Evening star., 1941-03-16
The Depression Fades
Before War Boom
By O1Den L. Scott.


signs of the boom already are evident
| as one 1929 record after another gives
way to a 1941 record. Right now, indus
| try is producing more, labor is earning
more and merchants are selling more
| than at any time in the past.
Yet the wheels that generate real
booms are just beginning to turn. The
! dollars for defense are only starting to
! find their way in volume into the pockets
| of workers and into the bank accounts
| of industries. Spending that will go
with aid to the British Empire has yet
to gain momentum. Industry is just
getting well started with its program of
plant expansion and workers in industry
are not yet showing what they can do
in the way of using the growing con-
tents of their pay envelopes to buy the
automobiles, houses, household equip
ment and other goods they want.
| AS 1941 wears on the pace of SPEND
ing and the effect of spending will in
crease.
Today this Government is paying out
cash at the rate of approximately $780,
| 600, 900 each month for defense alone.
Another $500 OOO,O 900 is flowing out to pay
! for the other activities of the Govern
ment. Before many months the cash
spending for defense will exceed 81 000,-
100000 each month and that additional
| $500 900 900 will continue to flow.
This is pump printing beyond the
widest dreams OF the New Deals pump
primers. Its effect months after month,
will be cumulative.
Even noW-before the effect of de-
fense spending is really felt-there is
beginning to be competition between the
defense industries with their growing de-
mand for raw materials and the indus
tries catering to civilian wants with their
growing demand for the same raw mate
rials. The Government has had to step
in to deny aluminium and nickel and
magnesium and machine tools to civilian
industries. 1t will be necessary for the
Government to ration steel so that some
companies may not have an .oversupply
while other companies are unable to fill
their wants.
BY the time defense spending really
takes hold the scramble for goods obvi-
ously will be intense. When that scram-
BILE starts, the boom will be under way.
Its symptoms will appear in price rises,
in a wave of demands by workers for
wage increases, in a greater demand
for some types of goods than there are
goods to go around. President Roose-
velt is being informed that the boom
may be in full force before fall, if war
and war preparation continue
Yet boom control and the problems
it raises, is getting little official atten-
! ton
Workers are being encouraged to de-
mand wage increases to add further to
| civilian purchasing power at a time
when there may not be goods for all.
There is no effective machinery for con-
trolling prices at time when the scram-
BILE for goods may result in some sharp
price increases. The Government today
lacks authority necessary to control the
use of bank credit when and if the re-
turning prosperity touches off an eX-
panded use of credit that will add to the
violence of the boom. Furthermore,
there is no carefully planned expansion
| of key industries designed to eliminate
supply bottlenecks that help to generate
boom conditions even before all of the
| countrys labor supply and all of the
Nations industry is fully occupied
| So far as can be discovered. neither
| the White House nor Congress is think
/ ing of plan of tax increases severe
| enough to draw off part of the growing
| volume of income either in the form of
| forced savings or revenue that will pay a
! larger proportion of the defense bill and
tend, in that way. to limit the forces
working for an imitation prosperity.
All, really, that is being considered in
| the way of boom control is a Govern
ment bond-selling campaign designed to
induce workers to save some of their
present income for later spending 1t
remains to be seen whether the Nation s
workers will be willing to forego the new
| cars and houses and refrigerators and
| furniture and other goods they want in
order to buy Government savings bonds.
The fact is that the boom now gener-
ating, unlike the boom that developed
| in the last war is to be based in impor-
tant part upon buying to satisfy indi-
vidual wants. During the last war, many
| individual wants went unsatisfied. and
when the armament effort ended a vast
backlog of housing and vast demand
| for automobiles had accumulated.
In this defense period there is home
building boom in the midst of the gen.
Grating defense boom. Records are be-
ing broken in the sale of automobiles
and household equipment, Along with
new battleships and airplanes and guns
the Nation is getting huge supply of
new homes and new automobiles and
new refrigerators, among other things.
The result is likely to be this: When
it comes time to start cutting down on
the production of arms. there will not
be the same backlog of untitled needs
that there was in 1919 An end of the
armament cycle may coincide with the
end of the building cycle and there then
could occur defationary situation of
very impressive proportions.
A realization of these possibilities is
| reflected in several ways \
President Roosevelt is deliberately
building up backlog of public works
! projects by directing that all new prof.
ects not related to defense now be cur
tailed. At least three separate Govern
ment agencies are conducting studies de-
signed to produce plans for meeting a
post-defense depression. Individual in