Mr. HAYS. That time came and went without any revolution, didn't it, Mr. McNiece?

Mr. MCNIECE. Of that type.

Mr. HAYS. But you do think that there was an undesirable social revolution of some kind or another?

Mr. McNIECE. In process.

Mr. HAYS. Still going on?

Mr. MCNIECE. Yes.

Mr. HAYS. That leads me to a very interesting thing that we started to pursue the other day. In fact, we touched on it a few times. In the event of a serious depression in this country, and we all hope we don't have one, but we have had them in the past, would you recommend that the Government adopt a laissez-faire attitude and take hands off and let the thing run its course?

Mr. MCNIECE. No. I have covered that point in the last section of my testimony, that is the economic and the Government interest.

Mr. HAYS. What would you suggest that the Government do? The CHAIRMAN. May I interject that it is going so far afield. We are not outlining a pattern of conduct during the

Mr. HAYS. No, but we are criticizing the conduct of the Government, and I would like to have some alternatives.

The CHAIRMAN. I do not understand we are criticizing the Gov

ernment.

Mr. HAYS. Have you read this empirical document here?

The CHAIRMAN. There is no such intention. I don't think it makes much difference to the Government what this committee or Mr. McNiece thinks of what should be done in the case of a depression in the future.

Mr. HAYS. In the third paragraph-if you don't mind jumping ahead-he said:

Among these is the increasing participation of the Federal Government * in subsidization of agriculture, scientific research, wage control, mortgage insurance and other activities. Most, if not all, of these were politically conceived and depression born. They represent new ventures in our Government activities.

As I read on, it is critical that the Government goes into that. Did you mean to be critical?

Mr. McNIECE. Prior to that in this section which I have not read, you will find the origin for the adoption of the suggestions by the Government in those activities, and that is why they are mentioned in this way from the section of the report you quoted.

Mr. HAYS. You are saying that somebody sort of talked the Government into this, and it would have been better if they had not done it. Isn't that what you mean to imply?

Mr. McNIECE. Yes. I told you in the beginning, and it is recorded in the early part of this investigative work, which is purely factualwe emphasized the fact that we are drawing no conclusions-the section of the report from which you are now quoting is getting into the conclusions which we are arriving at as a result of the evidence, all of which we have not yet presented.

The CHAIRMAN. Since we have gotten into this second report, I have just talked to Mr. Hays, we might as well proceed with the second phase of your report.

Mr. MCNIECE. I would like to make a short preliminary statement before getting into the reading from this document. This statement is as follows:

Before beginning a discussion of the relationships between foundations and government, it should be understood by all that we realize that we are entering the sensitive area of political controversy. One reason for mentioning this at this time is that we wish it to be understood that we are limiting our analysis of the conditions as we shall describe them, first to documented statements from the sources quoted and second, in the economics section of the report to statistical information available in the Government's own publications.

The economic facts seem to substantiate the conclusion that many of the proposals advanced by the planners and deemed experimental by some and questionable by others have been put into practice and are a part of our everyday lives as we are now living them. Congressional appropriations and governmental expenditures indicate this. While these facts seem to speak for themselves, there are certain interpretations which we shall make especially with reference to future conditions if we choose to continue these collectivistic ventures.

In these conclusions we are taking no partisan political position, nor do we wish to encourage or support any other attitude than this.

Our interest in these problems as they affect the state of the Nation and its future far exceeds our interest in any form of political prefferment.

Now, this section of the manuscript report is headed, "Relationships Between Foundations and Government." It is particularly concerned with the national and social planning.

Before proceeding with the submission of evidence bearing upon the relationships between foundations and government, we wish to make some comments by way of background as they pertain to national and social planning by government.

Three things should be obvious to anyone reasonably familiar with the interlocking complexities of our production, distribution, service, and financial problems in our economy:

(1) The successful correlation of all these activities would require the complete control of all phases of our economic endeavors. Price control, for example, cannot be effectively maintained without rigorous control of material supply and costs, wages, transportation, and all other elements entering into final costs.

Mr. HAYS. Mr. Chairman, it seems to me that these reports are very long, and if Mr. McNiece is going to read all of them today, that is about all we are going to get done. I have read them. I have some questions I would like to ask about them. I would like to just have them put in the record as is, and then go on with the questioning. I think it would save a lot of time.

Mr. KоCH. He was just going to read the shorter one.

Mr. HAYS. Is he going to read the typewritten introduction of this? Mr. KоCH. No.

Mr. McNIECE. I had expected to take selective manuscript reading. It would be dull and deadly, and I would say completely impossible to convey to anyone the message involved in that great series of, I think, 20 statistical tables. I could not hope to do that by reading. I had not expected to do that.

Mr. KOCH. You intended to read only the mimeographed statement? Mr. MCNIECE. Yes, and certain conclusions and introduction material from the Economic Report.

The CHAIRMAN. This is 19 pages.

Mr. MCNIECE. That is all.

Mrs. PrOST. There is a lot of single spacing and tightly written pages.

The CHAIRMAN. The quotations are single spaced. Had you expected to read the quotations in full?

Mr. MCNIECE. I had intended to read the quotations in full. It is immaterial to me.

The CHAIRMAN. Why don't you continue with the shorter form? The other material is to be inserted in the record.

Mr. MCNIECE. That is right. There are certain things in these quotations that I think from my point of view are very important from the standpoint of Mr. Hays' questions.

The CHAIRMAN. Very well.

Mr. HAYS. I have about 8 or 10 questions to this document, and I was wondering if you have any objection in order to prevent the disorganized thing we have had in the past, and going some other day, you could read them and answer all of my questions before noon? Would you have any objection if I stopped you at the bottom of page 2 and asked a question right there while it is fresh in mind?

The CHAIRMAN. What he had in mind, as I understood a while ago, in the remainder of this brief form might be the basis for answers. I have not read these quotations. I would rather like to hear them, if I might, before the questioning. I think we would have time before noon to conclude this and have the questioning also before noon, which I would like to do.

Mr. MCNIECE. Yes, we could.

The CHAIRMAN. For my own information, I would rather like to have it.

Mr. MCNIECE. It is very vital, Mr. Reece, to the questions which Mr. Hays very properly asked. I would like at least to present those that bear upon this idea of, let us say, a concentrated corps of influence. It is involved here to a certain extent. It is involved in one of the very first questions Mr. Hays asked me this morning. So I think it would be better if we could at least go this far with it.

Mr. HAYS. Read this whole thing?

Mr. McNIECE. Yes, it is not going to take very long.
The CHAIRMAN. Very well.

Mr. McNIECE. Otherwise, shortages, surpluses, and bottlenecks would bob up continuously and everywhere.

(2) With the complexity due to the literally millions of points or junctures where difficulties may arise, no man or centralized group of men possess the knowledge or judgment that will equal the integrated judgment of thousands of experienced men applied at the points where and when troubles first develop.

At the time when increased complexity of national and international affairs seem to make more governmental planning and control necessary, the Government is actually becoming less and less able to exercise rational and competent control over the multiplicity of details essential to good planning. To be even superficially effective, it must be completely autocratic.

(3) Even though such centralized planning were physically possible, the net results would be a smaller and smaller percentage of goods and services produced that would be available for those who produce them. This would result from the increasing cost of the

governmental agencies and bureaus necessary to devise and maintain control. Of course this would have to be met by increasing taxation. That is the experience in Russia and it has been developing here for some years as will be shown in the staff's economic report.

From the beginning, the Socialist programs have called for national ownership and planning of productive facilities.

Such references are frequent and clear. Perhaps the following quotation from Engels, friend and contemporary of Marx, may illustrate the point.

The planless production of capitalist society capitulates before the planned production of the invading Socialist society.

To emphasize the reiteration of this concept by a responsible body of men in our own times and country, we may again refer to a paragraph from the report of the Commission on Social Studies. After 5 years of deliberation they say (American Historical Association, Committee on Social Studies, p. 16):

Under the molding influence of socialized processes of living, drives of technology and science, pressures of changing thought and policy, and disrupting impacts of economic disaster, there is a notable waning of the once widespread popular faith in economic individualism; and leaders in public affairs, supported by a growing mass of the population, are demanding the introduction into economy of ever wider measures of planning and control.

In what way has this expression of belief found its way into our governmental activities?

In 1933, the National Planning Board was formed. How did it look upon its task and what seem to be its final objectives? These may be indicated in part by the following extracts from its final report for 1933-34-National Planning Board, final report 1933-34, page 11:

State and interstate planning is a lusty infant but the work is only beginning. Advisory economic councils may be regarded as instrumentalities for stimulating a coordinated view of national life and for developing mental attitudes favorable to the principle of national planning.

Page 60:

Finally, mention should be made of the fact that there are three great national councils which contribute to research in the social sciences. The Council of Learned Societies, the American Council on Education, and the Social Science Research Council are important factors in the development of research and add their activities to the body of scientific material available in any program of national planning.

The Council of Learned Societies has promoted historical and general social research.

The American Council on Education has recently sponsored an inquiry into the relation of Federal, State, and local governments to the conduct of public education. It has served as the organizing center for studies of materials of instruction and problems of educational administration. It represents the educational organizations of the country and is active in promoting research in its special field.

The Social Science Research Council, a committee of which prepared this memorandum, is an organization engaged in planning research. It is true that its object has not been to make social plans, but rather to plan research in the social field. A decade of thought on planning activities through its committees, distributed widely over the social sciences, has given it an experience, a background with regard to the idea of planning, that should be of value if it were called on to aid in national planning. Furthermore, the members of the Social Science Research Council, its staff, and the members of its committees are perhaps more familiar than the members of any other organization with the personnel in the social sciences, with the research interests of social scientists, and

with the experience and capabilities of social science research workers in the United States. The members of the council are familiar with the different bureaus of research. The council has been concerned chiefly with the determination of the groups and persons with whom special types of research should be placed. For this purpose it has set up committees, organized commissions, promoted research, and sponsored the development of various research agencies and interests. With its pivotal position among the social sciences, it could undoubtedly render valuable aid if called on to do so, in the formidable task of national planning.

Page 66:

It was after the Civil War that American economic life came to be dominated by the philosophy of laissez faire and by the doctrines of rugged individualism. But the economic and social evils of the period resulted in the development of new planning attitudes tending to emphasize especially public control and regulation.

Page 67:

Summing up the developments of these 125 years, one may say that insofar as the subject here considered is concerned, they are important because they left us a fourfold heritage:

First, to think in terms of an institutional framework which may be fashioned in accordance with prepared plans;

Second, a tendency to achieve results by compromise in which different lines and policies are more or less reconciled;

Third, a tendency to stress in theory the part played in economic life by individualism, while at the same time having recourse in practice to governmental aid and to collective action when necessary; and

Fourth, a continued social control applied to special areas of economic life. Page 71:

Such was the note already heard in America when during 1928-29 came the first intimations of the 5-year plan, and the Western World began to be interested in the work and methods of the Gosplan in Moscow. The Russian experience was not embodied in any concrete way in American thinking, but it stimulated the idea that we need to develop in an American plan out of our American background.

The National Planning Board after furnishing its report in 1934 was discontinued.

The National Resources Committee was in existence from 1934 to 1939.

In 1939, the National Resources Planning Board was constituted, in part with the same personnel. After a few years of deliberation, it rendered its final report, from which the following verbatim and continuous extract is quoted from page 3:

The National Resources Planning Board believes that it should be the declared policy of the United States Government to promote and maintain a high level of national production and consumption by all appropriate measures necessary for this purpose. The Board further believes that it should be the declared policy of the United States Government.

To underwrite full employment for the employables;

To guarantee a job for every man released from the Armed Forces and the war industries at the close of the war, with fair pay and working conditions;

To guarantee and, when necessary, underwrite:

Equal access to security,

Equal access to education for all,

Equal access to health and nutrition for all, and

Wholesome housing conditions for all.

This policy grows directly out of the Board's statement concerning which the President has said:

"All of the free peoples must plan, work, and fight together for the maintenance and development of our freedoms and rights."