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TOMORROW Address By Chester C. Davis President, Federal Reserve Bank of St. Louis Before the Annual Banquet of the Little Rock Chamber of Commerce Hotel Marion, Little Rock, Arkansas Thursday evening, January 20, 1544 TOMORROW When I asked your president to assign me a broad topic with latitude and range to it, I had in mind how fast these days the moving finger writes. The good egg today may be a dead duck tomorrow. He came back with one that has a lot of future to it when he asked me to talk about "Tomorrow". But even when we are deal- ing with something we think of as comfortably away in the future, we may be like Ernie Pyle's soldier who was on night outpost duty on a fast-moving part of the North African front. He heard a noise, he shot at it, then he called out: "Who went there?" Someone once remarked that about the only good the title of a speech did was to give the speaker something he could keep away from. But a speaker can't get away from this subject cfmine; what he really needs to do is to whittle it down to his size so he can take hold of it. We hear a lot of talk now about post-war planning - planning for tomorrow. Some people think there is too much talk of it; that we ought to get on with the war, and take care of the future when it comes. Let's take a minute to get that thought in the right perspective. We have crossed the threshold of a new year, a year of desperate war, a year in which more American boys will probably be lost in battle than this nation has lost in all the previous foreign wars of its history. We've got that war to win, and no thought of tomorrow can be permitted to detract one featherweight from our effort to that end* Many of us are not doing all that we can do or all that we should be doing to win this war, but that isn't because of our overconcentration on plans for the future. As a nation we were totally unprepared for war in 1917. We were even less prepared for the peace that followed. We were equally unprepared for the Second World War, and we may be unprepared again for the problems that will surround us with the end of the shooting stage of the present war. We know we will not be prepared, either abroad or at home, unless we can do our war jobs without losing the - 2- sense of touch with the future which we must cultivate and use if we are to survive. We will make a sorry show if we expect to improvise as we go along, come Armistice Day. The terms I have been using are too broad. Planning for the future, post- war planning, are words that cover too many problems for us to deal with them ad- * equately even though we know the problems they point at are vital to our human interests right here in Little Rock. Perhaps the most we can hope to do is to run over the field and try to see some of the important ones in perspective; perhaps, also, we can find a measure of agreement as to their relation and their importance, one with another. I should like to start with our international future, the role the United States is to play in the ordered or the disorderly world of tomorrow. The crying need here is for a common ground from which all citizens of this nation can start their thinking. We need to understand the world we live in better than we do; to understand that wishful thinking wonft fence in our part of it for us. We need to recognize that a long time ago we passed a turning point as a nation, changed swiftly from a debtor, frontier country to the world's foremost creditor nation possessing the bulk of the world1s monetary gold; we must learn to act the part. We must speak out in protest now and tomorrow against those mistaken ones who think we can will or wish for ourselves a place isolated and immune from the rest of the world; who believe that we will have no international responsibilities if only we will turn our back on them. Let's get out of our minds the thought that there is any magic by which we can sell abroad without buying from abroad. Let's tell our leaders in the Nation's Capital that the people will support them in a program of collective security that will outlaw banditry and aggression; that will scotch any future Herrensvolk dream of world domination while still in the slingshot - 3 stage. No blueprint here; at this stage I don't think one is possible. mentally a question of attitude. It!s funda- There is less excuse for divergence of American opinion in this than in domestic fields. We can't sacrifice our priceless youth on the battlefield only to back away from, responsibility as we did before. Certainly I would expect to find no substantial difference of opinion hore in Arkansas, whose major crop depends largely for its market on an orderly world and balanced international trade. On the domestic front we have seen how a nation fighting for its life can employ all of its human and material resources in high and sustained production. We know that this all-out effort has meant a high and widely distributed national income. The question that confronts us in every state and county is how to continue high levels of production and income after the nation has turned from war to peace* How c9.11 this nation continue in peacetime a productive effort equal to the productive effort we have been putting into the war? Where is there a market for the enormous flow of peacetime goods that would result from such an effort? Remem- ber, we don't have a marketing problem for the half or more of our national output that is going to war. War, as Charles F. Kettering once remarked, is the reverse of business economics; instead of running your business to suit your customers, you send him the last thing in the world he wants, and try to make delivery when he least expects it. There isn't much question that we need and can use the full product of our industrial and agricultural plant; it could be absorbed in higher standard of living, nutrition, health, and comfort. The trouble is in getting it distributed, in creat- ing ability to pay that equals our ability to produce. We have always fallen down at that point; some believe we always will. I am not so sure of that as I am that mankind will always be trying for improvement as long as we have the paradox of idle - 4- men and idle plant alongside great unfilled want. No political, economic, or social system will be invulnerable in another period of long-continued mass unemployment. These are some of the challenges that confront leadership in this country. I prefer to see the questions answered through the utmost possible expansion of private employment and production, with a minimum reliance on government-made work. I am not naive enough to believe that the government will not play a substantial role in meeting the post-war employment problem; But I know that the more men we can employ profitably in private enterprise, the fewer there will be for whose employment the government will assume responsibility. No matter what party is in power, it will be the concern of the government to avert mass unemployment. The first consideration of government in tackling this problem should be to encourage maximum non-government employment. Government policy must concern itself as to whether adequate incentives exist to encourage expanded private employment; war taxes will need speedy revision to that end. The aim of public policy must be to create confidence that jobs and income will be sustained. If and when public v/ork must be undertaken to supplement private employment, then it should be in well-planned projects that add permanently to the Nation1s economic and social wealth, chosen so that every government dollar spent will stimulate the expenditure of the maximum number of dollars in private employment. The states must be prepared for a real part in such a program. Right now sound State fiscal policy calls for maintenance of tax income, the reduction of debt, and the building of cash reserves for the future. Little Rock is not only the political and geographic capital of Arkansas; it is to a certain extent the financial and economic center as well. This community goes up or down with the economic pulse beat of the State. Tonight when I talk Ark - 5- ansas I mean Little Rock, and conversely what I say to you applies as well to the other hustling cities of the State. In appraising the future of a community we must start from where we are with what we've got. No one inside or outside this State is going to wave a magic wand and transform Arkansas overnight or in a decade into a Connecticut or New Jersey of manufacturing concentration. This State is predominantly agricultural and for a long time to come we of the cities will prosper or languish along with our cotton growers, our livestock and poultry producers and the makers of our fruit and specialty crops. You are interested therefore in expanding and stabilizing farm income. That doesn*t mean that your agricultural committee has the responsi- bility to formulate a farm program which it should try to impose on the rural communities; it does mean that you should have the closest possible relations with the agencies that are trying to strengthen the basis of Arkansas agriculture. Help them all you can. God knows there is room for infinite improvement. The literature of all races is rich with fable and maxim to illustrate the human tendency to look for the pot of gold at the end of the rainbow. overlook its application here. Let's not Our most substantial and profitable growth here in Arkansas will come from the better use of our soil and timber and climate resources. But we are not well balanced. More than half of the income produced in Arkansas is from agriculture and well over half of the agricultural income is from one crop cotton. The past 20 years have been hard on kings, and King Cotton is no exception. He still is king over much of this state and a large part of the United States, but his throne is shaky. Internationally, the conditions that made it natural for this developing new country to export raw materials to the rest of the world no longer exist. Our old customers no longer depend solely on natural fiber for their tex- tiles - the test tube has spawned a large and diversified family, and its procreative days are by no means over. what new impulses Only God and the National Science Research Council know the war has brought in the synthetic fiber field. - 6- We haven't even scratched the surface of our agricultural possibilities in this state* Here where a benign and temperate climate make all-year-round pastures possible, we haven1t even tested our capacity to produce livestock and livestock products in competition with the colder northern regions which heretofore have held a virtual monopoly - have even made up the deficits in our own production. That Arkansas needs wider diversity in its agricultural production is as commonplace in words as the Golden Rule, but this would be a lot better place if we made up our minds to do something besides talk about it. Of course, that goes for the Golden Rule, too. There are plenty of men out on the farms and in our agricultural college and its experiment and extension services who know what we can do and what we should be doing. We're all of us a good deal like the old farmer when the county agent asked him to come to the meeting to hear about better farming. "Hell, there's no use my coming", the old man said, ffI don't farm as good as I know how to now.ff Diversified farming brings a diversified manufacturing growth along with it. Time will not permit me to expand that thought because I want to hurry to another side of the picture - the great importance to the farmers of this state of a continued growth in its industrial and factory payrolls and production. Any sound increase in industrial activity is a move toward better economic balance for Arkansas. The war has about doubled the number of factory workers employed in Arkansas. Where there were about 36,000 pre-war factory workers, there are 70,000 now. About 25,000 of these are employed in major war plants. The job of keeping this number of trained factory workers in some kind of industrial production after the war doesn't look too enormous; finding continued employment for 30 to 35 thousand factory workers who are employed now because there is a world war on, doesn't look like too much of a job. But before long Arkansas - 7will have around 150,000 young men in the Armed Services, and we want them back here when they are discharged. Let me pay my respects here to the importance of the unspectacular growth of the little manufacturer - the woodworker with the genius to combine raw material, trained labor and the new demands on wood into a going concern; the baker who serves his community well and branches out; the butcher who grows into a small but successful packer. I am not crying down the importance of finding future usefulness for the great plants at Jacksonville, Bauxite, Marche, Jones Hill, Malvern, El Dorado, and Pine Bluff. But a lot of good little industries, fed by accessible markets and using Arkansas raw materials, can be enormously important. Now what good will planning about these things do, and who is ordained to do it? Let me release a few generalities on that. The closer home the planning is done, the more effective it is likely to be. The bulk of the job has to be done in the community - it will not be done for us from the outside. Plans a man makes for his own business have a better chance to bear fruit than plans made for him by a professional or an association miles away, plans a community works out for itself are worth more than generalized planning at the Nation1s Capital. However, plans leading to teamwork between business management, labor, and government to encourage high levels of employment and production and to continue big, well-distributed payrolls can provide a favorable setting for community plans and community growth. Significantly, one nationwide organization with which you are familiar and v/hich is devoted to post-war jobs and high production, the Committee for Economic Development, has planned its program along two lines: l) investigation to find out what is necessary to provide a climate or environment favorable to a high level of post-war employment, and 2) organization to stimulate each local community and local business concern to plan its own conversion from war to peace, and its ovm post-war program for jobs and production. - 8Arkansas has a superbly integrated organization as nerve center for its work along this line, and I predict the nation will hear much of it, and favorably. The Arkansas Economic Council, which you helped set up, and its wide ramifications in associated organizations * the Chamber of Commerce, the Arkansas State Planning Board, the State Agricultural and Industrial Commission, the Committee for Economic Development, the University of Arkansas, and other colleges, to name a few in this excellent combination, is one of the best it has been my privilege to note. At least no other Eighth District state has put in as much time and effort on the postwar problem as has the State of Arkansas. Of all the states contained in whole or in part within the Eighth Federal Reserve district, Arkansas has registered the greatest percdntage increases in both non-agricultural and manufacturing employment. These significant gains in over-all employment have lifted state income payments from less than $500 million in 1939 to well over $1 billion in 1942. Over the same period per capita income in the state has increased more than 100 per cent from $246.00 to $514.00. Arkansas leads the entire nation in percentage increase in income payments and ranks third among the 48 states in relative gain in per capita income. That's fine, but let us not forget that we started pretty far down on the scale. In planning for the post-war period Arkansas now has certain very distinct advantages. In the first place, the wartime industrialization of the state has pro- vided a much more extensive and much better trained labor force than has ever before existed here. With this group of trained manufacturing workers it will be possible to man such factories as are likely to develop in the state after the war, even though we discount, wisely I think, the probability of maintaining some of the large ammunition-explosive plants which have been established here. I believe there is much better prospect for the maintenance of at least a good portion of the new aluminum industry. - 9 ~ When this problem of post-war industrial development is approached realistically, the most promising avenues to expanded employment will probably come through the growth of textile plants, woodworking enterprises, non-ferrous metal factories, and new and expanded food processing plants so that Arkansas cotton, and Arkansas lumber, and Arkansas bauxite, and Arkansas food can be processed here at home, and Arkansas people receive a much greater share of the income developed by their production than has ever been true in the past* I believe your planning bodies arenft interested in acquiring just any kind of a new plant; they want growth that economically belongs here. Such planning is sound and I congratulate you upon this approach. I have been much interested recently in hearing and reading about the development of a very extensive survey of the post-war possibilities of the Fort Smith trading area in the northwestern part of your state, What they plan to do may be of interest here tonight - I am sure you have heard about it. A community group, organized under the Arkansas Economic Council, has undertaken to study the present situation and the post-war possiblilities around Port Smith. cludes 11 counties in Arkansas and 4 in Oklahoma. The area in- This survey will use the tech- nical research facilities of your very excellent State University, your State Planning board, your Department of Agriculture regional staff, and of various governmental agencies directly interested in Arkansas. However, the direction of the survey and the planning that will result from the findings of the survey are being done by the leaders of industry, trade, and agriculture in that section of Arkansas. This is a home project. As I understand it, the Arkansas Economic Council has a state-wide organization and the Fort Smith survey will probably be followed by numerous other surveys done by the communities themselves in various other areas of the state. When these studies are completed, they v/ill have shown rather accurately where the communities stand, and will probably develop somewhat less exactly what the future possibilities are# - 10 If anyone of your leaders could trace out for you, step by step, just how the work you are doing and will carry forward is going to pay off in jobs and industries, you would have no need for your committees, your far-flung teamwork-you could just turn the job over to him* It is because no man has all the answers, or the power to decree them, that the committees are needed. This I know: The community which studies its resources and its markets and encourages their combined development will outstrip the community that does not. The very act of cooperation generates new forces in the community. Now as I come to a conclusion, let me bear down once more on the function of community leadership. The bulk of worthwhile planning for the future must be done right at home - it will not be done for us from the outside.. Even where outside decisions are important, they will be influenced by what the community does by the vigor, determination, the youth and sparkle of its organized effort. This calls for participation in leadership not by the few, but by the many. Little Rock's tomorrow will surely reflect the quality of your leadership in this organization and in this state. Tomorrow does not belong to the tired, the passive, and the old; it belongs to the virile, the active, and the young. 000)0(000
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