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contained in the planner's head; and they can represent a persistent purpose, or have as little compelling force upon action as day dreams. Planning, there fore, is nothing to be feared because it will force us into a strait-jacket; if it attempted to do so in a field where harm would result, it would simply be bad planning. The good plan will adapt its degree of flexibility, its length of time span, and its measures to impel action, all to the full circumstances which surround the situation it deals with.

The degree of flexibility of any plan, and the extent to which it goes into detail, will be determined largely by the correctness with which the essential factors in the given situation can be known and future reactions foreseen. Yearly budgets are good examples of plans which can be flexible or rigid, and, also, of some of the difficulties which may arise when they are too flexible or too rigid.

The proper length of time span will depend partly upon the possibilities of foresight, and very largely upon the natural or usual lengths of the cycles in the fields covered. For example, the yearly plan is appropriate for any matters connected with agriculture in the temperate zone, but for measures which are to influence industrial and commercial affairs, the year is inadequate; a period at least sufficient to cover the typical 10-month span of the industrial cycle must be chosen. Taxation is an example of an influence which has a very material effect upon business and industry; and taxation is subject merely to annual planning, whereas the business situation upon which it imposes itself varies with fair regularity over something like a 4-year period and is, therefore, sometimes too heavily, sometimes too lightly, burdened by taxation.

Not even with national planning are all plans necessarily to be thought of as written. There will probably be, for example, a great deal of educational work necessary which will be undertaken not as a part of any specific plan but which will turn out to be, nevertheless, just as much a part of some future plan as if it had been written at the outset. But the value of writing down a plan in black and white is considerable even where the plan itself cannot be complete or specific. For in even the attempt to write down a highly imperfect plan, the imperfections become more obvious and definite and hence show the needs for further information, or further education, or whatever they may be. Only by writing down vague and imperfect plans and attempting to make them clear can we learn to make better ones. An example can be chosen again from the field of budgeting where it is now fairly well understood that in order to get a really good budget some 3 or 4 years must be spent making concise, definite, but very bad budgets, and learning from each as experience shows where the bad spots are. The civil service is another example of the possibilities of definite and planned action in opening the way to better action; for however imperfect the examinations for civil service may be, they are at least down on paper, they can be seen and, if one cares to study hard enough, their imperfections may become known; whereas the method of choosing Government employees by the hit-or-miss method, hundreds of different people acting from hundreds of different motives each time, gives no opportunity whatever for perfecting the machinery.

The methods used to put plans into effect will vary, also, with the circumstances of each case. In national planning many of the proposals will require congressional action; but even with these it will be a practical question each time whether the project is merely to be left upon the doorsteps of Congress, or whether educative or other measures will be appropriate to the circumstances in order to advance action upon them. But likewise it will be a function of national planning to guide the actions of the business world: and here very real and practical questions will offer themselves as to the best method of getting such plans into effect. Certainly at the early stages any measures approaching compulsion will be impossible; but it is not usually realized that measures for persuasion should be as carefully considered as methods for compulsion. In the Senate's committee hearings it was brought out as an objection to national planning that even if dangerous situations were made known and advice given concernig them, the advice was not taken. as, for example, when in 1928 the overbuilding in Chicago was widely recog. nized and definitely stated by several responsible people, with no results at all upon the newer projects for building. Likewise with agriculture, when all sorts of powerful statements are made about the overproduction of certain crops there is no visible response in reduced acreage; and when warnings

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are given by the Department of Commerce of the increase of stocks or of overquipment in certain industries, seldom has any slowing up of the growth in production or productive equipment been noticeable. But this is bad planning, for it should be recognized that when the natural economic forces in an individualistic system are working strongly in one direction, words of advice and warning are as the wind blowing in the trees; and it should be further recognized that more harm than good is done by issuing warnings which can not in the nature of the case be followed.

For repeated warnings which can not in the nature of the case be followed will turn into the cry of “wolf” and make it impossible that future and better calculated warnings can be heeded. To get any of its plans followed out a national board will have to induce action, and of all the means imaginable to this end exhortation is the poorest. In its subtle and difficult problems it is more likely that a successful planning board will accomplish its ends by taking into consultation representatives of the people, or of the organizations involved, and giving them a large share in working out the facts of the situation and the resulting plans, so that they may gain that depth of understanding that comes from taking part in creation. With thoroughness and patience shown in its preliminary work, it is not too much to expect that a real planning board will be able to invent and discover methods of enforcement a thousand times better than exhortations and warnings.

To summarize what planning really means, I want to quote some parts of the article written by Hugo von Haan in the Annals: “ Planning aims at

the avoidance of rapid and excessive changes in economic life.

“ Planning follows the law of extension from the narrower to the broader.

" Planning is to be based on planning units. These are: Geographical units, regions ; economic units, industries; and political units, nations.

“ Planning is not limited in time (like most of the plans), but represents a permanent way of concerted doing.

“ Planning breaks away from crystallized habits and from the opinion that economics, industry, business (and), production

are ends in themselves, and sets its objective outside, over them, in the steady rise of the general standard of living.

“ Planning, therefore, can not be entirely economic nor entirely social, but must be social-economic in character.

“ Planning believes in evolution, not in revolution, and therefore adopts a policy of patience, which counts progress in terms not of years nor of decades brut of generations, in conformity with a greater plan.” Our national plan. ning will by its nature aim at evolution, not revolution. It will have to do with an organic entity, with that group of human beings, human institutions, and human habit patterns which we call the United States of today; and its problem will, therefore, be of organic growth, partly of emergent evolution into the fie of the new, and, hence, a vital part of its technique must be recognized as experiment. Its final objective, therefore, will be somewhat vague and general, a statement of direction of effort rather than a goal. From the economic point of view it can, perhaps, be stated as a steadily, if slowly, rising general standard of living with the maximum possible freedom from large and abrupt fluctuations. From the broader social point of view we can at the moment, perhaps, state a general objective in no more precise terms than the attainment of fuller and deeper life for larger and larger numbers of people.

The problem of national planning is therefore not how to jump from complete laissez-faire to complete social control. We haven't, and never have had, the one, and haven't, and probably never will have the other. The problem will be how, in spite of existing obstacles, to take the most practical steps away from known evils and in the general direction of the broadest good. National planning would never attempt to decide whether laissez-faire individualism is in itself good or evil. It will attempt to discover, rather, in the present situation, whatever one may call it, the factors of good and the factors of evil, and propose such measures as will tend to eliminate or mitigate the evil factors one by one.

No one can pretend to be able to lay out in advance the various methods which a planning council would use to induce action, but some general comments upon the possibilities of such action can be made. In the first place,

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as I have already said, the members of the council must realize that truth does not of itself prevail. As a matter of fact, perhaps, it never has, or only when it has been driven home to the people by some near genius. Therefore the council will give advice only after considering the limitations of human comprehension, the limitations imposed by the habit patterns of thought, and the limitations imposed by self-interest. They must increase steadily the range of understanding of the business public and of the total public before they can hope to have influence. This understanding they must build before they can hope any proposals for compulsory action will be of real effect. It is the building up of understanding which is of principal importance.

For this reason, because much will depend upon their prestige, it is of the essence that the law which sets them up definitely frees them from any requirements to report on any specific subject, no matter who may ask for such report. It is clear to see, for example, that if in the first year any executive or Congress should ask for a report upon the tariff, the game would be up. Nothing could be said by them which would not injure their prestige with too large a section of the prejudiced public beyond hope of recovery.

But prestige even when gained must be held, and understanding even when won must be continually refreshed. Therefore it is probable that they will take the course of sending special reports to and taking into special consultation various types of organizations of business men; that they will maintain relationships with executive branches of the Government and with congressional committees. For this purpose, and to make this a continuous and organized activity, they should have a department for publicity. The word is unfortunate, because the publicity of such an organization as this would be far removed from the usual ballyhoo of publicity departments. Theirs would be, in fact, a difficult project in adult education. Nevertheless, in the true sense of the word it would be continuous publicity and could not be expected to succeed unless a permanent part of its organization were formed to see that it was carried on.

Their influence upon Congress is of essential importance, but I do not see that the technique of building up an influential relationship with Congress is far removed from that of building up such a relationship with various branches of the business world. If it is once understood that prestige and influence must be earned and reearned, the technique of developing it will not be too difficult. Again I repeat that if they are to build up such influence, they, themselves, must be the judges of what they undertake to study and upon what they decide to report, first, second, third, and all the time. They must not be required to issue reports upon any specific subject. If Congress or the executives need any such thing, and the council prefers not to undertake it, Congress and the executives have the same possibilities that they have today to set up special organizations for the purpose.

In the Senate hearings the statement recurs that such an organization as this must build from the bottom up rather than from the top down. It is certain that they must build from the bottom up, but it is equally certain, I think, that they must build from the top down. They must, that is to say. gain this growing understanding and attitude of cooperation in the business world, and in the legislative and executive branches of the Government; but they must, also, build their council into a piece of machinery for leadershin. Understanding, cooperation, better organization—all the measures which build from the bottom up—will mightily increase their effectiveness, but out of such development there is not one chance in a thousand that leadership will grow. The council must appreciate that it is upon them that the responsibility for leadership in their field rests. The business community may be made more ready to respond to such leadership, but under competitive conditions we have no right to expect leadership to grow in and of the business community. For this leadership we must look to the national economic or planning council.

Planning on any considerable scale is itself a pretty large undertaking am). therefore, itself needs planning. For this reason I have given as the title of this talk "A Five-Year Plan for Planning.” I want to attempt now to formolate such a plan, not because it will necessarily be the one which will be for lowed, but because it puts a proposition before us in concise and realistic fashion, so that its merits can be weighed and its deficiencies corrected. I am proposing activities for each of the first 5 years, and in each I am proposin: certain subjects for action by the planning board or council. This point I think of major importance, for although tliere will be many subjects to which considerable study must be devoted before action can be taken, it would be most unfortunate to have such a council start for the first 1 or 2 years upon study projects alone. It is humanly difficult, always, to come out from a study in a mood for action. That mood, and the habit of that mood, must be developed from the very beginning. And for each year, also, I have suggested subjects for study, but it should be clearly understood that “study” does not mean that the planning board itself, through its own organization, will undertake all the studies. There are a number of organizations in the country, like the national bureau and the conference board and many others, with which it can cooperate or to which it can assign certain projects or parts of them. Moreover, projects for study should be understood in each case to be projects, also, for conference with appropriate associations or individuals in the business and political world, so that as many as possible of the factors vital for effective action will be brought into the discussion to take an active part in the working out of the proposal later to be developed.



1. Public works and their financing over 5- or 10-year periods: A considerable amount of the study necessary to face this proposition has already been done. A recent book by Loucks is a compendium. There is no reason why, within a year from the time the planning board is organized, there should not be specific recommendations ready.

2. The development of the evolution of trade associations and other organizations: The effort should be made at once to evolve a new conception of and to develop a better and fuller working of trade associations on their present lines. For example, for the increase of budgeting among their members, of simplification and standardization, of uniform cost accounting, and of regularization of operation and employment.


1. Finance and credit: Many steps will be necessary here, and scme, it is wholly reasonable to believe, it will be possible to suggest within the first year. Such steps as the strengthening of the Federal Reserve Board, and of the whole banking structure, are cases in point. In addition, there should be a study of the dynamics of the credit-currency system, not merely in its long run but primarily in its short run trends; and along with it a study of the relation of our national finance to international finance, and the relation of international finance to export and import trade.

2. The organization of some single industry: This will take some advance study, but before the year is out there ought to be definite plans for its organization; and the industry to be chosen would seem, without any question, to be the coal industry, or, more likely, the soft-coal industry. There should be developed by the planning board a definite scheme for a 10-year organization of this industry, which should allow its return to a more freely organized form at the end of that time or if it should then turn out that the whole country is being better served, a continuation of the firmer type of organization.


1. Taxation : The primary purpose of such a study should not be so much on the revenue aspects of taxation as on the economic effects of the varieties of taxation commonly used, or other forms which might be used. Taxation for this purpose should be classified with relation to its different general economic effects over various separate sectors of the cycle, and each classification considered with regard to the possibility of planning such taxation not over merely annual periods but preferably over periods of from 5 to 10 years in length.

2. An intensive study of business cycles, with especial effort to segregate the cause and effects of the separate cycles: The industrial-commercial, the speculative, the agricultural, the long-time monetary cycles, and others.

3. Stock speculation: The deviations from long-run values in the case of separate stocks, and their various effects, as, for example, their effect in concealing the true valuation of savings, i. e., the true "price of capital."

4. A study of stock market cycles. 5. A study of the housing problem.



1. Develop further the field and influence of trade and other associations.

2. Initiate the full organization of some second industry, such as and for example, the textile industry or the oil industry.


1. Bring together in conferences men with statistical knowledge and men with practical knowledge in order to make more clear the practical applica tion of statistical facts and the gaps in our statistical knowledge that must be filled before such applications can be made.

2. A study of the distribution of commodities: The technique of distribution, the extent and distribution of inventories, and the the cost of distribution.

3. The distribution of wealth and of income.

4. The quantity and trends of productive equipment, and incidental to this the beginning of a study of the effects of additional quanta of equipment upon the total valuation of such equipment in any given productive field.





1. The organization of some third industry: It is too early now to make any specific suggestions. Certainly, experience in the fields of coal, and perhaps of textiles or oil, should point the way better than we can now know how to point it.

2. The beginnings of definite interpretations of statistical data. 3. Housing proposals based on first-year studies.


1. The beginnings of a limitation of speculative excesses in the stock market. 2. Proposals for the betterment of antitrust laws.


1. Agricultural problems-especially effects of capitalizing future in agricultural land values.

2. The relative flow of the income stream and the investment stream both in and out, that is, both from the point of view of sources and expenditures; and the influences effecting the relative flow of these streams.

3. Land speculation, its extent and its effects. 4. The problems of power production.



1. Establish under appropriate supervision the beginnings of the use of limited authority by trade and other business associations.

2. Establish open and uniform quarterly accounting by all public corporations. 3. Proposals for taxation based on the first year's study.



1. A permanent organization for crisis relief; primarily, of course, economie crisis, but it is possible that natural crises, such as floods and the like, can be included.

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