With the stimulus of the indicated investment opportunities, private consumption by the continually increasing population may well be expected to surpass even the high levels of recent years, particularly with constant improvements in productivity and personal income. From the standpoint of contributing to economic stability and expansion, we must count primarily on the flexibility and mobility of the private economy. But we must not overlook the contribution which can be made through flexibility in Federal fiscal, monetary, and regulatory programs. Some of the promising devices for insuring that construction of needed public works by Federal, State, and local governments are timed to make the most effective use of manpower and materials as they become available have been the various programs for encouraging the widespread use of advance planning. These programs are analyzed briefly in appendix A. As is pointed out in this discussion, the authority for one important program, that of providing Federal loans for advance planning by State and local governments, has been allowed to lapse during this period of material shortages. While a shelf of nearly $2.5 billion is still available in planned projects-many of which could not be built because of material limitations-the necessity of reviewing these plans with respect to current needs and the desirability of having the kind of program flexibility which such plans permit suggest looking into the need for similar or improved legislation at this time. This report was prepared by William H. Moore and John W. Lehman. Other members of the committee's professional staff participated in reviewing the data and the findings. While the staff has had the cooperation and active help of technicians from the Federal executive agencies and from outside the Government, the staff assumes full responsibility for the use of information supplied and the conclusions presented. GROVER W. ENSLEY, Staff Director. CONTENTS I. Beyond the peak in defense expenditures_ III. Housing requirements exceed recent construction levels. V. The increased needs for expenditures on public construction_ VI. Creating the economic climate in which our needs can be met.. LIST OF TABLES 1. Estimate of the total population of the United States with annual increase, 1931-52___ 2. Projections of the total population of the United States, including Armed Forces overseas, July 1, 1953, to July 1, 1960.. 3. Number of births and birth rate per thousand population, United States, 1910-52__. 10 4. Projections of total births in the United States, by calendar years, 1953-60, with birth rates___. 10 14 23 24 28 34 5. Population and number of persons per occupied dwelling unit or household, 1890-1950_ 6. Private outlays for producers' durable equipment and new construction (other than residential) in constant (1939) dollars, 1889-1960__ 7. Private outlays for producers' durable equipment in constant (1939) dollars, 1889-1960 8. Number of telephones in use, 1910-60.. 9. Number of tractors on farms, 1919-60_ 10. Total population and pupils enrolled in public elementary and sec- 11. Actual and estimated enrollments in public schools of continental 13. Expenditures for capital outlay in certain years for public elementary 15. Hospital-bed requirements, existing acceptable beds, January 1, 1952, 19. Status of Federal-aid highway program, October 31, 1952. VII LIST OF CHARTS 1. United States population, 1930-52, with projections to 1960-- 3. Growth of private outlays for producers' durable equipment and new 4. Growth of private outlays for producers' durable equipment in constant (1939) dollars, 1889-1960... Page 8 11 5. Power supply and requirements of electric utilities in the United States, 1939-52. 6. Growth of telephones in use, 1910-60. 7. 1975 milk, meat, and egg requirements summarized. 8. Growth of tractors on farms, 1919-60_. 9. Enrollment in public schools, 1920-60 . 10. Expenditures for capital outlay for elementary and secondary schools, in terms of 1951 costs.. 11. Miles of vehicle travel in the United States, 1920–51. 12. Growth of trucks in use, 1917-60__. 13. Annual highway construction expenditures in the United States, 1921-51 (actual expenditures and in constant dollars) 14. Construction expenditure per gross ton-mile of vehicle travel. 15. Federal-aid highway funds, 1945-52-- THE SUSTAINING ECONOMIC FORCES AHEAD I. BEYOND THE PEAK IN DEFENSE EXPENDITURES Indications for the near future are that our already large military expenditures will continue to rise at least for several quarters. But that they may ultimately level off to a stand-by or maintenance basis seems a reasonable assumption, barring any worsening of the international situation. While it is certain that even then defense requirements will continue to absorb a considerable portion of the national output of goods and services, the prospect that some cutbacks can be made suggests the probability of a "postpeak" era. The prospect of such a period of decreasing military demands raises questions which were familiar to the postwar period of World War II but which must now be examined in a somewhat different focus than that in which we viewed them before. Many of the problems of economic adjustment anticipated after World War II, and so carefully cataloged and studied in governmental and private reports during the 1942-45 "postwar planning" era, might be expected to be with us again, though with important differences. Indeed, between the "postwar" period then and the period which we may now look forward to after the defense "peak," the differences are, economically, far more important than are the similarities. Lest one fall into the error of drawing simple parallels or analogies between the situation thenpostwar and the situation to come-post peak-it is worth while to list certain points of difference. It seems quite likely that the United States will not this time enter into any sharply defined period of military demobilization or reconversion such as could be foreseen (and did transpire) at the end of World War II. During the war we could look forward to clearly recognizable terminal dates for active fighting-that is, to a kind o terrace development in military cut-backs as the wars on the respective European and Japanese fronts were expected to end at different times. Circumstances today seem much more likely to bring, after the peak, a gradual sliding downward to a plateau of still high-level defense expenditures-a plateau the duration of which may be expected to extend more or less indefinitely into the future. The possibility of "all-out peace" with curtailed armaments and sharply lowered defense expenditures continues, of course, to live in the world's hopes and its possibility cannot therefore be disregarded. Unfortunately, Woytinsky, W. S., "Postwar Economic Perspectives," Social Security Bulletin, vol. 8, No. 12, December 1945 Social Security Board, Federal Security Agency; Report No. 539, 78th Cong., 2d sess., Special Committee on Post-War Economic Policy and Planning, U. S. Senate; House Special Committee on Post-War Economic Policy and Planning, 79th Cong., 1st sess.; National Planning Association, planning pamphlets Nos. 43 and 44, National Budgets for Full Employment; local studies of employment after the war, carried out under the guidance of the Field Development Division of the Committee for Economic Development in a number of communities; and, Markets After the War, prepared and issued by the Bureau of Foreign and Domestic Commerce, U. S. Department of Commerce and reprinted for wider distribution by the Committee for Economic Development. 26189-52-2 the prospect of its attainment does not seem to be sufficiently realistic in the foreseeable future to dwell at this time upon the economic readjustments it might entail. In any case, the need for readjustment-post-peak or with the dawning of peace-will come upon us less abruptly and less definitively. A gradual transition should afford opportunity for measures and plans which will render dislocations even less disruptive of employment and production patterns than those successfully overcome in 1946-50. Another difference between the situation ahead and that which prevailed after our last big military effort is that, when and if military expenditures can again be leveled off, the magnitude of the cut-backs will be far, far less than those which occurred at the end of World War II. At that time Government purchases for national security purposes dropped from $88 billion in 1944 to $19 billion in 1946. Stated in terms of constant 1951 prices, the reduction in security expenditures is even more striking, falling as they did from a level of $139.3 billion in 1944 to $24.5 billion in 1946. In 1944 Government purchases of goods and services for national security purposes took 41 percent of our gross national product; 2 years later the percentage had fallen to less than 9 percent. At that time the expected dispersal and necessity for reabsorption into civilian occupations of Armed Forces numbering over 11 million-equivalent to 21 percent of the then employed civilian labor force-was clearly a formidable problem. Those who were called upon to make forecasts and plans with the knowledge that cut-backs of such proportions were in store for the country sooner or later can certainly be pardoned if they then viewed the postwar economic prospects with concern. In contrast with these figures, the most optimistic predictions today are that after the present defense build-up is completed, it will not be possible to cut major national security expenditures by more than $20 billion below their projected peak. Net decreases in the Armed Forces, numbering today only somewhat above 3.5 million, will certainly not add substantially to the number of job seekers in the civilian labor force. While one hesitates to use the word "gap" in connection with this hoped-for, ultimate reduction in defense effort, the figures do indicate that the problem of readjustment in the leveling-off of defense expenditures and manpower will be relatively small. It will certainly be of quite a different order of magnitude than after World War IÌ. A third point of difference in the present situation from that which prevailed during and after World War II lies in our national attitudes and preparations for economic change. The most popular recommendations for Government policy and action during World War II, for example, called for the formulation of a detailed "X-Day" plan which would estimate cancellations in advance, the resources likely to be released, and weigh these selections as to their contribution to the speedy resumption of civilian production and the orderly change-over from war to peace. The discussion and existence of such specific over-all plans for policy and actions to be taken by business and Government at the war's end doubtless did do much to smooth the economic difficulties of the transition period. |