Evening star., 1943-08-01
National Income This Year Estimated $50 900 600 600
Continued from Page A-121

repercussions on the economy. The
amounts spent become incomes of
corporations and individuals. If ex-
penditureS are financed either bv
taxing or by borrowing active funds,
the volume of spendable funds in
the hands of consumers will not
increase. If, however, expenditures
are financed by borrowing from
banks or by borrowing idle funds,
the spendable income in the hands
Of consumers will increase greatly.
Individuals are expected to receive
incomes approaching $3.50, 000, 900
during fiscal year 1914, over twice the
income payments to individuals in
fiscal year 1910. Such huge rise
creates a tremendous increase in de-
mand for goods and services.
A considerable portion of this en-
larged income and demand for goods
results from full employment of
many millions of workers who were
formerly either unemployed or un-
deremployed or were not seeking
employment in the years before the
defense and war effort. Such per-
sons now have money to buy more
necessities and even luxuries.
Near Capacity Production.
The Government directly or indi-
rectly is employing more than one
half of the total labor force either
in military service or in war pro-
duction. In view of this fact, sooner
or later a drastic reduction in the
supply of goods and in the services
available for civilian consumption
was bound 20 result These facts did
not make themselves felt during the
earlier phases of the defense and war
effort because our economy was rum
ming far below its capacity. Indus
trial production measured by the
Federal reserve index of production)
increased by 68 per cent from fiscal
1910 to fiscal 1943. Thus we were
able to increase war production and
civilian production at the same time.
In recent months the index of pro-
duction has not increased substan-
TALLY, which indicates that we are
approaching the capacity of produc-
ton with our available manpower.
I do believe, however, that fur
ther increase in production is posi-
bic If Government, management and
labor constructively tackle the prob
lens of the most effective use of
our resources. This could be our
objective, since we shall feel the full
impact of the curtailment in less
essential civilian supplies as our
large cushion of inventories disap-
pears.
We must recognize clearly that
war expenditures are creating an in
crease in the demand for civilian
goods while the supply of these very
goods is decreasing. Many of us
must reduce our accustomed stand
ard of living during wartime be-
cause of the absorption of large
portion of our labor force and labor
reserve for war service. A reduced
standard of living is due to the til
tanic war effort and not, as same
people believe, to taxes, rationing
and other governmental controls.
These controls are necessary to
achieve maximum war production, to
assure equitable distribution of the
available civilian supplies and to
prevent economic collapse after the
war has been won.
CurtailmentS Unavoidable.
We all know that it takes some
lime to organize a war economy in |
the most effective manner. We |
xnow, too, that controls and regu- |
ations imply many Inconvenience
which we constantly try to reduce.
Jurtailments and inconveniences
,annot be avoided if we are to help |
win the war with minimum of |
sacrifice in human life. Nobody |
wants to jeopardize victory or cause
avoidable loss of life by waging war |
with an insufficient number of |
troops, with poorly trained troops,
or with less than the best equipment
we can produce.
I recommended in my budget
last January a truly stiff
plO61 dlil Va aNblNlOlIdl ldAEo, SdSlliko,
or both. I continue to support that
program. The cost of living cannot
be stabilized unless price and wage
controls are supported by a further
absorption of purchas-
Ing power as a deterrent to bidding
up prices and resorting to the black
market. The alternative to stabili-
zation is initiation. and imitation is
the most inequitable way of dis
trihuting the necessary wartime cur
tailments. Initiation shifts the full
burden to the shoulders of the
people in the weakest bargaining
position, the people whose incomes
do not rise With. increasing prices.
Imitation also reduces production
by creating unrest and friction.
A war program involving $780,
600, ,000, 900 of expenditure during
the next II months is, I repeat, a
gigantic national effort for victory.
That expenditure program must be
backed up by a revenue program of
sufficient size to make sure that we
do not disrupt our home front and
that we do prepare the way for an
orderly transition to future peace
economy.