1940: United States

Economic Survey.

Although general business conditions were much better at the end of 1940 than at the beginning, the great boom which many had predicted as a result of the European War had not as yet fully materialized. The Second World War, as some called it, was generally recognized, nevertheless, as a major factor in American economic life. This was particularly true after the United States embarked on a wholesale program of national defense. The invasion of Finland by Russia; of Norway, the Low Countries and France by Germany, all acted as a damper on economic expansion, as did the intense preoccupation of Americans with the presidential election. As the defense program got under way and as it became evident that England's chances of escaping the fate of France were good, the whole aspect of American economic life took on new vigor. Speaking generally, indices measuring American business activities showed a steady decline from January to April. Beginning with that month, and except for a sharp but brief decline in late June, the movement was generally upwards. By December most measurements of economic activity showed a situation not only better than a year previous, but also better than in the boom year of 1929.

Other economic services, such as Barron's and Business Week, agreed substantially with the Times. Production of automobiles, bituminous coal, electric power, and steel ingots was ahead of December 1939, as were cotton consumption and carloadings. The week ending Dec. 21, 1940, for example, showed carloadings at 736,332, as against 678,132 for the same week in 1939.

Not only was there greater business activity, but along with this there were also generally greater industrial and utility profits than in the previous year. Many industries reported at the year-end a greater current and prospective business than at any time in their history. Even the railroads were completing a relatively prosperous year. Aggregate net profits of the nation's railroads in the first nine months of 1940 were estimated by the Wall Street Journal at $57,000,000, compared with a net loss of $33,367,314 during the same period in 1939, and a $175,500,000 loss in 1938. Profits for the full year 1940 were predicted as nearly double the 1939 figure.

The expansion of production and profits was fortunately taking place without, as yet, a great increase in commodity prices or stock-market speculation. Fear of the future, in fact, had actually kept stock-market prices lower than they had been in December, 1939. During the week ending Dec. 21, 1940, stock prices had averaged from 92.14 low to 94.62 high. The high and low averages for the same week in 1939 were 107.89 and 109.02. The average for domestic bonds for the same week in 1939 was 72.06, and slightly higher in 1940 at 74.82. That the war had yet brought no perceptible stock-market speculation may be seen by the fact that total sales of stock on the New York Stock Exchange for that week in 1940 were 4,187,702, but slightly higher than 4,174,022 in 1939. Stock trading, in fact, was smaller than any year since 1921. Commodity prices, wholesale, had advanced but slightly if at all. The Department of Labor combined index (1926 = 100) gives 78.8 for the week ending December 2, 1939, and 79.5 for the week ending November 23, 1940. Foodstuffs appear to have advanced more than other commodities.

While industry and transportation showed increased activity, the condition of agriculture also improved during 1940. Surveying the situation, the Bureau of Agricultural Economics of the Department of Agriculture, declared: 'Farmers bring to a close another year of abundant production. Prices are averaging a little higher than at the outbreak of the European War, cash farm income for 1940 — estimated at approximately $9,000,000,000 — is the second largest since 1929. Domestic demand for farm products continues good, and is expected to increase in 1941. Farmers producing for the domestic market are in the best position. Exports continue to decline as continental European markets have been cut off by war blockades. United States exports of farm products will continue to be small through 1941.' (See also AGRICULTURE.)

Although all estimates fix the number of unemployed as less at the end of the year than at the beginning, the employment situation in general presented the darkest aspect of the economic picture. Reporting in December, and estimating up to the end of October, the American Federation of Labor estimated the number of people at work in October 1940, at 46,063,000 as compared with 47,600,000 at the peak in November 1929. The unemployed as of January 1940, they put at 10,656,000 and for October at 8,130,000. Reemployment during the ten months absorbed approximately 2,526,000. Most of the improvement did not take place until May, when the defense program was accelerated and the armed forces of the nation increased. The high figure for unemployment, despite the general economic prosperity, was attributed by the Federation to the increase of 6,000,000 potential workers since 1929, and to technological improvements. 'Today,' said the A. F. of L., 'the United States is producing more goods on a forty-hour week than we produced in 1929 on a forty-eight or fifty-hour week. And we have fewer persons employed.' (See also articles on BUSINESS; CONSERVATION; INCOME IN THE UNITED STATES; RECLAMATION; WORLD ECONOMICS.)

SEVENTY-SIXTH CONGRESS

The third session of the Seventy-Sixth Congress came to an end by statutory limitation on Friday, Jan. 3, 1941. Although it was the longest session of Congress in the history of the nation, it had actually done little business after the presidential campaign started in earnest. A combination of Republicans and anti-Roosevelt Democrats, however, had refused to adjourn, presumably on the theory that it would be unwise to leave the President free from Congressional supervision. During the last two months of the year only one Act of any importance was passed, the Logan-Walter bill subjecting the rules and regulations of governmental administrative agencies to judicial review. This bill, passed in December, was vetoed by the President on the ground that it would hamper national defense, flood the courts with unnecessary litigation, subject all administrative action to control of the judiciary, and produce only delay and chaos. 'Today, in sustaining American ideals of justice,' said the President, 'an ounce of action is worth more than a pound of argument.' This was the only veto of the session that was sustained.

Altogether more than 500 public laws were passed during the session. Most of this legislation was concerned chiefly with national defense, taxation and appropriations. All peacetime records were exceeded when appropriations totalling $27,721,740,635 were voted for defense and other projects. In addition to the defense program two major tax Acts were passed — the Revenue Act of 1940 and the Excess Profits Tax and Amortization Act of 1940 — as well as other important legislation. Of the latter perhaps the most significant were the Commodity Corporation Act, the Investment Company Act, the Wheeler-Lea Transportation Act, the $500,000,000 Export-Import Bank Act, the Government Reorganization Act and the Act extending the Reciprocal Trade Pact for three years more. Inasmuch as the main requests of the President to Congress consisted of appropriations for defense and since Congress as a whole was more than anxious to cooperate, there was less friction than during the previous year between the legislative and executive branches.

National Defense.

Briefly stated, the many Acts passed in the interests of national defense during 1940 aimed to increase the personnel and equipment of the Army and Navy and to introduce a system of peacetime conscription. These various Acts provided for a year's training of a minimum of 695,990 men in Selective Military Service, raised the enlisted strength of the regular Army to 375,000, of the Navy to 170,000, of the Marine Corps to 34,000 and of the National Guard, now put on active Federal service, to 346,130. Provision was made for equipping with essential articles a mobilization of 1,400,000 men, and the necessary items of supply to equip a ground force of 2,000,000 men. Congress authorized 25,000 planes for the Army and 10,000 for the Navy, the construction of 292 combat vessels and 57 auxiliary ships for a two-ocean navy, and the establishment of Army and Navy air bases. It also provided for additional defense-production facilities and expansion of existing ones.

This immense program produced direct appropriations and contract authorizations totalling $8,792,145,145 for the Army and $3,537,138,137 for the Navy. For civil activities contributing to the national defense $776,944,648 was appropriated. When to this is added $4,586,000,000 for the two-ocean navy, the total defense commitments of the session amounted to $17,692,227,930.

Besides the military and naval appropriation Acts, other defense Acts of importance included the following:

The Vinson Two-Ocean Navy Act (approved July 19) authorized additional tonnage to provide for a two-ocean navy.

The May Defense Expediting Act (approved July 2) suspended many existing statutory limitations on costs of particular projects, granted authority for the employment of additional civilian personnel, authorized the President without advertising to provide for defense emergencies and to prohibit or curtail exportation of defense tools and equipment, if it seemed necessary.

In similar manner the Vinson Naval Speed-up Act (approved June 28) granted extra powers to the Secretary of the Navy, when it seemed advisable to the President to expedite preparedness. The Act stated that the Walsh-Healey Public Contracts Act of 1936 should apply ordinarily on naval contracts, but that the President could suspend it if necessary. It forbade in contracts the use of the cost-plus-a-percentage-of-profit system, but did not ban a cost-plus-a-fixed-fee. A fixed fee, however, was not to exceed 7 per cent of the estimated cost of the contract without the fee.

The National Guard Act (approved Aug. 27) authorized the President during the period ending June 30, 1942, to order into active military service for 12 consecutive months members and units of reserve components of the Army of the United States (except those under 18). These men, however, were not to be used outside the limits of the Western Hemisphere.

The Selective Training and Service Act of 1940 (approved Sept. 16) provided that all male citizens, and all male aliens in the United States who have declared their intention of becoming citizens, between the ages of 21 and 36 (with certain exemptions), shall register and be liable for military service under rules and regulations prescribed by the President. The training period was limited to 12 months, only 900,000 should be in training at any one time and the service was limited to the Western Hemisphere and to possessions of the United States including the Philippines. Ministers and divinity students were exempted and the President might defer training for those engaged in essential industries, agriculture, or for men with dependents. Conscientious objectors were to be employed in non-combatant work. An effort was made in the Act to provide for reemployment after completion of service, and voting rights of draftees were protected. Draftees were accorded the death and disability benefits provided for the regular Army.

The National Defense Housing Act (approved Oct. 14) authorized $150,000,000 and the Defense Housing Appropriation Act (approved Oct. 14) authorized $75,000,000 to build houses for persons engaged in national defense activities in locations where there was a shortage.

The Defense Eight-Hour Act (approved Oct. 10) provided that until June 30, 1942, the law prohibiting more than eight hours work per day on contracts with the Maritime Commission for construction of vessels be suspended.

The Alien Registration Act (approved June 28) not only required the registration and finger-printing of all aliens within six months, but it prohibited aliens from advocacy of insubordination, disloyalty, mutiny in the armed forces, and advocacy of the overthrow or destruction of the Government of the United States by force or violence. It provided additional grounds for deportation of aliens, but it permitted the suspension, subject to review by Congress, of deportation of unusual or technical cases.

The Barbour Espionage Act (approved June 13) increased the penalties for peacetime violation of the Act of June 15, 1917, which deals with violations of neutrality, espionage, passports, foreign commerce, and disturbance of foreign relations. Of a similar type was the Vorhees Anti-Propaganda Act (approved Oct. 17) which required that every organization engaged in political or civilian military activity, including those under Government control, and every foreign-controlled organization formed for the purpose of advocating the overthrow of the Government by force or violence, shall register with the Attorney General at intervals of six months and keep current information on file as to the organization.

The TVA National Defense Act (approved July 31) appropriated $25,000,000 to provide additional generating capacity to meet the requirements for power from plants manufacturing materials for national defense.

The Faddis Machine Tool Act (approved October 10) provided that until June 30, 1942, the President in the interests of national defense may requisition any military or naval equipment, munitions, machinery tools and supplies, request for the exportation of which had been denied. Owners of such materials were to be indemnified.

For full data on National Defense, see also AGRICULTURE; AUTOMOBILE INDUSTRY; AVIATION; BUSINESS; EDUCATION; INDUSTRIAL SCIENTIFIC RESEARCH; INSURANCE; LAW AND LEGISLATION; MECHANICAL ENGINEERING; METALLURGY; MILITARY SCIENCE; MINERALOGY; NATIONAL GUARD; NEWFOUNDLAND; PAN-AMERICAN COOPERATION; PAINTING AND SCULPTURE; PUBLIC FINANCE; RAILROADS; SOCIAL SERVICE, PUBLIC; TAXATION; TEXTILES; WORK RELIEF IN THE UNITED STATES.

Agriculture.

The most important of the various agricultural Acts passed during 1940 was the Agricultural Appropriation Act (June 25). This Act carried appropriations of $918,603,918 for the fiscal year ended June 30, 1940. This amount included grants of $212,000,000 to make parity payments to producers of wheat, cotton, corn, rice and tobacco; $438,560,000 to carry out the provisions of the Soil Conservation and Allotment Act; $3,075,000 for the Rural Electrification Administration, with power to that body to borrow $100,000,000 from the RFC; and $6,100,000 for the Bankhead-Jones Farm Tenant Act with power for the Secretary of Agriculture to borrow $50,000,000 from the RFC. Numerous amendments to existing agricultural laws were passed, including the Frazier-Lemke Act Amendment (March 4) which extended the earlier Act until March 4, 1944.

Budgetary.

The Treasury-Post Office Supply Act (March 25), carried appropriations of $218,752,033 for the Treasury Department and $814,049,062 for the Post Office Department, slight reductions in both cases from the appropriations for 1940. The main item in the Treasury Budget was $104,968,760 for the Internal Revenue Bureau. The First Deficiency Appropriation Act (April 6) was for $92,035,408, the chief item being $60,000,000 additional for conservation and use of agricultural land resources.

The Independent Offices Supply Act (April 18) carried appropriations for $1,120,243,528. The chief items here were $580,005,514 for the Veterans Bureau; $144,500,000 for the Maritime Commission; $97,241,000 for the Civil Service Commission and $40,000,000 for the Tennessee Valley Authority. The State, Commerce and Justice Supply Act (May 14) appropriated $20,125,500 for the State Department; $33,908,500 for the Department of Commerce; and $41,323,000 for the Department of Justice. The latter included $9,910,000 for the Bureau of Investigation and $1,425,000 for enforcement of the Anti-Trust laws. The District of Columbia Supply Act (June 12) appropriated $48,765,080 for the Government of the District of Columbia. The Interior Department Appropriation Act (June 18) was for $135,383,330; the Legislators Appropriation Act (June 18) for $23,671,220 and the War Department Civil Functions Act (June 24) for $222,718,717, mainly for flood control, rivers and harbors, and the Panama Canal.

The Urgent Deficiency Act (Feb. 12) appropriated $57,541,300, mainly for the Navy and the Internal Revenue Bureau; the Second Deficiency Appropriation Act (June 27) appropriated $85,891,777; and the First Supplemental Civil Functions Appropriation Act (Oct. 9), $228,132,013. The last two carried items for a great variety of purposes, the largest being $40,000,000 for the Administrator of Civil Aeronautics.

Civil Service and Politics.

The Ramspeck Civil Service Act (Nov. 26) authorized the President by executive order to add to the classified civil service any offices or positions in any executive department, independent establishment, or agency of the Federal government, excepting WPA and TVA and Presidential appointive positions necessitating Senatorial confirmation. The Act applied also to federally owned or controlled corporations. To acquire classified status incumbents must be recommended by the head of the agency and pass a non-competitive examination.

An effort was made in the Hatch Clean Politics Act (July 19) to make more effective the original Hatch Act of Aug. 2, 1939. The provisions of the earlier Act were now extended to apply to certain officers and employees in the several states and the District of Columbia, by making it unlawful for any person employed in any administrative position in connection with any activity financed in whole or in part by loans or grants from the United States to use his official authority for the purpose of interfering with, or affecting, the election of Federal officials. The Act also provided that no political committee should receive contributions aggregating more than $3,000,000 and that no person directly or indirectly might make contributions aggregating more than $5,000 in any calendar year. It also forbade any person or firm to make a contribution during the period of negotiation for, or the execution of, a contract with the United States.

Commerce and Trade.

Under the Finland Loan Act (March 2) the lending authority of the Export-Import Bank was increased from $100,000,000 to $200,000,000. It provided that a loan to any one foreign country might not exceed $20,000,000 at any one time, and that the Bank might not make loans to any government in default on the payment of its obligations or any part thereof to the United States on April 13, 1934. The Wagner Foreign Credits Act (May 7) extended the emergency powers of the President with respect to transactions in foreign exchange, transfer of credit by banks, and the hoarding or earmarking bullion or currency to cover transfers, withdrawals, or exportations in evidence of indebtedness in which any foreign state or its national has any interest. The Reconstruction Finance Corporation Act (June 25) amended the powers of that body so that it might contribute more effectively to the defense program. It was, for example, authorized (with the President's approval) to make loans to, buy the capital stock of, or organize, any corporation to produce materials, or it might lease plants or do other things necessary for defense.

Undoubtedly the most important commercial Act of this Congressional session was the Reciprocal Trade Pact Act (April 22) which extended for a further period of three years, or until June 12, 1943, the provisions of the original Trade Agreements Act of 1934.

Transportation.

In the Wheeler-Lea Transportation Act (Sept. 18) Congress passed the first major railroad legislation in some years. The Interstate Commerce Act was amended by extending its application to additional types of carriers and by modifying certain of its provisions. The jurisdiction of the Commission was extended to rates resulting in an undue preference of advantage between persons, localities, ports and gateways when the rates unduly favored regions, districts or territories; it extended the regulatory jurisdiction of the Commission to water carriers operating in the coastwise, inland and intercoastal trades, and it also extended the jurisdiction of the Commission to services performed within terminal areas such as transfer, collection, and delivery of rail, motor and water transportation. The Act repealed the previous provisions of the law requiring the Commission to propose consolidation, and leaves it to the carriers to make such proposals. Consolidation, however, may not become effective until the Commission approves. The authorized amount of outstanding loans to railroads by the RFC was increased from $350,000,000 to $500,000,000.

Two Acts covering the Merchant Marine were signed on June 29. The Bland War-Risk Insurance Act authorized the Maritime Commission to insure the water-borne commerce of the United States against marine and war risks whenever it appears that such insurance cannot be secured through domestic underwriters at reasonable rates. To do this a marine and war-risk insurance fund may be set up by the Treasury Department. The Bailey Merchant Marine Act makes emergency provision for the maintenance of essential vessels affected by the Neutrality Act of 1939 and for adjustment of obligations with respect to such vessels. This applied particularly to ships which had been subsidized under the Merchant Marine Act for operation in foreign trade routes now cut off by the war. (See also TRANSPORTATION.)

Taxation.

Two major taxation Acts were passed by this session of Congress. The Revenue Act of 1940 (June 25) provided in part for the expense of national preparedness, by provision for raising $1,000,000,000 additional revenue and adding $4,000,000,000 to the statutory national debt. (See also NATIONAL DEBT.) Among the chief provisions are those reducing income tax personal exemptions from $2,500 for married persons to $2,000 and from $1,000 to $800 for single persons; increasing the rate of surtax on incomes $6,000 or above, requiring the filing of income taxes by all single persons with an income of $800, and married persons with an income of $2,000; increasing from 10 to 15 per cent the tax on non-resident aliens not engaged in trade or business in the United States, and increasing by 1 per cent the tax on the income of domestic corporations. In addition to the major changes just noted there were numerous defense taxes levied generally for a period of five years and to be applied only for retirement of national defense obligations issued by the Treasury. Among these were increased taxes on cigarettes and distilled spirits and a 10 per cent tax on individual and corporate incomes. (See also INCOME TAXATION.)

The Excess Profits Tax and Amortization Act (Oct. 8) hoped to produce $500,000,000 additional revenue during 1941, and $1,000,000,000 annually thereafter, as well as curtailing preparedness and war profits. Its main provisions were an increased tax of 3.1 per cent on 'normal' income of corporations earning net profits of more than $25,000 a year, thus making the effective rate 24 per cent, and the imposing of additional graduated rates on 'excess profits,' running from 25 per cent on excess profits not exceeding $20,000 to 50 per cent on all over $500,000. (See also PUBLIC FINANCE; TAXATION.)

Power.

The Boulder Dam Adjustment Act (July 19) authorized the Secretary of the Interior to put into effect charges for electrical energy generated at Boulder Dam, which would meet the cost of maintenance, operation and amortization of the cost. The Bonneville Project Act Amendment (March 6) provided more definitely for the administration of the project and extended for a year (until Jan. 1, 1942) the date within which public bodies and cooperatives might enjoy a preferential right to power generated at the project up to 50 per cent of production.

Securities.

The Investment Company Act of 1940 extends the supervision of the Securities and Exchange Commission over investment companies and investment advisers. It provides for the registration of investment companies, prohibits various activities, such as purchase of securities on margin, participation in any trading account in securities, selling short, etc. It also seeks in various ways to protect the public from frauds and misrepresentations and at the same time protect the honest investment adviser. (See also SECURITIES AND EXCHANGE COMMISSION.)

Miscellaneous.

The Convict-Made Goods Act (Oct. 14) made it a Federal offense to import or to transport in interstate commerce goods manufactured, produced or mined by convict labor. The Bone Copyright Amendment Act (April 11) requires the Secretary of the Treasury and the Postmaster General, individually or jointly, to make and enforce rules to prevent importation of articles in violation of the Copyright Act. The Additional Judgeship Act (May 24) authorized the President to appoint three additional circuit judges, one for the Sixth and two for the Eighth Circuits, and eight additional district judges. The Government Reorganization Act (June 4) provided that certain recommendations of the Reorganization Plan submitted to Congress by the President on May 22, 1940, should take effect in June. Among these was the transference of the Immigration Bureau from the Department of Labor to the Department of Justice, and the merging of the Civil Aeronautics Authority and the Air Safety Board and placing them under the Department of Commerce. The Dickstein Alien Officials Act (July 1) amended the Immigration Act of 1924 to require aliens admitted to the United States as officials of foreign governments either to maintain their status as such or to depart from the United States. The D'Alesandro Repatriation Act (July 2) provides that native-born women married to aliens, but who have resided continuously in the United States since their marriage, are to be considered citizens of the United States. The Barbour Fight Film Act (June 29) repeals the act of July 31, 1912, which forbade the importation and the interstate transportation of films or other pictures of prize fights. The Mead Two-Cent Postal Rate (June 24) provided for a two-cent rate on first-class mail for local delivery, or delivery wholly within a county the population of which exceeds 1,000,000, if such county is entirely within a corporate city. The Finland War Debt Act (June 15) allowed the postponement of amounts due to this country during the period from January 1, 1940, to December 31, 1940. The Commodity Credit Corporations Act (Aug. 9) increases the credit resources of the Commodity Credit Corporation by $500,000,000, that is, from $900,000,000 to $1,400,000,000 (See also INTERSTATE COMMERCE COMMISSION.)

POLITICS

Principal Political Factors.

Two factors dominated the political scene in the early part of 1940: the uncertainty as to the plans of President Roosevelt, and the European war. It was difficult for either party to make plans until it was known whether Roosevelt would seek a third term and it was exceedingly difficult to map domestic policies when the minds of most Americans were on foreign problems. Despite the confusion, there was no dearth of candidates for either party. Among the Democrats who had personally announced their candidacy or who had developed strong backing were Secretary of State Cordell Hull, Postmaster General James J. Farley, Social Security Administrator Paul V. McNutt, and Vice-president John N. Garner. Any of these men might easily have won the nomination with the President's backing, but Roosevelt maintained a sphinx-like silence. Eventually Hull insisted that on no consideration would he be a candidate; McNutt insisted that he was not in the running, if the President desired the nomination. Both Farley and Garner continued as candidates until the end, and appeared on the ballots of certain of the states having presidential primaries.

The leading Republican candidates for the nomination early in the year were Thomas E. Dewey of New York, Arthur H. Vandenberg of Michigan, and Senator Robert H. Taft of Ohio. It was not until May that Wendell Willkie, president of Commonwealth and Southern, became a prominent candidate. His nomination at Philadelphia in June came without his having run the gauntlet of the state primaries. The chief beneficiary in the Republican primaries was Thomas E. Dewey who won a 2-to-1 victory in Wisconsin over Senator Vandenberg, a 4-to-3 victory in Nebraska. In New York he won 82 delegates as against 10 for Frank E. Gannett, newspaper publisher; in Illinois he was unopposed. Dewey remained until the end the favorite Republican candidate in the Gallup poll and others. In May he was the Gallup choice of 67 per cent of Republican votes. The Democratic primaries showed the President far in the lead as the popular favorite. He won over Garner in Wisconsin by a 3-to-1, in Illinois and California by 6-to-1.

As the pre-convention campaign proceeded the Republicans found themselves in the same position that Landon had been in in 1936 — one in which they had to meet millions of Republicans who believed in much of the New Deal and were, therefore, forced to criticize details of legislation rather than policies, and to suggest that they had a better program without being very specific. With totalitarian victories culminating in the fall of France in June, the attitude of the candidates on America's place in the European war became more important. Roosevelt's policy of preparedness and aid to the allies was well known. Of the Republicans, Willkie's position seemed closest to that of Roosevelt; Vandenberg's appeared the most isolationist, while Dewey and Taft took a middle ground.

Republican Convention.

When the Republican Convention met in Philadelphia on June 24, it was any man's victory. Dewey had the largest block of votes pledged to him, but there was clearly a swelling public demand for a candidate independent of organization affiliations, and for one with a personality vivid enough to attract young voters and win liberal Republicans back to their party. In Wendell L. Willkie, forty-eight-year-old public utility president, the rank and file Republicans, as well as large business and financial interests, thought they had found their man. They quickly ousted the old-line bosses from control of the convention and nominated Willkie on the sixth ballot.

On the sixth ballot the landslide to Willkie started and at 1147 A.M., Friday, June 28, his nomination was made unanimous. Charles L. McNary, Republican Senate leader, who had earlier asserted he would not accept the vice presidential nomination, was nominated and accepted the place on the ballot. On the first roll-call McNary received $90 votes and Representative Dewey Short of Missouri, 108. The Missouri delegation then moved that the nomination be made unanimous. McNary was sixty-six years old and had been famous for a decade and a half as spokesman of the farmers as well as co-author of the McNary-Haugen bills vetoed in the 1920's by Coolidge.

In their platform the Republican Party supported 'all necessary and proper measures' of defense, stated that it was 'firmly opposed to involving this nation in foreign war'; pledged a revision of the tax system and a removal of 'those practices which impede recovery'; pledge elimination of 'waste, discrimination and politics from relief' and the encouragement of 'a healthy, confident and growing private enterprise.' On labor the platform supported collective bargaining, but demanded amendment of the National Labor Relations Act in the interests of 'freedom' and 'orderliness.' On agriculture the platform advocated continued aid to the farmer by most of the methods already used by the Democrats. It favored withdrawal of 'the President's arbitrary authority to manipulate the currency' and it would repeal the Thomas Inflation Amendment of 1933 and also the Silver Purchase Act of 1934. The method of making the reciprocal trade agreements was criticized but no promise was made to repeal them. Enforcement of the antitrust acts was promised as was the confining of 'government activity to essential public services.' An amendment to the Constitution was urged which would make impossible a third term. No mention was made of low-cost housing, electric power, or health. (See also REPUBLICAN PARTY.)

Democratic Convention.

The Democratic Convention met in Chicago July 15. The President's long silence on his third-term candidacy was finally broken the next day when Senator Barkley, at the end of his formal speech as permanent chairman, announced that he had an additional statement to make on behalf of the President of the United States. 'The President,' said Senator Barkley, 'has never had and has not today any desire or purpose to continue in the office of the President, to be a candidate for that office, or to be nominated by the convention for that office.

'He wishes in all earnestness and sincerity to make it clear that all the delegates to this convention are free to vote for any candidate.'

As the Roosevelt sentiment in the convention was overwhelming, and as capable leaders were in Chicago to turn that sentiment into a nomination, no one was surprised when the President was nominated for a third term Thursday morning on the first ballot. The total vote, before the nomination was made unanimous, was Roosevelt 946 13/30, Farley 72 27/30, Garner 61, Tydings 9 1/2 and Hull 5 2/3. Farley's chief backing came from Massachusetts, where he picked up 12 1/2 votes and New York State where he obtained 25. Garner got the 46 votes from Texas and picked up a scattering elsewhere. Of the Tydings' votes 8 1/2 came from Maryland.

The nomination for the Vice-Presidency which went (July 19) to Henry A. Wallace of Iowa, fifty-one year-old Secretary of Agriculture, was evidently determined by Roosevelt and put through by his convention representatives. Irritated by White House dictation and convinced that Wallace would not be a good vote-getter, delegates hesitated, but finally nominated him by a large majority. Before the nomination was made unanimous the recorded vote gave Wallace 627.70, Bankhead 329.29, and McNutt 66.63, with a handful scattered among others.

The Democratic platform promised no participation in foreign wars, and that armed forces would not be sent to fight in foreign lands outside the Americas, 'except in case of attack.' It proposed 'an invincible Air Force, a Navy strong enough to protect all our seacoasts and our national interests, and a fully equipped and mechanized Army.' On labor the platform promised to enforce fair labor standards and continue the principles of the National Labor Relations Act. It also (as did the Republican platform) promised extension of social security. It promised increase in slum clearance and low-cost housing activities, defended Government ownership of public utilities and promised an extension of health activities. Although the platforms of the two major parties seemed superficially much the same, close scrutiny revealed a real contrast in their approach to American problems as a whole. The Republicans (except in agriculture) seemed inclined to look toward a more laissez-faire attitude on the part of the Government toward economic life, the Democrats would continue their wide application of Government power. In his acceptance speech the President did not directly mention the third term, but scored dictatorship, upheld the Democratic way of life, and apparently agreed with the platform. (See also DEMOCRATIC PARTY.)

Minor Parties.

Various minor parties had already made their nominations. The Socialist party at Washington, April 7, opposing both war and economic aid to belligerents, nominated for the presidency for the fourth time Norman Thomas, and for the vice-presidency, Maynard C. Krueger, economist of the University of Chicago. At New York City on June 2 the Communists nominated for President Earl Browder (under a sentence of four years at the time for violating the passport law), and James W. Ford for Vice-President. Its platform centered mainly around opposition to participation in 'the imperialist war,' to militarization at home and preparation for war. The Prohibition party nominated Roger Babson for President and Edgar V. Moorman for Vice-President; the Socialist Labor party nominated John W. Aiken and Aaron M. Orange.

Campaign Problems.

As the campaign got under way the Republicans seemed to be gaining the support of many former Democratic leaders. Not only would Willkie receive the support of the same conservative Democrats, such as Alfred E. Smith, Joseph B. Ely, Bainbridge Colby and James A. Read, who had left the party in 1936, but of many others who for one reason or another had quit the New Deal. These included such important persons as Hugh Johnson, former head of the NRA; Raymond Moley, former assistant Secretary of State; Lewis W. Douglas, former Budget Director; and James W. Hanes, former Under Secretary of the Treasury. Numerous college presidents, formerly Democrats, also came out for the Republican candidate. As the campaign progressed, leaders in other professions spoke out for one candidate or another, as both sides sought favorable publicity in this way. What the rank and file voters would do, however, was not clear, nor was there much indication of how those who had just come of age would cast their first ballot.

Problems of campaign organization faced both parties from the start. James J. Farley's opposition to the third term made it virtually impossible for him to retain his position as chairman of the Democratic National Committee. He resigned, but consented to retain control of the committee until Aug. 17. His successor was Edward J. Flynn, one of the Tammany chieftains of New York, Democratic boss of Bronx County, and former New York Secretary of State. That he was a local politician of ability was conceded, but his fitness to conduct a nation-wide campaign was questioned. The antipathy of the rural South and West to city bosses and machines was a handicap. On the other hand, he obviously understood the city Democratic machines. The Republican campaign was also under new management as John D. M. Hamilton, Chairman of the Republican National Committee, was replaced by Willkie with Joseph W. Martin, Jr., of Massachusetts, leader of the House Republicans. To what extent the Hatch 'clean politics' Act would influence the campaign, was not clear at the start. The $3,000,000 total and the $5,000 individual limit on contributions would effect detrimentally the Republican party. At the same time the provisions of the Hatch Act forbidding political activity of Federal office-holders and of all state employees, any part of whose income was derived from Federal funds, would hurt the Democratic party. A majority of the 1,500,000 office-holders thus debarred were Democrats.

As it was believed that the Democrats would carry the 'Solid South' as usual, and that their chances were more than even in the industrial Northeast, both parties made unusual efforts to win the Middle West and the Pacific Northwest, where the New Deal was believed to be slipping. Mr. Willkie, whose residence for some years had been in New York City, picked his birthplace, Elwood, Indiana, as the point from which to deliver his acceptance speech. Here a huge gathering, estimated by some as high as 200,000, heard him on Aug. 17 agree with Roosevelt's foreign policy and commit himself in favor of collective bargaining; minimum standards of wages and maximum standards of hours; Federal regulation of interstate utilities, security markets and banking; old-age benefits; unemployment insurance; rural electrification; and to an effort to 'equalize the lot of the farmer with that of the manufacturer.' While generally approving Roosevelt's foreign policy, Willkie accused him of dabbling 'in inflammatory statements and manufactured panics.' On domestic policy he attacked Government spending, the growth of the public debt, and the 'philosophy of distributed scarcity.' In place of the latter he preached unlimited productivity as a remedy for unemployment. He also called on the President to debate 'the fundamental issues of this campaign on the public platform.' This call the President ignored, presumably on the grounds that he was too busy with the problems of defense and the European War.