Regional President Speech

ease; ;d*p EQoaoHy. i'or throe yoaro wo hava boon road! of wastage of ng- the tot end the neoeoaity for economy. Tho daily papers and ija^oslnea recount the deotruction of property, tho ahorta^o of various kinds of food end supplies and the necessity for enlarging the prodoo- tlon j* thin^i* v*at are required to doc troy human life abroad, or // ' V\ to /l^tpport hnnttn .l.'.fe at hono- It has, In foot# beooao Imperative th ^ eorld error tbM poorplo should prtvotloo rigid economy In order w :/ to i^fit the various occasioned "by the war. ' ^Vf//aot aa yet ^%>.t in this prosperous country the reel pinch of F<rlf denial; prl3>o hove oonewhat advanced, but the \\ \\ >1 /' ir\ average ia»n lo colng ab^fcffc hio cffalro sxtoh ao ttsual, hay­ ing and conaxanln^ vJhat h o . t h l ^ l ^ he needs,Quad possibly with oooe la ok of fbrethsojdit ’©by a&4l$n& to tho burdona of // W . _ // K a situation which may well Neoomo ijl^^Mjahlei if tho people of X i ;i '-0 I [ )1 this nation d la regard tho exporlonooo of our pjjlliee end fall to appreciate the perils with which the world iajj Jonfrortw^ At tho sane tloo wo are being osk^/lo iaake large loans to tho iovomaont, and it la Important fV/</ w e 'should consider Joct what relation these loans bear to tho problem of waste and eoonooy. and shy soooeas in placing them is of supreste importance, both tor Military reasons aa well os for the nation's material prosperity and financial security. Ihose and allied questions coaprioe the great eoonozalo prohleta of warfare, and, aa this is t'e greatest war in the world's history, so the oaanonio problen le the greatest and no at serious that the world has over faced* Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis She wiatag® of war, aside from tho actual dentrootion of property in tho war son*, nay bo exhibited by a few simple eoc- angplee for which, without authoritative infornction. I am arbi­ trarily supplying figures for purpooos of illustration only, •Than a aon 1b called upon to inoroeae Ma physical ftzartloi', -rnr-~4jior eased wastage of the tioiraeo of tho body results snot bVVoatored by an increased oonsmptioa of food* huitfin engine rates Qoro heat, end, oonaequontly. oaat re- oei^e aore fuel. ' If there are 30,000,000 men under anna, oither on ^fighting lljrt', or ^tadergoinn In ten* ire t mining, or en- ■ / / > \ \ prated lif'the «*jL)re*fario*u3 aooiyitiea of oar, all requiring unusual physical exert^m, the lnoroaild oocmuaption of food by these non corresponds ror^Aly to tho I^roq^jdNqj^ortion exponded over what is usual in tlrao If/ ^rntally ocaae-arses 4 ounces of bread when at hono and army oonamaeo 9 ounces, tho aotivitioe oiSAheoo 80v000^000 will inoroaeo the <ewand upon tho bread oupplleo of the world nu less than 150,000,000 oxmeeo per day* If, in tixse of out 2 pairs of shoeo a year and whan In tho 6, the world zauot produoe 180,000*000 pairs of shoes per' In oxcoes of its fornor production. If 4 additional eulta of clot hoe are required ever normal, 1£0,000#Q00 additional suits of olothoa oat be pro- *uoed rrery year* She aonsunptioaa of fuel illustrates wastage with equal In tino poaoe the world'o great navies are, part, foxve. of in held in reserve and In part pursue a leisurely oouroe from one port to. another, at oaoh speed and under such conditions as Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -3- rosult In tho ^roatest poralblo eoonoray of fix el* 2oday thftso groat CLoetu ar« mobilised and are petrolling tho seas at higb speed* xSuyuoanda of now motor truoks are conveying aaaaaitL on and supplies in vast quantitive at high spoed: thousandc of new aeroplanes ore also oonanmlng gaaollno. Tho lnoreaao in the d«Bajnd for fuel, both coal and oil, growing out of thee* enlarged aotlvitlee, liPi plooed cm lmatmao strain upon the oapaoity of the ooal and oil* Inji|he oaras fashion tho notftlo requlrod for war pur- poM8 are hn "jig ooafamd at a hitherto unJmowi. Until the war hr oka c&$ r^fy o^pOr was pcmanently wasted or lost; old ooppar rootx' ^rnd gntta'u, ^cr~r..-r ?>_-*-turo8 and all tho various /tppllaiLOes in whii^^^sr nsed whan^lf lon^or serviceable, ware scrapped and tho oopp>o melted and r*>|uBed. -today thousandb of tons of ooppor are bein^U|h©t away an^'$the;psA?gus> destroyed so that they aro not reoovorablo id* ro-n-’Cj all tho ia*'- scents of war tfhlah noooaoltate the no© of this sz^i. other aotalsl,'tp*o being oonsmaed In ouch quantities that the pi •» Inction la harily equal to supplying tho douand. 2hoae are but of many, j|f&sible illustrations of tho vast lnoroaao in tho dental upon tho world’s product Iv o oapaoity over the dosaandc of noraal times. and siuaued up in ono great total would produoo a figure that would be ap­ palling, were It pooalhlo to state it. It oast ho borne in ntind that this inoreased consumption and wastage of goods of nany kinds ocmolst* in general of those things v/hloh are now being purchased by the of tho bellIgorant nations for use goveraaonts by their ami go and navies and, conoequantly, the world faoes Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis two problemss First to increase production and to reduce peace­ ful consumption of Toods and materials required for war purposes; and, Second, to furnish the governments at war with the necessary credits, that is banking funds, to enable them to pay for these goods which are being in a sense wasted, because their consump­ tion does not result in the production of other goods required for sustaining human life or for affording customary pleasures. The situation Is, of course, thei more serious because at the same time that the war tremendously increases demands for the production of goods, these30,000,000 men have been taken out of agricultural. Industrial and ooranercial occupations and, con­ sequently, the number of human beings available for producing goods has been correspondingly reduced. Various means must therefore be employed to enable our government to furnish our own amies and those of our allies with the supplies which they require, and to provide which necessitates our placing at the disposal of the government vast sums of money or credit as they are needed. The principal means possible may be briefly stunned up as follows: 1. The deficiency in labor caused by the withdrawal of man from normal occupations must be made up by supplying other labor, - that is men who have not worked in the past, also women and even children. 2. Increased production must be stimulated by the employment of labor saving devices and by cooperation among pro­ ducers, so as to bring about greater efficiency and economy in the application of labor, and thereby increase the output even Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis though at felsbar ooets. 3* £oojao*y anfet bepraetioed 1*7 people at heme in the oonsnnption of those things, particaliiiOLy food, *bleh are needed abroad for war purposes* 4* 2ho purohaeo of articles of Inxary - that is things whioh slqply afford pleasure - Boot be curtailed or discontinued i,r\\ In orftar that l*V;r now engaged in prodoelng snob artioloa may be released for orjployraont in producing those things whioh are es~ BoaeLfiai both ;Bor israr porpoaos and for sustaining hmraro life. il 1 5* 'General economy of expenditure nost bo prooticed by everyone, Ln «rftar vhat a l&jpge surplus of eexnings over ex­ penses may be ttrraed oiv? $:> ^ho mvs^rruaoxit, thus enabling it to pay and sustain a $?*at .and navy* 2he urobleia of war Maanoo is, after all* a rather Xi ll '! !! ■ simple one. A goverttaent ei^pged in war mn employ throe pos­ sible Beans for famishing iva^lf with n^^aasx-jr tTo^li©a: It ml^ht oonfisoate the goods requi*>*c war purposes pay nothing to tho owner a or produoorn; thi#|w&s the means oinployea centuries ago in feudal 2uropo and sas equivalent 4f a tax collection. Or it ml&ht levy taxes, payable in vmo^j or oredit, and uso tho funds co produced to pay war bills. Or it night even require its oitisono to land it their funds, giving to the lend­ ers itu obligations payable at future dates* 2o a certain extent, all throe means are now being em­ ployed by all the governments at war. 2c use certain arbitrary figures, illustrating this prooous:- If our Government mot ha twelve billion dollars for one year's oonduot of the *ar, it ni^tt produce or ssnre two billion dollars thereof by arfci^ris?£%’ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis fixing tho prioeo of tho goods whioh It buys somewhat below the aotual aarket value of thoee goods* This is a partial oorcflflofr- tion of gooA s produood ¥7 tho farmer and SBunxfaetnror and is la tho nature of a tax upon the ooantry’o production* She governastet then night may to its oitlsen* - "Wo will now roquire 70a to fur-* niah as ton billion dollars; too billions peyabla as taxes, that is to say by o©>i£isoatiou of your funds, for whloli we will giro nothing in r^iorxi", - and for tho remaining eight billions it might oay tc ita oltlsens * "Wo will not require you to famish this fond without siring yon anything in rettum, bat wo singly ask you, ro'tnntSYl^ find to tNF<actont of your aeans, to turn oror eight billon dolte^ tj yo&i-p Go^enuaont, for which In return wo will give yoa cti-r prcrj.se *,0 pay at future tote, with in­ ter eat,N 2ho GoveruiixfLt weald then proeeM to oolleot taxes ' !! !: ii I enough daring tho porloa tlat those bonds are outstanding to ear cblo it to pay tho interest to amortize tho principal; that is to say to set aside a suffioiaat -aaront every year tor the retirement of tho pxlnoipal of tho bond^i so that the ii^tal would have boon retired at oaturity. Viewing tho problen of war wastage aai. ^-j^iuMay in its broadest sense, it will be seen that the Govenuaont requires oortain goods for war purposes, tho goods required Bust largely recruit fron a production in ecsoess of the axaorcrat normally pro- duoed and to produoo these goods not only most output be inoroased, but oonsnnption at hotae oust bo Cooreased. Although these goods will bo wasted by tho armies and navies, they met nevertheless be paid for by tho government* Payment by the government will be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis possible only if the people of the country economize so generally that they will be able to provide the government with sufficient credit so that it may purchase tMs vast store of goods, whioh is to be prongptly destroyed. It will be observed that in the present, as in past wars, the greater part of the credit required by the Government is that whioh it asks its citizens to contribute voluntarily by purchasing government bonds, whioh is simply another way of saying that the government asks its citizens to set aside a proportion of their earnings and invest what they save in government bonds. Should the people of our country fail to voluntarily ftimish the govern­ ment with funds, the consequences would naturally be fatal to the successful prosecution of the war, unless the government thought best to employ the other two means; that is arbitrary confiscation and taxation, exclusively for financing its war operations. Such a policy would disorganize the business of the country by rendering nuch of its agricultural, industrial and coim»rcial rctivities un­ profitable. This would simply be restraining rather than stimu­ lating tiie country's productive capacity at a time when production must be tremendously increased. If democratic institutions, such as the people of this country value and enjoy, are to endure, in other words if this war is to be promptly and decisively won, our people must either freely furnish the government with the funds that it requires or they must submit to a surrender of that democratic freedom for whioh their fathers fought, and permit the government to commandeer goods and credit as it may be needed; there is no middle ground. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Benjamin Strong (1917, August 2). Regional President Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/regional_speeche_19170803_benjamin_strong

@misc{wtfs_regional_speeche_19170803_benjamin_strong,
  author = {Benjamin Strong},
  title = {Regional President Speech},
  year = {1917},
  month = {Aug},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/regional_speeche_19170803_benjamin_strong},
  note = {Retrieved via When the Fed Speaks corpus}
}