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W C T C T W X W W T C PCTEL0HIBIT8 iflr Karl R. Bopp M ò r e the Aitrioui Institute of 6x30 p.m., ìiaroh 11, 1$¡46 RECENT ECONOMIC DEVELOPMENTS Introduction 1. The current situation a. b. 2. I. Domestic: strong inflationary pressures International: rapid deterioration Origin of our present problems was the war Domestic developments A. Real factors 1. Construction a. b. 2. Location Manpower a. b. c. d. 3• Peak - July 1942, 286; latest, 93 To armed forces - 12 million Civilian - 45 to 52 million Overtime Peak - March 1943> 132; latest, 116 Production a. b. c. Peak - October 1943, 227; now, 149 About half for war, half for civilians Freight-car loadings: peak - Jan. 1944> 144; latest, 127 - B. 2 - Monetary factors 1. General objective: to assure adequate funds with minimum of disturbance that is, minimum borrowing from banks 2. December 8, 1941 statement of Board of Governors: nThe financial and banking mechanism of the country is today in a stronger position to meet any emergency than ever before. The existing supply of funds and of bank reserves is fully adequate to meet all present and prospective needs of the Government and of pri vate activity. The Federal Reserve System has powers to add to these resources to whatever extent may be required in the future. The System is prepared to use its powers to assure that an ample supply of funcs is available at all times for financing the v;ar effort and to exert its influence tov;ard maintaining condi tions in the United States Government security mar ket that are satisfactory from the standpoint of the Government's requirements.n 3- Implications of statement and procedures employed to make it effective a. Pattern of rates (1) Origin of pattern (2) If you are going to stabilize begin where you are b. c. Post bill rate and repurchase option Reserves eliminated against war loan deposits d. e. f. 4« Reduction in reserve requirements in central reserve cities Half per cent preferential rate Nonbankable issues Government finance Amount (Bill, t) Government expenditures*. ___ 387 156 Government receipts,net Borrowings : From commercial banks 73 22 From Fed. Res. Banks. From others........ 136 Per cent , 100 40 19 6 35 i J ..... . *Incluaes $23 billion increase in Treasury balance. 5. The supply of money a. C. Demand + U.S. deposits and currency increased from $43 (12/31/40) to $127 billion (end of 1945) Prices - and distribution 1. Kept under control during the vrar through direct controls a. b. Rationing and priorities Maximum prices and wages II. III. International developments A. The Bretton Woods Agreements B. The Eritish Loan Agreement Where we stand today
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