TOWNSEND PLAN

New Zealand Herald, Volume LXXIII, Issue 22402, 24 April 1936, Page 15

TOWNSEND PLAN

AMEEICAN INQUIRY ORGANISERS' DIVIDENDS SHARES OBTAINED GRATIS By Telegraph—Pres3 -Association—Copyright (Received April:" 23, 5.5 p.m.) WASHINGTON, April 22 The co-founder of the Townsend movement, Mr. Robert Clements, gave evidence to-day before the Committee of the House of Representatives which is investigating the affairs of that organisation. He said that the owners of Old Age Revolving Pensions, Limited, were the directors, who could dissolve the corporation at any time and divide the asset!, among themselves. The company which publishes the movement's weekly journal paid dividends in a little more than a year totalling 3250 dollars a share. Witness admitted having sold his shares in that property to Dr. Townsend and said he was paid 50,000 dollars, which Dr. Townsend had received as dividends. Neither had paid a cent for his stock. The Townsend plan was propounded in 1934 by Dr. F. E. Townsend, an elderly Californian medical practitioner, with "the idea of solving the unemployment problem in the United States. He° proposed that the Government should offer every citizen over 60 years of age a pension amounting to £8 a week for life, on condition that the recipient had no criminal record, promised not to work for a wage and spent each monthly instalment in the United States within 30 days of its receipt. The money was to be raised by a sales tax. The theory was that the money paid out to pensioners would be spent within a month and would be collected again in the sales tax, thus beginning an endless cycle guaranteed to produce prosperity. Thousands of people in the West and South of the United States became enthusiastic converts of the plan, and by the end of 1934 more than 24,000,000 signatures had been collected for petitions to Congress to make it law. Newspapers, under pressure from their readers, gave' great prominence to the plan, and hundreds of meetings were held every evening in California and the Western States. In January, 1935, Dr. Townsend went to Washington to seek the support of Congress and members, who were being flooded with petitions, were forced to listen to him. It was estimated, however, that if the scheme were put into operation the Government would havo to find about £6,000.000.000 a year, and as the total yearly income of the American people does not exceed j £10,000,000,000. the adoption of the plan would result in disastrous inflation.