activities of
American Legion Posts.
American Legion Monthly. July 1927. Rupert Hughes. Letter to
the American Legion Monthly. 19:414, April 1930. Free Speech
in Khaki.
American Mercury. 13:169, February 1928. O. L. Warr. The
Heroes Union.
Christian Century. 47:1418, November 19, 1930. Hankins. Ameri
can Legion Conventions. 48:1234-60, October 7, 1931. Hutchin-
son. Drunk with Sight of Power. 49:1159-61, September 28,
1932. Legion Raid. 49:1212, October 5, 1932. H. N. Dukes.
Why Blame the Legion? 50:380, March 22, 1933. Final Test
for the Legion.
CoUier s Weekly. 89:10-11, June 11, 1932. Davenport. But the
Dead Don t Vote.
Congressional Digest. 11:266, November 1932. Stevens. Legislative
Aims of the American Legion.
Forum. 85:257-65. May 1931. Duffield. American Legion in Poli
tics, 86:29-32, July 1931. H. Fish. In Defense of the Legion.
AMERICAN LEGION SHOULD BE CONDEMNED 247
Independent. November 12, 1927. V. S. Yarros. Making Patriotism
Hum in Darkest Chicago.
Literary Digest. 95:5-7, October 1, 1927. Legion s Conscription
Program.
Nation. 113:703-4, December 14, 1921. H. R. Warren. American
Legion: A Defense. 124:414, April 20, 1927. Free Speech and
the Legion. 131:469-71, October 29, 1930. Gordon. Legion
Takes Boston. 132:170, February 8, 1931. Bonus Raid. 136:
287-9, March 15, 1932, Angell. American Legion Versus
America.
National Congress of Social Workers. 1926:151-4. J. W. Garby.
American Legion s Program for Child Welfare.
Nature. 12:374, December 1928. Legion Shrine: Wild Game Refuge
m Wisconsin.
New Outlook. 161:7, October 1932. A. Roosevelt. Enemy Within
the Gate.
New Republic. 66:30, February 25, 1931. Mercenaries of Patriotism.
68:221-2, October 14, 1931. Lesson of the Legion.
Outlook (See also New Outlook). 138:364-5, November 5, 1924.
J. A. Drain. American Legion in Years to Come. 144:401-2,
November 24, 1926. H. P. Savage. American Legion s Program
for 1926-7. 157:323, March 4, 1931. Bonus Record.
Playground. 221:22-3. April 1928. Cooperating with the American
Legion.
Scribner s Magazine. 90:174-81, August 1931. Duffield. Legion
Prepares for War.
Survey. 62:254-5, May 15, 1929. R. D. Moot. American Legion as
City Planner.
World To-morrow. 15:292, September 28, 1932. Give Us This Day
Our Bonus.
GOVERNMENT CONTROL OF THE
BANKING SYSTEM
A Mid-West Conference Debate
GOVERNMENT CONTROL OF THE
BANKING SYSTEM
BELOIT COLLEGE AFFIRMATIVE VS.
MARQUETTE UNIVERSITY NEGATIVE
The Mid-West Conference Colleges chose Federal Regulation of
Banks for their subject during the 1932-33 debating season, and thus
without prophecy and foreknowledge, gave their member colleges a
most unusual experience debating a public question which came to
a boiling point during the debate season with the National Bank
Holiday.
The present debate was held just a few days before President
Roosevelt took things in hand and declared the National Bank
Holiday. The question was stated, Resolved: That all banking
functions should be regulated by the Federal Government with de
posits guaranteed.
The present debate was not a decision contest but partakes of that
style as both colleges represented engaged in numerous decision as
well as non-decision debates on this subject during the course of the
season. This discussion is of unusual value because of the current and
continued interest in the subject since nothing has been done up to
the time of going to press to settle this giant problem, and the Senate
hearings in the Morgan Bank Inquiry are still echoing about us.
The speeches were collected and submitted to this Volume by
Professor G, F, Rassweiler of Beloit College, Director of Debate.
First Affirmative, John S. Nash
Beloit College
LADIES AND GENTLEMEN: Before proceeding with
the Affirmative case I should like to clarify the ques
tion. First, we waive the constitutionality of the ques-
251
252 THE YEAR BOOK OF COLLEGE DEBATING
tion. Second, by the term "all banking functions" we
mean all those functions necessary for the operation of
a commercial or savings bank. Third, by the word
"regulate" we take our definition from the Standard
Dictionary which defines it as follows, "to dispose,
order, or govern by rule or system." Fourth, by the
"Federal Government" we mean any authorized agent
of the government such as the Federal Reserve Board.
Fiftk, by "deposits guaranteed" we mean a complete
reimbursement to the depositor for losses due to bank
failures.
This question is of supreme importance at this time
for the newspapers are full of accounts of bank fail
ures, which we individually feel either directly or in
directly. President Hoover, in his message to Congress
declared that banking reform is imperative, and Henry
Ford says that it is so necessary that he who shows us
the way will make his name immortal.
Let me summarize the present situation with a few
pertinent statistics. In the past twelve years ten thou
sand four hundred eighty-four banks have failed with
a loss to depositors of nearly five billion dollars. There
were nearly six times as many state banks failed as
national banks, and more than sixty-five per cent of the
closed banks were capitalized at less than twenty-five
thousand dollars. Eighty per cent of the failures were
in towns of a population of five thousand or less. This
clearly indicates that the weakness of the system is in
the small state banks. Further statistics show that
from January 30, to September 30, 1932, there were
seven hundred seventy-eight failures in the Federal
CONTROL OF THE BANKING SYSTEM 253
Reserve System. This amounted to ten and three
tenths per cent of the number of banks in the system
with a loss of four and two tenths per cent of the de
posits that were in the Federal Reserve Banks. In
contrast with this we find that three thousand eight
hundred ninety-eight non-member banks have failed
during the same period. This is twenty-two and two
tenths per cent of all the non-member banks, with a
loss of deposits of six and eight tenths per cent. In
other words the non-member banks are nearly twice as
bad as the Federal Reserve Banks in both of these
respects.
We find that currency has been hoarded until it was
estimated in excess of one and one-half billions of dol
lars according to figures of July 1932. And in case
any of you think that the depression is the sole cause
of bank failures, let me remind you that four hundred
ninety-one banks failed in the year 1928.
It is interesting to note that during the same period
of twelve years that there was only one failure in
Canada, none in England, and none in France. This
proves conclusively that it is not impossible to correct
our banking system.
Many more such appalling figures could be given,
but in general we have found the following "public
enemies" in our system.
1. The lack of a central organization which can
force through a definite reconstruction program.
2. Dangerous competition between member and non-
member banks, which impairs the operation of the Fed
eral Reserve System.
254 THE YEAR BOOK OF COLLEGE DEBATING
3. Many under-capitalized and poorly directed
country banks which are contributing many bank fail
ures.
4. Our Dollar is unstable not in mint value, but in
buying power. Economists tell us that this is due to
insufficient control of credit.
5. The inability to expand credit at times when it is
most needed.
6. The lack of ability to liquidate quickly in times of
a crisis. This is due to a lack of rigid control of bank
investments.
7. The loss of millions of dollars of depositors
money at a time when it is most needed, and the conse
quent limitation of buying power.
8. The inability to keep the faith and confidence of
the public.
With these weaknesses in mind we, of the Affirma
tive, have formulated a plan which we believe will do
much in the direction of the curtailment of these
pathological conditions.
We further contend that the Negative must show
that there will be a worse situation under our system
than at present, or else they must develop a new plan
which they can prove is superior to ours. It is the
duty of the Negative to do more than just wrangle
about detailed points of our plan. We ask them what
they intend to do.
We have based our argument on this logical syl
logism. "It is the duty of the government to protect
the property and lives of its citizens, and therefore to
protect their deposits. Our plan will protect the de~
CONTROL OF THE BANKING SYSTEM 255
positors. Therefore, it is the duty of the government
to adopt our plan." It is, therefore, only necessary for
us to show that our plan will protect the depositors,
which we shall do during the course of the debate this
evening.
Our plan, in general, is to extend the Federal Reserve
System downward and outward so as to include all
banks, and to so enhance the regulation of these banks
that failure will be reduced to a minimum. Further we
would guarantee all deposits which should become tied
up through failures. Note that this plan is very simi
lar to the Glass-Steagall bill now before Congress,
except that we would make it compulsory for all banks
to enter the system.
Our plan more specifically is composed of four parts.
First, we would legislate to force all banks into the
Federal Reserve System. This was the original idea
of Senator Glass and other originators of the Act.
Now our Federal Reserve System is merely a com
promise plan. This factor in our plan would have very
definite advantages.
It would give us a central organization which could
put through a definite reconstruction program. This
corrects "public enemy" number one.
It would do away with the dangerous competition
between member and non-member banks, of which
Eugene Meyer, a member of the Federal Reserve
Board, says, "It should be recognized that effective
supervision of banking in this country has been seri
ously hampered by the competition between member
and non-member banks, and that the establishment of
256 THE YEAR BOOK OF COLLEGE DEBATING
a unified system of banking under national supervision
is essential to fundamental banking reform." Thus we
see that "public enemy 5 number two has been con
quered.
We can in no wise consider a plan which reduces the
number of banking systems in this country from forty-
nine to one, dangerous or radical. It is a plan which
is recommended by the Federal Reserve Board, count
less economists, and many bankers including Thomas
Lamont, Number One Morgan Partner, who says, "No
thorough-going banking reform can be brought about
until two vital changes have been accomplished. First,
we must have all commercial banks under the Federal
Reserve System. Second, we must establish sensible
provisions for regional branch banking."
This brings me to the second step in our plan. We
would bring the smaller banks under the wing of the
larger and more ably-directed banks by means of
branch banking. Mr. Lamont goes on to say that it is
his opinion that "almost all of the bank failures in
Chicago could have been averted with branch bank
ing."
This eliminates the small banking unit with its in
sufficient capital ("public enemy" number three). We
have already noted that sixty-five per cent of the bank
failures in the last twelve years were in this class.
With small banks as " they now are, competition is
so strong that the profits for all of them are minimized
and as a consequence they are encouraged to make
unsafe investments in the hope of greater profits. An
other weakness that will be eliminated by our system
CONTROL OF THE BANKING SYSTEM 257
is that the smaller banks will be able to have a greater
distribution to their investment, and they can take
long-time paper without the fear of not being able to
liquidate. As you all know this is the basis of the
Canadian system which has proved so successful. Og-
den Mills, the Secretary of the Treasury, and also the
Comptroller of the Currency are firmly in favor of
branch banking.
Thirdly, after we have all the banks in the system,
and we have eliminated the small banking unit by
bringing it under the wing of the larger banks, we
would set up a stricter system of control of the mem
ber banks. We would force the banks to keep a cer
tain per cent of their investments in that type of highly
liquid paper which the Central Banks may rediscount,
As our system now operates the banks have this privi
lege, but few of them keep in a position where they can
take advantage of this privilege. Besides forcing the
banks to keep a definite per cent of this highly liquid
paper we would have closer supervision of all bank
investments. This stricter supervision will keep the
bank in a better condition. They will be able to liqui
date when necessary, expand credit when necessary,
and this will in turn be a material aid in keeping our
dollar more stabilized. Thus we have conquered "pub
lic enemies" numbers four, five, and six.
This factor of our plan will insure safety in the case
of a run on the bank. It will increase the confidence of
the public in the banking system, and it will check un
wise investments made to gain a larger rate of interest.
And finally, after we have all the banks under the
258 THE YEAR BOOK OF COLLEGE DEBATING
system, eliminated the small banking unit, and added
stricter supervision to the member banks, we would
add as an additional factor the guaranteeing of de
posits. We believe that this is essential to the regaining
of public confidence in our banks.
To do this we would set up a fund from the fran
chise taxes and the profit of the system. Don t you
think it better to pay for losses in advance by means
of this fund than to have the same cost borne by de
positors at a time when we can little afford to have
their buying power taken away from them?
Don t you think we have a plan here that is at least
better than the lack of plan which we now have? Don t
you think it will strengthen our banking system and
regain the confidence of the public? This plan is not
new. It is one which has the favorable opinion of
many of the nation s leaders in this field. In conclu
sion let me quote from the "Sooner or Later" column
of The Business Weekly which says, "Congress should
immediately amend the Reserve Act to compel all
banks of deposit to become members of the Federal
Reserve System, and set up in the system a deposit
fund for the protection of the depositors. This is a
step without which confidence in our banking system
cannot be completely restored and continuously main
tained."
First Negative, Donald W. Gleascm
Marquette University
LADIES AND GENTLEMEN: I am very sincere when I
state at the outset that Marquette University is pleased
CONTROL OF THE BANKING SYSTEM 259
to have the opportunity to present its version of this
important question of banking, a subject which is so
intimately related with the lives of all people. The
occasion tonight is even more pleasant for us, because
it is Beloit College that furnishes the opposition.
While, therefore, we engage in this controversy this
evening with a most friendly attitude toward our Op
ponents, the first speaker for the Affirmative has made
so many unusual remarks, that we are forced to dis
agree with our worthy Opponents- from the very begin
ning. He declared somewhat strikingly "that the
Negative tonight must uphold the present mess in our
banking system, or they must propose a counter plan,
and we would like to know what the Negative intends
to do." When Mr. Nash was thus mistaking the true
function of a Negative team, I was reminded of a cer
tain prisoner who had committed a very serious offense
and who was sentenced to be hanged. A few days
before the hanging was to take place, the prisoner
approached the warden and said: "Warden, I would
like to have a little exercise." The warden somewhat
amazed at the request answered: "Well, my good man,
just what kind of exercise would you like to have?"
And said the prisoner in reply, "I d like to skip the
rope." Apparently, the Affirmative tonight would like
very much to skip the burden of proving the proposi
tion by calling on the Negative to prove a counter
proposition.
Ladies and Gentlemen, we intend to do but one
thing tonight, namely, to show that the Affirmative pro
posal cannot be substantiated upon the fundamental
260 THE YEAR BOOK OF COLLEGE DEBATING
issues which it involves, and that it is such an imprac
ticable theory that it is dangerous and unwise seriously
to consider its adoption. More than this the Negative
need not do in any debate. We want it to be distinctly
understood that the Affirmative has the burden of
proof, and we do not intend to permit them to skip that
burden by creating in any manner the impression that
the Negative is under an obligation to present a solu
tion for the ills of our banking system. However, I
suppose the worthy opposition will now harp long and
loud throughout this debate that our answer to their
assertion of the Negative duty was very weak; they
may even attempt to capitalize on the answer by sug
gesting to you that the Negative cannot produce a
better plan. To forestall such an attitude it has just
occurred to me that our closing speaker, Mr. Hansen,
is a man of many moods and inclined to be very chari
table, and he may even present several plans that would
be better than that of the Affirmative, but I repeat that
should he do so, it will be the result of his disposition
and will not in any sense be done with a feeling of obli
gation.
Not only has Beloit s opening speaker misconstrued
the duty of the Negative team in this debate, but his
analysis of the question indicates that the Affirmative
has misinterpreted their own burden so badly that up
to this point they have not debated the question. The
Affirmative case begins with the argument that the
present banking system is defective; they point with
alarm to the great number of banks that have failed in
recent years; next, they listed about eight causes for
CONTROL OF THE BANKING SYSTEM 261
the failures, and then they present a remedy. I could
not write down all of the eight causes as Mr. Nash
recited them, but here are a few of them: First, a lack
of central organization in our banking system Second,
the competition between member and non-member
banks of the Federal Reserve System Third, too
many rural, small banks, and so on. What was the
remedy proposed for these alleged defects? First, the
placing of all banks under the Federal Reserve System.
Second, the establishment of regional banks. Third,
the further development of branch banking. What do
you notice, Ladies and Gentlemen, about each one of
these remedies? You should note this that every
single one of these proposed remedies is a remedy for
some part of the organization of our present banking
structure, and that not one of them has anything at all
to do with the functions of a bank. In that very essen
tial regard, the Affirmative case is entirely beside the
point. Our question tonight deals with the regulation
of the functions of a bank, not with organization of
banks. The Affirmative is supposed to argue a par
ticular method of regulating banking functions and
what are the functions? The chief function of a bank
is to receive money from depositors, retaining their
money with interest. But the Affirmative case does not
touch that function at all; instead, they tell you too
many of our banks were under-capitalized but is it a
function of a bank to be capitalized at any amount?
That is a defect in organization of banks. Their whole
plan, to place banks in the Federal Reserve System, to
establish regional banks, to promote branch banking,
262 THE YEAR BOOK OF COLLEGE DEBATING
in every detail the plan is a remedy for organization
of banks, a plan that does nothing in the way of regu
lating banking functions, and, therefore, the Affirmative
is in the embarrassing position of having debated before
their home audience on the wrong question. We chal
lenge the Affirmative to show that banking functions
are not now properly regulated, and to explain how
they propose to regulate those functions so as to come
within the bounds of our proposition.
Another general criticism of the Affirmative case thus
far, is that the analysis of the question as given by Mr.
Nash was not complete. Let us, therefore, examine
the wording of the question to determine in more detail
the exact issues of this controversy and to show more
clearly what the Affirmative must prove tonight in
order to establish its case.
The proposition is worded as follows, "Resolved:
that the Federal Government should regulate all bank
ing functions, and guarantee deposits. 37 You will note,
therefore that there are three distinct parts to the ques
tion: first, Federal Regulation; second, "of all bank
ing functions"; and third, guarantee of deposits.
Let us now consider the first issue, "Should we have
Federal Regulation." That issue really means should
we have Federal Regulation of state banks, for our
national banks are already regulated by the Federal
government It is therefore the burden of the Affirma
tive to prove that state regulation is directly responsi
ble for the defects; that there is a direct causal
connection between the defects and the system of state
regulation; for without such proof, they cannot arrive
CONTROL OF THE BANKING SYSTEM 263
at the conclusion that state regulation should be abol
ished; and it must then be shown that Federal Regula
tion of state banks will not be possessed of the same
evils.
The Affirmative condemns the present system chiefly
because a great number of state banks have failed.
We are sensible enough on the Negative to admit that
banks have failed, but what the Affirmative must show
is that those banks failed because they were under
state regulation, and until that be shown, any further
mention of bank failures by the Affirmative is imma
terial.
How about these failures? What did cause them?
Do you think for one moment that it was the state that
caused all these banks to fail? According to the first
speaker s very own argument, some of our banks failed
because they were unable to keep the faith of the pub
lic, but is that the fault of the state? No system of
regulation, no division of government could prevent
the distrust of banks that has grown among the masses
during the past few years, for some people were fright
ened by newspaper accounts, some depositors were vic
tims of the pessimism of their friends and neighbors,
and as a result a certain fear and loss of confidence was
created. Rumors that certain banks were going to
fail have recently been widely circulated, creating
more fear, and the result would have a telling effect on
the resources of any bank. The whole spirit of un
easiness often produced a run on various banks, as
was experienced in Green Bay, Milwaukee, and Chi
cago within the last year. The point is, that many
264 THE YEAR BOOK OF COLLEGE DEBATING
banks were forced to close their doors, not because of
state regulation, but because of idle rumor, fear, and
loss of confidence. State regulation did not cause that
feeling of distrust. It was caused in great part by the
dishonesty of a few bankers and their unlawful prac
tices. Two large banks were closed within the last
year, and in each case the status of the bank was
jeopardized by the unlawful practices of the president
and cashier respectively. Both men, prominent as
bankers for years, were recently convicted in Milwau
kee and are now at Leavenworth. In each city, the
depositors suffered and lost their confidence as a result.
In the city of Milwaukee, the president of another bank
was recently sentenced to Waupun for unlawful bank
ing practices; the trial of another banker in the same
city is now pending, and depositors there also suffered
and lost confidence. No system of regulation is re
sponsible for the weakness of the human flesh and yet
the Affirmative condemns state regulation because
banks have failed, including banks that failed through
weaknesses in the human element.
An even greater number of our banks failed because
of the severe adverse economic conditions. There has
been a world-wide depression for forty-one months and
our banks have not been immune to its effects. A bank
is not a large stately edifice, located on a busy street
corner, whose principal function it is to have uniformed
attendants to direct customers to the proper window.
In its broad aspects, a bank is the mechanism for the
distribution of the products of the world, and its proper
functioning in that capacity is just as essential to our
CONTROL OF THE BANKING SYSTEM 265
economic well-being as the physical transportation of
goods. As soon as there is a break-down in our money-
credit system, there is inevitably an interference with
the normal production and distribution of goods. It
is a maxim of banking that the strength of any bank
depends on the value of its securities. Our banks were
caught in the tide of the depression just as you and I
were caught; the value of their securities was lowered,
beyond all reasonable expectation. Their financial sta
bility was shattered just as the financial status of the
individual was broken. Naturally, some of the banks
could not withstand the intensity and duration of the
economic upheaval and were consequently forced to
close their doors. State regulation cannot be blamed
for the depression; no agency of government could
have reasonably been expected to foresee this particular
disorder; yet the Affirmative propose to abolish state
regulation because banks have failed, including those
which were caused by the disrupting of our economic
structure.
I have purposely refrained from plunging into sta
tistics on the causes of bank failures, because statistics
are often boring and unreliable, and have wished to
base my argument upon matter that has been part of
the general thought and observation of every member
of the audience. But I do have some authentic statis
tical evidence, which I desire to present because it
contains such a strong challenge to the Affirmative
case. The record of annual bank failures shows that
from January 1, 1929 until August 31, 1932, eight
hundred thirty-nine national banks failed. In other
266 THE YEAR BOOK OF COLLEGE DEBATING
words, for a period of forty-four months, twenty na
tional banks failed every month; twenty banks failed
every month under Federal regulation, yet the Affirma
tive proposes to cure our banking ills by placing all
banks under Federal regulation. Now the challenge is
this the Affirmative must do one of three things;
First, admit that their system is defective, in that banks
also failed under Federal regulation; or second, admit
that my argument is correct, namely, that it is not the
system of regulation that causes banks to fail, but cer
tain extraneous matters such as dishonesty in bankers,
loss of confidence by depositors, the economic depres
sion, and so on. Such an admission would be a declara
tion that they cannot prove the first issue. Or third,
they must offer some other explanation for these na
tional bank failures. We demand that the Affirmative
answer this challenge to the record of Federal regula
tion and until it is answered it stands as prima facie
evidence that banks fail under both systems of regula
tion, which admits that state regulation is not to blame,
and which means that the Affirmative cannot establish
the first of the three basic issues in this discussion.
It has been my intention, Ladies and Gentlemen, to
establish that the Negative does not have the burden of
proving a counter plan; that the Affirmative has mis
construed the question in proposing remedies for the
organization of banks rather than for the functions of
banking; that the proposition involves three basic is
sues, and that as to the first, "should we have Federal
regulation ?", the Affirmative proposal cannot be sup-
CONTROL OF THE BANKING SYSTEM 267
ported since it cannot be shown that state regulation is
directly responsible for the evils of the system.
Second Affirmative, John Martin
Beloit College
LADIES AND GENTLEMEN: The Negative has said
among other things that we must show that state regu
lation has been def ective, and I wish to do this before I
go any further. In 1929 there were in the United
States 7530 national banks. From January 1930 to
September 1932 there were 778 Federal Reserve banks
that failed. About ten and three tenths per cent of the
total number of national banks. At the same time
there were 17,580 non-national banks or state banks
of which 3898 failed or twenty-two and two tenths per
cent which was more than twice the proportion of those
that failed in the National system. At the same time
there was deposited in the national banks $19,500,000,-
000.00. During this same period in this Federal Re
serve system there were tied up deposits to the amount
of $783,800,000.00 or about four and two tenths per
cent of the total of deposits, while in the state banks
at the same time there were $34,500,000,000.00 of
which amount $2,356,248,000.00 was tied up or about
six and eight tenths per cent which is more than half
again as much in proportion tied up in the state banks
as in the national banks. So this distinctly shows that
state has been defective in comparison to Federal regu
lation.
The Negative speaker also went on to say that since
268 THE YEAR BOOK OF COLLEGE DEBATING
some state banks are well regulated there is no point
in bringing them all under the system. In other words
he wishes us to go right on letting these banks fail,
causing suffering and hardship to all persons concerned,
until they all have failed, because until that time there
will be some of them that are well regulated and have
not failed. Now I do not, and I am sure that you do
not believe that this is good sense for would it not be
better to put this group of state regulated banks into
the National system which we have just shown to be
better, rather than let a great many go on failing just
because a few are better regulated? This is especially
true since there will be no hardship imposed on the
better regulated banks because they would have high
standards anyway.
As has been pointed out by the first Affirmative
speaker, one of the basic faults in our present economic
system is the instability of the American dollar. We
thought for a while the technocrats had solved this
problem by the simple method of doing away with the
dollar. But it seems the plan of the technocrats has
to be put into working order and we won t be able to
live under it for a time at least. In the meantime I
believe that we had better try to get along with the
dollar.
I say, "get along with the dollar," but I do not mean
to go ambling along letting this most important measure
of value fluctuate up and down in the manner it does
at the present time* We are very careful to keep all
other forms of measurements correct we put the
standard yardstick in a glass case, and throw a man in
CONTROL OF THE BANKING SYSTEM 269
jail for selling wheat from a different sized basket, and
so on. Yet our dollar which measures almost all kinds
of commodities is allowed to fluctuate over two hun-..
dred per cent in just a few years. Let us take two
examples to show just what I mean by changing the
dollar.
Suppose that you had purchased a piece of land in
1918, and were going to pay for this land with wheat
using wheat as an average commodity. The first year
you paid four hundred bushels of wheat; the second
the same, and so on. But, although you were paying
four hundred bushels a year, the bushel basket was
being made larger and larger, until in 1929 it was just
two and one-half times as large as it had been when
you started making your payments. In other words
you were paying one thousand bushels according to the
1918 standard under which you made the contract.
The standard of value had expanded two hundred and
fifty per cent. Unbelievable. Yet this is just what
happened to the most important standard of value, the
dollar, during this period.
Or to take the case of a man who was not a debtor,
but a thrifty man with one hundred dollars who in
1896 decided to follow the approved method of saving
and put his money in a savings bank at three and one-
half per cent interest. In 1918 this thrifty individual
withdrew his money and found to his great delight that
it had grown to three hundred dollars. That was fine
until he went to spend the money and then he found
that over an average list of commodities his three hun
dred dollars would only buy what seventy-five dollars
270 THE YEAR BOOK OF COLLEGE DEBATING
would have bought when he deposited the money. He
had lost money by putting it in the bank and the bank
hadn t closed. Our standard bushel basket for all
commodities had changed size.
These examples show how the buying power of the
dollar varies, but to impress upon you the seriousness
of the situation let me quote from the booklet Honest
Money by the American Farm Bureau Federation:
"The effect of the deflation since 1929 has been the in
crease of public and private debts in this country (in terms
of commodities) by eighty billion dollars. On the present
price level, when we have paid off our debts on the basis of
what those debts were worth in terms of commodities in
1926, we shall still have eighty billions more to pay. Even
the most avaricious loan shark never dreamed of legalized
robbery in such terms as that."
For all practical purposes this is the same thing as
the wildcat currency which we had at one period in
our history but which was controlled for contractual
payments by regulating the amount issued. But it is
just as important that we stabilize the dollar in terms
of those commodities which we can use. Economists
are declaring this with increasing emphasis. For in
stance the Special Banking Commission of the Cham
ber of Commerce of the United States says:
"Our objective should be first of all to raise prices a long
way above the present level and then to maintain them at the
level thus reached with as much stability as can be managed.
We recommend that this objective be accepted as the guid
ing aim of the monetary policy of this country."
CONTROL OF THE BANKING SYSTEM 271
And from another country, England, we hear that
the Industrial report of the British Liberal party con
tains this statement:
"A steady healthy development of trade requires, as an
indispensable condition, the utmost stability in the purchas
ing power of money."
As we have seen the currency of this country has
been stabilized, but when we realize that money in this
form takes care of only about ten per cent of our busi
ness transactions we realize that this control has very
little effect. The money that takes care of the other
ninety per cent of the business is what we are con
cerned with this is credit money: money created when
a person deposits cash in a bank, and the bank makes a
loan to another person by giving him a checking ac
count, using the cash just as a reserve. This person
pays another person by check and that check is de
posited in another bank where it serves as the basis of
more credit. This expansion of credit goes on until it
is theoretically possible to expand it about ten times the
volume of actual cash.
Now the banks control this credit expansion and they
can make money dear or cheap according to the amount
they contract or expand credit. This is generally a
result of raising or lowering the discount rates. It is
now generally recognized that the boom market was
partly caused by the low discount rate which allowed
speculation to get too big a start and then nothing
could check it.
It then follows that the banking system could largely
272 THE YEAR BOOK OF COLLEGE DEBATING
stabilize our monetary system by regulating credit on a
scientific basis. That is all banks acting as a unity
could do this no individual bank can get away from
the profit motive which in many cases does not run
parallel to the best interests of the country. This was
recognized by those who drafted our Federal Reserve
system for there was a clause in the bill as adopted by
the House of Representatives in 1913 directing the
Federal Reserve System to use its powers to stabilize
the purchasing power of money. Though this was
eliminated in the Senate, it is becoming increasingly
evident that something of this kind must be done.
There are several ways the dollar may be stabilized,
but they all depend on the unity of the banking system
because an increase and decrease of the discount rate
is essential to control the value of the dollar. This
unity and power we propose in our extension of the
Federal Reserve system.
We do not claim that this would revive a dead busi
ness world, but we do say it will control live and going
business activity. The benefits of the plan toward
reviving business will be taken up by another speaker.
Not only do we say this but let me read what some
authorities on the subject say.
Owen D. Young says in regard to the policy of the
Federal Reserve System:
"It desires to contribute to the stabilization of purchasing
power of our money."
A. C. Whitaker in the American Economic Review
CONTROL OF THE BANKING SYSTEM 273
(March 1930) makes various proposals for change In
the Federal Reserve System. One Is;
"That the statute be made to declare the stabilization of
commodity prices to be a leading or perhaps the chief objec
tive of the Federal Reserve policy."
Lastly we have some legislative action in this direc
tion in the Goldsborough bill:
"The Goldsborough bill passed by the House in May,
1932, would make it the duty of the Federal Reserve banks
and the Treasury to undertake the policy of restoring the
level of wholesale commodity prices to the 1921-1929 aver
age; and after such result had been accomplished, to main
tain a stable price level thereafter."
In summary let me point out that we have seen that
we do not allow other measures of value to fluctuate
and there is no reason why we should make an excep
tion to the most important one the dollar. This can
be controlled by a definite policy to that end on the
part of a unified banking system, and we propose such
a system. Notice further that we rest this policy of
control of the dollar for the protection of the people s
property on a three legged stool, any one leg of which
may have little utility in holding up the policy. But,
when we take the three all banks in the system, strict
regulation, and guarantee of deposits we have a firm
and sound foundation.
274 THE YEAR BOOK OF COLLEGE DEBATING
Second Negative, Ernest O, Eisenberg
Marquette University
LADIES AND GENTLEMEN: It is most regrettable that
one of the modern requisites of debate technique seems
to consist of the practice of putting one s audience to
sleep before the first twenty minutes of speaking are
completed. As I gaze about this room and notice with
what tremendous effort you are struggling to maintain
an air of alertness, my heart wells with sympathy for
you. And yet I am quite sure that you did not come
here merely for the purpose of being put to sleep.
There are so many more congenial methods of con
ducing slumber, that it is at once obvious that you
came here for some other purpose. Frankly, this is no
ordinary debate question. True, it has its baffling
array of statistics; well, all debate questions have their
statistics. As a matter of fact, what would a debate
speech be like if it did not have statistics? And yet,
this question involves much more than the mere recita
tion of facts and the facile flow of words. Upon a
correct understanding of the issues involved in this
debate, upon a correct solution of the problems pre
sented herein, depends your own future existence.
Your own presence in this University one year from
this day will be determined largely by the action the
people of the United States take as to the safe-guarding
of their economic interests.
Our friends of the Opposition advocate as a remedy
for our modern ills the plan of Federal Regulation of
banking functions with a guaranty of deposits. In
CONTROL OF THE BANKING SYSTEM 275
seeking to convince you of the feasibility and desira
bility of their proposal, our worthy Opponents have
assumed a tremendous burden of proof. In the first
place, they must show you that Federal Regulation is
the only possible solution. They must absolutely con
vince you of the fact that regulation by the states is
hopeless, that there can possibly be no means by which
state regulation can be improved. The first speaker
of the Negative, in opening our case this evening has
established without any question of doubt the fact that
although state regulation is not perfect at the present,
there is no reason why it cannot be improved to a point
where it would possess all the advantages of Federal
Regulation without any of the disadvantages of Fed
eral Regulation. It is the contention of the Negative
that the defects in state regulation are not inherent in
the system. True, state regulatory bodies in certain
parts of the country may have been lax; state laws may
have been unwise; but we wish to remind you that
where model state banking regulations have been
enacted, competent commissions have given to the pub
lic a protection which has been as adequate and com
plete as that offered by the Federal Government.
Then, in the second place, the Affirmative must show
you that it is desirable and practical for the Federal
Government to regulate the functions of banking. At
this time, we think it wise to draw the distinction be
tween banking organization and banking functions.
By the organization of banking is meant the structural
form of banking, such as its capitalization, its opera
tion *as a unit, or its operation as a member of a chain
276 THE YEAR BOOK OF COLLEGE DEBATING
system. For example, laws providing that banks must
have a capital fund of fifty thousand dollars, laws pro
viding that banks cannot be organized except where
necessary to the best interests of the community, laws
prohibiting the organization of chains of banks these
are all laws pertaining to the organization of banking.
On the other hand, it is well recognized that the junc
tions of banking consist of the business of taking in
money in the form of deposits and of giving it out in
the form of loans. Federal Regulation of banking
functions would therefore consist of a regulation of the
very business of the bank. Federal agents and in
spectors would have supreme authority over the ad
visability of certain loans and extensions of credit.
We submit this question for your consideration: is it
to the best interests of a community to have an experi
enced banker lend money to the people he knows and
trusts, or to have those loans checked and regulated by
some distant official in Washington? The plan the
Affirmative proposes, if logically carried out, would of
necessity mean a financial dictatorship such as America
has never had, and such as America will never want to
have. If the government is to regulate banking func
tions so completely, why not have complete govern
ment ownership and control of banks? And if the
government is not to have control over the banks, why
should the government be forced to guarantee the de
posits which may be jeopardized by factors beyond its
scope of supervision? Bluntly speaking, the Affirma
tive is caught between the horns of a dilemma from
which there is no escape.
CONTROL OF THE BANKING SYSTEM 277
Finally, in the third place, the Affirmative must
show you that it is desirable and practical for the Fed
eral Government to guarantee the deposits of all Ameri
can banks. And, because this question in the debate
lends itself so readily and so easily to attack, I shall
devote the remainder of my time in disclosing to you
the impossibility and the undesirability of guaranteeing
bank deposits. As the Opposition has already pointed
out to you, guaranty of bank deposits by the Federal
Government would consist in the building up of a huge
insurance fund wherewith the government would
recompense the depositors of insolvent banking institu
tions. We base our criticism of this plan upon three
grounds, the first of which is that the sum required for
this fund would be so large as to be impossible. Ac
cording to statistics quoted you earlier in this debate
by our Opponents, according to statistics furnished by
the Federal Reserve Board, more than 10,000 banks
with deposits of over $5,000,000,000 involved, have
closed their doors since 1920; and in the past two and
one-half years more than 5,000 banks with deposits
totalling more than $3,000,000,000 have crashed down
in the collapse of our general economic structure.
Were the Federal Government to attempt to guarantee
these deposits, to pay out dollar for dollar the amount
of money involved, we should have to build up a guar
anty fund of not $100,000,000, nor even $500,000,000,
but actually of more than $2,500,000,000. This is but
elementary insurance. In times such as these, when
our local governments are breaking down, when our
Federal Government faces the hugest deficit in its
278 THE YEAR BOOK OF COLLEGE DEBATING
history, is it at all sound or feasible to suggest that to
this added burden we take $2,500,000,000 and say,
"Here is something more you can pay for"?
Further, we wish to add that this guaranty fund must
essentially consist of a cash or gold fund. You cannot
insure deposits unless you have a fund of insurance
money. And if you have money, you must have a gold
security behind that money. The Affirmative may
suggest that we guarantee deposits with a credit struc
ture. But let me point this out to you : if you guarantee
deposits by credit you are directly inflating the Ameri
can dollar in a most pernicious and objectionable man
ner. For example, let us say that 1,000 banks with
$1,000,000,000 deposits close. The government has
guaranteed the deposits, but it lacks a fund wherewith
it can pay out $1,000,000,000. Consequently, under
the credit system it will issue $1,000,000,000 of notes
on the credit of the government and deliver these notes
to the depositors. What has actually happened is that
the government has inflated its money. It has gone to
the printing presses and has caused money to be printed
without any gold backing. Germany tried this in 1923,
and the mark crashed down to the disappearing point.
Every nation which has tried the policy of inflation has
learned to rue the day when it set the printing presses
whirring. Such men as Bernard Baruch, New York
financier, and Senator Glass, one of the foremost bank
ing authorities in America, denounce the very thought
of inflation. Yet, a guaranty of bank deposits based
upon the credit of the government can mean nothing
else but inflation.
CONTROL OF THE BANKING SYSTEM 279
On the other hand, if you try to build up a gold
reserve, you must come to the understanding that there
is only $5,500,000,000 of gold in the United States.
Remove $2,500,000,000 from this total and you
destroy the credit structure of the nation. The Affirma
tive speaks of the dangers of hoarding. The forma
tion of this insurance fund would be wholesale hoarding
on a scale never before attempted in the United States,
and I assure you, never again to be attempted. Further,
remember that this huge gold sum will lie idle. It is
capable of earning at six per cent interest a year, ap
proximately $150,000,000 a year. With this sum lying
idle for a period of ten years, the net loss to the United
States at compound interest would exceed $1,500,000,-
000. To summarize then, guaranty of deposits would
require the setting up of an enormous fund. It is im
possible to guarantee deposits without this fund, since
any other system would lead to inflation; yet the main
tenance of this fund would destroy the economic fabric
of our nation, and cause greater loss to the nation than
the present total of bank failures.
The second ground upon which we attack this plan
is that such a plan will remove every incentive for
honest and careful banking. With the government pro
viding a guaranty of deposits, shrewd and unethical
bankers will find an opportunity to speculate with
dangerous risks, since if they lose, their depositors will
be safeguarded. To quote Representative McFadden,
former Chairman of the House Banking and Currency
Committee, speaking in Congress, May 25, 1932:
280 THE YEAR BOOK OF COLLEGE DEBATING
"The establishment of a guaranty fund is not going to
stop bank failures. If anything it will encourage through
irresponsible management more bank failures. This is going
to permit promoters and schemers to buy up banks and to
use them because the deposits will be insured."
Representative Hull of Illinois, speaking on the same
day in Congress, has this to say about the plan:
"When you guarantee bank deposits by law, you immedi
ately penalize the honest and conservative bankers for the
mistakes made by bankers who are not conservative, and
even at times reckless in their negotiations."
Thus, the plan of the Affirmative, instead of encour
aging a system of safe and prudent banking, will ac
tually tend to lower the standards we already have.
Finally, we oppose the guaranty of deposits, because
the actual experience of eight states has shown this plan
to be disastrous in practical operation. You know, we
in America are fortunate in our system of government.
We have forty-eight states acting as forty-eight labora
tories in which we can conduct our various sociological
and economic experiments. By the results of these
experiments the nation can gradually improve its sys
tem of government. Well, to state the matter briefly,
eight states adopted this guaranty plan for deposits.
Everyone of these eight states repealed the plan, and
for this reason:
In Oklahoma, the plan resulted in a deficit of
$8,000,000. In Kansas, the plan resulted in a deficit
of $7,000,000; in Mississippi, of $4,000,000; in North
Dakota of $14,000,000; in Texas of $16,000,000; in
CONTROL OF THE BANKING SYSTEM 281
Nebraska of $20,000,000; and in South Dakota of the
grand total of $32,000,000. Washington adopted the
plan, but repealed it immediately upon the failure of
the Scandinavian American Bank.
Thus according to Representative McFadden, speak
ing in the House of Congress, May 25, 1932, this plan
which was adopted so gloriously in eight states, was
repealed in one after another, as the total of losses
soared and soared until these states are faced with a
total deficit of more than $100,000,000. The rest of
the states can thank their lucky stars that they did not
join in this gay procession. And yet, our friends of
the Opposition advocate this plan as the salvation for
American banking. If you go into a laboratory and
place a mixture into a test tube, and the test tube
explodes, and you place the mixture in another test
tube, and that also explodes, and you then place the
mixture into a third, a fourth, a fifth, a sixth, a seventh
and an eighth, and they all explode, you begin to under
stand that there is something wrong with the mixture.
Similarly we say that there is something wrong with
guaranty of deposits. It can t possibly work; it doesn t
work; and it never will work. Consequently, in con
clusion, I will say that because of these three reasons,
first, the impracticability of building up a fund large
enough, second, the increased inefficiency of banking
under it, and third, its failure wherever tried, guaranty
of bank deposits should not be adopted by the United
States Government.
282 THE YEAR BOOK OF COLLEGE DEBATING
Third Affirmative, John K. Strong
Beloit College
LADIES AND GENTLEMEN: Two negroes were having
an altercation, and one, growing angry, pulled a razor
and slashed at the throat of the other, who laughed up
roariously and cried, "Well, Sambo, I guess dat s the
first time you evah missed." "Missed?" chuckled
Sambo, "missed? Shake yo-self, Henry, shake yo-
self."
Now we ve been playing the r61e of Sambo, and
Henry across the table there hasn t realized what has
happened. Our Opponents have been decapitated, and
they don t know it yet! For look we have shown
them that the state banks, in fair weather and foul,
have had a record about twice as bad as that of the
National banks. We have exposed the defects of the
present dual banking system which in spite of the
transcendent faith of our Opponents has brought
American life into this present morass. And we have
also proposed a plan that would remedy, with major
effectiveness, the evils of the present situation. And
what do our opponents do but take a wide detour
around this unshakable case that fulfills our obligation
as Affirmative, and begin to peck at us on matters in
consequential or unrelated to the subject for debate.
They have rung all the changes on a brain-tantalizer
which they call Organization versus Function. In this
it is apparent that they have fallen prey to a common
philosophical error. It will be distasteful to you,
Ladies and Gentlemen, for me to enter the metaphysi-
CONTROL OF THE BANKING SYSTEM 283
cal realm, and resurrect Descartes and Leibnitz; let
it suffice to say that all -matter is meaningless unless
it has organization; and it is the organization of an
institution that determines and controls its function.
A cat does not function like a carburetor because it is
not organized on that principle. And every speck of
control over Function is to be found hi Organization.
Therefore the only way that we may effectively control
the functions of banks is to control their larger organ
ization.
Still ignoring the Affirmative case, the Gentlemen of
the Opposition have presented us with an ultimatum.
We must show three things, they declare, and the first
of these is that regulation by the states is hopeless.
Upon my soul, do we have to prove this to them? Do
I have to present to you conclusive proof that there is
a depression, and that the breakdown of state regula
tion has contributed enormously to the severity of the
disorder? I do not have to defend this point it shouts
its truth through the blinds of ten thousand closed bank
buildings.
We are told in the second place that we must prove
that regulation by the government is practical. All
right: (a) We have tried everything, including state
control and private initiative, until we now jingle pen
nies instead of dollars in our pockets, and until one-
third of Beloit s families are receiving County aid.
From the record of the government in contrast with
private enterprise, there is much to be hoped for in
complete Government Regulation of our wildcat bank
ing. (5) The eight defects of our present banking
284 THE YEAR BOOK OF COLLEGE DEBATING
system, enumerated, by Mr. Nash and so studiously
avoided by the Negative, are all defects which are
remediable to a significant degree by inclusive mem
bership in the Federal Reserve System, whose Organ
ization and therefore whose Functions are controlled by
the government, (c) With Government Regulation
will come the elimination of other causes of bank fail
ure mentioned by Mr. Gleason of the Negative. Dis
trust of banks, uneasiness concerning deposits, dis
honesty of bankers these will become negligible when
the National Government manages the entire banking
system. Even a fourth cause (d) of failure also men
tioned, the general breakdown of the money-credit
system, will be removed since, as Mr. Martin has
shown, the Federal Reserve System does, in the words
of Owen D. Young, "contribute to the stabilization of
the purchasing power of our money."
And the third challenge that has been flung at us this
evening is to show that the guaranty of bank deposits is
practical and desirable. Let us look more closely at
some of Mr. Eisenberg s statements about this, (a) He
says that the fund required is too large. But let us see
what Senator Glass, foremost banking expert in the
country, has to say. In the Glass-Steagall bill now
before Congress, he would establish a Federal Liqui
dating Board consisting of the Secretary of the Treas
ury, Comptroller of the Currency, and three appointees
of the President. They are to administer a deposit
guarantee fund of not more than five hundred million
dollars, one-fourth of which has already been obtained,
to be raised by ( 1 ) treasury subscription to the amount
CONTROL OF THE BANKING SYSTEM 285
of franchise payments, (2) levy upon surplus account
of each Federal Reserve bank, (3) assessment upon
member and participating non-member banks in pro
portion to their deposits, and (4) borrowings from the
Reconstruction Finance Corporation. Senator Glass
says that it can be done! Equally as powerful an argu
ment is the fact that an estimated amount of one billion
six hundred million dollars is being hoarded today be
cause of people s fear of losing their bank deposits.
The establishing of a guaranty fund of five hundred
million dollars would be of inestimable aid in returning
to active turnover this huge amount of money. More
over Canada has guaranty of bank deposits. Does she
find it to be too expensive?
(6) Mr Eisenberg also has declared that the guar
anty of bank deposits would eliminate good banking.
How can he be sure? It never has been tried long
enough for anyone to tell what the results in that par
ticular line will be! And yet I think that we may lean
a big question-mark against this Negative argument by
demonstrating by analogy what effect such a scheme
might have upon the tender art of banking. In Eng
land in 1925 a Workmen s Compensation Act was put
through by the British Labor Party providing com
pensation for injuries received in pursuit of work. Not
deposits, but welfare was protected. Did this encour
age sloppier work or more careless attention to the use
of dangerous machinery? Well, all over England,
Safety Campaigns were put on; industrial workers and
employers were informed of the implications of this
social legislation, and as a result, the number of indus-
286 THE YEAR BOOK OF COLLEGE DEBATING
trial accidents dropped off appreciably the following
months. If anything, the guaranty of bank deposits,
placing a real obligation to the government on the
shoulders of our bankers, ought to create a sounder
kind of banking. Canada has guaranty of deposits;
does it eliminate good banking there?
(c) The third reason presented as to why guaranty
of bank deposits is neither practical nor desirable is
that eight states have tried it and failed. Yes, and
failed dismally. In proposing this argument, the Gen
tleman of the Opposition shows, I fear me, only a
rouge-deep apprehension of the conditions of these
State fiascos. He knows that they failed, but does not
ask why. Let me tell you why they failed, for I find in
their mistakes the most powerful argument for national
guaranty.
They failed in the first place because they violated
basic principles of insurance in not extending the risk
over an area large enough to include a diversity of eco
nomic and industrial interests. You would think a
company crazy that sold all its hail insurance in only
one county. But these eight states were too ignorant
to realize that actually they were making a similar
error, For they were all Mississippi basin states, agri
cultural, and in the time of agricultural disaster, the
banks in this area were all equally hard hit, and none
could absorb the strain. The plan we have proposed
is national in scope, tending to distribute sectional
strains over the whole of the United States, in accord
ance with sound insurance principles.
In the second place, these states failed because they
CONTROL OF THE BANKING SYSTEM 287
guaranteed something impossible under the present
banking system; and please notice that I said the
present system. You stockholders in the Second Na
tional Bank downtown know that your bank would not
guarantee the financial stability of Fairbanks-Morse
and Company unless your bank had a large measure of
control over the financial policy of that company. Yet
this is precisely what the states did. Even though our
banks have proved themselves incapable of practicing
sound banking under the present law of private initia
tive, these states guaranteed bank deposits without the
assurance that their banks would remain solvent. Is it
any wonder that those states found the discharge of
their guaranty obligations to be so onerous as to cause
the abandonment of the scheme? The guaranty of
bank deposits must be founded upon a National Fed
eral Regulation that will force all banks into policies
and practices that will strengthen the financial world.
And as you will remember, this is one of the foremost
tenets of the plan we proposed.
A third reason also might be added: because the
guaranty was based upon narrow state areas, the fund
had to be raised by taxing the state banks. To avoid
this objectionable tax the state banks tended to go
National, thus throwing the whole burden of the guar
anty fund upon the banks with too small capitalization
to become Federal Reserve members. Obviously these
few weak banks could not support the strain. A uni
fied National scheme, with an equal distribution of
obligation is necessary if guaranteeing deposits is to
work, and as you know, this is one of the stipulations
288 THE YEAR BOOK OF COLLEGE DEBATING
of our plan. And I might just throw in the fact that
Canada has a National plan of guaranteed deposits
that has functioned successfully since its inception.
But we are not satisfied merely with annihilating
their counter-arguments we offer you proof of several
benefits that will result from the functioning of such
a plan as we propose. The first and most obvious bene
fit that will result is that of absolute safety of deposits.
Four billion two hundred and twenty-seven million dol
lars are lost or tied up by bank failures of the past ten
years an amount so enormous that it is almost im
possible to comprehend. If every minute from the
birth of Christ one dollar and fifty cents had been
dropped into the ocean ? this loss by today would be
four hundred and twenty-five million dollars less than
the loss caused by the failure of our banks. Of course
a rather large percentage of this has eventually been
returned, but only after causing uncertainty, untold
suffering and misery, and economic maladjustment.
Not only will there be no money lost, but also there
will come a peace of mind and public confidence that
long has been a significant lack in our American life.
Once we are sure that we can lose no money in our
banks, we will be glad to cooperate with them in put
ting the dollar back to work along with our citizens.
This is the greatest need, says Roger Babson, that of
increasing the velocity of our money turn-over. The
one billion six hundred million dollars of hoarded
money would return to circulation and aid greatly in
stabilizing industry. But all this will happen only
CONTROL OF THE BANKING SYSTEM 289
when public confidence is created by a policy of guar
anteed deposits.
I would invite your attention to only one more of a
number of benefits, namely, that our plan would re
move the major cause for bank failures. The Uni
versity of Chicago professors several weeks ago in
their Sunday afternoon radio round table agreed that
most of the bank failures were precipitated by drains in
the time of economic duress or psychological uneasi
ness. The Michigan moratorium of several days ago
was the necessary climax of a series of disastrous runs,
It is possible that if the situation continues as at pres
ent, there may be a national moratorium that will be
come the first step in the adoption of the very plan we
are proposing to you this evening. When men and
women know for certain that they cannot lose their
money, the disaster of bank failures may in large meas
ure be averted.
In summary, we have presented our case and have
met the three requirements of the Negative, to show
that state regulation has failed, that Government Regu
lation would be desirable, and that the guaranty of
deposits would be practical. As regards the latter, I
have shown that with a system of guaranty we will lose
no more money, will support and stabilize business, and
will check disastrous runs on our banks. Therefore,
we submit to you our plan of guaranteed deposits, func
tioning within an inclusive Federal Reserve System, as
the solution of our present problem,
290 THE YEAR BOOK OF COLLEGE DEBATING
Third Negative, Robert W. Hansen
Marquette University
LADIES AND GENTLEMEN: The preceding speaker
returned to Biblical times to secure a basis for com
puting certain statistics. Possibly, it was his so doing
that reminded us of the Biblical parable of the wheat
and the tares, in which, you will remember, the master
said to the servant, ". . . and in the time of the har
vest I will say to the reapers, Gather up first the tares,
and bind them in bundles to burn them; but gather the
wheat into my barn/ 3 It is in somewhat this spirit of
selection and discrimination that we propose to analyze
the case of the Opposition separating the wheat from
the tares, the relevant from the irrelevant.
Great emphasis has been placed upon the fact that
while in former days checks came back marked, "No
funds," nowadays they return marked, "No bank."
Yet can banking institutions stand unmoved in the
midst of commercial and economic wreckage? This
very speech is punctuated by the detonations of crash
ing industrial enterprises. This nation has had over a
decade of agricultural paralysis; it has been four long
years since the last paper profits went west in the cov
ered wagon of margin calls. If banks fail, the fault
lies not in our banking structure, but in the economic
system of the country. If banks fail, it is because the
economic communities in which they are located are
failing. Much has also been said about branch bank
ing, a very interesting question; much can be said in
favor of and against branch banking, but all such
CONTROL OF THE BANKING SYSTEM 291
arguments are entirely irrelevant as far as the question
of Federal Regulation of banking functions and Fed
eral Guaranty of bank deposits is concerned. Remove
the legislative barriers to branch banking and the unit
banker will go for a one-way journey reminiscent of a
Windy City s gangster s last ride. Whether such
branch banking would be desirable is a separate de
bate question, and, therefore, feeling that the issue
raised is irrelevant to the question under discussion we
resist with firm resolution the temptation to wander
into the by-path of branch banking.
However much we might extend the list of sins of
commission of our Affirmative brethren, we feel that the
sin of omission of which they are guilty is far more
grievous. The question puts upon them the burden of
arguing in favor of Federal Regulation of banking
functions. What are the functions of a bank? In our
humble opinion they consist quite largely of accepting
deposits and making loans. No bank performs a more
important function than that of extending credit to
certain enterprises and individuals; the problem of
what enterprises are going to be given loans is all-
important to the continued existence of the bank. Yet
the plan of the Affirmative provides for no effective
regulation of these actual operations of a bank.
To this they counter that they will control the organ
ization, permitting the organization to control the func
tions. This is certainly Government Regulation of
banking organization, but it is a remarkably indirect
method of regulating banking functions. To illustrate;
if we had been debating Governmental Regulation of
292 THE YEAR BOOK OF COLLEGE DEBATING
public utilities some few years back, it would have been
the Affirmative s position that the control exercised
would be to tell the Insulls and the Byllesbys that
they might have branch companies, that they were to
have a certain minimum capitalization, that they were
to be subject to no state restrictions. This might be
controlling the organization but it would hardly be
regarded as control of the functions of the utility. We
now realize regulation implies the government s de
termining what rate the utility may charge, what stand
ard of service they shall render; or, in other words,
effective control over the actual operation of the utility.
Without such active control, it can hardly be said that
the functions of any enterprise are being Govern-
mentally Regulated.
We might remark, however, that there is one funda
mental disagreement between the two teams upon this
platform this evening. It seems to be the Affirmative s
viewpoint that banks are failing because there is not
sufficient Federal Regulation and Federal guaranty of
bank deposits. And yet, in the forty-four months fol
lowing January 1st, 1929, eight hundred thirty-nine
national banks, operating under the very system whicK
the Affirmative lauds so highly, failed. Twenty na
tional banks, many of them located in larger cities and
strongly financed, closed their doors each month. In
every state which has attempted guaranty of bank
deposits, despite the fact that the resources of the
state were pitted behind the banking institutions, banks
failed and deficits accumulated. It is the opinion of
the Negative that in these and other cases the credit
CONTROL OF THE BANKING SYSTEM 293
institutions have failed because the economic com
munities from which they draw their strength and
permanence also failed. Thus it is that when the bot
tom dropped out of the Florida real estate boom, even
the chain banks located in that sector were forced to
the wall; thus it is that so many small rural banks,
with their eggs resting in the basket of farm prosperity,
have failed because farmers remained impoverished
and farming remained a not especially lucrative form
of endeavor. The cases where defalcating cashiers and
embezzling bank presidents ruin banks are compara
tively rare. No banker goes into ecstasies of delight
nor sings rhapsodies of joy when the banking commis
sioner tacks the sign "Closed" upon his bank entrance.
It is to the banker s interest, aside from any altruistic
motives of community service, to keep the bank func
tioning. If the bank does fail, it usually fails because
of outside circumstances over which the banker has no
control.
It is then the considered opinion of the Negative
that the instability of American banks can be attributed
to the instability of the entire American economic struc
ture. And, as we view it, the problem is not to attempt
to build a stronger banking system; it is to build a sub
structure of sound agricultural and industrial pros
perity. With such substructure the present banking
system will prove more than adequate to meet the tests
of stability and flexibility; without such foundation no
banking system can be devised that will be able to stand
upon the shifting sands of business chaos. We do not
come as a Moses leading a depression-weary world to a
294 THE YEAR BOOK OF COLLEGE DEBATING
land of plenty. We intend merely to indicate the direc
tion in which the nation must travel and the mode of
attack the nation must adopt.
Some means must be found to stabilize our economic
system. Ability to produce must not be permitted to
outrun ability to consume. Some method of teaming
productive capacity and power to consume in double
harness must be devised. It is possible that, if the so-
called Roosevelt agricultural domestic allotment plan
proves feasible, it might be given a wider application.
Perhaps some more stringent form of social control
along the lines of economic planning as suggested by
Stuart Chase or of industrial coordination as suggested
by Gerard Swope and other industrial leaders will have
to be adopted. Quite possibly minimum wage legisla
tion and restriction of the hours of labor for both men
and women will be utilized to increase the purchasing
power of the ultimate consumers. There may be differ
ences as to the choice of method; possibly we can
return to this platform to discuss the comparative ad
vantages and disadvantages of the various plans for
remodeling our economic structure. However for the
present our general position remains clear; it is that in
a coal mining section where for thirty years the miners
have averaged but nine months employment per year
and in agricultural regions where the market price of
farm commodities does not pay for the costs of pro
ducing them; in such sections, no banking institutions
can expect to carry on a profitable or long continued
business. And the problem is not to bulwark th<e banks
but to rebuild the economic community.
CONTROL OF THE BANKING SYSTEM 295
If we might consider these periodic economic crises
as surging, seething torrents sweeping down upon a
countryside, causing untold damage, and shattering all
dikes and engulfing all buildings, then it seems to be
the Affirmative position that we should build taller
buildings and higher structures. But we have learned
that when the freshets come, no building can withstand
their fury. And so the Negative proposes that we go
up into the headwaters of the river and there, where
the floods are starting, build the reservoirs of a planned
production and plant the forests of more equitably dis
tributed purchasing power, so that we may check these
floods before they begin. It has been our sad experi
ence that once the flood has started no institution, in
dustrial or commercial, can long withstand its fury.
First Negative Rebuttal, Donald W. Gleason
Marquette University
LADIES AND GENTLEMEN: In my constructive speech,
I indicated that the first issue involved in this proposi
tion was "Should we have Federal Regulation"?, and
that to substantiate that issue the Affirmative would
have to prove that the defects in the banking system
were due to state regulation. I hope that the stenogra
pher heard me say that, for apparently the Affirmative
did not. The Affirmative has utterly failed to show
that any one defect was directly due to the system of
regulation. If there were three more speakers on the
Affirmative side, they would remind us of the "secret
six" of Chicago fame, for they label the defects of
296 THE YEAR BOOK OF COLLEGE DEBATING
banking as being "public enemies," and their secrecy
lies in the fact that they prove nothing relevant about
what produced these so-called public enemies.
You have heard from the lips of the Affirmative
speakers, that today we have too many small, rural,
under-capitalized banks; but if that is true then greater
capitalization is the remedy and not the abolition of
state regulation. Banks are organized with a certain
capitalization and if the amount thereof has proved
too small, then we have discovered a defect in the or
ganization of banks, which does not prove anything for
the Affirmative except that the argument is immaterial
to the issue. They told you further that the American
dollar is unstable, and that our banks are not able to
extend credit at a time when it is most needed, but if
those factors were intended by the Affirmative to be
pertinent to our discussion, then they should have
shown that state regulation of banking functions was
responsible for their existence. If you have heard the
Affirmative take any single defect of banking and say
in regard to it "now this defect is directly due to state
regulation and, therefore, state regulation has failed"
I repeat, Ladies and Gentlemen, if you have heard
the Affirmative say that, then we of the Negative are
the "deaf trio" and the Gentlemen from Beloit are not
the "secret six." It is our contention that the Affirma
tive has failed to prove the necessary elements to win
the first issue.
The second basic issue in this debate is "Should
Federal Regulation be extended to all banking junc
tions" and as to this issue the Affirmative proceeded on
CONTROL OF THE BANKING SYSTEM 297
the bald assumption that our state governments are
incapable of regulating any banking function. In none
of their three speeches can we find as much as an illus
tration to prove that a state cannot regulate the func
tions of a bank, to say nothing of the fact that their
case lacks any mention of why the Federal Govern
ment must step in to regulate all junctions. The Af
firmative ignores the fact that many of our state banks,
familiar with the problems within the particular state
have experienced twenty and thirty years of successful
bank management. The equipment, efficient organ
ization, and careful personal attention given by most
of our state banks to banking problems has constituted
a very satisfactory service.
According to the Banker s Magazine for September,
1932, of the total number of all banks in existence dur
ing the year 1931, only ten per cent failed. Despite the
dishonesty of some bankers, despite the loss of confi
dence and even despite the depression, ninety per cent
of our banks in 1931 remained in existence and bore
testimony to the fact that our states can and do success
fully regulate banking functions, but the boys from
Beloit seize upon the ten per cent that failed and then
hasten to the conclusion that no state can regulate bank
functions.
If I have a draft issued by a Milwaukee bank, I may
present it to a bank in Beloit for collection. The Beloit
bank accepts the draft on deposit for collection, but
only in the capacity as my agent. All that is required
of the Beloit bank is that it send the draft to Milwau
kee; in other words, it need only make use of the mails.
298 THE YEAR BOOK OF COLLEGE DEBATING
But the Affirmative case assumes that the Beloit bank
is unable to perform that function because it is under
state regulation, whereas in fact, it has successfully
handled such transactions for many years. When the
Affirmative recommends that the Federal Government
regulate all banking functions, they in effect say to
you that your bank in Beloit cannot receive your money
or retain it for you at interest, that it cannot collect
your drafts, give you investment advice, or provide a
checking account service for you, while you know from
experience that your bank has done all these things for
you ever since you became part of the commercial
world. We believe, not only that the Affirmative has
failed to prove that our states cannot regulate bank
functions, but that it is absurd to even attempt to do
so, and that consequently, they have lost the second
issue.
"Shall the Federal Government guarantee deposits"
is the final issue this evening. Mr. Eisenberg, our sec
ond speaker, has shown that such a proposal is unwise,
impossible, that it has already failed in eight states,
and will further deal with the issue in his rebuttal,
since my time is about spent.
In closing I want to raise an important inquiry. The
Affirmative supposedly condemns state regulation;
they would replace it with Federal Regulation. I pre
sume that the idea is that Federal Regulation would
be so much better. (Presumed, because not shown by
Affirmative.) But in that case, why does the Affirma
tive contend that the Federal Government should also
guarantee deposits? If Federal Regulation is to mark
CONTROL OF THE BANKING SYSTEM 299
an advance in our banking system, why must deposits
be guaranteed? To the Negative your double proposal
is contradictory; the guaranty clause seems to be an
implied admission that Federal Regulation alone will
not be sufficient. I submit the question to our Op
ponents but I do so with shaken confidence that it will
be answered, for as yet the Affirmative has refused to
tell us why the eight hundred thirty-nine national banks
failed. Gentlemen, shall we assume that it is because
so many national banks fail under Federal Regulation
that you want to guarantee deposits?
First Affirmative Rebuttal, John S. Nash
Beloit College
LADIES AND GENTLEMEN: At the outset of this de
bate the Affirmative took the position that the Negative
must either uphold the present situation or else present
a plan which they can prove to be a better one. The
Negative denied this and said that if they gave a plan
it was from choice and not from necessity. The Af
firmative of the question as stated implies that there
are more benefits to be derived from having the gov
ernment regulate banking functions than under the
present situation. The Negative therefore, implies
that there will be less benefits, and as yet they have
only given you a hatful of reasons why they think that
the Affirmative plan will not work. But they have not
shown you that there will be more harm than good done
by our plan, and until they can point with proof at the
300 THE YEAR BOOK OF COLLEGE DEBATING
items of our proposal and say, "These would make the
present mess worse," we maintain our position.
Now let us examine this plan which they have pre
sented. They would stabilize the whole economic
structure, and thus the banking structure would neces
sarily be made stronger. Now we believe strongly in
stabilizing the whole economic structure, but what a
hypothetical plan it is that supposes that we can do this
without a complete overturning of our present economic
order. It will be absolutely impossible to do this unless
we start with smaller units. Our plan is really a com
ponent part of making the whole structure more stable.
It is impossible to have business unless we have a bank
ing system that can take care of the demands of it.
We contend that the Negative have presented a meta
physical thing which in no wise can be used as a sub
stitute plan for the one which we have presented this
evening.
The Negative, this evening, have neither presented a
substitute plan nor have they proven the results of our
plan to be worse than the present situation, and so we
claim that our position has been untouched.
Now the Negative have further contended that we
must show that the state banks are the cause of our
present crisis or else there is no justification for turning
the banks over to the Federal Government. We have
shown that the record of the state banks is twice as
bad as the Federal Reserve Banks both in regard to
the proportion of bank failures and to the percentage
of the deposits lost. Our main fight, however, is not
with the state bank as such, as it is against having
CONTROL OF THE BANKING SYSTEM 301
forty-nine systems instead of one central system. We
have already shown the dangerous and unfair competi
tion which exists between member and non-member
banks.
The second speaker for the Negative attempted to
show you how impossible it would be to establish a
fund for the guaranteeing of deposits. With mathe
matical precision he showed that it would demand a
cash fund of three or four billions of dollars. If the
Gentleman had spent more time reading the papers
instead of on his mathematics he would find that it is
not only possible, but that it is being done and not at
the sacrifice of having billions of dollars tied up either.
Canada is guaranteeing deposits very successfully. As
a matter of fact the Glass-Steagall bill now before Con
gress provides that when the fund reaches $500,000,000
they will refund money to the banks.
We have been accused of arguing against ourselves
as we propose a sound banking plan, and then feeling
that it isn t so sound after all, we decide to guarantee
deposits. They ask us why we include this. There are
two reasons. Superficially we include it because it is in
the question. But there is a much more real reason.
We feel that without guaranteed deposits we cannot
establish confidence in the banking system. This item
in itself reduces failures for it reduces the danger of
runs on banks. We note that Canada, although it has
had only one failure in the last twelve years, guarantees
deposits. Further the cost of guaranteeing will be
reduced to a negligible amount as the number of bank
failures is minimized.
302 THE YEAR BOOK OF COLLEGE DEBATING
In regard to the failures in the eight states which
the Negative made so much of, let me remind you that
there is a lot of difference between state and Federal
action. We notice that all the states that adopted this
plan were agricultural states, and the investments were
local instead of being spread over the whole nation.
It would be analogous to an insurance company insur
ing against a hail storm in a local area. Further, the
state guarantee system did not include National banks,
and so, as the system weakened the stronger banks that
were able to, withdrew and became nationalized and
left the small, weak banks to support the system, which
of course was impossible.
In conclusion then, we have presented a plan which
the Negative have not proven worse than the present
system, nor have they themselves produced an adequate
substitute plan. They have wasted your time and ours
by merely wrangling about minor points. We have
presented this plan, and we have shown definitely how
it will meet the pathological conditions which are in our
present system. We have included guaranteeing of
deposits and we have proven to you that this is not only
easily possible and now successfully in operation in
Canada, but we have shown that it is necessary to
restore the confidence and faith of the public in our
banking structure*
CONTROL OF THE BANKING SYSTEM 303
Second Negative Rebuttal, Ernest O. Eisenberg
Marquette University
LADIES AND GENTLEMEN: Our worthy Opponents
have seen fit to wax philosophical in this debate. In
fact they have taken the famous French philosopher
Descartes and have embraced him in their arms.
May I add, that their entire case is built upon a process
of reasoning which is typical of Descartes. If you
will remember, Descartes achieved fame because of
one simple sentence, namely, "I think; therefore I
am." The fallacy in this statement should be quite
obvious to you, for what Descartes actually said was
this: "I am thinking; therefore / am" Similarly the
Affirmative states: "The Federal Government should
regulate banking functions with a guaranty of deposits.
Therefore the Federal Government should regulate
banking functions with a guaranty of deposits." It
may be pertinent to point out to you at this time, that
thus far in the debate the Affirmative has failed to
show you, first that state regulation cannot cope with
the present problem; second, that the Federal Govern
ment can actually regulate the functions of banking;
and third, that the Federal Government can practically
guarantee deposits. We want more than mere assump
tions; we demand proof!
It is characteristic of the Affirmative that throughout
this debate they have failed to attack fundamentals,
and have concerned themselves only with the superfi
cial manifestations of what is really a deep rooted
problem. Bank failure is not due so much to methods
304 THE YEAR BOOK OF COLLEGE DEBATING
of regulation, as to the failure of the economic com
munities supporting the banks. Yet the Affirmative
contends that regulation will prevent failure, without
first proving to you that regulation will prevent failure
of the economic communities supporting the banks.
In a similar manner, they have proceeded throughout
their entire second speech to prove to you that the lack
of stabilization of the dollar is a cause for bank failure,
and that through their plan for relief, they will stabilize
the dollar.
This matter of stabilizing the dollar, however, cannot
be so simply explained away. As a matter of fact, just
why is your dollar worth more today than it was in
1928; and why was the dollar in 1928 worth less than
it was in 1913? Simply for this reason: the relative
value of the dollar depends upon the ratio between con
suming power and producing power. We have had no
tie up, no connection between our producing power and
our purchasing power. The plan proposed by the Af
firmative errs in that it neglects to make any provision
for the financing of consumption. The reason why
banks fail to lend money today, is not due to the fact
that the banks have no money, but rather due to the
fact that business men are afraid to borrow money,
since if they do manufacture goods they will have no
market for those goods.
Throughout this debate the Affirmative has refused
to recognize the ultimate problem involved, namely the
problem of the collapse of the American credit struc
ture due to the failure of purchasing power of the pub
lic to keep up with producing power. The third speaker
CONTROL OF THE BANKING SYSTEM 305
for the Negative, Mr. Hansen, has shown you in his
speech that the proper method of curing this evil is by
the plan proposed by President Roosevelt, namely the
farm allotment plan. Use the principles outlined in
this plan in every other phase of economic activity, use
the principles of scientific planning in our national
economy, balance consuming power and purchasing
power, and the problem of bank failures together with
the problem of the fluctuating dollar will disappear.
The failure to recognize the fundamental nature of
the problem on the part of the Affirmative, naturally
causes our worthy Opponents to suggest to you methods
of reform which will not bear close scrutiny. For
example they propose to stabilize the dollar by increas
ing or decreasing the rediscount rate of the Federal
Reserve Structure. May we remind you that though
the Federal Reserve Board repeatedly increased the
rediscount rate in 1929, it failed to check the stock-
market boom; and may we point out to you once more
that in spite of a fifty per cent reduction in the redis
count rate this year, the credit situation has not been
eased. Why has this method failed? The Affirmative
rightly claims that its failure is due to the fact that
there is too much money outside the Federal Reserve
System; they err, however, when they state that under
their plan this money would be controlled by the Fed
eral Reserve Board. All that they would embrace
would be the banks now outside the system; they could
do nothing to control the investments of large industrial
corporations with millions of dollars of cash assets;
they could not control investment trusts; they could
306 THE YEAR BOOK OF COLLEGE DEBATING
not control building and loan societies; they could not
control huge private pools of professional lenders and
stock market speculators; in short, they could control
but a fraction of the nation s credit. We say, on the
other hand, regulate production and purchasing power;
strike at the root of the evil, and not at its most promi
nent branches. Further, we should like to remind you
that under the proposal of the Affirmative, nothing is
done to extend credit to the consumer. As long as
there are fifteen million men unemployed in America;
as long as the farmer is destitute; so long will our
factories remain closed. If people cannot buy, the
industrialists cannot manufacture. The plan of the
Affirmative in no way seeks to remedy this problem,
which is perhaps the most vital of all.
Therefore to summarize the weaknesses of the Af
firmative s case;
1. They have pointed out as "public enemy" Num
ber One the lack of central organization. We
have shown you that two-fifths of the bank fail
ures occurred within the Federal Reserve System.
2. They have shown as "public enemy" Number
Two competition between member and non-
member banks. We have shown you that this
competition will continue between member banks.
3. They have given as "public enemy" Number Three
the failure of rural banks. We have shown you
that rural banks failed because of the rural de
pression. In no way have they pointed out how
they would safeguard rural banks under their
plan*
CONTROL OF THE BANKING SYSTEM 307
4. They have offered as "public enemy" Number
Four the instability of the dollar. We have shown
you that this instability is due to basic economic
conditions which would not be altered by the plan
they propose.
5. They have asserted as "public enemy" Number
Five the inability to expand credit. Yet their
plan would in no way expand credit to the con
sumer who needs credit the most.
6. They have indicated as "public enemy" Number
Six the inability of banks to liquidate. This
weakness is due to the loss of confidence of people
in the business structure of the country, and can
in no way be affected by a plan of regulation or
guaranty.
7. They have proposed as "public enemy" Number
Seven the reduction of buying power. However,
they could not prove to you that under their plan
buying power would be expanded. We, on the
other hand, have continuously advocated a better
control of the ratio between purchasing power
and producing power.
8. And finally they have tendered as "public enemy"
Number Eight the inability of the banks to keep
the faith of the public. My friends, the public
has not lost its faith in the banks so much as it
has lost its faith in the business structure of the
entire nation. We propose to put that business
structure on a permanently sound basis.
Therefore in conclusion, I should like to state this:
our banking system is comparable to a train speeding
308 THE YEAR BOOK OF COLLEGE DEBATING
along the country. At a certain place that train must
cross a bridge. Economic disturbances however ; like
a torrent beyond the control of the engineer of the
train, have demolished the bridge. The Affirmative
does not propose that we rebuild the bridge; our Op
ponents do not wish to dam back the waters; all they
advocate as relief is that we regulate the speed of the
train, and guarantee 1 that if the first train falls over the
bridge, we shall have a second train ready to proceed,
and likewise to fall over the bridge.
Second Affirmative Rebuttal, John Martin
Beloit College
LADIES AND GENTLEMEN: I certainly feel pretty
badly about that first speech of mine; for after having
spent ten minutes expounding the necessity of a stable
dollar for a sound economic development of our coun
try, Mr. Hansen stated that we were building on a
foundation of shifting sands and that we should "dam
the torrent at the headwaters" in order to have a sound
economic development. This is just exactly what I
was proposing, only I tried to put a very definite plan
before you as to how this could be done rather than
sluffing off this subject with a figure of speech and
vague references to boards and commissions. The
point is, we maintain that the banking system is a part
and in fact a very important part of the basis of our
economic system and anything that is done must be
done with an eye to and a help from the banks.
And as to the point about whether we are regulating
CONTROL OF THE BANKING SYSTEM 309
Function or Organization, ~L think that you students
will take it just as lightly as they did Mr. Strong s
allusion to a like subject of discussion between the
Platonic and Aristotelian schools. As we have said
before, organization and function are so interwoven
that nothing can be done to one without affecting the
other. As far as that goes I believe that our control
of the volume of loans by means of the discount rate is
a very direct means of regulation of banking functions.
We have shown how the change in the discount rate
precipitated the stock crash and fixing the discount rate
is certainly a banking function. This shows how neces
sary it is to regulate banking functions that we may
avoid another such crash, and in regulating the discount
rate as we propose we would certainly be regulating
banking functions.
On the subject of loans there is one point that is
very obvious that might bear repeating. 1 refer to
competition between member banks. The Negative
say that under our plan competition would still be car
ried on between the banks even if they all became na
tional banks. We admit this, but it will not be that
unfair and demoralizing competition that now exists
under our dual system, for it will be competition under
the same rules, instead of competition against banks
operating under lower standards thus bringing about
lower standards for all banks. It is like organizing
kids gangs into football teams they still fight with
each other but in an organized way and the sticks and
bricks are discarded in favor of more favorable com
petition.
310 THE YEAR BOOK OF COLLEGE DEBATING
And, lastly, I wish to touch on another of the Nega
tive s analogies. He referred to the fact that the state
failures were like putting chemical mixtures in one test
tube after another and watching them break. Then
he inferred that the Nation was just another test tube
and another failure would result. We have pointed
out that in the Nation we have a chance for diversifica
tion, and, hence, weakness in one part of the country
would not ruin the whole system. We say that with
the Nation we do not have just another test tube which
will break with the mixing of the elements, but we have
a strong pyrex beaker which will easily stand the strain
and a successful reaction is the result.
Mr. Hansen maintains that what we need is a gen
eral readjustment of commercial and industrial
conditions, but even if we could find a perfect and all-
inclusive society stabilizer, we still maintain that it
would not be the solution for our banking problem.
Ten thousand four hundred eighty-four banks have
failed in the last ten years in America, in times of both
prosperity and depression. And yet in Canada, where
the same conditions have prevailed, there has been
only one bank failure! During the same years and
under the same economic conditions, Canadian banks
have remained firm and sound, while American banks
have failed on every side. The difference is not in the
economic substructure but in the banking system!
The Canadian banks are Government Regulated, and
have guaranteed deposits.
CONTROL OP THE BANKING SYSTEM 311
Third Negative Rebuttal, Robert W. Hansen
Marquette University
LADIES AND GENTLEMEN: Two darkies were slowly
making their way up a dimly lighted stairway when
their boss asked them, "Boys, what you-all doin ? here?"
And Sambo answered, "Boss, we done been carryin
dis heah trunk up dese stairs." "Ah," but the boss
answered, "Where is de trunk?" "Rastus," Sambo
mournfully informed his partner, "we done forgot de
trunk." It is in somewhat the position of having for
gotten the trunk that the Affirmative team has placed
itself. They have rather completely ignored the bur
den placed upon their shoulders of arguing in favor of
Governmental Regulation of banking functions. And
when they remark that control of Organization means
control of Function, we mention the fact that if one set
out to control the functions of a saloon, and merely
regulated the organization by placing larger brass rails
under the well worn shoes of the customers and hang
ing larger curtains in the window, you might be con
trolling the structure, the form, the organization, but
you would not be controlling the activities or the func
tions.
The importance of the distinction cannot be over
emphasized. Some time ago a Milwaukee bank failed,
and in the closing there was involved the ntoe dollar
deposit which represented a sizeable portion of your
humble servant s private fortune. So I have a keen
personal interest in the activities and reason for failure
of this particular bank. It failed because of unfortu-
312 THE YEAR BOOK OF COLLEGE DEBATING
nate investments. It invested in real estate, and real
estate values fell; it dabbled in South American bonds,
than which there was no more perilous pastime. Its
directors were no lineal descendants of Midas; what
ever they touched turned out to be considerably less
valuable than gold and less valuable than they had
anticipated. It is, then, the contention of the Negative
that when the Opposition exercises no control whatso
ever over the investments of this bank or over the
types of investment that other banks may make, they
do not sufficiently regulate banking functions. It
might also be again remarked that they certainly en
courage slipshod banking by allowing the banker to
make the choice and having the government under
write his losses. Uncle Sam has often played the simi
lar role of wet nurse to various businesses, but never
with distinction. And so, we ask the Opponents, "Why
all the talk about .regulating banking functions when
your plan does not include regulation of such func
tions?"
As to the strenuously maintained argument that uni
fying banks would control industrial stability by con
trolling credit, we might remark that although the
National City Bank bulletin for January, 1933, men
tions further reduction of interest rates, already un-
precedently low to almost the vanishing point," the
effect upon the business structure of these additional
credit facilities is not noticeably apparent. As a matter
of principle it would appear the tail of credit could
hardly wag the dog of industry. The banks and the
manufactures may have credit; but the consumers have
CONTROL OF THE BANKING SYSTEM 313
no purchasing power. And even if the manufacturers
might secure greatly increased credit, they could not
sell the products which they might produce with this
additional credit. The problem in this nation is not
that of securing credit for business men, it is the prob
lem of securing purchasing power for the masses of
the people in the land.
And when we asked the Opposition, in regard to the
guaranty of deposits feature of their plan, where they
would get the money and how they would avoid harm
ful effects upon the business of the nation involved in
withdrawing so much gold from the channels of trade,
their only answer was the rather naive remark, "Guar
anty is in the question, and we will have to debate it."
We certainly offer them our heartfelt sympathy, but
we can hardly grant them exemptions from their bur
dens. And so we tell them that if they do not build up
a fund, every bank liquidation in time of stress will
put an additional strain upon the remaining solvent
financial institutions. And if they do propose to build
up a fund, we ask them, "Where do you propose to get
the money?" and "How do you propose to avoid the
almost inevitable repercussions upon the credit system
of the land involved in withdrawing billions of dollars
of gold from active circulation in the channels of
trade?" Their answer will be rather belated, of course,
but that is better than no answer.
Newspaper dispatches tell of the two hundred mile
battlefront between warring Chinese and Japanese
troops. In the not quite as extended battlefront and
hardly as bitterly contested struggle between the two
314 THE YEAR BOOK OF COLLEGE DEBATING
teams this evening, we conceive it to be the duty of the
Affirmative to shell every vantage point, to wage the
war all along the line of battle, to establish every ulti
mate issuable fact. We conceive it to be the privilege
of the Negative commanders to mass their argumenta
tive battalions anywhere along the battlefront This
we have done. We have had one intrenched battalion
training its guns on regulation of banking functions;
what does it mean, what does it involve, what benefits
will it bring. This conflict was rendered a bit unsatis
factory by the fact that we could not ascertain the
nationality or even existence of the Affirmative troops.
We placed one flank of our army opposing guaranty of
bank deposits, pointing out the record of failure of
such systems, pointing out the impossibility and in-
advisability of building up a great gold reserve fund.
The Opposition guns were also strangely silent in this
sector. Finally, we made one counter attack at the
very heart of the Affirmative position when we main
tained that the problem in this country was not that of
building larger banks but that of building stronger eco
nomic communities, feeling that banks are strong or
weak dependent upon whether the economic communi
ties in which such banks are located are strong or weak.
This is the position of our respective troops at the
present time, and we yield this war-torn platform to the
Affirmative who will attempt, we suppose, to dislodge
our troops with a barrage of argument and fusillade of
criticism.
CONTROL OF THE BANKING SYSTEM 315
Third Affirmative Rebuttal, John K. Strong
Beloit College
LADIES AND GENTLEMEN: In order to give validity
to his arguments the third Negative speaker turned to
scriptural sources. There is a verse of scripture, how
ever, in Second Kings, I believe, that may be very
happily applied to the debate this evening. A para
phrase would read something like this: "And a great
and strong wind rent the mountains and brake in pieces
before the Truth; but the Truth was not in the wind:
and after the wind an earthquake; but the Truth was
not in the earthquake: and after the earthquake a fire;
but the Truth was not in the fire: and after the fire, a
still small voice, which was the voice of Truth." Ladies
and Gentlemen, while you and I have been entertained
this evening with roaratorical contests, the states of this
union are having moratorical contests that are pro
foundly influencing the life and interests of the Ameri
can people. And still the Gentlemen of the Negative
blare that if we will have faith in our present system
everything will be lovely some day. Wise was that
writer who said, "But the Truth was not in the wind."
The still small voice has spoken this evening, but the
deaf have not profited therefrom. The Negative has
left the Affirmative case, as progressively established,
almost completely untouched. It has executed several
admirable circumlocutions around it, as if it were a
briar-patch rather than just an ordinary bush. We
have shown you that the dual, state-national banking
system is the major evil of the present system. Mr.
316 THE YEAR BOOK OF COLLEGE DEBATING
Nash proved this, Mr. Martin supplemented it, and the
present speaker gold-leafed it. And still they say to
us "First, you must prove that state regulation has
failed."
With urbane boldness they continue to tell us, di
rectly to our faces that we must also prove that Gov
ernmental Regulation is desirable and practical! If
they had not been worrying so much they might have
heard Mr. Nash give you the eight defects of the pres
ent banking system later very kindly supplemented
by Mr. Gleason and show you how in each case a
remedy would be effected through membership in the
Federal Reserve System. They would also have heard
Mr. Martin tell you about the opportunities in govern
ment control for the stabilization of the purchasing
power of our money. Even I took the occasion to
reiterate all these points in my constructive speech, but
I noted at the time that the Negative was in a strained
huddle.
There has been, I will admit, the semblance of a de
bate upon the proposition of guaranteed deposits, but
we have shown you, in answer to Mr. Eisenberg s
charges, that the fund would not be too large, that it
would not eliminate good banking, and that the eight
states failed because they didn t try it on a national
scale. We further cited several outstanding benefits
that would result, not one of which was even sniffed at
by the Negative.
These three points then, seem to have been the center
of this debate, but it is equally interesting to notice that
this center is well within the bounds of the Affirmative s
CONTROL OF THE BANKING SYSTEM 317
case. Only two minor matters remain. One of these
is that Lilliputian matter of Organization versus Func
tion. Although I recognize that you of the audience
understood my answer the first time, let me briefly
reiterate it. Form always determines Function, and
Function is possible only through the medium of, and
in conformity with, Form. Hence it is absolutely neces
sary to control the Form in order to control the Func
tion. Now the three Functions of banks are to make
investments and loans, support the credit structure,
receive and return deposits. And the Federal Reserve
System through its Organization controls these very
Functions!
And just one more word as regards the Negative
plan which Mr. Hansen so charitably proposed. From
Plato s Republic through Bacon s New Atlantis down
to Scott s Technocracy, Ladies and Gentlemen, man
kind has been striving toward this Utopian goal. And
like these visionaries of old, our friends of the Negative
have seen the Perfect State, but have forgotten to con
sider the component elements that first must attain
perfection. They see the complete tapestry, but have
no eye for the thousand threads that must be perfectly
coordinated. Their mistake is a good case of the error
that the medieval Nominalists made, that of thinking
the universal-general to be more real than the immedi
ate-particular. This splendid society envisioned by the
Opposition will undoubtedly come some day, but only
when men and women forget the larger pattern and
work with the individual and component parts of so
ciety. And one of the first steps we must take in this
318 THE YEAR BOOK OF COLLEGE DEBATING
direction is the very thing that we have so consistently
upheld this evening and which the Negative has as
consistently opposed the stabilization of our banking
structure.
Some of you no doubt are acquainted with the Peter-
kin Papers, whose delightful philosophy has whiled
away many a rainy day. In one of them is recorded
the story of how Elizabeth-Eliza made a cup of coffee,
but put salt in by mistake. The whole family as
sembled around that tea-cup, and one by one made
suggestions as to what would remedy the situation.
One suggested putting in a dash of baking soda, an
other would add some capsicum. A third tried a
quarter of a spoon of cream of tartar, and Elizabeth-
Eliza finally pulled out the drug-chest, none of the
contents of which make the coffee taste as it should.
In despair Elizabeth-Eliza finally telephoned the Lady
from Philadelphia, who, after being introduced to the
trouble, suggested that another cup of coffee be made.
And the family gave three cheers and carried out the
advice successfully. The Gentlemen of the Negative
have been telling us this evening that our present situa
tion must not be changed, and that we can doctor it up,
and drug it so* that perhaps it will operate soundly in
the future. But we are tired of such Elizabeth-Eliza
tactics, as no doubt you are, and we propose to create
an entirely new cup of coffee, as it were, a national
banking system on the lines of the present Federal
Reserve Plan that will guarantee to the people of
America the financial integrity of their banks. This
CONTROL OF THE BANKING SYSTEM 319
we most thoroughly believe in, and this we recommend
to your most earnest support.
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320 THE YEAR BOOK OF COLLEGE DEBATING
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