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EXECUTIVE OFFICE O F THE PRESIDENT
OFFICE FOR EMERGENCY MANAGEMENT

OFFICE OF ECONOMIC STABILIZATION
WASHINGTON, D. C.

November 20, 1942
JAMES F. BYRNES
Director




Dear Marriner:
Enclosed are the minutes of our last Board meeting.
The next meeting will be held on Friday, November 27, at
eleven o!clock a. m.
We shall discuss:
1. Government policy with respect to the
use of subsidies in holding down the cost of
living.
2. Probable necessity for rationing
essential civilian goods.
Some members of the Board have already submitted
memoranda dealing with these subjects. If you have not done
so, we should all be grateful for an expression of your view,

Sincerely yours,
Directcr

Hon. Marriner S. Eccles,
Federal Reserve Board,
"nashington, S. C.

MINUTES OF BOARD L1EETIHG

The Economic Stabilization Board net on Friday, November 13, at
11:00 A* Ii.
Present:

The Director (presiding), Mr. Morgenthau, Mr. TSickard,

Mr. Jones, Lliss Perkins, Llr. Smith, Mr. Eccles, Mr, Green, Mri Flanders,
Mr. Johnston, Mr. Davis, Mr. Hamm (Acting Price Administrator), and Mr.
Lubin (Economic Advisor to the President).

A memorandum previously submitted by Secretary Morgenthau, dealing
•with the relation between fiscal policy and the control of excess purchasing
power, was read.
Llr* lilccles also read a memorandum which he had prepared, dealing
with the same general subject matter.

Secretary Jones stated his intention to sot forth his viows similarly
in a future memorandum.

In general, he agreed with tho genoral proposals for

compulsory savings dealt with in Secretary Morgenthau1 s memorandum.

He also

stated a preference for some form of sales tax, probably on a graduated basis,
as suggested in the Treasury memorandum.
Miss Perkins questioned Mr. Eocles1 statement with reference to the
length of the work week.
dustry to industry.

She pointed out that the problem differed from in-

The Fair Labor Standards Act does not, she pointed out,

prohibit a work week in excess of 40 hours, simply requiring the payment of
overtime on that basis.

Mr. Davis agreed with the observations made by Miss Perkins. He
also expressed the opinion that any change in the present basis of overtime
pay would increase the number of labor disputes, disturb production, and




- 2perhaps lead to -wage increases which would give the country an excessively
rigid post-war wage structure.

Those demands for wage increases would be

occasioned by the fact that millions of workers in munitions industries are
now \vorking many hours of overtime; and without some change in tho basic wago
rate, repeal of tho present 40-hour overtime statutes would cause a sharp reduction in their wookly earnings.
Secretary Lickard emphasized -che importeinco of encouraging tho propayment of debt by farmers, and of recognizing tho necessity for maintenance
and repair- on tho farms during tho post-war period.

The Director expressed the opinion that the Board could, with the
guidance of the Treasury, formulate a common fiscal program, backed by the
united support of all groups represented on the Board. This program could
then be submitted to the President, and, after consultation with the Congressional leaders, to the Congress.

Secretary Horgenthau and other members of

the Board endorsed this suggestion.

Mr. Sriith felt that thu Board now had an opportunity to fit all
separate economic problems together in a single pattern. He felt that, in
considering fiscal policy, we should think not merely of the immediate economic future, but of tho years ahead.

Mr. Groon emphasized the nocossity of talcing into account tho necessary economic transition from war-timo to peace-time in tho future. Ho also
stated that, in fixing tho length of tho work wook, it is important to maintain
the officioncy of the worker. Ho reminded the Board that a recent British
survey had demonstrated that production tended to fall off after about 54




of work by tho individual employee•

- 3Mr. Johnston expressed the opinion that business recognizes the
necessity of both higher taxes and compulsory savings. He also felt that it
would be desirable to aim at financing 50% of the cost of the war on a "payas-you-go" basis. Ilr. Johnston also emphasized the desirability of obtaining
united support for a single fiscal program.

Ilr. Flanders pointed out that it is the wage-earner who has the
greatest stake in preventing inflation. Pie also stated that it would be
desirable to aim at a tax program which would riake our fiscal policy at
least as stiff as that of othor countries, like Great iritain and Canada,
which are also attempting to deal with the problems of a war economy.

He also

expressed the view that manpower was the key to many of our problems, including that of the civilian oconoir^r.

The mooting adjourned at 1:50 P.M. to moot again on Friday, November
27th, at 11:00 A.M*




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