Stigmatizing a balanced budget as "disastrous" under present conditions, George H. Earle '13, Governor of Pennsylvania, before an audience of 400 in the Harvard Union, last night advocated government spending on a vast scale to tide over the country until its economists can work out a permanent solution for pressing economic problems.
"Ever since 1900, when a moving frontler ceased to take up unemployment resulting from technological advances in labor-saving machinery, we have been facing a showdown with the Machine," Governor Earle stated. "The World War and the subsequent inflation bubble which burst in 1929 only postponed that showdown."
Increased industrial efficiency has given the United States "magnificent production, miserable distribution, and appalling unemployment," he said, " but the economists have not advanced beyond Adam Smith."
U. S. Debt Lower Than Franco, England
Governor Earle pointed out to critics of an unbalanced budget that the United States' debt is less than a third that of France and England. "We must must stop the downward momentum by constructive government spending. Empty stomachs do not think."
Stressing the fact that his is only a temporary solution Pennsylvania's chief executive specifically urged a three part spending program which would provide low cost housing, an extensive system of safe highways, and rural electrification. The masses must be made into customers, he said.
Confident in Roosevolt
Despite his feeling that "pump priming" was halted to soon, Governor Earle himself currently rumored as a presidential possibility in 1940, expressed great confidence in President Roosevelt's ability to find a way out. Blaming curtailment of government spending as a cause of the current recession, he suggested that reactionary advice may have had an influence on the Administration's shift in policy.
A general sales tax, such as recently proposed for Massachusetts, the governor described as "one of the most subtly vicious taxes ever devised," since it cuts into the poor man's dollar far more than the rich man's.
Rich Man Avoids Tax
The average American, with an income ranging from $400 to $2500 a year, must necessarily subject almost all his expenditures to the sales tax through local expenditures, he explained. The rich man avoids the tax by outside purchases. He pays no tax on money spent for rent or travel, or on such portion of his income which he does not spend.
To the audience Governor Earle posed the problem of whether or not censorship should be invoked against foreign propaganda through the movies.
Cites "Belgian Babies"
Stating both sides of the question he said that a balance must be found between the undisputed value of absolute freedom of speech and press, and the vicious effect of propaganda from Europe. He cited the "Belgian babies" propaganda as a factor contributing to our entrance into the World War. Subsequent investigation, he said, did not reveal one case of children having their hands cut off by German soldiers.
As his one bit of advice to the audidience, the Pennsylvania executive said. "Cultivate a sense of humor the kind that will let you laugh at yourself. If's your philosophy of life."