Evening star., 1940-06-09
Spur to National Economy Seen
In Five>Billion Defense Program
y. S. War Orders Expected to Dominate Business
Picture, Creating Jobs, Toning Up Industry
and Raising Nations Income
Ry Oliver Mckee.

ment today remains the country's No. l
social and economic problem. Accord
ing to the estimates of the c. I. o. more
than 100000 American workers are
unemployed Other estimates place the
total Tar less than this. There is no
doubt. however, that the jobless army is
large. If the arms program provides
only million new jobs, it will meas
urably decrease the volume of unem-
ployment, and thus tighten the relief
burden In many American cities and
towns.
National defense expenditures also will
create a good deal Of indirect employ
ment. AS an Illustration in point, c.
c. c. camps not only gave jobs to the
enrollees, but they created new mar
kets for the neighboring farmers, trades
men and others. New aviation factories,
expanded shipyards and larger gar
risons at Army posts will similarly put
more money in circulation in the COM
munities in which they are located To
supply the needs of those on Govern
ment payrolls or working on Govern
ment orders, employment will be created
for many workers elsewhere. In cal
culating indirect employment, many
economists use multiplier of is or 2.
In other words, for every thousand new
jobs directly created by Government
expenditures. from 500 to 1000 other
persons will indirectly receive employ
ment, if these multiplers are accurate.
Partly Due in 1910.
For the calendar year 1899, national
| income was shade under $4,000 900 900,
according to estimates of the Commerce
Department. The full effect of the arms
expenditures, in terms of national in
come, probably will not be felt until
194l. II we accept a multiplier of
is or 2. national income in 194l should
reach SIS 900, ,OO0O 900, if $500 600 900 is
spent on defense next year Though to
less degree than in 194l, arms eX-
penditures will also increase national in
come this year. Despite the loss of
many export markets due to the Euro
pean war and lower agricultural prices,
national income in 1910 is expected TO
go beyond the $70,00O,0OO mark
From high point of over 80 millions
in 1929, national income, in swift to-
boggan slide, dropped to less than 40
billions in 1882. From then on, the curve
has been almost continuously upward.
There was a sharp drop from 1887 to
1898. The 1887 figure, 70 billions was
the highest since the depression. Last
year national income increased more
than billions over the 1888 figure of 64
billions. Before reaching the 1929 level,
We still have long way to 60. In the
past decade, the population of the United
States has increased by about 5000 900,
according to Census Bureau estimates.
So national income must climb we'll
above the 1929 total before per capita
income is as high as it was just before
the stock market crash of 1929
Uncertainty Due After War.
Defense expenditures will more than
offset the loss to national income caused
by the shrinking of our European export
markets, Holland, Belgium and the
Scandinavian countries have sharply
curtailed their purchases of American
goods since the Nazis launched their
blitzkrieg. With the exception of war
materials, exports to other European
countries have fallen off in recent
months. When peace comes in Europe.
whoever may be the victor, a period of
uncertainty is to be expected, an eco
nomic interregnum. If Hitler wins it
will be many months before American
exporters will know the bases on which
the new order in Europe will be estab-
lished. If the Allies win there will be
similar uncertainty as to the European
markets for American goods For the
war has changed the pattern of world
trade and it will take time for interna-
tional commerce to move again in
peace-time channels.
Unless there is a drastic curtailment
of other Federal activities, the arms pro-
gram will increase Government pay rolls
AS result of the defense spending, an
increase in prices seems likely, in the
opinion of many Federal economists
Though some industries will be working
close to full capacity in filling Govern
ment orders, there is no reason, accord
ing to Government experts, to anticipate
war boom. The arms program is ex-
pected to increase national income this
year and in 194l. But the increases will
not come suddenly and it will be many
months before the national economy
feels the full effects of the new defense
expenditures.