Full text of Papers of Benjamin Strong, Jr. : Correspondence with the Commerce Department : Secretary of the Conference on Unemployment, Commerce Department, E. E. Hunt, 1921-1923

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DEPARTMENT OF COMMERCE
OFFICE OF THE SECRETARY
WASHINGTON

".1,N...4L4.-1,

SntILA),.

September 17, 1921.

Dear :Ir. Strang:

Allow me to sand you a word of
ccngratulation on your membership in the President's
Conference on Unemployment.

The Conferalue will

open in Washington on September twenty-sixth, at ten

O'clock in the rooms of the Department of Commerce.

Please send us such suggest ions

or recaests fcr further information as you may wish.

Yours very sincerely,

Edward Eyre Hunt,
Secretary, Conference on Unemployment.

Mr. Benjamin Strong,
Gov. Federal Reserve Bank,
New York, N. Y.

M-I*2113

DEPARTMENT OF' COMMERCE
OFFICE OF THE SECRETARY
WASHINGTON

September 22, 1921.

No(N°

WLE)DCI

Mr. Benjamin Strong,
Do.
15 Dassau Street,
New Xork Oity, D.
My dear Mx. Strong:

The Advisory Committee of Economists
and others have been preparing material for submission
to the Conference on Unemployment.

We ho ,e to have

this materil mimeogra-nhed and ready to mil on Priday.
In the hope that you may wish to read this' matter before

the Conference opens, I shall mil n copy to the same address

that to which this le ter goes today.

The Economic Advisory Committee, as

you no doubt

know, has been appointed in advance of the

opening of the'Conference by enlarging the Economic Advisory Committee of the Department of Commerce.
Very truly yours,

14.5

EH-RR

Secret1

Eclard Eyre Hunt,
Conference on Unemployment.

DEPARTMENT OF COMMERCE
OFFICE OF THE SECRETARY
WASHINGTON

September 22, 1921.

A.C1<:NOWLEDUZID
1921
SO) 2

Dear Mr. Strong:

I am sending you by this mail a
brief transcript of information prepared
by the Advisory Committee to the Conference
on Unemployment.

Yours very sincerely,

)

Ed-ard Eyre Hunt,
Secretary, Conference On Unemployment.

Mr. Benjamin Strong,
Governor,2edeal lieserve Bank of ner York,
Lew iork City.
EEH -RR

September 23, 1921.

My dear Mr. Hunt:

have for acknowledgment your letter of September 22,

enclosing brief transcript of information prepared by the Advisory
Committee to the Conference on Unemployment which you were good

enough to send me for perusal prior to the Conference meeting.
Thanking you,

Yours very truly,

Edward E. Hunt, Esq.,
Secretary, Conference on Unemployment,
Department of Commerce,

Washington, D. C.

GB:MM

ACKc,kY

DEPARTMENT OF COMMERCE
OFFICE OF THE SECRETARY

3-1 3 1921

WASHINGTON

October

1921.

r!1 ralr

rk.K.

Mr. Benjamin Strong,ERL4i),AAN
tESE;, f
Governor, Pederril Reserve Bank,_
New Iork City,
De' r Sir:

of Agiv YORK

At a meeting of the Committee on OrTrni-

zrtion f,nd Programs of the Iresidentuula.x..--

ence eniinameat., it wasiled to add a

Trade to the present Committees c) the Conference.
4
The membership of this Committee is:
Mr. Joseph H. DePrees, 01v7u.irman.

Mr. Benjamin Strong.
Mr. Julius H. Barnes.
Mr. William H. Butler.
r. Charles Piet.
G. W. Mclidden.
John H. Fahey.

The Conference assembles in the TOOMS of
the Deprtment of Com:fierce at 1:JO o'clock on

77-ond7, October 10th, 1921.
Your

very sincerely,

AmaraJ.,yre
,_,ocretary, Conference on Unemplo:
EEH-RAR

'3759731\11,403 7.0 11431,41'51Acria
YgiAT3H2.112. ',Mils '10

THE PRESIDENT'S CONFERENCE ON UNEMPLOYMENT
DEPARTMENT OF COMMERCE

ACKNOWLEDGED

WASHINGTON

OCT r 1921

!I. S.

u- October 3, 1921.

rong
-overnor,
eserve bank,
15 Nassau Street,
New York City, N. Y.

Mr. B9,njamin
Jederal

Dear Sir:

Enclosed herewith is complete rep ór
of the Economic Advisory Committee which is
forwarded to you for your information and
guidance in connection with the Conference on
UnemployMent.

Very truly you

Edward Eyre Hunt,
Secretary, Conference on Unemployment.
EEH:MB

14.0t released for publication)

ADVANCE SUMMARY
of

REPORT OF ECONOMIC ADVISORY CONIMITTEE
to the

PRESIDENT'S UNEMPLOYMENT CONFERENCE

ECONOMIC ADVISORY COMMITTEE

William S. Rossiter, 'Chairman,
formerly Chief of the United
States Census; President of
the Rumford Press, Concord,
N. H.

John B. Andrews, Executive
Secretary,American Association
for Labor Legislation, New York.

George E. Barnett, Professor
of Statistics, Johns Hopkins
University, Baltimore.

Sam. A. Lewisdftn, Banker,
New York.

Otto T. Mallery, Member Pennsylvania State Industrial Board,
PhiladelPhia.
Samuel McCune Lindsay, Professor
of Social Legislation, Columbia
University, New York.
Wesley C. Mitchell, Professor of
Economics, New School for Social
Research, New York.

E. S. Bradford, Statistician,
New Rochelle, N.Y.

Henry R. Seager, Professor of
Economics, Columbia University.

Bailey B. Burritt, Executive
Secretary Association for Improving the Condition of the
Poor, New York.

Edward R. A. Seligman, Professor
of Economics, Columbia University.

Henry S. Dennison, Manufacturer,
Framingham, Mass.

Sanford E. Thompson, Industrial
Engineer, Boston.
Walter F. Willcox, Professor of
Economics and Statistics, Cornell
University, Ithaca, N.Y.

Davis R. Dewey, Professor of
Economics and Statistics,
Massachusetts Institute of
Technology, Cambridge, Mass.

Leo Wolman, New School for Social
Research, New York.

Carroll W. Doten, Professor of
Economics, Massachusetts
Institute of Tedhnology.

Allyn A. Young, Harvard University,
Cambridge, Mass., Chief of the
Division of Economics and Statistics, American Commission to
Negotiate Peace, 1918-1919.

Edwin F. Gay, President New
York Evening Post, New York;
former Dean Graduate School
of Business Administration,
Harvard University.
Clyde L. King,, Assistant Professor of Political
Science, University of Pennsylvania, PhiladelPhia.

September 22, 1921.

\L'ip
October 10, 1921.
COMMITTEES OF THE PRESIDENTS' CONFERENCE ON UNEMPLOYMENT.
1.

ECONOMIC ADVISORY COMMITTEE (Room

Sam. A. Lewisohn.
Otto T. Mallery.
Samuel McCune Lindsay.
Wesley C. Mitchell.
Henry R. Seager.
Edwin R. A. Seligman.
Sanford E. Thompson.
Walter F. Willcox.
Leo Tolman.
Allyn A. Young.

William S. Rossiter, Chairman.
John B. Andrews, Executive Secretary.
George E. Barnett.
E. S. Bradford.
Bailey B. Burritt.
Henry S. Dennison.
Davis R. Dewey.
Carroll T. Doten.
Edwin F. Gay.
Clyde L. Ring.

COMMITTEE ON ORGANIZATION AND PROGRAM (Room

713).

Samuel McCune Lindsay.
Clarence Mott Woolley.
Julius H. Barnes.
C. H. Markham.
Thomas V. O'Connor.

Henry M. Robinson, Chairman.
Edward Eyre Hunt, Executive Secretary.
Matthew Toll,
Miss Ida M. Tarbell.
Charles M. Schwab.
Mayor James Cauzens.

UNEMPLOYMENT STATISTICS (Room

708).

Matthew Toll.
Clarence Mott Woolley.
W. L. Burdick.
Carroll W. Doten.
Allyn A. Young.

Henry M. Robinson, Chairman.
T. T. Mitchell, Executive Secretary.
James A. Campbell.
Mayor James Couzens.
C. H. Markham.
Miss Mary Van Kleeck.

713).

EMPLOYMENT AGENCIES AND REGISTRATION (Room

707).

Mortimer Fleishhacker,
Julius H. Barnes, Chairman.
William M. Leiserson, Executive Secretary. Clarence J. Hicks.
Jackson Johnson.
Miss Elizabeth Christman.
M. F. Tighe.
Bird S. Coler.
Henry S. Dennison.
Joseph H. DeFrees.

Mayor Andrew J. Peters, Chairman_
Otto T. Mallory, Executive Secretary.
Charles M. Babcock.
Bird S. Coler.
Mayor James Couzens.
Bascom Little.

705).

PUBLIC WORKS (Room

Ida M. Tarbell.

Matthew Toll.
Col. Arthur woods.
Evans Toollen.
Bailey B. Burritt.

- 2 -

6. COMMUNITY, CIVIC, :1ND PERMANENT MEASURES

Col. Arthur Woods, Chairman.
Bailey B. Burritt, Executive Secretary.
Mayor Andrew J. Peters.
Mayor James Couzens.
Bird S. Color,
William M. Leiserson.
Charles P. Neill,
Bascom Little.
Ida M. Tarbell.
Mary Van Kleeck,

Elizabeth Christman.
Salmon P. Halle.
Julius H. Barnes.
Matthew J. Won,
Clarence M. Woolley.
Edmund Haynes,

7. MEASURES BY MANUFACTURERS. (Room
James A. Campbell, Chairman.
W. H. Stackhouse Chairman.
Gordon Lee, Executive Secretary.
William M. Butler.
Mrs. Sara A. Conboy.
John E. Edgerton.
Samuel Gompers.

R o'cir. 719).

709).

Clarence J. Hicks.
A. L. Humphrey.
Jackson Johnson.
7.C, Proctor.

Charles M. Schwab.
J. A. Penton.
R. M. Dickerson.

8. MEASURES IN TRANSPORTATION (Room 727).
Edgar E. Clark, Chairman.
Charles P. Neill, Executive Secretary.
C. H. Markham.

Raymond A. Pearson.
W. S. Carter.

9. MEASURES IN CONSTRUCTION (Room 721).
Gen. Richard C. Marshall, Jr., Chairman.
John M. Gries, Executive Secretary.
Winslow B. Ayer.
John Donlin.

John H. Kirby.
Bascom Little.
Ernest T. Trigg.

10. MEASURES IN MINING (Room 722).
John B. Ryan, chairman.
David L. ring, Executive Secretary.
John T. Cannery.
W. K. Field.
John L. Lewis.
J. Moore (alternate).
E. M. Poston,
Miss Mary Van Kleeck.

John P. white.
Samuel A. Lewisohn.

-3MEASURES IN SHIPPING (Room 706).
Thomas V. 0,Conner, Chairman.
R. A. Lundquist, Executive Secretary.
E. S. Gregg, Executive Secretary.
Wm. S. Brown.
James F. Gibson.

John A. Penton.
Capt. John H. Pruett.
R. H. M. Robinson.
Charles M. Schwab.

PUBLIC HEARINGS (Room

704).

Samuel McCune Lindsay, Chairman.
John B. Andrews, Executive Secretary.

PUBLICATIONS (Room
Miss Mary Van Kleeck, Chairman.
Samuel McCune Lindsay.

gib).

William M. Leiserson.
Miss Ida M. Tarbell.

FOREIGN TRADE (Room 612).

Joseph H. DeFrees, Chairman.
William M. Butler.
Paul A. Palmerton, Executive Secretary. John H. Fahey.
Julius H. Barnes.
Benjamin Strong.
George McFadden.

AGRICULTURE (Room 618).
Raymond A. Pearson, Chairman.
W. L. Burdick.
John H. Kirby.

-0 -

Al=C:=1

GENERAL INTRODUCTION.

This report of the Advisory Committee gives in three main parts
I.

U.
III.

A statistical investigation of the present State of Employment.
Suggestions for Immediate Relief,
Suggestions for Permanent Progress.

Each part is summarized in its first pages so that reference to its full
findings may be more readily made.

PART I. STATISTICAL SURVEY.

What is the size of the unemployment ,problem?

There is no body of complete

and reliable statistical data anywhere available to answer the question with
entire satisfaction.

In the absence of such accurate data, the best information

that could be Obtained has been gathered and an estimate has been based upon this
information.

The Committee has had the cooperation and advice of a number of the

leading statisticians Of the country and believes that the estimate it has made
Closely approximates the facts.

The Committee finds that in the early part of September there were 3,500/000

persons out of work in the United States, excluAve of laborers on farms.

It is

convinced that the greater part of this number are idle because of the present

industrial depression, though it is well aware that seasonal variations and other
factors making for irregularity of emnloyment are accountable for a limited amount
of unemployment now as at all times.

It is significant that these figures indicate a more serious situation for the
coming winter than existed in 1907-08 or in 1914-15.

The problem is of grave though

not necessarily of unmanageable proportions.,

During times of normal business activity there is a residue of employable
persons out of work.

Through savings, family assistance, and local institutional

relief, the community. carries this residual group of unemployed; but even a moderate

addition

to. this number out of work creates a burden too great for the community's

ordinary resources.

The much greater addition to the load in a period of sevel'e-,

business depresssion like the present must be measured not merely quantitatively.
The problem differs, not only in degree but in kind.

It becomes, at each re-

current downward curve of the business cycle, a national problem demanding not
only local relief measures, not only State and Federal consideration, but concerted voluntary action of a preventive character on the part of employers.

PART II.

EMERGENCY RELIEF MEASURES.

Part II deals with immediate measures for the revival of industry and the
relief of unemployment.
in others.

The situation is serious in many communities, less so

As winter approaches every.community ought to be prepared and whatever

agencies - public or private - that are willing to cooperate in the relief of
unemployment, should unite in a common program.

The experience of the past has

been studied with the help of local organizations, so that.specimens of unified
community programs which have proved successful, can be locally adjusted to suit
the needs of every individual community.

The mistakes of the past, and mistakes

that are almost inherent in emergency measures when the crisis is not planned for,
can be avoided and effectual remedies can be emphasized from

the

start without ex-

perimentation with the ineffectual.

The suggestions of Part II consist of plans

for advancing and increasing public works,

of stimulating wise programs by public

and private charitable and civic agencies, of strengthening family welfare agencies,
of creating and directing special community and municipal activities1

Most im-

portant of all is the consideration of what private employers are doing to spread
employment, to undertake repairs and improvements, to manufacture wherever possible
for replenishing stocks.

Even the Federal Government can help in emergency measures

not only through public works but in its fiscal policies in their effect upon the
:stimulation and revival of. industry.

for an educational

campaign'

This part of the report furnishes the basis

which the Conference may inaugurate on a national scale

to start local activities founded on sound principles and grounded in the wisdom
rather than the folly of past dealing with industrial depression and business reviv

PART III.

PERMANENT PREVENTIVE MEASURES.

Pare III pays particular attention to seasonal and cyclical unemployment.
The whole problem includes also the unemployment due to shifting from job to job
and to the so-called "unemployable."

The former is being given more and more -

attention by Personnel and Employment Divisions through their efforts to reduce
labor turnover and will likewise be favorably affected by all sound measures
reduce seasonal irregularity.

The latter is a social problem more closely allied

to the study of social defectives than to commercial and industrial studies.

To make progress towards more regular employment we can count heavily upon
the business managers and financiers of the country in the far sighted interest of
their own concerns, to overcome many of the forces now making for unstable conditions.

They will increasingly think and plan in terms of the business cycle.

Bt they must be much better and more promptly informed than they now are as to the
essential facts of production;stocks, and other industrial and commercial factors
as a basis for .sound judgment and good business planning.

Their efforts should

be given,encouragement and their successful practices effective currency through
permanen

bureaus of the Federal Government.

At the same timepublic work of many

sorts must be organized well in advance and executed so as to complement rather thaI
compete with private undertakings.

Permanent or fundamental measures, no less than those of emergency relief, mus,
be inaugurated in time of depression.

More time is needed for their effective

organization, and, furthermore - and this appears to be decisive - human nature is
such that if organization for permanent progress is not begun at the time of most

critical
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1
Federal Reserve Bank of St. Louis

unemployment, it will be deferred, and again deferred, and never be begun.

Ztt
The

following pages

contain the

71-tct-4-4.1t,o4)

outlines of principles

already established

by practical experience for meeting the problem both of seasonal and cyclical
fluctuations of unemployment.

Most of this preventive work--if undertaken

promptly with the same determination and good

planning

that have characterird

the efforts of American business men in other directions--can best be inaugurated
through the voluntary efforts of the employers of labor.

In addition it is

recommended that careful consideration be given to the possibilities of unemployment

and "depression insurance".

The various measures which constitute

the following brief constructive program are respectfully submitted in the

belief that they would stimulate new interest in making employment more regular
and save the country from some of the extreme consequences of irregular productiol'1.

I. Essertial Informatiom

4
5.

L Statistics of prices
Factors affecting probable demand for or consumption of
specific articles
Other significant cycle figures.

II.

long Pang Planrirp of Thiblin Works

To be adjusted to Fluctuations
Potential Volume
Methods Recommended
Machinery Recommended

Industry.

III.

IV.

Schedule for MitiirAtion of Seasonal Irregularities of Employment
Irregularities in Demand.
Irregularities in Production
3tep.s for Permanent Betterment of Cyclical Unem:iaoyment
1.

At the Crest:
Timsly Statistics
Restrictions on Credit Expansion
(6) Counterbalancing Devices
(4),Beduction of Aggravating Factors

At the Trough:

Timely Statistics
Expansion of Credit Resources
Counterbalancing Devices
Reduction of Aggravating Factors
3.

Ta3 Uhole Cycle:
Citizen-Consumer Education
Development of Foreign Trade
(0) Adjustment of Immigration
(4) Administration of Taxes

V. Unemployment and "repression Insurance".

Essential Information

We are of the opinion that one of the chief causes of industriad.epressions
is to be found in the lacL of information available to business men as to certain
essential facts connected With their general lines of business.

The far-sighted

business man who desires to forecast the future and to guide his action accord,
.

ingly is often compelled to rely upon pure guesses or arbitrary estimates.

,44

Were he to be provided with the actual facts he would often act very differently from what he now does.

Stabilization of

business and the avoidance of

recurring industrial depressions and crises are in no small measure dependent

upon a more complete knowledge of the factors affecting the business situation.

(Refer to the ten points under this head--"I.

Essential Information"--

in preceding outline).

We also believe that this information should not only be collected but

such a way as

disseminated in

to became available to the ordinary business man.

Special study should be given this problem of circulation.

view

it is

With this end in

suggested that additional facilities for the coordination and pub-

lication of all

this

information be provided, as for example, in the Bureau of

the Census or in some similar Bureau of Statistics to be created for the
purpose.
II.

Lang Range Planning of Public Works.

works_Municipal, State and Federal, should be contracted in
years of industrial activity and expinded in years of depression to accomplish
the following purposes:
To revive private industry and to check industrial depression and
unemployment;

To prevent the demand of public works for materials and lator
from conflicting with the needs of private industry;
In general to stabilize industry and employment.
2.

Methods Recommended for Expanding and Contracting Public Works in Ac-

cordance with the Condition of Private Industry and alployirent:

Defer at least 10% of the average annual public works expenditures of federal,
state and municipal agencies.

depression

Execute the deferred accumulations in the year of

Which occurs once in about 10 years.

- 19 This does rot mean, however, that
be deferred more than two years, in

any specific

piece of public works will

Most cases, only one

year (See full report).
4

In order that plans may be quickly available when needed, do not defer approprit
ation for planning and engineering

any wor'le authorized.

Consider the effect of a federal bond issue as a lean in aid of municipal

public works in years of depression, such loans to be made

on4

Upon proof of national -"employment and industrial depreoeion, as shown
by industrial and unemployment statistics;
Upon proof of the soundness and utility of specific public works proposed;
Loan to be made to municipalities at a rate of interest not less than that
paid by the Federal Government; (Note British policy);
Advance preparaticn of engineering plans, which must be thought out and
periodically revised

order to be ready for execution when the period of de-

pression arrives (see practice of Indian Government), otherwise, great waste will
result;

Work to be executed upon a "commercial" basis and not a "relief" basis (see
Appendix 2 of full report).
3.

Machinery Recommended:

EMIFEAL_
(1)

Fortify the United States Employment Service to enable it to obtain regular

Unemployment Index f±gures so that knowledge may be had when public work should
be stimulated or retarded, based upon reliable and complete employment statistics;

7Orr

20 -

Formulation by the Director of the Budget of a change in method in making
appropriations by Congress for roads, rivers and harbors, public building,-s, and

other public works, so that the percer_tage of the total authorized appropriation

to be expended in any one year may be determined by executive order, based upon th
condition of private industry and employment.

In years of normal industry, a

minimum program; in a year of depression, a maximum program of public works resulting from previous accumulations, being thus effected,

Application of the same policy to the public works of states, municipalities
counties, etc., the aggregate of which is about 6 times the volume of federal public
"works.

This can be best secured through suggestions from a central federal agency
Incorporate this central federal agency as a part of whatever Department may

in future be charged with the duty of executing public works (Department of Public
Works, or Interior Department).

Pending such legislation the central federal

agency should be immediately formed and temporarily located wherever the President
may suggest.

Functions of Central Federal Agency.

- To advise the President whem federal public works Should be expanded or contracted, basea upon its studies from statistics collected
by other governmental agencies (Bureau of Labor, Statistics,
Bureau of Mines, U. S. Employment Service, Department of Commerce,
etc.);

- To advise the President when the expansion or contraction of local

public works would serve a national policy of reviving private industr3
and checking unemployment, or of preventing interference with private
industry during periods of normal business;

To suggest methods of synchronizing local with federal public

works for the same purposes.
STATE AND CITY MACHINERY.
State

and

City Agencies are recommended in order to

apply

principles of expansion and contraction to their public works.

the same

(For examples

see Emergency Public Works Commission of Pennsylvania; and California Board
of Control plan, created 1921, in appendix)
Comparison of Potential; Volume of Public 'Works with Wage Loss in

Private Industry during Year of Depression:

Estimates of Otto T. Mallory of the Industrial Board of Pennsylvania
measure the lifting power of public works as one-third the dead weight of such
a depression as the present.

P/0

An estimated possible $1,650 millions of

additional public works wages in a year of depression is contrasted with

estimated $5,000 millions decrease in wages in private industry in a year of
depression.

(See Charts in Conference 'Room and appendices)

The best time, and possibly the only time for successfully inaugurating these measures is at once, during the period of depression.
III. NOTES ON SEASONAL EMPLOYMENT.

Seasonal unemployment varies so greatly as among different productive

/016

activities that no general program of mitigation should pretend to be more
than suggestive.

Under the best arrangements we can imagine at the present time there will
be a residuum of seasonal unemploy.ment due to agricultural needs but it may

easily prove that this residuum is not serious enough to call for special
relief measures.

P2 -

Progress in these three subjects is so difficult but so profitable that
special committees ought to be formed for the purpose of assisting it, and the
assays proposed by the Federated Engineering Societies should be forwarded.
Some of the suggestions that have recently been made hint at a few of tLe
possibilities.

In building trades
Allowance for small margin of profit for both capital and labor
during winter months.
Deyelopment of methods of conducting work in cold weather.
Planning bf work to provide indoor operations in cold and
stormy weathel,r.

4. The development
pmployer.
5. Organization of

of a nucleus of permanent employees by each
local clearing houses for coordination of

building activities.
In coal mining
I.
Storage of coal at the mine
Storage of coal by the consumer
Varying selling price in different seasons to encourage off
season purchases.
Improved scheduling of coal cars
Improved methods of production in mines

Specific examples of sub-heads 1, 2 and 3 should be given to make the
advertising effective.

Figures can be obtained without much difficulty with the

assistance of several National Associations which have given some attention to
these subjects.

dustries

In particular statistics of the wage levels in different in-

which vary in their seasonal nature might be very illuminating.
,------IV.

NOTESSM CYCTJCAt TINFMPLOYNT,NT

Consumption may be capable of infinite increase, but not at an infinite
ratp

Expansion cannot exactly find and match that rate.

Then it largely exceeds

it a variety of strains are set up which at some point, A, (see chart "A

Typical

Cycle") begin to overmatch the strdngth of the structure and eventually bring on
prostration.

On the up wave we are,--taking the country as a whole and especially

the ultimate congumer;--stocking up.

On the down wave we are drawing from stock.

It is at the speculative froth on the wave of prosperity that we want to aim our

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strongest
Federal Reserve Bank of St. Louis

efforts.

- 23 The normal sequence is subject to accidents such as war, natural calamity,
(Icrop, failure, earthquake) and revolution in political control, in technical
advance, or in consumerst demand, and in one part or another of the business
structure such accidents are continuous.

They can not be specifically guarded

against but are best met by building up the resistance of the Whole structure
the avoidance of the strains of over extension and prostration
For individual enterprises as for public undertakings safety lies in planning.,

If most of them asre planned well ahead we could expect a healthy swing to

the cycle, broken only by occasional calamity.
Immediate causes of fluctuations in the purchases of the consumer and of
the merchant-manufacturer may be indicated as in the charts C and D.
dealer; consumer and dealer").

("Consumer;

Each of the forces which induce purchase or

abstention is of course a complex of several

socio-economic

influences.

It is just Where the screws must be put upon inflation that citizen-education
on cycles will do its best service.
measures.

Bankers

will

Congress will be tempted to inflationist

need even more real courage at that point than during

the discouragements of depression.

We Must cease the meaningless use of the word

"Pessimist" and certainly cease to be afraid of being called

one.

The present surplus of gold, Whose corrective international flow is Checked

for some years to come, offers a peculiar temptation to a false boom which
would set -us back in international trade and bring on a diuick and deadly depression.

One seldom recognized, but important, aggravation to the over-stocks durinç.
a slump lies in the "goods an order,"--the impending inventory.

Bankers can help

this situation by demanding an account of impending inventory as they would of
contingent liabilities, thus bringing the need of slid:, records before the business man.

The directing heads of corporations should scrutinize each of the projects
put before them by their engineering staffs.

They will find 10% (and a larger

percentage as the turn approaches) which can be completed as to investigation and
planning, but postponed as to execution, with profit to the company and community

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asSt.well.
Federal Reserve Bank of
Louis

A24To effect a distribution of labor more

accord with the need for it and

to gain first hand information as to employment conditions a Federal coordination
It must be recognized as a job for men of

of State Labor Exchanges is essential.
first grade ability.

Excess of varieties results in slow-turnover goods and high inventories which

during a slump are a peculiar aggravation, all the way along the line from raw
materials to retailers' stocks.
Planning and Budgetting both force specific

attention

upon the future.

their use becomes habitual, unbridled guessing gives way to more careful estimates to guesses guided by all available facts,

It must not be forgotten that the discouragement during depressions has to be
counteracted; without intelligent direction which locks well beyond the feelings of
the moment, withheld work will be withheld through depression and show up just
after it's needed.

Both harm and good can be done by drives at high rates and prices.

The more

we come to know of cycle forces and facts the more net good can be gained from such
drives.

Certainly recovery has been often delayed by attempts to defer liquidation

too long.

The understanding of the people must be the force and will be the only.guarante
behind any such wide-flung efforts as are here scheduled.

Without it results

will

be sporadic.

In flush times "Save your Overtime" should be a slogan.

A well distributed export trade has usually been a stabilizer.

A ,lorld war

has just now placed every country in about the same conomic hole; but in the
future it is likely that again some countries will be gaining while others are in
the trough.

Our present immigration law suits present conditions excellently, but in times
of more normal activity it may not.

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Federal Reserve Bank or
of St.diminished
Louis

by exemutve order

Congress should set standards to be increased

4.m f"

17:

Page 25.

MEASURES FOP PERMANENT BETITRYENTOF CYCLICAL UNEMPLOYMENT.

Possible
......

A TYPICAL

CYCLE

__---,,

ble C'°\1"

1\551''

If the crest is

reduced the trugh

will be less deep

..........
ci

It is probatJ.;, -andesirable to flatten out the line of business activity to tht

7traight line of growth.

It is certainly impossible to do so.

Some unemployment might result from the curve labelled. "desirable" but the

evils arising from such unemployment might be negligible.

It is not the wave it-

self but the crest of the wave which breaks and does the damage.

Te shcald the-

fore focus our attention on the =est and on such part of it as we shall have a
reasonable expectation of affecting.
The crest is due to the common belief in the continuance of a RATE of expansion of the country which is too great to be maintained and assimilated.

This

belief induces

Over-estimates of requirements and of future prices leading to

Over-extension of plant
Over-purchase of maA:erials and merchandise
Increasing amount of inefficiency in
(Z) labor force
(b)
Management methods
Over straining of credit resource
These points apply to commerce, industry, transportation and public works.
Credit expansion.

V. ITITR,10PT,orvyfrp t,ND PiCiT

T1egriRmve,7

"Despite the best efforts of industrial managers and public authorities

;

to 11111
144

reduce the amount of involuntary unemployment, it mast be expected that many wageearners will from time to time and through no fault of their own be thrown out of
work.

Thousands of these self-respecting unemployed--with savings exhausted and

with the peculiar discouragement which comes from seeking work without being able
to find it--are likely to so suffer in morale and efficiency as to add permaikent17

to the already large burden of public and private charity.

With the coming of each

period of industrial depression there is a growing demand for some just system of
dealing with this question on a dignified basis".
The Advisory Committee then cites interesting examples of unemployment funds
established by American trade unions and employers and suggests the desirability of

,employ011t

compensation and "depression insurance" to stimulate still wider

he mitigation

of71.--1-

,ent.

-o

'mg

PART TT.rMlfRGENCY PELIEF MEASURE S.
OUTLINE.

Introduction
i.

Program for Private, Civic and Family Velfare Agencies:
Abstract of suggestions.
Community programs.

Governmental Agencies - Public Works:
Cautions
Favorable factors
Volume of public works in 1921
Methods of expanding public works
Rotating employment
European experience
Supporting data:
Winter pUblic works in Canada;
Examples of "Commercial" basis and "Relief" basis;
Private gifts to local public works funds;
Example of rotating employment;
Municipal bond sales, 1921;
Original charts (See Part III):
Chart 1 - Powerlessness of Public 7orks Construction as Ordinarily Conducted to Assist
Industry in Time of :pepression.
Chart 2 - Direct Effect of a Public Works Reserve'
in Checking Unemployment and Reviving
Industry.
art 3 - Aggregate Stimulus to Private Industry
Caused by Pressure of concentration of
Public Works in Depression Year.
Chart 4 - Manifold over of Concentrated Public
Works to Sustain and Revive Industry;
Chart,5 - Comparison of Federal with State and
Municipal Expenditures for Public Works
Construction,

Emergency Measures Adopted by Employers
Part Time Tork;
Rotation of Jobs;
Manufacturing for
Stock;
Repairs and construction;. Unemployment Insurance;
Miscellaneous Measures.

Su gestions Relating to Railroad Pm lo ment and Fiscal
Policies of the Federal Government:
(1)

- 2 -

INTPODUCTION,

The Committee has investigated the experience of governmental
agencies (Public 7:orks), public and private charitable and civic

agencies, including special organized activities of municipalities,

and the efforts of private employers in dealing with emergency relief of unemployment.

We have attempted to summari7e and collate

great variety of experiments, some of them applicable only locally

or in particular 'industries, for the consideration of the Conference

as the basis for a program of advice and information which the Conference might adopt and to which it could give wide publicity as
part of an educational campaign that would stimulate wise local
effort and help local organizations and employers to avoid the
mistakes of the past in the emergency relief of unemployment.

I. Program for -private, civic, and family welfare agencies.

The following suggestions reresent briefly the most notable
considerations which past experience shows must be reckoned with,some things to avoid and others to be emphasized in local contacts
with the unemployment relief problem,

1. ABSTRACT OF SUGGESTIONS.
1.
Unite existing private and public organizations to formulate and -)ut
through a constructive program for your community,

Procure all obtainable facts relative to unemployment in your community
and make these available to all agencies and to the public.
See that there is 4 suitable employment exchange in your community,
4.
Assist private and public employers and labozorganizations to deal with
the problem rather than to have any single civic or family welfare agency or combination of agencies assume the full responsibility,

Bring to the attention of public authorities specific recommendations for
increasing volume of public work,
5,

6.
Urge both private and public employers to distribute labor by rotation in
shifts of three days or more at a time,

Persuade each industry to absorb definite quotas of unemployed,
Urge not only private and public employers but individual householders and
property owners to make improvements, extraordinary or ordinary repairs and general
sprucing up of properties,
Experience indicates that cash or other relief with:ei work to able-bodied
unemployed men is of doubtful value until after every effort has been made to provide eork,

Ordinary problems of relief of 'poverty are increased in times of distress.
Strengthen organizations dealing with these,

Increase resources of local family welfare agencies to enable them to cope
with unemployment which your community can not meet through its industries or
through its public employment,
12. Formulate standards and rules for temporary employment for those out of
work dealing with rotation of shifts; wages to be paid - preference to be given to
resident family men, etc.
Urge relatives and friends to make extraordinary sacrifices to assist their
.own relatives and acquaintances ,vho are out of work,
See that decent sanitary accomodations for homeless men-are made in drder
to differentiate the problems of resident and floating unemployed,
Past experience shows that great caution should be exercised in 0$tablishing
bread lines; soup kitchens; food or lodging without provision for work; bundle dayd
and other such measures.
Discourage migration of unemployed to and from your community,'

Make your emergency and community agencies result in some permanent community
organization to prevent industrial crisis and to deal with them with fore:sight when
unpreventable,

-4-

2. COMMUNITY PROGRAMS
The major effort in mitigating the troubles arizing from unemployment must
necessarily rest on local communities.
It is very important that each municipality or other community Which is con() fronted with unemployment should. have an effective community-wide program.
One of the best and most recent example of possibilities along this line is
the report of the Milwalikee Commission of Fifteen.
The final recommendations in the Milwaukee report may be summarized as
follows:

1: That efforts be made to provide work first for Milwaukee family
men and women andthen for other Milwaukee citizens. Let it be given the
broadest publicity possible that outsiders cannot expect work here until
all local men are cared for.
That the State Employment Bureau should be used for registration
of unemployed, and that all employers be urged. to register jobs.with the
bureau.
That all public works that can possibly be undertaken be started
as soon as possible.
That the county board and City Council be urged to get together
Immediately on the civic center plans;
That the zoning and city planning ordinances should be promptly
defined, but that no advantage be taken of the present emergency to weaken
these undertakings.
That the Garden Homes Co. project be given active and unqualified
support.

That a special session of the Legislature be called to provide for
the 1923 road.. pro grani.

That now is the time to begin private building as we consider
prices will be no lower in the spring.
That manufacturers take advantage of the present conditions to
put their plants in a high state of efficiency.
That owners of houses and other buildings be urged to start at
once all repairs, improvements, etc.
That the City Council arant water and fire protection to buildings
outside the city.
That the Association of Commerce do all it can to induce the
railroads to carry on the track elevation and depression work at this
time and to push same to completion.

That the public should not retrench on ordinary expenditures.

-5-

GOVERNMENTAL AGENCIES--PUBLIC WORKS,

The present industrial situation can immediately be improved by the use of
such of the following measures as the Conference may approve and promote. Your
committee is convinced that the expansion of public works during the winter of
1921-22 constitutes one of the most important measures to revive private industry
and to check unemployment. We therefore recommend to the Conference that methods
be foimulated and measures pressed for the advancement and au,gmentation of public
works for the following reasons:
The best remedy for unemployment is employment;

1,
2.

- Direct employment is given by public works;

3, - Indirect employment is given in the manufactvre of the materials needed;
- The wages paid to those directly and indirectly employed create a demand
for other commodities which require the employment of new groups to proThus public works assist in reviving induce, (See charts attached)
dustry in general;
5, - Public works will serve as a partial substitute for private relief and
charity,

CAUTIONS.

1,-- Public works can not be expanded in large volume on short notice because of the
time required for preparing plans, authorizing loans, selling bonds, etc.
Where city charters or other obstacles prevent, a local campaign for private
gifts to a public works fund should be considered. (See appendix).
- Public works must be on a "commercial" basis, not a "relief" basis, otherOn a "commercial" basis men fit for the work are
wise, west will result.
On the
engaged at usual rates and wages and unfit v,orkers are discharged.
nrelief" basis the workers are chosen primarily because they are in need and
retained whether fit or not;
3. - Only necessary public works should be undertaken which' would ordinarly be
executed at some future time
FAVORABLE FACTORS,

- Many communities are alert to the uses of public works as a check to unemployment and their plans are in process: Philadelphia, Milwaukee, Massachusetts,
California,
- Present favorable market for municipal bonds.

cities

shows many types of public works, successfully
- Experience of Canadian
executed in winter, (Summary available).
VOLUME OF PUBLIC WORKS IN 1921,

Municipal bohd sales for the first eight months of 1921 totaled$688,000,000
as against an average for the entire twelve months of the two previous years, of
$700,000,000.

-6-

MET-ICOS OF ..:XFANDING PUBLIC WOE S RECOMMENDED.

It is recormended that the Depi.rtment of Commerce prepare to inform local
public works officials which types of public works have been successfully executed in winter in Canada, and give reasons for planning additional necessary
public works this winter.

Advise cities to adopt specific program, including semi-public works.
(see Program of Milwaukee.)
Expedite all federal public works by executive order to the full extent
of appraoriations available.
Expend $200,000,000 federal road appropriation immediately through the
agency of the Chief of Engineers, Y. S. Army.
Consider passing federal public buildings appropriation this winter
instead of next year.
6,

"Revive Industry" campaiEn through private gifts for local public works,
and Give Work to the Workers."

"Improve the Iliare To

7.
If these measures prove insufficient, a federal bond issue to be loaned
to the States for local public wors under adequate restrictions.
See Appendix.

ROTATING EMPLOYI1ENT.

In public work arrange that men are employed in shifts of three days or
longer, each, in order that the work may be distributed among a larger number of
persons; example, the City. of Altoona, Pa.
2,
Rotate employment in Federal Navy Yards, reclamation, rivers and harbors,
roads, etc., for the same reason,

EUROPEAN EXPERIENCES.

The Interhational Labor Office, League of Nations, has lodged a 400 page
report with the committee showing wr and present experience of many nations in
checking unemployment through public works and by other means (Summary available),

-77.

(1)

SUPPORTING DATA.

WINTER. PUBLIC WORKS IN CANADA.

Canadian experience in mitigating seasonal unemployment by winter
public works construction and concentrating supply orders in slack
seasons, as contained in a report made for the Canadian Employment
Service by W. C. Clark, in 1919.
SUMMARY
Winter Public Works Construction:
Eight out of 36 Canadian cities reported a definite policy
to lay sewers and water mains during winter months; 13 others
had done so at one tire or another to relieve unemployment;
others to complete contracts. Few reported no experience.

Kinds of Work eported Adapted to Winter Construction:
Sewer work in rock, tunnelling, deep excavating, heavy
cuts and fills in grading work, concrete construction in large
bulk such as heavy bridge abutments, construction work in swamp
and muskeg sections.
The Degree of Success
depends upon the preparations made in the fall for continuing
work in severe weather; also on character of supervision.
Comparative Cost:
Tunnelling

Rock work
Ordinary sewer construction

no difference
less than 25% excess
25 to 100% excess

General Conclusion:
Winter construction apparently costs approximately 25%
more than constiuction in milder weather.

(These figures apply to Canadian cities Which on the average
experience more severe winters than American cities)
Offset:

The additional cost is offset, however, by certain financial advantages. Contractors are able to spread their
fixed annual overhead over 12 months operations instead of
9; to keep their construction gangs together, thus avoiding
loss of time and money; also labor is more plentiful and
cheaper in winter time; also men work faster in cold weather,
although 45 minutes a day is lost in getting to work. Hence,
contractors make lower bids for winter construction.

- 8 -

Some municip.dities find it advantageous to keep some construction
as to have a force available for switching to snow Shoveling and to take care of breaks in mains and the like. Furthermore,
operation of stone quarries and stone breakers or stone cruSners during
the winter months and the distribution of the materials along highways
to be constructed not only offers the advantages of sleigh transportation and keeps teams busy When they would otherwise be idle, but enables
construction tiork to commence earlier in the spring.

gangs going so

Fabrication of many kinds of materials used in public structures can
be concentrated in winter months--fabrication of materials for bridges,
of water pipes and the like. These can be transported to the places
where needed.
Concentrating Goverinental Orders for Supplies:
It is suggested that instead of distributing the purchase of fire
hose, uniforms and many kinds of supplies uniformly over the year, the
seasonal fluctuations in private industry might be "ironed out" in part
In 1913,
by concentrating purchases more into the slack seasons.
1,800,000 of Canadian government printingand $1,036,000 of Dominion and
It is recommended
municipal purchases of textiles were so concentrated.
(See Proceedings of
that this practice be extended as a regular policy.
International Association of Public Employment Services, Ottawa, Canada,
1921).
(2)

Examples of "Commercial" Basis and "Belief" Basis:

In the same city public work las been tried by both methods, with
the following results:
The instructions were that the men to be en"Commercial" Basis:
gaged were to be fit for the work and that the official was to have
the usual power of discharging any men Whose conduct or work was not
The engagement of the men was on the same terms as if
satisfactory.
The standard rate of wages
work were being carried out by contract.
The work:has been well
The result has been satisfactory.
was paid.
done and at a reasonable cost.

the

"Relief" Basis: 'Public work was found for the unem.ployed, first in
laying a sewer, and second, in leveling a playground, etc. The arrangement was made that the Unemployment Committee should pay the wages
of the men employed and that the city Should pay the committee for the
The result
work according to its value as measured by the City Engineer.
Showed that the labor cost the committee 75% more than its value. It
was found that the good workman deteriorated While employed alongside
of the others and instead of his raising the standard of the unemployed to his awn level, the reverse was the case.

- 9 -

The vital distinction between these two instances
is that in the case of "1-elief" works men were taken
on primarily because they werein need and this idea
governed their engagement, their dismissal and the
whole condition of the work.
On the "commercial" basis
it may have been true that the men employed were equally
in need, but they were engaged and dismissed as workmen,
not as men in need.- (From English Poor Law peport, 1909.)

(3).

PRIVATE GIFTS FOR LOCAL PUBLIC WORKS FUND.

Where City charters or other Obstacles prevent public
works expansion, the following suggestions have been made.
SLOGAN.

"Improve the home town and give work to the
workers."
"Revive private industry through useful public
works."
"Let wages paid in public works increase the demand for employment by private industry,"
DISTRICTING AND METHODS.

Use Federal Reserve and Liberty Loan local
machinery.
Central Community Committee to appoint local
"Revive Industry Committee" to raise funds for expenditure
upon local public works. Sum received to be added to community
chests.
Public works expenditures to be supervised by a
committee satisfactory to the committee which raised the fund,
for example by a representative committee of employers, workers,
Contracts to be made in
local officials, and social workers.
accordance 4ith rules governing local governmental unit.
Rotate employment in three days shifts giving preference to
family men and residents, Employ at regular hours and wages.
Use "four minute" men, movies and community singing and other war-time methods in raising funds.

-10 ()4). EXAMPLE OF ROTATING EMPLOYMENT.

(The City of Altoona, Pa.)

The State Employment Bureau of Pennsylvania suggested to the
contractors who were engaged in municipal and county work in and near
Altoona, Pa., that they should give part-time employment to unskilled
and semi-skilled labor in order that the employment might be distributed
among more persons.

A number of contractors agreed.

There a contractor

required 100 men 200 men found employment during a pay-period of two
weeks.

This was satisfactory and the contractors readily agreed to

accept the additional burden of clerical work.

Several large con-

tractors engaged in private work cooperated by using the same method.

Some of the contractors gave men work for three days and then changed
their shift, employing about the same number of men for three additional
days during the week.

Most of the contractors made the change at the

expiration of a pay-period.

Where 500 men had been employed on several

different contracts, employment was found for 1,000 men.

(5)

MUNICIPAL BONa_SALES 1 921

"Commercial ard_Firaricipl

January.

Chromic:le

$ 0,487,896

February..
March
April
May
'

June

July.
August

TOTAL

b1,142,41g
81,817,844

86,710,212
5 6 , 806 , 219
110,269,646
96,931,371
106,291,852
$688,457,458

NOTE:-Municipalities to the number of 311 sold bonds in
August, 1921.

II I. EMERNCY PEASTI-OES ADOPTED BY EIZLOYERS

(For fuller statement with supporting data, see end
of Report.)

sensible manar:eaaent should, ix. for no other reason, purely from motives

Of self-interest feel the necessity in normal times of maintaining a stable and.
continuous working force and. in abnormal times of preventing the demoralization
necessarily resulting from unenTployment.

The cost and. demoralization duo to

shutting down in times of ,depression is often more expensive and demoralizing
than can be foreseen.

But, after all, the relation of management to its organi-

zation is not wholly contractual and where curtailment of production is necessary,

management should, if from no other considerations, from a sense of the human
responsibilities of leadership, and pride of accomplishment, do what it can even
at some sacrifice to mitigate distress amor.::: its working force.

In a way a

managing er-loloyer regards himself and is regarded as the head. of a family.

has asked for loyalty from the workers of his organization and. should in turn

help at a time when they are helpless.
That there are a considerable number that realize these responsibilities
of leadership is indicated by a hasty survey just made of emergency measures
taken by various employers to meet the present situation.
The information was secured from replies to questionnaires sent to various
selected firms and associations.

The details of thfte -replies are contained

in the full report and 250 original letters are on file.
There are three main varieties of such emep:ency measures which have been
adopted.

These are:

First.
Second.
Third.

Part-time work, through reduced time or rotation of jobs;
Manufacturing for stock; and.

Seizing the opportunity to do as much plant construction, repairs
and cleaning up as is possible, with the consequent transfer ofmanY
employees to other than their regular work.

The expedient that has been by far the most commonly adopted is the first,
namely that of part time and totation of jobs.
burden of unemployment and not of preventing it.

This is a method of distributing t..e

Seventy five firma in all used

one or both of these methods,
REDUCED NUMBER OF HOURS PER DAY,

At least sixty five firms of those replying have reduced the hours worked per
day.

Firms with long shifts are in a particularly advantageous position to

alleviate the situation.
REDUCED NUMBER OF DAYS PER TJEEK.

About thirty employers have reduced the nuMber of days per week, among %la=
two-thirds found the four or five day weak preferable while the rest had to content themselves with only two or three days work a week,
ROTATION OF JOBS.

This need not have been accompanied by any reduction of factory hours, but
in some cases this was also done to spread work as far as possible.
Approximately fifty firms which are carrying on the rotation of jobs in order
to relieve unemployment are mentioned in the correspondence in possession of this
Committee.

In addition reference is made to many more who are doing this, in the

general reports sent in by representatives written to in various cities.
There is a wide variety of method in operating this type of distribution of
available

:ork.

In half a dozen cases noted, the work is spread to only a small

number of workers more than is required.

About t-ienty firms divide all or most of

their employees into groups or shifts alternating weekly, and about the same
Amber of firms use split week shifts of two or three days each.
shift of employees worked only one day a week.

In one case a

1 3-

V1hile general success in the main purpose of keepa..;.,g elq:;_oy:,-es in jobs

has been secured in most cases, the re are others '..Lee the work was not

sufficiently standardized to allow operation on this basis. 'khile enrployers
should generally be vigorously urged. to adopt this expedient even at some sac-

rifice, it should 'be kept in mind that the extent to which part time and rotation
measures are suitable and advisable depends on the particular circumstances of

the individual plant.. For exarraple, in some plants where men can go back on
farms no such method is necessary and it might be bad from every standpoint to

encourage men to stay in the vicinity. As indicated in some of the above

replies, in some 'businesses continuity of tenure of any particular job is most
important and, therefore part time seriously affects efficiency.

In others the

handling of the same job by a rramber of men does not brinc.: . ,bout inefficiency

and part time is particularly applicable.

In some cases it is almost certain

that the entire organization will be needed again and therefore management can

r-rtrra to hold it together. Though mainly an expedient part time is an
important method, of mitigating a critical situa'Aon such as the present, one
and. if not likely to demoralize should: be adopted.
t/LaTUFACTURING FOR STOCK.

The second, method. adopted is that of manufacturing for stock. Over thirty

fiiiis report that they have manufactured for stock as far as they could.

The

expression "as far as safety would permit" is frequently used. in the replies

received, indicating that employers felt that there were perils in carrying this
policy too far' in a period, of uncertain business conditions.

Generally speaking,

the older firms, with an established marLet and. a standardized product were

best able to manufacture for stock. That firms did. a great deal to keep their

factories going in this way is shown by the fact that in half of the cases
manufacturing was continued until the warehouse space available was filled.

- 14-

Where conditions permit the most effective method ,of using this expedient

so as to obviate as far as possible the question of financing raw material is to
concentrate on articles that entail a high labor content and a small material
content.

REPAIRS AND CONSTRUCTION.

The third method, that of transferring a part of the force from their

regular work to necessary construction work and to cleaning up, etc., has been
adopted by a number of firms.

Twenty employers mentioned specifically their

efforts to keep their employees engaged by this method.

The character of repairs

and construction work reported are repairs upon operating equipment, cleaning
presses, improvements, alterations, painting, cleaning of windows, installing new
equipment, building part of a plant, "every possible repair", etd.
This policy involves transferring employees to work to which they are not
accustomed.

Aside from assigning employees to repair and construction work,

employers have tried to give workers that are not needed in one department emnlovment in other departments which would normally take on outside employees,
despite the fact that, the employees thus transferred were not experienced in the

work of the department to which they were transferred.
Those firms which have in the past given their employees a broad training
so that many of them could handle a number of different types of jobs in the plan,:

were in the best position to make such transfer when depression forced a layoff
or reduction.

UNINPLOYMENT INSURANCE AND RELIEF.

At least three companies have already adopted unemployment insurance p4ns.
In addition to these, there is reported one joint agreement between a group of
employers and a union which calls for a guaranty in case of unemployment.
The Deering Milliken Company of Wappinger Falls, N. Y., and The Dennison
Mfg. Company conduct the two outstanding insurance funds.

This is entirely aside from the question of compulsory unemployment insufance
WhiCh is still a mootAd. question.

It has been suggested that if employers

should generally undertake voluntary plans of unemployment insurance, it might

atiate the necessity of any Governmental action.
IV,

SUGGESTIONS RELATING TO RAILROAD EMPLOYMENT AND FISCAL
POLT.CIF nF THE FEDERAL GOVERNMENT.

In providing for the payment of any sums due to railroads by the Federal
Government or in any advances or loans to the railroads that may be made by the
Federal Gove rnment, a co ndition should be attached that would make such
funds immediately available in greater part only for new construction, repairs and
outlays that would increase the demand of the railroad

for labor and materials

and thus augment general emplo yment and revive idusti!y.
The postponement of the payment of the interest on the foreign debt due
the United States by European countries until such time as,..;he purchase of

foreign ex.change by suda countries would not add to the fluctuations in prices

Which have sudh disastrous effects on the present industrial crisis and prevent
the revival of foreign trade and commerce would be, in the judgment of this
Committee, helpful in diminishing present unemployment.

PART III.PERMANENT PREVENTIVE MEASURES.
OUTLINE

Introduction
Essential Information:

Statistics of Inventories
Statistics of goods on order
Statistics of production and production capacity
Construction statistics
Weekly earnings and hours by trades and establishments
Employment statistics
Statistics of cost fundamentals
Statistics of prices
Factors affecting probable demand for or consumption of specific articles
Other significant cycle figures.
II.

Long Range Planning of Public Works:
Purposes
Methods for Expanding and Contracting
Machinery Recommended:
.

Federal
State and City

Potential Yolume of Public Works Compared with
Wage Loss in Private Industry in Year of
Depression
Necessity for Beginning Now
Original Charts:
Chart 1 - Powerlessness of Public Works Construction as Ordinarily Conducted to Assist
Industry in Time of Depression.
Chart 2 -.Direct Effect of a Public Works Reserve
in Checking Unemployment and Reviving
Industry.

Chart 3 - Aggregate Stimulus to Private Industry
Caused by Pressure of Concentration of
Public Works in Depression Year.
Chart 4 - Manifold Power of concentrated Public
Works to Sustain and Revive Industry.
Chart 5 - Comparison of Federal with State and
Municipal Expenditures for Public Works
Construction.
(1)

SupnortIT=.: Data,

(1) Emergency Public 7orks Commission of
Pennsylvania, and California Legislation of 1921.
European Experience.
On Deferring Specific Public Works.
Statistics of Municipal 7iond Sales and
Outlays, 1904-1920 (available in
separate typewritten form on request).

Seasons as Causes of Unemployment;
Schedule for Mitigation of Seasonal Irregularities of
Employment:
1,
2.
3.

IV.

Irregularities in Demand
Irregularities in Production
Notes on III. (Seasonal Unemployment).

Business Cycles as Causes of Unemployment;
Steps for Permanent Betterment of Cyclical Unemployment:
1.

Preventive Influences at the Crest: (Point A)
(1) Timely Statistics
() Restrictions on Credit Expansion
Counterbalancing Devices
Reduction of Aggravating Factors

Corrective Influences at the Trough: (Point B)
Timely Statistics
Expansion of Credit Resources
Counterbalancing Devices
Reductional Aggravating Factors

Influences Upon Mole Cycle:
Citizen-Consumer Education
Development of Foreign Trade
Adjustment of Immigration
Administration of Taxes

Notes on IV.

(Cyclical Unemployment).

Unemployment and "Depression Insurance":

Brief Bibliography.

List of Concerns having Plans to Reduce Seasonal Unemployment.
Detail Illustrations of Successful Experiments.

-3-

INTRODUCTTON

One of the tragedies of unemployment is the almost total lack of public
interest in the problem except during.industrial crises when attention is usually
concentrated upon measures for emergency relief,

Constructive public action for

the prevention of unemployment - in so far as this greatest industrial evil is
preventable - must therefore be initikted with statesmanlike vision and courage
during the periods of depression,

The various forms of unemployment - irregular work within employment, and
the results of seasonal fluctuations as well as of the more Spectacular recurrent depressions of the business cycle - demand necessarily various methods of
approach.

If unemployment is to be attacked with vigor and with a prospect of.last-

ing success steps must be taken now
of the next upward trend of business,

to deal with the problem even well in advance
When the next downward phase of the business

cycle comes it will be too late for the application of the most effective means
of assistance,

For intelligent and far-sighted action we believe certain kinds

of statistical information are essential and the gathering of such data
be promptly undertaken.

should

We also believe an effort should now be made to set up a

machinery for the long range planning of public works to mesh in with the fluctuations of private demands for labor,

Probably most promising of all is the opportunity now offered to bring home
to the public mind the significance of the business cycle and to enlist the individuE,
enterprise of business managers - singly and through trade associations - in thr,work
of regularizing employment within their own establishments,

- 4 -

The follo.ing pages oontain the outlines of principles already established by practical experience for meeting the problem both of
seasonal and cyclical fluctuations of unemployment.

Most of this pre-

ventive workif undertaken promptly with the same determination and
good planning that have Characterized the efforts of American business

men in other directions--can best be inaugurated through the voluntary
efforts of the employers of labor.

In addition it is recommended that

careful consideration be Liven to the possibilities of unemployment and
"depression insurance."

The various measures Whidh constitute the

following brief constructive program are respectfully submitted in the
belief that they would stimulate new interest in making employment more
regular and save the country from some of the extreme consequences of
irregular production.
I.

ESSENTIAL INIFORMATION.

We are of the opinion that one of the chief causes of industrial
depressions is to be found in the lack of information available to
men as to certain essential facts connected with their general
lines of business.

The far-sighted business man *ho desire

to fore-

cast the future and to guide his action accordingly is often com-

pelled-to rely

upda

be provided with
from

pure guesses or arbitrary- estimates.

the actual

at he now does.

Were he to

facts he would often act very differently

Stabilization of business and the avoidance of

recurring- industrial depressions and crises are in no small measure

dependent upon a more complete knowledge of the factors affecting the
business situation.

We also believe that this information Should not only be

collected

but disseminated in such a way as to become available to the ordinary
business man..
tion.

Special study should be given this prob/em of circula-

With this end in view it is suggested that additional facilities

for the coordination and publication of all this information be provided, as for example, in the Bureau of the Census

or in Eoxe similar

Bureau of Statistics to be created for the purpose.
114. knowledge of existing inventories or stocks on hand in every

particular line of business would be of the greatest assistance to
producers in deciding When the time had come to take in sail.

These

statistics aught to include not alone merchandise, but also equipment.
In a more or less adequate way they are now being collected by a few
trade associations.

It Should be the endeavor of all trade associa-

tions to present full and accurate statistics for the trade as a shole,
published, at frequent intervals.

It is only in times of stringency that information of goods an
order is ordinarily demanded from the business men by the banks.

It is

desirable that these statistics should be furnished regularly as a
matter of information When applying for credit, and such statistics
classified by trades.ought to be included in the financial statistics
regularly issued by the banks of the country (See Chart A2).
Statistics of production are now collected in part by the
Census and in a very few cases at more frequent intervals by other
departments of the government.
by trade associations.

In some cases they are also published

Few of such statistics are either sufficiently

authoritative or sufficiently frequent to be of much use.

If both

accuracy and timeliness were achieved these figures would be of the
greatest possible value.

- 6 -

4.onstructiah statistics way be sub-divided into at least five
Railway construction, mining construction, industrial con-

catagories:
struction,

construction

of dwellings, and public

works.

With the

partial exception of the first catagory they are now almost non-existent
or at all events lamentably deficient.

Yet an accurate knowledge of

such facts is of the greatest value for purposes of forecasting the
future.

An attempt is made to collect some weekly hours and earnings
by the Federal Department of Labor and by sane of the state bureaus of
Most of these figures, however, are published so

labor statistics.

infrequently as to be of relatively little use.

These figures give

4 valuable indication of the buying power of ultimate consumers.

By employment we mean not alone under-employment but also overemployment.

In other words, the figures ought to give a picture of the

situation in boom times, \then the crest of the wave is near the

In this respect the published figures leave mush to

breaking point.
be desired.

By this is meant the statistics of the fundamental or essential
elements in the cost of producing basic materials.

The figures would

have to be based ixpon broad studies of extraction and production processes.

We have in price statistics an almost limitless field of investigation.

Figures out to include vholesale as well as retail

prices and present prices ought to be presented not only in themselves

but in comparison

with

past prices.

For only in this way can any

conclusions as to relative trends of prices be secured.

-7.9.

The special factors will be perhaps the most difficult

to secure and present with accuracy because of the elusive character
of the factors themselves.

Among the points to be considered would

be such as the export demand, recent changes in demand, the Interrelations of demand and the broad field of consumers' inventories.
The entire subject of demand is, of course, more important and more
difficult than that of supply but no attempt ought to be spared to
secure and publish as accurate figures as possible.
10.

By this is meant the collection of a large number of

series of facts bearing upon business cycles such as have been made
irog21'iby the different charts, like the Babson charts, the Brookmire
charts, the Harvard charts, and the like.
to be emphasized are the following:

Among the classes of facts

Prices of securities, bank deposits,

bank reserves, idle freight cars, monthly exports and imports of merchandise and of gold, the index of wholesale prices and of retail
prices, and various other facts of importance.

There is scarcely any

class of important business facts which cannot lend itself, to inter-

pretation as throwing light upon the advance and recession of business
prosperity.
II.
1.

Long Range Planning of Public Works.

Purposes--Public Works--Municipal, State and Federal, should be

contracted in years of industrial activity and expanded in years of
depression to accomplish the following purposes:

(1)

To revive private industry and to check industrial

depression and unemployment;

Reclamation- -5.
CO1!PIFINTT OF AGRICULTURAL SUBCOVITTa UPON THE REPORT.

the athompanying report submittod by the Committee on Emergency Ph3pli,o
Works on Reclamation was received by the Committee on Azrivulture this morning and is returned herewith without recuumendation and with this comment.
This matter did not originate to the Committee on Agriculture and bears no
specific approval by that Committee.
It is universally recognized that many mistakes have been made in Government
reclamation of land and many settlers on sudh land have suffered heavy losses.

The future policy of this Federal ,:ove:ment in this matter should be
determined after a careful study of all related questions :as been made by a
body of en;ineerin_ and aricultural e.iperts. The Coamittee an Agriculture
aould be opposed to the 'oe-,,innin6 of your reclamation projects at this time.
With the .understanding that the projects iinluded in tis report are
legall: autaorized for completion and aro already under viry the Committee sees
no serious objection to speedin,, up the work, provided this contemplates only
a loan and no direct appropriation of public.funds.

EMERGENCY MEACURES ADOPTED BY EMPLOYERS
TO MITIGATE UNEMPLOYNENT
DUE TO THE PRESENT SITUATION.

As the direction of the affairs of the business world lies
mainly in the hands of employing management and of financiers, it is
Obvious that the responsibility for taking the initiative in adopting
measures to minimize unemployment is primarily theirs.

This does not

mean that unemploytent is the "fault" of these groups or that they are
responsible for bringing about the conditions antecedent to unemployment.

But what is suggested is that these groups are the only ones

that can be of any large influence in mitigating these conditions.
In this connection, seasonal and normal unemployment occurring in ordinary times must be sharply distinguished from unemployment caused by
cyclical depressions.

(

The power to adopt measures for reducing ordi-

ary year-in and year-out unemployment, whether due to seasonal conditions or the casual labor problem, lies mainly in the hands of employing management and the Governmeni, the latter having the responsibility of introducing an adequate employment service.

On the other hand,

any attempt to diminish the force of cyclical depressions must come
primarily from both the financial and employing groups.

Labor is a

negligible force in affecting this phenomenon of cyclical depression.
It becomes somewhat demoralized, it is true, by the high wages due to
the inflation period, but it is not responsible for the conditions
which produce the inflation.

Of course, when depression takes place

and continues as at present it is important that labor co-operate in

the readjustment of wages to the cost of living in those industries

which are out of line, and thus contribute to the business revival and
a cessation of unemployment.

When we come to the consideration of the

emergency measures necessary to mitigate the actual unemployment re

.Ittl

sulting from

the present

depression,

managing employers

are in a posi-

tion where they can exert the largest influence of any group.
The sensible management should if for no other reason than pure7y
from motives of self-interest feel the necessity in normal times of

aintaining a

stable

and continuous working force and in abnormal times

of preventing the demoralization necessarily resulting from unenployment.

The cost and demoralization due to shutting down in times of de-

pression is often more expensive and serious than can be foreseen.

Bit

the relation of management to its organization is r14t whol]

'after all

contractual and where curtailment of production

necessary, manage-

ment should, if from no other considerations, from a sense of the humau
responsibilities of leadership, and pride of accomplishment, do what it
can e7en at some sacrifice to mitigate distress. among its working force.

In a way a managing employer regards himself and is regarded as theheed
of

family.

He has anked for loyalty from the workers of his organi-

zation and should in turn help at a time when they are helpless.
That there are a considerable number that realize these responsibilities of leadership is indicated by a hasty survey just made of
emergency measures taken by various employers to meet the present situation.

This spirit is strikingly voiced in the following letter from

the Columbia

Conserve Company, of Indianapolis whose president writes:

For about a year we have .taken the position in our
own business that unemployment is the first lien on-our business, and beginning late last fall and continuing up to the
present time we have carried our regular force through the enDuring that time we found a good deal of work
tire period.
for the men on our farm which is situated about eight miles
from the factory. We also reduced the number of working
hours per week but did not reduce the weekly income. We
also gave the entire force three weeks vacation with full
pay. In addition we found a great many odd jobs about the
plant and altogether we were enableA to keep our small force
employed during the hours they worked. Most of the time we

We gave no special
were working forty-four hours per week.
consideration to any individuals because of the fact that
we took care of all of them.

"We feel that an industry should consider as its second
duty the protection of its employees from unemployment. Its
first duty of course is to protect the business by which we
mean that no steps should be taken which may jeopardize the
but up to that point we think that the embusiness itself;
ployees should be retained."
The information set forth below was secured from replies to
questionnaries which were sent out by this sub-committee to various
selected firms, employment managers associations, and other associations, and bureaus interested in the problem.

Approximately one hun-

dred letters were received in reply and are filed with this report.
In addition one hundred and fifty replies to a questionnaire sent out
by the Merchants' Association of New York City last May have also been
used.

There are three main varieties of such emergency measures
which have been adopted.
First,-

These are

part-time won, through reduced time or
rotation of jobs;

Second,- manufacturing for stock; and
Third,-

seizing the opportunity to do as much
plant construction, repairs and cleaning as is possible, with the consequent
transfer of many employees to other than
their regular work.

The expedient that has been by far the most commonly adopted
is the first, namely that of part time and rotation of jobs.
a method of distributing the burden of
venting it.

This is

unemployment and not of pre-

Seventy-five firms used one or both of these methods.

PART-TIME WORK
The General Electric COppany says "We have adopted the

()

practice of part time work and rotation of employment".
Two principal methods for reducing the time worked were
'Ised, aside from the rotation of jobs, which is treated separately.
.Lne first and most prevalent method

was that of reducing the time

worked per day, while retaining the full numberct days per week, or
five days per week.

The second method, also frequently adopted, was

to work full days but to work fewer days per week.

In this connection

it might be mentioned that many firms gave up Saturday work, especially where the custom was to have a half-holiday on:this day.
Reduced number of hours per day:
At least 65 firms of those replying have reduced the hours
worked per day.

A typical examPle of how general the plan was in an

industrial town such as Bridgeport will be evident from the following
.tract from a letter by the secretary of the local chapter of the
Industrial Relations Association of America, who states:
"5 plants now operating 40 hours per week, five
36 hours, three 27 hours, three 24 hours, one
37p.- hours, one 35 hours, one 27-45 hours, one
23 hours, one 24-48 hours, one 34-40 hours per
week".

Another correspondent from

Niagara Falls writes:

"A metal products plant during the past four
months has added 250 to 300 men to its payroll
by reducing shifts from 8 to 6 hours and adding
another shift."
The International Harvester Company writes that it adopted
"four eight hour days instead of the former 50hour week of 9 hour days and 5 hours on Saturday.
Lately, however, it has been necessary to close
some plants completely resulting in the laying
off of many employees."
That firms with long shifts can alleviate the situation

considerably can be seen from the following example of a firm which
formerly had two twelve-hour shifts:

"A food products plant operating 24 hours per day
formerly, with ten- and twelve-hour shifts, now
is on three shifts of eight hours each."
(Letter from Secretary of Buffalo I.R.A.A.)
Reduced number of days per week:

About thirty employers have reduced the number of days per
week, among whom two-thirds found the four or five day week preferable
while the rest had to content themselves with only two or three days
work a week.

Thus it is stated:

"Link Belt Plants are working three days a week 25%
of their force rather than work one full week with
12110 of their force."

(Letter from Secretary of Indianapolis branch
of the Industrial Relations Association)

A New York clothing firm reported in May that extra pay of
one day was given to the employee if he had worked only three days a
week.

About a dozen firms experimented with various combinations of
rt-time methods, so that different departments worked different hours
or varying numbers of days per week, including also rotation of jobs,as
described later.

The cutting of time had its drawbacks, and it took a little

while in some cases before the best procedure was worked out.

The

following letter from a large. lamp company indicated how this firm
made its part-time arrangements:
"Would advise that in January of this year
it necessary to revert to a four day week. Before
however, we classified our help into three grades,
and "C", the "A" grade being our best operatives,
and "C" last.

we found
doing so,
"An, ni90,

B" next,

"When we curtailed our working time for four days in
January, we also reduced our working force by the elimination
of most of our "C" operatives. During the month of February
we scheduled our working time to 12 full days for the month
and again reduced our working force this time doing away with
some of our grade "B" operatives.

6.
nit i8 evident from the number of people we were losing
on the four day schedule that we would have to increase our
working time in March, which we accomplished by working a
five day week.
It has been our experience, covering the months
mentioned, that it was better to work five days a week with a
curtailed force than to work four days with a complete force,
in that we lost considerable of our good operatives on a short
timed basis."

The drawback of part-time work in piece rate industries is
indicated by the following extract from a letter describing its opera:tion:

"Part-time work for the piece-worker is apt to result in
little reduction in the amount of goods produced but a
sharp lowering in quality, Since a man in order to keep his
earnings up, speeds up his effort to a point where the quality
of his work is impaired and wastage is increased."
Letter from Secretary Rochester I. R. A. A.
The following paragraph takes up the otter method of reducing time worked, viz:

Rotation of jobs.

This need not have been ac-

companied.by any reduction of factory hours, but in some cases this

A,as also done to spread work as far as possible.
ROTATION OF JOBS:

Approximately fifty firms which are carrying on the rotation of jobs in order to relieve unemployment are mentioned in the correspondence in possession of this Committee.

In addition reference is

made to many more who are dolng this, in the general reports sent in by
representatives written to in

various cities.

There is a wide variety of method in operating this type of
distribution.of available work.

In half a dozen cases noted, the work

-s spread to only a small number of workers more than is required, viz:

the worker in a certain paper box factory loses none week in six or
seven", and in another company one week out of every four (Standard
Oil Co. of N.J.)

About twenty firms divide all or most of their err,

(Vloyees

into groups or shifts alternating weekly, and about the same

number of firms use split week shifts of two or three days each.

one case a shift of employees worked only one day a week.
While general success in the main purpose of keeping employees
jobs has been secured in most cases, there are others where the

work was not sufficiently standardized to allow operation on this basis.

An electrochemical plant is such an instance.

Unless the pro-

duction is routine and the work does not require the same employee to
complete the job, rotation is impractical.

A correspondent from

Bridgeport writes:

"In many instances it has been found impractical to use
two shifts of men on the same work. In such cases the men
working the first three days of the week work on special and
current orders, while the men working the last three days are
kept going on stock ahead.
Sometimes orders for immediate
delivery have necessitated having this schedule somewhat
changed
Not many of the manufacturers have seen fit thus
far to operate in this fashion."

Rotation of work was also found disadvantageous for other

reasons, for employees sought other employment while off and when they
did not report for work with their shift, the personnel was somewhat
disorganized and time was lost.

The experience of the Norton Company

with both the reduction of hours and rotation of work is interesting
in this connection:

When it became apparent that the amount of output must
be curtailed, weekly operating hours were first decreased
from 50 to 45; then to 40 and finally to 24. By this practice, employees were retained until it became necessary to
gradually reduce the operating force as the production requirements declined.
"After careful trial, the 24-hour week proved inefficient from a manufacturing point of view and an advance to
a 40-hour week together with a rotation of employees was
made effective. In this plan, the operating force was divided so that groups would be idle, in turn, for one week in
three.
On account of the size and nature of the work of some
departments, this method was impractical and employees reported daily to perform any work available, whether or not a full
day was required.

The aim in reducing the plant force was to release, in
order, those most able to cope with the problem of unemployment, In carrying out this plan, the selection of persons
to be discharged was preceded by an investigation in every
case as to their relative domestic conditions. Women and
single men were first released, then married men on a basis
of the number of dependents.
"In order to provide additional employment, emergency
work including general repairs and painting has been carried
on to a larger extent than is ordinarily practiced."
"Rates of pay were adjusted at times when the change in
hours was most favorable to the employee.
"As a general policy, stock has not been accumulated in
order to provide employment.
For a number of months, however,
manufacture fat stock of one type of product was carried on."
While employers should generally be vigorously urged to adopt
this expedient even at some sacrifice, it shoUld be kept in mind that
the extent to which part time and rotation measures are suitable and
advisable depends on the particular circumstances of the individual

rlant.

For example, in some plants where men can go back on farms

no such method is necessary and it might be bad from every standpoint
to encourage men to stay in the vicinity.

As indicated in some of

the above replies, in some businesses continuity of tenure of any
particular job is most important and therefore part time seriously
affects efficiency.

In others the handling of the same job by a num-

ber of men does not bring about inefficiency and part time i8 particularly applicable.

In some cases it is almost certain that the en-

tire organization will be needed again and therefore management can
well afford to hold it together.

Though mainly an expedient part

_me is an important method of mitigating a critical situation such

as the present one and if not likely to demoralize should be adopted.
One correspondent, Mr. W. H. Winans of the Union Carbide and Carbon
Corporation writes:

"Many companies had an abnormally large number of employees
during the peak period of production previous to last Fall,
and it is quite improbable that production requirements will
call for such an inflation of working force in the near future.
This is particularly true on account of the relatively
low individual efficiency, in most instances, of those previously employed.
Accordingly, we feel that a re-distribution of the general labor supply of the country is absolvtely
essential.
For example, it is felt that many women who were
employed in manufacturing plants during the last two or three
years will not be required for similar work, and their services
should be made available for domestic employment and similar
lines where there now exists a definite shortage of help of
that character.
"Also the number of men who were employed in munition
plants, shipyards, metal working plants, etc., far exceeded
the number which will be required under normal conditions.
Many of these workers should return to agricultural employment and related lines in the rural districts. Considerable
questions therefore, arises in our minds as to the wisdom
of carrying indefinitely an abnormally large number of industrial workers in the cities and manufacturing districts
on either a false hope of return of former conditions or
on short time employment. It has seemed to us that attention might very well be given to the possibility of speeding up this redistribution of the nationts labor resource.s
which must sooner or later be accomplished."

MANUFACTURING FOR STOCK:

The second method adopted is that of manufacturing for stock.

Over thirty firms report that they have manufactured for stock as
far as they could.

The expression "as far as safety would permit", is

frequently used in the repliesreceived, indicating that employers felt

that there were perils in carrying this policy too far in a period of
uncertain business conditions.

Generally speaking, the older firms,

with an established market and a standardized product were best able
to manufacture for stock.

That firms did a great deal to keep their

4.actories going in this way is shown by the fact that in half of the

cases manufacturing was continued until the warehouse space available
was filled.

Half a dozen instances are noted in which the employer

expressed doubts as to the wiadom of the policy as a loss had resulted
from it.

In this connection it is suggested by oae correspondent that

10.

manufacturing for stock may endanger the continuance of part-time work
later since it may ultimately force a factory to shut down completely
because of oversupply.

The following extracts from letters received give a good general
(

ir,pression of the situation:

"The American Hoist and Derrick Company, a firm manufacturing hoisting machinery of all kinds....report that
they manufactured for stock during the entire winter and
that during this time they were fully aware of the fact
that there would be no market for their product during
this spring orsummer. During the winter they kept their
entire staff of workers employed, but when in the spring
it became impossible to keep the organization intact, it
was cut down to twice the number of men that the actual
number of orders in hand warranted, and these men were
employed half time."
(Industrial Secretary of the St.Paul As,n)
s"We maintain a stock department of our own for which
For
we manufacture heavily in times when orders are loW.
example: we are now running on the first of our Spring
We have not as yet sent out our salesmen,neither
season.
asked for nor redeived any of our customers' Spring orders,
but are running at full capacity on shoes for our stock
department, which bridges over this little gap that always
occurs at the beginning and end of every season."
(Morse and Burt Co., N. Y. C. )

"We also keep our employees at work during such exceptional dull periods by manufacturing some by-product which
we use in latge quantities and which we receive from outside sources. Materials for the construction of these byproducts are always kept on hand, and employees can be transferred to such work on short notice."
(A large firm of corsetmanufacturers)
"We are working on stock of merchandise which we hope to
be able to dispose of later on in the year in order to employ
as many of our people as possible."
(A Tobacco pipe company)

"There has been an unusual amount of manufacturing for
stock, or in other words, storing material."
(Secretary of Lansing, Mich. ,branch
of the Industrial Relations Assn.)
"We have no system for the protection of our employees
against unemployment but it has always been customary with
us when there is a dearth of orders, to put in hand as much
work in the way of machinery for stock as we can afford to
carry and also see our way clear to dispose of eventually,
thus keeping on the payroll a large percentage of the normal
working force."
(A large machinery and saw factory)

11.

"When orders fall off, our firm, in its effort to maintain
employment, resorts to the expedient of manufacturing stock,
even if it has to be sold at cost Or at a price that does not
even cover the overhead expense.
So far as I know, ours is
the only firm in Rochester that follows this policy, although
we are manufacturing the finest ready-made clothing in the
country."
Hickey-Freeman Co.- Clothing.
"In order to keep the employment as near normal as possible in our plants, we have made up future orders immediately
when received, regardless of delivery dates, and we have also
increased our inventory of shoes in stock quite materially
with this same object in view.
(Charles A.Eaton Company, Brockton, Mass.)
"Doing business at a small profit, and selling some items
at a loss....resulting in keeping our institution going full
blast at present."
(A silk rib-con company)

"In case
manufacturing
summer. This
ees who would

of certain orders for the Navy Department we are
equipment which will not be required until next
will give work to large number of skilled employotherwise be idle."
(General Electric Co.)

"We ran our mill practically all though the past year with
the exception of about 30 days. Manufacturing for stock has
caused us considerable loss."
(A knitting company)
Two firms which are manufacturing for stock mentioned their special efforts to increase the volume ofEales.
eral Electric Company

The President of the Gen-

writes:

"We are also extending to our customers longer credit than
usual with the same Object in view (to give work to large number of skilled employees who would otherwise be idle.) We have
been active in extending our business in foreign countries, especially when such business will give additional employ,ment for our workmen in this country."
A knitting firms writes:

"No reduction has been accomplished by the added energy on
the .part of our sales force who have gone out with larger and
better lines of samples than heretofore, and are making longer
trips over their territory."
Where conditions permit the most effective method of using this
expedient so as to obviate as far as possible the question of financing raw material is to concentrate on articles that entail a high labor content and a small material content.

12.

That there are limits to the possibilities of manufacturing for
stock are indicated in the following quotations.

The Secretary of the

Employment Managers Association of Moline writes:
"The implement plants in Moline, East Moline and Rock
Island, Illinois, manufactured for stock until all warehouses
were filled, and it was absolutely necessary to stop operation
of their factories."
The President of the Bethlehem Steel Company writes:
"Manufacturing f,or stock has been carried on as far as
consistent with safety."
The

JnteTnational Harvester reports:

"The trade in agricultural implements has been exceedingly slow and the Company finds itself with an unusually large
inventory of manufactured goods on hand and facing a situation
which would not justify the further manufacture of goods for
an unknown market."

In a circular which accompanied their letter they say:
Operations have already been continued in spite of heavy
cancellations of orders and at serious risk of over-production
so that the maximum employment might be afforded during the
winter months."
The Secretary of the :Bridgeport Council of the Industrial Relations Association of America writes:
"During the last 9 months much has been done to relieve
unemployment by the manufacturing of stock ahead of current
orders.
This is just why the improvement of industrial conditions will be slow and gradual. As orders are received more
frequently and for larger quantities, production will nece8sarily not increase as fast, owing to the great amount of
completed stock on hand, which the manufacturer must unload
in order to turn his money over."
On the other hand, financial authorities whom this committee has
consulted have expressed the opinion that manufacturing for stock, as
far as the financial condition of each company and underlying costs of

the article manufactured will permit, is a sound expedient and on the
whole tends to exercise a healthy influence on the situation.

13.

REPAIR AND CONSTRUCTION

The third method, that of transferring a part of the force from
their regular work to necessary construction work and to cleaning up,
;to., has been adopted by a number of firms.

Twenty employers men-

tioned specifically their efforts to keep their employees eagagedbythis
method.

The character of repairs and construction work reported are:

repairs upon operating equipment, cleaning presses, improvements,
alterations, painting, cleaning of windows, installing new equipment,
building part of a plant, "every possible repair", etc.
In mechanical firms with skilled workers, much of the repair
work required can be done by the firm's own employees, but the helpfulness of this method

is rather limited in firms of different character,

such as those in the needle trades.

It is therefore interesting to

have one manufacturer of dress trimmings state:
"Through making repairs, painting, cleaning of windows, etc.... we managed to keep all of our employees during the slack period."

Some firms have adopted this policy as a practice, and therefore
have been able to withhold certain types of activities for the opportune moment.

The E. E. White Coal Company, of Glen White, Va.,states:

"All we do is try to take care of our men by doing
needful improvement during times of depression. This
saves labor turnover, prevents distress, and we get our
improvement work done at a time when our officials are
not giving all their attention to production."
The motive in at least one case was also to provide work for out'ders who might be unemployed at that time.
Further quotations follow:

"In order to provide additional employment,emergency
work including general repairs and painting has been carried on to a larger extent than is ordinarilYP4acticed."
(Norton Company, Worcester, Mass.,
mfrs.of grinding wheels and machines)

14.

have done a great deal of repair work on our buildings, which has enabled us to use some of our men as carpenters and painters. We have done some new construction work..
We have also transferred men temporarily from one plant to
another wherever there was work to be done, tnorder to carry
the men along. As our men are specially skilled along our
line of work we make every effort to hold them at work even
though we do not have orders enough to keep us up to full
production.
"The above remarks apply to the skilled and semi-skilled
workmen and not to the day laborers, of whom we employ but
very few, largely on receiving and yard work. These men were
let off as they were transient workers and we did not feel
justified in carrying them when we did not have work for old
employees. The older men often did the work of day laborers
in order to keep going."
(A terra cotta company)
"We schedule as much work as possible to be done during
slack periods or the annual shut-down of about two months at
Construction work, major and
end of year, between crops.
minor repairs, changes, improvements in refinery are given
as employment for those otherwise laid off, and much work
in the community, such as cleaning streets, repairing fences,
improving company's gardens and other property, at remuneration commensurate with class of work performed. In this way
continuous employment is given practically all of our regular
force.

(California and Hawaiin Sugar
Refining Company)

"We have not undertaken any new construction but are making,long-needed repairs in our operating equipment that we
were, not in a position to pay attention to in the past two
or three years.
(A lithograph company).
"One local plant employing approximately 1000 men makes
an annual practicedf scheduling repair work for the slack
This custom is being followed this year.
winter months.
"Another plant employing 300 men will retain many for
repair,work.
The payroll will, however, be reduced."
(Secretary of the San Francisco
Induetrial Relations Association)
"In time of depression, we make every possible repair
and try as far as possible to give employment by the rehabilitation of the plant."

(A silk mill)

This policy involves transferring employees to work to which they
are not accustomed.

Aside from assigning employees to repair and con-

struction work, employers have tried to give workers that are not needed in one department employment in other departments which would nor

1.5.

wally take on outside employees, despite the fact that the employees
t..

transferred were not experienced in the work of the department to

v,hich they were transferred.

The U. S. Rubber Company has endeavored to overcame some of the
( ifficulties of thus transferring employees from their usual jobs to

work with which theyvere not familiar by using their
staff to train them for this puzpose.

educational

Those firms which have

in the

past given their employees a broad training so that many of them could
handle a number of different types of jobs in the plant were in the
best position to make such transfer when depression forced a layoff or
reduction.

A large motor car company of Detroit writes that they found it

profitable to retain second hand cars and recondition them in order
to provide employment for the mechanical shops.
R .W MATERIALS VS. MANUFACTURING:

In connection with measures to mitigate the situation generally
it should be kept in mind that manufacturing institutions differ
plants producing raw materials.

from

The reply of the American Metals Com-

pany is suggestive in this connection:
Our operations are of a character which normally fluctuate, due to changing circumstances. For more than a year
we have been on a minimum basis at most of our plants. However, where we can do so we are maintaining full operations
and are attempting to retain our basic working organization.
With us there is no such thing as a normal working force because our plants are necessarily flexible, due to currently
changing conditions. All the energies of the organization
are devoted to maintaining operations wherever possible,
through the development of market over the world for our product, which consists of metals, as you know.
and will
',These observations are necessarily general
be of little use to you because your inquiry must be directed
to manufacturing institutions very largely. We are engaged in
the production of raw materials, and do no manufacturing."

A special study of plants producing raw materials may be advisable.

16.

The realization of the responsibility of leadership 'may well
take

another form than

that of merely meeting the situation when the

depression is in full swing.

fl
---'of

It can take the form of preparation in

normal and supernormal years in advance of the depression.
such preparation is

that of employment

One form

insurance.

UNEMPLOYMENT INSURANCE AND RELIEF
There are only three companies that are reported to have adopted
unemployment insurance plans, of which one plan is very limited in
scope-,

In addition to these three firms, there is reported one joint

agreement between a group of employers and a

union which calls for

unemployment guaranty.

The Deering, Milliken & Company of New York and the

facturing Company Of
insurance funds.

Framingham, Mass., conduct the

Behind the plan of the Dennison

VNO

Dennison

Manu-

outstanding

Company is

the deter-

'mined effort to level the production and employment curve of the business so as to prevent seasonal unemployment, thereby making unnecessary the use of the fund except in time of severe depression.
The following extracts from the statNnent issued by the Personnel

Division of the Company

outline some of the main features of the unem-

ployment fund.

"The impossibility of determining now the proper fixed charge
or ratio of charge to be made against unemployment and the advisability of budgetting charges capable of so elastic an aRe
plioation have lead to the creation of an Unemployment Fund,
set aside by the Directors out of the profits, and accumulated over a period of approximately five years... .....

"After the Directors had established a Fund, the matter of
working out provisions for its administration was placed in
the hands of a special joint committee, of which two 'of the
members ere chosen by representatives of the employees themselves from the General Works Committee of employees, and two
from the Management.

"This committee in drafting the rules governing the use
of the Fund gave to the term "unemployment" a broadinterpretation, not regarding total or even partial idleness as necessary in order to establish unemployment within the intent of
the Fund, but regarding any loss involved by the inability of
a willing worker to continue employment at his normal and
qualified duties, while being retained on the books of the
Company, as creating a field of unemployment
"Accordingly, whenever there is actual unemployment,
the Fund is set in operation for the relief of distress in
the following manner.
"Employees who are temporarily laid off receive 90 per
cent of their regular wages if they have dependents and 60
per cent if they have no dependents. Both classes of employees, when they secure temporary work outside, are entitled to
10 per cent of their outside earnings plus 90 per cent of
their earnings with the Dennison Company, the unemployment
fund being used to make up the differenoe between this
amount and what they receive outside. Employees who are
transferred inside to other work are paid their full wages
if they are time workers and 90 per cent of their six weeks'
average if piece workers. Whatever they are worth on their
new job is charged to operating expenses and the rest is
made up out of the unemployment fund. At any time after
six day's payments have been made the Unemployment Fund
Committee may stop payments to any who in its opinion are
not making proper efforts to secure outside work
"Thus, by its efforts to prevent seasonal unemploymentthat phase of unemployment which is largely controllable by
the employer- and by budgetting unemployment relief and working with its employees in testing out relief methods, this
company is endeavoring to develop a scientific method of
solving the greatest evil of present working conditions."
The plan

of "the Deering, Milliken & Company, iS described by

Mr. H. A. Hatch, the Treasurer of the Company, in a recent issue of
the American Labor Legislation Review.

The following quotations have

been extracted from this article:
"Since the unemployment funds of these companies are
an integral part of their whole plan of industrial management, I outline-our complete program as the best setting
for our experience with unemployment insurance,
"Our partnership plan - as we call it - is in operation in _five plants, three in the South and two in New
York State. For simplicity, I will describe its operation
in the two New York plants - the Rockland Finishing Company, Inc., at West Havestraw, and the Dutchess Bleachery,
Inc., at Wappingers Falls.

18.

After outlining the partnership plan" under which this company is
operating, Mr. Hatsh states:
"Operatives are paid current wages. Capital employed
is credited at the legal rate of interest. Two sinking
funds are set up, designed to make the wages both of capital and of labor constant. The balance remaining, after
these sinking funds are cared for, is divided fifty-fifty
between capital and labor.
"The sinking fund for capital consists of 15 per cent of
the earnings over and above capitals wage of 6 per cent.
This fund is designed to make up the deficit below 6 per
cent in the earnings of lean years.
"It is the second sinking fund which we call the Unemployment Guarantee Fund. This unemployment insurance fund for
the employees also consists of 13 per cent of the net earnings remaining after the payment of wages as above mentioned
to both capital and labor. From it labor - that is, all
those on a weekly or hourly basj.s of wagerreceives half pay
.

duringperiods of unemployment.

The regulations under which

this fund is administered are entirely in the hands of the
Board of Operatives, thus insuring thoioughly representative
control by those directly concerned.-"Ail matters which affect the workers intimately and the
owners only indirectly are placed under the direction of the
Board of Oreratives. This board is elected annually by secret
ballot of all employees.....'
"During the past year there has been distributed from the
unemployment insurance fund at the Rockland Finishing Company,
Inc., $59,512.89 or 5 per cent of the total annual payroll.
At the Dutchess Bleachery Inc. plant, the sinking fund against
unemployment has this year made payments of 16,062.32 or 3
per cent of the total annual payroll.
"Between 400 and 500 operatives have shared this distribution at Dutchess, receiving an average of about $35 each. At
Rockland, about 750 operatives have participated, receiving
an average of, approximately, i80. each.
"Let me suggest here that both these companies sell service not merchandise, and so are unable to control the question of regularization- ofcperating or not operating."
The Crocker-McElwain Company has a plan which contains the germs

It applies only to employees who have been five years
in the company's employ. The benefits which are granted are limited
to four weeks and are conditioned on a promise on the part of the em.
ployee to help maintain the Open Shop,
of insurance.

19.

Unemployment is provided against in a recent agreement of the
Cleveland Garment Manufacturers' Association with the International
Ladies Garment Workers Union, by a clause which binds every employer
<I.;ho

is a party to the agreement to pay 7-1/2% of his payroll to a fund

Nhich is to be used to pay unemployment benefits to the workers if the
amount of unemployment should exceed six weeks of the twenty-;six weeks

luring which the agreement will be in force.

If, however, at the end

of this period twenty weeks of employment had been provided, no pay.
ments will have to be made and the fund will be returned to the enplc.yers.

A relief loan fund that is of a different character was conducted
by the Knox Hat Company.

This was created originally by a fixed con-

tribution of 8%, and later of 1%, of every employee's salary, includ(

-Jg that of the President, and was used as a loan fund to be available
without

iLterest or security for any employee laid off who was in

distress.

The increase in employment due to increased business made

it unnecessary to continue to levy the contributions.

Recently 504 of

this fund was re-distributed to the employees from whose salary it had
been deducted, and ultimately, when all the money borrowed will have
been paid back,the full amount will be returned to the employees unless a deduction is made for uncollected debts.
This is entirely aside from the question of Governmental compulsory unemployment insurance which is still a much-mooted question. It
s been suggested that if employers should generally undertake plans

of.WwPployment insurance, it might obviate the necessity of any Governmental action.

20.

SCELLANEOUS M7ASURES FOR REDUCING
HARDSHIPS OF TH7 rAYOFF:
About a dozen firms mention their efforts to discriminate between
the men with dependents and the needy generally, as contrasted with
(-hose better able to stand a lay-Off.

Married men, and in some case

married women, are given preference, but this policy is usually closely
associated with a review of the worker's record and length of service,
since employers are also using this time to assure themselves that
their workers are the most efficient available.
In a half-dozen cases, t he firm has tried to assist the

worker in securing another job elsewhere.

The McElwain Shoe Co. re-

ports:

"One woman employment manager in our Employment and
Personnel Department devoted nearly 100% of her time to
finding whole-time or part-time work in other industries
and from private individuals."

The president of the Walworth Manufacturing Company reports:
"We are to a considerable extent locating jobs
so as to bring about the least possible suffering."
The comprehensive plans of the International Harvester Company to

reduce the suffering of the employees laid off is brought out in the
following quotation from their letter of September 14th:
"Advance Notice of Shut Down:

"In an effort to lessen the hardships of the situation
we have endeavored to give advance notice, and in many cases
have notified employes individually six weeks in advance of
the probable necessity of practically closing the plant, and
advising them of our willingness to have them seek employment
elsewhere and our desire to cooperate with them in this resThese notices fully explained the cause of the shut
pect.
down and were issued with the approval of the various Works
Councils.
"Aid in Securing EmplOyment Elsewhere:

"At all plants employment managers have been retained on
full time service, their principal duties being to supervise
rotation of part time work and investigation of eligibility,
and to cooperate with former employes in securing work in
other industries, or on farms, or wherever it might be obIt is difficult to state specifically the results of
tained.

21.

these activities, but we do know that many hundreds of
former employes have been placed in satisfactory employment through these efforts.
',Each employe laid off has been given a service
certificate which would serve as a recommendation for him
to prospective employers. In addition, at some of the
plants the men were given printed postcards which
they forwarded to the employment manager on applying for
work elsewhere and desiring recommendation. Promptly
on receipt of these requests letters giving the employes' service records are signed by the local plant superintendents and mailed to the prospective employers

"Relief Measures
Since November 1, the
Pension Retirements.
retirement of old employes has been accelerated; 182
employes have been so retired from November 1,
1920,to date.

A fund has been established
Loans to gmployes.
to provide for relief of needy employes, and provisions are
being made to extend this work. We are endeavoring to furnish this assistance to employes in the form of loans, with
or without collateral as circumstances may indicate. While
it is expected that many of the so-called "loans" will never
be repaid, we have carefully avoided designation of this
service as "donation" or "charity1).
Through the
Loans to Employe Stockholders.
"(o)
operation of our Extra Compensation and Stock Ownership
Plan a large sum of money was distributed to participating employes on or about May 1, 1921. Part of this distribution was in stock of the Company, and all employes
were notified of the Company's willingness to lend them
money on this stock.
Hate Gardening. A well planned and carefully
"(d)
supervised campaign for the encouragement of home gardening was conducted under the auspices of the Works Councils,
which resulted in many hundreds of our employes raising
produce of definite value to them in view of decreased
earnings."

Some firms which have been prosperous in the past and which ex-

ect to resume their normal

operations when the depression is over

have continued to hold a large part of their force even though not
needed.

One firm writes!

at present time
than we actually need."

are retaining about 251c more
(A bronze company)

The survey which has been made indicates that one of the chief
features of the present depression is the uneven character of the unemployed.

Though

unemployment is severe

many important induS-

( tries, others are running at full speed, for example, the Gilletee
Safety Razor Company reports

We are trying to work a full force. We are having
a little difficulty in getting the required number of female operatives, but as rapidly as they are obtained, they
are being put to work so that inside of two or three weeks,
we should be operating at 10000 capacity; In fact, in the
handle manufacturing department, we are running a night
The Endicott Johnson Company reports:
",Perhaps for sixty days the first of the year we
The balance of the so-called
ran on about 75% capacity.
period of depression we have been running full time and
for several months past we have been working overtime.
Hence, we are not in a position to be of any service to
you regarding our methods for part time work, rotation
at employment, and other questions you have asked in your
telegram."

It is reported that activities in tHbuilding industry in New
York is only limited by the amount of skilled labor available.
The reports from Lawrence, Mass. indicate that there is no unusual unemployment there.

Total textile workers 40,750 and

those reported unemployed are 600.

This fact must betaken into consideration and also the disparity between conditions and remedial measures possible in various industries in which unemployment exists.

It is therefore suggested

at it be determined as far as is possible in the limited time available froi;ra a study of the information furnished by the Bureau of Labor

Statistics and elsewhere in just what industries unemployment does
exist, the extent thereof in each instance and what type of remedial
measure ii7; suitable in each case to the Particular situation.

TYPICAL CYCLE

It is probably undesirable to flatten out the line of business
activity to the straight line of growth. It is certainly Impossible to
do so.

Some unemployment might result from the curve labelled "preferable"
but the evils arising from such unemployment might be negligible°
It
is not the wave itself but the crest of the wave Which breaks and does
the damage. We should therefore focus our attention on the crest and

on such part of it as we shall have a reasonable expectation of affecting,
The crest is due to the common belief in the continuance of fiRATE
of expansion of the country Which is too great to be maintained and assimilated. This belief induces.
A. Over.estimates of requirements and of future prices, leading t)
1.

2.
3.

Over-extension of plant

Over-purchase of materials and merahandiso
Increasing amount of inefficiency in
Labor force
Management methods

Over straining of credit resources.
These points apply to commerce, industry, transportation and
public works.
4.

Credit expansion.

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SYMBOL

VICE

Blue

WESTERN UNION

Nile

age

Telegrams are
business stimulators. If you

me- 3

want to liven

Le,

NL
If non of these three symbols
appears after the check (number of
words) this is a telegram. Otherwise its character is indicated by the

!symbol appearing after the check.

thingsup-NEWCOMB CARLTON, PRESIDENT

GEORGE W. E. ATKINS, EMIT VIG.PRESIDEN

Don't write_
Telegraph!

1111.111.."

RECEIVED AT 40 BROAD STREtriktiTYORW, Phone k
-.CE 23 GVT
3 EX

DC WASH INGTON DC 520P OCT 6 1921

BENJ STRONG

804

15 NASSAU ST
FEDERAL RESERVE BANK OF NY NEWYORK
ILL BE NO GENERAL MEETING OF UNEMPLOYMENT CONFERENCE
4

HERE

NT I L TUESDAY AFTERNOON OCTOBER ELEVENTH BUT COMMITTEES WILL
T IvION:DAY FORENOON

EDWARD EYRE HUNT SECT Y OF CONFERENCE
33 2P
fitf.;b

October 5, 1921.

Dear Sir:

acknowledge receipt of your letter of
October

ill:

and thank you for the complete report of

the Economic Advisory Committee, which you were good

enough to send to me for my information and zuidance
in connection with the Conference on Unemployment.

Yours very truly,

E. E. Hunt, Esq.,
Secretary, Conference on Unemployment,
Department of Commerce,
Waehington, D. C.
GB:i0

THE PRESIDENT'S CONFERENCE ON UNEMPLOYMENT
DEPARTMENT OF COMMERCE

OGI 20 1921

WASHINGTON

October 14, 1921.

Hon. Benjanin Strong,
Governor, Federal Reserve Bank,
15 Nassau Street,
New York, N. Y.

Dear Mr. Strong:

By this rnail I an siding you copies of:
Unemployment Statistics,
Business Cycles,

Agriculture,

Public Works on Reclamation,
Public Works.
The Conference on Unanployment has been an

unqu al if led success, and the spirit in wh ich it closed you will

find described in the address of certain manufacturers, read by
Mr. Trigg, Mr. Goners' speech pledging the support of organized

labor, aid Mr. Hoover's closing remarks, all of vhich I am sending
you..

Copies of Resolutions submitted by committees,

or individual members of committees, and not apIroved by the Con-

ference will be sent you later.
Please advis e

other way.

if we may serve you rn any

Let me add a personal mrd of appreciation for the

fine service you have rendered, aid believe me,

Verc erely yours,
Edwaryre Hunt, 1'ecr ary,
77;11:P

Conference on Unemployment.

THE PRESIDENT'S CONFERENCE ON UNEMPLOYMENT
DEPARTMENT OF COMMERCE

OCT 2 0 1921

WASHINGTON

Octobej

Mr. Benjamin Strong,
415 Nassau Street,
New York City, N.Y.

r11;14.)

GENE
ocT 29 1921

Dear Mr. Strong:

L t""
(1

CommittiVI"

t 44106rs of the
Standing Committee on Unemployment has selected the following to serve for the present:

The

Mr. Julius H. Barnes,
Mr. 7illiam M. Butler,
Mr.'algar. E. Clark,

Mr. Joseph H. Defrees,
Mr. Mortimer Fleichhacker,

Mr. C. H. Markham,
Mr. Andrew J. Peters,
Mr. A. M. Poston,
Ernest T. Trigg,
.ss Ida M. Tarbell,
-iss Mary Van Kleeck,
Mr. Matthew
Col. Arthur Woods,
Ur. Clarence Mott 'oolley.

'ion,

..ye

sincerely,

jq..sb
Edward Eyre Hunt, Secretary,
Conference on Unemployment.

October 20, 19?1.

ikon TM nie

Dear Mr. Hunt:

This will acknowledge receipt of the reports men-

tionad in your letter of October 14, for which accept
thanks.

Yours very truly,

E. E. Hunt, Esc.,

Secretary, Conference on Unemployment,
Department of Comerce,
Washington, D. C.
GB: MM

October 20, 1921.

Dear Cr. Hunt:
than

you for your letter of October 18, giving

the names of the member of the Standing Committee on Un-

employment which were selected by the Committee.

Yours very truly,

E. E. Hunt, Esq.,

Secretary, Conference on Unemployment,
Deprtu,ent of Commerce,
Wmehington, D. C.

THE PRESIDENT'S CONFERENCE ON UNEMPLOYMENT
DEPARTMENT OF COMMERCE
WASHINGTON

NET
October 27, 1921.

TO MEMBERS OF THE CONFERENCE ON UNEMPLOYMENT:
I think you will want to know the following:

The threatened railroad strike has obliged
Mr. Hoover to postpone calling together the Standing Committee of the Conference on Unemployment.

As soon as possible this Committee will be
asked to meet in Washington to consider following

up the Conference recommendations.
Yours, very sincerely,

EDWARD EYRE HUNT,
Secretary, Conference
on Unemployment.
EEH-RAR

THE PRESIDENT'S CONFERENCE ON UNEMPLOYMENT
DEPARTMENT OF COMMERCE
WASHINGTON

November 23, 1921.

ACkNOWLEDGHon. Benjamin Strong,
Governor, Federal Reserve Bank,
15 Nassau Street,
New York, N. Y.

DECIO- 1921

My dear Mr. StrongvAN'%--,-

Senator Kenyon, of Iowa, Chairman of the Senate

Commi ee on Education and Labor, has introduced the enclosed
bi
, which carries out in part the recommendations of the
President's
on Unemployment.

14,6, .-4.1cAL

9.("~
Conferene
May I` suggest thatyou write to the members of

-41ein..4 /,4(
h......1).
/&1,....:.

this committee, to reach them before the hearing on December 12th,
and also that you write to your own Senators about December 15th,
at which time the bill will probably be reported.

277

Members of the Senate Committee on Education and
Labor are:

William S. Kenyon,
William E. Borah,
Thomas Sterling,
Lawrence C. _Phipps,

Francis E. Warren,
Kenneth McKellar,
Frank K. Kellogg,
Josiah 0. Wolcott,
Samuel M. Shortridge, David I. Walsh,
Andrieus A. Jones.

Passage of this bill will commit the Federal
Government to expansion of its public works during periods of unemployment and advance preparations therefor, without which expansion
impossible to any adequate degree.
The adoption of a
similar policy by cities and states is even more important as
their public works average five times the amount of federal public
works.

Any assistance on your part in popularizing these
recommendations of the Conference and in calling attention to the
Kenyon Bill will be appreciated.
Very truly

rs,

EDWARD EYRE HUNT,
Secretary, Conference
on Unemployment.

Ve:- A
Y"4

S.C1,

5 E.00i

GOV

.01:001111.-0-05:It

December 10, 1921.

LOOSE

My dear Mr. Hunt:

Mr. Strong has asked me to reply to your letter of
November 2!3, with respect to Senate Bill No. 2749,

regarding

appropriations for future periods of depression.
As recuested, Mr. Strong has sent a persons/. letter
each :nein ()el' of

toAthe Senate Committee on Education and Labor, as well as to
honorable James W. Wadsworth, Jr., and Honorable William M.

Calder, Senators from the State of New York, as per copy eneiosed herewith.
Mr. Strong would have answered your letter personally

but he is confined to his home owing to a slight
Yours

very truly,

Secretary to Mr.
Edward Eyre Hunt, Esq.,
Secretary, Conference on Unemployment,

Department of Commerce,
Washington, D. C.
En c.
GB.WM

indisposition.

Strong.

FILE'

THE PRESIDENT'S CONFERENCE ON UNEMPLOYMENT
DEPARTMENT OF COMMERCE
WASH I NGTON

December 14, 1921.

Mr. George Beyer,
Federal Reserve Bank,
New York City, N. Y.
My dear Mr. Beyer:
I trust that Mr. Strong is better. Please
thank him for his letter of December 11th addressed
to the members of the Senate Committee on Education
and Labor.

Yours very

Edward Eyre Hunt,
Secretary, Conference
on Unemployment.

EEH :AH

OS'.$C$

4,...0.0, ',"*"''

:-.....00

"1'

THE PRESIDENT'S CONFERENCE ON UNEMPLOYMENT
DEPARTMENT OF COMMERCE
WASHINGTON

December 21, 1921.

Dear Sir:

On page 86 of the Report of the President's Conference on
0

Unemployment, which was recently sent you, lines 8, 9, and 10
read as follows:

Mr. Harrison stated his personal conclu,
sion is unfavorable to the immediate extension of public employment service, and
that certain types of private agencies ...

Will you have the kindness to change your copy of the report
to read:

Mr. Harrison stated his personal conclusion is favorable to the immediate extension of public employment service, but
that certain types of private agencies ...
Very truly yours,
E. E...,_HUNT,,

Secretary, Conference on Unemployment.

THE PRESIDENT'S CONFERENCE ON UNEMPLOYMENT
DEPARTMENT OF COMMERCE
WASHINGTON

ATT
ijEC 0 0

1921

5, A.
December 29, 1921.

Mr. Shepard Morgan,
Assistant Federal Reserve Agent,
Federal Reserve Bank of New York,
New York, N. Y.

My dear Mx. Morgan:

Thank you for your kind
letter of December 28th and for the enclosure.

Very truly yours,

EDWARD EYRE HUNT,
Secretary, President's Conference on Unemployment.

]& :GB

THE PRESIDENT'S CONFERENCE ON UNEMPLOYMENT
DEPARTMENT OF COMMERCE

ACYNOWLF,IYIED

WASH I NGTON

FEB 6 - 1922

February 4, 1922.

TO ALL MEMBERS OF THE PRESIDENT'S CONFERENCE ON UNEMPLOYMENT.

The Kenyon bill on long-range planning of public works (Senate
bill No.2749) will come to a vote next week (February 6 to 11).

This bill, as I wrote you on November 23, is a result of the Conference on Unemployment, and carries out its recommendation providing that the expansion and contraction of Federal public works be
arranged to accord with periods of fall and rise in private industry
and employment.

The bill was reported favorably by the committee.
public interest should assure its passage.

Sufficient

Perhaps you and your

friends will care, by letter or telegram, to call this highly important piece of legislation to the attention of the Senators.

Edward Eyre Hunt,
Secretary, President's Conference on Unemployment.

EEH-M

February et 1922.

My dear Mr. Hunt:

Replying to your notice of February 40 to the
memb-ere of the President's Conference on Unemployment, I take

pleasure in s..dvising that I have already sritten to the
members of the Senate Comr_ittee on Education and Labor, sith

respect to Senate Bill NQ. ?749, regarding appropriation6 for
future periods of depression, under date of December

1921,

and to which letter I neve received very favorable reeponsee.
Yours very truly,

pt--,

'TONG

Edward Eyre Hunt, Esq.,
Secretary, President's Conference on Unemployment,

Deparent

Commerce,

iashington, D. C.

GB.fiti

THE PRESIDENT'S CONFERENCE ON UNEMPLOYMENT
DEPARTMENT OF COMMERCE
WASHINGTON

Feb. 7, 1922

cy.Y.
cCg)
).
Benjamin Strong, Esq.,
Federal Reserve Bank,
N7 York, N.Y.
14, dear Mr. Strong:

I am afraid my letter of February 4 was not
clear.

The Senate Committee on Education and Labor has already

reported Senate Bill No. 2749, and it is the Senators not on the

Committee who have so far had no opportunity to know what support
there is of the bill.

Possibly you would wish to write to New York
Senators or others in general what you wrote previously to the
members of the Committee.
Yours very truly,

Yxm31.4..y;
OTM/A.

February 9, 1922.

Edward E. Hunt, Esq.,
Secretary, Conference on Employmeat Department of Commerce,
Washington, D. C.
Dear Sir:

from the

Owing'to Mr. Strong's absence

office this morning

I have for acknowledgment your letter of February 7, with respect to
the

Senate Bill #2749, and asking that

Senators or others In

Dr. Strong write to our New york

general, that might be Interested In the bill.

If you will kindly refer to my letter of
will note that It

mentions

that kr.

Strong had sent

to the Honorable James W.

Wadsworth, Jr.

Calder, Senators from the

State of New

and the

Very truly yours,

G. Beyer,

Secretary.

a personal letter

Honorable William M.

York, a copy of which

was sent you for your information.

GB/EC

December 10 you

letter

THE PRESIDENT'S CONFERENCE ON UNEMPLOYMENT

DEPARTMENT OF COMMERCE
WASHINGTON

9 February, 1922.
\ONI

Mr. Benjamin Strong, Governor
Federal Reserve Bank
15 Nassau Street
New York, New York
My dear Governor:Strong:
In connection with Section 11 of the
Kenyon Bill for long-range planning of public works the question
is being asked by some Senators whether governmental reports
concerning the approach of a period of business strain and overextension will not alarm people and bring on such a period.

Would it be possible for you to write
a letter in answer to this objection? I shall not quote you
without your permission but would like to have your opinion.
The contemplated reports are to be
monthly and largely in the form of charts, to be published as
a supplement to the "Current Survey of Business" of the Bureau
of the Census.
I feel that monthly reports uy their frequency
rut the business world on notice of the approach of trouble
and enable it to prepare more adequately. The Federal Reserve
Banks have already rendered a great service along such lines.

Very truly yours,

EEH:W.

Edward Eyre Hunt,
Secretary, President's Conference
on Unemployment.

0:001137-_"crr".,'
GOIEFOAORS

E 03

10 12:4

THE PRESIDENT'S CONFERENCE ON UNLEMPLOyMENT

DEPARTMENT OF COMMERCE
WASHINGTON

February 13, 1922

Mr. 0eorge Beyer
Secretary to Mr. Benjamin Strong'
15 Nassau Street
New York City
My dear Mr. Beyer:

Many t anks for your letter of February
9th calling attention tyour letter of December 10th,
which had been overlooked.
Very sincerely

E.E:V

yours,

1.4.,V

February 23, 1922

Edward Tyre ;hart, 7.sq.,
Secretary, President's ilonforence on Unemployment,
Departmont of Ismmerce,
Washington, D. C.

Hy dear Hr. Hunt:

I have been delayed through absence in my answer to your note regarding Section 11 of the Kenyon Bill for long-range planning of public works; and
the question "whether governmental resorts concerning the approach of a period
of business strain and over-extension will not alarm people and bring on such
a period."

Possibly after the action of the Senate it is now too late for a letter to be of any especial service, but I am, nevertheleus, sending it as an indication of my interest in the subject.
In a smallish country, where the momentum of trade in not very great
and the effect of demand and supply is very quickly felt, such information is
scarcely so needful. But in a country so vast as the United States, with production on such a tremendous scale and the parts so widely distributed, such
information is vital. Business thrives best under conditions of certainty,
where people can forecast the immediate future with a reasonable degree of success; and anything which contrilmrtee to this will contribute to stability of
trade and employment.

I cannot see how any kind of governmental report could calms alarm

and bring on a period of strain unless fundementel conditions for such a strain
existed. Isad the more quickly these conditions were apprehended the less

likely the period of strain.

It is an old saying that to be forewarned is to be forearmed. I do
not know that the proposals of the Kenyon Bill could completely guard us against
periods of depreenion but it certainly seems to me that the wort proposed
might do much to mitigate their severity.
It is conceivable that the strongest leverage over periods of undue
exoansion and booms may be found to lie in a proper regulation of the sunply of

bank credit; and I an myself hopeful of investigation along this line.

:lean-

while, I cannot see how the very moderate nronesals of the Kenyon Bill could
other than a certain degree of good.

;th best regards, believe me,
Very sincerely yours,
4

Benjenin Strong,
Governor.

THE PRESIDENT'S CONFERENCE ON UNEMPLOYMENT
DEPARTMENT OF COMMERCE
WASHINGTON

February 28, 1922.

Benjamin Strong, Governor,
Federal Reserve Bank,
New York, N. Y.
My dear t;overnor Strong:
Thank you hear lily for your
letter of February 23rd rega ing the use of
governmental,rerorts concerning the approach of
a period of business strain
d over-extension.

I hope the xcomnendations of the
Kenyon bill have received nly temporary setback, and that we shall b able to get this matter
under way again.

Edward Eyre Hunt,
Secretary, President's
Conference on Unemployment.

EEH. :AH

192Z
0 tit,

SECY.

THE PRESIDENT'S CONFERENCE ON UNEMPLOYMENT
DEPARTMENT OF COMMERCE
WASHINGTON

.)(iTED
MAR 6

1922

March 1, 1922.

Benjamin Strong, Governor,
Federal Reserve Bank, New York,

15 Nassau Street,
Hew York, N. Y.

My dear Mr. Strong:

At the direction of the President and
Secretaty Hoover, I am sending you a certificate of

appointment as a member of the Conference on Unemploy-

ment in cordial appreciation of your services.

You will note that this certificate is

dated the 4th day of Janttary .1922, inasmuch as
documEnts bearing the President's signature must be
dated hmn he signs them.

With high regard, believe me,

Yours very truly,

Adward Eyre Hunt,

)^Cs'

Secretary, President's
Conference on Unemployment.

March 6, 1922.

ly dear Yr. Funt:

I have your letter of LIrch first, and thank you
sincerely for the certificate of appointment itE a member
of the Conference on Unemployment, Thich
morning.

It las a pletteure for me to have served on

this committee.

Yours very truly,

Edvard Eyre Hunt, Esq.,

Secretary, 7re,-;i'lent,s

Conference on Unemployment,
neartment ef Ccnnerce, Xashington, D. C. CID.MM

as received this

THE PRESIDENT'S CONFERENCE ON UNEMPLOXIMEIsr,

Fk.,t916

DEPARTMENT OF COMMERCE
WASHINGTON

April 3, 1923.

Mr. Benjamin Strong,
15 Nassau Street,
New York City, N. Y.
Dear Mr. Strong:

The President' s Conference on Unemployment suggested that an
analytical study be prepared of the causes of the business cycle and an
attempt be made to collect facts as to methods for offsetting the bad results of the periods of expansion and depression which have been characteristic of our industries.

The most important economic investigation into these subjects
ever undertaken in this country has just been completed by a Committee of
the Unemployment Conference consisting of:
{ken D. Young, Chairman, Clarence M. Woolley, Joseph H. Defrees,
Mary Van Kleeck, and Matthew Won.

The report with an introduction by Herbert Hoover contains the
recommendations of the Committee, together with the results of a six months
fact finding investigation made for the Committee by the National Bureau of
Economic Research. Professor Wesley C. Mitchell was in charge of this investigation.
The greater part of the funds were contributed by the Carnegie
Corporation of New York; and the Russell Sage Foundation, the American
Association for Labor Legislation, the Bureau of Railway Economics, the
Federated American Digineering Societies, the American Federation of Labor,
the Chamber of Commerce of the United States, the American Statistical Association, the American Economic Association, the Federal Departments of Agriculture, Commerce, and Labor have contributed their services.
The complete report, including the recommendations of the Committee
and. the investigation of the National Bureau of Economic Research, has been
publi shed in book form by the McGraw-Hill Book Company, 370 Seventh Avenue,
New York. The recommendations of the Committee are also publi shed. separately
in pamphlet form by the Department of Commerce.
This report is one of the most important results of the Unemployment
Conference and. I call it to your attention believing that you will do what
you can to promote interest in its findings and action based on them.
Yours faithfully,

EER:S:J

94
Secretary.

7vr

19a3

April P, 19?3.

Derr

In Mr. Stronels absence I have your letter of April 5,
together with the report entitled "Business Cycles and Unemployment", ''or which please accept thanks.

As kr. arong will be

away from the bank for sometime to come, I shall forward your

letter and the report to him as I know he will oe interested in
reading the same.

Yours very truly,

Secretary to
kir. Benj. Strong.

fi6r. 6 .

Hunt,

Secretary, President' B Conference on Unemployment,
De. a.rtment of Commerce,

Nashington, D. C.

THE PRESIDEN*1_,:'_SCONFERENCE ON UNEMPLOYMENT
4

DEPARTMENT OF COMMERCE
WASHINGTON

...Opecember

9,4k3C.1(

)w ,EDOED

0E07- 1923
Mr. Benjamin Strong, Goy.,
Federal Reserve Bank of N. Y.,
15 Nassau Street,
New York City.

.k?

Dear Mr. Strong:

For your information I at sendjiacoQiii

;la

ing you a brief statement of certain activities, some of them concerned with the continuing work of the President's Conference
on Unemployment of which you were a member.
Very truly yours,

Secretary.

Earls

Q,7t

December 7, 1923.

Mr. E. E. Bunt,
Department of Commerce,
Washington, D. C.
Dear Sir:
)

I have for ac

owledgment the receipt of
117

December 3, enclosing cOpy

of your

your letter

recent address on Stabilizing

Employment, which you were good enough

send to Mr. Strong for

his perusal, and for which kindly accept thanks.
Yours very truly,

Secretary to
Mr. Benj. Strong.

49ferred teQ. 111 letter of ikP
4

STABILIZING EMPLOYMENT
THE NATIONAL POINT
OF VIEW

BY EDWARD EYRE HUNT
Secretary, the President's Conference on Unemployment

AN ADDRESS GIVEN AT THE SILVER BAY CONFERENCE OF THE

YOUNG MEN'S CHRISTIAN ASSOCIATION, AUGUST 31, 1923

STABILIZING EMPLOYMENT-THE
NATIONAL POINT OF VIEW
The task of the Department of Commerce under its present leadership is the task of popularizing with American
business a series of great ideas. Some of these ideas have been
crystallized in economic and engineering reports; still others
have been set out in a booklet by Mr. Herbert Hoover called
"American Individualism." All of them arise from a profound belief that the economic system under which we live
is essentially sound, that it is dynamic, and that it can be
modified by voluntary action on the part of those who enjoy

its benefits so as to meet the pressing social needs of the
immediate future.
I. THE WILSON INDUSTRIAL CONVERENM

Two of the reports to which I refer were developed before
Mr. Hoover became Secretary of Commerce. The first was
the report in 1919 of President Wilson's Second Industrial
Conference which set forth a national plan for the settlement
of labor disputes. This plan was never carried out. It was
never adequately discussed. It was presented at a time when
the business boom which followed the war was just developing, when the striking steel workers had just been defeated
and when the country was in no mood to think out the farreaching problems with which the report dealt. But I ven-,
ture to say that no more statesmanlike proposal has been r
brought forward in this field than that of the report signed

by W. B. Wilson as chairman and by Herbert Hoover as
vice chairman, and I believe we shall eventually turn to a
national plan of this general sort for dealing with great industrial conflicts.
The Wilson Conference believed that sound relationship between employee and employer can be promoted by the organi-

zation of that relationship, and that this should begin within
the plant itself. If the joint organization of management and
employers in the plant or industry fail to reach a collective
agreement, then the Conference proposed a system of settlement under Government encouragement and with a minimum
of regulation.
The system of settlement provided for a National Industrial Board, local Regional Conferences, and Boards of
Inquiry.

The parties to the dispute might voluntarily submit their
differences for settlement to a board known as a Regional Adjustment Conference. This board was to consist of 'four rep-

resentatives selected by the parties, and four others in their
industry chosen by them and familiar with their problems.
The board was to be presided over by a trained Government
official, the. regional chairman, acting as a conciliator. If a
unanimous agreement were reached, it resulted in a collective
bargain having the same effect as if reached by joint orc,banization in the shop.
If the Regional Conference failed to agree unanimously, the
matter, with certain restrictions, was to go under the agreement of submission to the National Industrial Board, unless

the parties preferred the decision of an umpire selected by
them.

The voluntary submission to a Regional Adjustment Conference carried with it an agreement by both parties that there
should be no interference with production pending the processes of adjustment.
If the parties, or either of them, refused voluntarily to submit the dispute to the processes of the plan of adjustment, a
Regional Board of Inquiry was to be formed by the regional
chairman of two employers and two employees from the industry, and not parties to the dispute. This Board was to have
the right, under proper safeguards, to subpoena witnesses and

records, and the duty to publish its findings as a guide to
public opinion. Either of the parties at conflict might join the

Board of Inquiry on giving an undertaking that, so far as its

side was concerned, it would agree to submit its contention
to a Regional Adjustment Conference, and, if both join, a Regional Adjustment Conference was thus automatically created.

A National Industrial Board in Washington was to have
general oversight of the working of the plan.
The plan was applicable also to public utilities, but in such
cases the Government agency having power to regulate the

service was to have two representatives in the Adjustment
Conference. Provision was made for prompt report of its
findings to the rate-regulating body.

The plan involved no penalties other than those imposed
by public opinion. It did not impose compulsory arbitration.
It did not deny the right to strike. It did not submit to arbitration the policy of the "closed" or "open" shop.
The plan was national in scope and operation, yet was decentralized. It was different from anything in operation elsewhere. It was based upon American experience and was designed to meet American conditions. It employed no legal
authority except the right of inquiry. Its basic idea was stimulation to settlement of differences by the parties in conflict, and
the enlistment of public opinion toward enforcing that method
of settlement.
As I have said, nothing seems to have come of this excellent report.
--

II. THE ENGINEERS' REPORT ON ELIMINATION or WASTE
IN INDUSTRY.

The second great effort to deal with the basic factors of our
industrial relations was the report on Elimination of Waste in,

Industry, due to Mr. Hoover's inspiration as president of
the Federated American Engineering Societies, and prepared
by a committee of which Mr. J. Parke Charming, of this conference, was chairman.
The Committee consisted of 17 experts. Under their direction some 50 engineers made a rapid analysis of waste in six
typical branches of industry and published their unanimous

report in October, 1921, under the title Waste in Industry.

A summary of this report was given to the press on June
3, 1921, and attracted wide attention. More than 14 million
readers were reached through the first newspaper accounts of
the investigation, and in book form the report was in its second printing only a few weeks after publication.
The basic assumptions of the report on waste were these :
That the most serious waste in industry is the waste of
the time and energies of men;
That while some of this waste is due to economic conditions over which men have not yet asserted their control,
the greater part is due to defective management. "The wastes
from unemployment during depressions, from speculation and
overproduction in booms, from labor turnover, from labor con=
flicts, from seasonal operation, from lack of standardization, all
represent a huge deduction from the goods and services that
we might all enjoy," as Mr. Hoover says in a foreword, "if
we could do a better job of it."
The report places the responsibility for doing "a better job

of it" squarely upon industrial management. "Over 50 per
cent of the responsibility for these wastes," it states, " can be
placed at the door of management and less than 25 per cent

at the door of labor, while the amounts chargeable to outside contacts (the public, trade relationships, and other factors) is least of all."
Waste in industry is attributable:
To low production caused by faulty management of
materials, plant, equipment and men. Let me give one example. The loss from idleness in the shoe manufacturing industry, occasioned by waiting for work and material, amounts

to some 35 per cent of the time. The shoe industry has a
capacity of 1,750,000 pairs per day; and produces little more
than half that number.
To interrupted production, caused by idle men, idle materials, idle plants, and idle equipment.
To restricted production intentionally caused by owners,
management, or labor.

(4) To lost production caused by ill health, physical defects, and industrial accidents.
Forty-two million persons gainfully employed lose a total
of 350 milion days annually from illness and accidents.
Half a million persons, able to do good work, die annually.
Half of this loss is preventable. 25 million workers have defective vision ; 25 million have defective teeth ; over a million
have tuberculosis ; over 6 million have organic diseases; 5 to 6
million have heart trouble.

The annual economic loss from preventable diseases and
substandard physical conditions is at least 3 billion dollars.

Some of the recommendations deal with improvement of
organization and executive control, some with production control including balancing productive capacity with demand, elimination of cancellations, inspection policies, maintenance, uniform cost accounting, standardization of products, materials
and equipment, and improved personnel management.

A result has been the establishment in the Department of
Commerce of the Division of Simplified Business Practice,
and through its means the manufacturers, distributors, and
users of various products voluntarily eliminate wasteful multiplicity of varieties and sizes. One group, those concerned
with paving brick, in a single session eliminated 55 sizes, reducing the number of varieties from 66 to 11; at a later conference they reduced the 11 to 7, and at a still later conference
They eliminated one additional type, reducing the recognized
types and sizes to 6.
III. PRESIDENT HARDING'S CONFERENCE ON UNEMPLOYMENT.

The President's Conference on Unemployment called in September, 1921, and placed under the chairmanship of the Secretary of Commerce, was due to the inspiration of Mr. Hoover.
This first national conference called to deal with the wasteful
results of one of the periodic failures of our economic system, representative of widely divergent thoughts and interests,
adopted unanimously recommendations for a program to meet

this emergency created by the unemployment of 472 million
workers, agreed unanimously on a permanent program and
set up an organization to develop the work. Its membership
included an advisory committee of economists, social scientists,

engineers, and statisticians; there were representatives of the
American Federation of Labor, the Railway Brotherhoods,
United Mine Workers of America, and other labor organizations, the United States Chamber of Commerce, the National
,Manufacturers' Association, Government officials, and bankers.

Its resolutions were in every case the unanimous view of
its members.

The measures covered a wide range of economic factors
and the results were striking. As a consequence of the Conference from 172 to 2 million persons, it is believed, were set
at work who otherwise would have been idle. "Clean-up"
campaigns in various industries were inaugurated. The enlargement or renovation of plants and improvement in equipment were started as a direct contribution to meet the emergency. There was a marked revival in the construction industries, and an improvement in general business quickly became apparent.
Cities in the United States of 20,000 inhabitants or more
where there was an unemployment problem organized to relieve it. A central clearing house to coordinate these efforts

was set up in Washington by the Conference, under Col.
Arthur Woods, who was one of its members and was former
Police Commissioner of New York City.
Municipal bond sales for public works broke all records.
Three major problems faced the continuing committee of
the President's Conference on Unemployment : the problem
of recurring booms and depressions, called the business cycle,
and the problem of seasonal instability of employment especially in such vast industries as bituminous coal mining and
the construction industries.
What these booms and depressions mean in terms of wasted
capital, wasted equipment, and wasted labor is almost beyond
the power of mathematics to compute. In the short space

1110

111

of 20 years we have had four important depressions and several
minor ones. Things were dull in 1903, there was a depression
in 1904, improvement in 1905, boom in 1906-7, depression in

1908, activity in 1909-10, a minor depression in 1911, gain
again in 1912-13, depression in 1913-14, improvement in 1915,
uncertainty in early 1916, then the war boom, and finally the
depression of 1921. They appear to have come a little thicker

and a little faster in these last 20 years than in the 20 that
'preceded.

If the enormous wastes from future periods of depression
were to be avoided, a close analytical study of the possibilities
of controlling the business cycle was necessary, and for this
purpose Secretary Hoover appointed a committee headed by
Mr. Owen D. Young, Chairman of the Board of the General
Electric Co. The Carnegie Corporation made an important

financial contribution to the work, and the study began in
February, 1922.
During the whole of 1922, this committee was at work. The
task of making a survey of the available facts was entrusted to

the National Bureau of Economic Research, Inc., of New
York, of which Dr. Wesley C. Mitchell, the authority on business cycles, is director. Based upon the facts which this
survey revealed, the committee prepared its report and made
specific recommendations as to the part which the Government should play and as to the share of industry in stabilizing
the business life of the nation.
IV. BUSINESS CYCLES AND UNEMPLOYMENT.

This was the first national effort to study the problem of
unemployment in its relation to business booms and depressions, it was also the first attempt to discuss systematically
ways and means of controlling the extremes of the business
cycle. By closely studying the fluctuations in their own business, certain firms have been able to foresee general periods
of depression and to avoid their most disastrous effects ; the
Committee believed that if there could be a general anticipation

of the business cycle by American business men, not only

would the danger of protracted periods of unemployment be
lessened but the entire business structure would be materially
strengthened.

The conclusion of the Committee, as stated in a foreword
by Secretary Hoover, is :
"Broadly, the business cycle is a constant recurrence of irregularly separated booms and slumps. As the slumps are in
the main due to wastes, extravagance, speculation, inflation,
overexpansion, and inefficiency in production developed dur-.
ing the booms, the strategic point of attack, therefore, is the

reduction of these evils, mainly through provision for such
current economic information as will show the signs of danger
and its more general understanding and use by producers, dis-

tributors, and banks, inducing more constructive and safer
policies. Furthermore, the Committee has developed construc-

tive suggestions as to the deferment of public work and construction work of large public service corporations to periods
of depression and unemployment, which while in the nature of
relief from evils already created, would tend both by their
subtraction from production at the peak of the boom and addition of production in the valley of depression toward more
even progress of business itself."
Conditions within business itself, rather than remote, outside consideration, are the primary cause of the business cycle
and past cycles have shown certain common tendencies. During the up-grade, or period of business revival, we see a rise
in the volume of manufacturing, in stock exchange prices,
in commodity prices, and in demand for credit by business
men and speculators. Then follow stiffening money rates,
and the gradual straining of credit, with possible curtailment
to speculators. The change is heralded by falling stock exchange prices, while business wavers or continues to rise unevenly, and transportation facilities are overburdened and deliveries delayed and the apparent shortage of goods is intensified by speculative buying and duplication of orders. Credit
expansion nears its limit ; public confidence is shaken ; orders
are canceled ruthlessly; there is quick liquidation of inventories

with sharp and irregular fall of prices ; and workers are laid
off. The cycle ending in the depression of 1921 was unusual
in the extent of the preceding expansion and in the severity of
the depression. During the deepest part of the slump, as I
have said, more than 4 million American wage earners were
out of work.
The proposals for the possible prevention of another such
period of widespread unemployment in America were placed
before the bar of public opinion for concerted public action
by the President's Committee. They concern the control of
extreme fluctuations of the business cycle, as related both to the
direct prevention of expansion or inflation and to the prevention of unemployment.

Three of the ten recommendations of the Committee are
concerned with the need for knowledge as a guide to business

An increase in the facilities of the Department of
Commerce is also recommended and a greater degree of cooperation with that Department in coordinating and extending
business information. The Committee also emphasizes the
need for expansion and standardization of statistics by the
Department of Labor. It urges periodic and prompt publication of the facts about the following key industries: raw wool
and woolen textiles, raw cotton and cotton textiles, hides and
leather and shoes, iron and steel and leading fabricated products of each, zinc, lead and copper and leading products of
policies.

each, and bituminous coal.
A section of great practical value discusses the use of con-

struction work as a balance wheel for business.

If all
branches of our public works and the construction work of

our public utilitiesthe railways, telephones, and others
could systematically put aside financial reserves to be provided

in times of prosperity for the deliberate purpose of improvement and expansion in times of depression, we should not only
decrease the depth of depressions but we should at the same
time diminish the height of booms. A further advantage of
the proposal is that our plant and equipment would be built
in times of lower costs than is now the case when the con-

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tractor competes with consumable goods in overbidding for
Loth material and labor.
This utilization of Government projects as an employment
reserve, so far as possible, by which demand for labor and
materials may be stimulated during depression, is now a part
of the Government's policy. Last spring in response to President Harding's request f or an opinion regarding the advisability of building or postponement of proposed public construction work, Secretary Hoover recommended that such construction then under way should be slowed down and the ini-

tiations of new projects delayed, in order that they may be
pushed forward at some later period when there is less activity

in private construction and greater need for providing erhployment to the nation's workers. But the report on Business
Cycles and Unemployment also has had a profound effect on
the policy of the construction industries as was seen when the
Construction Council which includes representatives of the
American Federation of Labor, bankers, railroad men, architects, engineers, contractors, material manufacturers and
dealers, bond and insurance representatives, and municipal
officials, declared their determination themselves to limit construction in order to avoid a later depression.
At the same time that the investigation of business cycles
was undertaken, the Conference planned to name a committee
to study the possibilities of stabilization in bituminous coal

mining operations, and the Cabot Fund of Boston made a
grant for this purpose.
V. COAL.

But before the investigation could begin, the threat of a
strike on April 1, 1922, made it obvious that the plan must
either be dropped or else greatly curtailed. To have then
named a joint committee of operators and miners to sponsor
the studies would have been misunderstood, and to have made

a scientific investigation under the auspices of such a committee in a period of vast conflict such as promptly developed
would have been out of the question. However, under the di-

rection of the Secretary of the Conference, an investigation
of the important records already available was inaugurated,
and when the United States Coal Commission was named by
the President in October, 1922, the Conference on Unemployment turned over to it data of value covering wages, earnings,
records of production, days worked, men employed and mine
capacity, variations in production by regions, variations in
consumption, strikes and suspensions, coal storage, investment
in lands and mines, and methods of marketing coal.

The naming of the United States Coal Commission was
recognition by the Government of one of the pressing examples
of an unstable industry employing y, of a million mena prob-

lem which may now seem further from solution than ever.
But it is my belief that the work of the United States Coal
Commission has advanced not simply our information in
regard to a very difficult industrial situation, but has strengthened our knowledge of how to deal with it.
It is impossible to evaluate the work until the final reports
have been made.
VI. CONSTRUCTION.

The third great undertaking of the Conference under the
direction of Secretary Hoover is an investigation of the wastes
caused by instability in the construction industries. This study
is now in progress.
'Previous surveys have indicated that most construction ac-

tivity is concentrated in 7 to 10 months of the year, which
means that building trades workers, in an industry which employs 2,000,000 men, can not find work in their trade during
several months, and that contractors' organizations and equipment men, architects, engineers, building material producers,
and others connected with construction, must usually remain
idle for similar periods. This idle time represents waste and
direct losses to the construction industries and large numbers
of workers, as well as the public.
The committee expects to report to Secretary Hoover next
winter with a comprehensive program to do away with dull

seasons in construction, and it is hoped to have the plan in
operation before the beginning of the usual spring building
program next year.
The committee will study seasonal construction by regions

and kinds of structural work, showing the dates of beginning and end of the normal building season for types of work,

such as road building, dwellings, apartment and business
houses.

The survey will also cover seasonal production in building
materials, to determine how far this is due to seasonal building operations and trade customs and how far to climatic conditions. For instance, in spite of the fact that climatic conditions in many sections of the South are as favorable to building operations in winter as in summer, the chief building activity in Southern cities, due to long habit and the custom of
auxiliary industries, closely follows the same seasonal ups and
downs as in the North.

Let me conclude:
These ideas are native ; they are characteristically American;

They have proved themselves "good business";
They are individualistic;
They are an inspiring challenge to the American business
man to lead ;

And they are being received with an enthusiasm which
promises great things for the future.

PUBLICATIONS REFERRED TO IN FOREGOING ADDRESS

American Individualism, a timely message to the American people; by
Herbert Hoover. Doubleday, Page & Co., New York, 1922.
Report of Industrial Conference called by the President. Privately
printed, March 6, 1920.
Waste in Industry, by the Committee on Elimination of Waste in Industry of The Federated American Engineering Societies. McGrawHill Book Co., New York, 1921.
Report of the President's Conference on Unemployment. Government
Printing Office, Washington, D. C., 1921.
Business Cycles and Unemployment, report and recommendations of a
committee of the President's Conference on Unemployment, including
an investigation made under the auspices of the National Bureau of

Economic Research, Inc., with a foreword by Herbert Hoover.
McGraw-Hill Book Co., New York, 1923.
Business Cycles and Unemployment, recommendations of a committee of
the President's Conference on Unemployment Government Printing
Office, Washington, D. C., 1923.

Full text of Papers of Benjamin Strong, Jr. : Correspondence with the Commerce Department : Secretary of the Conference on Unemployment, Commerce Department, E. E. Hunt, 1921-1923

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