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F o r m F. R. 5 1 1
TO
FROM
REMARKS:
February 9, 1943.
This memo and charts were left with
Mr. James F. Biynes by Chairman Eccles
(re his radio address tonight).

CHAIRMAN'S OFFICE



©

February 6 # 1943

PSIIDING 1BMAHDS FOR 5&GB INCREASES

Demands for wage increases in coal mining$ meat packing* aircraft# w W M f * clothing and on th© railroads, will have to be dealt with
within th® next few weeks* tfnles® these and other demands for wage and
price increases are denied, the Eeonoisie Stabilisation Program will be
seriously threatened* Thereroustbe no retreat fross the "Little Steel*
fomula* Recent increases in the cost of lining are not an adequate
justification for general increases in wag© rates and the initiation of
a new wave of oost^prioe increases.

1* Granting increases will not solve the basic economic problem!
it will only intensify it* Higher wages will not gi^e labor the ability
to obtain sore goods and services* The war is taking goods off th®
shelves and higher wages cannot put thera back. It is econoaai© nonsense
to attempt to increase the siae of the pay envelope when the si*e of the
market basket is bein^ out down* Larger pay envelopes will intensify the
pressure upon the disinishing supply of goods* Larger pay envelopes will
lengthen the lift of oomrodities that have to b© rationed and encourage
the growth of black isarkets* Higher wages will breed higher costsj higher
costs will breed higher prices* To continue a poliey of appeasement to*
ward any group in the community will not stop the soraable for ad vantage j
It will merely sake the scramble more frensied* All this activity Is
futile$ because# in the very nature of this situation* nobody ©an realize
any real advantage*
Pressure for higher isoney reamaaeration ought to be firmly resisted, from whatever quarter it coses* Labor is no exception*

2* The aeooipfcnying chart shows th© movement of weekly
earnings in factories# compared with the oost of living* A glance at
the chart is enough to show that workers taken as a whole have realised
an Important gain over their pre-war eeonaade position* V?hil© part of
this §ain is attributable to the movement of workers into hlgh-wage
industries and to longer hours of work* increases in wage-rates are an
important factor* We could afford these gains as long as it was possible
to increase production of civilian goods* By now it has become evident
that the demands of war xaust reduce civilian standards to bed-rock* Wage
rates have become adjusted to levels which presupposed a continued abundant
flow of consumer goods* How that th© flow has been curtailed, consumers*
budgets mart be curtailed as well* But the problem of iOT$obili*ing wag©
ineosse on the soale that is now necessary is very difficult* We must call
upon workers to redue© their desands upon th© available supply of goods
by paying taxes and by saving. The present situation is difficult enough!
further wage increases will make it impossible*



3. Surely the answer to den&nds for higher pay is more work*
Even in return for aore work, we should not pay out funds that ean be
spent ourrently* Every ounce of additional effort ought to be devoted
to m r production* W© cannot hope to inereas© civilian supply, but w©
ean hope, by increasing the intensity with which we use our lftbor supply,
to minimize the inevitable reduction. In return for more work, w« can
give deferred claims upon the future supply of goods that Aaerican industry will "be able to produce when the war is over* But these do*
ferred claim should be paid only in return for more work* Otherwise
employers will be confronted with higher costs • They will be forced
to reeovw those costs frero the- Government or f?m the consuming public
in higher prices•
More work means a longer working -*?eek* Proposals for increasing
the length of the working week have been ia@t with the objection that hours
of work in aiott war industries are already long and those essential
civilian industries which have a short work-week are already working at
the limits of capacity imposed by available tsaterials, plant, and equipment. This objection overlooks the fact that a longer work-week in such
essential civilian industries would release workers now employed there
for use in other areas where labor shortages have be©oa© acute* The
most important of these areas is agriculture* There is general agreo&ent
that a partial solution to the labor supply problem in agriculture lies
in raisinr wage rates in those areas ishere they are inequitably low* But
this is only a partial solutioni it will no* slow up ©r reverse the laoiresient fro® th© fields to the factories unless we lengthen hours and enable
the factories to get along with a smaller labor supply* Diminishing the
industrial tasand for labor is our enly hope of maintaining our agricultural labor supply*

4« In ay opinion these arguments are decisive against the
demands for wage increases which will ecm& before you during the next
few weeks* If other considerations mdm it necessary to grant &TS? eoncessions at all, they should be made in the form of savings bonds or in
soise other fons not available for iass«diat@ expenditure* But it would
b© better to tak© a fins stand, for the duration, against any inereas©
in rates of pay^est by employers to workers* The Government should guarantee
not merely organised labor but all consumers against further increases in
th© cost of living, particularly in the eost of food* the link between
increased costs to consumers and increased costs to employers should be
broken*
On© m y of breaking th© link would b© to givs- th© housewife,
whenever she buys food# savings stamps in an amount sufficient to eoEip
her family for the rise in food prices that has occurred since wages were




frozen in September. The value of stamps given with each dollar's worth
of purchases would b© increased, if it became impossible to prevent
further increases in food prices* The rise in prices that has occurred
since September would require th© issuance of a 5f£ stasap for every
dollar*s worth of food purchases• Unlike the present savings stas$«*
th»#© staisps should not " e rftdftenablo usctil after the w&r# fh@ eost
b
to the &«werraftent of stioh a proposal, while ooasiderabl®, would »# a
relatlvsly s®all prioe to pay for easing the social and political tension
that is being created by the competitive demands of agriculture and
organised labor upon the consumer* I *a aware of th© administrative
difficulties which this proposal involves but I believe that thev could
be worked out*




F e b r u a r y 8, 1943
CHANGES IN SELECTED PRICES, WA.GES A1TD LIVING COSTS

June 1939 January 1941 May 1942 December
1942 3/
Yifholesale prices (1926=100) z/
Farm
Other than farm and food

75.6
62.4
80.2

80.8
71.6
84.3

98.8
104.4
95.7

101.0
113.8
95.9

Percent rise to December 1942 l/ from
June 1939 January 1941 May 1942

34
82
20

25
59
14

100
23
63

71
22
41

17
3
14
4
9

Farm prices (1909-14=100) s/
Prices received
*"
~
Prices paid
Ratio of prices received to paid

89*
127
70

104
128
81

152
152
100

178
156
114

Cost of living (1935-39=100) z/
Food
Clothing
Rent

98*6
93.6
100.3
104.3

100.8
97.8
100.7
105.0

116.0
121.6
126.2
109.9

120.4
132.7
125.9
108.0

22
42
26
4

19
36
25
3

64.2/
| 24.17
37.3

68.9/
§ 27.74
39.0

83.1/
37.46

89.9/
$ 39.78
44.0

40
65
18

31
43
13

Factory Wages Z/
Average hourly earnings
Average weekly earnings
Average hours worked

V

November for average hours, hourly and weekly earnings.

2/

Bureau of Labor Statistics.

3/

Bureau of Agricultural Economics.




42 .a

-

2

FACTORY EMPLOYMENT AND PAYROLLS
BUREAU OF LABOR STATISTICS INDEXES, WITHOUT SEASONAL ADJUSTMENT, 1939 • 100
PER CENT

PER CENT

MONTHLY

350

350
-

300

-

_
250

1

—
-

1
1

-

250

7
-

200

300

-

200

-

150

-

PAYROLLS /

-

_

_
-

£2 b-^^EIIPLOYMEl IT

100

100

•

50 —Nr?

50
-

1932

1933

1934

• o n tr ttmnmts tr TM rtMnu. turn srsnm




1935

1936

150

1937

1938

1939

1940

1941

1942

1943

1944

WEEKLY EARNINGS ANO COSTS OF FACTORY WORKERS
1939 • 100

PER CENT

PER CENT

180

180

170

"- 170

160

160

150

150

140




WEEKLY EARNINGS

90
80

1939

1940

1941

1942

WHOLESALE PRICES
1926 •100
MONTHLY

PER CENT

*

180

180
170

i ~7r\

\ (V

I

160

160
150

150

•

140

140

—
i

130

—

_

_

130
120

120
/

I

110
100

i

1 10
100

.

90

90
'

80

\ v

70

/"""'

\K^*+

s^l

80

J

70

ALL COMMOCITIES

\J FR
AM

60

60

50
40

50
40

w

OTHf[R THAN f •ARM PROC)UCTS ANO FOODS

30

30

1936

1938

$OAM0 of 9ovta*o*$ or rue narau *nt*vt



tr$rt*

1940

1942

1944