Evening star., 1941-07-27
National Economy
and National Defense
BIZ O,Gen L. Scott.

Until now, this country's defense ef-
fort primarily has represented vast
pump -priming program. 1t has meant
boom times for almost every one, with
rising profits for business, record-break-
ing wages for labor, near record income
for farmers. Just about everybody, ex-
cept a relatively few soldiers and sailors,
has been made happy.
From now on not everybody can be
happy. The reason is that American
industry, if it ever is TO get down to the
business of really producing war ma
terials, will not be able to continue TO
produce all of the houses and automo-
biles and refrigeratorS and radio sets
and washing machines that the public
wants. The boom of recent months is
fast exhausting the big stocks of ma
terlals that industry had built up against
the day that rationing might come
That day is at hand. The choice must
be made between producing more of
the things that people want to add to
their enjoyment or producing more
weapons with which the Nation can
defend itself. That choice, inevitably, is
for more weapons.
This means that an industry that has
devoted itself during the past year to
production of vast output of peace
time goods will need to shift over now
to production of armament. The alterna-
tive will be disruption for that industry
when its present supplies of raw ma
terials run out. From now on, individual
business Enterprises increasingly must
find ways to fit into an armament
economy or face depression.
Why this is so can be seen from a
glance at few figures.
AS matters now stand the defense
program of the United States, plus Brit
ish orders in this country, totals S65,-
600 100000. This is the amount appro-
priated, requested or soon to be re-
qJested. 1t represents very formidable
total of dollars that must be translated
as rapidly as possible into guns and
ships and aircraft and other weapons
of war
Out of that total, to date barely
$4,000 000,0 600 has been expended during
the past l3 months. This includes
$1,000 100000 in British orders filled dur
ing that time The bulk of the billions
for American orders cover construction
of cantonments for soldiers and new
plants for industry and vast amounts
of equipment and supplies of a light
nature needed by greatly increased num-
bers of soldiers and sailors.
In a word, the past year was a year
of tooling up, of getting ready for arms
production.
Today, the tooling-up period is reach
ing far-advanced stage. In very few
weeks or months. those tools will begin
TO work on turning the bulk of s56 000,-
100000 into the shooting weapons of
war. This is a stupendous job. 1t calls
for production of $4,000 aircraft. for at
tanks, for an immense new Navy. for
huge quantities of shells and bombs,
for about 300 new merchant ships
There simply is not enough steel Of
special types, or copper, or rubber, or
aluminium, or tin or many other raw
materials to make armament and to
make the many types of goods that
the public wants to buy. Likewise, there
isn't enough machinery or labor or cleo
trio power to fill the needs for armament
and the wants of people with money to
spend on peacetime products.
The troubles that lie ahead trace to
those facts. And the troubles that lie
ahead are serious troubles that involve
more than simply denying new auto
mobile or new house to somebody
with money to spend.
Troubles now to come are the troubles
of planning.
For example. the Government must
decide which industries can have the
materials that they require to keep
going and which cannot have materials
and must slow down or stop altogether.
When this decision is made, the Gov
ernment must decide which manufac-
turers within an industry can get the
materials they require and which man.
ufacturers are to be out in the cold
Many other problems come into the
picture.
The public already possesses more dol
lars than it ever possessed before. In
the months ahead the flow of dollars
into the pockets of workers and farmers
is to increase still further. Before long,
the Government alone will be con-
tributing $1,000 900 900 a month to new
purchasing power. Back in 1896, an out
pouring of about s60O000,000 a month
for two months, due to the bonus pay
ment, created a boom. Now, for month
after month, s1OO0,OOOO0O and more
will be AIDED by the Government to
individual purchasing power.
Individuals getting those dollars will
want to spend them. Yet, with rationing,
there will be fewer goods on which
dollars may be spent.
The result: An irresistible pressure for
price imitation More dollars and fewer
goods make a price rise mathematically
certain unless ways can be found either
to divert those dollars to or find new
outlets for their use 1t is this problem
that Price Controller Leon Henderson
has to face, and he is armed with in
adequate powers for effecting its solution.
The simple fact is that neither Con-
gress nor the White House is aware of
the nature of the economic problems that
will grow out of the armament program