xt7wwp9t2q46_41 https://exploreuk.uky.edu/dips/xt7wwp9t2q46/data/mets.xml https://exploreuk.uky.edu/dips/xt7wwp9t2q46/data/59m61.dao.xml American Liberty League 37 linear feet archival material English University of Kentucky This digital resource may be freely searched and displayed.  Permission must be received for subsequent distribution in print or electronically.  Physical rights are retained by the owning repository.  Copyright is retained in accordance with U. S. copyright laws.  For information about permissions to reproduce or publish, contact the Special Collections Research Center. Jouett Shouse Collection (American Liberty League Pamphlets), No. 44 "An Open Letter to the President," by Dr. Neil Carothers, Professor of Economics and Director of the College of Business Administration at Lehigh University, June 23,1935 text No. 44 "An Open Letter to the President," by Dr. Neil Carothers, Professor of Economics and Director of the College of Business Administration at Lehigh University, June 23,1935 2013 https://exploreuk.uky.edu/dips/xt7wwp9t2q46/data/59m61/59m61_44/Am_Lib_Lg_44_001/Am_Lib_Lg_44_001.pdf section false xt7wwp9t2q46_41 xt7wwp9t2q46 Pamphlets Available ir I *
· *
Copies of the following pamphlets and
other League literature may be obtained      
upon application to the League’s national
H headquarters : -  
V Why, The AmericanlLiberty League?
Sta tement of Princip es and Purposes •
Prhgress vs. Change—-Speech by Jouett Shouse    
Recovery, Relief and the Constituti0n—Speech
by Iouett Shouse
American Liberty League—Its Platform
An Analysis of the President’s Budget Message
Analysis of the $4,880,0%,000 Emergency Relief
Appropriation Act
Economic Security * * * ‘
The Bonus
Inflation 4
Democracy or Bureaucracy`?—Speech by Jouett
Shouse
The Thirty Hour Week
The Pending Banking Bill B
The Holding Company Bill y R
The Legislative Situation——Speech by Jouett
Shouse DR. NEIL CAROTHERS
"What is the Constitutgm getween Friends?”——
Speech by lames M. ec · ·
Where Are We Geine·?_Speeeh by James W_ Professor of Economics and Direetor of I
P Wadéwvrthl the College of Business Administra-
rice ontro . . . .
Yesterday, Téeeey endB·1ieme"ew tion at Lehigh University
Th L bor e ations i _ _ ,
` Goiierdment by Experiment—Speech by Dr. Mombor National Advrsvry Counml
Neil Carothers ’ ' L
How Iniiation Affects the Average Family-- Amerlcan Llberty caguc
Speech by Dr. Ray Bert Westerfield
The AAA Amendments
Political Banking—Speech by Dr. Walter E.
Spahr
The Bituminous Coal Bill `
· Regimenting the Farmers—Speech by Dr. G. W.
Dyer -e;,€ C‘4
Extension of the NRA Y-   *9
Human Rights and the C0nstitution—Speech  
by R. E. Desvernine E   M
The Farmers’ Home Bill 6* '4t?2si$Y?ii·°¤’r 
The TVA Amendments `6»?,.Y H ev
The New Deal, Its Unsound Theories and Ir- "
reconcilable Policies——Speech by Ralph M.
Shaw
Is the Constitution for Sale?——Speech by Capt.
William H. Stayton
How to Meet the Issue-—Speech by the Hon.
William E. Borah
The Supreme Court and the New Deal
The Duty of the Church to the Social Order- AMERICAN LIBERTY LEAGUE
Speech by S' WellS’Utl€y National Headquarters
* NATIONAL PRESS BUILDING
AMERICAN LIBERTY LEAGUE wAsH1Nc.roN, D. c.
NATIONAL PRESS BUILDING
WASHINGTON, D. C. * *
  4 Document N0. 44
June, 1935

 AN         second election. President Harding went to
  his death without knowing what the people
U _ , thought of his administration. Some presidents
* refused to rely on the judgments of partisan
M advisers but sought information from every
Y DEAR M]-t· PRESIDENT: 1 available source and then acted without refer-
When a Ptwate etttzeh Writes tin epeu iter ence to politics or politicians. Cleveland was
to the President he is near y. aways see mg conspicuous mmm h d d h · h ld
_ _ gtese,an toay 618 e
$0me Personal benetttv tnatertat et Peyehelogb to have been one of America’s greatest men.
cal. Th1s letter has no such objective. I am not Th€rC are Some reliable avenues of inf 01_ma_
writing In mY Own tntet`eSt· h h tion and sources of advice available to a presi-
This is not the first letter to you t at as dem in Om, time Ons is the editorial - d
. ju gment
borne my signature. In October, 1933, there was Of the reputable newspapers. Another is the
sent to Yen a letter sighed by t°ttY'f°m` econ` t judgment of the academic economists. The edi-
omists and pract1cal experts on money. It was tors Of Om, great papers, along with the cc0n_
sl letter nrglng Yen tv Ptesettte thte eetmtrys t omists, happen to be the best informed, most
m0netaI'Y standard an£h Waththg Yett of the ° impartial and most courageous judges of eco-
dangers of inflation. e group s1gn1ng t at nomic 1- · h Th
po 1cy 1n t e country. ey are not
letter Included .tnanY¤ though het ath et the infallible, of course, and in rare cases they are
leading eXPe1`ta en tneneY and eitehange th all   prejudiced by their partisan or financial con-
America. In an accompanying etter we very msctions But not the ma- · B h h
. jority. ot t ese
1‘esPeetfnnY asked Yen te matee that letter Pub' groups are so far superior in economic wisdom
lie- But it never was- A wht]; tatit: ttteltse was I to any political organization, such as the United
made Pnnne a letter ttem Ve ttt e' hewn States Senate, that it would be cruel to force
instructors of subordinate rank in one college. thc comparison
, • 9
This letter lndetsed the gevethmeht S mehey Take one example. If there is one responsible
PeneY· newspaper in this country that has not con-
A Pfesldent et thta eeuhtty te thevttahty Sm" demned the 30-hour-week bill for the economic
rounded by Pehttetane ThFY eteate amend idiocy it is, I have not heard of it. If there is
him a thick mist of misin ormation, propa- an bl · - f f · I d
_ _ y reputa e econom1st in avor o 1t, o
ganda and adulation wh1ch separates him from not know about its But that Senate has Passed
the views of millions of citizens. The thousands this monstmsity twice, and will do SO again
Wne Write Yen ate neatly all Patttsah admttiete unless they are frightened by some rival politi-
frequently beneficiar1es of governmental action. ca] pressure brought on th€m_ when the ]cad_
. Their letters are less than worthless, for they t ing newspapers, the academic economists and
are aetdanY nneteadthg· § the Supreme Court are on one side of a ques-
U   tion, and the Rev. Coughlin, the Committee for
THUS 3 President is eetnetnnea tn tgneranee f the Nation, and Senator Elmer Thomas are on
of the real feelings of his people and frequently t the Othsrt thsts is just Ons smswsh
uninformed as to the judgments of the people  
d' h's c nduct. You have studied the f _ _ _ _ _
regu mg 1 0 . BUT 1n your entire administration you have
history of other pres1dents, and you must have _ _ _
. had l1ttle confidence 1n the newspapers and st1ll
been 1mpressed by the number who never knew _ _ _ _ _
. . less 1n the economists. Early 1n your adm1n1s-
unt1l too late. Some pres1dents never under- ~ _ d_ d h _ _
stood how their policies were regarded until Hatton you lsappravc t C sconsmsts In a
radio talk to the nat1on, even before they had
the Supreme Court got around to them, and by 1 t_ d _ l_ _
others never knew where they stood until a pu IC Y ques 10116 your Ccmmmlc P0 mms'
A 3
2

 i But two years later it is clear that on the issues past history it has been possible to hope that
` where the economists have differed with the the lower House could be kept under some sort
policies of the government, the economists were of control by a wiser and more patriotic Senate,
( right. They have made a hit every time they but for two years past it has been very difficult H
. came to bat. to tell which is the lower House. I
You have approved a number of measures And this brings me to the crux of this letter
that were vehemently opposed by an over- On my own responsibility I am undertaking to
whelming majority of the newspapers and of speak for a great many millions of people who
the economists. As awhole both of these groups badly need your protection but who are but
condemned the abrogation of the gold clause. poorly represented among your advisers. I am
They said it was repudiation nearly two years wondering if you are not willing to consider
before the Supreme Court SHI-(Il 1t. You said the judgment of the newspapers and the econ-
that there was not enough gold in the world p omists in regard to certain of your policies.
to pay the gold bond indebtedness, despite the `
fact that the economists had long before pointed O
_ N M 2
out the truth that we had just about twice as V . ay 2 you Prcsemizd your message V€t°`
_ _ F 1ng the `Patman bonus bill. The message won
much gold as we could possibly need to pay the practical] ummim 1 f h _
all gold debts as they fell due, a tiny bit at a . Y , ous app ausc 0 t 8 m`
time tell1gent people of this country. In clear and
‘ f f l l
Both the newspapers and the economists have Owe u anguage you presented _ th? masons
why a bonus should not be pa1d m paper
known for more than a year that the N.R.A. money The masonin d d H
has retarded recovery. The economists said so 1 ` g you 8 Vance _ was aw`
_ _ _ _ _ ess. In that message you made an irrefutable
publicly at their Chicago meeting in December. . _ _ _
_ _ _ _ case aga1nst fiat money, against 1niiat1on
The Brook1ngs Inst1tut1on sa1d so somewhat . . _ _ ’
_ aga1nst Treasury deficits without taxat1on and
later. And all they got 1n reply was abuse from against your Own Emir t 1, ’ ,
administration spokesmen. A majority of the March 1933 6 mmm ary P0 my Smcc
responsible papers and of the economists con- ° · , _
_ _ About fiat money you sa1d this:
a demned the Fraz1er-Lemke Act and the s1lver an . ,
Subsidies before they Wwe Passed. · 1S easy to see the ultimate result of meet-
1ng recurr1ng demands by the issuance of Treas-
ury notes. It invites an ultimate reckoning in
THIS is not merely a review of past history. uncontrollable prices and in destruction of the
It has a very deep significance now. When a value of savings that will strike most cruelly
president ignores the patriotic appeals of the those, like the veterans, who seem to he tem-
two most reliable agencies available, he must porarily benefited.”
turn to politicians, and more especially to Con- And yet on May 12, 1933, you signed the
gress. And you have been unfortunate in having _ Thomas Inflation Act, which authorizes and
during your administration the most irrespon- makes possible a three-way inflation of the
sible Congress in American history. When they currency beside which the Patman inflation is
have not been passing bills without even read- { a drop in the bucket. And on June 19, 1934,
ing them, they have been busy passing measures you signed a silver bill which compels a slow
in response to mob pressure. On the few oc- but relentless inflation.
casions when they have summoned up enough In that veto message you pointed out the
courage to oppose you, they have opposed you sinister dangers of recurring deficits. You said
on measures about which you were signally this:
right, as in the case of the bonus bill, the °°S0lely from the point of view of the good
economy measure, and the World Court. In credit of the United States the complete failure I
4 s

 of the Congress to provide additional taxes for based on gold, but there is only paper. The  
an additional expenditure of this magnitude Secretary has somewhere referred to it as a  
2 would in itself and by itself alone warrant dis- gold bullion standard. But you have down   T
approval of this measure.” there in Washington a weird hybrid mixture 1 s
And yet we have had for the past two years of gold and silver of fluctuating value, locked )
t the most stupendous deficits in the history of up in the vaults.
  the world, financed by every imaginable device Although the gold dollars in that mixture
Q except taxation, even including the forcible weigh 25.8 grains, you now call 59 per cent of
i seizure of gold coin in private hands. each one a dollar. Although the silver dollars
in that mixture are worth about half-a-dollar, ’
IN THAT veto message you Said this: you call each one a standard dollar. And this
=¢The fmal ewhereaev dense, Stating that sterilized and uncertain mixture is by law the
  spending the money is the most effective means bose of out motley SYStom· A11 our Paper money
of hastening recovery, is so ill-considered that   is togat tenders although Some of it roprssssts
little comment is necessaryje   one thing, some another. No other nation in
And yet there has been fel, two years past a _1 history ever had any such goulash as this for a
record of reckless expenditures of government ourronoy
money without parallel in history, in a futile
attempt to “prime the pump" of private busi- DAY after day, secretly, we buy capricious
11855- 111 the bottomloss P1t of C·W·A·s P·W·A·e amounts of silver and bury it in the vaults, for
T.V.A. and, in part, F.E.R.A., there have been what purpose no one knows. And every day
Sllllli 12116 l)ill10D.S HOW 1‘€pI‘CS€I1lL€(l by thc T11- wc pump into [hc currcncy 3 lct gf Sjlvcy cc]--
crease in government debt. And between now tificates. But each one represents a useless
and 1937 there is to be spent the incredible lump of silver not worth a dollar or redeem-
sum of $4,800,000,000, of which about $4,000,- able in a dollar’s worth of anything. At yester-
000,000 is pure deficit. This is to be spent in day’s value a silver certificate represented about
"work relief," but, whatever the needs for relief 55 cents worth of silver. What it will be worth
and whatever the plans for spending, at least tomorrow is a guess. And every single certificate
half of this vast sum will be pure “pump going into circulation is debased fiat money,
priming.” and every one represents that much inflation.
ln 1878 the silver bloc, which has been gnaw-
1N THAT splendid veto message attacking m- ins swsy in Consross from 1873 to 1935,
flation you overlooked two other types of jammed tbrougn orsr rhs Prestdenus Veto a
maattea already steadily undermining the em-- mossurs just s 1i¤1s 1i13· Tho sovoromont ss11s
¥n it or describe it. He couldn’t. No man in the bonds to rho books, rhs goVernment sbends rhs
i world can name or describe the strange thing moneY» and rhs money goes baok to tho banks
j` our currency has become. It is supposed to be as dePostts· Tne banks maY thor borrow rrom
6 ' 7

 the Federal Reserve Banks on their bonds. The sion level that gets us into the trouble.. What i
Reserve Banks may also buy bonds on their is needed for recovery is confidence 1n the y
own and use them as a basis for currency issues. integrity of the money supply. On this are built   y
the foundations of recovery, which are profit /
for business and wide-spread employment.
WITH this set-up there develops a swollen You do not have to gggg - h
_ _ _ _ _ pt economic t eory
ll€pl?Sll Sllllallqll Wlllqll has lll? (lccepllvc CX- to believe this. You need only to look at the \
plesive properties of nitro-glycerine. It 1S harm- rapidly rising prices ef 1934 and the tragic >
less until exploded, and then you cannot find unemployment figures fer the Samtc yeer_ In I
the pieces of the innocent bystanders. The fuse our other great depressions reeeyery came at
that Sets lt Olll mayyllc a Sllllllcll Poplllall dlslllllsl ,a lower level of prices. There was no artificial
of the govsrsmsnt S *i¤a¤·i1==1S*==·b1h*=¥· It may peee.eeuene, end we eee out alot quicker than _
be almad fhglgt frcigm capiial. And .1t may ibe we hgvg in this One.
mm Y a Su °” um ° €°°”°m*° “°*“’“>’ ‘ As for "adjusting the burden of debt,” re- t
ll-Om llcllllllllllg llllélilcss collllllcllcll _ covery has been so long delayed by our efforts  
we have been plllllg up these cxploslva ma- I to force it by act of Congress that time has in  
, lclllals lol a long lllll€' The banks Ol the i large measure wiped out the old debtor classes. i
tg collllllly now llolll about $lLl’000’000’000 lll gov` Artificial price-raising is now in great degree {
g ernment secur1t1es. It is conservatively esti- for the benefit ef the eneenieterei fereeiesereg y
bx mated ther there are already enough curreney gnd mgneyed men whe heneht Steeke and other  
and credit available to finance a. hundred b1l- P1,gnei,ty et reeinhettern nrieeS_ Any further  
’ lxll llogali mHE“°“· It Sielllslfaiili to Say that price·rises will probably be at the expense of   e
l liilll allflll ES ll0l_ ta cl} 0 g3y€l' Com` the wage-earners and the middle classes. The  
mo lly Plllccs ave HSCH a°°ut per cent st f livin is up about 16 per cent since ;
Slllcc lllc abnormally low Pollll Ol M“`°h= l933’ llllarcli, 1933.g]ust how this benefits the many tl
but this has been due lo a multitude sf °V€mS° millions whose incomes have not increased is l
N of which the chief factor is probably natural hard te eee_
: lllc0V€l·y’ S“PP1""{°”*°d bY Sfwh Ccolmmlc aHll°' The whole policy of the administration has
· tipnsd as destruction of agricultural products, been iniietienery Sinee the date ef the World
t e rought, devaluation and the N.R.A. But Eeenemie Cenferenee in 1933 There may bc
cvclly qllallllcll Blpclll in Amclllclkllows that no justification for it, but it is widely believed,  
Xegllavcgall thc llgillmllelllis Ol- ll °llSaSl;°uS gm none the less, that the administration, still  
a 1on. ecretary orgent au goes ont e ra io giinging tg the “ni,ime_the_ntnnn¤¤ theory, hee i
to tell the —P“°P1“ we llavc a Very S°uml_°}u" now embraced the theory of “squandering our  
t i rency, but the financial journals are advertising Way nntp Many neenie heiieye that this theory  
· ways by which their subscribers may seek to · i· h M ti  
E i avoid the destruction of the coming inflation · was adopted ml th? advlcc 0   J? n lynn l
1 _’ ¤ Keynes. If this is so, there 1S 1rony 1n the
Not long ago you told the country that PHCCS situation, for there is cosmic humor in a great
am not yet hlgh Cllougll government which derides economic theory
‘ adopting the worst economic theory there is. .
THERE is the underlying philosophy respon- .
Bible for our whole confused monetary p0]iey_ IT IS a regrettable thing for economists to
t Recovery does not require any given 16%] gf disagree, because it enables people to defend
\ y prices, the 1926 level or any ether; A rapid wholly unsound policies with the statement that
y· and wholesome recovery comes naturally at a th€I`€ are H0 agI'€€d'uP°n economic truths-
tl price level considerably below the pre-depres· Th€1'€ am a great m&nY ccmwmistsv and it is
3 9

 uiiiiappiiy tttie tiiat ayary now and than one some assurance that we are going to have 5011Ild
of them loses his balance and goes haywire. eurreney and credit.
They da not da tnie aa often aa Poiitioiono oi` There is no need to wait for international
batik Ptesltlelits ar eaptaiiis at indnatry» but a currency stabilization. We had our chance for
few da go oit tha raaaryatian at tiineS· that in July, 1933, and mulfed it. We are strong
‘ Thara wad far ananrpid that tiny httia sranp ` enough to eete1o1nn e sound currency at home
that aaid NRA- Wanid hrins raaarary hy arti- and let the foreign onnneney.jngg1ere piey their
ficial wage-and-hour regulations. There was, for games. The European tail eennot wag the
a¤ia» tha saiiant hand that nrsad tha said- American dog. What we need now is me roster-  
Purchase Program, and snarantaad d Prioo rise ation of our own gold standard, at the 59-cent it
from devaluation. These are mostly dispersed ]eVe] `VG finally stumbled into. We need also  
nowa nook aariainins ta tneii` ooiioagnoo and an end of this blind and unjustified and humili-
students in our grandest universities just how ating and dangerous silver business, We need ,1.
right th€Y Would havn h€€h if they had hot i also some assurance of the frugal employment  
haan So Wi`ong· Tneio ia tno iaaiatad indo Crow of the work-relief billions, for purposes of relief
who believe in a commodity dollar, but cannot on]y, and not pumpprjming,
agmd dd tn What it ianr h0W tn Still it 01' what i These three simple measures would assure
it would do. recovery, and then the government would gird
\ But thara d0€S hdt aPP€ttI` to he ih Am€1`i€¤ its loins for the control of the inflationary ele-
{ ithy diacnvarahla g1‘0uP Wh0 h€h€V€ ih the ments now working in our midst. It is still
  S*lhdhd€F‘0hY·WdY·0Ut th€0I‘Y· And I haw to S€€ possible to restrain the inflationary forces in
gi this GOUHTYY, tiftér €Xhtll1Sti11g the programs of our situation. There are ways to do it. But will
5 domestic economists with hallucinations, im- it be done? I1; would he a solemn thing to be
·   porting a special brand from Europe, especially responsible for a monetary policy that does
when the imported commodity has such a low what you said the Patman bonus would do, that
value at home. Mr. John Keynes urging the a is, destroy the savings and the wages of the
\ squander theory on this country is too remi- common man. It would be a bad thing to have
niscent of Mr. John Law urging the Mississippi the long-delayed and now-inevitable recovery
i Bubble on King Louis of France. ruined by a head-long inflation resulting from
policies wilfully put through over the bitter
BUT I am interested mainly in the futmg protests of the leading newspapers, nearly all
Recovery is Standing en the deeggtepv humbly the economists, practically all the recognized
  begging admittance The Supreme Court has experts on money, all the responsible organ-
l     done a lot to revive free enterprise and restore lzatlells ai lsttsltless mell’ and the alslest melt
    i the obligation of contract. But there is a fear in Cellgtess in yetlli own party" lt Wauid ha an
Y i   of inflation over the land. Many of the most 3 awful tlllllg tel yetl’ alltl an awiui thing ter tts
K distinguished and conservative authorities in I ' Demooiatsr and alleve all an awttll tiling tot the
the country believe that a disastrous inflation is nation that etltttlstetl ta Yell mere Pewet tliaii
{ inevitable. I do not believe it. This is a rich ally etllet Atttetleall llas evet had-
  and powerful country. It can withstand nearly i (Reprinted from the New York Herald Tribune,
  any economic adversity, including depression June 23, 1935)
  and recovery by experiment. lt can absorb the
  inflation already initiated. It can carry the
\ burden of deficits already created, and the huge
i deficit of the coming year. But it cannot do
j this indefinitely. There ought to be, very soon,