Hoover Committee

Back in the dull, depressed days of 1921 President Warren Gamaliel Harding appointed a committee to look into the matter of unemployment, to make a report upon this then burning question. When last week the Unemployment Committee announced its findings, neither President Harding nor unemployment remained a U. S. problem. It was primarily a Hoover Committee that made the report (President Hoover was Committee Chairman while Secretary of Commerce) and prosperity, not unemployment, was the burden of its story. Called upon to view with alarm, the Committee concluded by pointing with pride.

"1929 and All's Well" was, indeed, almost the gist of the lengthy report. Exceptions were admitted in the cases of the coal, cotton, and "grain growing" industries, and in the New England States.

Stock market absorption of credit was regarded with misgiving. But the keynote, ringingly struck, was that there is no limit to the capacity of the U. S. consumer to consume, and that the years 1922-29 had seen a pleasing increase in the capacity of U. S. production to supply material for consumption. Thus was observed a non-vicious circle in which the manufacturer constantly produced more merchandise, the consumer constantly consumed more merchandise, and out of the horn of plenty came gifts for one and all.

This general conclusion was based upon the following specific points:

Wages, Prices. The cost of living has slowly declined since 1922, wholesale prices having fallen an average of 1/10 of 1% each year. While prices were being kept relatively stable, wages increased, so that the purchasing power of wages rose 2.1% a year. So, while prices are slightly lower than in 1922, purchasing power of wages is almost 15% greater, thus making the wage-earner's pay-envelope extend comfortably beyond the bare necessities of life. The committee complimented U. S. industry upon its wisdom in realizing that its profits could best be based, not on an attempt to go back to pre-War wages or to maintain inflation prices, but upon increasing consumption through a policy of "low costs and high wages." Production and Consumption. Since 1922 primary production has increased about 17%, manufacturing and transportation about 28%. Greatest increase has come in per capita production, which increased 35% between 1922 and 1925. Consumption, however, has had little difficulty in keeping pace with production.

"An almost insatiable appetite for goods and services" was termed a "striking characteristic" of the 1922-29 period.

Optional Consumption. Furthermore, much of recent consumption has been "optional"--i. e., has consisted of purchases made from choice rather than necessity.

In addition to Optional Consumption, the committee (seemingly bent on creating phrases) also discussed Leisure Consumption--the fact that shorter hours of employment produce longer hours of leisure and that less work and more play make Jack a good spender. The busy radio and cinema industries were cited as examples of Optional Consumers engaged in Leisure Consumption.

Economic Balance. The past seven years have been characterized by an improved adjustment between production and consumption. "Once an intermittent starting and stopping of production-consumption was characteristic of the economic situation . . . overproduction was followed by a pause for consumption to catch up ... there is now a more even flow from producer to consumer. ... In many cases the rate of production-consumption seems to be fairly well under control." Power. The committee had many a good word to say for the development of electric power, and some of those words might well have been interpreted as favor able to the development of Superpower.

"Factories need no longer cluster about the sources of power. Widespread interconnection between power plants . . . has created huge reservoirs of power, so that abnormal conditions in one locality need not stop the wheels of industry. ... A home or farm wired for electricity is a different economic unit from one which is not wired. Concerning electric flatirons, washing machines, vacuum cleaners, electric refrigerators, it was pointed out that "we are still far from the saturation point." Unemployment. "No serious cyclical fluctuations have characterized the period under review," remarked the Committee, "so that unemployment due to the business cycle has not been marked." In other words, business has been so consistently good that few workmen have lost jobs through "bad times." The committee was, however, somewhat concerned over "technological unemployment"--the jobs lost when manpower is supplanted by machine power, or when a man who knows how to operate only one type of machine finds that a new mechanism has made both him and his machine archaic. New machines and processes, observed the committee, doubtless worked some hardship in individual cases, yet they also tended toward the greater good of society as a whole.

Most famed committee member was Chairman Herbert Hoover, now U. S. President. An able bank messenger could promptly identify William Green, Julius Klein, John Jacob Raskob, Daniel Willard, Owen D. Young. Famed or near-famed but not so easily identified were Arch Wilkinson Shaw; Renick William Dunlap (appointed Assistant Secretary of Agriculture in 1925); Max Mason (onetime [1925-28] University of Chicago head, now with the Rockefeller Foundation) ; Walter Folger Brown (U. S. Postmaster General) ; John Silsbee Lawrence (head of Ipswich [hosiery] Mills) ; Louis John Taber (Master of the National Grange) ; Lewis Eugene Pierson (President of U. S.

Chamber of Commerce) ; George McFadden (Philadelphia merchant who was one of the two U. S. civilian members of the Armistice Commission and holds a Distinguished Service Medal bestowed by General Pershing) ; Adolph Caspar Miller (member of the Federal Reserve Board) ; Clarence M. Wood (Board chairman of American Radiator) and Edward Eyre Hunt (War correspondent, worker on Belgian Relief and head of Red Cross rehabilitation in France).

The later deliberations of the committee were presided over by Committeeman Arch Shaw, famed founder of the magazine System. Started as a house-organ by the Shaw-Walker Co. (card index systems) the magazine was so successful that it be came a "regular" periodical. Later, when Shaw-Walker went into the steel furniture business, the partnership split along the line of steel furniture for Walker and the publishing of business magazines by Shaw.

Mr. Shaw's fame has, in the last decade, increased by reason of his aid and counsel to the Harvard School of business.