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February 11, 1939 It is pro ^o : an i ^is be made of certain fundamental ti ^rter objective of billion national inco d upon the longer tfl objectivill em lo; ily r national come. Specific r. c?d on the findings of this study will be made. The sis will be focused on two broad subject : I - T a rt l rient of existing deterrents to private enter id the t y be . to remove to stimulate recovery. II- Ar.tlci2:>r>.uory action that may be taken to vent the ernerfence of factors that would endr.nrer orderly and sustained to full recover. Basic Questions In order to determine the necessity r itude ditional r t ttain the stated objectives, it is first desirable to er three ic ruestlo 1. al In1 What level? of .ction, consunotion and ail (a) irit billion full . into recount , (b) probable :rlce c ? 2. What level of e Income, t3. :it v:ould prevail vith r.n into recount probably Drice How far, on the b ro national lnoome likely to lnc d ! in t ne::t tv:o ycrrs? I A. ,:.l3tinr Deterrents to Private Enterprise and Their Ro:.iovrl. I' L^tr;;"-i;i;- Industries. ich industries and branches of r riculture hrvo lagged in the recover , d vhy? specific t B (other than those indicated belov:) might - 2 - be done to lnci the ani cs/oitres in: ) the n 12J (b") t h e u t i l i t i e s , ( c ) b u l l d i r , (d) fields? 2. : of r le Sxcese Ccoaclt; . To what extent is the existence of idle plpnt acting P S a deterrent to new capital expenditures? uoh increase in consumer de. an :sorb idle c?pncity in Tarloue fields? How far can an increase in consumer c e brc out by: a. an excesc of £ove> enditures over receipts? b. chi si in the tax structure, c. c " i n the t;r:e3 of rover iture^? 3. :Trfhnt elements of our Fod^ . tat or local tax structures, • en rty, ii 1 or cor DP tfl , ^olla 1'-, rtloularly effects on cor. ion or new li ent? -lific ' " collection of itlmulate c^ dt it? Duld t' .olitlon or re-trlction of c t securitl .. rivate lti 1 •:•: enditures? • . __ ' r- v .:.. . ve oin of new In T^sr? .ir. B bee red t o ill >ion, technolc - , Lgn 1< ' a acted ures ar if it exists? 5. * r a t e of -nee, , e t c . , than we now Bcorery? to meet this situation, Av 11-- j l l l t y of cr.^it- -sofar r.s the difficulty in securing loans rnd uity ioney for expansion to b< t • 'ent, to extent could this be remedied \ a. provision of better un ollitiee, b. c anges in the Securities 2::c Act or regulations of the S.E.G., c. the establishment of r new type of fovernment lyinc agency, d. the R.F.C., e. f. g. 6. c as In st.^te laws governing investment of insurance and trustee funds, further reductions in mortgage and other Interest rrtes on loans to ultimate borrowers? further modification of laws and re"ul^tions relating to loans and lnvestmento "ono^ollstlc Practices. Is the existence of nonopolistlc elements, such as price, production and patent controls, retarding investment or consumption? If so, how mip;ht such controls be removed, modified or offset? 7. Prices. Are present price relationships and trends acti' deterrents? what action might be ta-:en with reference to prices in certain fields thrt would stimulate recover:'? 8. Profit ::rrr:lns. In which industries, if any, are inadequate or excessive profit margins actinr as deterrents? 9. Labor. Are particular wage rates actinr as deterrents? Are certain labor practices, such as trade union apprenticeship and membership requirements, and output controls, acting as deterrents? What action in reepect to these factors might be ta>en that would be in the interests of both labor and of recovery? Is labor legislation, such as the Wages and Hours Act and t 1 Labor Relations Act, actinr as a deterrent? 10. Agriculture. Insofar as present agricultural price and productlo policies and tl-ryover of agricultural commodities are act_ i deterrents, what changes or additional measures appear appropriate? 11. Market in? Leri sl^.tion. Insofar as existing le tion in the aarlcrt fi 'leldfl with reference to retail price maintenance, fair trade lawe, etc., acts as a deterrent, w: ohangefl appe .r)riate? 12. Private debt burden. Are excessive debt structures as 1. the rail* %>! li B id utilities, :r suited debt BLI In the marl field, retardl wr investment? How r.i• v.t deterrent effects, if any, arising fron these sources be ~oder?ted? 13. Social Insurance. To rlo-t extent, If at all, does t e present social inBY a ro . constitute P drac on recovery? What c ea ight i in the re Ml 1 t-ir.lrv t o contributory principle, would aid in the ttaliment of e r national income? 14. Government Co-petition. To what e. , if an:', pirate capital expenditures beinr deterred by uncertainty over the future role which li to be played by Government 'ctivlties of ~ture competitive wi1 iv te enter ? To 1 % extent could this deterrent, if it exists, be lessened c: oved by a further clarif icrtion of the j'ov^mrr.pntf s policy on these tterst 15. Forelrn Dcvc-lo^r.ento. What are the exist in eterrents to recovery arising fro . conditions abroad? How night there deterrents be all od or removed? How can our foreign trade be lncrensed? 16. Budget. How far, if at all, i c t\ a existence of rr. unbalanced bud I thologloi 1 deterrent? If the deterrent exist3, is it sufficiently serious to warrant p.n increase in taxes or a decrease in expenditure G, or both, in order to balance the budret? To what e::ter.t could this deterrent, if it exists, be noc^ifind by the introduction »ivate business concepts Into Gk>ver nent recount./ ? 17. Other Jovcrmaentrl -0011019 3. To what extent, if at all, have other governmental policies in t fiscal, monetary, railroad, utility and other fields not mentioned above, aoted to deter Ion • term investneiio? - f( 5. Other Measures to Stliulpte Recovery 1. Fiscal Policy. (a) What seasurefl could the rovcrnnent trie, either Inc Lently, or in cooperation vith state d locnl goYei ~s, to increase [•overnment lnT68t«entfl I.. self-liquidating enterprises without conpeti: prirate industry and without adding to the budgetary deficit? (b) How 1 t the naxi::u~ volume of desirable inreet . local bodies be secured vith the ilni thai a the Fedf p 1 JU ' i ett 2. ::-. z ry Policy. Cr - further steps be taken in the field of r; polioy to stimulate recovery? II THREATS TO ORDERLY AND BU8TAZXED RECOVERY 1. IIonopollHtlc Practices. In v'.ich industrinr and at what level of production will monopolistic praotioea and controls result : in excessive r>rlce advances? or ay this be prevented or relieved? 2. Bottlenecks in Productive Capacity. I . v ioh induatriefl and at what level of production will be the laok of adequ^t^ plant oa \icities retard e Biont ly this be prevented or relieved?* 3. Lr.bor Shortafreo and Disputes. At vhpt points I it level of increased production will the laok of adenunte skilled labor retard expansion? Hor >e prevented or relieved? VHiat devices promise .ore amioable relations betv:een employers and labor? 4. Over-Production of Inventories. Kov; far might the collection and publication of current information on inventories, new rnd unfilled orders, etc., lessen the danger of overs.ccur.iulation of inventories! - 6 5. Speculation. Are present controlr. sufficient to prevent disastrous stock and corjnodity speculation? 6. Adverse Developments Abroad. What steps can be taken to protect our economy from possible adverse developments ansocipted with: a. foreign exchance developments, b. foreign trade and exchange policies of forelrn governments, c. wpr, d. international cp^itpl movements, e. business recession abroad? 7. Deficiency of Consumer Buying Power. Is there a danger that recovery will be checked by r. deficiency of consumer buyinr power (i.e., by the tendency of savinrs to Increase faster than the demand for nev; capital)? If so, whrt action can be taken to forestall this danger? 8. Excessive Swings in Consumer Credit. Is there a danger that the orderly character of the recovery will be thrertened by excessive chrn'-e^ in the outstandlnr volume of consumer credit? 9. Faulty Tlr.inr of Monetary and Fiscal Operations. (a) Is there a danger that recovery nay be checked through hifher interest rates? What beprinc does this have on Treasury and Federal Reserve monetary policies ^nd Tre?sury financing policies? (b) How rapid a reduction in net government expenditures would be consistent with a continuation of private recovery? Ill SUPPLEMENTARY QjUESTIOHfl 1. Danrer of Inflptlon or Deflation. Is there any foreseeable d?nrer of (a) Inflation, (b) deflation rrlsinr from the fiscal and monetary policies currently beinn followed? that changes in our monetar:;, banking and fiscal mechanisms and - 7 controlF, cnn be nfi.de to Improve the adequacy and effectiveness of monetary policy and the timing of fiscal operations to avoid lnflrtion and deflation? 2. Public Credit. a substantial increase in the public debt have any important effect on the public credit? 3. Public Debt Burden. What is the burden and incidence of the public debt? 4. Trend of Interest Rr.tes. What are the more importrnt considerrtions bearing on the future couree of long term interest rates? 5. Trend of Price L^vel. What would be the most desirable trend in the general price level in the next few years? 6. Changes in 3r.sic Underlying Conditions. To what extent have the outlets for private capital expenditures and the possibilities for sustained full employment been affected by the slackenin-- In the grovth of population and by other modifier.ions in basic underlying factors conditioning our economic growth?
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