Evening star., 1951-01-12
Partial Text of Presidents Economic Message to Congress

doubled, would still be clearly
within our capabilities.
Infiationary Danger.
= While it is clear that we have
t the productive ability to meet
even far greater defense demands
, on our economy, we must not be
, misled into thinking that we can
' make the change to a defense
' economy easily. 1t will require
effort. restraint and sacrifice by
all of us.
! Although we can increase pro-
duction, we cannot do it quickly
enough to expand the defense
, program. and at the same time
still have as much left over for
other purposes. We must put
heavy restraints upon non-essen-
tial business activity. The
excess of consumer demand over
available goods will rise by many
billions of dollars.
This will cause intense and
mounting infationary pressures,
which must be counteracted.
During 1850, even before the
defense expansion gathered speed,
initiation started to march. Whole
sale prices rose almost 1872 per
cent, and passed the previous all
time peak in the second half of
the year. Particular price increases
were even more spectacular, with
chemicals rising by 21la per cent
and textiles by "a per cent. The
average price of goods to con-
sumers rose over 6 per cent; and
there was over a AZ per cent
rise to a new all-time peak in
the six months from June to
December.
Incomes also started to rise
sharply. During the year, real
weekly earnings in manufacture
ing, after adjusting for changes
in prices. rose by 10 per cent.
Corporate profits before taxes
rose by about 6 billion dollars
above the previous record year.
Must Hold Down Demand.
If imitation continues to gain
cumulative force, it will multiply
the cost of the defense program.
It will undermine production,
destroy confidence, generate fric-
ton and economic strife, impair
the value of the dollar, dissipate
the value of savings, and impose
an intolerable burden upon fixed
income groups. This must not
happen.
To fight initiation. demand must
be held down until supplies can
catch up. This is why we must
have stringent stabilization pro-
gram. 1t will mean sacrifices by
everybody. But under the condi-
tions now facing us, restraints
will serve the interest of all.
AS we prepare ourselves for the
stern task which confronts us,
we must keep in mind five basic
principles. These are: Cd all of
us must plan; ca all of us must
serve; CD sacrifices must be
shared fairly: a. we must develop
all our resources wisely; (5) we
must work with our Allies in the
common cause.
A defense emergency requires
far more planning than is Gus
tomary or desirable in normal
peacetime. In these critical
times, it is recognized that Gov
ernment must assume leadership
in this planning. But the
Government cannot develop these
basic plans alone.
All Must Serve.
In defense emergency. all
those on the home front should
serve, to the limit of their ability.
in the kind Of work for which
they are best fitted.
Businessmen should serve, by
employing their financial resources
and managerial skills to produce
the greatest possible amount OF
the goods which the Nation
needs. =.
Farmers should serve, by in
creasing their output. They have
less manpower than before World
War II, but far more machinery
and fertilizer, and far better sci
entif1c methods. -.
Workers should serve, by help
ing to improve productivity. They
should seek out jobs which are
essential to the defense effort.
They should cooperate by work.
ing longer hours wherever it will
help the defense effort.
Millions of others, in addition to
businessmen, industrial workers,
and farmers, are now called upon
to do their jobs more efficiently,
and to readjust their efforts to the
needs of national defense. -.
Sacrifices Must Be Shared Fairly.
No matter how efficiently we do
our jobs, all of us must make
sacrifices.
Businessmen must make sacri-
fees. They must pay much higher
taxes. While profits should not
be taxed to the extent which would
jeopardize production or destroy
incentives. businessmen cannot
expect to retain profits on the
scale which would be expected
during normal peacetime pros
perlty -.
Workers must make sacrifices.
They must seek the jobs which
need doing, in the locations where
these jobs must be done, instead
of the jobs which may be most
pleasant in the locations which
are most convenient. They must
accept restraints and controls
upon wages, designed to prevent
the wage increases which would
be attainable if more goods were
being produced for wage earners
to buy. While the right to bar
gain collectively will be preserved,
workers-along with management
must find ways to settle disputes
without stopping essential pro-
I,,otioY