Evening star., 1950-07-26
rtiuI Text of Truman Economic Report to Conqress

need becomes critical. I therefore
recommend to the Congress, for i'm
mediate action, a program of guar
antees and loans for capital expan-
sion, development of chronological
processes, and production of essen
tial materials. We cannot afford
longer to risk the possibility of flu
ture desperate shortages of some
of the most essential requirements
for our national security. It is also
imperative that we continue to pur-
sue the international economic pro-
grams which are directed toward a
more prosperous and more peace
full world. Some of these pro-
grams now need to be reshaped or
retarded, in view of the greater
urgency of military undertakings
But the continuing Importance of
many of these programs should not
be lost through concentration sole
ly upon the military situation.
Responsibilities of individuals.
The changes in national economic
policy, which I am recommending
at this time, are based upon the
proposition that we must look also
to individual and voluntary adjust
ments within our. free economy to
see us safely through the type of
economic situation which is now un-
folding. If conditions do not change
very materially, we should continue
to place large reliance upon these
voluntary adjustments.
The expansion of certain types of
production, which is now doubly
urgent because of international
tensions, should not be held back
by fears that capacity would be-
come excessive for peacetime use if
international tensions should sub
side. The experience of the last five
years has indicated that our do
mestic markets and the consump-
ton requirements of our people are
plentiful and growing. A
With a growing population and
working force, this full prosperity
will absorb an ever-increasing out
put. The intelligent course for busi-
ness now, in it's own interests as
well as those of the country, is to
remember these long-range pros
poets even as it adjusts to shorter
range developments.
Labor also has great responsible
ties, rising in proportion to it's in
creasing strength and influence
upon the course of the whole econ
omy. Labor should continue and
enlarge its contribution toward in
creasing productivity, and toward
even more effective use of man
power. Wage demands of a charac-
ter which might lead to an
other infiationary spiral should be
avoided. Above all, labor should Join
with management in the further
consolidation of industrial peace.
Work stoppages in vital industries
are something we simply cannot af-
ford under current conditions.
Every person in the United States
Is a consumer. The best rule to
follow is to buy normally. The cur
rent outlook is that serious Short
ages of consumer goods will rot de-
velop, unless they are created arti-
ficially by speculative or panicky
acquisition of goods far in excess of
actual need. This rule applies to
business buying as well. Those of
us who are not now called Upon to
make great sacrifices should GER
tainly, in justice to those in the
services, refrain from hoard
ing or avarice.
We cannot now take action
against all the contingencies of the
future. But If we deal promptly
and realistically with the problems
OF the present, the foundations will
be firmly established for meeting
new problems as they arise.
We have achieved unity in our
policies to resist foreign agrees
sion. We must seek and achieve
the same unity in economic policies,
which will enable us to make that
resistance successful as rapidly as
possible. All else must yield to this
controlling consideration in the
minds and hearts of the freedom
loving people of the United States.
Legislative Recommendations.
l. On account of the cost of ex-
panding our military strength, and
to help contain inf1ationary pres
sures, an interim revenue measure
should be enacted Immediately to
Yield substantial additional revenue
IN the current fiscal year. The tax
Dill now pending should be revised
as follows:
(a) All excise tax reductions
md other losing provi-
ions should be eliminated, but the
oophole closing, the dividend
Withholding, and the life insur-
lnce company provisions should
,e retained;
to) The revised corporate in
ome tax rate structure contained
n the pending bill should be ad-
usted to provide an increase in
he normal tax rate from 81 to rs
YER cent; taking into account the
% per cent surtax, this would in
rease the tax rate on corporate
income in excess of $4,000 to As
'er cent, beginning with the year
$50;
(c) Individual income tax rates
hould be increased to the "tenta-
i've" levels adopted in 1945, by re-
moving the reductions from those
evels made in 1945 and 1948. This
Increase should be effective be-
with one quarter of 1850
Incomes, and would require an in
reaSe in the Withholding rate
rom Is to 18 per cent, beginning
With the last quarter of 1850.
2. AS a safeguard against infla-
ionary buying, and to reduce the
lemand for scarce materials, au-
hority should be granted to reg
late consumer credit, to restrain
mortgage credit, particularly for
lousing, and to limit speculation
n commodities.
3. In view of the mounting
hortage of some commodities re-