Evening star., 1944-06-25
Postwar Boom
Expected
Bu Ouen L. Scott.

A timetable for war and for the shift
from war to peace now Is being shaped
for guidance of the Governments plan.
ners who must look ahead. This time
table necessarily is rough and subject to
change, but 1t does serve to show the
present trend in official thinking.
In terms of months and years. the
course Of events ahead is seen to be as
follows:
War, war production war controls will
continue about as at present during
remaining months of 1914. This will be
the period of maximum war effort and
maximum war spending. The draft will
continue on about its present basis.
There will be little shifting of industry
from war to a peace basis. Labor will
continue to be scarce.
Next year, 1945, probably will be year
Of great change. Germany almost cer-
tainly will have been defeated. With
German defeat, war spending quickly
will fall from the present rate OF about
800 900 900 900 year to a rate of about
$4,000, ,000, 900 year. Demobilization Of
men from the Army will start at rate
of around 25o,0o0 month. Only 18-
year-olds will be subject to draft in this
period. Unemployment will appear in
war industries. particularly in those
industries making equipment for the
Army. Industries supplying the Navy
and air forces will continue active in
war work. Rationing will ease. Mate
rials Of almost all kinds will begin to pile
up in superabundance Japan probably
will be defeated some time in this year.
The following year, 1946, is likely to be
difdcult year. If Japan is defeated,
demobilization will be in full swing, with
military services quickly squeezed down
by another 100000 men. War spending
probably will fall from rate OF
$4,000 ,00o,0 900 to about s1o000,000,OO0 a
year. Unemployment will be on large
scale as industry seeks to adjust from a
war to peace basis. Rationing will end.
Congress probably will take of price
controls. National income will fall
sharply, but, If Congress permits present
tax rates to continue, there may be a
near balance of the Governments
budget.
BY 1947 the postwar recovery probably
will be under way. Employment will be
rising. Industry will be pouring out
peacetirne goods. The construction
boom will be getting well under way.
Prices probably will be pointed upward.
with feeling of prosperity widespread.
That, roughly, Is the timetable as seen
by the planners. Any alteration in it
will be related to the time that Ger-
many and Japan surrender. AS soon as
Germany surrenders, many industries,
including the automobile industry, can
begin to shift back to production of
civilian goods. This fact will have spe-
cial importance because it will mean
that there can be period of adjust
ment before Japan goes down. If both
wars should end at or near the same
time, the shock would be much greater
than If, as expected, they end several
months apart.
Once an adjustment is made to the
fact of war ending, the recovery that
sets in will be expected to last several
years. There is difference of opinion
among the planners concerning the
length of the postwar boom, but the
most pessimistic expect 1t to last from
three to FIVE years. after 1947, with the
more optimistic foreseeing as many as
10 years OF recovery. ar, s~s
The duration Of postwar prosperity
will be related to several factors, all Of
which depend upon the attitude and be-
havior of the general public and of the
Congress.
One of these factors, and probably
the most important is that Of price
policy. If the public, with vast war
time savings and with very large new
payments to veterans, starts scramble
for goods before industry is able to
meet all demands, then much of this
pent-up spending power can be dissi-
pated in an inflationary rise in prices.
IT, on the other hand, prices can be
held down and savings can be spent for
new homes and automobiles, ETC., over
a longer period, the postwar prosperity
can be of rather long duration.
=" The second of the factors that will
govern the length of postwar prosperity
will be that of taxation. Taxes now are
geared in way to discourage chance
taking and initiative. That Is true
both of individual taxes and corporation
taxes. BY careful revising of tax policy.
Congress can find the revenue needed
to balance $4,000, ,OOo, 900 postwar bud
get and still permit some reward to the
individual or the corporation willing to
venture in creating new enterprises and
in adding to employment.
A third factor is that of foreign trade.
The prospect of sustained pros
perity and reasonably full employment
in this country is related closely to the
ability of American industry to find
outlets abroad for an important portion
of its production. A large foreign trade
is the alternative to much more am
bilious New Deal at home, with its
planning and regimentation. This trade,
however, is related in turn to the will
ingness of the American people to go
back to policy of large-scale lending
abroad.
Altogether the years just ahead are
likely to be years in which the Govern
ment will continue to play very i'm
portant role in the lives of ordinary
people as well as in industry. In a
relatively few months the problems of
today, which are strictly problems of
war mobilization, will become problems
of demobiliZation. The problems to