"The excuse of lack of funds may have justified the last veto. That excuse does not exist now. There is no present justification for delay. Congress should and must act at once.

Were it not so serious a matter, it would be laughable to see what arguments are grasped by the heels and dragged into this debate. One would think that the idea of a bonus is new. As a matter of fact, from the early history of our country after every war our soldiers have been given some sort of a bonus or bounty. If there were anything disgraceful about it, it would reflect upon the memory of great men, outstanding figures, and numbered among the heroes of our history.

"Do you know that Gen. Phil Sheridan received 160 acres of land as an additional compensation for his service in the Indian war of 1853?

"Do you know that Gen. William T. Sherman, for service in the Seminole Indian and Mexican wars, received 160 acres of land in addition to his salary as an officer in the Army?

"Do you know that Gen. Winfield Scott, for his services in the Mexican War, was given a similar bonus?

"Do you know that Admiral David G. Farragut, for service as midshipman in the War of 1812 and commander in the Mexican War, received 160 acres of land in addition to his salary as an officer of the Navy?

"Do you know that Gen. Robert E. Lee, who served as a captain in the Mexican War, received a grant of 160 acres of land under the act of 1850?

"Do you know that Gen. U. S. Grant received a bounty of 160 acres of land for his service as a second lieutenant in the Mexican War? "Finally, may I ask, do you know that Abraham Lincoln, who served 40 days as a captain in the Black Hawk Indian war in 1832, received for his services, as late as 1850, 40 acres of land? Hanging on the wall in room 306 of the Pension Office Building in Washington is the original application signed by Mr. Lincoln on August 21, 1855, making application for 120 acres of additional land provided by subsequent act of Congress for soldiers in that war.

"You have heard the most exaggerated and disturbing figures about the cost of a bonus. I want you to know what it would cost to adjust the compensation of the veterans and to pay it in cash, which is the kind of a bonus I consider to be reasonable and just.

Of

"In the army of the World War there were 4,679,853 men. these 2,435,000 served overseas. The remaining 2,244,853 were denied the privilege of leaving these shores.

"The average number of days served by each man in the service was 260. The average for the men who had overseas service was 833 days.

"The bonus bills which have been proposed provide a dollar a day for home service, or a total in round numbers of $585,000,000. They provide for overseas men a dollar and a quarter a day, or a total of a trifle over $1,000,000,000. Deducting the $60 each man did receive on bis discharge, the total cost of a cash bonus on this plan would be $1,318,575,600.

Personally I am not quite satisfied with this plan, because it marks a difference between the men who went to Europe and the men who were detained here. In the last analysis the sacrifice was the same for each group. If I had my way I should add 25 cents a day to the home-service group, giving these men a dollar and a quarter a day, the same as the overseas veterans. This would place all the exservice men on the same plane of equality, just as they have chosen to be in the Legion.

"This extra payment to the home-service men would increase the bonus by $146,201,663. This would make the whole amount due the veterans on the cash payment plan $1.464,777,263. "This is considerably less than a billion and a half of dollars. It is a modest sum in comparison with a total cost of twenty-five billions for the war. It is less than any one of the major European countries Owes us. Yet this sum, a billion and a half, would adjust the compensation of every veteran, and it can be provided for out of the more productive income prophesied by Mr. Mellon as a result of the reduced surtaxes.

"Suppose this money were borrowed on 60-year bonds, issuing the billion and a half at once, or, if the bonus is paid in five equal annual installments, in issues of three hundred millions annually for five years, the total cost at the high rate of 5 per cent would be less than seventy-five millions per year.

"Twenty-five millions paid annually to retire the bonds would make a total expense to the country the first year for interest and principal of $100,000,000, and this would decrease annually till the debt was wiped out at the end of 60 years.

"This is a simple problem in arithmetic and one need not be a great banker to understand it. Even a doctor can understand it. The increased revenues which are promised if the surtaxes of the rich are reduced will pay the entire cost of the bonus.

"

Let us cultivate patience and forbearance. The pulse of the public is running too fast just now for clear thinking about tax reduction and

LXV- -113

Pretty soon the patient will

the bonus. Let us keep calm and cool. be better and able to study these matters. "I have confidence in Congress. In my opinion the able men of that body will find a solution. If this group does not find the way, another will be called to solve the problem.

"It is probable the superrich will not get all they want. But millions of taxpayers will get more relief from the Democratic plan than they would from the Mellon plan, and personally I am more inetrested in the millions than in the millionaires.

FOREIGN RELATIONS.

"Such a program as I have outlined to-day would make for marked increase in prosperity at home, but are we satisfied to think or to talk about our own prosperity without regard for the rest of the globe?

"It is human to stand aloof from great world questions. Their very magnitude frightens us. We hesitate to approach them in the way we attack the little problems of our own households. We scurry away when the troubles of the great round world are mentioned. Is not this attitude of mind merely an unusual expression of stage fright?

"Let us study the world disease exactly as we would a simple little incident in our daily walk. What are some of the conclusions. we would reach.

"Hunger, broken rest, the stress and strain of mental and physlcal want-these make for restlessness, irritability, quarrelsomeness and war.

"Every school-teacher, every parent knows that the way to keep children from quarreling and the way to make them happy is to keep them busy. Men are like children and nations are like groups of children.

"To restore peace, to obliterate the scars of the great war, to wipe out hatred, to calm the fears and agitation of the world's mind, there must be found a way to put the world back to work.

"The present trouble of Europe is not war or the fear of warit is the discontent born of idleness. What the world needs is work. It needs to be busy. Nothing makes for contentment of mind like pleasing occupation with a fair share of profits, and the certainty of unfailing income.

"Hunger, disease, undernourishment of children, social unrest, interrupted education, mental stunting, and broken lives are found throughout the earth. They must be replaced by health, vigor, and happiness, which are the natural outcome of peace, industrial activity, and freedom to work and to earn.

"The business, the industry, the commerce of the world must be reestablished. What statesmen should do, it seems to me, is to find the least common denominator upon which they can agree and then proceed to settle the world's economic troubles by the accepted formula.

"This is to my mind a page from the book we should study just now. It may be the elementary arithmetic of politics, but at least it presents something which can be understood by everybody.

"Our farmers want markets for their surplus grains. Our manufacturers wish to dispose of their products. Our merchants hunt markets for their goods. Our ships await cargoes. Our railroads seek freight.

More than this, our citizens pray for a permanency in prosperity and want nothing to interfere with the steady flow of the streams of trade and commerce throughout the world.

"There is nothing remarkable in this diagnosis of American desires. Neither is our feeling different from the impulses and desires of the citizens of every other country on earth. Undoubtedly our view is shared by men everywhere.

"Even if the sentiment of the dominating group is against entrance into some sort of an association of nations, is America to shirk the leadership the world looks to us to assume?

Even though we should assume the correctness of the statement often repeated that America is unwilling to enter into a permanent political alliance with nations across the ocean, are we on this account to be purely negative in our national attitude? Will somebody tell me why in the name of high Heaven some present effort is not being made to deal with the world's difficulties, not from a political standpoint, not with the idea of permanent alliance, but solely and wholly to restore economic prosperity to the world? Why not seek to revive national and world business, to rehabilitate the commerce of the world and to wipe out international hatred, by replacing it with that contentment and peace of mind associated with economic or business activity?

"No matter what may have been possible immediately after the armistice-no matter what may be possible next year or in the next decade the fact remains that the immediate need of the world, of our world, is for all the world to get back to work.

of a plan for the economic rehabilitation of the world. The most ardent supporter of the league, after these years of deferred hope and endless disappointment, can not object to a brief departure from the original program. It will be a period during which heated feelings may cool and engendered hatreds may be buried.

"In certain lines in America we have prosperity, but the idleness of the rest of the world should warn us that our prosperity is likely to be transient. We must not discard the warnings of the economic signs. All the signs indicate approaching financial, commercial, and Industrial depression. I should consider him a very poor guardian of the public health if the official waited until the disease entered the city before preparing to combat it. It is the duty of statesmen, too, to anticipate events and to escape national disaster by early and effective action.

"In my opinion the surest guaranty against this imminent peril is the calling of an immediate economic conference. Such a conference should not be limited to the major nations. It should include them all--old and new, eastern, western, and central.

"From every viewpoint, it seems to me, the world must welcome a proposal for a business and economic conference. The diplomats of the world have tried to settle these problems. They have failed. The administration has failed to use our Government's tremendous ⚫ moral, political, and economic influence to bring about a settlement of the world's economic troubles. Our country must take the initiative.

"Let it be understood that such an arrangement as I propose, when it is made, is for a limited time and for a single purpose-the rehabilitation of the world's industry and commerce. No other consideration should be permitted to mar the purpose of this movement.

In Washington's Farewell Address, in the paragraph immediately preceding the one where he so touchingly speaks of his advice as the 'counsels of an old and affectionate friend,' he uses language I wish to quote. It is as follows:

"Harmony. liberal intercourse with all nations are recommended by policy, humanity, and interest. But even our commercial policy should hold an equal and impartial hand, neither seeking nor granting exclusive favors or preferences; consulting the natural course of things; diffusing and diversifying by gentle means the streams of commerce, not forcing; establishing with powers so disposed order to give trade a stable course, to define the rights of our merchants, and to enable the Government to support them, conventional rules of intercourse, the best that present circumstances and mutual opinion will permit, but temporary and liable to be from time to time abandoned or varied as experience and circumstances shall dictate; constantly keeping in view that it is folly for one nation to look for disinterested favors from another.'

These are exactly the things I have in mind as necessary for Immediate adoption-temporary arrangements, building up, or to use Washington's quaint phrase, establishing,' with powers so disposed, such economic intercourse as will set flowing again the streams of { 'mmerce. It seems to me such action would insure harmony, liberal intercourse with nations' and certainly such action is ' recommended by policy, humanity, and interest.'

"I wish we might turn aside from our accustomed and predominating

political beliefs just long enough to take stock of present economic conditions.

"If a great fire is raging and a city block is threatened with destruction, we do not hold a convention to determine what form of fire apparatus should be purchased and what method of administrative control should be used in the fire department. We employ every facility we have to put out the fire. When the immediate conflagration is

ended we will sit down to discuss the larger and permanent policy of the city with regard to the department.

It seems to me this country can not afford to shirk the responsibility of making every possible attempt to have determined an economic policy for the world. Surely there is a way to accomplish this. It is very probable that by gentle means,' to quote Washington, we may open the streams of commerce.

"Is it not worth while to try? What finer thing can be accomplished by the Democratic Party? We have the moral force, born of conviction as to our duty, to take up arms against our sea of troubles and by united economic effort relieve the misery of the world.

CONSERVATION OF NATURAL RESOURCES.

"From the time of Solomon men have been admonished to provide against the rainy day. It has been drilled into us to make provision for adversity and necessity. We can not look with approval upon a landowner who is forever cutting his trees and never renewing, who exhausts his substance and soil without thought of the future.

"Where is there an American within the boundary of the Union who has not blushed for shame during the past few days over the revelations made in the Teapot Dome scandal. The charge has been made on the floor of the Senate that high officials of this Government have been guilty of treason Benedict Arnold has been reviled for scores of years for his perfidy. What can be said of a man in this generation who would take over the priceless possessions of the Nation and give them over to private interests for monetary exploitation?

"Since the beginning of our program of conservation of national resources every President has zealously guarded these natural deposits in order that posterity might benefit by some of nature's gifts to the American people.

"As a result of the Disarmament Conference several of our great ships were ordered to be scrapped, and most of our effective fleet at the present time depend upon oil for their locomotion. It is a little short of treason that officials of this Government should turn over to the oil interests these natural resources which have been set aside in order that our children and our children's children might be safely guarded by our great fleet and by the airships which the last war developed.

"Be it said to the everlasting shame of the Republican Party that it seems to have forgotten that the welfare of our people is vastly more Important than the financial gain of the small coterie of persons, willing if need be to take the coppers from a dead man's eyes, or what is infinitely worse, to rob the Nation of its means of defense.

"I predict that before the next Presidential campaign is ended that every man, woman, and child in the United States will know about the Teapot Dome scandal, and the perfidy of the sworn officials of this great Government.

CONCLUSION.

"Reviewing the history of the failure of the Republican Party to serve the farmer, to serve the workman, to serve the masses of our people, it would seem as if that political party had no thought of the common welfare, but had in mind always only the welfare of the great money interests entrenched in Wall Street. The Democratic Party is determined that within the next year there shall be elected a President of the United States and a Congress pledged to the betterment of the conditions of the sovereign people. The Democratic Party is determined that by a process of education every voter shall know what is going on in America, and shall be given an opportunity to register bis protest against the malfeasance of the present administration.

"As I study the Democratic Party I am glad to find that there are hundreds of men in official life in America who possess the spirit of Andrew Jackson. They will not truckle to the money power. They will not fall victims to the flattery of those who would seduce them from their duties. They will go forward determined to make this country not alone the best country in the world-it is that now-but to make it the greatest country that can be conceived by the mind of man."

MARKETING OF COTTON.

Mr. SMITH. Mr. President, there has been brought to my attention a matter to which I desire to call the attention of the Senate, and I intend to introduce a resolution making inquiry as to the facts.

We have been busily engaged, in the Agricultural Committee room, on several bills, two of them very prominent, looking toward the relief of the farmers of certain sections of the country particularly, and to the agricultural conditions of the development of foreign markets, as well as the relieving of country in general. These bills have as their main purpose the

conditions at home.

The hearings on these bills and the facts developed before the Senate and the Congress seem to show that there has been a lack of coordination in our commercial bodies, and the level of prices in most commodities has not been affected as have the

prices of farm products. So it was rather startling for me to receive the following communication, which explains itself and the facts as to which I propose to obtain through a resolution. tion, Seuner & Bean, New Orleans, New York, and Liverpool I want to read from a circular letter furnished by a corporaIt contains a rather startling allegation. Before I read this, I should say that as compared with the demand and the con sumption, the supply of the commodity referred to here is less than it ever has been before in the history of this coun try, so that there is likely to be, and it is commonly accepted that we are approaching, a famine in this article. Yet, in spite of that condition and the world-wide use of this article, I find this sent out in a circular letter, and attached to it a telegram from a citizen of Arizona.

with the representatives of the world market to control the situation as it now obtains.

I shall to-morrow introduce a resolution asking this adininistration, the President of the United States, to ascertain whether or not any of his Cabinet officers or any of those under his control, or his appointees, have anything to do with the movement referred to in the allegation herein contained. If this be true, this movement is in spirit, if not in fact, a conspiracy in restraint of trade, and it is taking advantage of a condition which naturally, without coming to Congress, would relleve the situation of the cotton producers of the South.

Nature has so favored us that there is a world-wide demand for cotton and a totally inadequate supply, and we had hoped, after the terrible years of deflation through which we went, that as nature had cut down the supply and the world demand exceeded it, we might at least be the beneficiaries of the operation of the natural law.

If this allegation be true, we find that there is at least a suspicion that the spinners and the converters of the raw material-and the raw material is almost an American monopoly-are entering into an agreement with our foreign markets to withdraw the converted spinner and allow the reflex to fall upon the producer.

The PRESIDENT pro tempore. The calendar is now in order.

AGRICULTURAL SITUATION IN THE NORTHWEST.

Mr SHIPSTEAD obtained the floor.

Mr. CURTIS. Mr. President, I do not want to interfere with the Senator's speech, but in order that we may have something before the Senate, I ask that the first bill on the calendar be announced, and that the Senator be permitted to make his speech on that bill.

Mr. NORRIS. I understand the Senator is going to speak in pursuance of a notice he gave that he would make an address.

Mr. CURTIS. I beg the Senator's pardon; I did not understand that.

Mr. SHIPSTEAD. Mr. President, we are informed by newspapers that the President has called another conference of citizens engaged in the various vocations of life for the purpose of conferring on the agricultural situation in the Northwest.

We are also informed by the newspapers that the financial condition in the Northwest is partly due to the prices being paid for agricultural products, and also partly due to certain actions and conduct of the Secretary of the Treasury in carrying on the financial operations of the Government. Therefore I desire to call the attention of the Senate and of the people of the country to the conduct of the Secretary of the Treasury in financing the operations of the Government.

I shall speak especially of its effect on business in general, particularly in the Northwest, and the added tax burden which it lays upon the back of the American people.

An examination of the law enacted by Congress granting powers to the Secretary of the Treasury to issue Federal securities reveals the astounding fact that the Secretary of the Treasury has been granted the authority to issue Government securities to the amount of $21,500,000,000 and to fix the interest thereon at such rates as he, the Secretary of the Treasury, may prescribe.

From an examination of the Government securities issued during the year 1923 and of the securities now being issued it becomes at once apparent that the Federal Government is paying a higher rate of interest on borrowed money than is being paid by banks, commercial interests, and States like New York, Massachusetts, and municipalities like the city of St. Paul.

Such an examination reveals another astounding fact-that the Government is outbidding banks for bank deposits by agents working through the Federal reserve banks.

Financial newspapers carry the information that banks in the large financial cities have "gone on a strike" against commercial paper and are investing their funds in Government securities on account of the high rate of interest paid by the Government and because these securities are tax exempt when held by banks and other corporations.

On October 31, 1923, according to statement issued by the Treasury Department, the interest-bearing public debt of the United States amounted to $21,790,684,118.91.

The interest paid on the public debt for the fiscal year ended June 30, 1923, amounted to 28 per cent of all expenditures by the Government for the year 1923. The interest paid during that year amounted to over $1,055,000,000. (Report of Secretary of the Treasury, 1923, pp. 17, 510.) This amount was about a quarter of a billion more than the total Govern

ment expenditures during the fiscal year 1916, the last prewar year (p. 17 of said report). In view of the fact that the interest paid on the public debt in the year 1923 exceeded by more than a quarter of a billion dollars the total Government expenditures for 1916, it is not surprising that taxes and cost of living are high. The rate of interest paid on the public debt constitutes a very large item in the rate of taxes. order to reduce taxes we must reduce expenditures, and at this time, while Congress is trying to devise ways and means for reducing the tax rate, I deem it proper to make a few remarks upon the very important subject of interest on the public debt and its relation to taxes and business.

In

From the above statement it will be seen that in the year 1923 the Government did not issue any securities at less than 4 per cent interest and paid as high as 4 per cent.

Comparing the rate of interest on the bonds that were sold in the year 1923 with the rate on bonds that were issued before the World War and are still outstanding, we find a very surprising difference in the rates.

Bonds amounting to $118,489,900 are outstanding, issued February 1, 1895, due in 30 years, interest 4 per cent, were sold at a premium ranging from $4 to $11 per $100.

The bonds known as “consols of 1920," issued April 1, 1900, due in 30 years, $599,724.050 outstanding, bearing interest at the rate of 2 per cent, were sold at a premium of about 50 cents on the $100.

Panama Canal bonds, of which there are outstanding about $75,000,000, issued August 1, 1906, and November 1, 1908, bear interest at 2 per cent, and were sold at a premium ranging from $2.43 to $3.51 per $100.

Panama Canal loan bonds, issued June 11, 1911, due in 50 years, of which there are about $49,800,000 outstanding, bear 3 per cent interest, and were sold at a premium of $2.58 per $100.

Conversion bonds, issued January 1, 1916-17, of which there are outstanding $28.894,500, due in 30 years, bear 3 per cent interest, and were exchanged at par.

These were all long-term bonds, and this feature appears to have made them attractive to the investors, and they paid a premium on 2 per cent bonds. In June, 1923, the Government paid 4 per cent interest on certificates due in six months, but in May the same year the Government paid 4 per cent interest on notes due in 3 years and 10 months.

But,

It has been claimed that the reason that these pre-war bonds sold at a premium was that they were eligible for security for national-bank circulation, and that there was such a large demand for these bonds by the national banks that that is the reason that 2 and 3 per cent bonds sold at a premium. according to the report of the Comptroller of the Currency, dated December 3, 1923 (see p. 83), the total Government interest-bearing obligations that were outstanding on June 30, 1923, and were issued prior to 1917, that were eligible as security for national-bank circulation, amounted to $793,115,530, and of these $744,654,990 are on deposit with the Treasurer of the United States as security for national-bank circulation, $4,993,000 to secure Federal reserve bank notes, and $1,316,500 to secure deposits of public moneys. Hence there is outstand

ing the sum of $42.150,000 of these pre-war honds that are eligible as securities for national-bank circulation. So it appears that a large amount of these bonds were purchased by private investors.

The Panama Canal 3 per cent bonds were not eligible for national-bank circulation, but were sold at a premium. The 3 per cent conversion bonds and the 23 per cent postal savings bonds were not eligible as security for national-bank circulation and were sold at par at the time they were issued.

The Treasury Department is now offering Treasury savings certificates to yield a little more than 4 per cent, interest compounded semiannually, due in five years.

In my opinion the "overnment during the preceding year paid and is now paying too high a rate of interest on the giltedged Geverament securities issued by the Government, and I believe that this opinion is sustained by the facts found in the report of the Secretary of the Treasury for the fiscal year ending June 30, 1923, and other sources of information.

At this time when the country is waiting for Congress to do everything possible to reduce taxes, this question of the interest rates on all debts, public and private, is of vital importance.

I want to say in passing that I have received hundreds of letters from people who say they do not want war taxes in time of peace. I direct their attention and the attention of the Senate to the fact that we can not get rid of war taxes until the war debt is paid.

A high rate of interest paid on Government securities sets the pace in maintaining a high interest rate on borrowings of all kinds. In view of the fact that it is estimated that about 90 per cent of all commercial transactions re based on credit, the problem of the amount of interest paid on borrowings is of vital importance to all business life. The speculator making speculative profits can pay a high rate. A monopoly making monopoly profits can also pay a high rate of interest, because it can pass the burden on to the consumer. But the man engaged in competitive business and making a competitive profit only can not as easily pass the burden on to the consumer; and so he, like the farmer and small banker, finds himself in serious diffien!ties.

The high rate of interest being paid by the Secretary of the Treasury on nearly $5,000,000,000 of floating or unfunded debt will serve to continue the existing high rate.

There appears to be a concerted effort on the part of the Treasury Department and the Federal reserve banks to maintain a high rate of interest. I make this statement after carefully reading the report of the Secretary of the Treasury for the fiscal year ended June 30, 1923.

On page 43 of said report it states:

In February and March of this year the three Federal reserve banks which had been maintaining their discount rates on a 4 per cent basis raised them to 43 per cent, thus making the discount rate for all Federal reserve banks uniform.

I see nothing in this report to indicate that the Secretary of the Treasury disapproves of the action of the Federal reserve

banks in raising the discount rates.

The announcement of the sale of Treasury savings certificates-page 55 of said report-states that after December 1, 1923, the Government will pay a considerably higher rate of interest on the new certificates than the Government has been paying heretofore.

Can there be any doubt but that the rate of interest that is paid on the public debt of the United States determines to a large extent the interest that has to be paid on all debts, private or public?

An increase in the interest rate on the debt of the United States raises the rate on all borrowings. Increasing the interest increases the debt; increasing the debt increases the taxes. In order that the burdens of taxation should be made more easy to bear, interest should not be raised, but should be lowered by the Treasury Department.

As to the importance to the people of the United States having a low rate of interest on all public indebtedness, I will call attention to the fact that during the next five years the Government has to take care of maturing indebtedness of $4,000,000.000 Treasury notes and $3,400,000.000 third Liberty bonds, a total of $7,400,000,000.

The sinking fund will provide only an estimated $1,620,000,000, leaving a balance of $5.780.000.000 which has to be raised by issuing new securities or additional taxes. If one-half of 1 per cent interest per annum can be saved, it will mean a saving of about $27,000,000 a year, or $135,000,000 in five years, on these securities that will become due during the next five years. When we consider that the total indebtedness of the United States is nearly $22,000,000,000, a saving of one-half of

Mr. KING. Complaints have been brought to my attention that the Treasury Department, in order to meet maturing short. time obligations, has been invading the loan field and increasing interest charges to the dislocation of existing interest rates and largely to the demoralization of business. Evidently the Senator has given a great deal of attention to the consideration of the question. I would like to ask whether or not in his judgment, from his investigation, there is ground for the criti cism to which I have just adverted.

Mr. SHIPSTEAD. Mr. President, I think the Senator from Utah is correctly informed, and I intend to cover that part of the subject a little bit later.

The Department of Commerce in a bulletin released for January 14, 1924, asserts that State and municipal bonds amount to $10.260,942,000. The saving on these bonds to the taxpayers, if the interest were reduced one-half of 1 per cent per annum, or, rather, if it were not increased to that extent, would amount to $51,000,000 a year, or $1,026,000,000 in 20 years. The total amount of farm mortgages can safely be estimated at $10,000,000,000, so that a saving of one-half of 1 per cent interest per annum will mean a saving to farm owners of $50,000,000 a year, or $1,000,000,000 in 20 years.

I believe on January 19 last the Wall Street Journal gave the information that commercial bank borrowings in the United States aggregate about $25,000,000,000. I have stated that in my opinion one-half of 1 per cent interest could be saved. I think that is a very conservative estimate. I have had letters from many bankers who state that in their opinion the Federal Government should not pay over 3 or 34 per cent interest on its indebtedness. In the Journal of Commerce and Finance, I believe, for January 23 Mr. Theodore H. Price makes the claim that the people of the United States are paying at least 1 per cent too much interest on all indebtedness in the United States. If that claim be correct, it becomes very evident that adding the indebtedness of $21,000,000,000 represented by United States Government securities, $11,000,000.000 of State and municipal bonds outstanding, about $10,000,000,000 of farm mortgages, $10,000,000,000 of city and village real-estate mortgages, not including corporate mortgages, $40,000,000,000 of corporate bonds and mortgages, and $25,000,000,000 of commercial bank borrowings, there is outstanding a total indebtedness of $117,000.000,000.

Mr. President, the figures which I have cited have been ob tained from various sources. The figures relative to capital invested in the manufacturing industries I secured from the Census Abstract for 1919; from the Department of Commerce I obtained the estimate of the amount of State and munici pal bonds outstanding; and from the Wall Street Journal I obtained the statement of the amount of farm mortgages out standing.

As I have stated, the figures show a total indebtedness of $117,000,000,000, but for the sake of brevity and clarity we will assume the total indebtedness to be $100,000,000,000. Mr. KING. Mr. President, will the Senator from Minnesota yield to me?

Mr. SHIPSTEAD. Yes, I yield with pleasure.

Mr. KING. I made some computations last week respecting the indebtedness of the people of the United States--118. tional indebtedness, State indebtedness, together with the indebtedness of all political subdivisions of the State, corporate indebtedness, private indebtedness--and the figures which I reached were $129,000,000,000. Therefore, I am sure the fig ures of the Senator from Minnesota estimating that indebtedness to be $117,000,000,000 are well within the limit.

Mr. SHIPSTEAD. I thank the Senator from Utah for that information; and I also wish to state to the Senate that I always try to be conservative.

Mr. KING. Even though the Senator is classed as a radical.

Mr. SHIPSTEAD. But let us assume a total indebtedness of $100,000,000,000, an unnecessary interest rate of 1 per cent would mean an annual additional burden of $1,000,000,000 on the people of the United States, due to the excessive rates of interest being charged on borrowings of all kinds, the pace for which is being set by the Secretary of the Treasury and the Federal reserve banks.

The debt covered by Treasury notes and certificates and Treasury savings certificates, amounting to over $5,000,000,000,

should be funded into long-term bonds at a lower rate of interest. When Treasury notes and Treasury certificates of indebtedness are offered for sale they should be offered at a rate commensurate with their value as compared with other securities of less value.

During the last month I have received a large number of letters from the smaller bankers of Minnesota protesting against the rate that the Government is paying on Treasury savings certificates to be issued in pursuance of offering of the Treasury Department dated November 15, 1923. I send to the desk a letter I have received from the First National Bank of St. Cloud, Minn., and ask that it may be read. This letter is one of very many which I have received.

The PRESIDING OFFICER (Mr. JOHNSON of Minnesota in the chair). In the absence of objection, the letter will be read. The principal legislative clerk read as follows:

Hon. HENRIK SHIPSTEAD,

FIRST NATIONAL BANK,

St. Cloud, Minn., January 13, 1924.

United States Senate, Washington, D. O. DEAR SIR: The following resolution was passed at a meeting of the stockholders of the First National Bank, of St. Cloud, Minn., on January 8, 1924, at which meeting more than 80 per cent of the outstanding stock was represented:

"The Treasury Department of the United States Government, by Issuing Government securities at their present rate of interest, is being unfair in its competition for money in this territory.

"Present conditions prohibit banks from paying more than 4 per cent to depositors. It is the intention and purpose of this bank to serve this community. This can not be done properly if this bank must compete with an interest return of more than 4 per cent, with additional tax-exempt features, such as is offered by the United States Government.

"It is essential to the growth of any community and country at any time but particularly during these times that the people who are obliged to borrow money be given as low an interest rate as is possible and consistent with sound banking practice.

"We earnestly believe from reports of heavy oversubscriptions of recent Treasury offerings that the interest rate on future issues and United States savings certificates can be materially reduced and still afford ample funds for such financing. This would not only be an additional saving in interest to the Government but would also eliminate the existing unfair competition for funds.

"The Government of the United States should consider the injustice it is working upon the banks and people of this country and discontinue the issuance of Government securities at the present interest return."

The above resolution, while it states the opinion of a good many people, is, in fact, the feeling of a large majority in this territory. We believe that any influence detrimental to a majority of people is detrimental to the whole country, and while we are honestly endeavoring to better the conditions in this vicinity we do not see how we can do so to the extent we might be able to do providing we had the cooperation of the Treasury Department.

If you will give this your most careful consideration, we are confident you will assist us in every possible way for a change in the present method of issuing United States Government securities.

Yours truly,

Mr. STERLING. The order was issued, I think, about three days ago, and I have taken the pains to have the order communicated by wire to certain portions of South Dakota.

Mr. SHIPSTEAD. I am very glad to learn that that is being done. I was not informed of this order. I had it from what I considered a reliable source that it would not be done. I can not see why the order was ever issued to sell Government securities at that rate. A great deal of damage has been done. Of course the rate paid on savings certificates is a very small matter in comparison with the high rate of interest that is paid on other securities outstanding. The amount of savings certificates outstanding is, I believe, less than $400,000,000, while there are over $4,000,000,000 of Treasury notes and Treasury certificates of indebtedness issued during the last

three years bearing interest at the rates of from 4 to 5 per cent, and they being in such large amounts are really of more vital importance than are savings certificates.

I have another letter from the First State Bank of Beltrami, Minn., which I ask unanimous consent to have printed in the RECORD without reading.

The PRESIDING OFFICER. Without objection, permission is granted.

The letter referred to is as follows:

FIRST STATE BANK OF BELTRAMI, MINN., January 26, 1924.

Hon. HENRIK SHIPSTEAD,

United States Senate, Washington, D. O. DEAR SIR: We notice that the various branches of the Federal Treasury Department will make a special effort to help finance the Northwest during these troublesome times. However, to some of us it seems as if it would be like raising oneself by pulling on his boot straps or worse; on the one hand this effort is being put forth and on the other hand the public are being offered, urged, and encouraged by every possible means and by practically every postmaster to buy Government securities and take advantage of the Government savings system to net them anything from 4 per cent to 5 per cent.

I well remember the hearing that was held in St. Paul last winter on the 8 per cent bill, and the proponents of that bill stated that no bank bad any business paying more than 4 per cent for deposits, and in extreme cases certainly not more than 5 per cent. Of course no good bank can operate safely and pay more than 5 per cent on deposits when the money must be loaned and some risk taken under present conditions at an 8 per cent rate. But when the Government is urging the public to buy its securities and take advantage of its bank privileges and offer them a rate greater than that which banks can safely pay, it is not the fault of the public if they withdraw their deposits from the banks and put them into the Government securities. It would seem that the Government ought not pay a rate of interest greater than that which banks can pay. In fact, they ought not to pay more than 3 per cent or 3 per cent. The State of Minnesota is to-day geting all of the money that they need for the rural credit bureau at a rate slightly more than 4 per cent, and the Government certainly ought to be able to obtain money at a less rate than they are now offering. Therefore we urge that you put forth an effort to have the Postal Savings System withdrawn for the present, that some money may be left in the country banks, so that the country banks can carry the farmer through these troublesome times. I am going to say that we are experiencing no difficulty here, but neighboring towns have had much difficulty, and I personally know of two or three banks that have been very conservatively managed that have been forced to close because depositors have asked for practically all of their money, and, of course, the farmer borrower could not pay the bank on short notice. In fact, they could not pay even on reasonable notice, because if all of their stock, machinery, and other equipment was offered for sale for cash there would be so much offered that there would be no buyers, but they would all be sellers.

However, if the Government does not continue to encourage depositors to withdraw their funds from the country banks and put it into Government securities and have the money from the country transferred to the large financial centers, the country banks will be able to function and carry the farmer until a better and brighter day, which surely is coming, for the agricultural districts of the Northwest. Yours truly,

T. O. HAFDAHL, Cashier.

Mr. SHIPSTEAD. The banks in the west central and northern part of the State of Minnesota have been paying 5 per cent interest per annum on time certificates of deposit. For years the banks have been trying to reduce this rate of interest to 4 per cent in order that they might reduce the interest rates to farmers and other borrowers in this agricultural section of the State. But the bankers claim that when the Government offers about 4 per cent interest, compounded semiannually, or 5 per cent simple interest for five years, they can not get deposits at 5 per cent per annum, to say nothing about being able to reduce their interest rate. In the southern part of the State the prevailing rate on time deposits seems to be 4 per cent per annum, but on account of the high interest rates on Treasury certifi cates their deposits are rapidly decreasing, and they will be compelled to get their money from the Federal reserve bank at higher rates than they have been paying to local parties; hence they have to raise the interest rates they formerly charged their customers.

This means that the farmers, already overburdened with debt which can not be liquidated, because of low prices, must make renewals of loans at an increased rate of interest. This means increasing his burden of debt. The merchant must also pay a higher rate, thus increasing the cost of doing business, and in turn the cost of living.