Evening star., 1940-09-15
Gains in Industry
Aid Employment
Seen in Next Year
Economists to Urge Action
To Prevent BottIenecks,
Causing Price Jumps
the Associated Press.

Administration economists, an
ticipating vast industrial and en-
ployment gains in the next year,
Yesterday urged immediate action to
prevent industrial bottlenecks which
might touch off a spiral of rocket
ing prices.
The recommendations were made
In a memorandum prepared for
circulation among high officials,
particularly those concerned with
defense.
While the report has not been
made public, it was learned that
the economists set out these general
conclusions and recommendations:
Immediate expansion is necessary
particularly in the number of rail-
road freight cars and production
facilities for steel and machinery.
Unless more are built, freight cars
are expected to be 100000 short of
requirements by next fall Steel
production is slated to hit ''prac-
tical capacity" by January, with
shortages appearing already in some
types of steel, such as armor- plate.
The machine tool industry needs 25
per cent more facilities.
Employment to Be Increased.
Business is expected to produce
employment such as the country has
not seen since 1929 Depending on
how fast the defense program
gathers speed, industry is slated to
take on between 2.500,000 and $780,
900 more workers by next July.
The CONSUMPTION and National
Guard mobilization programs are
due to take more than 1000, 900
additional men out of the labor
market in this period.
If prices remain unchanged, the
national income, which totaled
ST.. 700, ,OO0. 900 in the last fiscal year,
should reach s78, ,000,000000 in this
fiscal year which ends next June 80.
If prices 60 up. and some rise Is
believed inevitable, the figure may
shoot considerably past $4,000 ,000,-
600.
AS for industrial bottlenecks and
prices, the economists said that
there was this possible prospect:
Once businessmen see such bottle
necks delaying or making dlfncult
the delivery of ordered goods they
will start laying in huge supplies
of things they expect to need in the
future and at the same time bio
up the prices not only OF these
specific items, but nearly all others
as we'll.
Increase in Prices Seen.
If this happens, the cost of goods
NAV be Is per cent higher next June
than it is now. A rise of 5 per cent
Is believed probable. in any case.
Some slight price increases have
occurred in the last month.
All these estimates were based
on calculations of the effect Of de-
fense expenditures, foreign trade
and tax changes Some alternate
guesses also were made on what
would happen if England sur
rendered.
A British capitulation, however,
was not expected to alter the figures
greatly. The experts calculated that
to the extent that the United States
lost business by surrender OF
Britain our own defense program
probably would be stepped up. Thus
if Britain surrendered and failed
to take several thousand airplanes
she has ordered, the United States
ARMY and Navy probably would buy
the planes.
Defense Spending a Factor.
The dominant factor In the busl-
ness situation as these economists
see it is the size Of this Govern
ment's defense expenditures. The
budget Bureau has calculated that
actual defense expenditures, in ad-
dition to normal costs of the armed
services, will total $4,000 100000 in
this fiscal year. The economists
said that s4OOO,0O0.O00 was more
probable because of the potential
bottlenecks in industry which would
retard the program.
If defense costs amount to 5000
100000, total Federal expenditures
this year are expected to hit Sl2,-
100000. 900. The statisticians figured
that defense costs might soar to
$4,000 900 900 and total Government
spending to $4,000, 900 900 in the
next fiscal year beginning July 1,
l941.
One Of the few restraining influ-
ences they cited was the rise in
taxes. To the extent that people
pay taxes. the economists said, they
can't spend money for other things.
In this fiscal year alone, more than
$70O 100000 was added to the Fed
eral tax bill. Another addition OF
at least 2OOOOO,OO0 is slated in the
proposed excess profits tax.