Plan Banks, gave his own opinion from his banking experience that the amounts of repayments would be extraordinarily large instead of small.

Senator CoSTIGAN. Have you given consideration to the question? To what extent may credit be utilized as distinguished from cash? Mr. RICHBERG. Of course, Mr. Chairman, the bulk of the business of this country is done on credit; of course, the volume of our currency that actually moves to-day is very small compared with the total volume of business. As a matter of fact, our whole financial economy is on the basis of credit, and I suppose every financial expert who has dealt with the question has come back to the proposition that what was needed in some way was to create a credit behind purchasing power.

Without using any names, because I do not want to bring persons into this discussion without their authority, but I want to say this, that I discussed this problem with the head of one of the largest banks in the United States within the last month. He said that the credit facilities have been organized for the purpose of aiding in production. That we had ample credit facilities to stimulate, to increase, and maintain productive power, but that no financial system had been developed up to date to provide credit facilities. for increasing purchasing power, except so far as somewhat abortive and violently stimulating efforts were made in the last seven or eight years to increase installment buying. There has really been very little known in financial operations of putting credit behind purchasing power; and yet that is the great need of the present time, which I say, not of my personal conviction, but on the authority of such men as this particular banker with whom I was discussing the question.

There is no question that this bill will put an enormous credit behind purchasing power, will create a vast purchasing power.

I will say, Mr. Chairman, that I do not believe anyone hereI do not believe anyone in the country-is competent to give an absolute prophecy of the results of any stimulation of purchasing power and general resumption of business over a period of three or four years. But at least we can look ahead for 12 months and we can say with complete conviction that if the unemployed heads of families in this country were given the absolutely essential purchasing power, to supply the necessaries of life for six months, we would have an enormous increase of business activity, of employment, and we certainly would prevent privation in the coming winter. Those things we can be sure of.

Senator COSTIGAN. Mr. Richberg, are you familiar with what is termed the Seattle plan of which we have been hearing recently? Mr. RICHBERG. Is that the exchange plan?

Senator COSTIGAN. The exchange plan.

Mr. RICHBERG. I am familiar with efforts that have been made in various parts of the country, Mr. Chairman, to get business into operation by direct exchange in one form or another.

Senator CoSTIGAN. Is it not in a measure an illustration of the principle of which you are speaking?

Mr. RICHBERG. I think it is a very definite example of it. It is simply going back to an early and clumsy method and a slow method of stimulating business, whereas, since we are on a credit economy,

the way to stimulate business to-day is to put a new flow of credit into the markets.

In that connection I happened to notice, and without saying that either of the eminent Senators has given any approval to this proposition, I happened to notice in the discussion in the Senate on July 1 a brief colloquy between Senator Borah and Senator Watson which I would like to quote simply for its inferential bearing upon the present problem.

Senator CoSTIGAN. Have you the page of the Record?

Mr. RICHBERG. It is on page 14882 of the Congressional Record, during a discussion on the home-loan bank bill, when Senator Borah said, in a colloquy with Senator Watson:

Which suggests the proposition that before we close this session we had better pass a bill which will enable the individual citizen himself to have a little more currency and a little more money with which to do business. Mr. WATSON. I am personally in favor of that.

I assume, from other statements, that possibly what the Senators had in mind in that discussion may have been something in the nature of a currency inflation, but that at least is a little more indirect method and a little more uncertain method of accomplishing the same result which is directly aimed at in this particular bill.

Senator CoSTIGAN. Have you completed your statement?
Mr. RICHBERG. I have practically completed it.

Senator CoSTIGAN. The committee will be glad to hear anything further you wish to state.

Mr. RICHBERG. There is only one thing further I would like to say and it may be perhaps anticipating a criticism. It seems that every effort to help individuals in this country in any form is termed a "dole "; and in order that there might be no confusion as to this particular program, I would like to express as my personal opinion that no one using words accurately, and otherwise than as mere epithets, can call such a program as this a plan for "doles." We may have passed to the point where some "dole " is accepted as necessary in this country. Certainly, the passage of a direct relief bill involving the payment of several hundred million dollars in charitable relief smacks somewhat of the hated designation of a "dole." But there is no more resemblance in the proposition that a loan shall be made to an individual, there is no more resemblance to a "dole," than there is in the proposition that a loan shall be made to a corporation.

If credit should be extended to railroads and banks and other institutions, and that is not a "dole," then the extension of credit to individuals whose earning power is behind the solvency of the banks and other institutions, the extension of credit to such individuals, responsible borrowers, issuing their notes, promising to pay, that is not a "dole." I would like to make it perfectly clear from my point of view that it would be wholly improper and unfair as a method of argument to discuss this proposition that way, as though it smacked of the charitable gifts which receive the common name of a dole."

Senator CoSTIGAN. By the word "dole " you mean charity?

Mr. RICHBERG. As I understand the word "dole " means charity. It means giving something for nothing and essentially it means the support by the State of individuals in idleness.

Now, this bill does not in any way suggest any continuing support. It does not in any way suggest any charity. It is limited in its application to individuals normally capable of self-support, and that is specified in section 6 of the bill which provides for extending credit to "unemployed adults responsible for and capable of selfsupport." Also it is credit for the specific purchase of necessary goods and services; and it is credit extended upon the notes of the borrower. Now, that proposition, whether sound or unsound, is entirely different from anything which can be sincerely and honestly described as a dole."

Senator COSTIGAN. The essential purpose of the bill is to promote industry by extending sound credit to individuals?

Mr. RICHBERG. That is its purpose; yes.

I may point out one other thing, Mr. Chairman, and that is that the merit of this proposition rests upon the volume of purchasing power created within a short period of time and that is a merit which is not possessed by any proposition to which Congress has given serious consideration, apparently. In other words, a mere trickle of increased purchasing power, a mere slight stimulation of employment, can not be expected to turn the tide of such a tremendous depression as that we are in now. But if you should create a tremendous volume of purchasing power in a short space of time you would gain a stimulating effect which could not be denied. Senator CoSTIGAN. Have you concluded?

Mr. RICHBERG. I have completed what I wanted to volunteer, Mr. Chairman.

Senator CoSTIGAN. Thank you, Mr. Richberg. Because of business of the Senate, the subcommittee will now recess, subject to the call of the Chair.

(Whereupon, at 11.35 o'clock a. m., the subcommittee recessed subject to the call of the Chair.)