Evening star., 1950-07-19

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ing men and facilities not nov
fully utilized. And we can con.
tinue to increase our total annua
output each year, by putting tt
use the increasing skills of oul
growing population and the higher
productive capacity which results
from plant expansion, new inven.
tions, and more efficient method.
of production.
With this enormous economic
strength, the new and necessary
programs 7 am now recommending
can be undertaken with confidence
in the ability of our economy te
bear the strains involved. Never.
theless, the magnitude of the de.
mands for military purposes thai
are now foreseeable, in an econ.
omy which is already operating
at a very high level, will require
substantial redirection of economic
resources.
Must Avoid Initiation.
Under the program for increas-
ing military strength which have
outlined above, military and re.
lated procurement will need to be
expanded at a more rapid rate
than total production can be ex.
panded. Some materials were ir
short supply even before the Ko.
rean situation developed. Ths
steel industry, for example, wa.
operating at capacity levels, anc
even so was not able to satisfy
all market demands. Some othel
construction materials and certain
other products were also under
pressure and their prices wert
rising-even before the outbeak il
Korea.
The substantial speedup of mil.
itary procurement will intensif,
these shortages. Action must b,
taken to insure that these short.
ages do not interfere with or de.
lay the materials and the supple.
needed for the national defense
Further, the dollars spent now
for military purposes will have 8
magnified effect upon the economy
as a whole, since they will be
added to the high level of current
civilian demand. These increased
pressures, if neglected, could drive
us into general inf1ationary sit.
uation. The best evidence of this
is the recent price advances il
many raw materials and in the
cost of living, even upon the mere
expectancy of increased military
outlays.
In these circumstances, we must
take action to insure that the in
creased national defense needs
will be met, and that in the proc
esS we do not bring on an infla-
ton, with its resulting hardship
for every family.
Asks ALLEGATION Powers.
At the same time, we must
recognize that it will be necessary
for a number of years to support
continuing defense expenditures
including assistance to other ma
tions, at higher level than we
had previously planned. There
fore. the economic measures we
take now must be planned and
used in such a manner as to de-
velop and maintain our economic
strength for the long run as well
as the short run.
am recommending certain leg
islative measures to help achieve
these objectives. I believe that
each of them should be promptly
enacted. We must be sure to take
the steps that are necessary now
or we shall surely be required to
take much more drastic steps late,
on.
First, We should adopt such
direct measures as are now neces-
sary to assure prompt and ade-
quate supplies of goods for mill
tary and essential civilian use. ]
therefore recommend that the
Congress now enact legislation au-
thorizing the Government to
establish priorities and allocate
materials as necessary to promote
the national security: to limit the
use OF materials for non-essential
purposes; to prevent inventory
boarding: and to requisition sup
plies and materials needed for the
national defense, particularly ex-
cessive and unnecessary inven-
tories.
Increased Revenue Essential.
Second, we must promptly adopt
some general measures to COM
pensate for the growth of demand
caused by the expansion of mill
tary programs in a period of high
civilian incomes. I am directing
all executive agencies to conduct
a detailed review of Government
programs, for the purpose of mod
flying them wherever practicable
to lessen the demand upon serv-
ices, commodities, raw materials,
manpoWer and facilities which are
in competition with those needed
for national defense.
The Government, as we'll as the
public, must exercise great re-
straint in the use of those goods
and services which are needed for
our increased defense efforts.
Nevertheless, the increased ap-
preparations for the Department
of Defense, plus the defense-re-
lated appropriations which I have
recently submitted for power de-
velopment and atomic energy, and
others which will be necessary fol-
such purposes as Stockpiling, will
mean sharply increased Federal
expenditures. For this reason, we
should increase Federal revenues
more sharply than I have pre-
viously recommended, in order to
reduce the inflationary effect OF
the Government deficit.
Tax to Prevent Profiteering.
Thnrp orn tun flypdo M a