I am taking the liberty of addressing you on a matter of somewhat wider import than my own department. My justification lies in the feeling of your own receptivity of suggestions, in the two years of opportunity which I have enjoyed in the observation of the growth of war governments in Europe, and in some two months study of the situation in Washington.
It appears to me that we have now reached the stage in war experience when we can safely enlarge into a series of broad positive steps in war administration. The mixture of administrative and advisory functions in the Council of National Defense and its collateral organizations and other departments, may now be clarified by the creation of a number of positive administrative organs out of the totality of their experience and personnel. It does seem to me that all of these extra war administrations require definite coordination in order to prevent overlap and loss of efficiency. Therefore, to take a broad view of the whole war functions in the purchase of supplies for both home and abroad and in the regulating of domestic production and trading, I should like to submit for your consideration the following suggestions:
1. FEDERAL TRADE COMMISSION. The functions of the Federal Trade Commission to be extended to cover investigation and determination of cost in primary production and manufacture and the reasonable profits upon all of the ordinary commodities. It is not to be predicted that these costs can be determined within five or perhaps ten percent, but in any event a generalized figure must be obtained as the fundamental basis for administration by the other departments.
2. FOOD ADMINISTRATION. That its functions include not only the regulation of distribution to our civilian population, but that it should have considerable voice in the placing of Government contracts for food supplies. And furthermore, that it should absolutely control the purchase of supplies for export abroad.
3. RAW MATERIALS ADMINISTRATION. This body to be created to administer the regulation of price, stimulation of production, to secure economy and eliminate waste in the fuel, iron, steel, cotton and other great materials, both in the field of civilian and Government requirements.
4. MUNITIONS ADMINISTRATION. This administration to take over from the Army and Navy and from the Allied Governments, the purchase and administration of all munitions; to cooperate with the Food Administration in matters affecting our Government foodstuffs and with the Raw Materials Administration in that field.
5. PRIORITY ADMINISTRATION. This administration to cover the absolute decision between the various other administrative arms of the Government and between the demands of the different civilian institutions as to priority in the delivery and consumption of materials and supplies.
Under the above plan, the Food, Raw Materials and Munitions Administrations would rely upon one body--the Federal Trade Commission--for the determination broadly of price levels. It appears to me that this is fundamental, first, to obtain independent and thorough consideration and second, to secure coordination of the price levels between commodities, and third, adjustment in the general price levels will be necessary in the country from time to time in the face of inflation which will be our curse and burden during the war. These changes in price levels cannot be solved by haphazard or independent determination by the various departments. Furthermore, it is unjust to our people that the Government buy at specially reduced prices, for this is simply taxation in a wrong form.
The three administrations mentioned would also depend upon the Priority Administration for the practical coordination of the use of primary materials and their distribution.
It appears to me that these administrations should be set up under single-headed control, responsible to yourself, under men who must have no personal interest in any enterprise in this country which bears upon his department and that each should be staffed in such a manner as to secure entire independence of interest. In order, however, to take full advantage of the wide spirit of patriotism and service in the trades, all of the three administrations mentioned should make use of committees comprised of representatives of the great trades, thus securing not only technical advice but may be in position for general bargaining with the trades as a whole so that burdens may fall equally upon all. Under this plan a final shaping of policy and final decision would rest in the hands of the officials not connected with any interested trade organization, yet preserving their interest and cooperation.
I would also like to suggest that the precedent which has been set up in the Exports Council of combining various heads of departments for coordination of interest and elimination of overlap, can be extended in other directions, and if the above additional administrations were set up, by the creation of such coordinating committees.
As an instance of this I would like to suggest that we need strong coordination on the question of national saving. It is true that the current expenses of the war must be paid from, (a) savings before the war; (b) from savings during the war; (c) from inflation which will be a double burden on savings after the war. All that we can genuinely save in the reduction of consumption of commodities and the reduction of non-productive labor will be just that much reduction of the penalty of inflation. If the Food Administration can effect a saving in actual commodities of six cents per capita per day, it will have saved $2,000,000,000 annually available generally for investment in the war. It ought to be possible by propaganda to similarly save on fuel and mineral consumption, to reduce the amount of labor employed in non-productive fields throughout the country, etc., etc., and therefore if this were accomplished in addition to the current savings of our people we would have met from day to day the cost of the war, except for loans to the Allies. It would therefore logically arise out of the above administrative scheme that a Savings Council could be formed from representatives of the Federal Reserve Board, the Food Administration, the Raw Materials Administration and from the Treasury and Department of Labor. Such a Council could coordinate the propaganda on savings efforts in all directions. I mention this only as an instance, but before such coordination can be undertaken it does appear to me that we need the erection of the fundamental branches of administration underneath.
I trust you will forgive my trespassing outside my own field for it arises solely from a desire to serve.