This body represents the industries of the United States. You have been invited to create a temporary organization for the purpose of systematically spreading into industry as a whole the measures which have been taken by some of our leading industries to counteract the effect of the recent panic in the stock market. There has necessarily been some unemployment, starting with diversions of capital from the channels of business into the speculation, and after the break by some reduction in the demand for luxuries and semi-necessities from those who met with losses. But the large effect was to create undue pessimism, fear, uncertainty, and hesitation in business. These emotions, being emotions, if they had been allowed to run their course would, by feeding on themselves, create difficulties. The American mind is prone to revert to previous occasions when we were much less able to organize to meet such situations.
These are potential difficulties which cannot be cured with words. If we could do so, the merest description of the fundamental stability of our vast organism of production and distribution, touched with the light of the future of the United States, would cure it instantly. The cure for such storms is action; the cure for unemployment is to find jobs.
We have, fortunately, since our previous crashes established the Federal Reserve System. The first step in recovering confidence was made by the powerful effectiveness of that system, and the strong position of banks, the result of which has been steadily diminishing interest rates, with a smooth and rapid return into the channels of business of the money previously absorbed into the speculative market. This is reversal of our historic experience and is a magnificent tribute to the System. Capital is becoming more abundant in all parts of the country, the bond market is growing stronger each day and already public issues held back for months have begun to appear.
The third line of action has been to undertake through voluntary organization of industry the continuity and expansion of the construction and maintenance work of the country, so as to take up any slack in employment which arises in other directions. The extension and organization of this work are the purpose of this meeting. The greatest tool which our economic system affords for the establishment of stability is the construction of maintenance work, the improvements and betterments and general clean-up of plants in preparation for cheaper production and the increased demand of the future. It has long been agreed by both business men and economists that this great field of expenditure could, by its acceleration in time of need, be made into a great balance wheel of stability. It is agreed that its temporary speeding up to absorb otherwise idle labor brings great subsequent benefits and no liabilities. A very considerable part of our wage earners are employed directly and indirectly in construction and the preparation and transportation of its materials. In the inevitable periods when the demand for consumable goods increases and labor is fully employed, construction and maintenance can slacken and we actually again gain in stability. No one would advocate the production of consumable goods beyond the daily demand; that in itself only stirs up future difficulty.
I am glad to report that such a program has met with universal approval of all those in responsible posititons. Our railways and utilities and many of our larger manufacturers have shown a most distinguished spirit in undertaking to maintain and even to expand their construction and betterment programs. The state, county, and municipal governments are responding in the most gratifying way to the requests to cooperate with the Federal Government in every prudent expansion of public works. Much construction work has been postponed during the past few months by reason of the shortage of mortgage money due to the diversion of capital to speculative purposes, which should soon be released.
It is to make this movement systematic in all branches of the industrial world that we are here—that is the task. I believe that with the great back logs which are already assured by the public service institutions and the governmental works you will be able to build up the construction and maintenance activities for 1930 to a higher level than that of 1929, and that is what we require.
Another of the great balance wheels of stability is our foreign trade. But in stimulating our exports we should be mainly interested in development work abroad such as roads and utilities which increase the standards of living of peoples and thus the increased demand for goods from people of every nation, for we gain in prosperity by a prosperous world, not by displacing others.
All of these efforts have one end—to assure employment and to remove the fear of unemployment.
The very fact that you gentlemen come together for these broad purposes represents an advance in the whole conception of the relationship of business to public welfare. You represent the business of the United States, undertaking through your own voluntary action to contribute something definite to the advancement of stability and progress in our economic life. This is a far cry from the arbitrary and dog-eat-dog attitude of the business world some thirty or forty years ago. And this is not dictation or interference by the Government with business. It is a request from the Government that you cooperate in prudent measures to solve a national problem. A great responsibility and a great opportunity rest upn the business and economic organization of the country. The task is one fitted to its fine initiative and courage.
Beyond this, a great responsibility for stability and prosperity rests with the whole people. I have no desire to preach. I may, however, mention one good old word—work.