Speech

Summary of Remarks by Chairman Thomas B. McCabe Board of Governors of the Federal Reserve System Before the Breakfast Meeting of the National Sales Executives Statler Hotel, S'eptember 7, 1950 The most important objectives which our country seeks today are: 1. The establishment of a peaceful, free world. 2* The maintenance of a strong economy. 3* The preservation of our religious faith and the freedoms which we enjoy in our form of Government. - He said that unless we keep our economy strong, our military efforts iz^^ su£fer and our freedoms at home will be in jeopardy. He emphas- th 8rea"kest danger facing our economy today is inflation and that ? fight against this insidious enemy at home should be waged with all our 0 o „ .and resources. He stressed the urgency of public support for a vigor- u b^- ^scal program to put the Government so far as possible on a "pay-as-you-go" ^e have the courage to levy adequate taxes and to reduce non- At +e* p e n s es of the Government sufficiently to achieve this objective. •Same tirce, said, we must curb excessive extensions of credit in all e°tions. He cited the foil wing figures to show the rapid growth of credit: c*>e Within the past year loans made by all commercial banks have in- eXc?Se<? more than ^ billion, to a total of over $1^7 billion. Consumer debt, ^ ^ding that owed for the purchase of homes, has increased billion dur- ifcst 6 past' year to a Present "total of more than $20 billion. Consumer bi{vlment credit is up from $9.h billion a year ago to a total of $12*6 lon at the end of July. The aggregate non-farm home mortgage debt has of nGarly $6 billion in the past 12 months to a present total in excess $10 billion. n^nt We gave the highlights of the policy expressed in the recent state- Th , the Federal Reserve in its announced policy to wage war on inflation, a statement read as follows: "Within the past six weeks loans and holdings of corporate ar*d municipal securities have expanded by Sl-l/2 billion at banks in leading cities alone. Such an expansion under present condi- tions is clearly excessive. In view of this development and to support the Government's decision to rely in major degree for the immediate future upon fiscal and credit measures to curb inflation, the Board of Governors of the Federal Reserve System and the Federal Cpen Market Committee are prepared to use all the means at their command to restrain further expansion of bank credit consistent with the policy of maintaining orderly conditions in the Government securities market* "The Board is also prepared to request the Congress for additional authority should that prove necessary. "Effective restraint of inflation must depend ultimately on the willingness of the American people to tax themselves adequate3y to meet the Governments needs on a pay-as-you-go basis* Taxation alone, however, will not do the job. Parallel and prompt restraint in the area of monetary and credit policy is essential," tho v, since was asked to give this group of businessmen some of his Wmnf concerning what they might do in this emergency, he said that he uxa suggest the following: 1. That they maintain the versatility and resourcefulness for which American business is famous. 2. That they do everything possible to avoid price increases ©xcept where forced to do so by mounting costs 0 3. That they constantly strive to improve labor- management relationships. U. That their research and development activities be intensified. That they make some of their best men available to the Government, i We pointed out that we won the last war by the united efforts of nci $t Sl a b o r, agriculture, and Government, and that the greatest potential r and nfth in our Nation today is the reserve corps of business, professional *e er.men who served the Government from 19b0 to 19^6. He compared this Se with our military reserve and said that many businessmen who had ^st ^efore are bein& called back. Industry and Government, he declared, at** Unite and work together to achieve victory abroad and to maintain our *e»gth at home. he , Speaking particularly of problems in the sales-management field, Ql ^omi the follcwing significant statements made to him recently by a lr*ent sales executives "Today*s sellers* market can change very rapidly in either direction. During July and August there has been a substantial amount of inventory buying. While I feel the demand will continue at a high level, it is imperative that a sales executive should not take it for granted. "1. Keep up a program of advertising. This force, skill- iully done and constructively used,builds for future years. "2. Drive even harder to maintain and improve quality. xhere is a natural tendency to be less particular and to let down quality in a sellers' market. This calls for greater drive the part of sales executives to keep quality high. -3- u3. Market and product research should be accelerated — a knowledge of marketing factors is even more important now. "iu Make sure that our products are distributed equitably — a reputation for being fair in times such as these will be in- valuable when going gets tough — and it's the right thing to do, Take our customers' complaints seriously and try to solve them. We must not forget that our customers are the greatest assets of our business and that we have a great respon- sibility to them. New customers and new markets look very at- tractive, but we must tread carefully here if we are properly to take care of our old customers and our established markets. M6, The sales executives greatest responsibility is to his men — we must not let them get 'allotment-itis.' They must not c^come big-headed because they are in the driver's seat. Now is the time for humility and genuine customer interest on the part of °ur men. Buyers resent the normal situation being reversed. The smart salesman recognizes this. "7. An oversold sales position requires more planning and management on the part of our men to carry out their responsi- bilities to their customers* We insist that they call on cus- tomers regularly for psychological reasons and keep in closer touch than ever with market conditions. Our men, properly trained, provide our best source of information. If we are sincere in our desire for their advice and help it strengthens and builds them at the same time. "8. Finally, a sales executive must keep his men from becom- ing lax in a period when the pressures of a defense economy distort normal marketing channels. He must keep his men on their toes and tnis calls for more sales meetings and more field trips on the part °f executive personnel instead of less. "The sales executive should carefully develop ways of stimu- lating his organization (this is true at all times, but even more important now). The vital importance of selling in our American Gconomy never changes even though the direction does. Now is the opportunity to sell a business, its concepts of service, and its story of quality." r

Thomas B. McCabe (1950, September 6). Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/speech_19500907_mccabe

@misc{wtfs_speech_19500907_mccabe,
  author = {Thomas B. McCabe},
  title = {Speech},
  year = {1950},
  month = {Sep},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/speech_19500907_mccabe},
  note = {Retrieved via When the Fed Speaks corpus}
}