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The Executives' C lub o f C hicago stands unalterably fo r the Constitution o f the United States as handed down to us by our forefathers and under which we have lived fo r the past 160 years; and affirms th a t the fundamental principles it asserts form the basis o f true Americanism. E x e c u t i v e s ’c l u b t e Volume 25, No. 2 C H IC A G O 2, U. S. A. September 24, 1948 Warning on Inflation’s Spread Sounded by Veteran Member of the Federal Reserve Board Marriner S. Eccles discusses "inflation and the Dangers to O ur Economic System" at meeting o f Friday, Sept. 17, 1948 P r esid e n t corbett: seldom is it physically possible to secure the cxact timing o f a national issue and a national figure so thoroughly identi fied with that issue at the exact m o ment of one of our meetings as we have succeeded in achieving today. Inflation is the great American head ache o f the moment. In all sections of our land from the Chairman of the Hoard o f our largest corporation down to the housewife with her market bas ket, inflation is tightening its clammy hand on our econom y in a firm, strang ling grip. W e arc not panicky—we are not overly fearful— hut we arc searching diligently and hopefully for an infla tion cure. Mr. Marriner Eccles was for twelve years Chairman o f the Hoard o f the Federal Reserve System and during that period instituted and directed a large part o f the monetary policy of the nation. Mr. Eccles has managed to keep a remarkable sense o f balance through one of the dizziest rides on the W ash ington M erry-Go-Round that any pub lic servant ever endured. This par ticular mariner indeed has had a rough voyage on the Potomac. (Laughter) On several occasions, Mr. Eccles has shown a rare type of political courage by publicly attacking anti-inflation pro grams proposed by President Truman. This, o f course, is not the way to win friends and influence people inside of any administration. As a result, President Truman re placed Mr. Eccles with Thomas M c Cabe as Chairman o f the Federal Re serve Board. Hut Marriner Eccles, in a move that only a really big man could have made, agreed to stay on as Vice Chairman. Mr. Eccles hails from Utah where instead o f having 28 wives, he owned 28 banks and a whole string o f sugar, lumber and construction (Laughter) companies. Marriner Eccles is a rare public serv ant; he owes no allegiance to anyone— he only wants to serve. He sticks to his own sincere beliefs and lets the chips fall where they may. Few men are more acutely aware of our economic danger signals than our speaker today. Gentlemen— Mr. Marriner S. Eccles. (Applause) MR. ECCLES: Chairman Corbett, Distinguished Guests and Members of The Executives’ Club of Chicago: This is, indeed, a privilege and a pleasure for me ^ to meet with the business leadership of this great city. I never appear before a group to talk but that I am reminded o f what happened to me one evening when I was invited to speak to the editors o f the McGrawHill Publishing Company. There were about thirty or forty o f them and as we were haying dinner I turned to one of my associates, who was an assistant while I was Chairman, and said to him, ‘‘ Elliott, as I look around I know a great many o f these men and I am just wondering if I have spoken to this group before.” He said very seriously, “ I am sure that you have not, because if you had you w o u l d n ’ t be h e re tonight.” (Laughter) So it is quite apparent that I have not spoken to this group before on the basis o f that reputation! Your chairman spoke of the rough ride that I had had on the Potomac. I rather feel that it was somewhat of, maybe, a fortunate ride. He spoke o f the fact that my resignation had been in the President’s desk. I think I need to clarify that statement to this extent. The members o f4 the Federal Reserve Board are appointed by the President and confirmed by the Senate for terms o f fourteen years. I had ten years o f my term to run. One o f the members is designated as the Chair man o f the Board by the President to serve for a term o f four years and the same is true of the Vice Chairman. Mr. Truman neither appointed me as a member o f the Board nor did lie designate me as Chairman. It always has been my belief—and I so argued before the committees o f Congress dur ing the hearings on the Banking A ct o f 1935— that the Chairman should serve at the pleasure of the President because he is the liaison between the Federal Reserve System and any ad ministration that may be in power at any given time. I did not succeed in getting that provision in the statute— that the Chairman serve at the pleasure o f the President. However, as far as I was concerned, it seemed impractical that I, as Chairman, should undertake to be a liaison if I was persona non grata with the President. So I said to Mr. Truman, “ You did not designate me and I want you to know that I will make available the chairmanship any time that you may desire.” He assured me upon that o c casion and others that he would not hear o f it. But, when my term as Chairman— the four years— did expire, which was last January 31st, without any previous notice, except about two days, he had John Stcelman advise me N O TE Since M r. Eccles’ speech was mad* off th t record, It is not for further publication although he has authorized its printing in tha Executives' C lu b News for distribution to our membership. Page 2 Executives' OFFICERS PR ESID ENT— Paul M. Corbett, Vice Presi dent, Youngberg-Carlson Co. 1st V IC E PR ESIDEN T— M. Glen Miller, Owner, M. Glen Miller, Advertising 2nd V IC E PR ESID ENT— John J. McDon ough. Assistant Vice President, Harris Trust & Savings Bank SECRETARY— George L. Fairbairn, Secre tary, Marsh & Truman Lumber Co. T REASURER— Elliot W . Frank, Vice Presi dent, La Salle National Bank E X E C U T IV E DIRECTOR— A. T. Etcheson, Suite 1949, 111 West Washington St., Chi cago 2. ANdover 3-3500 DIRECTORS Frank G. Anger— Vice President, Chicago Na tional Bank John W . Barriger— President, Chicago, Indian apolis & Louisville Ry. Co. Reuben D. Beckett, Vice President and Trust Officer, Mercantile National Bank of Chicago James B. Blaine— Executive Vice President, John F. Cuneo Co. Harold L. Boyle— Vice President and Director, Deere and Co* John W . Carnrick— Atlas Film Corporation Thomas H. Coulter— Booz, Allen and Hamilton Frank D. King— Vice President, Secretary and Treasurer, The Railways Ice Company L. Duncan Lloyd— Partner, Lord, Bissel) & Kadyk Otis S. Mansell— President, The Celotex Corp. A. King McCord— First Vice President, The Oliver Corporation Michael F. Mulcahy— Partner, Mulcahy, Murphy and Dieringer Frank E. Spencer— President, Spencer Petroleum Co., Division of Socony Vacuum Oil Co. James C. Thompson— President, The Wacker Corporation Oliver S. Turner— Partner, Sudler and Company Ferre C. Watkins— Attorney at Law EXECUTIVE COMMITTEE John D. Ames— Editor and Publisher, Chicago Journal of Commerce, Inc. Laurance Armour— Chairman, La Salle National Bank Sewell L. Avery— Chairman, Montgomery Ward & Company James B. Blaine— Executive Vice President, John F. Cuneo Co. Ralph Budd<— President, Chicago, Burlington & Quincy R. R. Co. John F. Cuneo— President, The Cuneo Press, Inc. Gen. Charles G. Dawes— Chairman, City Na tional Bank & Trust Company of Chicago Marshall Field— Publisher, The Sun-Times Co. Stanley G. Harris— Chairman of Executive Com mittee, Harris Trust & Savings Bank James S. Kemper— Chairman, Lumbermens Mu tual Casualty Co. James L. Kraft— Chairman, Kraft Foods Co. Nathaniel Leverone— Chairman, Automatic Can teen Company of America Chauncey McCormick— President, Art Institute of Chicago Max McGraw— President, McGraw Electric Co. James F. Oates, Jr.— Chairman, Peoples Gas Light & Coke Co. Frank C. Rathje— President and Chairman, Chi cago City Bank & Trust Company Arch W . Shaw— President, Shaw and Co., Inc. Dr. Franklyn Bliss Snyder— President, Northwestern University Club News lie was not going to redesignate me after I had served for so many years. Well, I didn't feel too happy about the way the matter was handled. I have been away from Washington nearly a month, during which time I have been up in Canada— Banff, Lake Louise, and Jasper— and out to my home in Utah. Therefore, I did not have either the inclination or the oppor tunity to prepare a written spccch and I am going to have to ask that what I say today be off the record. I do feel that it is one thing to speak on the record before the committees of Con gress when you have no choice as to whether or not you will go up there, but it is quite another thing to speak on the record under these circum stances and during these critical times without preparing a statement. A c cordingly, if the press will be good enough to treat what I may say off the record, I will be glad to meet them in a press conference after the meeting. I have nothing to say, but if they have some questions 1 can indicate whether or not I can answer them on the record. The Inflationary Situation Now, getting down to some o f the serious problems I know you expect and you want me to discuss, that is, the development o f the inflationary situation with which we all are con fronted and some of the causes and the effects of the situation, I am going to read just briefly from a statement I made before the Joint Committee on the Economic Report, which is known as the Taft Committee, on April 13th. This is the statement I made on be half o f the Board. I just want to give you this excerpt from it: “ Never in our memories has the world been pervaded by greater fears, confusion and discouragement arising chiefly because of the disappointments of the past and the uncertainties of the future. The great hopes we had dur ing the war for achieving a lasting peace in a prosperous world have been steadily diminished because a few ruthless and despotic men hold a sword of Damocles over the heads of free peoples throughout the world. It is difficult, if not impossible, to plan for a rational economic future either at home or abroad while that sword hangs over us. W e think that the prospect of removing the threat by peaceful means will be immeasurably enhanced the sooner we assert our moral and our physical power to establish the founda tions for peace before we are engulfed by the economic and social problems which grow more menacing the longer the establishment of a firm basis for a permanent peace is delayed.” COMMITTEE CHAIRMEN E X E C U T IV E — James B. Blaine PROGRAM— Thcmas H. Coulter M EM B ER SH IP— Michael F. Mulcahy FIN AN CE— Elliot W . Frank SPEAK ER ’S TABLE— John J. McDonough P U BLIC ATIO N S-1 —James C. Thompson RECEPTION— Frank D. King A T TEN D AN C E— L. Duncan Lloyd SPORTS— Thurston R, Lundeberg M USIC DIRECTOR— Frank L. Bennett • FOUNDED 1913 THOMSON & McKINNON Securities : Commodities • • • 231 S. LaSalle St. Phone CEntral 6-5775 • • I • 11 Wall Street New York Branches in 32 Cities ^ n it 1/1/r i t e A .W .M A N S F IE L D Resident Partner tor our weekly Stock Survey Members New York Stock Exchange and other principal exchanges W hen the defense program was started in 1940, we had a great cushion of unemployment, of excess food, of idle productive facilities. It was not long, however, until the excess capacity of men, material and plants had been utilized. That was brought about by war defense and soon thereafter by war financing. The war financing would not have brought about the inflationary situation had it all been financed cur rently out o f taxes. But that was not done. It possibly could not have been done. It never has been done in any country and we financed during the entire war only about 44 per cent of its cost, which was over $400 billion, out o f taxes. The balance of it was financed out of borrowing and the public debt went up from something around $45 billion to $270 billion in the short space of five years. A very substantial part of that public debt was financed by the banking system, which was the process of creating money. Money comes from bank credit— and I w on’t go into the mechanism o f how that is brought about except that it is a fact. At the end o f the war, the expansion o f bank deposits and currency had in creased about three times. In addition to that, the public held large quantities of government securities which were the equivalent of cash. W e wanted to prevent inflation dur ing the wrar when 45 per cent of our entire productive capacity and goods were being devoted to the sustaining o f the war and the balance was left for the civilian population. The money sup ply in the hands of the civilian popu lation equalled 100 per cent because the goods available for war were not available for purchase by the civilian EXECUTIVES* CLUB NEWS Published Weekly from the third week in Sep tember to the third week in June, Inclusive T H E E X E C U T IV E S ’ CLUB OF CHICAGO 111 West Washington Street, Chicago 2 ANdover 3-3500 Annual Subscription (Non-Members, $5.00 Extra Copies 15 Cents '‘Entered as second class matter September 28, 1945, at the postoffice at Chicago, Illinois, under the Act of March 3, 1879.” Executives' F o r Y o u r b u s in e s s AND PERSONAL BANKING Club News Page 3 out a terminal point. W e have had an expanding European Aid Program and there is no terminal point to that. A world aid program would be better. Right in the face of that, we cut taxes about $5 billion. So the most important anti-inflationary weapon we had in the kit, which was budgetary surplus, has practically disappeared. Tragic Mistake LA SALLE N a t io n a l B a n k COM PLETE B A N K AND T R U ST SE R V ICE M E M B E R F E D E R A L D E P O S IT IN S U R A N C E C O R P . population who produced the goods, Imt they had the money which they got for the production. Therefore, you had a very large supply of money and a growing supply o f money without a growing supply o f goods available to the civilian population. In order to prevent inflation during the war, the harness o f controls was put into effect— price control, rationing, allocation of scarce materials, build ing permits, wage controls, export licenses and excess profit taxes. It was perfectly natural that when the war ended there would not be a supply o f goods and services available to meet the demand and available purchasing power. Causes of Inflation Now, inflation is a condition where the means of payment in the hands of those who will spend it exceed the supply o f goods and services available— and you certainly had and still have that condition. Y ou had a terrific po tential inflation. Y ou had a backlog of demand that had accumulated for many goods and services over a period o f five years. In addtion to that, you had what was the normal current de mand which you would have had had there been no war. So immediately there was what was the current de mand plus everybody’s desire to get what was the backlog o f demand. W hat we have had since the war ended is an attempt on the part o f the American people and American busi ness to not only satisfy their current demands, but to satisfy this backlog demand. It was not physically possible to produce what would be the equiv alent o f seven years in housing, auto mobiles and many goods in a period of two to three years. The miracle is that we have not had far more infla tion. If it had not been for the great faith o f the public in the government and the purchasing power o f the dol lar— in which they have been deceived, 1 think, in many instances— we cer tainly could have had far more infla tion than we have had. Now, to make this inflationary situa tion even worse, we have had recently an expanding military program with The taking off of the controls was a tragic mistake— and that mistake was made, not last year, but in 1945. Prac tically every control was taken off be fore the end of 1945. Price control was left on, but price control was complete ly useless without rationing, without allocation, without wage control and without the other harness of controls. All it did was to play into the black market—the racketeers, who were the strongest advocates for a continuation of price control. They were just like the bootleggers during prohibition— they wanted prohibition continued; and just so did the black market opera tors want price control continued. It was ineffective when you took the con trols off. Mr. Vincent and Mr. Snyder strong ly advocated the taking off of the ex cess profits tax. Now, I am not saying that the Republicans who were not in control of Congress at that time raised any objection to taking off these con trols. (Laughter) Neither am I saying American busi ness and farmers and labor raised ob jection to it. Everybody wanted them off, except; labor wanted wage con trols off, but wanted price controls left on; business wanted wage controls left on, but wanted excess profit taxes taken off; the farmer wanted the ceil ing taken off of his farm products, but wanted a floor kept on them; the bank er wanted higher interest rates as a means of controlling credit, but wanted no other means on the part o f the Federal agencies to control his bank ing operations. W ell, you know the story. The D em ocratic Administration is largely re sponsible for the results. They were supported to a great extent by the Republicans and most o f the American public. Vicious Circle The longer inflation goes, the more serious will be the adjustment. You have already created a terrific dis equilibrium. Business as a whole and the farmer and organized labor have not suffered by inflation. The income of business after taxes has more than doubled. I am speaking nationally. The income o f the farmer has gone up more than two and a half times since 1941. The wages of organized labor— not taking into account their inefficien cy, which in many cases is appalling— has likewise doubled. GUESTS AND MEMBERS AT SPEAKER'S TABLE, SEPT. 17, 1948 Vice President, Cur Mr. E. V. Zeddics, tiss Candy Company. Vice President Mr. F. M. Knight, , Con tinental Illinois National Bank & Trust Company of Chicago. Mr. Malcolm J. Boyle, Boyle & Co. President, M. J. Chairman, Former Director, Mr. Percy Wilson, Percy Wilson Mortgage & Finance Corp., and, The Execu tives’ Club o f Chicago. President Mr. A. M. Jens, , The Chi cago Federal Savings & Loan Asso ciation. President, The Mr. Horace S. French, Manufacturers National Chicago. Bank of Chairman of Mr. Charles W. Scabury, Marsh & McLennan, Inc. the Board, Partner of the Mr. Richard A. Kebbon, Kebbon, McCormick & Co. firm, Mr. Bernard P. Smith, Peacock. President, C. D. Executive Vice & Co. Mr. Harold V. Amberg, Vice President, .Mr. Willard W. Cole, , Henry C. Lytton President The First National Bank o f Chicago. Senior Partner of Mr. Edwin G. Booz, Booz, Alien & Hamilton. the firm, Vice President, Treasurer, H a ls e y , Mr. Walter L. Darfler, <5* Stuart & Co., Inc. Secretary President, Mr. Paul M. Corbett, Executives’ Club of Chicago. President, Mr. C. S. Young, Reserve Bank o f Chicago. The Federal President & Mr. Frank C. Rathje, , Chicago City Trust Company. Chairman Bank & President, Air. John M. Budd, Chicago & Eastern Illinois Railroad. President, Mr. John C. Wright, Salle National Bank. Secretary La Treas Mr. Mathew Keck, <3* Borg-Warner Corporation. urer, School of Busi Dean Garfield V. Cox, The University o f Chicago. ness, First Vice Presi Mr. A. King McCord, The Oliver Corporation, and, The Executives' Club of Chicago. dent, Director, President, The Mr. Solomon A. Smith, Northern Trust Company. Major General Carl F. Gray, Jr., V e te ra n s Affairs Washington, D. C. ministrator, sld~ in Senior Vice Mr. Chester R. Davis, Chicago Title & Trust Co. President, President, The Chi Air. James E. Day, cago Stock Exchange. Vice President, Mr. R. E. Pritchard, Harris Trust & Savings Bank. Page 4 Executives' On the other hand, you have the great mass o f the unorganized groups, the pensioners, people living on an nuities, the white collared groups and the returned veterans— many of them were not members o f unions. The union members are about 14 million out of 60 million people employed. That group is hurt and in order to keep up their standard along with the groups that have been benefited, they have used up some of their savings. They have cashed in their "E ” bonds and they have gone into debt. Consumer crcdit since the war ended lias practically doubled. Installment consumer credit has more than doubled. M ortgage debt on housing has almost doubled in the past two years. W c have been getting the little fellow in debt to purchase inflated houses in the last two years at the rate of around $9 billion a year. Club EXECUTIVE News ORDER! in C A L C U L A T I N G , T A B U L A T IN G and T Y P IN G (including transcribing) C a ll us. Use us f o r em ergencies, peaks, tlie O V E R LO A D S w ith M U ST tags. T hink o f us as yo u r branch office; lean on us fo r the extra tasks beyond the ca p a city o f y o u r ow n efficient o r gan iza tion . B uild lean, com petent, economical d e p a rtm e n ts ; send you r o verload s to u s ; w e'll get you r cin8 wcr 8, y o u r typing back to you fast. P ay us ON LY when we work fo r you. PHONE CApitol 7-0500 You see, we are not dealing with the economic facts of life— neither the gov ernment, nor business, nor the farmers, nor labor. It is unfortunate that we did not keep controls on. It is too late to put them on now. First o f all, the public would not accept them. It is like humpty-dumpty on the wall. Y ou just cannot put it together again and one control without all o f the others would be quite useless. Y ou must have the entire harness and I don’t think any such a regimen- A COMPLETE M ARKET FOR IN CHICAGO IT'S ★ Y0UNGBERG-CARLS0N CO. GOOD INSURANCE * So we have been perfectly incon sistent. At one and the same time, the Government talks about controlling in flation through various m eins while doing the very thing that tends to create and sustain it. You have got what we call parity payment in the case o f the farmer. The Department of Agriculture talks about the reduction of production so as to be able to sustain prices. It appears now that we are going to get some surpluses and, with the Government bound to maintain parity, they are g o ing to have to buy up the surpluses and therefore there is a feeling that pro duction should be restricted so Govern ment will not have to buy up the sur pluses. Too Late for Controls M I D L A N Sam Workman, Pres. talion in peacetime is practicable or possible without a greater degree of education and understanding than the public now has. There arc some things that could be done. I am going to just give you what I said off the cuff the other day before the Committee of Congress, if I have it here. I am not sure that I do. This was before the Committee and it read fairly well, so I possibly could not say it any better. Proposed Remedies “ What we are interested in this time, o f course, is not so much recrimina tion. What we are interested in is what can be done, at this late date, to overcome as far as possible the mis takes o f the past. I do not believe it practical to put back a complete har ness o f wartime inflationary controls.” The press can get this because this is what I said before the Committee o f Congress. “ I do not believe that to put back some and leave off others would do the job. I do believe that it is too late to avoid a serious deflationary adjust ment at some point. The disequilib rium and the distortions have already been created and the public are in debt. I do believe that the inflation can go D O ffering la rge and sm all shippers m odern w arehouse service a t con ven ient loca tio n s. H eated an d sprinklered. P a t r o l l e d by A D T W atch S ervice. L ow est insurance rates. I d and O ut fre ig h t sta tion on prem ises D irect ra il con n ection s w ith a ll rail* roads. A m ple loa din g and un loa d in g fa cilitie s. A train ed org an iza tion f o r y o u r w areh ouse h a n d lin g and paper w ork. N o sh ip pin g delays. W arehouse spa ce t o let. In sp ection co r d ia lly in* 201 S. La Salle Street Chicago 4 CEntral 6-4477 WORKMAN SERVICE, inc. 109 N . Wabash, CH ICA G O 2, RAndolph 6-8250 Now, true, you can have inflation as long as you keep up the process of getting the public living beyond their incomes by the process o f consumer credit, mortgage credit, or bank crcdit that is not tied directly to the produc tion that would not be produced with out the bank credit. On top o f all o f this inflationary effect, as I say, you have had the Federal Government and the states and municipalities carrying out public works and public projects. So what you should be holding today for a cushion for a deflationary period in public works and public roads, not only on the part o f the Federal govern ment but on the part o f all the muni cipalities and states, is being spent. In addition to that, state and local governments have been passing soldier bonuses and increasing the public’s pur chasing power. These measures have been financed through debt and this creation o f debt has helped to sustain inflation. Y ou have had the Federal govern ment stimulate this housing program on the one hand, particularly through the mortgage which is known as Title 6, while they are talking about con trolling inflation on the other. W e have had the veterans’ housing pro gram which has been another stimula tion. W e have the R F C to provide credit where banks did not. YOUR EVERY INSURANCE NEED when you have OVERLOADS MIDLAND WAREHOUSES, Inc. ELMER ERICKSON, President 1500 So. Western Ave., Chicago 8 EXECUTIVES find this a safe and profitable place for saving and investment. BELL SAVINGS AND LOAN ASSOCIATION 3 0 NORTH U SAME STREET, CHICAGO 2 Phone Fi nanci al 6 - 1 0 0 0 Member Federal Ilomc Loan Bank System and FeUctal Savings &Loan Insurance Corporation Executives' GEORGE S. MAY COMPANY • Club News B r y a n t > 0 Stratton CO j *l )e g e “Training Executives for almost a Century” Schools of 7(/6nleC& *piHC4t BUSINESS ADM INISTRATION SECRETARIAL SCIENCE HIGHER ACCOUNTANCY Catalog on request • Address T. C. Swiger, Mgr. O F F I C E S IN PR I NC I P AL CI T I E S 18 South Michigan Avenue Telephone RAndoIph 6-1575 further if nothing is done and if budgetary deficits develop/’ that is, if we don’t have the budgetary surplus, “ it can be long postponed, and can be catastrophic in its ultimate effect the longer it is postponed. I do believe that the sooner inflationary develop ment is stopped the less serious the adjustment, or the deflationary de velopment, will be. do believe it essential that credit controls, sufficiently broad in power and authority, both in consumer credit and bank reserves field, be made avail able. That can be, at the present, the most useful, the most practical and the most effective/' O f course, budgetary surpluses would be more effective than anything, but that is not something that you can get quickly. “ 1 do believe it essential that credit the power o f the administration and the Congress .should be.done to main tain or to secure a budgetary surplus. I do believe that the Federal Govern ment should do everything within its power to encourage the States and cities to postpone every expenditure that it is possible to postpone and to set an example to the states by doing likewise. I do believe that the Federal Government should not, for what seems to me political reasons, encourage a **l Top Quality Furniture For Your Home ★ housing program in excess of the ca pacity of labor and material available and encourage further inflation there by. I do believe that the Federal Gov ernment should do everything in its power to bring down food prices, to take off floors if necessary and to en courage more and not less produc tion”— at least at this time. “ I do believe that we should— and I may sound naive in this regard— ad journ political considerations, and I say that for both parties, and consider honestly and openly in the interest o f all the people the economic facts of life.” In the beginning o f my statement, I quoted from a statement that I had read on the 13th of April, which you will observe, recognized that our do mestic inflationary situation could not be dealt with, no matter what we did, adequately as long as we did not have a basis for peace in the world. So long as we have a burden o f world aid to prevent communism from engulfing the world and so long as we feel it neces sary and urgent to spend the billions we are for a preparedness program, it is pretty difficult to deal with these economic problems on the domestic front. W e cannot and do not operate in a vacuum. Therefore, I think that we must be Wright &Cnmpaiy “Character Coeds f o r Low Steam Costs ” Page 5 realistic in dealing with this foreign situation and I cannot help but feel that the results o f the past three years have not been very fruitful. It is ap parent to all of us that the world situa tion has been rapidly deteriorating. W e have not kept pace with the develop ments, at least sufficiently, to even maintain a status quo which was en tirely unsatisfactory. But it seems that we may have lost ground. W e must have a basis for world peace and we must have it soon. If we must risk war while we have the atom bomb and the enemy does not have it, then we had better risk it now rather than be forced into it at a time when, with all of our preparation—and preparation is relative— we may be less well pre pared than the enemy. A program o f preparedness is all right if it is preparedness for offense. But a preparedness program for de fense does not seem to me to make too much logic. If a preparedness pro gram of defense means anything in the present situation, it means an arma ment race and an armament race ultimately leads to war—and in this instance it would be an atomic war. W e may not be the ones to choose the time. Democracies seldom, if ever, do. The British and the French were sufficiently prepared to stop the Ger mans and enforce the conditions o f the Versailles Treaty in 1934 and ’35 and ’36, even though they were less pre pared than they were in ’39 when they were entirely unprepared to deal with Hitler. W e were well prepared to stop the Japs from going into Manchukuo when they broke the Nine-Power Pact. But even though we were possibly much better prepared at the time of Pearl Harbor, relatively we were less pre pared. Difficult Alternatives It seems to me that we are con fronted with these very difficult alter natives. W e carry on a preparedness program of an expanding amount o f money— $15 billion this year, eleven last and eighteen or twenty next. W h o knows? The more inflation you get, the more money it .takes. A world aid program to hold our position! All of TEN COMPLETE SAMPLE ROOMS FOR YOUR SELECTION Steel Files and Storage Cabinets IN OFFICE FURNISHINGS One Name Stands Out Eminently THAT NAM E IS ★ ★ ROCHELLE’S, INC. BEN KALLIS, Fr*sfd#nf 228 S. Wabash Avenue Entire Third Floor CITY-WIDE DELIVERIES W A bash 2 -1 8 9 6 W A bash 2-5028 OFFICE FURNITURE HOUSE, INC. IM W. LAKE ST. PHONE CEntral 6-360? Page 6 Executives' TH E G O LFER S T H A N K the following donors fo r the fine prizes they provided fo r our golf outings: James B. Blaine Paul M. C o rb e tt Bennett H. C rofford J. Philip David George L. Fairbairn Jerry Glynn Ben Kallis E. W . K ettlety Dana C . Lambert Rube Metz M . Glen M iller Robert C. Munnecke Ray L. Odman Chester E. Rieck Thur L. Schmidt John A . Stolp Charles T. W ilt, Jr. They also wish to thank M r. and Mrs. Frank Bennett fo r the splendid entertainment they provided at all o f our season's golf dinners. that means that we are getting weaker in a sense. W e are getting weaker in an economic sense on the home front while our enemy is getting stronger. It seems to me, then, that we are confronted with either wrecking our selves ultimately on the rocks of in flation, or destroying the very system that we are preparing to save by the adoption of such rigid controls that we would be, in essence, a totalitarian econom y ourselves to control the do mestic situation, or the third alterna tive is to find ways and means very shortly o f forcing a basis o f peace in order that we can avoid the catas Real Estate Management Financing Specialists in the Management, Sale, Leasing, Financing and Development of Downtown and Outlying Office Buildings, Business and Industrial Properties L . J. SH ERID AN & CO. I ll W. Washington Street HA. 6-7743 Club News trophe that we will be ultimately con fronted with if wc do not face up to these very unpleasant alternatives. In that connection, I would like to give you some quotation from a book written by none other than M ajor Gen eral Dean who headed the United States Military Mission in M oscow throughout the Period o f Our W ar Alliance with the Soviets. Nobody could know better than he the situation. What does he say? “ If the record up until the end of the war was not sufficient to clarify Soviet intentions, certainly all doubts should have been dispelled by February 9, 1946, when Stalin reaffirmed the doctrine of Marx and Lenin in exhorting his people to extraordinary efforts in the preparation for the inevitable wars which must be expected so long as the capitalistic sys tem exists. “ In a sense, we are fortunate that the issue is so clearly drawn. Never before in our history have we had so much advance warning of the peril which confronts us. Never has it been more important to take preventive measures to avoid the dangers which lie ahead and to prepare to overcome them if they prove to be unavoidable. This is going to require American leadership which is crystal clear as to our own objectives and which is sup ported in pursuit of them by a unified public opinion. Most important, we must adopt a program which is de signed not to defend our American way o f life passively, but offensively, to counteract constructively th o s e forces which threaten it. “ Again, Soviet leaders would prob ably have used the threat of the Red Army with much greater abandon were it not that they know that we still have a strategic air force whereas they have none that is comparable to it, that we still have naval supremacy despite the number of our ships that are inactive and above all that we alone have the atom bomb. Until the Soviet Union has atom bombs o f her own, she will be restrained from crossing swords with those who have and the chances o f obtaining our objective by peaceful means will be enhanced immeasurably if we are prepared to defend our posi tion by force at any point where it is threatened. “ Nothing induces greater restraint on the part o f the Soviet leaders than a display of strength by their ad versaries.” I have just one more quotation— Winston Churchill, that great British wartime leader, in an address before the Parliament on February 23rd of this year said: “ The best chance o f pre venting war is to bring matters to a head, to come to a settlement with the Soviet government before it is too late. This would imply that the western democracies would take the initiative in asking the Soviet for a settlement. It is idle to reason or to argue with the communists. It is, however, possible to deal with them on a realistic basis and in my experience they will keep their bargains only as long as it is in their interest to do so, which might, in this grave matter, be a long time once things are settled. “ I said that the possession of the atom bomb would give three to four years’ breathing space, perhaps it may be more than that. But more than two years o f these years have already gone. I cannot think that any serious dis cussion which it may be necessary to have with the Soviet government would be more likely to reach a favorable conclusion if we wait until they have got it, too. W e may be absolutely sure that the present favorable situation cannot last.” W hat I have said on this last sub ject is entirely out of my field o f mon etary banking and credit control. But I cannot think in terms o f a domestic economic social problem when every problem you look at, whether it is taxes, whether it is appropriations for the military or foreign aid, or whether it is inflation, goes back to Russia. That is the controlling factor at the present time, not only of the foreign situation, but o f our domestic situation. You have been very patient and I pos sibly have talked too long. What I have said has been off the record and I appreciate very much your attention. I thank you! (The audience arose and applauded) OFFICE SU P P LIES PRINTING r—ENGRAVING STATIONERY.. . BUSINESS FOMAS . . . CARDS LETTERHEADS . . . ENVELOPES. HORDER’ S, me. • STOKES IN DOWNTOWN CHICAGO HUmMiR2-4740
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