Evening star., 1941-02-09
Industry Alert
ToDangerso Of
War Boom
Remarks of President
Emphasize Need for
Cautious Planning
By FRANK MaCMILLEN,
Associated Press Business Writer

dustries, their plants already driven
at the fastest pace in history and
with greater production planned,
are actively considering the prob
lens that increased facilities and
workers will present when the
inevitable letdown comes with
peace abroad
When President Roosevelt told his
press conference this week that he
was seeking means of cushioning
postwar" slaCkening in industry,
he focused national attention on
questions which have occupied
much of the recent thinking of top
policy officers of some of the coun-
try's biggest corporations.
First effort by many of the IN
duStrialistS who control expanding
war industries to mitigate an after
war slump has been to avoid need
less construction Of facilities now.
Steel Leaders Active.
The steel industry, through such
leading figures as Irving Olds,
chairman of United States Steel,
and Eugene G. Grace, president of
Bethlehem Steel, has been parti-
cularly outspoken against the in
definite expansion Of capacities TO
meet an upward spiral of civilian
demand as we'll as the rush for
defense requirements
In this attitude, conversations
with these men and others in the
industry indicate. they have been
motivated not solely by the thought
of idle plants left on their hands
when peak armament demand has
passed
They also want to build up a
hidden backlog of civilian demand
for steel which will make itself
felt when the country returns again
TO a peacetime economy.
Some steel makers, for instance.
feel that it would be preferable. II
steel capacity is taxed, to ration
supplies for pleasure cars and give
the materials to defense industry,
rather than to expand plant facin-
ties now.
This policy. they reason. would
not only avoid burdening the steel
business with plants it could not
use in peace times. 1t would also
provide buying public with a real
need Of automobiles when the emer-
gency has passed. Similar reason
ing. of course. would apply to many
other basic industries.
President Roosevelt's approach to
the problem, naturally, was through
such activities as the Government
can most easily initiate to provids
a cushion against declining activity
elsewhere-road building, public
works and the like
Most businessmen here believe
such steps probably will be necessary.
But they are asking what can be
done now to hold the necessity Of
public assistance to a minimum.
One step which is receiving wide
discussion is a continuance and,
where possible, an expansion in re-
search activities with the idea Of
creating new products and markets
Gossip among executives indicates
that several large companies have
surprises in store for their customers
which are tucked away in file draw
ers ready TO spring when the sag
in business comes. The chemical,
electrical and autOmotive industries
are said to be active in this dlrec-
ton.
Some of the more theoretical at
taCks on the problem. which never
theleSs have been discussed by busi-
nessmen both publicly and over the
luncheon tables, include certain
forms of taxation and enforced saw
ings.
Selective taxation on consumers
goods. some economists believe, by
restraining consumption now Of non-
essentials. would allow more of eX-
listing factory facilities to be de-
voted to arms uses without those
headaches of idle plants later Con-
verSely. they say. release from tax
alton. when the emergency is over,
would undam much pent-up demand
and provide a cushion for dropping
industry.
Forced Saving Urged.
TOIOCO Sd liz, ' a. Ia NlOllN vi NlllOll
have been tried by the warning ma
tiOnS abroad. has been a favorlte
suggestion of some economists. This
is how they think it would work:
During the emergency. while most
of the population is steadily en-
ployed at good wages, the Govern
ment should arbitrarily take some
portion of their earnings as loan.
giving them bonds or notes redeem
able after the emergency has passed.
This. its proponents say, would
cut down civilian consumption now.
would provide money which would
otherwise have to be raised by taxa
ton, and would give workers. when
the emergency has passed. a back
log of cash to enable them to con-
tinue as consumers through the
period of postwar adjustment Of
industry.
A secondary advantage claimed
for this plan is that. by reducing
the competition between the ci-
william consumer and Government
for the factory facilities of the Ma
tion, it would tend to keep in hand
the rise in all sorts of prices which
usually accompanies wartime
economy. From this both wage
earners and Government would
benefit
Business Week. magazine widely
read by executives and businessmen,
concludes its lead editorial this
week:
Should we try to use our newly
expanded plant and equipment to
reconstruct battered and probably
bankrupt Europe? Should We try
to make a world market for our
manufacturing industry through
general tariff reductions? Could we,
if necessary, so rearrange the So
cial and economic scheme at home
that domestic consumption will alb
sorb the output of industry?
Those are academic questions
today, but later they will be vital
and urgent We may not be aware
of it, but right now economic deci-
sions of international consequence
are in the making-regardless Of
who wins the war