Problems of Reconversion


By JAMES F. BYRNES, Director of War Mobilization

Delivered at National Press Club Luncheon and broadcast over the Blue Network, Washington, D. C., September 27, 1944

Vital Speeches of the Day, Vol. XI, pp. 52-54.

I HAVE been asked to talk about some of the problems of reconversion which grow out of our unprecedented production for war. I cannot do so without first saying that while we know, and Hitler knows, we are going to win this war, the war is not over. Only now have our armies invaded the soil of Germany, and we have not yet invaded the homeland of the Japs. The roads to Berlin and Tokio remain long, hard and bloody.

It has been America's production on the home front which has made possible and is making possible the victories of the United Nations on the battlefronts. It will be tomorrows accomplishments on the home front which will in no small measure determine America's contribution to a better world at home and abroad.

To understand the problems of reconversion we must first understand the magnitude and scope of America's war production. We have not only doubled our national income, but we have more than doubled our industrial production.

It has been this enormous increase in production which has made possible the enormous increase in our fighting power since Pearl Harbor. Our Navy now has more than three times the number of combat ships it then had. It has two and one-half times the tonnage. Its fighting strength has been increased at least five-fold. It has almost seven times as many planes. Its offensive and defensive powers have been enormously strengthened by aircraft carriers, escort vessels and radar equipment. Its air force is as strong as the entire air force of either one of our enemies.

Today we are producing planes at the rate of 100,000 per annum. Our production is larger than the combined production of all other countries, and is three times the combined production of our enemies. To achieve this plane production we had to increase our production of aluminum five-fold, and our production of magnesium 70 fold.

The personnel of the Army has increased more than fivefold since Pearl Harbor, now numbering more than 7 1/2 million, and the forces in all of the armed services now number more than 11 million.

We are able to produce 75,000 tanks a year and as much ammunition as all the rest of the world combined.

Food is a weapon of war. At the beginning of the war there was talk of a food shortage and a food famine. But despite the movement of labor from the farms and the shortage of farm machinery, our farmers, by long hours of work, will produce in 1944 30 per cent more food than in 1939.

In 1939, we were using 592,000 tons of rubber, practically all of which we imported from foreign countries. Almost over night our supply was shut off. American industry met the problem and solved it. In 1944 we are using approximately a million tons of rubber, four-fifths of which is being turned out by our great synthetic rubber plants.

In 1939 we were using 36 million tons of steel. In 1944 we are using 65 million tons of steel.

In 1939 we were producing 28 billion feet of lumber. In 1944 we are producing 36 billion feet of lumber. Recent surveys indicate after V-E Day the lumber situation will still be tight but there will be enough lumber and building materials to take care of the demand for private construction.

In the light of our production record, achieved while eleven million of our youngest and strongest men, physically, and mentally, were in the Armed Services, what limit is there to our production when they return home? We must view our task after the war not simply as a task of demobilization from war but mobilization for peace. The task of reconversion is not to go back but to go forward.

As a result of our successful mobilization, nearly half of our total production is now going for war purposes. Despite our extraordinary war effort, we have avoided any real suffering on the part of our civilian population. There has been rationing, but our people, as a whole, are better fed and better clothed than they ever were, even though there are fewer nylon stockings to wear and fewer beefsteaks to eat.

Even after V-E Day we must continue rationing commodities which are in short supply, but it is the policy of the government to remove items from the ration list as soon as the supply makes it possible.

We have had price control. Without it we could not have prevented the cost of living from skyrocketing as it did during the last war. According to the Bureau of Labor Statistics, the cost of living since January 1, 1941 has risen only 25.3 per cent. Food prices have risen only 40.8 per cent; and in most communities rents have been held at the 1942 level. Of course there has been some deterioration in quality and some difficulty in getting low priced items, and these facts are not reflected in any index. But who can be happy feeling that he is not foregoing anything when the heroes of Bataan are still prisoners of the Japs?

While we are prosecuting the war against Japan, price control must continue just as wage control must continue, and the relationship between wages and prices must be stabilized.

The stabilization program has hurt neither the farmer nor the worker. The net income of farmers in 1943 was 81 per cent higher than in 1941, and current estimates are that this will be maintained in 1944.

Since January 1, 1941, the average weekly earnings of salary and wage earners have increased 51.3 per cent and the average hourly earnings have increased 36.4 per cent.

The white collar workers and people with small fixed incomes have fared less well during the war, but the only way to help them is to continue to hold the line against inflation. In April 1943, the President issued what was known as the Hold the Line Order. Subsequently, I issued a directive supplementing that Order. The present Director of Economic Stabilization in several decisions has referred to it as the Byrnes' Hold the Line Order. Well, I am proud of it. My only regret is that its provisions were not written into the law which was enacted before I took charge.

The Office of Economic Stabilization, the Office of Price Administration, and the War Labor Board have done a wonderful job trying to hold that line. Here and there it has been bent. Rear guard actions have been fought against the attacks of groups that are powerful while we are fightinga war. But, on the whole, the line has been held and government should continue to hold it until the dangers of inflation are passed. If we do not preserve a stable economy, post war deflation will ruin all plans for post war prosperity.

But the success of neither our production program nor our stabilization program will eliminate the problems of readjustment when V-E Day comes.

Congress has properly said that when production is no longer needed for the war effort, it shall not be continued merely to furnish business to an employer or jobs to employees. The overnight reduction of 40 per cent in the requirements of the War Department will necessarily seriously affect our economy. The procurement agencies are taking steps to promptly settle with contractors, remove government property from their plants and thus hasten the resumption of civilian production. Advanced notice is being given to contractors and the contractors will be required to communicate that notice to employees.

All information about cancellations will now be cleared through one office—that of the Production Executive Committee. From time to time meetings of various agencies will be held so that the reconversion plans of an agency will be known to other agencies. The war controls of War Production Board, of the War Manpower Commission, and other agencies will be lifted as quickly as possible, consistent with the all-out prosecution of the war against Japan.

I have asked the Director of the Budget to make a survey of the requests of government agencies for reports from business. In many instances the requests for these reports come from some representatives of business. Many are still essential but I hope at this stage we can dispense with many of them.

Many of us have changed our thinking. We have accomplished what seemed impossible two short years ago. In the past I was certain a democracy could function in peacetime but doubted that it could successfully function in wartime. Today, we must meet the challenge to prove that our democracy can function as well for purposes of peace as for purposes of war.

V-E Day will present many problems for our solution. Government alone can not solve them. You of the press can arouse the thoughtful people* among us who can help in the solution.

When on V-E Day the War Department reduces its requirements 40 per cent because thereafter there will be a war on only one front, it must then be determined whether there should be a corresponding reduction in the munitions of war we produce and through lend-lease furnish to our Allies. The seriousness of the problem is apparent when you realize that our lend-lease expenditures for all purposes for the first six months of this year amounted to $5,794,000,000. The problem, however, involves not only dollars, but the extent to which we and our Allies should change from war production to civilian production, and what our respective contributions to the war against Japan should be. This can be determined only by the heads of governments.

I look ahead to V-J Day which from the reconversion point of view will present more serious problems than V-E Day. Here are a few, not necessarily the most critical. We have a shipping problem. On Pearl Harbor Day we had an ocean-going merchant fleet of 1,100 ships of approximately 10,000,000 deadweight tons. Today with over 4,000 oceangoing merchant type vessels having a tonnage of approximately 42,000,000, our fleet is four times as large.

At the outbreak of the war in 1939 the ocean-borne commerce of the world was carried in 9,200 ships with a total tonnage of 72,000,000. Today our tonnage alone is more than one-half the combined tonnage of the world prior to the war. Our tonnage is four times that of Germany and Japan.

In the past much of the world commerce was transported by other nations like Great Britain and Norway where ships were built and operated for less than ours. The service they rendered in carrying our goods made it possible for them to pay for goods purchased from us. Their ships will return to the sea.

At the present rate of ship construction, a large postwar surplus of world shipping seems inevitable. With our huge stake in shipping, shall we watch this surplus result in international cut-throat competition or shall we participate in an orderly international procedure for adjusting the world supply of ships to the world demand for ocean transportation? Industry should now agree upon a policy and submit that policy to government.

And what about air transportation? Before the war all of our domestic airlines were using only 350 transport planes. Today the Army and Navy have more than 12,000 transport planes.

After the war thousands of planes can be converted to commercial use. We have transport equipment scattered over the world. We have trained personnel with which we can develop an air transport system larger and better than any other nation. We know there will be a tremendous increase in overseas passenger traffic by air. Again, there must be established international procedure to regulate that air traffic. And again, industry must agree upon a policy and government must give fair and sympathetic consideration to its proposals.

America today stands at the cross roads. This generation of Americans can nobly gain or meanly lose the hope of the world. If America can use her productive powers for peace as she .used them for war, we shall nobly gain that hope. If America cannot use her productive powers for peace, America and the whole world will lose that hope.

Only by working together as a united people can we achieve that hope. It is not a theory to be held, but a condition to be met. We must not allow fear of going to work in the wrong way keep us from going to work at all. We must and shall provide the opportunity for productive work for all our people.

There may be one perfect theory by which this can be accomplished. But I doubt it. It is far more likely that we shall reach our goal more safely and more quickly if we approach it by many avenues. Even economists are better able to tell us how things happen after the event than before. The true economic theory of full employment is not likely to be written until full employment has in fact been achieved.

America's technical equipment, America's capacity and trained skill to produce, are greater than ever before. America has the ability to maintain a much higher standard of life than ever before.

There is no place in America for economic defeatism. We can make America worthy of the men and women who are fighting to preserve its highest ideals. We have the men and materials to replace the slum dwellings in town and in country with modern low-cost homes, to conserve our soils, improve and diversify our agriculture, and modernize our transportation.

As we keep our soldiers fit for fighting and care for them when they can no longer fight, so after the war we must strengthen and expand our social security system to make and keep our citizens fit for working and fit for living. No one in America should be denied access to those minimum standards of living because he is too young to work or too old to

work; or because through no fault of his own he is unable to work.

I am not blind to the irreplaceable resources we are using up in this terrible war. I am not unaware of the precious youths who are giving their lives bravely and gladly that we may have a better world. But tragic as the loss of human life may be, and great as our loss of resources may be, our country is so richly endowed and so marvellously equipped that only the lack of vision stands in the way of our handing down to the next generation a heritage of even greater promise than our fathers bequeathed to us.

As a rich and powerful nation we have responsibilities not only to ourselves but to the whole world. If we do not maintain employment and prosperity at home, we will not be able to do our part to maintain employment and prosperity abroad.

Relief will be required and should be extended to those peace-loving countries whose economic life has been shattered by war, but no world settlement that provides only a place on the relief rolls to nations willing to work for their livelihood as well as to fight for freedom will be adequate to ensure a just and enduring peace. That is not the sort of freedom from want that the free and peace-loving nations are fighting for. Only through increased production, increased employment and increased trade can freedom from want be achieved.

There can be no lasting peace in or for America, unless America does her part to maintain world peace. We have learned that nations, like individuals, cannot live at peace except under law, and that nations, like individuals, must cooperate to see that the law is enforced and must be willing to use force if need be to compel obedience to law.

It is not, however, enough to cooperate to put down aggression and to settle boundary disputes. We must cooperate with other nations in order that each nation may be helped in its effort to enable its own people to enjoy the highest standard of life that a wise and prudent use of their human and material resources entitle them to have. We must cooperate with other nations so that every people by a fair exchange of the products of their labor should be helped to acquire the products of the labor of other countries required for their health and welfare. That is necessary to ensure full employment in our country and rising standards of living here and throughout the world.

We have the strongest Navy in the world; an Army that is the equal of any in the world. We have unlimited natural resources and unlimited capacity for production. We have the gold, the ships and the planes. For the sacrifices we have made in this war we ask neither territory nor money. But surely through the proposed international bank and by other means, we will use our influence to raise the standards of living throughout the world, promoting the economic productivity and welfare of the people and thus providing markets for our surplus goods.

But the great wealth and strength of America must not be used primarily for material gain. That is not the spirit of our people. To win this war we have given the most precious of our assets—the youth of our land. We want to make certain that those who speak for us in the days to come will use the wealth and power of America to prevent the mothers of this nation from again suffering the anguish they today endure.