Evening star. [volume] (Washington, D.C.) 1854-1972, 1949-04-08
Warning 10 Business
Seen in Nourse Talk
On Arms Spending
Writer Asks If People
Won't Program Reviewed
In Light Of US. Economy
By Davfd Laurence

Do the American people want
to go on spending more and more
for armament without taking into
account what the economic sys-
tenn can truly absorb. or do they
want the whole arms program
reviewed to see whether the re-
ou;rements of the Atlantic Pact
and the previous military budget
can be combined without adding
to an already huge military ex-
penditure?
This question was presented by
Edwin G. Nourse, chairman OF the
Presidents Council Of Economic
Advisers. to a conference OF civil
ians and military men at the
Pentagon Building early this week.
and there have been immediate
repercussions.
The speech was cleared at the
White House" which means the
President read it in advance. Mr..
Truman did not disapprove nor
did he voice any special approval.
He evidently wanted the view
point of Mr.. Nourse thoroughly
aired, however, as it seemed 10
him important to have the dis
cussion.
Arms Spending Results.
On Capitol Hill the Nourse
speech was taken to mean that
further additions to the arms
program were not desired by the
President. Others thought it
meant that the 81 500, 600, 900 for
the Atlantic Pact would be an
extra and was not included. in the
Presidents January budget OF
5000 100000
Plainly, If the budget Is in
creased by $500. 000.0 900 and the
other armament expenses remain
the same, additional taxes must
be found.
Then comes the real issue
will the added spending ward of
q recession or depression? If 1t
does, will the President feel vim
dicated In his request for higher
taxes?
Mr.. Nourse's address is particu-
larly significant on the subject
of infiationary results from arms
spending. In one passage, unin-
tentionally,' of course, light Is
thrown on the events preceding
the last election-how an arms
program produced a boom and
imitation, how Mr.. Truman was
blaming business for high prices
and for failing to reduce them,
and how the arms program
created shortages and helped
prices to stay up. Here is exactly
what. Mr.. Nourse said:
Then on March II of last year,
President Truman brought the
bad news that international de-
velopments required us s. to di-
vert substantially larger amount
Of our annual product to rearma-.
ment. The military chiefs fol-
lowed MIR. Truman a day or two
later, spelling out this need in
terms of three billion dollars an
nually of added budget load.
THE economic results were al
most immediate. A process of
market adjustment then under
way toward lower price levels
promptly gave way to a new burst
of imitation that. by early fall,
carried both wholesale and con-
sumner prices up to new postwar
peaks"
Recites Cause and Effect.
Mr.. Nourse doesn't interpret
these happenings, of course, in
any political sense. He merely
recites cause and effect from an
economic standpoint. He dis
cusses the possibility that a dras-
tic cut in the armapent program
could produce a more or less
serious recession before suitable
readjustments could be made"
Then he adds this is far cry
from saying that the present
scale of military expenditure is
really good for the economy and
that a few billions more would
be better"
Mr.. Nourse makes a splendid
plea for an increased spending
program through private enter
prise so that needs deferred dur
ing wartime can be filled, as, for
instance, in certain public-facil-
tiles projects in states and cities.
The whole case is stated in this
paragraph:
'It would be wrong to conclude
that we can. without concern, add
these expenditures (for the At
lantic pact), whatever they are,
to present budget items for ma
tional security. Any addition to
the budget would contribute to
the need for additional taxes or
to the making of a budget deficit"
What Mr.. Nourse is saying, in
effect, is a warning to business
men, to Government officials and
to the military chiefs that it Is
time to review the whole military
budget and accomplish the pur-
poses of the Atlantic pact and
national security within the $l5.-
900 900 900 military budget If a
serious imitation Is to be avoided.
Except by implication. he doesn't
say fatty what ought to be done
but he gives the economic basis
for national policy.
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