Address to the Chamber of Commerce of the United States.

Gentlemen of the United States Chamber of Commerce:

We have been passing through one of those great economic storms which periodically bring hardship and suffering upon our people. While the crash only took place 6 months ago, I am convinced we have now passed the worst and with continued unity of effort we shall rapidly recover. There is one certainty in the future of a people of the resources, intelligence, and character of the people of the United States-that is prosperity.

On the occasion of this great storm we have for the first time attempted a great economic experiment, possibly one of the greatest of our history. By cooperation between Government officials and the entire community, business, railways, public utilities, agriculture, labor, the press, our financial institutions and public authorities, we have undertaken to stabilize economic forces; to mitigate the effects of the crash and to shorten its destructive period. I believe I can say with assurance that our joint undertaking has succeeded to a remarkable degree, and that it furnishes a basis of great tribute to our people for unity of action in time of national emergency. To those many business leaders present here I know that I express the gratitude of our countrymen.

It is unfortunate, in a sense, that any useful discussion of the problems behind and before us has to be expressed wholly in the cold language of economics, for I realize as keenly as anyone can that individually they are not problems in science but are the most human questions in the world. They involve the immediate fears of men and women for their daily bread, the well-being of their children, the security of their homes. They are intensely personal questions fraught with living significance to everything they hold dear. The officers of a ship in heavy seas have as deep a consciousness of the human values involved in the passengers and crew whose lives are in their keeping, but they can best serve them by taking counsel of their charts, compass, and barometer, and by devotion to navigation and the boilers. In like manner, the individual welfare can best be served by us if we devote ourselves to the amelioration of destructive forces for thereby we serve millions of our people.

All slumps are the inexorable consequences of the destructive forces of booms. If we inquire into the primary cause of the great boom on the stock exchanges last year we find it rests mainly upon certain forces inherent in human mind. When our Nation has traveled on the high road to prosperity for a considerable term of years, the natural optimism of our people brings into being a spirit of undue speculation against the future. These vast contagions of speculative emotion have hitherto throughout all history proved themselves uncontrollable by any device that the economist, the businessman, or the Government has been able to suggest. The effect of them is to divert capital and energy from healthy enterprise--the only real source of prosperity--to stimulate waste, extravagance, and unsound enterprise, with the inevitable collapse in panic.

Out of the great crashes hitherto there has always come a long train of destructive forces. A vast number of innocent people are directly involved in losses. Optimism swings to deepest pessimism; fear of the future chokes initiative and enterprise; monetary stringencies, security and commodity panics in our exchanges, bankruptcies and other losses all contribute to stifle consumption, decrease production, and finally express themselves in unemployment, decreased wages, strikes, lockouts, and a long period of stagnation. Many have looked upon all this rise and fall as a disease which must run its course and for which nothing could be done either in prevention, or to speed recovery, or to relieve the hardship which wreaks itself especially upon workers, farmers, and smaller business people. I do not accept the fatalistic view that the discovery of the means to restrain destructive speculation is beyond the genius of the American people.

Our immediate problem, however, has been the necessity to mitigate the effect of the recent crash, and to get back onto the road of prosperity as quickly as possible. This is the first time an effort has been made by the united community to this end. The success of this effort is of paramount importance, not only for our immediate needs but the possibilities it opens for the future. The intensity of the speculative boom on this occasion was, in my view, as great as or greater than any of our major manias before. The intensity of the slump has been greatly diminished by the efforts that have been made.

We--and as we, I speak of many men and many institutions--have followed several major lines of action. Our program was one of deliberate purpose to do everything possible to uphold general confidence which lies at the root of maintained initiative and enterprise; to check monetary, security, and commodity panics in our exchanges; to assure an abundance of capital at decreasing rates of interest so as to enable the resumption of business; to accelerate construction work so as to absorb as many employees as possible from industries hit by decreased demand; to hold up the level of wages by voluntary agreement and thus maintain the living standards of the vast majority who remain in employment to avoid accelerating the depression by the hardship and disarrangement of strikes and lockouts; and by upholding consuming power of the wage earners to in turn support agriculture.

We may well inquire into our progress thus far. We have succeeded in maintaining confidence and courage. We have avoided monetary panic and credit stringency. Those dangers are behind us. From the moment of the crash, interest rates have steadily decreased and capital has become steadily more abundant. Our investment markets have absorbed over 2 billions of new securities since the crash. There has been no significant bank or industrial failure. That danger, too, is safely behind us.

The acceleration of construction programs has been successful beyond our hopes. The great utilities, the railways, and the large manufacturers have responded courageously. The Federal Government has not only expedited its current works but Congress has authorized further expenditures. The Governors, mayors, and other authorities have everywhere been doing their full part. The result has been the placing of contracts of this character to the value of about $500 million during the first 4 months of 1930, or nearly three times the amount brought into being in the corresponding 4 months of the last great depression of 8 years ago. All of which contributes not only to direct employment but also a long train of jobs in the material and transportation industries. We are suffering from a decrease in residential construction, but despite this we have reason to believe that the total construction will still further expand, and we should during 1930 witness a larger gross volume of improvement work than normal.

For the first time in the history of great slumps we have had no substantial reductions in wages and we have had no strikes or lockouts which were in any way connected with this situation.

The accelerated construction has naturally not been able to absorb all the unemployment brought by the injuries of the boom and crash. Unfortunately we have no adequate statistics upon the volume of unemployment. The maximum point of depression was about the first of the year, when, severe as the shock was, the unemployment was much less proportionately than in our two last major depressions. A telegraphic canvass of the Governors and mayors who are cooperating so ably with us in organizing public works brings with one exception the unanimous response of continuously decreasing unemployment each month and the assurance of further decreases again in May.

All these widespread activities of our businessmen and our institutions offer sharp contrast with the activities of previous major crashes and our experiences from them. As a consequence, we have attained a stage of recovery within this short period greater than that attained during a whole year or more following previous equally great storms.

While we are today chiefly concerned with continuing the measures we have in process for relief from this storm, and in which we must have no relaxation, we must not neglect the lessons we have had from it, and we must consider the measures which we can undertake both for prevention of such storms and for relief from them. Economic health, like human health, requires prevention of infection as well as cure of it.

I take it that the outstanding problem and the ideal of our economic system is to secure freedom of initiative and to preserve stability in the economic structure in order that the door of opportunity and equality of opportunity may be held open to all our citizens; that every businessman shall go about his affairs with confidence in the future; that it shall give assurance to our people of a job for everyone who wishes to work; that it shall, by steady improvement through research and invention, advance standards of living to the whole of our people. That will constitute the conquest of poverty, which is the great human aspiration of our economic life.

And these economic storms are the most serious interruptions to this progress which we have to face. Some of you will recollect that following the great boom and slump of 8 years ago, as Secretary of Commerce, I initiated a series of conferences and investigations by representative men into the experiences of that occasion and to make therefrom recommendations for the future. It is worth a moment to examine our conclusions at that time as tested in this present crisis.

The first of the conclusions at that time was that our credit machinery should be strengthened to stand the shock of crash; that the adjustment of interest rates through the Federal Reserve System should retard destructive speculation and support enterprise during the depression.

Our credit machinery has proved itself able to stand shock in the commercial field through the Federal Reserve System, in the industrial field through the bond market and the investment houses, in the farm mortgage field to some extent through the Farm Loan System; and in the installment-buying field through the organization of powerful finance corporations.

But if we examine the strains during the past 6 months we shall find one area of credit which is most inadequately organized and which almost ceased to function under the present stress. This is the provision of a steady flow of capital to the home builder.

From a social point of view this is one of the most vital segments of credit and should be placed in such a definitely mobilized and organized form as would assure its continuous and stable flow. The ownership of homes, the improvement of residential conditions to our people, is the first anchor in social stability and social progress. Here is the greatest field for expanded organization of capital and at the same time stimulation to increased standards of living and social service that lies open to our great loan institutions.

The result of the inability to freely secure capital has been a great diminution in home construction and a large segment of unemployment which could have been avoided had there been a more systematic capital supply organized with the adequacy and efficiency of the other segments of finance. We need right now an especial effort of our loan institutions in all parts of the country to increase the capital available for this purpose as a part of the remedy of the present situation.

There can be no doubt of the service of the Federal Reserve System in not only withstanding the shock but also in promoting the supply of capital after the collapse. We have, however, a new experience in the effect of discount rates and other actions of the system in attempts to retard speculation. The system and the banks managed throughout the whole of the speculative period to maintain interest rates on money for commercial use at 5 to 6 percent per annum, and by their efforts they segregated the use of capital for speculation in such fashion that the rates upon such capital ran up to 18 percent per annum. But even these high rates on speculative capital offered little real retardation to the speculative mania of the country. They served, in fact, to attract capital from productive enterprise, and this was one of the secondary factors in producing the crash itself. The alternative, however, of lifting commercial rates still higher in order to check speculation by checking business is also debatable. The whole bearing of interest rates upon speculation and stable production requires exhaustive consideration in view of these new experiences.

One of the subsidiary proposals in our examination 7 years ago, directed to increase stability, was that improved statistical services should be created which would indicate the approach of undue speculation and thereby give advance storm warnings to the business world and the country. Great improvements were made in the statistical services, and by reading the signals thousands of businessmen avoided the maelstrom of speculation and our major industries came through strong and unimpaired--though the people generally did not grasp these warnings, or this crisis would not have happened. We should have even more accurate services in the future and a wider understanding of their use. We need, particularly, a knowledge of employment at all times, if we are intelligently to plan a proper functioning of our economic system. I have interested myself in seeing that the census we are taking today makes for the first time a real determination of unemployment. I have hopes that upon this foundation we can regularly secure information of first importance to daily conduct in our economic world.

In remedial measures we have followed the recommendations of 7 years ago as to the acceleration of construction work, the most practicable remedy for unemployment. It has been organized effectively in most important directions, and the success of organization in certain local communities points the way to even more effective action in the future by definite plans of decentralization.

Another of the byproducts of this experience which has been vividly brought to the front is the whole question of agencies for placing the unemployed in contact with possible jobs. In this field is also the problem of what is termed technological unemployment. The great expansion in scientific and industrial research, the multiplicity of inventions and increasing efficiency of business, is shifting men in industry with a speed we have never hitherto known. The whole subject is one of profound importance.

We have advanced in all these methods of stability in recent years. The development of our credit system, our statistics, our methods of security and relief in depression, all show progress. We have developed further steps during the past 6 months. But the whole range of our experiences from this boom and slump should be placed under accurate examination with a view to broad determination of what can be done to achieve greater stability for the future both in prevention and in remedy. If such an exhaustive examination meets with general approval, I shall, when the situation clears a little, move to organize a body--representative of business, economics, labor, and agriculture--to undertake it.

I do believe that our experience shows that we can produce helpful and wholesome effects in our economic system by voluntary cooperation through the great associations representative of business, industry, labor, and agriculture, both nationally and locally.

And it is my view that in this field of cooperative action outside of government lies the hope of intelligent information and wise planning. The Government can be helpful in emergency, it can be helpful to secure and spread information.

Such action, however, as may be developed must adhere steadfastly to the very bones of our economic system, which are the framework of progress. And that progress must come from individual initiative, and in time of stress it must be mobilized through cooperative action.

The proper constructive activities of the great voluntary organizations in the community provide the highest form of economic self-government. Permanent advance in the Republic will lie in the initiative of the people themselves.

We are not yet entirely through the difficulties of our situation. We have need to maintain every agency and every force that we have placed in motion until we are far along on the road to stable prosperity.

He would be a rash man who would state that we can produce the economic millennium, but there is great assurance that America is finding herself upon the road to secure social satisfaction, with the preservation of private industry, initiative, and a full opportunity for the development of the individual.

It is true that these economic things are not the objective of life itself. If by their steady improvement we shall yet further reduce poverty, shall create and secure more happy homes, we shall have served to make better men and women and a greater nation.