JUNE 15, 1951
NEW YORK, Thursday—Someone asked me the other day what would happen if the United Nations were successful in staving off a general war and we achieved the rearmament for defense at home and had contributed sufficiently in defense supplies to the rest of the free world so that it felt it could then fill its own needs. What would we do with our increased production capacity? What would happen if we suddenly turned back to the full volume of production of civilian goods? Would this flood the market so that we would have to close down factories, throw people out of jobs? In other words, would we face a depression?
It seems to me part of the answer is that since an army must constantly be supplied with more modern and better equipment, it would be necessary to keep going a certain percentage of arms production. This proportion would have to be maintained for as long as we kept large numbers of men under arms even though they were rotated regularly. Granted that we increase our production capacity and then cut down somewhat on our military demands, it still seems to me that with the crying needs that confront us in all parts of the world, we would have no difficulty in disposing of our surplus production. At the same time we might have to do a readjustment job, looking to meet a greater amount of civilian need in various parts of the world.
What little is being done today through the specialized agencies of the United Nations, in conjunction with the United States, can only be looked upon as providing demonstrations of what could be done on a larger scale if money and productive capacity could be made available.
It also seems to me that our people ought to be made aware of the importance of saving so that they can invest in civilian goods after the present defense emergency is over.
I know that some people are fearful of investing in government bonds because they fear that the value of the dollar will be lower when they want to redeem them. Nevertheless, this is one of the "calculated risks" that we, as a nation, will have to take whenever we are able to do so.
Savings are going to be essential to prevent inflation, and they also will be essential to tide us over the period during which we will be attempting to return to a normal civilian economy but on an expanded scale. Some of this slack will be taken up by aid to underdeveloped countries, but there probably will be more which will have to be taken up in this country. That can best be done by buying savings bonds and deciding to commit ourselves to a program of future spending.
In so doing we may possibly lose some of the money we saved, but at least we can feel that we have spared our government what might prove to be serious losses for them as well as for ourselves.