Evening star., 1942-02-08
Initiation Germ
.Lurks in Vast
War Program
Experts Fear Excess
Of Spending Power
/. Over Supplies
BY FRANK MacMILLEN,
Wide World Business Writer.

ucuL . FlCVUTy pIOSI TAIN OI plRnec,
ships and arms means In dollars
and cents, not only to the Treasury.
but to you as consumer
If you want to play this game you
will be following close behind its
originators. the countryis financial
and statistical experts, who have
been indulging in an orgy of cal
culation and guesswork, In print
and In private, of what the gigantic
arms total means In terms of such
forbidding distractions as the
national income" the standard of
living" and "the imitation spiral Of
prices"
The way we'll play it, the game
will have three rules, which ought
to make 1t simpler:
First, we'll call all the big num-
bers by their first names, and leave
out those confusing multiple zeros;
second, the year we will talk about
won't be any specific period but Just
a sort of typical II months some
where along in the victory program
because most statisticians are not
sure just how fast we can get to
spending the big sums for victory,
and finally, we'll try to figure out
what some of the economists fancier
names mean.
lis Billion Used as Base.
Our typical V-program year will
be one in which the national income
all the wages and salaries paid out
and all the savings of corporations
and other businesses-is about
Sis, 900 ,O00, 900.
The Government, taking first cut
at this, will get about s27, 600, 900 900
$50 ,000, ,000, 900 Of taxes of one kind
and another, all but a few billionf
Of which will go into the war effort
That will leave (using the highef
tax figure) IS billions to be used
for other things. The IS billion
figure about equals the national in
come last year.
The Treasury hopes to borrow, di-
rectly out of the income of the
people. further money that will be
needed for the war, via Defense
stamps and bonds.
Let's suppose this borrowing in
our typical year-and it's bound to
be guesswork--average l billion
a month, the best monthly total so
far, reached since Pearl Harbor.
So we can knock of II billion
from our IS billion, bringing it
down to 73 billion. This may be
too small figure for war savings
program. Public emotions in war
time are hard to translate into dol
lar signs.
This 70 billion is the spending
money" of the people in V-year.
Imitation Enters Here.
And here is where the standard of
living and the upward spiral of in
f1ation" just call it higher. prices)
comes in:
What will the money be spent for?
Here the economists have gotten
pretty far apart on their big-number
guesses. but they all point to some
OF the conclusions any average citi-
zen has already drawn.
Will Oc like dS
many kinds of goods to use the
spending money on as we're accus-
toned to.
Automobiles and tires, great soak
ersup of Mr. Americans spending
money, are already off the list, and
many other kinds of goods will not
be replaced when present stocks are
gone.
The National Industrial Confer
ence Board, private statistical or
ganization, estimates that present
stocks of things the average man
can buy. plus anything in the civil
Ian line which our factories are
capable OF producing while still
turning the great mass of arms
called for by the President, might
run to $50 1000, 900 900 a year.
This total Is subject to wide yari-
alton in other estimates and the
further off we set our V-year the
lower it may be expected to drop.
But, using the $50 900. 900 900. it
looks like the country comes out
with $4,000, 900 900 of extra spend
ing money in V-year and nothing
to spend it on.
Excess Cash Feared.
Lots OF things may happen to
this guess-taxes may be pushed
still higher, a wage-deduction saw
ings plan might get past the dis
cusslon stage and, on the other
hand. the supply of things which
civilians might buy could be used up
even more quickly than present
estimates indicate,
But somewhere in that S13por
100000 Of excess spending money
or some higher or lower equivalent,
Is the germ of imitation, the war
time rise in prices.
IL Is money burning a hole in
Americas pocket. 1t will come from
higher hourly wages, longer working
hours with overtime pay, fuller EN-.
pioyment as the V-program eventu-
ally takes up every one capable of
working at a productive Job.
And 1t will be paid, in the main.
to the kind of average American
who has been in the habit of SPEND
ing nearly everything he earned.
simply because his annual income
didn't permit much slack for any,
thing but the most rudimentary saw.
ings program, If 1t permitted that.
cit costs the average wage Garner
about 81 500 year to support q
family of four).
In V-year, the income win have
more slack. but the goods won't bs
there In anything Like the aec,s-
toned quantity.
Some Of the extra pocket money
viii 60 to things not competitive
with the war production effort, OF
which entertainment, commercial
amusements, education and gam-
bling are likely candidates.
But what's left over will tempt
the civilian consumer to bid more
for scarce goods, and the producer
and seller to charge more. At that
point the prices start to spiral up
and living standards to spiral down.
And that is why you will hear
more Of wage-withholding taxes and