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Un iv e r s it y o f Mic h ig a n ANN ARBOR S H I R L E Y W . S M IT H VICE PRESIDENT AND SECRETARY April 3, 1943 H o n o rab le M a r r in e r S . E c c le s , Chairm an o f th e Board o f G overnors o f th e F e d e r a l R es e rv e System , W a s h in g to n , D . C* D ear M r. E c c le s : I have ju s t been re a d in g i n ‘'F in a n c e " f o r M arch 22 a resume o f an address y o u r e c e n t ly made i n C hicago to th e In v e s tm e n t B ankers A s s o c ia tio n . May I s ay , f i r s t , t h a t w it h a lm o st a l l o f t h i s speech I h e a r t i l y a g re e * T h ere seems t o be no " p o l i t i c s " i n y o u r t h in k in g * The p l i g h t o f one c o n s id e ra b le c la s s o f p e o p le , among w h ite c o l l a r w o rk e rs in g e n e r a l, under p re s e n t c irc u m s ta n c e s seems t o be ig n o re d by e v e ry b o d y * The i n s t i t u t i o n a l em ployee?- - t h e f a c u l t i e s o f c o lle g e s and u n iv e r s i t ie s b e in g an o u ts ta n d in g e x a m p le , - - is ?i t seems to me to d a y ?th e f o r g o t t e n man* The f a c u l t y and th e c l e r i c a l and o th e r s im ila r em ployees o f th e U n iv e r s it y o f M ic h ig a n , f o r e x a m p le , to o k two s u b s t a n t ia l pay re d u c tio n s e a r ly i n th e 1 9 3 0 * 8 , and many o f th e s e s a la r ie s have n o t been r e s to r e d to w hat th e y w e re * I am sure I do n o t need t o say a n y th in g ab o u t th e h ig h e r c o s t o f l i v i n g w h ic h i s s t i l l go in g u p . In s t i t u t i o n s c an n o t m eet th e demands f o r in c re a s e d pay as i n d u s t r i a l concerns may do* T h is i s o b vio u s and I do n o t need to e la b o r a te i t * The r e s u lt has been , a t th e U n iv e r s it y o f M ic h ig a n , t h a t ou r non^academ ic and n o n - c l e r ic a l fo r e e has been d e p le te d by th e wages p a id a t th e W illo w Run p la n t and any num b e r o f o th e r w ar p la n ts i n D e t r o it and in Ann A rb o r and v i c i n i t y We o r d i n a r i l y have seven n ig h t watchmen to p a t r o l o v er s i x t y m onum ental b u ild in g s and numerous s m a lle r o n e s . Now we have two o r t h r e e * The ran ks o f j a n i t o r s , m e c h a n ic s , la u n d ry w o rk e rs e t c . , e t c . , are o n ly a s k e le to n a f a p ro p e r o r g a n iz a t io n * Our H o s p ita l^ w h ic h has n o rm a lly o v e r a thousand b e d s , is now much red u c ed i n a v a ila b le c a p a c ity because o f d e p a rtu re o f d o c to rs and n u rs e s to th e Army and Navy and o f o th e r em ployees to th e wait. p l a n t s . The above f a c t s w it h re g a rd t o i n s t i t u t i o n a l problem s a re n o t p a r t i c u l a r l y p e r t in e n t t o y o u r rem arks as q u o te d * They do i l l u s t r a t e , how ever, a phase o f i n s t i t u t i o n a l problem s to d a y H o no rable M a r r in e r S . E c c le s , # 2 A p r i l 3 , 1 943 The i n s t i t u t i o n a l problem w h ic h i £ d i r e c t l y r e l a t e d to y o u r rem arks and to th e t a x a t io n p o lic ie s o f th e Governm ent l i e s i n th e p l i g h t o f th e s a la r ie d man who has no hope o f any in c re a s e i n com p ensation b u t who i n w h a te v e r d i r e c t i o n he tu rn s o r l i s t e n s , is c o n fro n te d w it h W ash in g to n m easures and n o is e ab out how much lo o s e money th e r e i s i n th e c o u n try w h ic h m ust be ta x e d i n o rd e r to a v o id i n f l a t i o n * O b v io u s ly th e "W ashington th e o ry " is c o r r e c t , I t h i n k , b u t i t is u t t e r l y u n f a ir th e way i t is b e in g a p p lie d to men w it h f a m i l i e s who n o t o n ly d o n ’ t have any more money th a n th e y e v e r h a d , i f as much, b u t who m ust use more and more o f i t e v e ry day t o l i v e . I lo n g ago made t h e sug gestion t o v a r io u s economic com m ittees t h a t some a d a p ta tio n to in d iv id u a l incom es s h o u ld be made a lo n g th e l i n e o f excess p r o f i t s t a x f o r c o r p o r a tio n s , b u t th e r e p ly was alw ays t h a t such a p la n w ould be to o d i f f i c u l t to a d m in is te r * May be so* But i t w ould n o t be any more d i f f i c u l t th a n th e t a x problem s w h ic h [th e w h ite c o lla r w o rker has to m eet to d a y * I f somebody i n power ic o u ld g iv e him some c o n s id e r a tio n i t w ould h e lp h is m o ra le tre m e n d o u s ly * I r e p e a t t h a t i t seems t o Ae v e ry one w it h any sense m ust a g re e w it h y o u i n y o u r em phasis on th e d an g ers o f i n f l a t i o n and th e n e c e s s ity o f p la n n in g and a c tin g a g a in s t th e s e d a n g e rs * I have a p e rs o n a l s ta k e i n i t as w it h i n two y e a rs a t th e o u t s id e I s h a l l r e t i r e on a p e n s io n . I w ant my p e n s io n d o l l a r to have re a s o n a b le p u rc h a s in g p o w e r. I had a son i n th e f i r s t w o rld w a r; I have a n o th e r son i n t h is o n e. I w ant t o do and e x p e c t to do my f u l l s h are i n th e w a r e f f o r t t o d a y . I p u t o v e r 30$ o f my 1942 s a la r y in t o w ar b o n d s . A n y th in g t h a t f o s t e r s th e id e a t h a t nobody is b e in g f o r g o t t e n and u n d u ly lo a d e d w it h th e w ar e f f o r t o f to d a y I t h in k w i l l h e lp i n t h i s e f f o r t . C e r t a in l y , ho w ever, th e w h ite c o l l a r w o rk e r and u n iv e r s i t y and c o lle g e f a c u l t i e s i n p a r t i c u l a r a re n o t c o n t r ib u t in g t o th e i n f l a t i o n p e r i l # I m ust beg y o u r p ard o n f o r t h i s more o r le s s ra m b lin g in t r u s io n on y o u r la r g e r a f f a i r s . I do b e l i e v e , h o w ever, t h a t you a re an h o n e s t and w is e man in a p o w e rfu l p o s it io n and on th e w hole I f e e l j u s t i f i e d i n p o in t in g o u t one o f th e ways i n w h ic h F e d e r a l t a x a t io n to d a te i s i n my o p in io n u n f a i r and consequ en t l y u n fo r tu n a te * Yours v e r y fro SWS/EH J$J>- -VNWXwfc. y tZ-vJU > 7o — '' ? V f C r - t , ^~0 April 6, 1943» Mr. Shirley W. Smith, Vice President and Secretary, University of Michigan, Ann Arbor, Michigan. Dear Mr. Smith: This is to acknowledge your letter of April 3* á s I have never been and am not now in politics, I trust that anything I may have to say publicly will not give off the odor of political thinking, in which I do not ever consciously indulge. I am well aware of the plight of the white-collar workers. They are feeling the impact of the war with particular force. Sacrifices in wartime cannot be equally distributed and shared. Certainly all those who go to the fighting^fronts, those who lose their lives, are obliged to make the greatest sacrifices. Innumerable businesses inevitably suffer. There is no legislative way so far as I have heard to spare the whitecollar groups. It is true, of course, that national income is redistributed in a time like this by being in effect skimmed from the top and spread around to mi Ilians who were out of work and living below a decent sub sistence level before. That has happened in every country at war. I think your own personal record as you relate it is admirable. I take exception only to your appended remark as to whether men elected and appointed to Washington have the idea that they have been chosen to preside over the liquidation of the white-coTlar salaried men and women. You must bear in mind that the government people, from the Congress on down to the lowliest clerks and messengers in the many departments, belong to the whitecollar salaried groups whose incomes are fixed and have been but little if at all improved. If anybody had reason to want to protect the white-collar groups, this8great mass of government workers, whether elected or appointed, would have. Sincerely yours, M. S. Eccles, Chairman. ET:b
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