Federal-state relations; policy of tax exemptions; sales tax; enlargement of executive authority; the National Industrial Recovery Act; unemployment insurance and reserve funds; and hours of labor and minimum wage
Former Governor George Dern of Utah, now Secretary of War, spoke to the Governors about federal-state relations and about the National Industrial Recovery Act (NIRA), the purposes of which were to reduce unemployment, rehabilitate industry, and implement public works. Road building, Navy ship building, and other employment projects funded by NIRA were carried out under terms established jointly by industry and trade associations with the approval of President Roosevelt. Specifically, the act prohibited monopolies or price fixing, and required compliance with maximum hour and minimum wage standards, permitting labor organizing and collective bargaining.
It was noted, however, that the constitutionality of NIRA's requirements with respect to maximum hours and minimum wages was expected to be challenged in court.
With respect to taxes and recovery, Governor Wilbur Cross of Connecticut said that tax exemptions--for property in particular--rose during periods of prosperity, and that while giving exemptions to charitable organizations was justifiable, it could not be justified for fraternal and social groups whose aim might only incidentally be charitable. Governors talked about limiting the amount of exemption an institution's (e.g., a university's) property could receive, and whether endowments to educational institutions should be exempt from inheritance taxes.
Governors disagreed as to the fairness of sales taxes. Governor I.C. Blackwood of South Carolina argued, for example, that sales taxes did not discriminate against the poor in part because anyone who could afford to consume could afford to pay consumption taxes. In contrast, Governor Theodore Green of Rhode Island said that a person whose income was 100 times that of another didn't spend 100 times more, and therefore paid disproportionately less in sales taxes.
Governor Fred Balzar of Nevada offered a resolution to petition the President to speed organization of a national police system that would cooperate with state and local law enforcement agencies to stamp out crime. The Secretary of the Governors' Conference pointed out that there was an unwritten rule against resolutions being adopted on the floor. But when Governor Frank Cooney of Montana said that his own child had been kidnapped two years earlier and was now in a sanitarium, it was agreed to refer Gov. Balzar's proposal to the Resolutions Committee, which normally was limited to processing resolutions of appreciation.
Governors talked about the two favored plans for unemployment insurance, one of which (the "reserve" system) held a specific employer's contributions in reserve for its own employees to receive, while the other (the "insurance" system) held money for all contributions in a state in a single fund, thus spreading risk. Wisconsin was a key architect of the "reserve" system, while Ohio used the "insurance" system. Answering opposition to the concept of unemployment insurance, Governor George White of Ohio argued that without it, citizens would pay the cost of unemployment in other forms--e.g., in unpaid bills and unpaid rent.
With respect to unemployment insurance,
Governor George White of Ohio said: "We are now justified in the belief that the worst of the depression is over, and that our difficulties in the near future will not be as great as in the immediate past. But we shall be making a very serious mistake if we assume that business recovery...will automatically solve the perplexing problems that now beset us...in the years of the depression the resources of the relief agencies and of the self-supporting families have been exhausted. The burden has been shifted to the shoulders of the taxpayers, as more and more people were thrown out of work and their families forced to become dependent on charity. The dole...will continue to threaten the solvency of our public treasuries...unless we begin at once to adopt constructive measures to stimulate [management] and the workers in our industries to provide against unemployment without saddling the cost on our city, state and federal governments."
Former Governor George Dern of Utah, now Secretary of War, said: "In the emergency of war the nation acts as a unit and real sovereignty belongs to the National Government, because under such circumstances our very national existence is at stake. The people will come to feel the same way in a severe industrial crisis...It is of crucial importance in the present emergency that labor, business, agriculture and government cooperate in making [the National Industrial Recovery Act] effective. It is the rainbow of hope against the black clouds of chaos..."
With respect to a reduction in hours of work, Governor John Winant of New Hampshire said: "Now, there is one peril that is coming with reduced hours, and that has to do with the wise use of leisure...If our leisure hours are far in excess of our work hours, then in the years to come the effect of individual action and national action will be largely dependent upon what we do in leisure hours; and we want recreation...to build character as well as to give pleasure."
Resolution Adopted:
Declaring support for federal efforts to fight organized crime.
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