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X·- 690fSu.,..~··~e-•..;n~
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I.hi!:i Draft.
MEMORANDUM
FOR THE INFORMATION AND GUIDANCE OF THE FEDERAL
RESERVE BANK OFF!CERS AND ASSOC!ATED COMNiiTTEES
OUTLINE OF A PLAN FOR
~HE
CONSERVATION 01 CREDITS
Men in the councils of the Nation appreciate already that the
national
greatest/problem of today (because of the war} i$ the Conserva~ion of
Googs ang Services.
It is recognized that this can be brought about only
through cooperation and moral suasion.
Hence the prbpQsals hereinafter
outlined are fraffied with that object in view.
phrased in a different way
~~ght
The problem above stated
very truly be said to be the gigantic
labor problem of releasing workers and raw
~aterials
for war industries
by gradually curtailing unessential operations and doing it in such a
way as to cause as little hardship as possible to the workers or thair
effiployers.
This is by no ILeana an easy problerr. for it n:eans a very ...
general redistribution of labor.
In connection with the Problem·it will probably be necessary
or desirable:
(1)
To coordinate whereever practicable with the war savings Comndt-
tees already launched in the different States and utilize those organizations (State, County, and Municipal) so far as possible.
(Z)
To preach the gos:pel of the "Conservation ot goods and services"
until it is understood even though it means ringing the changes upon itj
and
harr~ering
(3)
it in as the first great essential.
To urge that all public or private expenditures for nonessential
improvenents be curtailed or postponed.
This rreans sooner or later
.I·
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(a)
An appeal to Congress.
(b)
An appeal to the Governor and Legislature of ever State.
(c)
An appeal to the Mayor and Council of every City.
(d)
An appeal to the public utility or public service com~issions of every State and City not to require extensions
improvenents or betterr.~nts.which can be deferred till ··
after the war 1 and an urgent request that they refuse
authority for increrr~nts to capit~l for iffiproverr~nts which
they ~hink can be safely deferred.
To urge all corporations~ copartherships~· and individuals not to
{4)
tr.ako. in.provements which require new capitJ:l unless they be absolutely
necessary.
As the Governrr~ntis war needs can be net both by economizing
(5)
services on the one band. and by
of
l~bor
incr~asing
production or the productivity
on the other* it is well to urge an increased production
~long
the more essential lines:
(a)
By the effiployment of worr~n in all classes of industry
where their labor can be used to adv~ntage and especially
wherever nen whose labor is required can be released thereby.
(b)
By increasing the productivity of ~n's labor through
discussions and treaties with the representatives of
organized labor or by adopting u~thods which will 1 during
the period of the war 1 result in the n4ore continuous en.ployuent of labor or its productivitr.
lt may be pointed out that great progress along both• these lines has been
rrade in European
(G)
c~ntries.
Waste or·unnecessary consumption of bread 1 meat~ sugar~ and other
foodstuffs should be
stopped~
and'to that end there should be the closest
cooperation with the United States F.ood Administrator.
•
•
- 3 ·:.;.
In the saire way the consumption of other necessary sta;pies; such
as coal, fuel oil; gasoline, etc4, s:1ould be restricted wherever possible..,
to the end that these necessities shall not be used for unessential purposes.
In these
~atters
there should be the closest cooperation with the
Fuel Administrator.
(7)
It is important, and it should be borne in mind that the dis-
charge of workers from one kind of employment, unless some scheme is
devised for their reemployment in son:e necessary work, will not have a
benefic~al
effect but will be harmful.
In other words, it must be rerr.em-
bered that labor is fluid only to a limited extent and that workers can
not be shifted quickly from one point to another or !rom one kind of work
to another withqut a certain amount of enforced idleness and pecuniary loss.
(8)
While it nay be argued that
so~~
kinds
of
e~ployrnent
are unes-
sential to.the conduct of the war and therefore should be restricted, it
II.ust at the sa.&e tin:e be admitted that if 'the articles, however unessential
to our needs, are exported, let us say to soue neutral country from which
we are obtaining necessary articles, it is an industry which may properly
be encoura~d,
thro~gh
{9)
not at the direct expense of necessary industries, but
absorption of scarce materials or available labor.
It will probably be f~nd necessary to adopt so~~ sort of ap-
plication blank# in the nature of a "certificate of necessity" for all
proposed
c;:~.pita.l
expenditures and require all National and State banks
when askeQ. to lend money to corporations, copartnerships or individuals,
to Q.emnd suc}l certification, it being understood that this would not
•
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apply to seasonal or com:r:ercia:. borrowing 1 but only t.o extensions of
credit for iiLproven:ents 1 bettera.9nta, and other capital expenditures.
by a
Con-~j_t.t.oe
appointed for each State anrl 1 if approved 1 :passei on with
that Cormii ttee 1 s recbtrn:endation tb the Federal Reserve
(10)
Ba~1k
The Federal Reserve Bank of the District sho:;.ld
:i!'. i,urll, p~ss
upon such requests for credit) and send them to the Federal
for final decision.
of tbe District.
Reser~e Bo~rd
The Federal Reserve Board 1 acting through
i~s
Com-
rrdttee on Capital Issues will issue its license or foriL of approval 1 if
approved, or will decline to do so.
The
Corr~ttee
on Capital Issues will in all probability pass
only upon requests in excess of $250)000 and will probably delegate to
the District
Corrn~ttees
the authority to rrake final decisions subject to
appeal to it in cases involving srraller arr.ourits.
( 11)
1'he cattying Wi Of this progra!IlLe presupposes and n:ut:lt have
to be successfu1
/the hearty coopetation of b~nks and bankers, ~erchants and aanufacturers 1
little and big all over the countl!Cy; with the object in view of dacent:ralizing the work and arresting the
fl~od of ~plications
so far
as
possible
at their source.
February l, 1918.
Paul M. Warburg
) Corrn.i ttee of the
Chairn.an
) Federal heserve Board
Frederic A. Delano)
on
Charles S. Hanllin ) Capital Issues
Allen B. Forbes of N. y.)
) Advisory
Chairrr:an
Henry c. Flower of
)
Corrnd ttJe
)
Kansas City
on
F. H. Goff of Cleveland ) Capital Issnes
@FedFRASER