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 . OOtlEGE H6SARY 
 
 THE PEW, STAT£ ^8#fea 
 
 U. S. DEPARTMENT OF COMMERCE 
 
 UNEMPLOYMENT AND 
 BUSINESS STABILITY 
 
 AN ADDRESS BY 
 SECRETARY OF COMMERCE ROBERT P. LAMONT 
 
 BEFORE THE 
 
 NINETEENTH ANNUAL MEETING OF THE 
 
 CHAMBER OF COMMERCE OF THE UNITED STATES 
 
 AT ATLANTIC CITY, N. J. 
 
 WEDNESDAY, APRIL 29, 1931 
 
 IE 
 
 ITED STATES 
 GOVERNMENT PRINTING OFFICB 
 WASHINGTON : 1931 
 
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 REPORTS PREPARED FOR THE PRESIDENT'S EMERGENCY COM- 
 
 MITTEE FOR EMPLOYMENT 
 
 The following reports have been issued by the President's Emer- 
 gency Committee for Employment. As their titles indicate, these 
 pamphlets are designed to stimulate activities at once on all projects 
 that are susceptible of immediate attention. 
 
 Copies of these reports are available, without cost, on application 
 to the President's Emergency Committee for Employment, Depart- 
 ment of Commerce. 
 
 (1) Organization to Promote Employment in the State of Ohio, 1929 and 1930. 
 
 (2) A Survey of Unemployment Relief in Industry. 
 
 (3) Outline of Industrial Policies and Practices in Time of Reduced Operation 
 
 and Employment. 
 
 (4) Suggestions for Possible Repairs and Improvements in the House and Its 
 
 Equipment. 
 
 (5) Selected Bibliography — Industrial Plans for the Regulation of Employ- 
 
 ment. 
 
 (6) Unemployment — Industry Seeks a Solution. 
 
 (7) Spruce up Your Garden. 
 
 (8) Emergency and Permanent Policies of Spreading Work in Industrial Em- 
 
 ployment. 
 
 (9) Home Gardens for Employment and Food. 
 
 (10) Institutional Construction — An Avenue to Employment. 
 
 (11) Modernizing the Home — Suggestions for Remodeling and Modernization 
 
 of Houses and Apartments. 
 
 (12) Policies and Practices for the Stabilization of Employment in Retail 
 
 Establishments. 
 n 
 
UNEMPLOYMENT AND BUSINESS STABILITY 
 
 An address by Secretary of Commerce Robert P. Lamont before the Nineteenth Annual 
 Meeting of the Chamber of Commerce of the United States at Atlantic City, N. J., 
 Wednesday, April 29, 1931. 
 
 I greatly appreciate the opportunity of addressing you on this 
 important occasion of the nineteenth annual meeting of the Chamber 
 of Commerce of the United States, and should like to discuss a 
 problem which you will agree represents at this time a vital responsi- 
 bility of American industry and a very pressing challenge to our 
 business leadership. It is a problem, moreover, which in a peculiar 
 sense demands an associational or cooperative approach for its 
 permanent solution. 
 
 Unemployment — for that is the problem of which I shall speak — 
 has always accompanied such great depressions as that from which 
 the world is now suffering and is an evil which strikes deep at the 
 roots of our economic and social well-being. Its paralyzing effects 
 are felt not only by the unfortunate millions throughout the world 
 who find themselves idle, though eager to work, but in every branch 
 of industry and commerce and throughout the entire community. 
 
 Enforced idleness and loss of income endanger the security and 
 welfare of the individual and his family. They also mean curtailed 
 operations and shrinking profits to business enterprise, for unem- 
 ployed labor implies also unemployed capital. The worker is both 
 producer and consumer, and when he finds himself without a job and 
 without income, business has lost a buyer. Hence, the employer 
 who finds it necessary to contract his own operations and discharge 
 his workers is helping to curtail the market for his own goods and 
 those of other producers, and is thereby further aggravating a situ- 
 ation of which he himself is a victim. This vicious circle of unem- 
 ployment, curtailed purchasing power, and then further unemploy- 
 ment is an evil from which our own and other commercial countries 
 have suffered at recurrent intervals ever since the dawn of this 
 industrial age. There are some who accept this situation with a 
 resignation bordering on fatalism and who believe that the cycle of 
 prosperity and depression is an economic malady for which it is 
 useless to seek a remedy. I do not accept this view, although appre- 
 ciating fr ia y- the many difficulties to be encountered in the search for 
 correctives, and I am also aware that the effects of many of the 
 remedies proposed would be worse than the ills they seek to cure. 
 
 But it is equally certain that the problem of cyclical or abnormal 
 unemployment, and the larger problem of which it is a part — that 
 of stabilizing business activity — is not one that can be solved by 
 refusing to recognize its existence. It demands the same kind of 
 persistent and careful research and study, and the same fine spirit 
 of cooperative effort, by means of which American business has been 
 
 55667° — 31 (1) 
 
able to meet and solve so many of its common problems. I need 
 hardly mention the many fields of constructive effort in which 
 American business men, individually, and particularly through their 
 varied trade associations, have been successful in improving prac- 
 tices, introducing economies, and eliminating waste. The extra- 
 ordinary success of associational efforts during the past decade in 
 elevating the standards of business conduct, in improving employee 
 relations, in attacking the problems of cost accounting, budgeting, 
 credits and collections, and in simplification and standardization, 
 indicates the important role which similar collective action can play 
 in helping to eliminate these major economic wastes of instability 
 and unemployment. 
 
 At the present time, quite naturally, much attention has been cen- 
 tered on the problem of unemployment. The subject has been dis- 
 cussed in great detail during the past year and a half, often without 
 much knowledge of facts and sometimes with political or other bias. 
 What are the known facts? A nation-wide enumeration of the 
 unemployed was made last April in connection with the regular 
 census of population. A carefully prepared schedule was used in 
 this canvas and the enumerators were compensated on the basis of 
 the number of individuals enumerated on this schedule, so that it 
 was obviously in their interest to count all of the unemployed. The 
 enumerators were instructed to record on the unemployment schedule 
 information regarding every person, ordinarily in the gainfully 
 occupied class, who was not at work on the day before the enumerator 
 called. 
 
 All of the persons enumerated on the unemployment schedules 
 were then divided into seven classes. Class A, including those who 
 were " out of a job, able to work, and looking for a job," was ob- 
 viously the most significant and important group, including nearly 
 all of those we have in mind when speaking of the " unemployed." 
 Class B included those who reported themselves as " having jobs " 
 but not working and not receiving pay on the day before the enu- 
 meration. This group consisted in large part of persons working 
 part time — less than the full number of days each week — and also 
 a number who had been laid off from their regular jobs, and should 
 therefore be considered as temporarily unemployed. The other five 
 classes included persons returned as out of a job because of sickness 
 or disability; having jobs but idle for the same reason; out of a job 
 but not looking for work; having jobs but voluntarily idle without 
 pay ; and having jobs and drawing pay though not at work — that is, 
 those on vacation. Obviously, practically all of the persons in these 
 last five groups constitute a type of unemployment which can not be 
 considered an industrial or economic problem. W 
 
 In order to provide some information on the extent of unem- 
 ployment as promptly as possible, and to avoid the delay involved 
 in punching the millions of cards necessary for a complete mechan- 
 ical tabulation, an immediate hand count was made of the number 
 enumerated in class A. Preliminary results were published in 
 August, 1930, and the final returns for this class showed 2,429,062 
 persons, or about 2 per cent of the population, as out of a job, able 
 to work, and looking for a job in April, 1930. These figures were 
 criticized in some sections of the press and in Congress in two re- 
 spects : First, as being altogether too small a number, and second, as 
 
being purposely misleading in stating the percentage of unemployed 
 as a fraction of the total population, rather than as a proportion 
 of the total number of gainfully occupied persons. With respect 
 to the latter criticism, I might state that the Census Bureau was 
 able to obtain figures on total population very early by means of a 
 hand count, but that even now, a year later, we do not have complete 
 figures on the number of gainfully occupied persons, so that such a 
 comparison at the time the unemployment results were released 
 would have been quite impossible. 
 
 As months went by and industrial conditions grew steadily worse, 
 discussion of unemployment continued, and more and more extrav- 
 agant guesses, some running as high as 10,000,000 to 12,000,000 
 were advanced in support of movements to obtain equally extrava- 
 gant appropriations from Federal funds. It was obvious, of course, 
 that unemployment had increased considerably by midwinter, partly 
 from seasonal causes, so that it was decided to take a special census 
 of unemployment in 19 of the largest cities at a time which it was 
 believed would represent the lowest point of the depression. The 
 4,700 special enumerators who were employed on this task made a 
 complete house-to-house canvass of every dwelling place in these 
 cities. The field work was commenced January 15 and the last 
 schedule was received in Washington on March 2. The results, 
 published about the middle of March, showed a total of 1,932,000 
 jobless persons in those 19 cities, from which it was estimated that 
 there were upward of 6,000,000 in the United States unemployed in 
 the latter part of January. 
 
 In some quarters — and curiously enough some which believed the 
 April results were too low — the results of the January census were 
 criticized as exaggerating the situation, but, generally speaking, 
 there were few criticisms of this estimate. But some observers cited 
 the January figures as a vindication of their criticism of earlier 
 announcements and of their own high estimates. An examination of 
 the course of business during the period from April, 1930, to January, 
 1931, however, shows quite clearly that there had been a large in- 
 crease in unemployment between the two dates. At the time of the 
 April count we were in the sixth month of depression, and business 
 generally was considerably above the low point reached in the fol- 
 lowing winter. Public utilities, railroads, and many large indus- 
 trial enterprises were carrying forward construction programs in 
 accordance with the agreements reached at the President's confer- 
 ences in the fall of 1929. Furthermore, seasonal unemployment in 
 April is normally less by nearly half a million than in January. 
 When the second census was taken, in January, we were nine months 
 deeper in depression than at the time of the first count, and seasonal 
 unemployment was at the highest level of the year. 
 
 It was obvious that there had been a large increase in unemploy- 
 ment between the two dates, and good additional evidence of the 
 extent of this increase is to be found in an examination of the figures 
 collected each month by the Department of Labor and other official 
 agencies. By applying these month-to-month changes in employ- 
 ment to the April unemployment aggregate we arrive again at a 
 total of about 6,000,000 for January — a striking confirmation of the 
 results of the special census taken in that month. 
 
I have gone into considerable detail in this matter, as I am anxious 
 that you should be in possession of all of the facts, rather than hav- 
 ing to depend upon estimates and guesses frequently made without 
 any sound statistical basis. 
 
 Everyone will admit that a total of 6,000,000 persons out of work 
 is a matter for serious concern, although it must be remembered that 
 not all of this unemployment can be attributed to the effects of busi- 
 ness depression. Even in the most prosperous years there is a con- 
 siderable amount of normal unemployment involving a shift of 
 workers from job to job, as well as seasonal unemployment, which 
 varies from a very small number in busy months of the year to a 
 total of more than a million and a half in January and February, 
 when construction and agriculture and many lines of trade and 
 industry reach a low ebb for the year. This type of unemployment 
 is not, under normal conditions, serious, because it generally involves 
 not more than a few weeks' or at most two or three months' idleness 
 for each individual. Since these workers are regularly employed 
 during the remainder of the year and are thus able to maintain them- 
 selves during these expected period of idleness, they do not become 
 a part of the general problem of unemployment. 
 
 As a matter of fact, the only kind of unemployment that gives 
 cause for anxiety is that class of abnormal unemployment which is 
 the inevitable by-product of such depressions as we are now going 
 through, and this is the serious problem confronting the country to- 
 day. The total of 6,000,000 for last January — which I am happy 
 to say has already been reduced somewhat by the slight improve- 
 ment in business during the first quarter — may safely be assumed to 
 include 1,500,000 of seasonally unemployed. This indicates that the 
 abnormal or depressional unemployment amounted to 4,500,000 in 
 that month, or somewhat less than 10 per cent of the total number 
 of workers in the country. But the figures and charts published 
 by various statistical agencies and our own studies in the Depart- 
 ment of Commerce indicate that the general volume of business has 
 fallen to a point some 25 to 30 per cent below normal, while some 
 important industries, such as steel, are operating at little better than 
 50 per cent of capacity. 
 
 Is there any reason to believe that, when business has regained 
 this 25 or 30 per cent loss and returned to normal volume, this 10 
 per cent of the workers will not be readily absorbed by industry? 
 
 Certainly there was no serious unemployment problem during the 
 period from 1923 to 1929. The subject was not discussed in Congress 
 and did not appear on the front page of newspapers. You may say 
 that that was an abnormal period during which we overproduced in 
 many lines. But a country does not continue to overproduce and 
 pile up stocks of goods year after year for six or seven years. The 
 bulk of the goods produced during that period was being currently 
 purchased and consumed. According to reliable statistical measures 
 the volume of business did not average more than 5 per cent above 
 normal, and this excess was confined largely to a few of the newer 
 and more rapidly growing industries. Inventories of most raw mate- 
 rials and finished goods were not excessive during this prosperous 
 period, and stocks did not become abnormally large until the de- 
 pression actually set in. Undoubtedly, due to easy credit and install- 
 ment selling, there was a large volume of finished goods only par- 
 
tially paid for in the homes of buyers. And, of course, whatever 
 surplus stocks of goods existed at the end of 1929 have not yet been 
 entirely absorbed, because of the paralysis of buying power resulting 
 from curtailed incomes, actual and " paper " stock-market losses, and 
 the fear and uncertainty engendered by the speculative collapse. 
 By and large, however, business, except in a few lines, was not more 
 than normally prosperous during this period, yet unemployment of 
 an abnormal character was virtually nonexistent. Is it not reasonable 
 to suppose, therefore, that our present unemployment problem will 
 virtually disappear with a return to normal and steady prosperity? 
 But this does not mean, of course, that we have no immediate 
 responsibilities. 
 
 What, then, of the contention that, due to technological and other 
 factors, unemployment has become a permanent problem? As you 
 know, there has been much recent discussion of technological unem- 
 ployment — meaning, of course, that which grows out of the displace- 
 ment of men by machines and other labor-saving devices and shifts 
 in industry. It has frequently been assumed that this type of unem- 
 ployment is a distinctive characteristic of this particular depression 
 and that the rapid displacement of workers by machinery coupled 
 with the overexpansion of many industries is likely to result in a 
 permanent unemployment problem. That this technological dis- 
 placement of labor in many of the basic industries has been going 
 on at a rapid rate during the past decade is apparent to everyone, 
 but there is ample evidence that these changes have resulted not 
 in unemployment, but in the shifting of workers from agriculture 
 and manufacturing to the newer service industries. Moreover, this 
 phenomenon is by no means a new one; it has been going on at a 
 more or less rapid rate during the past two centuries, and there is 
 every reason to believe and hope that it will continue in the future 
 as in the past. 
 
 Almost 50 years ago, during the depression of the middle eighties, 
 the First Keport of the United States Commissioner of Labor was 
 published, and in this volume an entire section is devoted to a very 
 interesting discussion of Machinery and Overproduction. In view 
 of our natural tendency to think of present problems as being unique 
 and never before encountered in history, it may be of interest to 
 read a few extracts from this chapter. " The rapid development and 
 adaptation of machinery," states the report, published in 1886, " have 
 brought what is commonly called overproduction, so that machinery 
 and overproduction are two causes so closely allied that it is quite 
 difficult to discuss the one without taking the other into consid- 
 eration." 
 
 The report then cites a multitude of specific instances of the dis- 
 placement of labor by machinery. One agricultural implement fac- 
 tory was reported as employing only 600 men in 1886, who, aided 
 by improved machinery, were able to do the work for which 2,145 
 were required a decade before. A large shoe-manufacturing firm 
 stated that the introduction of new machinery, within the preceding 
 30 years, had displaced about six times the amount of hand labor 
 formerly required and that the cost of production had been reduced 
 one-half. Another firm reported that one man could do the work 
 which 20 years before required 10 men. A clothing manufacturer 
 reported he had installed a machine which enabled one man to do 
 
six times the amount of work done before by hand labor. In paper 
 manufacture a large firm was able to treble its output per worker 
 by the aid of new machinery, while in the manufacture of wallpaper 
 the displacement was said to be as high as 100 to 1. Hundreds of 
 other similar instances are recorded in great detail. And let me 
 point out again that I am not reading from a report published this 
 spring, but from one which appeared in March, 1886. 
 
 Apparently, then as now, there was a feeling among many people 
 that overproduction and unemployment had become persistent and 
 continuous phenomena and that the world had entered upon a new 
 era of permanent depression. The future looked very gloomy in- 
 deed. " In England, Belgium, and France," states the report, " rail- 
 roads and canals that are really needed have been built, Germany 
 is provided with a full network of railroads, and in the United 
 States railroad construction has been out of all proportion to the 
 increase of products to be carried. Harbors and rivers are suffi- 
 ciently developed, and warehouses, water and gas works, tramways, 
 etc., are largely provided for; the Pyrenees and the Alps are tun- 
 neled, and the Suez Canal has been built. Terrestrial and trans- 
 oceanic lines of telegraph have been laid and the merchant marine 
 has been transformed from wood to iron. The nations of the world 
 have overstocked themselves with machinery and manufacturing 
 plants far in excess of the wants of production. On all sides one 
 sees th-e accomplished results of the labor of half a century. What 
 is strictly necessary has been done oftentimes to superfluity. This 
 full supply of economic tools to meet the wants of nearly all 
 branches of commerce and industry is the most important factor in 
 the present industrial depression. It is true that discovery of new 
 processes of manufacture will undoubtedly continue and this will 
 act as an ameliorating influence, but it will not leave room for 
 marked extension, such as has been witnessed during the last 50 
 years, or afford employment to the vast amount of capital which 
 has been created during that period. * * * The day of large 
 profits is probably past? 
 
 You can readily see from this quotation, gentlemen, that the out- 
 look for the future in 1886 was very drab indeed. But in order 
 not to leave its readers in too great discouragement the report goes 
 on to add that — " supplying themselves with full facilities for indus- 
 tries and commerce will give to each of the great nations of Europe 
 and America something to do, but the part of each in this work 
 will be small and far from enough to insure more than temporary 
 activit}^. It may help to keep away stagnation and modify the 
 severity and duration of industrial depressions." 
 
 Reading these comments now, half a century later, it seems almost 
 incredible that they were written in the age of zinc bathtubs, Brus- 
 sels carpets, kerosene lamps, horse cars, mud roads, red flannel 
 underwear, and cotton stockings. However, there is some comfort 
 to be found in the fact that, after these dire predictions, the world 
 really did find something to do during the next half century. De- 
 spite the fact — or rather because of the fact — that we continued to 
 release labor from the basic industries by further use of labor-saving 
 machinery, we were able to invent, produce, and sell, a host of new 
 comforts and luxuries (automobiles, radios, motion pictures, air- 
 planes, electrical equipment — to mention only a few) which were 
 
hardly thought of in 1886, when it appeared that the work of the 
 world had been completed. 
 
 I am enough of an optimist to believe that industrial history will 
 again repeat itself and that the next 50 years will witness further 
 displacement of labor from the older pursuits and the further de- 
 velopment of many new products and new services which will afford 
 employment to those displaced and supply the ever-expanding wants 
 of our people. To believe otherwise would be to accept the view 
 that technical progress has reached an end and that business hence- 
 forth will be static and stationary. 
 
 But these bright prospects for the long-term future can not 
 obscure the fact that we are deep into one of the most severe depres- 
 sions of our business history and that labor and capital as well have 
 suffered seriously from curtailed earnings and unemployment. In 
 spite of this I am sure it will not be denied that there has been less 
 actual distress and less social disturbance than ever before under 
 similar circumstances. If anyone questions this statement, let him 
 read the accounts of earlier panics and depressions. 
 
 He will find that in almost every crisis prior to 1921 the inadequate 
 money and credit system caused suspension of trading on the stock 
 exchanges, runs on banks and closing of many of the largest and 
 strongest, hoarding of gold and currency, sometimes a complete 
 disappearance of hard money and universal financial distress. 
 Employers immediately discharged hundreds of thousands of work- 
 ers and slashed wages at the first signs of trouble, and labor 
 responded by engaging in the most bitter and destructive strikes, 
 involving destruction of property, riots, and bloodshed. During the 
 great depression of the seventies the suffering of labor was par- 
 ticularly acute; for years great hordes of homeless workers roamed 
 over the country begging from door to door. The police records of 
 large cities recorded case after case of individuals and entire families 
 dying from starvation. 
 
 Even in the depths of depression, it must be clear that we have 
 advanced greatly from the misery of the seventies, the eighties and 
 the nineties. And I am sure that it will be generally acknowledged 
 that the outstanding difference between the present depression and 
 its predecessors is the remarkable way in which both industry and 
 labor have meet the crisis with a conciliatory attitude which recog- 
 nized each other's problems. The great industries of the country 
 responded with fine spirit to the President's request that wages be 
 maintained and that construction and extension programs be under- 
 taken. By schemes for staggering employment, varied to meet con- 
 ditions in different industries, by carrying forward repairs, altera- 
 tions, and new construction — frequently in advance of actual needs — 
 by money loans, advances, and credits to former employees to whom 
 it was impossible to give work, by deferring credit payments and 
 installment obligations, and in many other ways, industry generally 
 has shown an interest in its workers of a quality never before seen 
 in this or any other country. Labor's attitude as well has been a 
 most enlightened one, showing that the workers recognized quite 
 fully the difficulties and problems confronting employers. This 
 spirit of helpful cooperation has been of incalculable value in light- 
 ening the burdens of the depression, and has made it possible foi- 
 national and community agencies to care for the pressing needs of the 
 
unfortunate workers who in the backwash of a great depression, find 
 themselves adrift without means of support. 
 
 This voluntary assumption of responsibility on the part of industry 
 involving, as it has, the finest type of cooperative spirit and collec- 
 tive effort, has been one of the most important factors in carrying 
 us thus far without serious distress or disturbance through a major 
 depression. And this attitude on the part of industry toward its 
 common problems seems to me to hold out the best hope for the 
 future. 
 
 Throughout these difficult and trying months, hundreds of sug- 
 gestions have come to Washington of things to be done to bring 
 about a return to normal conditions. These plans generally con- 
 template vast expenditures of Federal funds, the planning and prep- 
 aration for which, alone, would require years. Many proposals 
 seemed to be based on the assumption that the Federal Government 
 can draw a line across the continent and proceed at once with the 
 construction of roads, bridges, and other forms of public works 
 The truth is that the Government can not get under way with its 
 construction programs as quickly as individuals or corporations. It 
 can not take private property without due process of law, and with- 
 out condemnation proceedings — a legal process which necessarily 
 takes more time than private negotiations. 
 
 The truth is that I have not seen a single feasible scheme sug- 
 gested by which the Federal Government could have done more 
 than it has done to bring about a return to more prosperous con- 
 ditions. No other Government has been able to do more. Nor have 
 those Governments leaning toward a socialistic policy been suc- 
 cessful in finding a solution for present problems. 
 
 No governmental policy, however wise, no individual, however 
 powerful, no single industry, however great, can promptly bring 
 about a change in a situation such as that in which we now find 
 ourselves. The forces are too vast and powerful. If millions of 
 workers are out of employment for a year, through loss of wages 
 their buying power is cut by billions of dollars. If the income of 
 the remaining millions who are still employed is cut 10 per cent 
 through shorter hours and part-time work, the loss amounts to 
 several more billions. Add to this great loss in buying power the 
 retrenchment due to the fears and uncertainties of such a period, 
 and the total loss of purchasing power becomes a staggering amount. 
 
 A Government building program, even contemplating the ex- 
 penditure of a billion dollars in a single year, while it would be 
 helpful, of course, could not materially affect the situation. The 
 lever must be in proportion to the weight to be lifted, and the only 
 lever powerful enough to lift us out of our present difficulties con- 
 sists of the combined efforts of all our industries and all our people, 
 each doing his share as producer and consumer. 
 
 After such a cataclysm as we have been through, time and the 
 slow working of economic readjustments are necessary before the 
 world can return to economic health and vigor. 
 
 And there can be no doubt that many of these necessary readjust- 
 ments have been and are being made, and that business is even now 
 sluggishly responding to the stimulus of these needed changes. 
 Whatever were the causes of our present difficulties, the corrective 
 influences have now been at work for many months. If an unequal 
 
9 
 
 distribution of the world's capital supply — to which overspeeula- 
 tion in this country may have contributed — was a factor, there 
 are already indications that this situation is gradually being cor- 
 rected. If overproduction of many commodities of world-wide im- 
 portance was a contributing cause, surely this situation is being 
 corrected. Production has been drastically curtailed, and accumu- 
 lations of goods have been cut down in spite of reduced demand. 
 
 If prices were maintained too long at too high a level, it can not be 
 denied that this situation has been corrected. Perhaps in some cases 
 price declines have gone too far, but if present prices are below the 
 cost of production, these maladjustments will correct themselves 
 promptly with improving markets. If in this country a bad situa- 
 tion was made worse by a drought which destroyed the buying capac- 
 ity of large sections of our people, reports from nearly all parts of 
 the stricken areas give promise of good crops for the coming year. 
 
 And we must remember that agricultural prosperity is still a vital 
 factor in our national economy. Although we have shifted in a 
 century from a position in which agriculture occupied the attention 
 of 90 per cent of our people to a position in which only a fourth 
 of our population is dependent on the farm, it is still true that 
 agricultural buying power is a tremendously important factor, and 
 that crop production constitutes a substantial proportion of our 
 national output. It is a quite significant fact that the upturn from 
 almost every major depression since the Civil War began about the 
 middle of the year, or at the time when the crop prospects became 
 reasonably certain. The outstanding exception, that of 1914, when 
 business turned upward in midwinter, can undoubtedly be attributed 
 to the influence of the war. 
 
 Study of these curves of business volume shows other significant 
 things. In most of the earlier depressions, the decline from the 
 date when business turned downward occupied from 11 to 16 months, 
 while business on the average declined about 25 per cent from the 
 maximum. 
 
 In the present depression, as I have said, we have already experi- 
 enced a longer and more severe decline than in most earlier depres- 
 sions. It appears that the severity of these dips below normal — at 
 least the " statistical picture " of the severity of depressions — has been 
 becoming greater in recent decades, and this still further emphasizes 
 the necessity of serious efforts to bring about some means of control. 
 
 Since it is apparent that any efforts to ameliorate the severity of 
 depression after the collapse has commenced can not be very effec- 
 tive, it clearly becomes a problem of controlling the preceding boom 
 before it has reached the mob-psychology stage. As one of our 
 experienced and able commentators has said, the cure, if there is 
 a cure, must involve " sitting on the bulge " before the speculative 
 boom has gotten out of control. But who is to sit on the bulge and 
 when? How shall we know when the stage has been reached which 
 requires a flattening of the boom? The job can only be done by 
 industry itself. With respect to financial and credit considerations, 
 the banks have great responsibility and will have to exert the neces- 
 sary pressure or restraint long before the acute phase has been 
 reached. In the maintenance of a better balance between production 
 and consumption, and in keeping prices on a fair level, in fostering 
 sound business policies and practices, in developing a spirit of " live 
 
10 
 
 and let live " in the competition for sales — all of these influences 
 must come from industry itself, and there are many indications that 
 much can and will be done in this direction. 
 
 A most important factor in aiding these developments is the 
 growing tendency among the individual units of industry to take 
 into account in their own planning the interest and welfare of the 
 industry as a whole. The development of the American trade asso- 
 ciation movement has been and will continue to be a very significant 
 influence in the direction of greater business stability. And there 
 are many things that can be done in this direction within the bounds 
 of legal sanction. 
 
 As for the long-term future — however discouraging the present 
 outlook may appear to some observers, just as it did in 1886 — we 
 can be sure that the increase in our population and the steady eleva- 
 tion of our standard of living will continue to be powerful forces 
 in bringing us to new and higher levels. Those of us who started 
 in business in the early nineties have seen the population of the 
 country practically doubled in our generation — from 63,000,000 in 
 1890 to 123,000,000 to-day. We have seen added to our population 
 almost the equivalent of the whole of Germany to-day, with all 
 that this implies in increased consumption of goods, houses, fac- 
 tories, transportation facilities, schools, roads, theaters, etc. In the 
 past decade alone we have witnessed an increase in our population 
 of 16,000,000, and, even though the percentage rate of population 
 growth is decreasing, we can expect that the coming decade will 
 bring another large increase. 
 
 But we have not depended in the past, nor shall we depend in 
 the future, upon mere increase in numbers for bur expanding trade. 
 Throughout the history of our country, and of other countries, dur- 
 ing the industrial era, each decade has found a further improvement 
 in the standard of living, in the real wages of labor, and in the 
 abundance of material comforts and luxuries. 
 
 Since the Civil War, dollar wages of labor have increased almost 
 uninterruptedly, and at the present time the actual rates paid are 
 between four and five times as great as at the end of that war. 
 Making allowance for changes in price levels, the real wages of 
 labor have more than trebled during this period. Along with 
 this increase in wages, which is a measure of the advancement in 
 our standard of living, working hours have been steadily reduced. 
 It is not so many years since men, women, and children on the 
 farms worked from sunup to sundown, while in the factories, mills, 
 and mines, 11 and 12 hours a day was the rule, and even longer 
 hours were not exceptional. Gradually throughout the years, as 
 conditions warranted, and not always without opposition and serious 
 misgivings on the part of owners of industries, the hours have been 
 reduced until now 8 hours a day has become a generally accepted 
 standard. 
 
 Moreover, in many occupations, working time has been further re- 
 duced by the Saturday half holiday. Of course, this progress would 
 not have been possible without the continual lowering of costs 
 through the increasing use of machinery and other labor-saving de- 
 vices. But it is true, nevertheless, that the most prosperous periods 
 of our industrial history have been those coincident with high wages 
 and shorter hours. 
 
11 
 
 If we have already adjusted ourselves to a reduction of more than 
 40 per cent in working hours, taking into account the Saturday 
 half holiday, and if we have trebled real wages in the last six decades, 
 it must be clear that as our technical and economic progress justifies 
 it, further adjustments can certainly be made without serious re- 
 sults. The past half century in this country has been devoted to 
 increasing production and lowering costs. The phenomenal growth 
 and rising prosperity of the country has absorbed this increased 
 production even as it lowered costs and widened markets. It is 
 interesting to note that even in this period of depression when sell- 
 ing prices are pressing close to production costs one of the very 
 largest corporations, which has been fortunate enough to be able to 
 continue its production at a high rate, has adopted a working sched- 
 ule of four 6-hour shifts. As a result of this experiment, this cor- 
 poration has not only found it possible to lower working hours, and 
 maintain a fair wage rate, but also through a 100 per cent use of 
 equipment it has actually reduced the cost of production. The plan 
 would probably not be applicable to all industries, but it is an inter- 
 esting indication of what can be done. 
 
 It shows too, that American business is not static — that its leaders 
 have imagination, courage, and vision, that by the further applica- 
 tion of evolutionary principles and methods, which have been in use 
 for generations, new problems can be met and solved. 
 
 One who has seen the splendid way in which the present genera- 
 tion has met the problems of its time — growing out of industrial and 
 transportation developments, nothing short of revolutionary, and 
 including the stupendous difficulties arising from a terrible war — 
 can not doubt the ability of the coming generation to solve its prob- 
 lems at least as satisfactorily as we have solved ours. 
 
 In the next decade or so the younger men in this audience who 
 will be in charge of the business of the country at that time, may 
 find themselves again in the midst of another depression — for human 
 nature does not change much in a generation. If they observe well 
 and remember the hardships and difficulties of our present situation, 
 if during the intervening years they put a little more emphasis on the 
 economic and human aspects of business, and if they begin as soon 
 as conditions warrant to put away each year in some form of reserve 
 a small fraction of what may have perhaps been overspent in 
 mechanical and physical development, they may find themselves 
 with a less difficult problem of unemployment to cope with and in 
 a very much better position to meet it. 
 
 U. S. 80VERNMENT PRINTING OFFICE: 1931 
 
PENN STATE UNIVERSITY LIBRARIES 
 
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