Evening star. [volume] (Washington, D.C.) 1854-1972, 1940-09-08
Defense Spending Held
Recovery Factor
By OlDen L. Scott.

spending IOr defense.
The country is not yet aware of the
coming volume of this spending. 1t is
not aware of the effect it will have upon
industry and upon employment Until
now the new defense program has rep
resented little more than an impressive
total of figures. The translation of those
figures into actual contracts and into
actual work upon those contracts will
take some time. But that translation is
about to begin and soon will grow in
importance.
Once the wheels really start to turn,
all Of the past pump printing ventures OF
the New Deal will seem small by COM
parison. Those previous ventures have
been somewhat hating and have not
been sustained. They were affected by
opposition of businessmen and by fear
over debt Armament spending is to be
of a different type. This spending al
ready is plotted ahead for six years and
is in far greater volume than other
pump primlng 1t is type OF spending
not opposed by business. The country
is reconciled to it and to the resulting
debt creation because of the feeling that
defense is imperative. AS a result the
country seems assured of prosperity.
Business, as a matter of fact, is pretty
good today. The Federal Reserve Board,
and its new index, shows American In
dustry to be more active than in 1929.
That activity is inspired, in part, by big
British orders for war materials. 1t is
only moderately influenced by the spend
ing of this Government for defense ma
terials. That spending in August
amounted to no more than $4,000 900.
In the months just ahead 1t will rise to
$500 00O.0 900 and to push on even higher.
The Treasury estimates officially that
this Government will spend $1,000 900
on national defense in the year that
began July /. w. P. A. pump printing
amounted only to ST 400 100000 in the
last year and subsidies to farmers were
less than 81 900 900 ,o00 The billions for
defense obviously are to have greater
effect upon industry than the w. P. A.
and A. A. A. billions because there are
more of them.
Yet these billions of the first defense
wear are only start. Instead OF S5,00O.-
600 900 they will be $4,000 100000 in the
wear that begins next July and will con-
tinue at that high level for the year that
begins in July, 1912. Not until the year
following that will any important decline
start, even on the basis of present plans.
Events can easily lead to even greater
outlaws.
The defense program now mapped out
contemplates the expenditure OF more
than 500 100000 in cash during six
years.
Immense pump-prining effect lies in
these figures. They represent intended
cash outlaws over and above the billions
that are spent for ordinary Government
activities. Those other activities Will
average at least s70OO,0O0000 year, or
s42. 900 100000 in six years, so that the
Government between now and July, 1916
will spend about 100000 100000. The
figures are somewhat staggering and
difficult to comprehend, but they repre-
sent an immense volume of orders for
industry and what cannot help but be
high level of industrial activity with
more jobs and profits and income for
individuals and for industry.
The effect will be like that of repeat
ing the bonus payment of 1886 each
month over a period Of years, Business
will respond and when it does the coun-
try may face the problem of controlling
recovery to keep it from developing dis
tortions that will lay the groundwork for
a violent new collapse.
Butt is suggested-how can there be
any assurance that this high level of
spending on defense will continue?
Isn't there strong chance that the war
abroad may end and that there will be
decided swing away from such vast out
lays on arms?
The answer is this: If Great Britain
holds out against Germany, the British
will need vast supplies from the United
States. They will need everything in
the way Of arms that this country can
produce in order to lay the groundwork
for an eventual attack on Germany. At
the same time, the United States will
have to push forward its own defense
program so as to be prepared for any
eventuality. The result is that, with
Britain holding out, American industry
will be up against production problem
greater than any it ever has faced.
II Britain should fail to hold out, then
the United States would-for the first
time in its modern history-face hostile
powers in two oceans This country is
committed to policy of hemisphere de-
Tense. This policy makes necessary
large army, an air force greater than
any possessed by any possible combina-
ton of enemies and feet than can
command vast areas in two oceans Even
if Germany and Japan did not threaten
this country, prudence alone would force
the United States to maintain powerful
defenses
Added up this means that the defense
industry inevitably is to be a vital in
dustry for many years to come. In
reality, it is new industry far greater
in size than the automobile industry or
any other industry with the single ex-
ception of agriculture. To build and to
maintain this industry will require ire
mendous effort. Expending that effort
will provide the United States with re-
covery that will continue for a number
of years. Once there has been an adj
justment to that higher level of activity,
and once a vast inventory of armament
has been built, then there undoubtedly