the c-span series the contenders. [cheering] >> we want willkie! we want willkie! we want willkie! ♪ >> i stand before you without a single pledge or promise or understanding of any kind except for the advancement of your cause and the preservation of american democracy. [applause] as your nominee, i will have an aggressive fighting campaign. [applause]

>> we want willkie! >> wendell willkie ran for president in 1940. these are some images of him on the campaign trail. we are here with david willkie, his grandson. i want you to introduce the audience to some of the fervor. as we're seeing from these iconic images from the 1940's campaign that surrounded him. your grandfather ran for president and tried to defeat franklin delano roosevelt, who was seeking a third term. >> here we are just entering into the great depression, the end of the hoover administration, eight years of the roosevelt administration. president roosevelt was right at the height of his power. that opened up a place for a dark horse candidate to come outside the political spectrum. >> keep in mind the state of

the republican party. it was a party defeated by roosevelt in 1932. he defeated herbert hoover and another. what were the republicans looking for and why was your grandfather the person they chose? >> and nobody else had run for a third term before, going back to the time of george washington. when washington stepped down, no one had even dreamed of running for a third term for the presidency. when roosevelt announced that he did, it changed the whole dynamic of what was out there. certainly looking at europe, world war ii, the nazis were going over to northern europe. it certainly opened up a time in which the republicans said, "what do we do?" >> herbert hoover was hoping the party would come back to him. u.s. senator thomas dewey of new york. u.s. senator taft from ohio -- mr. republican. this was a convention in

philadelphia that went for six hours. >> and nobody had come from the business side. nobody was actually doing that except for wendell willkie. he certainly rose up and had an electric personality and magnetic energy about him. >> you obviously never knew your grandfather. as you talk to family members who knew him, he died at the age of 52. we will learn more about his life. why did he ultimately decide to run for the nomination? he did set the groundwork in 1939 for a possible presidential bid in 1940. >> he was always interested in politics, even from growing up in his hometown. of elwood, indiana, which is just up the road from here. he talked about it in his life, in his childhood with his parents, when they got to college -- it was always an integral part of his life. >> we are in rushville, indiana, one of the homes of wendell willkie. we are inside the historical

society. i want to turn back here and look at this. if you can explain what this is, representative of that campaign? >> this is a wooden post card sent through the united states mail, sent from aberdeen, washington. all of the people in the town actually signed the back of the postcard to say "we want willkie." we want wendell willkie to run for the presidential nomination for the pregnancy. >> what was the campaign like? you had your willkie clubs. you had boxes of buttons and banners. they were distributed around the country and some are on display here. >> people wanted something new and different that they had not had before. this is where the willkie name started to take off. here was someone who had

challenged the new deal successfully. he had been a strong proponent of individual freedom and liberty. people were drawn to the message. >> we are about a block off of main street. your mother, wendell willkie's daughter in law, lived a few blocks from here in rushville, indiana. the significance of this home to your family. >> it was my grandmother's home town. my grandfather grew up in elwood. when they married, this was the place they generally called home. in the family, my great great grandfather had lost his shirt during the depression. instead of giving his father in law a handout, what wendell willkie did was bought farmland. he asked his father-in-law if he would manage it. >> how much time did he spend in rushville? >> on and off. >> his wife and son would come back constantly, but during the campaign, this was the

headquarters. >> where is elwood? >> the northeastern part of the state, north of rushville about an hour and a half from here, a little over an hour from indianapolis in madison county. >> why is elwood so important for the 1940 campaign? >> he decided to accept the nomination in elwood, indiana. still to this day, it is the largest political rally ever in the history of indiana. >> the historical society said the people were honking horns and cheering that the hometown boy was the republican nominee. >> he was improbable going into the philadelphia. >> no question. he was the dark horse. during the nomination speech,

you had stories of beer cans many feet high. it was such a hot, sweltering indiana day. it was a carnival atmosphere with books and paraphernalia. some of those you may see here today. >> david willkie, who is the grandson of wendell willkie. we'll be checking in with you over the next two hours. as we continue the series, "the contenders," tonight we are coming to you from rushville, indiana. in a moment, we'll be joined by author and historian amity shlaes, the author of "the forgotten man," and james madison, professor of history at the university of indiana. we are going to show you the scene in elwood, indiana, and the speech by wendell willkie as i walk into the next room and introduce our guests coming up in a minute and half. >> i say that we must substitute

for the philosophy of distributed scarcity, the philosophy of unlimited productivity. [applause] i stand for the restoration of full production and reemployment by private enterprise in america. [applause] the new deal's effect on business has had the inevitable results. the investor has been afraid to invest his capital. therefore billions of dollars lie idle in our banks. the businessman has been afraid to expand his operations. many hands have returned to the unemployment office. low incomes in the city and irresponsible experiments in the country have deprived the farmer of this market. for the first time in history,

american industry has remained stationary for a full decade. i charge that the path this administration is following will lead us like france to the end of the road. i say that this course will lead us to economic disintegration and dictatorship. i say that we must substitute for the philosophy of spending, the philosophy of production. you cannot buy freedom. you must make freedom. [applause] >> from elwood, indiana, in august of 1940 to the west -- rush county's historical society here in rushville, indiana. this is one of the postage stamps from 1992 -- a 75 cent stamp celebrating the centennial of wendell willkie's birth. amity shlaes is with the george washington institute in dallas, texas. james madison, you have been a

professor of history at indiana university. let me begin with that speech he gave in elwood, indiana. it lays the groundwork for why he was challenging franklin delano roosevelt. >> he ran against roosevelt and against the new deal and against the tide of policies and politics represented by the new deal. we will have a good opportunity to talk about those in detail. it was a fairly standard political speech, but not a fairly standard political rally. as david said, it was a massive rally. 150,000-200,000 people in the small indiana town in august at a time when as hoosiers say, you can hear the corn grow. it was 102 degrees that afternoon when wendell took the podium. he spoke with eloquence, yet the atmosphere was such the speech was a bit flat in terms of the audience, in terms of the reception.

that was not the best start for thecampaign. we now know looking back that it was rather indicative of the campaign itself -- some of the disorganization and difficulties that the amateur newcomer had. why they should vote roosevelt out of office and not give him a third term. >> one note about the speech, it was heard on radio by millions of americans. >> this was the time for radio. people sat by the radio and listened intently. >> amity shlaes, you have written extensively about the new deal. this is now eight years after franklin roosevelt promised a new deal for the american people, yet unemployment still in the double digits, still a lot of concern about the economy. why did republicans turned to an outsider? it is probably the first time in american history that a non- military not a politician was the party nominee. >> this was a political

expression. i see the speech as a enormous success of some kind. the republican party was failing the country. it was not giving an answer to what the democrats had offered. the democrats were not delivering recovery. the recovery was choosing to stay away. what willkie was an expression of his public charity -- popularity, willkie was an expression of the people. the gop had never expected a rally like that. it was a genuine grass-roots event of a kind that is very rare in the u.s. you start way down there and get to the nomination for president. >> why him? what did he do to try to lay the groundwork that allowed the party to turn to this outsider, this businessman from indiana

who spent some time in new york at the 1940 nominee? >> it is easy to underestimate willkie. the professional, the long term career politicians did just that. they underestimated this fellow. he did have no political experience to speak up. he had never ran for office. he never held office. he was a businessman, a lawyer, but very smart and very sophisticated. i think it is relevant that his business experience was really, in a way, political experience. he was a wonderful communicator. he knew how to work with people. he knew how to make a case, how to make an argument -- the kind of skills he deployed as a presidential candidate. >> yet alice roosevelt longworth said it was a grassroots of 1000 country clubs. you are smiling. >> the grassroots campaign is part of the politics ofpoliticking. it truly was a grassroots in what it intended, but willkie was not a common man. he was a wealthy corporate lawyer and businessman.

he had an agricultural interest, but he was not a farmer. he said he farmed by conversation, not by actually farming. he was far from the grass roots, but he tried to appeal to the grassroots. >> amity shlaes, let's talk about the 1940 convention. this had the governor of minnesota delivering the speech. longtime presidential candidate. herbert hoover, former president, who is hoping the party would turn to him one more time. tom dewey, and, of course, robert taft, who is hoping the party returned to him. >> we get in a little trouble when we draw analogies. dewey was the prosecutor from new york who overrated himself. we often have new yorkers come out and say they are going to win, especially when they have a legal background.

taft was mr. republican. people had heard about him before. taft was a name. we had had a president named taft. that was not particularly new. herbert hoover was a wonderful man, but he had become a great vanity. he was getting in the way of the progress of the party because he kept wanting to run again. his time was probably past. what was exciting about willkie was he went to hear herbert hoover and could not believe that herbert hoover would hog the nomination. in that way, willkie was grassroots. he, himself, was not of the grass. he was chosen by people who were voting against the party. the other names were "the party." willkie came in as somebody different, not what we expected.

>> he retired and an exciting man. i think for many people, it was none of the above. it was the perfect atmosphere for an outsider who promises and looks very different from the republican standard of the late 1930's. >> what was the state of the democratic party, amity shlaes, and franklin roosevelt and his support in 1940, eight years after the new deal at a time when most presidents would step down? >> roosevelt's victory -- 46 out of 48 states in the preceding election -- was so hard to get past. even as the party was beginning to get past it, this idea of having a third term -- the war was coming closer. war in 1940 had already been declared in europe. germans had invaded poland and britain. all of a sudden, roosevelt was -- just when you say there roosevelt could not run again, roosevelt was a navalpresident. he was good at war. they knew that.

they knew that he served the secretary of the navy. he might be a good war leader. all of a sudden, people were tongue tied and did not protest against roosevelt. still, it was quite amazing. >> professor madison, the headlines in the summer of 1940 with willkie as the republican nominee, hitler moving to france and declaring victory. the big question, is great britain next? juxtapose the politics of 1940 and the looming clouds of war in 1940-1941. >> it worked very much to wendell willkie's advantage. >> france surrendered to the nazis a couple of days before the philadelphia convention began. that turned americans' attention very forcefully to this war in europe. they did not want to be a part of it.

but they knew they needed a wartime leader. roosevelt looked a lot better in that context than did any of of the other republicans. >> we are coming to you from the rush county historical society in rushville, indiana, one of the homes of wendell willkie. just about an hour from indianapolis. he was born in elwood, indiana. as we continue this series, our focus this week is on wendell willkie. the telephone numbers are on the screen. there are so many images from that campaign. there are things we do not see in modern campaigns -- ticker- tape parades. what was that significant? what did that tell you about the support wendell willkie had with certain sectors of the public? >> of course, there was no television. they really had to get out there with the people. he spent a lot of time crossing the country on trains.

retail politics in towns and cities all across america, with all the hoopla, with all the stuff to get people engaged andkeep them excited about the campaign. >> was franklin roosevelt worried about wendell willkie? >> i think he enjoyed it. he said, "i am not going to pretend that it is an unpleasant duty for me campaign." both of them were warriors. both of them enjoyed that process, yet he respected willkie as a contender. from the beginning, you see him dropping comments -- "that one i am worried about." he was ready for the battle. >> we will hear from franklin roosevelt in just a minute. who was behind the willkie campaign? who are some names our audience might be familiar with? >> willkie had the good fortune or the good sense to meet people in the publishing and newspaper business.

people who bought ink by the barrel, as they say. the editor of forbes magazine, the book editor of the new york tribune, henry luce of time- life, and others. these people in the publishing world like him very much and were very strong behind-the- scenes in advocating a working for his nomination and election. >> yet, he was a democrat before becoming the republican nominee. >> he had more credibility as an outsider. he supported the league of nations. he was a wilsonian. he was a democrat right up to 1935. you can find documents with willkie associated with democrats. that gave him more power because he was a dark horse, because he was not a party man. he became a republican out of conviction. he saw what was wrong with the

democratic philosophy of governance. when you look at the beginning of his career as a businessman, he thought he was a democratic utilities man. they gradually came to be as the government was hurting the private utilities and he grew angry. he was speaking truth to power. that is what he represented. he really was angry for what happened to his company. he saw shareholders lose money, in commonwealth and southern, and his company get hurt. that is someone observing from the political sphere. >> the unemployment rate in 1940 was what? >> the unemployment rate for 1940 was 10% or below. it was above where we are. it is a little bit muddy because you are moving towards world war ii. the average unemployment rate for the 1940's was in the teens. that is the important thing to know. some people say 14, some say 15.

it is the difference between terrible and awful. we would not accept it and it was so long. >> wendell willkie talking about unemployment and jobs on the campaign trail in hoboken, new jersey. and then a conversation, part of the recordings of president roosevelt in the oval office from october 1940 as president roosevelt discusses the challenge. >> one of the things that struck me as i was driving up the streets of hoboken, why does the average store window -- that is, the vacant store window -- have pictures of my opponent and his running mate on the new deal ticket? i do not know of any more appropriate place to put those pictures. [applause]

>> franklin roosevelt in recordings from 1940. james madison, franklin roosevelt was a politician. we hear a little bit of that in this oval office recording. >> there is probably never anyone in the white house who was more of a wily politician than franklin roosevelt. it is just superb. he had a skill and ability and success that has few if any rivals. willkie had the misfortune of running against that skillful politician. >> was wendell willkie consistent on the issues in the 1940 campaign? >> i do not think so. few politicians are consistent on the issues. the campaign started to go badly for willkie.

the disorganization, the chaos, the difficulty of challenging roosevelt. in the last part of the campaign, he moved toward a position on the war and the new deal that he may not have happily agreed with. they were more harsh, more vituperative then the true wendell willkie. >> amity shlaes. >> he was inconsistent, but we cannot downplay his success. he won more votes in that election than any republican had ever won. electorally, roosevelt was that wily fox. he had that large number of electoral votes relative to willkie. on the popular vote, it was much narrower. willkie got much closer to the democrats than republicans have before.

to the tape we just heard of roosevelt, roosevelt really did become worried. that's where you see him worried. he said all sorts of things. maybe we will hear tonight another tape where he worried about whether he could use willkie's mistress as a fact to beat him in the election, irita van doren. there is a lot of stuff going on and they are beginning to take him seriously. that was the future of the campaign. a very important girlfriend back willkie had. >> you write about her in your book. let's take a few phone calls. we are in rushville, indiana. our first caller is kurt from ohio. welcome to the conversation. >> thank you and good evening. this is a great program and i

hope that a lot of people take advantage of this great service that you are giving to the american people. my question is -- i have a couple of comments -- the first one is being in the suburbs of akron, ohio, i wanted to know a little bit more about wendell willkie's role as an attorney for the goodyear tire and rubber co. where he, during that time, was heavily involved in akron city democratic politics. my second comment is with wendell willkie being the dark horse candidate at that time in 1940, do you see history kind of repeating itself 72 years later with the emergence of herman cain as the new dark horse for the republican party with no political experience and a business background, that sort of thing? he is starting to look better compared to governor romney and governor perry and all the others who are basically career politicians.

>> you bring up two good points. thanks for the call. he grew up here in indiana, but moved to akron. ohio was a key part of his career. >> he followed the economic growth. that is what happened. why did he go from indiana to ohio? because rubber was there. because tires were there. we think of our cities now -- when he got to akron, he could not find a bedroom. it was that packed during the automobile boom. he parked on a chair that first night if you read his biography. it was so tight, going so fast with the automobile industry. that tells you a lot about what he was for. he was for economic growth. from there to new york with a law firm to serve a new industry, utilities, and then to have that utilities company. commonwealth and southern. >> herman cain was on the fox news channel today. one of the questions was the republican party has not nominated a businessman since wendell willkie. you have a direct link today.

>> i always like when people make connections between present-day politics or issues and the past. >> i always like when people make connections between present-day politics or issues and the past. i am reluctant to do that except to say this -- it is too early to identify the dark horse because at this point in 1939, in the fall of 1939, very few people had ever heard of wendell willkie. many thought he was still a democrat. he did not emerge until the spring of 1940. if we are following the format, we would have to wait until the spring of 2012 to know if we have a dark horse. >> the conventions of a 1940 were very different from the conventions of 2012. >> the outcomes were less certain than now. we seem to be more settled in a primary system. when they aren't getting there, they are discounting of what already happened. >> ron is starting us from maryville, washington, to talk about the provincial campaign of

wendell willkie. >> thanks for taking my call and for having this series. it is outstanding. i want to provide three corrections or clarifications to statements that have been made. number one, the statement that roosevelt was the first president to contemplate a third term. actually, woodrow wilson contemplated it as documented in his recent biography by john milton cooper. it may have been delusional, but he seriously contemplated it. it was after his stroke. secondly, i am pretty sure roosevelt was the assistant secretary of the navy, not full secretary. >> we did not say -- >> third, willkie, i do not think, was the first non- politician republican nominee. i would specify hoover as being in that category, even though

he did hold the cabinet post of secretary of commerce. he was never an elected politician, nor did he serve in the military. >> thanks for the call. first on herbert hoover, and also woodrow wilson. hoover was secretary of commerce before he was the nominee. woodrow wilson, the point about whether he was serious about a third term in 1920. >> i am writing a biography of calvin coolidge. wilson and wilson's crowd talked about a lot of things, but it was clear to the party that he could not be the next president. that is a little bit of a different category. we did not say roosevelt was secretary of the navy, we said he served the secretary of the navy, but we appreciate the caller. >> james is joining us next from stanford, north carolina. >> i just wanted to comment --

in the fall of 1940, willkie did a whistle stop tour of florida. i happened to be a western union trainee in melbourne, florida. he came through melbourne. he was on the rear platform of the train. a crowd of 50 or 60 people had the opportunity to shake hands with wendell willkie. that was either september or october of 1940. that was the comment i wanted to add. very interesting. >> do you remember when you saw him on the whistle stop tour, what did you think when you saw him campaign? did he leave an impression? >> i was a kid, 18 years old. i was in awe. here is a guy could be the president of the united states. i am 89 now. i was 18 then. just a kid. i was very impressed. it was an appearance on the back of that train. it was really something. it was something very, very

special. >> james, thank you for that call. these are some of the images of the crowds swarming around wendell willkie. he also used the media. a couple of points that nbc radio carried almost 30 hours of the republican convention in philadelphia. television was introduced in the 1940 convention. viewers in new york, schenectady, and a few other cities could see the republican convention. the republican party put together some advertisements used in movie theaters around the country. >> politics are always changing. there are always new techniques, new possibilities, and new media. willkie was very astute. it was part of his experience as a businessman to work with the media and new opportunities to make your case. he was excellent at that. he was helped by the time the people he had around him in the campaign, or the best of the best. >> he was not a farmer, but he went after the agriculture vote.

>> the agricultural vote was still very important in 1940. there are a very large number of farmers in america and they are very important -- they vote. farm policy was central to presidential elections for any president expected to have a chance of victory. they must pay attention to that. that is what we see these photographs of willkie standing in front of a corn field or in front of pigs. some wags said that all the hogs in rushville started to pose as soon as the cameras showed up, they were so accustomed to willkie in with the hogs and the cornfields. he was quite honest. one of the nice things about willkie is he was honest, including never actually pretending he was indeed a farmer. >> the major issues in 1940 -- what were they, amity shlaes? >> there was the war.

are we going in? do we have to go in? if london is to be bombed, maybe we have to go in. even though we remember that world war i was such a horror. war always trumps economics. to the economy. the recovery had chosen to stay away. those are the big ones. one thing about willkie, we know the phrase "happy warrior." we know it from the democrats, roosevelt, al smith. willkie was a happy warrior. he was basically not a vicious man. what the gop have learned in the 1930's was that they failed through bitterness. they failed through the liberty league. all the attacks on the new deal were bitter and angry. willkie represented a new way of being for the party, not just

to smear roosevelt, but to take him on with facts and without too much ad hominen. i do not know if you call that media or character. i call it character. >> "gone with the wind," one of the many movies in theaters in 1940, if you had gone, you very well could have seen this advertisement put together by the republican national committee for wendell willkie. >> whether you are in oregon or florida, new jersey orcalifornia, you have a right to know how well your republican candidates ffor president and vice-president understand agricultural problems and their personal interest in farming. for this purpose, this motion picture has been produced. ♪ the two most talked-about men in american life today are the central figures of this picture. wendell willkie of indiana and

charles mcnary of oregon. mr. willkie visits with a family of one ofhis partners. a farmer. it is a hot day. mr. willkie requested to pump before the tour began. he does not let anything stand in his way. these are practical corn belt farmers. his interest in 4-h and america's young people is genuine. in them, he sees the future of america. >> from the republican national committee -- amity shlaes, he described himself as a liberal. this is an important point to understand. liberals in the 1940 was a very different term. >> what he meant was the

liberalism of the individual -- your individual rights. human rights. that was a big thing for him. not the liberalism of the group. not the progressive bloc. he saw an opposition there. that is quite different from liberalism today where we have blocs such as farms or veterans. that is what he was seeking to define, especially in the wasle of the 1930's, as he becoming a political personality. >> richard is joining us from wellington, florida. we are with amity shlaes and james madison. >> you mentioned the important role of the publication houses in new york. henry luce and so on. i visited the elite special collections and went to the willkie files. i was very struck by the role

and campaign of people like john whitney, william harding jackson, the managing director of the whitney co., and of william mcilvaine in the chicago area. i would like to know if you would talk a little bit about their role in the campaign and, more broadly, the level of support from the melbourne and b. j. h. whitney companies in new york that stem from mr. willkie's time in new york in 1949 and maybe before that. thank you so much. >> he actually passed away in 1944. his years in new york and the people who supported him. >> wendell willkie was a corporate man. he worked at commonwealth and southern, which was a company put together to wire the southern united states. it would not be surprising if

you heard names like that associated, but not all establishment republicans with money worked for willkie. many worked for the other names we heard. some of them came around when they thought he would become the candidate. that is different. you see people jumping in at various points. >> the sale of the tva and the impact it had on willkie and his view of government -- >> it really starts in the 1920's. the south is dark. the rest of the country is lit up. the rest of the country is beginning to wonder how we light up the south. the company was put together to supply the answer. there is a bit of governance orchestration because there were different laws in the

states. they thought they could do it. they went on the stock exchange. it was when the dow jones first started. that was the internet of the time. another view coming from the government was the government should supply the power. we light up the south -- the tennessee valley authority. willkie found himself as head of commonwealth and southern in a wrestling match with one of the heads of the tva said who would light up the south? they were meeting at the cosmos club. the gentleman lawyer from indiana -- there they were at the cosmos club trying to make friendly like two lawyers. willkie said my company will do some and your company will do some. lillianthal wrote that night in

his diary, he did not get it. the government was to take over it all. that was the battle waged through the whole period. much of commonwealth and southern was sold to the government. willkie was declared the victor and the shareholders got money from the government. the question was was it really a victory or was it the annihilation of the private sector in the marketplace of the future, utilities? they took a big check to show his friends. i am not sure it was a victory for the private sector or the shareholders. >> ruth is joining us from new york city. we welcome you to the conversation as we look at the life, career, in the 1940 campaign of wendell willkie. >> thank you so much for taking my call. it seems if every election cycle, politicians and pundits will cite wendell willkie.

why does he still resonate through today's political environment? >> i would say it is the freshness, the newness that is inevitable. it is the dark horse standard we have been talking about. this is someone who is so different from vandenberg, taft, and the others. so vital, so energetic. he seemed so honest. one of my favorites stories about him is at a time even then when religion was important, candidates were expected to be churchgoers. when willkie was asked, he said, "i generally sleep in on sunday mornings." that was an honesty many people found refreshing in 1940. >> in 1968, the ap said, "could it be another year of wendell willkie?"

republicans were dissatisfied with the potential nomination of richard nixon. >> every few cycles the republican party is the ostracized party. when it gets tired of itself, someone comes from outside. the republican party is more affiliated with business and enterprise. enterprising people tend to turn out to these republicans because they are from the private sector. that will always be a factor. who is the 1968 republican they were thinking of? he never came. we are still waiting for wendell willkie. he pushed roosevelt over into the war, to put it simply. willkie fought the war at to happen because what was going on in europe was wrong and we had to help fight the bad nazis.

he was on the right side on that. that is refreshing, when someone comes in and speaks the truth about an important and difficult issue. i think that is what people remember. he forced roosevelt to do what roosevelt knew what was right to do, which was go into the war. he made roosevelt be a better roosevelt. >> more from wendell willkie as he talks about liberalism and, also, the roosevelt new deal. this another from the republican national committee, a series of films. >> the doctrinaires of the opposition have attempted to picture me as an opponent of liberalism, but i was a liberal before many of those men heard the word, and i fought for the reforms of theodore roosevelt and woodrow wilson before

another roosevelt adopted and distorted the word liberal. american liberalism does not consist merely of reforming things. it consists primarily of making things. we must substitute for the philosophy of distributed scarcity, the philosophy of unlimited productivity. i stand for the restoration of full production and reemployment in american private enterprise. present administration has spent $60 billion. the new deal stands for doing what has to be done by spending as much money as possible. i propose to do it by spending as little money as possible. this is one issue in this campaign that i intend to make crystal clear before the conclusion of the campaign so that everybody in this country may understand the tremendous waste of their resources and money that has taken place in

the last 7.5 years. >> amity shlaes, as you hear the words of wendell willkie, your thoughts? >> that liberalism which he described, which he differentiates from progressivism, modern liberalism, goes all the way back to the germany of his family. his family left europe, in 1848 or soon after, as social democrats or liberals to get away from prussian militarism. it is all about the individual and freedom coming straight through and down. some of us would call willkie the last liberal because he was the last big classical liberal in u.s. politics like that. ronald reagan did not call himself a liberal. maybe someone called him a libertarian. the word changes meaning.

the second was the economic specification of what he was saying. that does come from him. from the point of view of the firms, productivity is really important, we not only make the widgets, but we make them better. that will increase the standard of living for everyone instead of redistributing, which is the alternate. that is a very clear and sophisticated economic argument. it is not about just helping the middle class. it is more complex than that. more complex than what we hear from politicians in this campaign. >> amity shlaes is a columnist with bloomberg. jim madison teaches history at indiana university. our next caller is ted from morristown, new jersey. go ahead with your question. >> did willkie feel that he got an inappropriate level of support in the general election from this nomination rivals, taft and hoover, and their people or was he too recently arrived in the party to engage the leaders the way a veteran

republican politician would have? >> professor madison, you are shaking your head no. >> i do not think he got the support he wanted or deserved from the professional politicians. a little aphorism there comes from james watson said on hearing of the nomination, "it is all right if the town prostitute wants to join the church, but she would not expect to sing a solo on the first day." willkie was an outsider to senator watson. they never ever trusted him. they never got behind him. >> if you go back to the speech in elwood, indiana, he said, "you republicans." how did that resonate with the republican base? >> i think some of them noticed there were called "you" rather than "us" or "we." because he was not a republican a year or two prior to that speech. he was a democrat. >> our next caller is from

savannah, georgia. >> thank you for doing this program on wendell willkie. i believe he was far ahead of his time on many issues. first of all, civil rights. he was a great advocate of civil rights. if the country had followed his lead, we would have avoided a lot of the strife and dissension we had in later decades. during the war, he was a great advocate of ending colonialism. he wanted to prevent the european countries from reestablishing their empires in the third world, particularly france and indochina. if we had not stepped into the shoes of france, we would have avoided the tragedy of vietnam and the war.

finally, i wanted to mention, the one speech that he gave, who is a great believer in the idea that the way to fight unemployment was to encourage investment and growth. that would be the only way we would get jobs in this country. that is still relevant to what we are debating about today. i would be interested in hearing your panel discussion about those points. >> thank you, charles. amity shlaes. >> one thing that really resonates from one world when we look at it today, his book sold tremendously well about this time -- when he went to the middle east, he said the colonials here are too dominant. when we withdraw, there will be a vacuum. there'll be nothing for the people to return to. we need to help them build democracy. he had a more cynical, cavalier attitude towards the middle east. when you hear the protesters in the middle east today, you go back to the errors we made in the 1940's and 1950's, not taking this seriously, squandering opportunity. his description of tehran and

the number of babies who died because the water was not clean and the tyranny of their regime gets back to what we see today in many places of the middle east. and what we have not been able to address systematically. he was like an analyst of the arab spring years ago. it is striking. >> john from maryville, indiana. we welcome you. please go ahead. >> within six months of the election of 1940, willkie was totally unpopular with the republicans merely because he had adopted roosevelt's foreign policy. he was pro-war. the republican party ostracized him completely, no matter how well he did in the previous election. when he toured europe, he went over to asia. republicans hated that, the regular republicans of all

stripes. he called his campaign foreign policy statements "campaign oratory" before a congressional hearing in 1941. he ran again in 1944 for the nomination, but he had so embittered the republicans by becoming roosevelt's almost foreign policy agent, that he had no chance against dewey. he really was pro-roosevelt with regard to foreign policy. for the purposes of the campaign, he took an opposite position, but after the election, he came around and really endorsed roosevelt's foreign policy, went over to england to store on behalf of roosevelt. in 1944, roosevelt and willkie had met. i think roosevelt wanted his

endorsement. willkie held off. before the election he died, so he never endorsed dewey or roosevelt. >> you bring up a number of key points. we are going to talk about this book, "one world," and his post campaign visit to new york and its relationship with franklin roosevelt. you also brought up the 1940 fall campaign. let's touch on that. if we could. in the next hour, we will focus on the second part of your phone call. the 1940 fall campaign. he went in with such great promise. he did not have a lot of support from the republican establishment. you touched on this earlier. basically, what happened? how did this unfold? >> roosevelt did have liabilities going into the 1940 campaign. he won in a landslide in 1936. the congressional elections in 1938 produced, i think, 81 new republican house members voting

against roosevelt, voting against the new deal. the results of the court packing plan. that created a lot of bitterness, even among some democrats in america. then there was, as we talked about, this notion that two terms were enough. it was good enough for washington, it should be good enough for roosevelt. they thought about his arrogance, his power, and the big government he had created. roosevelt had liabilities in 1940. willkie, a republican, might have been able to beat him. maybe willkie was the best possibility. >> willkie did not do it, in part, because he was running against his own former position as much as against his opponent. >> he did not have a good track record politically.

>> he was pro union. he was with john l. lewis. he supported the war and then was against it and then supported it. he was quite inconsistent. the best way to see him is as a wonderful attorney who takes the best case, the clarifying case. he speaks truth to power about it. the case of for the market and the company was the one he made at the end of the 1930's. in the campaign, several different cases conflicted with one another. later tonight we'll talk about some great cases that we still talk about today. his positions and what he did. he always stood for free market. he was always pro-war or no war. it is not right. he was a protean man. that was part of his charm. often right, often canny in the switch. it does not make for a good campaign. they could see he was like roosevelt.

>> a lot more to talk about. we want to show you another piece of film. this is from the republican national committee as a way of trying to frame william willkie -- that childhood and roots of wendell willkie. we will come back and talk to david willkie about his grandfather. >> wendell willkie, born 48 years ago, emerges in response to the greatest demonstration of spontaneous support and our country has ever known. his grandparents, like the ancestors of many americans, fled the autocracy of europe to find liberty in this country. here in elwood, his parents practiced law. wendell willkie was born in a modest home like many americans. he went to public high school just like many americans. his hard-working parents moved to this elwood home. he went on to success in law and business.

>> just some of the scenes from elwood, indiana, the birthplace of wendell willkie. david willkie is wendell willkie's grandson. many say the resemblance is pretty amazing. do you think you look like your grandfather? >> not exactly. i think of myself as my own person. >> what kind of a man was wendell willkie? describe his persona and how your family views him as a politician. >> physically, he was a large man. some called him a big bear of a man. his brother was a heavyweight roman-greco -- greco-roman wrestler. he was always tasseled. he would put on a suit. it would immediately become rumpled. he could never keep his hair straight. his wife would have to tell him when to get a haircut.

he was not so worried about outward appearances. what he was worried about what the idea. how do you convey the idea? what is important about it? how do you win the other person over to your side? >> explain his indiana roots and, also, where he went to college and how he began his career here as a lawyer. >> he grew up in elwood, indiana. the interesting thing about him and his parents was not only was his father a lawyer, but his mother became one of the first attorneys in indiana. her first case was against his father. they were husband and wife against each other. at the end of the day, his mother won. not surprising because because she was the true driving force in the family. all of his siblings went to indiana university. they lived together. they were a vibrant part of the community of indiana university. they led the conversations that came out of there.

a future governor of indiana was also there at the same time and became friends with him. after he finished at indiana university, he took a job in kansas teaching history. he also coached basketball. i never think of him as being an athletic person, but coming from indiana, we always like to think of ourselves as basketball players. he did that for a time before coming back to indiana university and going to law school. when he went to law school, he was always challenging the thought process that was there. he was the top of his class, and at the end, when he graduated, he was giving a speech to the commencement class and he chastised both the indiana general assembly, the legislature here in indiana, but also the supreme court at the time. it was so scandalous that the university did not know what to do.

they delayed giving him his diploma for several days while they debated what to do and eventually let him go on, but he was always one to challenge the status quo. >> unlike some of the earlier contenders we have covered, we are now moving into the radio, television and film age, so we can hear some of these personalities speak, and wendell willkie did have a strong tv personality. can you elaborate on that? >> absolutely. he was drawn to the camera, as you can see in the clips you have shown. he relished talking about different ideas both in casual conversation, but then on a larger stage too. when people were paying attention to him, it was almost as if he got more energized along the way. >> your grandmother was edith willke.

how did the two meet? >> they were in a neutral wedding party together. he was drawn to her. she was a librarian by training, intellectual in her own right, and there was a natural romance that bloomed. >> david willkie is the grandson of the 1940 presidential candidate, wendell willkie. he got the republican nomination on the sixth ballot in philadelphia. we have the author of "the forgotten man" with us. let's take you to the scene in november of 1940.

it was just down the street at the hotel were many reporters gathered to follow the 1940 campaign. wendell willkie came not to declare that franklin roosevelt was in fact going to be elected. he conceded the election. we will follow that with a conversation we had a few weeks ago dick lugar on wendell willkie and his brand of republican politics. >> people of america, i accept the result of the election with complete good will. i know that they will continue to work as i shall for the unity of our people in the building of a national defense, in aid to britain, and for the elimination from the america of antagonisms of every kind to the and that the free way of life may survive and spread throughout the world.

>> after that, he really became an ambassador for the united states. he had a friendship with franklin roosevelt. he certainly seemed to prosper from that. he was not a bad loser. he was a winner in terms of our country and his outlook. his ability, really, to influence public use in other countries about the united states or correspondingly, american views, so that we would not become isolationist, and not become withdrawn. >> those are the thoughts of senator dick lugar and how he viewed the republican party. that was just a portion of wendell willkie pose a concession speech. did he expect to lose? >> the campaign began to go against him in october. the results were not a shot at all to wendell willkie or to anyone who was following the campaign. >> post-election, the relationship began to really

grow between president roosevelt and wendell willkie. >> it is quite amazing. all of his relationships, roosevelt's relationships are hard to nail down, but he and wendell willkie did move closer and closer together until roosevelt's death in 1944, particularly in areas of foreign policy and supporting great britain before they went into the war. >> when wendell willkie goes to europe on a tour for roosevelt as his ambassador, the famous tour in 1942, he repeats the same behavior he did at his law school graduation. roosevelt has kindly given him a state. he goes to meet with stalin on roosevelt's behalf, and what does he do? he hears that stalin needs a second front in the war, that he needs help, and he thinks maybe we could give you a second front. that was not the u.s. policy at

all. roosevelt did not like that. he did not plan to have a second front for stalin. wendell willkie called it as he saw it. when he got to russia, he said these people need help. but roosevelt, to his credit, was able to manage an upsurge. >> we're joined from phoenix, arizona. >> good evening. i would like to point out to your audience that you're getting a very one-sided economic argument on your program from your panel. she is entitled to her opinion, but she is a well-known revisionist historian who encourages the new deal. she has seven times repeated on tonight's program the canard

that because unemployment was still in the low teens in 1940, the new deal had failed. i would like to point out that in her book she concedes that the keynesian experiment worked. she writes "the spending was so dramatic that finally it functioned as keynes had hoped it would and unemployment had dropped from 22% to 14%." now granted, 13%-14% is still too high, but to say that when roosevelt came in with unemployment in the mid-high- twenties and due to can see in spending reduced it to the low- teens, earmarked as a failure, is just unfair. but she has made a career of repeating these canards and i think it needs to be pointed out to your audience. >> we will give both of our guests a chance to respond. >> i do not think we need to get

too personal about this. whether you are a democrat or republican, we see both parties, the obama administration, and unemployment rate of 13% is as unacceptable now whether you are a keynesian or not. the spending had some effect, especially in 1936, so the caller is really excising a little bit of what i wrote and giving it an interpretation i did not intend nor was visible in the text. but anyway, the 1930's were a bad period. we did not recover. we sort of appeared to recover during the war, but nobody calls for a recovery. >> my grandfather was a dirt- poor farmer at the beginning of

the new deal and a dirt-poor farmer after, but he had a framed photo of mr. roosevelt on his wall. he treated him with great respect. i, as an historian, think the new deal was a great success. i would much rather talk about wendell willkie after the election. >> let's go to william from florida first. go ahead, please. >> just as a footnote to the history of the 1940 campaign, one of the most courageous supporters the wendell willkie had was a friend of mine, the longtime mayor of syracuse, and probably the best mayor syracuse ever had. syracuse is in the center of new york state, which was the political empire at that point.

it took a great deal of courage to take on the entire state political establishment, which he did. unfortunately, when wendell willkie lost, dewey left no stone unturned to drag him out of political life. he said his mistake was that he bet on a man with a weak heart. it should be remembered that he had a very strong political supporter in the center of new york state and i think that is a footnote to the whole thing. >> thank you for the call. you bring up an important point that we touched on in the last hour. the relationship between wendell willkie and thomas dewey. >> not a happy relationship. i do not think they ever reconciled. in the 1944 republican

convention, no one bothered to invite wendell willkie to speak or even to be a delegate. he was not there. he was exercised by the party. >> under the roosevelt administration was a lend-lease program. what was that? >> we gave money, loaned money to europe, send arms, so that england could defend herself. that is the simplest way to put it. eventually, we went into the war. that was an important spending program. that is an example of one. one of the things that is happening during this period is that up until 1938 or so, 1939, roosevelt is fighting with business. he is chasing them. one person said, why don't you either nationalize them or leave them alone?

wire you chasing them around a lot every other week. but then suddenly he needed business to wage his war and instead of being the enemy, the occasional target, there they were in the white house making aluminum, not being prosecuted, making airplanes, making boats, making material for europe and for the u.s. that was an important change for business because they knew they were allies of the government and not antagonists. >> in 1941, wendell willkie travels to london. how unusual is it for a democratic president to select his republican opponent? >> he carried a letter of introduction from roosevelt to churchill. at a time when it has already been badly battered by the germans, he sees canterbury

cathedral. he gets a real sense of what this war really is for england and what the british people are doing to stand against hitler alone. he brings that message back. he brings it back to the senate and he makes a very powerful case for helping england. >> here is wendell willkie before congress. >> if we are to aid britain effectively, we should provide her with 5-10 destroyers a month. we should be able to do this directly and swiftly rather than through the rigmarole of dubious legal interpretation. i am as much opposed as any man in america to undue concentration of power in the chief executive.

and may i say that i did my best to remove that power from the present executive. personally, i would have preferred to see congress, whether through this bill or through others, instruct the president to lend or lease these things. >> in february of 1941, what was the country going through and what was wendell willkie thinking as he testifies before congress and realizes what has been happening in europe, especially in london? >> this is a country that came out of world war i and said never, never again. 30% or more of veterans were disabled in some way. the casualties were tremendous. american said its mind against war. and yet, when we had the evidence, and that is what

wendell willkie was bringing home of what was happening to britain, so like us in many ways, and the evidence of hitler's utter audacity with poland and on and on, suddenly, we knew we had to help. that was a big, emotional change for the u.s. that was a reason for the republican isolationism. there was a sense of league of nations and there was a sense of isolationism because world war i had been so incredibly wasteful of lives in every way. there comes a moment when you have to step in, and wendell willkie crystallize that for us. >> richard is joining us from san francisco as we look at the life and career of wendell willkie. hello. >> hello, i have enjoyed tremendously your author's book on the new deal. there were lots of books written, or some books written many years ago, but she has taken up the cause of those who have some doubts.

one of the previous callers kind of attack you from the left. i would like to attack you from the right. i do not understand the love affair you have with wendell willkie. i just do not comprehend it. in the case of foreign policy, particularly after the war started, he was an absolute disgrace. going to the soviet far east and looking at a labor camp and saying how wonderful conditions were was just too much. i would have thought that the republicans would have had a little bit more of a level head as far as our international commitments were concerned, particularly after the beginning of the war. at the same time, i think it is a bit much to champion a republican who the base was resentful of. i will listen to the comments of the author. thank you. >> thank you for the call. is as sentiment pretty typical of what many republicans feel?

>> a lot of republicans would of said that sentiment and maybe in stronger words. they called wendell willkie naive. they felt he was taken in. he was just a tourist. the soviets especially manipulated him. so did the chinese. he was inexperienced and not up to the level of international diplomacy and knowledge. >> and yet he received more votes than herbert hoover in 1932 or the candidate in 1936. >> he received a lot of votes for someone who allegedly had no support. this hall of television show is a love affair with wendell willkie because he is interesting on a number of levels. that does not mean he is perfect. that does not mean he is consistent. as we said before, he is like an attorney. he moves from case to case, and those cases are not always consistent. he spoke truth to power at an important point in 1938. narratively, that was important.

every case is different. we make a cartoon version in the forgotten man book. one person made a bust of wendell willkie because he was so inspired by him. there is something about him, inconsistent and disappointing as he is, that is very alluring to people. i think because he talks about what is possible, not merely what is realistic. he is an aspirational figure for a set many different points and in many different ways. >> one professor working with us on the series said wendell willkie is the personification of this 14 part series. an individual to be a lot of americans may not know much about but who had a very serious impact in his lifetime. >> i think that is a good point. i think wendell willkie brings us to our better natures.

he asks more of us. that is one of the things i like most about him. he holds out the ideals of america and ultimately the ideals of the human race, of the condition of the world. there is a lot to like about wendell willkie, even if you might think he is a little not even uninformed at times. >> georgia, go ahead. >> i will take you back to the glamour and excitement of that day in philadelphia. at the convention hall. i was there. i was there with my father who had a unique involvement at the convention. he sort of orchestrated what was known as the stampeding of the gallery. as a kid, i was up there with instruction on the cue to rise up and begin the chant of, "we

want willkie." television had just come on the scene. from a national standpoint, and particularly for the delegates, to hear this raucous crowd from the gallery stampeding a convention, it put them in the mood, although it did take a number of ballots to ultimately nominee wendell willkie. it was fun. i have never forgotten the experience. >> we should also point out a 26-year-old young republican from michigan, gerald ford, was also in attendance. he talked to c-span about that in 2000 as he went back to philadelphia for another republican convention. >> that is right. >> do you want to talk about the excitement the wendell willkie generated in the 1940

convention? >> i think we're done with that topic. >> we will go to oliver next. >> i would like to commend c- span, one of the greatest things on television. i did not know a lot about wendell willkie. this is very interesting. i seem to remember his name was spelled with one l in my history books. but i want to ask, you talked about his mistress. was she related to charles van doren? >> she was related to those van dorens. we talked about wendell willkie's identity. what was his liberalism. rita van doren started to write

about classical liberals. that was his way of thinking about what was wrong with politics in the u.s., that it was too much about groups and too little about individuals. he started to write these articles and to talk to read a. he got his bearings and he began to speak politically and right politically, and not just write articles, but to write manifestoes and to meet the people that then began to back him. sometimes someone comes along in your life who is a transition person, and rita was at that point such a person who helped him to clarify his ideas. >> she was also on calvin coolidge's book tour. >> she was a wonderful book editor. she edited many of these people down.

there are figures who appear over and again. coolidge was said to represent the silent majority. we certainly associate that phrase with nixon and agnew. those people last a long time, sometimes through many candidates. >> i want to play one more piece of sound from franklin delano roosevelt poser recordings. he is in the white house trying to figure out whether his relationship with rita van doren should be brought up as a campaign issue. >> this was a time when it was

not common to reveal those relationships. reporters knew about those relationships. other politicians had them, including roosevelt himself, of course. but at the time, you did not write about that. you did not report that. whether roosevelt was going to try to use that against wendell willkie is what this tape is about. >> again, this is a recording with president roosevelt on the relationship, and the affair that wendell willkie was having with rita van doren.

>> professor j. madison, two points, playing dirty politics, that conversation, and the president wondering whether edith was hired to come back and campaign with her husband. >> she loved her husband and remained with him until the end. she had a party in her apartment in new york city after wendell willkie died. she invited rita van doren to that party, behaving in an adult way. that is not a way that any of us need to approve, but that is

their life, their personal life. talking about that relationship, it clearly was a romantic relationship, but it was also a very important intellectual relationship. she was especially important to his speaking, his politics and his life. >> utah, go ahead. >> yes, i'm curious as to why wendell willkie's relationship with madam chiang has not been discussed. >> you have brought it up, so we will talk about it. >> leave that to the international hoosier scholar and. >> i think the answer is we do not really know what happened. we know that this was on the one world trip in late 1942.

it included a stop in china. we know that at one point in the evening, wendell willkie and the woman left by themselves and were gone for several hours. some people say there was a relationship there, but the evidence is very tricky. >> explain the significance of this second trip in 1942 for wendell willkie. >> roosevelt sent him on a tour. he went all over the world, including to china, russia, the middle east. often to places that were also a little bit tricky, close to the battlefield. he rolled around in an american jeep in russia.

with the russian general, he said what are you all defending here, sir, and the russian general said we are not defending, we are attacking. he was trying to send an expression of hope and support from the u.s. to these countries at the time. china was a big country in play at the time. the book he wrote, "one world," was an enormous success. so close to a million copies. david lilienthal, the old antagonist, asked how come the book sold so well. other politicians, everyone was in awe of the concept of peace now, one world. why that happened was that we were now in war. pearl harbor had happened.

everyone was thinking about what kind of peace we should have after. right away in world war ii, we were framing how to make the world safe for democracy and make the next world war not come quite so fast. all of the ideas that you hear about were formulating in people's minds, and wendell willkie was one of the first four emulators. >> david, you have read your grandfather's book. it is still available now. why did it resonates so in 1942-1943? >> there were several reasons. number one was that he took it upon himself to visit all different war crimes at the same time. here we were in the second world war. if we think about that time, no one person had traveled around

the world. no one had reported to theif weo one person had traveled around the world. no one had reported to the american people the struggles of different people around the world. why were we in this war? why did we keep going through this work? i want to go back to some of the conversations that just happened talking about my grandfather and his development. over time, he did develop. he did change in his thought process based on what he went through, and i think the american people did too. if you think about the american people, going back and looking at the american people during the depression and moving through coming into world war ii, this was a different place. that is where "one world" came into play. here was a view of different parts of the world that people had not seen before. people had not traveled outside of their farms in the way the people are able to do now, so easily. to talk about these faraway places, baghdad, chun king,

northern africa, all of these places came into play and fascinated people. >> he said that america is like a beleaguered city, living within high walls. i have been outside of those walls, and then he tells the story of what he saw. >> he talked about at that time -- but one important thing was that national boundaries were becoming less and less important to countries in and of themselves. it was more commerce the was going to rule the day. that is what the connection is that we see now, how that commerce really does come into play. we see that now in the national discussion. even here in indiana, we have a company selling things halfway around world to baghdad right now.

that idea that wendell willkie had during that time is much of the world that we live in today, and that is described in the book. >> the book was published 70 years ago. how can you get a copy? >> you can e-mail here to the historical society. i believe the e-mail address is up. rushhistorical@frontier.com. >> let me take our audience back a couple of blocks to a home you spent many years in. this is the same home where wendell willkie came back and talked about his one world tour. >> but i want you to remember that we can only have one president at one time and one foreign policy at one time. it does folks good to say i am not the president of the united

states, that he acts through hypocrisy. no man in charge of the united states at this critical moment could act from such motives as that. [applause] they expose the expansion of our nation, of our army, of the bill. they oppose the passage of the selective service act. if the policies which they advocate had been adopted, the united states today would be facing a victorious nazism in a world wide conflict in which we might ultimately be destroyed. >> as you hear and see your grandfather just a few blocks from where we are in the historical society and the message that he was delivering to those residents of indiana

back in 1942, your thoughts? >> he wanted to bring those thoughts directly here to the american people, to middle america, to say there are other places that have become so important. it is common wisdom now that if america had not entered the war at the time it did, what would europe look like? would hitler have continued and gone on in his conquest? what would stalin have done? if he could not talk to the people in indiana, he felt that it was important to go on to other places, other cities throughout the country. it would be much harder to do. >> 70 years ago this month, october of 1942, the book hits stores. did it face criticism? >> it did. it did sell many copies, people like it very much, but it had much criticism.

there were many who believed that america should be america alone and not part of some larger entity such as the un. there were many americans who had never been out of the country, never been out of the state or even the county that they lived in. the provincialism is central to what willkie is trying to do in this book is explain in clear language why the farmers of russia live not very differently than the farmers of rush county indiana. they are human beings and we have some obligation and some self-interest and larger interest to understand that and to act on that. >> we want to thank the historical society for hosting us here tonight. if you're interested in getting

more information about wendell willkie or the book, you can e- mail us. we're joined from north carolina. good evening. >> hello. >> please go ahead. >> i am the last surviving member i think of the roosevelt white house staff. i was there for a couple of years in the mail room. i read the incoming mail. theentering into the war was a very heavy issue at that time. the public was very, very much against it. we received up to 15,000 letters a day, most of which opposed entry into the war.

only pearl harbor turned public opinion around. i also want to go back to the election when wendell willkie gave his concession speech. i will never forget how tired he sounded, how heavy his voice was when he said i tried my very best to defeat franklin roosevelt. and i could not do it. he apologized to the nation for not doing so. i just wanted to make a comment that i was an actual person involved in the issue at that time. >> thank you for adding an important dimension to our conversation. another amazing call. >> one thing about "one world," the anti-united nations people hate it, because it does lay out the framework for it, but the push for democracy is very

important, right up until today. in fact, the astoundingly modern part of "one world," is that he sees through the government to the people with the democracy deficit. it is very analogous to what we see today in the world. finding a way to democracy. when there is violence, as we saw with gaddafi, do we declare it a victory for democracy or not? we heard obama being ambivalent about that. we do not know. we think it is a victory for democracy but it is a hard call because it was so violent. he was looking for these things. >> we will go to california and then get your follow-up. go ahead. >> could you have your guests to speculate on what might happen had wendell willkie won the election? >> as much as i admire and respect wendell willkie, i am personally glad that he did not win.

it's counterfactual history. we really do not know what would have happened, but roosevelt was a far better wartime leader, far better prepared and experienced to lead this nation in more than wendell willkie would have been. >> the go to michael next in fargo, north dakota. >> i was a little late getting to the program, but as i understand it, wendell willkie never held political office. i would be curious if his vice- presidential nominee was chosen for political experience to, i don't know, help balance the ticket, or how he came about to be appointed. >> his first choice was not selected and so it came to the party establishment to come to wendell willkie. how did this all come about and who ultimately did he choose? >> again, a traditional republican in many ways, far more acceptable to the rank and

file of the republican party and the republican party leadership, so i think the caller's guess is right on. >> jim in washington, d.c., you're next. >> very interesting program. i would like to address two questions. one was that wendell willkie was named in a newsweek article in 1960 as a model for a candidate that year. that model was george romney. he was the candidate of the republican primary, but dropped out because he made a remark about the vietnam war, but he was an industrial executive at american motors and had never really served in public office before. but he ran in the early days of the republican primary against

nixon and then did not, of course, win. >> but he did serve as the governor of michigan. please continue. >> the other president who ran for a third term was ulysses s. grant. he had been president for two terms, stepped down for a term, and was a candidate at the republican convention in 1880. he lost to james garfield. that was the other president who did seek a third term. >> thank you for the call. we had teddy roosevelt also ran for a third term under a different party after he left the white house. >> coolidge served under harding. harding died. coolidge became president and

won of his own right in the next election. he could have run for another term. easy call. the democrat always runs again when they are popular incumbent, and he chose not to run. that is a famous decision which is attributed to personnel decisions or depression. what i am discovering in researching calvin coolidge is that he chose not to run because of george washington. absolute power corrupts absolutely. he thought overtime an executive gets too used to the office. that was a concern the people had over fdr, that you do become too -- you confuse that the state is me.

the more you serve, the longer you served in office. >> you can learn more on our website and get more on this program and our 14-week series, looking a presidential candidates who ran for office, lost, but changed american history. new jersey, go ahead. >> i am a college teacher. my students have been assigned to watch and they will be so envious that i'm getting to speak to you. i loved your book. i am looking forward to the coolidge book. my question is, what is the percentage of the electorate that came out to vote in that election? was it a big percentage or not? again, i cannot wait to read the coolidge book. >> well, we do have the electoral college totals. we know that it was a landslide for franklin roosevelt. >> but we do not have the share of the turnout and we apologize for that. we will supply that on our website in 24 hours. we are sorry. we owe you.

>> you see when the will be receiving just over 22 million votes, franklin roosevelt just over 27 million votes. >> it was not a landslide. wendell willkie had done better than his republican predecessors, but it was a clear victory for roosevelt. >> david, your grandfather had a view of civil rights in this country 20 + years before we saw the civil rights movement led by martin luther king. >> he was certainly ahead of his time when it came to thinking about civil rights and the rights of all people. it was part of his creed. it was part of his code. one of the things i wanted to show you was the part of his campaign where he talks about race relations in a very direct and raw way. this was an advertisement used in an african american press at the time, how he reached out to that part of the electorate.

>> again, we're trying to always get a sense of what was going on in the country. in this part of the country, in indiana, talk about the kkk and its role in society here. >> certainly the kkk had a very strong presence here in indiana. there was a major push to keep them out of the republican party. there was division in small towns. there was an african-american population in this town, and continues to be, and throughout all towns, but the races did not mix, did not intermingle, so there was always a fearful nature. that is how wendell willkie, not only his thought process coming before the election, but also afterwards, on the one world trip.

>> what about this aspect of his life, his views on civil rights? >> i think david is being unduly modest about his grandfather's position on civil rights. he was well ahead of everyone in this country with the exception perhaps of eleanor roosevelt. it comes out of some of the same things better in one world about democracy, anti- colonialism. he was strongly opposed. he insisted that colonialism had to disappear in the name of democracy. he insisted that equality around the world could only be achieved if there were equality at home. he connected the international one world idea with the necessity of justice for all in the united states and he walked the walk. he spent a lot of time working

with the naacp. he worked with hollywood filmmakers to remove the horrible racism in hollywood films in the 1930's and 1940's. in all sorts of ways, wendell willkie was an advocate for racial justice, a supremely important advocate, long before most americans, white americans, will take that position. >> you just took the words right out of my mouth. i was just about to say that. i was just about to say, what did when the wilkins said that the african community in indiana at that time he did what did wendell willkie say about the african-american community in indiana at that time and the kkk at that time? you took the words right out of my mouth. i love your show, the contenders. i learn every day as a young african-american man who owns a home. i tried to teach my daughter and my son about presidential

things. i tell them every day, you can make it, you can do it, you know. i am just thankful that you all have this show on here talking about this great man that, hey, i do not know anything. my granddad, he is 89-years old and he tells people about history in america. i am so glad you're talking about the african-american community in indiana which was a racist-ass -- sorry about my language, but was very racist toward african-americans at that time, the 1940's. thank you for bringing this up. >> thank you. david, he is talking about his grandfather. what about your grandfather as you hear that sentiment? >> he thought that everybody was responsible just from their

own meritocracy of what they would do for their own lives. that was part of his dream, is that anybody, anywhere in the world, should have that individual freedom. that was a core part of his values. he thought if you help somebody someplace else in the world it would come back and help you. it was through hard work and struggle that we would better ourselves here as americans. going on to the race relations part, certainly he had a long, even after he died, wendell willkie, the naacp was housed in the wendell willkie freedom house in new york city. they kept that mantle that was there just because he was so far out in front of every place else. as jim matheson talked about, being in hollywood, pushing the idea of race equality. certainly as we look at what came up in the 1950's and 1960's, what would have been different if wendell willkie had been president? >> and the other question is, would this republican party

accept a wendell willkie and his brand of politics. we asked that question of dick lugar, republican from indiana? >> i doubt that wendell willkie could win today because he was a moderate. he was a person who was looking out for the good of the whole country. there was not the same sharp partisan fever attached to his candidacy or to his rhetoric. he had a very sound business attitude, and that is why he was successful. he understood the american free enterprise system and job creation, the things that are very important to us as we look at the economic recovery now. >> what do you think about

wendell willkie's politics and the republican party today? >> wonderful observation from senator lugar. i beg to differ about whether a business candidate would do well today. i think he would. maybe it is herman cain or someone else. what we see from both parties is a desire to find someone who started a firm, who comes from the outside. a very similiar mood. when you have had a long period of non-recovery, you look outside of washington for the answers. quite similar, and that is why someone like that would get a reception, i would argue. >> he ran again in 1944 briefly. >> and not at all successfully. the republican establishment had no use for him because of his continued support to roosevelt after the 1940 election. in fact, there was some talk, not much more than talk, that roosevelt, who had his own troubles with certain

democrats, of franklin roosevelt and wendell willkie coming together and forming a new political party. now there is an idea to think about for the future of america. >> our next call is erica from washington, d.c. go ahead, please. >> thank you for doing this. it is a great show. i have a policy question if we could go back a little bit. i think i've understand the type of things the shape wendell willkie's economic beliefs and background. do know if there were any specific events that shaped his foreign policy prior to the events of world war ii? that brought that internationalist view. >> the foreign policy of wendell willkie? >> i would mention his family background. they had the experience of fleeing prussian militarism. his grandfather was beaten for no reason by prussian soldier. it was an arbitrary exercise of

authority. they came here to work as lawyers. that comes through their children especially. german americans who sought freedom and wanted to preserve freedom. >> certainly, within the family, thinking about wendell and his life, growing up being part of world war i, his time in the army opened his eyes. the intellectual life of the family. when wendell grew up, his father would wake up his children by reading shakespeare quotes every morning. that is how they would start their day. it was an era of intellectualism. thought process that allowed him to look at side of his own surroundings in indiana. >> duncan is joining us from ohio.

go ahead. >> i was just curious about the relationship he may remain not have had with huey long? >> are you familiar with that? >> i know he defended him against criticism and charges. he defended all sorts of people who were not popular. he defended american nazis, american communists. this was part of his political belief that everyone has the right to individual freedom. he was a great patriot, in my mind. >> how did your grandfather pass away? >> he had a series of heart attacks. he was a workaholic.

he never stopped. diet, exercise and genetics, although we know today about those things certainly played a role in his death. >> i think he was an exceedingly hard working person. he was 24/7. he also lived hard. he smoked. he smoked heavily. i have seen pictures of him with a camel cigarettes on the desk and we know what kind of coffin nails those are. he drank heavily. he did not live what we now understand is a healthy life. >> he is buried just a few miles from where we're located. correct? >> a beautiful cemetery that is described as being looking out over the prairie, although we are not quite prairie here. he has a stone granite book lay open and talking about his life and his view of what the world should be, equality, that america was the place to be. why?

because you could dream and in america you could make those dreams come true. >> if you could ask him one question, what would it be? >> how do we bring our country together this time so that we have a political process that yields economic recovery? that we get past calling each other names to formulate a policy that gets the country to grow again. >> hugo is joining us from connecticut. welcome to the program. >> first of all, i met wendell willkie and my grandfathers, along with thomas e. dewey, two very, very fascinating public persons. i was 10-years old at the time, but i do remember distinctly both of these personalities. my grandfather was the publisher

of the oldest newspaper in this country. but i won't get into history. he was an fdr republican, my grandfather. my uncle was a socialist. but that is beside the point. the point is that i was terribly impressed as a young boy with this man. i was always in a political environment, intellectual environment, educational, historical, etc., in my family. but this man impressed me a great deal. frankly, he was the reason, as i became eligible to vote, that i became a republican. what disturbs me today is the wendell willkie republican -- the first time i voted was for

eisenhower, when i was able to vote. subsequently, i became a young republican club member. subsequent to that, by disillusionment, i lost my contact with the republican party. i hate to say this because there were so many elements in the republican party personified by wendell willkie, and thomas dewey and others that impressed me. i was just wondering, among your panelists, whether or not they could at least comment on why we have lost the essential, how can i put this?

i do not know how to put this in political terms. i will put it in human terms. how we have lost the fundamental understanding of what capitalism is, political association with capitalism is, and ultimately, the nature of what is going on in our society today, particularly among the parties? >> thank you for the call. next week, we will talk more about the personality and political career of thomas dewey as we bring you our live coverage from the roosevelt hotel in new york city. to the caller's point. >> in understand what the caller is saying and there are days when i would agree with him. but overall, most of the time, in the long run, i do not agree with the pessimistic view. i am still a great american optimist. part of my optimism is the hope that there will be candidates offering us the choices that wendell willkie offered us in 1940, and especially the wendell willkie after 1940. >> david, what was your

grandfather's legacy? >> there were many aspects to his legacy. certainly, the talk about commerce, and to the caller's point, do politics and business have a place at the same table, coming together? as we look right now the economic times that we have, i would argue that yes. part of the legacy is thinking about race relations, thinking about what it means to be a citizen of the world and understand how the rest of the world affects us here. all of those coming: a together to say, yes, can an outsider come been -- all of those things coming together to say, yes, can an outsider come in?

yes. >> to david willkie, the grandson of wendell willkie and the historical society, we think them for being here in russia will, indiana. he passed away in the fall of 1944. here's how the newsreel reflected on his life. ♪ >> wendell l. willkie, republican candidate for the aid president of the united states and the election of 1940 was taken at 52. nominated by popular acclaim and an overnight rise to political eminence, he won the admiration of all of his countrymen for his energy, honesty, and forthright courage. he spent the last years of his

vigorous life in an effort to promote mutual understanding and good will among all nations. he talked with churchill in london and shared experiences with britain's average folk. he visited and talk with the people of russia, of the middle east, and of china, renewing his strong faith in unity among all people. a great american and world citizen who will be sorely missed. >> although this approved false, dewey's defeat over

truman had a great impact. follow the career of thomas e. dewey, a dominant force in new york state politics as three- time governor and influence in national politics in elections apply eisenhower and richard nixon. "the contenders" friday at 8:00 p.m. eastern on c-span. >> tomorrow, political logger craig crawford discusses the present plans for jobs and the economy and his reelection. talks about his company's plans to team up with starbucks to create jobs. and nirvi shah looks at funding. >> live monday on c-span 3, and

and and financial analysts from around the world gathered to discuss the impact of the global crisis. there will talk about what is happening in their region and the emerging trends they see in the financial-services industry. the event is hosted by the american enterprise institute and you can watch live coverage at 10:30 a.m. eastern on c-span 3. >> every weekend, led the c-span network to the resource for public affairs, nonfiction books, and american history. on c-span, it is politics and public affairs events. c-span 2 has bought tv with the latest nonfiction books and authors. and american history tv on c- span 3 showcasing the people and events that shaped our country. and all of our programs are available at any time at the c- span the library. the c-span networks, it is washington your way. >> treasury secretary tim geithner warned of serious consequences for the economy if

congress does not pass the president's job plan. and the talk of a review in the u.s. tax code. this is two hours and 10 minutes. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> good morning. let me thank all of you for joining us this morning for this important hearing and a very special welcome to secretary geithner who has potentially the toughest job in washington. we thank him for being with us this morning. a year ago, senate democrats and two of our republican colleagues battled for months to past the small business jobs at the 2010. it has been called the most significant piece of legislation to help small business in over a

decade by the national economic council. today, we will review the results of portions of the act and will attempt to ascertain what our next step should be. keeping in mind the important goal of providing capital to small businesses on main street throughout america, an essential component of job creation and economic recovery. what is clear today is that sba lending has exceeded pre recession levels in the final three quarters of 2011. the jobs backed loan initiative led to an all-time high sba loan approval level for 7a and 504 loans, making the 2011 the most successful year in sba loan program. as a result, some of the provisions that we had included in the small business job that.

also, as of september 22 this year, the u.s. department of treasury had approved more than $1.2 billion of the world would $5 billion available for small business initiative credit available -- of the $1.5 billion available for small business initiative credit available. to date, 50 states and territories -- we have 55, including the district of columbia -- have been approved with for state spending. these businesses are not in the beltway here in washington. they are not on wall street in new york. they are in rural, suburban, and rural areas on main streets

across america that have been starved for capital because of this tough recession. many of these programs have recently received funding from treasury, so a complete picture will have to wait. we will get some initial data this morning from secretary geithner could i intend to have a hearing early in the second quarter next year to receive testimony from a variety of state programs. the small business lending fund, a bold initiative, is a key element of the small business jobs that appeared under a barrage of criticism and publicly declared obstructionism by the senate minority leader and false charges, this lending program was born. it is a wonder if survive at all. some of my colleagues will be quick to point out the initial expectations of actual lending. i would like to add a few letters.

i will not read the entire letter, but i will submit them for the record. in pennsylvania, 612 main street is their dress. "dear mrs. landers, are wholly and subsidiary bank of wilmington, serves eight counties in western pennsylvania through 13 offices. with nearly $5 million in total assets, we are a rural community bank serving businesses and individual interests. harrod commercial banks employ 120 professionals -- our commercial banks employ nearly 120 professionals. four of our banking offices are the only bank in town in markets where they are located. while we do not view government- sponsored funding as an operative form of capital, both are programs have provided

keppel support during a difficult economic period. both programs have supported recent growth and coming in turn, the local economy where we operate. we have funded and closed more than 700 qualified loans under the program. our commercial lending efforts built around sound quality standards have been organized around the program to ensure optimal legalization for programs for our constituents. the next bank is heartland, 1398 central avenue in iowa -- dear senator lender and snow. i am privileged to write to on behalf of heartland financial

concerning your produce a vision of small business loan funds. we are four. by cloning company with operations -- we are a bank loan company. our purpose in the great depression as is now is to provide businesses as the economic engine for growth. fuelled by the lower cost of funding, we provide affordable credit to small commercial and agricultural clients who will increase employment and sustain the economic recovery. the people's bank of taliban and from georgia -- it was found --

the people's bank of kalibatin onlygeorgigeorgia is the community bank and its location. it allows us to meet plans to grow 10% annually for the foreseeable future. thank you so much, henry persons, president. finally, leader bank at arlington, mass. -- it is proud to be a participant in the fpl small business lending fund. in september 2011, it raised approximately $12.9 million from the u.s. treasury. using the allocated funds, we have loaned more than $4 billion to qualifying businesses under this program and has supported the creation of approximately

113 new jobs. a variety of businesses who borrowed funds, including firms in the biotech industry as well as a frozen yogurt franchiser, neighborhood convenience stores, and fuel companies. and just one more letter that i will not read, but from a women's business initiative in wisconsin that is not a bank, but because of my assistants and others, the lending sheorations, called cdfi's, goes on to say what a tremendous thing it has been for her and for women in wisconsin. today, we will hear from congress. it is important to note that treasury estimates that $4 billion invested in community banks will lead to small business lending ranging from $9

billion to $16 billion over the next few years. to put this into context, i draw your attention to charge on how some banks averaged zero lending. from jpmorgan, citigroup, and bank of america -- how some banks averaged their lending. from jpmorgan, citibank, and bank of america, over two years, even at the lower rates of lending, because it took so much time to get this program up and running and there so much opposition to it initially, because the not too badly in comparison. today, 137 borrowers were also top recipients and use some of the money they received to repay their loans. there's nothing here that is controversial. there is a reason why we included tarp recipients in this program.

all small business lending fund banks, whether they receive a tarp or not, must increase loans to small business to keep their rates low. in fact, if they do not keep their small-business lending, they will be paying treasury back at higher interest rates. we will see more lending to small business. today, we will hear the process has been too long to get out the door and i will agree. but i will remind everyone that it is an entirely unique program. the treasury did not have a readily available road map. despite the difficulties, the program was launched. community banks are creative, star run, and resilience. -- creative, stubborn, and resilienc.

resilient. i am pleased to report that thiwe could increase small busis lending by billions of dollars. we had a degree of success nonetheless. i intend to take the testimony today as well as input from banks and small businesses to begin to develop a small business lending fund, too. until this recession is at a distance, believe that this committee has an obligation to turn out time tested as well as new and innovative programs to get capital into the hands of the only people that can bring this recession to an end. that is small businesses throughout our country. today, i welcome secretary geithner. i look forward to hearing about these programs that we created through this extraordinary act. i thank you for your time. i would like to turn it over and out to ranking member snow and

then we will take questions. >> thank you for this critical hearing. it is about time that we examine the small business jobs that. because of the economic crisis epic proportions. mr. secretary, it we welcome you here today. the lack of job creation overall and what has gone wrong? at this point, it is not working. there is no doubt that there's nothing more urgent that creating jobs for the american people. our nation has been plagued by staggering unemployment for nearly three years. according to the bureau of

statistics, the unemployment rate for 2010 is 9.6%. it translates into 14.8 million americans unemployed. 27 of the last 32 months, the unemployment rate has been 9% or higher. what is especially frustrating and never more so for those americans who are unemployed or underemployed, this is not a new issue. it has been out there for three years. it is something that we have known. this catastrophe did not happen overnight. in fact, when you appeared before the senate finance committee in early february, i was subscribing to you this scenario of what i was hearing in my state on main street and what i hear here and as a member of the finance committee and you said that your view of it --

that my view the economy was dark and pessimistic. what i relate to you is what i have been hearing. what i hear is the key ingredient for leadership and the ability for small businesses to create jobs, the people that we depend on to greet those jobs for hardworking and deserving americans. america's always provide the promise of the dignity of the job. so people can support their families. millions of americans right now are missing out on that opportunity. that is what we have to restore. seven months later, since early february, with about 9% unemployment, today it is 9.1%. the long term of underemployed -- it is the first time since world war ii that no new jobs

have been created in a single month. there is a decline of 2.2 million jobs. that is what it is is all about, mr. secretary, looking at the stark numbers. but who represents those numbers? as you well know, in order to restore any stability into our economy, natalie to get the 100,000 needed every month, but to change the unemployment numbers back to the pre- recession levels, it would require more than two hundred 80,000 jobs to be treated every month for five consecutive years. a former colleague noted in a recent column in "the wall street journal," had the economy bounced back like the of the 10 recessions since world war ii,

our gdp would be higher than it is today, 11.9 million americans would be employed. we are basically facing the worst post-recession recovery in the history of our country. it requires a sense of urgency in addressing those issues. we look at the recovery during the reagan years. we would've had almost 60 million jobs created. -- 16 million jobs created. this has mushroomed into a state of emergency. it has long passed the time for the alarm bells to sound. one has to dig deeper to unearth the underlying causes.

if you listen to those businesses, as i do on my main street tours and in the conduct of round tables and the many people i meet here and everywhere, they will tell you loud and clear. there are two main issues -- tax reform and your regulation. that is what is driving the problems that we're facing in america, mr. secretary. it can be temporary solutions. there is no reflection of that urgency or the need are the impetus to move in a direction to reform our tax code and overhaul our regulatory system. you said in early october that the idea that regulation affecting our economy is without foundation. but when you talk with business after business, they cite the regulatory impact.

there are 3000 federal regulations every year. we have had more than 407 come out of the administration this year that would cost another $58 billion. but we rely on these businesses because they are the ones that economicven past year recovery. jobs are being created in government, not in the private sector, essentially. the lending fund in the jobs that is a case in point. the time the jobs at was discussed or than a year ago on the senate floor, i warned at that time that the lending fund of $30 billion was a new and expensive federal program that

would closely resemble tax. i remind everyone that mr. brodsky stated that it would essentially be an extension of tax. but i know proponents of the legislation do not share that view. they did not heed the warnings and neither did the inspector general. they claim that it would be popular across our nation. it would require a full $30 billion. in reality, we wasted and an entire nine months on this program, nine months before a single dollar was distributed. and only $4 billion will be utilized by nearly 332 banks. 137 of them are using two $0.2 billion to refinance their outstanding tax obligation.

the wall street journal pointed out the programs failures on october 6. so where is the disconnected? $30 billion a year ago -- i know how urgent it was. but clearly, the problems were anticipated. they were foreseen. here we are today, dealing with less than $1.8 billion added the entire $30 billion that went to small business lending. prior to begin receiving the lending fund, a full 51% of recipients had increase small- business lending to qualify for low-interest rate of 2% less. the baseline for increased lending was purposely set by legislation. but the administration that represents this is seriously flawed. not surprisingly, the banks are

in great fear and they refinanced. this can be expected when a program encourages paying off one credit card with another. is it wise or corporate use of tax dollars? it was not effective -- is it wise or appropriate use of tax dollars? it was not effective. the bottom line is that i am deeply concerned that this administration for its conditions that are warranted in urgent times. something has gone terribly wrong. when i hear over and over again

is that there is no tambo, a temple of urgency, that there is an emergency out there -- is no tempo, a tempo of urgency, that there is an emergency out there. one-year temporary solution will not be enough to extricate ourselves from the worst recession recovery in the history of this country. that is why we need fundamental structural reforms, both on taxes and on regulations of the they have stability beyond this. we have 11 out of 12 that expire the jobs bill. they're all expiring, that is the point, and small business recognizes that. beyond one year, there's nothing. that is why we need fundamental reform right now and it requires a presidential leadership to join the congressional leadership to get it done now.

>> secretary geithner. >> thank you, madam chair, and ranking members kno snowe. the biggest challenge facing small business today is the demand for the goods and services they produce is not growing fast enough. the most important thing we can do for small businesses to strengthen the overall rate of economic growth. we have proposed, as you know, to the congress a very small set of tax investments and incentives to increase economic growth and put more americans back to work. these proposals, according to independent estimates, not ours, would increase economic growth between 1% 2% and add more than 1.5 million jobs. if congress does not act on these measures, then taxes will go up for virtually all working americans. taxes will rise for most

businesses, businesses large and small. unemployment rates will rise, not fall. there will be fewer jobs for veterans and the long-term unemployed. the housing market will be weaker. our damage to infrastructure will leave america's businesses with growing costs. and cities and states will have to cut back further on critical services, laying off or teachers and first responders. enacting the proposals will not solve all the problems. we need comprehensive tax reform that will retreats, reduces loopholes, and improves incentives for investing in the united states. we need a sustained program of investment to rebuild infrastructure. we need the education system to produce better results. we need to expand exports building on the trade agreements congress passed last week. we need to get our deficit

spending down to earth to make sure we're living within our means. as we work on the long-term challenges, we need to get the economy growing more rapidly. we need congress to act. that means democrats and republicans working together. we cannot have tax cuts for working people and businesses, it critical help to state and local governments without the support of republicans alongside democrats. i will provide an update on the full range of programs we put in place over the past today years to help small businesses. because of these programs, the tax burden on small businesses is lower than when the president took office. among the things inactive, we made it possible for businesses to fully write off investments in equipment. because of the small business credit programs, the cost of

credit is lower. credit terms have eased for businesses. small banks in solid shape that have been unable to raise capital have been able to take investments from the treasury to increase lending to small businesses. we have provided $15.5 billion in capital including roughly $4 billion for a total of 13 community banks across the country. we are a very large economy. that is roughly 10% of community banks. that is a substantial number of banks that have been assisted through the programs. they're not designed to help banks. they're designed to help banks get the capital they need to extend credit. have been able to get help to expand lending across the country. governors have been able to access support from treasury to

put more resources into small business credit programs. businesses have been able to access loans in larger amounts and for lower-cost. these programs have been among the most cost-effective available to help economic growth. their work alongside the private sector -- they work alongside private sector mobilizing resources. we estimate investments made in banks will produce billions of dollars in gains for the american taxpayer those investments provided the oxygen is essential for economic growth. they were in critical reason why the economy started growing again in the spring of 2009 after the deepest recession since the great depression. the small-business programs were not large enough to insulate small businesses from the full damage caused by the crisis. they made a major difference and are a good model of how to combine tax incentives with

credit programs to ease some burden on businesses. i appreciate the support you provided to the programs. i hope we continue to work together on new steps to help small businesses access to credit and capital they need. i would be happy to respond to questions. i am grateful for the chance to do so. >> i would like to reiterate the initiatives the administration has taken in reducing the tax burden to small business. i think that is important. i agree with senator snowe that giving some long-term stability and relief in the tax code is important. we do not have jurisdiction in the small business committee. that is a finance issue. we have provided ideas. reiterate some of the

accomplishments of lowering tax rates to businesses and what you continue -- will continue to do in that regard. >> the tax system we have today for businesses has tremendous uncertainty about the basic rates you will pay. a system that is riddled with special preferences needs reform. it is important keep our eye on the long-term reform imperatives. we need more clarity and certainty about the environment businesses face. we want a system that provides incentives for investment. even if the super committee is tremendously effective, we will

not do fundamental tax reform in two months. as we start to lay the foundation for a broader consensus on tax reform that lowers the rate and makes investment more competitive, we need to be doing some things now to get the economy growing more rapidly. in my testimony, i listed the full array of temporary incentives. they are powerful incentives. the two i think the most powerful are zero capital gains for investments in small businesses. that is good for start-ups. that has enjoyed bipartisan support. we did a range of things to make expensive and more generous. that makes it more likely businesses are investing today to meet the demand that comes later. this is the broadest and most

creative mix of tax incentives congress has considered for small businesses. we should think about this being a bridge to long term tax reform and not a substitute. >> let me ask you about regulatory relief. i want to remind everyone the hearing is focused on the jurisdiction of our committee and small-business lending. i do hear criticism about over- regulation. comment on the actions you are taking with other members of the administration to review that and what your initial findings are on trying to reduce regulations. >> they have undertaken a comprehensive review of the existing body of regulation and announced a series of changes to regulations designed to reduce

the burden where we can. i am completely supportive of that. i am sure there is a range of work we can do in that area. it is true that because of health care reform, and financial reform, and using energy more efficiently, we're changing the basic protections that businesses depend on across the economy. that is the change in what people have to adjust to. lastly, i was quoting a republican economist who concluded that it is hard to find evidence today that regulations are having a material effect on growth. the evidence he cited is worth looking at. if you look at profitability and employment in the sectors with the most reform, there is no

evidence to suggest profitability is lower. if you look at the economy, the level of profitability across the business sector is that historically high levels. it is important we put a greater burden on all of us to make sure that as we're changing the rules for stronger connections that we do it in ways that are sensible and get regulations smarter. we will look for ways to do that. the biggest problem facing the economy today, businesses say the overwhelming challenge as they do not see enough growth in demand for their products. they have other concerns, but they are weighed down the list -- way down on the issues you want to get the rules better

and smarter. i do not think it is good evidence the regulatory uncertainty is causing the economy to grow slower than we would like. >> one more question. one criticism despite the fact we're going to get up to $9 billion in lending out is that it was too tarp-like. can you explain that the taxpayers will make money? >> you have to look at the independent assessments of the cbo and others. they showed that investments will give a positive return to the taxpayers. the current estimates are over

$10 billion in positive returns to the taxpayers. that is not the most important benefit. the most important benefit that had for banks is that they took an economy that was falling off of the cliff when the president took office in economic growth began again. just three months after the president took office because of the scope of the measures, including making sure that depositors were protected. these capital programs and investments are one of the most efficient uses of taxpayer money we have. every dollar you make available to a bay is worth between $8.10 dollars of lending capacity.

-- is worth between $8.10 dollars of lending capacity. these are very successful programs i would like to talk about it in more detail. where they have been slower to get off the ground is because we have been very careful to make sure these investments came with strong protections for the taxpayer interests. >> i will allow 7.5 minutes to senator snowe. >> many of the recipients would have made those investments in small business lending. they were doing it anyway. that is the point. it was all recognized at the time.

it was identified as one of the major issues. they increased their lending. that was the minimum level of lending. that was in the normal course of business. >> i understand your concerns with the original design of the program but i do not agree. what we did was combined investments in banks with an incentive designed to improve the odds that they would use it to land. you cannot force the banks to lend. but for every bank debt capital in the program, and they have more capacity to lend money would have had otherwise. i am not aware of a more effective way than this to help get more credit to small businesses. i am very supportive of the sba guarantees, but those were not

enough. we have to compliment those to make sure that banks have access to capital. there is a significant case for giving them an investment with a return to the taxpayer. the evidence shows a very good return to the taxpayer. >> 51% of the recipients were already getting presale lending. there were already at the lower level. those are the facts. >> congress authorized a $30 billion program. banks applied for only 1/3 of the capital in the program. we cannot force banks to come. we had a major effort to make sure they were aware of it. they applied for 1/3. only half were eligible. we had to be careful to make

sure the taxpayers resources were going to banks that were viable. we are not going to take too much risk with those resources. banks only applied for 1/3 of the $30 billion. only half of the banks were eligible in the eyes of the supervisors. >> others were a not eligible and never got responses as to why they were ineligible. >> we cannot force the banks to come. >> i am saying he should have known in the advance of the program would work -- you should have known in advance how the program would work. we were putting our eggs in that basket. >> cbs for this as making money for the taxpayer.

>> i am talking about job creation. there was a whole issue as to whether or not it would ultimately do that. even the special inspector general for tarp indicated it. >> we do not disagree with that. banks were allowed by congress to refinance the tarp money. that was congressional intent. there is a good case for that. the capitol on this program comes with a better incentive to lend. congress made that judgment knowingly and for good reason. inspector general says in the may 13 report that the

investment would replace the amount under tarp. >> that is right, but there is no inside in his observation. that was congressional intent. >> the point is $one. billion out of $30 billion. -- the point is $1.8 billion out of $30 billion. people cannot wait. there have been too many faulty assumptions and miscalculations. the burden has now been borne by many people unemployed. and it's just whenever economist you are talking to, i suggest you go down to main street. if 74% of american people think we're moving in the wrong direction, what are you not hearing? i would love to take you on the street tour. i have invited you before. i think you need to listen to the average american and what

they are facing right now. when you talk about the tax provisions, they are all temporary. one year tax policy is not going to make a major difference. some of the initiatives are worthwhile. the bottom line is there is a mixed message. i am not making it up. i did not make it up in february or last year. i have been trying to get the administration to concentrate on jobs. i do not know who you are talking to. i do not know who the president is talking to. you need to talk to the average person on main street and tell them what you are talking about. they are talking about not daring to make a move. after one year, then what? given the dynamics of this economy -- the ceo of gm who is

on the president's job council said the final party is improving collaboration between government and business with regards to regulation. decades of uncoordinated regulations increased burdens for entrepreneurs and businesses across the country. the point is that is what is happening. tax reform and regulatory form -- i was on the panel with you in february of 2009 at the white house. we said we needed it. you say we cannot do it in two months. why not? it needs to be both branches. i was here when president reagan was elected. we were facing severe circumstances.

we had 10.8% unemployment. a democratic house and republican senate, we worked together to get it done for the american people. rome is burning. we're facing the decimation of our communities. they want help. they feel they're not getting any deference from the administration or congress to work together. you are talking about policies in 2016. we've had three years of high unemployment. that is the point. this is nothing new. we need to get ahead of the curve at some point and make long-term, fundamental, predictable changes in our tax and regulatory policies. i am hearing it from everybody from fortune 500 companies to small businesses.

everybody is saying the same thing. they need certainty and stability. uncertainty has a huge price tag. that is being born right now by the americans. that is what we have to correct. i am not here to assign blame. i am here to get the job done for the american people. >> we're on your side for tax reform. i would encourage you not to lose sight of the near term imperative. realistically we have to focus on things that matter now i agree with you about tax reform. i hope we have a chance to do it more quickly than otherwise might be the case. >> i know everybody has strong feelings about this. the secretary has been wonderful to give us his time. we're going to go to an order of

appearance at 11:00. hour hearing is about the sbls program and credit. we do not have jurisdiction over a lot of issues. i know these are very important to small business. senator levin? >> >> thank you for your extraordinary leadership in getting the bill passed. it took years in -- it to your determination to get it passed. you had to overcome a filibuster that was almost a year long. now there are complaints it is not being implemented fast enough. a yearlong filibuster against this bill that was so desperately needed by small business, supported by community bankers, still supported by main street bankers. we have lots of main streets in michigan. when i talk to bankers and small businesses, they talk about two

things. one is the lack of demand with the economic situation. they also talk about the availability of credit. this bill is aimed at providing credit. it was filibustered by the republicans for a year. it is amazing to hear the complaint that one part of the bill is not being implemented fast enough. if republicans have their way, it would not be on the books at all. the chamber of commerce tells us the lack of demand, the economic situation is the number one problem for businesses. the u.s. debt comes second. regulation is not at the top. taxes are not at the top. as the secretary just pointed out, the small-business taxes have gone down under this administration. we're trying to provide support

for small businesses. we're trying to get collateral support for small businesses. one part of this bill but has not been talked about that i want to focus on is called the small business credit initiative. 44 states and a number of territories have made use of the initiative. i do not know if every member committee state has made use of it. almost always come from states that have used the states small- business credit initiative. it is a way of getting support to the collateral that small businesses provide. the problem with the recession that i hear from small businesses is the lack of availability of credit because the value of their collateral has gone down because the value

of all our collateral has gone down. almost all of our homes are worth less because of the recession than they were before the recession. the same thing is true with the assets of small businesses. the same thing is true with inventory value, building and equipment value. they have gone down because of the recession. when small businesses take out a loan, the value of the collateral is less. that does not mean less customers or they have not paid their bills at all. the complaint i got more than any other from small businesses is the collateral support issue. community banks that have given them loans all their lives now. not because the requirements of the regulators is that the collateral be a certain percentage of the loan. if the value of the collateral went alone, it was more

difficult to take out a loan. the community bankers came to us. these are main street bankers. these are not the big banks. they came to us to support a bill to help them land to small businesses. we had to overcome a filibuster for a year, get it done. we're all frustrated is not moving more quickly. to suggest this bill is a failure because part of it is being implemented to slowly with republicans have their way would not be there at all, that is counterintuitive. if i have any time left, i want to talk about the small business credit initiative. i want to ask the secretary to the questions -- two questions.

is this initiative producing the intended effect? this is the collateral support program where we are using state funds, adding to them, offering support. almost all states and territories are taking advantage of this fund. in their view, this is a success. >> i agree and you are right. as a compliment, we thought we would work within the range of existing state programs. we thought it would be quicker to work through the state. the states have a better feel of what works. 54 states and territories submitted a notice of intent to apply. 47 states, five territories, nbc submitted applications.

46 states and three territories were approved for nearly $1.3 5 billion in funds. we're well on the way to getting the money out the door. we will do it quickly. we're working with existing state programs. i would suggest that to test the value of this bill, they talked to two people. the talked to the states, economic development people, to see if they have applied and why. talk of governors and economic development people to test the value of that part of the bill. the other test would be to talk to community bankers. they will say they got support in some cases. where they did not get support, they wished that we would take a look to see if we can modify the

regs to make it available to more banks. the complaint we get is that not more banks got it. it was implemented in a very conservative way to protect the taxpayers. that made it less available to more banks. that is the complaint i get. they wish they could have more banks getting the benefit of the program. that is what i think we should focus on. perhaps i will recognize senator -- >> i will recognize senator vitter in a minute. we could not overcome the filibuster on the bill. the republican members did not support the bill in the senate. the president signed september 27. there was a lot of resistance.

we will get it for the record and put it in. >> than i want to correct my statement about one year. >> we will get in the record to say it took some time for us to pass this with the small- business lending program. >> it came to the floor in july. we have in august recess. it passed september 26 and became wall a few days later. >> it had to overcome the filibuster. parts it was a matter of months it was filibustered. >> it was not a matter of months. >> it was a matter of 60 votes. >> we're not going to argue. we're going to look at the record of when the skin before the small business committee as well. we will get in the record. senator vitter. >> i want to focus on the small- business lending fund. every bank that received the

money have more capital and was in a better position to lend. if they traded that money for tarp money, they did not have more capital, correct? >> that is a good point. it was designed so that the capital they got even if they used it to replace tarp capital is structured in a way that makes it more likely they will use the capital. that was the purpose of the design. we cannot force banks to get capital or land. we can try to make it more compelling for them to lend. i want to underscore that over half of the money that went out was used to repay tarp money. >> that is what we expected. >> that amounts to not increase. >> i would not say it that way. there is no surprise in that.

>> in dollar terms, did that increase capital in the small banking sector? >> it is a more valuable form of capital to expand lending. one of the folks who supported the program and to the advantage of it was a heartland financial usa. their chief operating officer is quoted as saying it is a bit of a shell game. they took 81 $0.7 million the debate to $81.7 million and use it to repay part money. >> the bill was intended to be available to repay part money. there was a stronger incentive for lending. we expected that amount of refinancing. that was the intent of the bill. there is no surprise in those numbers.

it is a very cost-effective way to mitigate credit pressures businesses face. >> i am not suggesting it was a surprise. i am suggesting it has a limited impact when the majority is used to repay tarp. the vice president for small- business policy at the chamber support to the bill. he said it was basically a bailout for 100 banks. >> the associated businesses that supported the bill supported this provision >> --. >> i am sure they did. they loved it. >> why are you concerned about this? if you look it estimates of the cost and return to taxpayers, this will look very good against

comparable programs. it has a good return. nothing is certain in life. we have a tough economy. i am not sure why you are so concerned about this. the bankers and architects who created it designed so that part of it could be used to refinance part. they thought it would be a better incentive for lending. >> let me go to the point of taxpayer return and how it looks. a lot of folks have note to the small banks were all for this provision. if they can repay part money -- repay the tarp money with cheap money, they were all for it. it does not proved it had a significant impact in the small business sector. it did have an impact that the

small banks white. let's go to your comment about taxpayer return. when this taxpayer money is used to repay tarp, is that accounted for in a different way than the banks repaid out of their own money? >> of course. we describe the overall estimates on the returns. we take into concerned the net effects of the program. we do not double counted. we make it clear. >> on the tarp accounting side, that is not counted as repayment of taxpayer dollars? >> we try to show everybody both numbers. the bottom line is these investments that allow banks to come to the treasury to get capital have had an overwhelmingly positive return to the taxpayers.

they have been over $10 billion in total. >> when you talk about a total number of tarp repayments, this is not included. quickly show both numbers. we show the tarp numbers alone. we have a separate number to show the estimates. >> there is a footnote. >> this program just closed on september 28. now we know how many banks came and what they did with it. you will see when we show it that the overall return to the american taxpayer was overwhelmingly positive to a substantial degree. >> we will submit for the record the truth on the record.

i am instructing the staff to call this gentleman and see if he wants to go by the letter or his quotation in the newspaper. i will give you a copy of the heartland letter. i want the record to reflect the truth. it was not a dollar for dollar swap with tarp. it was 1/3 of the bank's refinancing with tarp. it was designed by those of us who supported the program. it should be no shock it was done. tarp was not a program to help small banks lend. it was a program to bail out big banks from bad investments. this program was designed differently the numbers were not as high as we would have liked, but it seems to work. the banks stepped up and managed to use it. >> thank you for holding the hearing. secretary, thank you for being here.

comment on what you think about occupy wall street >> my general view is that the country faces high unemployment and increasing inequality, an alarming rise in poverty, a deep sense of economic insecurity, loss of confidence in public institutions. there is a huge amount of frustration and concern about the challenges we face. that is why we are trying to work so hard with congress to get more things in place to get the economy stronger and put in place stronger protections over the financial system to heal the damage caused by the crisis. by any measure, we have a lot

more work to do. >> i think a lot of people are frustrated. they think the big banks got access to capital in about 10 seconds. it has taken nearly 10 months for the small businesses to get access through community banks. in my state, the banks that got access to capital have proven they have increased lending to small business. it was a success. people are still frustrated that main street cannot get access to capital are you for reinstating a program like this to get more capital to small businesses through community banks? >> i am a big supporter of these programs. we have been constantly refining them, designing more of them, trying to improve them. i am completely willing to work with you on new ways to do that going forward.

>> would you provide some level of transparency on why certain banks were denied access to capital and were not given reasons for that? >> on the question about why this took so long, i want to address this. we designed the system requires that bank supervisors showed they were viable and eligible. it took a long time to do that. in all laws of the land, we have legal protections from criminal sanctions for disclosure of confidential information. we were prohibited under the laws and agreements with banks from sharing reasons with the banks for denial.

we have worked out an arrangement. banks are now getting concrete communications approved by regulators about the reasons they did not meet the standards in the law. the reason this took so long is because we were careful and relied on regulators to approve applications. we were not able to give reasons for denial because of the laws of the land. i think we have fixed that. the banks are hearing about it now. >> i do not know if you can capture the level of frustration america feels. big banks did not jump to any of those hoops and got access to capital. the small banks seeking to loan to businesses have been frustrated with not knowing answers, not having

responsiveness. it is very frustrating. i want to clear up one last point. you stated the reasons the mysteries and is looking to change the equation. you talked about the demand for services as your number one issue. do you think there are small businesses out there that have demands? >> the economy is growing at roughly 2%. that is not strong enough to bring the on and on every down. if you are a small business in the construction industry or retail, growth is still very weak. those are the averages. it is not strong enough. >> i would beg to differ with you on this point. there is demand out there by some small businesses.

these small businesses can create jobs. they need access to capital. " i agree with you. >> i would hope the administration would say we also have to give capital to main street where demand has been seen so businesses are growing. they are 75% of the job creation in america. >> i completely agree with you. >> you mentioned a lowering of marginal tax rates is good for economic growth. i could not agree it more. under kennedy and reagan, we lowered tax rates and lower the unemployment rate -- lowered the unemployment rate.

your statement saying lowering rates would encourage economic growth seems to conflict with the policies of your administration and the majority party in the senate. the president's budget would increase marginal tax rates. a variation of your jobs plan would also have increased marginal tax rates. i do not know if you have had a chance to read the republican jobs plan. it will lower tax rates and simplify the tax code by getting rid of loopholes and even now the tax code. i wonder if i can assume your testimony here is in support of the republican plan. >> no risk of that. on the broad strategy of tax reform, we will disagree on fundamental pieces. on the general strategy, that is what will guide our basic strategy. >> it is part of our plan.

it is part of the republican plan to lower the rates and get rid of loopholes. what do you think caused the housing crisis and bubble from 2001 to 2007? >> we had a long period of low rates. we had a terrible erosion of underwriting standards. those things together caused a huge over investment in housing. americans were allowed to borrow a huge amount of relative income to their house values. >> who do you think have more influence over interest rates? the central bank, the federal reserve? maybe the open market committee? >> i was vice president of the

fmoc and the fed chairman. i started in the fall of 2003. >> interest rates are the price of money. they should fluctuate based on the demand for money. if government controls the interest rates and you obscure market forces, the price of money goes up. you get a slowing down of the economy. if you do not do that and interest rates are not allowed to arise, it is an allusion and airbursts. that is bad policy. that is what we're in today. we do not want to have no interest rates and spur growth out of nothing. we want to create the illusion. the allusion is gone. that is why you cannot get the economy growing again. >> the one the rates to be higher? >> i want the market to control rates.

the soviet union failed because they could not determine the price of bread. we are failing because we're trying to determine the price of money. we should not have central bankers determining the price of money. when they do, they make mistakes. there is this pretense of knowledge. people think they are smart enough some how to tell us what the price of money should be. >> the fed does not have the ability to affect all interest rates across the economy. the only influence the short- term interest rates. they cannot control the long rate. they can have some effect in terms of prices. they cannot do what you fear they're trying to do. >> why do you think interest rates were low? a market force that had nothing to do with the open committee? >> i try not to comment on

monetary policy press secretary. most economists would say that because of the recession, rates were low coming out of the recession. the global forces caused huge investment. that helped to keep long-term rates down. the reason we had that boom in housing was because we longtime of low rates and a complete breakdown of controls and risks. >> i want to thank you for coming in and inadvertently supporting part of the republicans' job plan. >> i do agree that fundamental tax reform is coming. >> lower-income a simple fine, getting rid of loopholes.

we can agree to some of years. you can agree to some of ours. we can move forward. >> you will have to raise revenues. you cannot get the budget under control unless you are willing to see some modest increase in revenues. we think the most fortunate americans can afford to bear the burden. >> time has expired. senator hagen. >> i appreciate you holding this hearing. about we're here to talk small business lending fund. in north carolina, eight banks have received over $155 million in capital to lend to small businesses. it is no doubt that is helpful and positive.

i think the hopes for the program were much higher than that. the banks that were approved to participate are pleased with the program and had started lending. more were frustrated with the communications from the department. i heard from community banks that set after they applied, they did not hear back for weeks. i have heard from others that there was little explanation of why they were not approved. if you can comment on that, was very standardized process to respond to applicants? was there any formal way for the banks to appeal or seek review of the decision not to approve the application? i think the timing was very late in the game, in the process. there has been an incredible

amount of frustration on their part. why did it take so long to approve applications? because we put in place a system where we rely on the primary supervisors to make the judgment for us about whether banks were viable enough to benefit from the program. that took them some time. it took more time than we hoped. it took nine months to legislate the bill. we did not get the approvals until early june. the timeframe between when we started to get approval from regulators to actual approvals was very short. i would love to have accelerated that. we were not in a position to design a program where we made the individual judgments on hundreds of community banks. we have to rely on the supervisors to do that. the second frustration people

raised is why they were not told why there were not eligible. we have legal protections against criminal penalties on sharing confidential information to protect the system as a whole. we were not in a position as the treasury to tell banks why. it has taken four weeks to work out with the bank supervisors a system where we can let them know. that is happening as we speak. we have approved a way consistent with a wall to help them understand why they did not meet the requirements of the program. i wish it could have been different. it is because we were being careful with taxpayer resources. we cannot force the banks to come and apply for credit. we cannot lower the eligibility standards to the point we risk putting an undue level of taxpayer money exposed to risk. we want to make sure it has the maximum effect. want to preserve the capacity

for you and your colleagues to look for ways to support the programs in the future. if we got the balance wrong, we would have undermined these programs for the future. >> there is no opportunity to appeal the decision. >> that is not quite true. you apply. the treasury gives your application to the primary supervisor. the supervisor looks at the application. in this case, it would be the federal reserve, occ, or fdic. they provide that to the committee. we wanted checks and balances. that allowed for a careful review. where supervisors had no information from the banks, they were able to reflect that in the

process. i do not know how to design a system where they could appeal to somebody besides me. i do not think she would have wanted us substituting our judgment for a committee of their peers to make sure they're not being too tough or too soft on the merits of the application. i agree with your frustration. we shared about the fact the banks only apply for 1/3 of the money. when we started getting assessments from regulators, we move quickly. >> is there any of the case -- opportunity to apply for more? that is in the hands of the congress. >> it took so long that now the timing is a catch-22. >> i do not think that had an effect. banks had a long time to get

exposure to the program to decide whether they wanted to apply. it is possible if you were to extend the time from, you might see a few more. there was a huge national effort by members of congress and the administration to get the word out. i do not think it was a secret that this was out there as a program. >> what about the people who did not receive the funding, the entities? >> roughly half of the banks that applied did not meet the standards of the program. it is understandable that there are frustrations and concerns. it is probably not fundamentally a surprise. the relationship with the supervisors. it was their judgment that determined whether they would be eligible or not. i do not know if more time with an increased the number approved. cannot change the fundamentals.

>> senator brown. >> thinks you for holding the hearing. i want to thank you for correcting the record. it was weeks and not a year to push this through. we checked our files. i know there was guidance from treasury saying $30 billion is the number we are anticipating. 930 banks applied but only a fraction were approved. senator vitter is concerned because the banks that qualified were able to use the additional money to refinance their part that thattarp -- to refinance their tarp debt.

very little of it went to main street. for the main street bar, there is nothing. there is very little money on the street. -- for the mainstream barrault work, there is nothing. there's very little money on the street. >> it went out to more than 700 banks. you are slightly mistaken in your numbers. this was designed to be up to $30 billion in potential. we cannot force the banks to apply. >> one reason they did not apply is because there was a tremendous amount of red tape. there was the declination process and not having any idea why. >> if you were in my shoes, you would want to be very careful that we're using taxpayer money

carefully. judging banks is complicated. we had to rely on the supervisors. you would have done the same in my shoes. the fact that not all banks were eligible should be no surprise. it is still a tough economy coming out of the worst financial crisis since the depression. we have 7000 community banks. a lot of those are still under pressure and will not meet the test of eligibility. the reason why this took some time is because we were careful to protect taxpayer resources. >> i do not think you can guess what i would do in your shoes. as i travel around my state and the country, the number one thing i find is the lack of certainty for every business that is the wet blanket over their efforts to create jobs.

in the last year, in the last couple months, we've had for dinner 88 regulations deemed significant by the administration. new rules have been imposed with 64,000 new pages in the federal register. 88.9 million hours of paperwork burden. individuals and businesses state the lack of certainty. they are very scared. the banks do not want to take advantage of these programs because of the overregulation. people do not want to borrow because of the strings attached. there is a disconnect between getting the money out the door in a timely manner. >> about offered two contrary explanations.

-- i would offer to the contrary explanations. the average is roughly in line. there are no material increases in the propensity of rules proposed standards to those in the bush and administration. there have been changes that could account for weaker growth. businesses always complain about regulation. they want less of it. >> they just want regulations they can understand and that are not overlapping. >> usually they want less and more favorable ones. >> they want to know the game plan. they want to understand what the process is. i only have time for one more question. it is bugging me and many other people and businesses in massachusetts. massachusetts.