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Cold War At Home

( Originally Published 1952 )

The Straitjacket on Production

`Victory, without the use for abundance of the powers we have developed for production in war, would be indeed a hollow victory.

'We must plan for security and abundance together.'

President Franklin D. Roosevelt

THE LEADERS OF THE BASIC INDUSTRIES ARE AS FAINT-HEARTED as they are powerful. They always see danger in abundance. They believe that low profits, glut and depression muSt result if, in time of peace, they allow the nation to use to the full its resources of human skill, mechanical power and new technology, its mines and fields and factories.

This is why, at the end of the second world war, they put the country into a straitjacket of managed scarcity, and with it a good part of the world; why, over the average of the first six post-war years, American industry produced twenty per cent leSs than at the height of the war, in 1944; why hundreds of billions worth of goods which could have been turned out and were badly needed to fight want and poverty at home and abroad, were not produced; why the straitjacket was loosened only after the Korean outbreak; yet why even in the first half of 1952, during the new armament boom, the total induStrial output of the United States was still 13 per cent below the highest level it had reached during the war, or actually 24 per cent less per head of the country's greatly increased population.

Few Americans knew about that first, decisive post-war action of the giants of industry against the concept of `peace through plenty'—until, in 1947 and 1948, some of those reponsible for it were invited by Congressional committees to defend themselves. Even then, the popular press revealed little about that dramatic spectacle.

The accused were the rulers of the steel industry who held production down in order to keep prices up, prevented the expansion of their own and other industries for fear of competition, and thereby set the poSt-war pattern for America and many other nations.

Among their accusers were first of all the delegates of the nation's 33,000 independent processors of steel: small and medium manufacturers, solid businessmen who cut fine figures at chamber of commerce meetings and bargaining sessions with the labour unions, but who live in utter dependence and fear of America's eighteen powerful steel makers.

'Your Committee is well aware of the fear which makes evidence hard to get', said the vice-president of a sizeable company when the chairman asked him for details on the nationwide complaints against the steel masters. 'Many small businessmen are unwilling to talk because, if they should, they fear that such steel as they are now able to secure will be shut off altogether, forcing them out of business..

It is deplorable that a situation warranting such apprehension can exist in America.'

'You see, the stampers and other small buyers are really scared, Sir, to talk out loud', said the president of the Pressed Metal Institute. 'They are afraid to be cut off because they had the temerity to speak out of turn. I know to my own knowledge that Jones and Laughlin [the fourth-largest steel concern] when this campaign of ours was getting under way, sent word to a member that they wanted this campaign stopped, period. .. . At r r o'clock today, one hundred stampers will stand in solemn prayer, Sir, that you may have the wisdom to find the answer for them.'

The Committee chairman still did not quite realize the fear those businessmen had of the steel corporations in the free United States. `After you go home', he suggested, 'if you can send us a list of these. . .

'I will endeavour to see if anybody will confess . . . but you know, they are scared, Sir.'

Week after week followed the testimonies of the few who had the courage to speak out. They told of expansion plans in many secondary industries and agriculture which had to be abandoned because of the artificially created lack of steel; of factories that had to be slowed down or closed, manufacturers who went bankrupt, uncounted workers who lost their jobs; of farmers forced to curtail their herds on vast expanses of semi-arid grazing land where cattle were dying by the thousands for lack of steel products like windmills, pumps and pipe needed to supply them with drinking water; of housing projects that were stalled, oil drilling that was stopped; of the lack of railway cars for the transport of bumper crops, with the result that food rotted in open-air dumps while the world was hungry—all because the steel industry, for its own safety, wanted scarcity.

Then came the experts of various government departments, criticizing the steel makers for their refusal to increase their output, charging that they had actually lowered productive capacity since the war under the pretext of 'modernization', accusing them of fixing an unduly low production volume for the future of the entire American economy—since it must always be true that 'as steel goes so goes the nation'.

But the steel masters did not yield. They knew no law could be invoked against them and felt safe in the knowledge that their influence in a high place had already broken the front of Administration leaders that criticized their low-production policies. The most competent of the government departments significantly failed to give the Congressional Committee its own forecast of the nation's need for steel: the Department of Commerce under Secretary W. Averill Harriman, himself one of the magnates of Big Business. The steel investigation of his Department, having gone 'far enough to indicate that the results wouldn't have differed greatly from other government studies, has been enmeshed in the complicated politics of steel', reported Business Week on May 17, 1947. `Steelmen resent accusations of inadequate ingot capacity. . . . They didn't welcome the prospect of a Commerce Department voice joining the chorus. So the issue became more sensitive than Secretary Harriman relished. Plans for a forecast, therefore, were dropped.'

Finally, organized labour came to testify. Its main spokesman was Walter P. Reuther, president of the United Automobile Workers (C.I.O.), America's largest single trade union, himself one of labour's staunchest upholders of the existing economic order. By their restrictive policies, he said, the steel leaders 'decided that our chances of achieving full employment are too risky to justify the capital investment in steel making which full employment will require. . The steel formula which they lay down would freeze our future standard of living to the levels of the past. . . . It is a program of planned scarcity plainly calculated to enhance profits and fortify their monopoly hold over this basic industry. . . .The restricted production and the disastrous unemployment which their plans entail will be forced upon us. . . . All that the steel industry is risking is capital, but the people of this country are going to risk their whole future and their freedom . . . shortage of steel is one of the Communists' secret weapons in America.'

While America and the world were suffering acute shortage, 'the American Iron and Steel Institute showed that the steel industry today, without even expanding capacity, could be producing 9 million tons a year more than its present output'. Those nine million tons of steel which could have been, but were not, made were as much as the combined annual production of France, Belgium and Luxembourg.

The nation would need at least x 1 o million tons of steel a year by 195o if there were to be full employment, the scientifically calculated estimates of government and labour experts told the Committee; and 120 million tons would be needed if full employment were to go hand in hand with full investment for the normal growth of the economy.

But the steel magnates differed from these experts to an almost incredible extent: 56 million tons per year by 1950, said their main spokesman, Mr Sykes of the American Iron and Steel Institute, might actually be enough to cover 'average demand' and 77 million tons would provide for the 'optimistic assumption' of 'peak demand'. The industry's capacity, although admittedly reduced from its wartime record of nearly 96 million tons to 91 million tons, would therefore be more than sufficient. In fact, it would 'seem to be ample for our future needs for many years to come'. Only by 1975 or so, said Mr Sykes, might more steel be needed.

How was it then that the 85 million tons of steel a year that were actually made at the time of the investigation proved so tragically short? That—in the steel masters' view—reflected an 'abnormal situation', a freak demand which must not be made the basis for long-term production plans.

`In other words, you think we will again have a very serious drop in consumption?' the Committee chairman asked the witness.

`I don't know how serious', Mr Sykes replied. 'We have always had our ups and downs and I don't think there is any reason to assume we won't have them in the future.' He then gave the steel industry's considered opinion of small businessmen who still believed in the proverbial 'American opportunities' and wanted to build, expand and produce as much as possible.

'It came to my attention', said Mr Sykes, 'that a manufacturer who normally would use 10,000 to 12,000 tons of steel a year and who during the war worked up to using 3o to 40,000 tons . . . had the idea that he was going to continue pretty well along the war tempo. . . . I think he is foolish.'

`But in America, where we have free enterprise, the free enterprise system', the Committee chairman broke in, 'hasn't a man a right to his judgment?'

'If he can get it', Mr Sykes conceded, referring to the steel supplies so firmly controlled by corporate power. 'I suppose he has if he can get it.'

It was not the first time that the steel leaders had flagrantly misjudged the nation's needs and taken lightly their responsibilities. 'Sixty years ago', Business Week recalled on June 4, 1949 in an article about the founder of the vast trust that became the U.S. Steel Corporation, 'Andrew Carnegie dickered with British financiers on the probable sale of his American iron and steel properties. He had the notion that the steel industry in 1889 had reached its limit in this country. Obviously, he was wrong. But he incurred no penalty for underestimating the future growth of demand?

Carnegie's successors had made another 'bad guess' when the second world war was coming to its height in Europe, the Japanese were ready for attack, and the democratic world was in deadly danger. Steel was its major need. But the American steel magnates stubbornly refused to expand productive capacity and did not budge under President Roosevelt's prodding. They feared being caught with surplus capacity in another depression and eventually forced the Government to carry the financial risk of building for them the additional plant the war required.

America and her allies had to pay dearly for the delay, in lives and precious time. In the grim summer of 1942, when the worst blows were falling at all fronts, a similar Congressional inquiry was held to find out why, in the words of Senator O'Mahoney, 'construction of Liberty ships . . . has been stopped because of lack of steel', why there was 'not steel enough to build the military equipment needed by the Navy and the Army', and why 'the railroads haven't steel enough' —even after the Government had put up the money for the belated expansion of the steel industry.

The chairman of the Committee then was Senator Harry S. Truman from Missouri. 'There was fear on the part of the big companies that they would lose control of the steel business', he said, 'and they were very careful to see that the expansion was made among themselves and that no new facilities were put up and that no little company was allowed to get in on the expansion.'

A witness gave the Committee this typical experience of his firm, an independent concern which had been developing ore, coal and limestone resources on the steel-starved West Coast, but was prevented from building the urgently needed steel plant: `We were stopped when it came to finance. Wherever we went, we encountered the Morgan-U.S. Steel Corporation forces and these had the power to prevent every private and government source from handing us the funds pledged us in written, signed undertakings. . . . Each was forced to back out, through one method of evasive action or another, a series of performances that rival Hitler's best. . . ?

`I feel you sense, while our Nation but dimly realizes'—this victim of 'free enterprise' summed up—`that winning the war against the Hitlers in our midst is equally as important as winning the war against the Hitlers without.' Senator O'Mahoney underscored 'the testimony of this and many other witnesses that the manufacture of steel is being impeded by those who desire to control the manufacture of steel, no matter what happens to the Government, to the war, and to the people of the United States'. Yet the steel masters escaped, their power unimpaired.

'Today, industry cannot afford any more bad guesses like these', Business Week warned seven years later. 'If the steel industry or any basic industry now underestimates the future need for its product, it will incur real penalties—penalties that may extend to something close to socialization.'

But the steel masters knew what risks they could run after the war. They never feared the Government of the United States and did not fear it now. They knew that a few years of the steel scarcity they were again enforcing would prove them right; that no more steel would in fact be needed; for the simple reason that 'foolish' businessmen who wanted to continue peacetime production at wartime levels would have to forget about their dreams. For America's post-war economy could not possibly grow bigger than the volume of steel supplies permitted; and the same would be true of that vast part of the world which was now more or less dependent upon the United States. They knew also that if there were to be war again, or near-war, Washington would once more finance the construction of the necessary plants and later leave those plants to them for a fraction of the cost, as it had done after the second world war.

Untold numbers of expansion plans in industry, agriculture and public works were thus frustrated—first by the physical lack and then by the high price of steel. In this way, the nation's total production of goods was 'normalized' far below the much larger volume that could easily have been achieved. Rising prices and unemployment further lowered the people's purchasing power, and the effective demand for steel and everything else eventually fell so much that even the low output the steel masters had fixed became excessive. So that, in the spring of 1949, the business press could report: 'U.S. Steel Shortage Ending', 'Normality Trend Seen In Steel Cuts—Furnaces To Close Down', 'Pittsburgh Company Reduces Output Because Of Drop In Demand'. And the steel men proudly said to their critics of yesterday, `we told you so'.

Yet even in the general business slump of 1949, which drove down most other prices, the price of steel stayed high. For the steel industry, despite the forced expansion of the world war, had held down the total ten-year growth of its productive capacity to a mere one-sixth, while the manufacturing industries had increased theirs two-thirds since 1939; and even during the slump of 1949—in the words of the Congressional Committee To Study Problems of American Small Business —there was still none of that 'competitive surplus' of steel that would `adequately serve an expanding economy'.

Soon, however, the growing armament boom revived the steel shortage in the civilian industries. 'Distressful stories have come to light of eager and ambitious businessmen who are being blocked in plans for setting up new industries because of inability to get the metal', the New York Times reported on June 18, 195o. The United States Steel Corporation, because of its dominant position, in effect dictates price, wage and production policies for the industry as a whole. Hence, it is contended, a free market in steel does not exist and competition is a negligible influence; whereas more steel-making capacity would lead to greater competition and thus to lower prices and a more flexible supply situation.'

It is true that the rising armaments with their great, long-term profit prospects eventually induced the steel corporations to reinvest some of their vast profits. But, as President Philip Murray of the C.I.O. unions said on March 29, 195o, those investments were made 'not primarily to increase production but to increase profit and per capita production', with the result that 'thousands of men are being laid off'.

This has been true of a good part of the large post-war investments of American industry as a whole: they served to rationalize rather than expand production, to save labour, lower costs, and increase the rate of profits.

It was only after the outbreak of the Korean war, which raised the armament boom to a new high and gave it the air of permanency, that, with a good deal of help from the Government, the steel industry by 1951 raised its capacity to 1o5 million tons per year and planned to increase it by 1955 to 120 million tons—the level which, in the opinion of government experts, should have been reached by 195o to allow the American economy full peacetime development, without enlarged armaments.

What happened in steel during the years before Korea had its parallel in all other basic industries.

Manufacturing 'certainly has experienced misery since the war', stated the Congressional Committee To Study Problems of American Small Business, 'because the facilities of the basic industries have been inadequate to support the volume of production that could be sustained by the processing industries. . . . The deficit in supply will inevitably set a ceiling on the national productivity and a brake on free enterprise. ... The controlling producers of the most important basic materials are few in number, less than a dozen in each of the great basic industries, steel, aluminum, copper, chemicals, etc., on which other industries depend. . . . They have great investments to protect; and to a large extent they own or control their own sources of raw material supply. ... Their similarity of interests and their close business and personal relationships [make it] possible for the managers of basic industries to adopt and carry out policies of limiting capacity and output—to adjust supply to their idea of demand without formal or organized action.'

There were still other forces at work to stunt the growth and imperil the health of the American economy--by depriving it of the full benefits of modern science and technology.

Yet no Congressional Committee cited them for investigation, no governmental agency tried to prosecute them, no major labour leader declared war on them. For, it would have meant indicting most of business; condemning the futile 'Fair Deal' policies of the Truman Administration, which tried to reconcile 'reform' with maintaining the status quo; and inculpating the leadership of many labour unions which tried to protect their members' narrow, immediate interests by tacit co-operation with business in putting brakes on new technology. It would have meant denouncing the very principles of the American economic order on which the United States and the American-led world supposedly were able to rely for wholesome, steady growth. The futile steel investigation had done enough harm to the prestige of the American system.

First of all, there was serious trouble on the highest scientific level. The United States is not holding its own with Europe in producing new discoveries', Dr Karl T. Compton, president of the Massachusetts Institute of Technology, was quoted by the New York Herald Tribune on December 10, 1947; 'most of the new scientific ideas are emanating from the brains of Europeans.'

Why? 'We have not been able to maintain the proper conditions for best scientific work', President Truman told the American Associafor the Advancement of Science on September 13, 1948. 'Eight distinguished scientists ... expressed their alarm at the deterioration of relations between scientists and the Government because of the frequent attacks which have been made on scientists in the ostensible name of security. . . The Federal Government is losing the services of excellent scientists [who] very understandably are reluctant to work where they are subject to the possibility of smears that may ruin them professionally for life. . . . Indispensable work may be made impossible by the creation of an atmosphere in which no man feels safe . . . the climate of a totalitarian country in which scientists are expected to change their theories to match changes in the police state's propaganda line.'

Strangely enough, the President said this at the very time when he initiated 'loyalty checks' on the political convictions of all Government officials, extending to the persons with whom they had ever associated, the newspapers and books they read, and whatever else might lay them open to suspicion of 'subversive tendencies'; when, at the inspiration and with the aid of his Government, red-baiting and witch hunts spread all over the nation and rose from climax to climax; and when Washington induced the labour leaders to follow suit and transform their unions into another battleground of ideological warfare.

Moreover, most major scientific work in post-war years has been of a military nature, and a good deal of the rest depends upon military patronage. 'The military services in this country have purchased American science, lock, stock and barrel', wrote the New York Herald Tribune on November 16, 1946; so that scientists 'fear the day when science will be utterly an appurtenance of the Army and Navy, for on that day it will be only a question of the services' continuing good will that will guarantee freedom for science'.

`Since the war the U.S. has taken about every misstep possible, it seems, in the promotion of basic science', Fortune magazine wrote in 1949. 'An immediate post-war attempt to retain a large segment of science under military control, defeated in the area of nuclear physics by a unique uprising on the part of scientists themselves, made the conversion from war to peace extremely rocky. . . . Congress and the Administration have fumbled the creation of a National Science Foundation, under civilian scientific direction, to supply much needed funds to universities and other institutions for basic research.... By default, major support of research has fallen, in spite of all battling against it, to the military, which has almost unlimited funds. . — Nothing has struck deeper at U.S. scientific morale, however, than l'affaire Condon—branding Dr E. V. Condon, chief of the U.S. Bureau of Standards, by imputation, with no chance to defend himself, as the weakest link in atomic security. . There are now two recorded cases in which American scientists, revolted by the turn of affairs here, have left the U.S. and taken up residence abroad . . . an ironic twist in world history.'

The 'financial pull toward military applications' has been moving research away from its peacetime aims, Business Week quoted the president of a research foundation on June 18, 1949. 'While it is true that some of the research which is done for military purposes will have industrial applications, it is an inefficient method of getting results for industry.'

Added to the political handicaps in the way of American scientists are manifold organizational and financial difficulties. The President's Scientific Research Board (Steelman Committee) dealt with some of them: The United States has no unified or comprehensive policy on scientific research or the support of science.' Expenditures on basic research, to become sufficient, would require a four-fold increase; for they are badly neglected in a system in which 7o per cent of all outlays for scientific work are normally made by industry and therefore for practical rather than fundamental aims. The salaries of scientists have been too low. Two-thirds of all college and university science professors and instructors received salaries under $4,000 a year in 1946', or one-fourth less than a family then needed to obtain even adequate medical care, by the standards of the Federal Security Administration. Only two per cent of them were paid $7,000 or more. Of the scientists employed by the Government, two-thirds received less than $5,000 a year, and only some six per cent drew $7,000 or more.

Scientists in industry, as a rule, are not paid much better. The fortunes they make out of their discoveries are more or less film and magazine fiction. 'What are the incentives that inventors in your industrial plant have, the monetary incentives?' Dr Kettering, the research director of the General Motors Corporation, was asked on April 9, 194o during the Senate's investigation of the concentration of economic power. 'Do they gain by the invention made?'

`We don't give specific bonuses to the inventor', was the answer of Dr Kettering, one of America's most vocal defenders of free enterprise and rugged individualism, 'because we want to keep these fellows from becoming individuals.'

Altogether, 'the crisis of science in the United States' with which the Steelman report dealt is that of an economic order unable, in peacetime, to devote more than one-half of one per cent of the national income to scientific research and development—because the scope of its science work is circumscribed on one side by the cash dividends it promises and on the other by the danger it implies of making existing industrial plant obsolete.

America's economic order also makes it difficult to apply all available scientific knowledge to new technology.

The problem of the industrial use of atomic energy provides an example. Two prominent U.S. Senators, Arthur Vandenberg and Brien MacMahon, according to Collier's magazine of May 3, 1947, `gave a dramatic illustration of the way in which unrestrained development of atomic energy could affect the American economic order. Suppose a man suddenly announced he had invented an atomic locomotive which could run from New York to Washington on a few dollars' worth of atomic fuel. All railroad and coal company stocks would be worthless. ... Insurance companies with railroad investments would go broke and there would be pretty general financial chaos.' The National Association of Manufacturers, therefore, acted only in the logic of 'free enterprise' when it attacked the bill for the control of atomic energy, which gave the Government the right to refuse licences to concerns liable to use them `to maintain or foster the growth of monopoly, restraint of trade, unlawful competition', or to indulge in practices that -would 'be inimical to the entry of new, freely competitive enterprises into the field.' As the N.A.M. News of June 15, 1946 put it, 'no one would desire to expend the funds necessary to establish a plant to carry on production when all of his competitors would be on an equal footing'.

It is not only in the field of harnessing the atom to industrial use that the question continues to arise: can America afford to apply new scientific knowledge as quickly and as fully as it would be technically feasible? 'A banker once defined invention as that which makes his securities insecure', stated the report of the Temporary National Economic Committee on technological trends in the United States. Edsel Ford, then president of the Ford Motor Company, admitted before the committee: 'It is believed that the use of some [technological] devices is retarded by the fear of capital to make the necessary investment. . . The theory of scarcity rather than that of plenty is another retarding factor. Usually, full use is slower than desired.'

The Twentieth Century Fund stated after the war that 'new production techniques are introduced more quickly under competition than in controlled markets [since] monopolists do not introduce or permit the introduction of a new process if they can prevent it—unless the total cost of production under the new process is less than out-of-pocket costs under the old. Otherwise, the new technique reduces or destroys the capital value of their equipment.' What that means in practice can best be judged by the facts that have already been cited on the ever-increasing monopolization of economic power in the United States.

Yet the Committee for Economic Development, a group of business leaders and congenial economists, in their praise of America's economic order as a model for the world, found it 'difficult to imagine how a regimented [socialist] economy with relatively few centres of initiative could compete in dynamic drive and in technological progress with an economy [like America's] that has several million such centres'. The Committee overlooked that such difficulty arises only if one confines oneself to mechanical comparisons between the current production totals of the exceptionally rich and historically favoured United States and those of nations that suffered terribly from the same wars which so greatly benefited America; if one leaves out of account that Britain's `semi-Socialist' system also happens to be greatly handicapped by longstanding industrial obsolescence, the grim heritage of her own 'free enterprise' past, and by her trade dependence on the ever unstable dollar world; and that the Soviet economy is in a very early stage of industrial development during which civil war and the need for great defence preparations in the thirties have been enormous additional obstacles.

A typical illustration of America's technological dilemma was given by an editorial in the New York Times on May 15, 1949, commenting on the speech of a Harvard professor who told the American Chemical Society 'how wonderful it would be if chemistry were exploited to the full'. The article admitted: 'No doubt discoveries and inventions are not always applied or introduced as rapidly as they might be.' Yet, American conditions being what they are, it continued: 'It is not easy to determine how rapidly innovations can be absorbed without upsetting the whole economy. . . . Political and economic difficulties must be disposed of before we can enter this chemical dream world. The removal of all such obstacles would be possible only in a totalitarian state that relies on planning and that decides what is and what is not good for society. Here we clash with democratic ideals.'

But is governmental planning for economic and social progress really less in harmony with democratic ideals than a system that leaves it to Big Business to decide 'what is and what is not good for society'?

The peacetime use of atomic fission is only one of the many elements in the utopian vistas of coming happiness which are so popular in America; and many of them might be well on the way to becoming real blessings if corporate power were not forced to retard innovations that might upset its precarious economic order.

`Hundreds of amazing technological developments resulting from the demands of war soon will be converted to peacetime uses that will simplify many household and farm tasks, eliminate health hazards [and] materially reduce the cost of living', Senator Harley M. Kilgore announced in November 1945. General David Sarnoff, President of the Radio Corporation of America, in October 1946, foresaw 'push button weather control to provide rain or shine at will, nuclear power to change deserts to gardens, radio mail delivery, and communication sets for individuals for immediate contact with persons throughout the world'; a promise on which he improved during the Korean war with the assurance that television would soon bring 'real war', by direct transmission from the front, into the living room of every American family.

'Increases in output, immediately obtainable by installing new machinery, range from a minimum of 10 per cent to such large amounts as 500 per cent, but a conservative average increase is 33 1/3 per cent', the president of the National Machine Tool Builders' Association stated in November 1947. In July 1948, its general manager declared that `American industry could increase its output 50 per cent by studying its weak points and by replacing the equipment which can no longer compete with what the equipment machine tool builders are putting out today'.

The Oxygen Age Is Just Ahead', a writer in the Saturday Evening Post predicted in September 1947. This 'unpublicized industrial revolution' promised 'cities without the umbrella of smoke that hangs over industrial America . . . endless cheap fertilizer to make worn-out rural areas bloom again . . . an enormously increased output of scarce steel without building a single new blast furnace . . . an endless supply of gasoline and other liquid fuels. . . '

`Sea Soon May Yield Great Food Stores', reported the New York Times on June 21, 1948. 'Man is now on the eve of one of the greatest achievements in his history—the creation of food in amounts sufficient to provide an adequate diet for the world's entire population.' For new discoveries make it possible to 'train sea plants as well as inedible land plants to produce all manner of vital foods—proteins and fats, starches and sugars, vitamins and amino-acids . . . in whatever quantities are necessary, . . . at little cost'. Even without taking recourse to the sea, Louis Bromfield said on October 19, 1947, merely by improving the methods of its 'wretched and wasteful agriculture, . . . the United States can provide food at existing dietary levels for five times the nation's present population on land now under cultivation'.

'U.S. Seeks To Harness Sun', the New York Times reported on August 26, 1949 about plans to utilize solar energy for increasing food production and supplying heat. 'Big Windmills May Beat Atom To Power Field', the New York Herald Tribune announced on February 9, 1947: 'A recent report of the Federal Power Commission envisions giant aerogenerators or wind turbines . . . [which] may even precede atomic energy as our next great source of electricity.'

The 'mechanical brain', hailed by reports from Washington as promising a 'faultlessly working Electronic War Production Board' for the next war, would meanwhile 'translate sonnets . . . compute salaries, forecast weather, solve social and economic problems, make hitherto impossible checks on scientific theories, and perhaps even replace a minor human executive'. (Associated Press, July 1, 1949.)

If Americans only awaited the fulfillment of 'The Promise Of The Next i00 Years', made by Harold G. Moulton of the Brookings Institution in Fortune magazine in 1949, they would find that 'by 2049 "regulated" free enterprise could satisfy the wants of 30o million Americans (twice as many as there are now) living eight times higher than their great-grandparents'. Even if they waited merely until 2000 A.D, , they might see the prediction of Seymour E. Harris, another well-known economist, come true: that, 'within another 55 years, the U.S. production machine will be able to fill the country's needs by working employees only 20 hours a week, 35 weeks a year'.

But American reality still looks sadly different from the promised land of technological utopia, as the next chapters will show.

Even the Government's modest 'goal of annual progress' has not been reached. 'In the Economic Message in January I said we should strive for a 3 or 4 per cent increase in output this year if we were to maintain maximum production and employment', President Truman reminded his listeners in a radio address on July 14, 1949. 'Instead, we have fallen somewhat below last year's level.' This 'somewhat' meant a drop in the physical volume of industrial production from its postwar peak by no less than 17 per cent.

The people's benefits from the peacetime use of atomic energy still were trifling six years after Hiroshima. Private industry was extremely slow to take an interest in it. It even showed reluctance to initiate in its plants a wide use of radio-active isotopes, easily available from the Atomic Energy Commission, according to a prominent chemist quoted by the New York Herald Tribune of February 4, 1949. 'In spite of the predicted wonders of radio-active tracer techniques less than one per cent of the A.E.C.'s shipments of isotopes went to industry'; for business is 'worried because competitive secrecy might be lost, due to A.E.C. requirements that research advances with isotopes be made public'. Only the rubber concern B.F. Goodrich, according to Business Week of June 17, 195o, mustered the courage of pioneering in—radioactive golf balls which, if lost on the course, 'you can find with a Geiger-Mueller counter'.

As to the use of solar energy, some practical development was reported from the Soviet Union. The news that the Russians are installing helioboilers on a large scale for power plants has vital significance, for it is part of a pattern', stated a letter to the New York Times, whose author claimed to be connected with the invention. Today it is Russia that hastens the development of every new discovery... . If we may judge by the helioboiler, the Russians will soon lead the world in the practical application of the new force for every purpose while we wrangle about government or private supervision and sink deeper and deeper into the sad conflict of mutual greed now being staged by capital, labour and politics. The time is short and the whole future of democracy is at stake. Shall we fail again?'

It is true that certain industrial materials, machinery and processes have been considerably improved since the war, that there has been a good deal of new development in various fields, and that many Americans now enjoy television (they even watched an experimental atom bomb explode in Nevada in April 1952), electric dishwashers and deep freezers for the long-term storage of food reserves—not to forget new gadgets like the 'atomic-ray detector for the man-in-the-street

"Curie Pie" ... resembling an outsized flashlight'; the 'automatic rocker' which 'starts rocking at the push of a button, singing baby to sleep with an electric phonograph connected to a motor' with 'a lullaby recording of the mother's own voice'; and the new device of `sky-typing that takes the place of sky-writing', spelling words like Pepsi Cola in the blue skies over New York in neatly typed smoke puffs instead of the familiar, clumsily 'handwritten' letters.

On the whole, however, the peacetime harvest from technological and scientific developments has been disappointingly small, compared with the nation's capacity for them.

As to the equipment of the American economy, its unfilled needs have remained astonishingly great. According to Professor Sumner H. Slichter of Harvard University (Fortune magazine, February, 1949), industry then needed'$70 billion more plant than we have', a backlog which even the stimulus to the installation of new equipment provided by the post-Korean armament boom cannot possibly overcome for years. For even the record construction of the second world war did not nearly make good the lag of the depression years. 'If we had built new industrial facilities during 1930-48 at the rate we did in the prosperous ¬'20's, we would have spent at least $100 billion more than actually we did', wrote the president of the McGraw-Hill Publishing Company in one of his 'public service' advertisements on October 30, 1948.

The backlog of urgently needed public works, like highways, schools, sewers, waterworks, hospitals, and other utilities, is even greater. The Government economist Dr. E. J. Howenstine estimated it at $120 billion; and the New York Times of July 5, 1948 called this a `simply staggering cost estimate of work that must be done before the nation can be considered to have met its minimum public works needs'. The American Public Health Association received a report in November 1948 that 'almost 6,000 communities in the United States have no public waterworks system; more than 9,000 communities need sewerage systems; and 33 million people in rural areas lack satisfactory sewerage or excreta disposal facilities of even the simplest types'. The chairman of the National Security Resources Board stated on May 6, 1948 that 'national defense and the urban and rural economic existence are threatened through failure to provide adequate roads'.

The facts on the post-war performance of American industrial production as a whole are even more surprising.

The total output of consumers' and other 'non-durable' goods in the booming peacetime years of 1947-8 was still 5 per cent below the highest war production level of September 1943, which had naturally been much below peak capacity on account of the raw material and manpower shortages of wartime. In 1949, those 'light' industries further lowered their output by 4 per cent. By June I950, before the Korean war, their output again reached the peak of 1943 ; but since the population had in the meantime increased by 1 i per cent, production per capita was that much lower than seven years before. Early in 195z, when the new armament boom was in full swing, the 'light' industries still turned out one-tenth less per head of the population than at the height of the second world war. Yet, even so, they were suffering from an increasing lack of effective demand and considerable unemployment.

The industries that make 'durable goods' for consumers and especially for the renewal and expansion of the nation's productive equipment, operated on an average 40 per cent below the war peak during 1947-8. 'Equipment Output Reduced 20 to 70%—Survey Of Seven Major Lines Shows Two Of Three Plants Are Under Retrenchment', read a typical headline in the New York Times in March 1948. The Wall Street Journal reported six months later: 'Machine Tool Industry Operating At Half Of Capacity'. In 1949 the output of the entire 'durable goods' industries was reduced another one-tenth. Even after the enormous Spurt that followed the Korean war, by February 1952, their production was still one-quarter lower than eight years before, or one-third lower per head of the nation'S population.

Altogether, American industries turned out 20 per cent fewer goods during the average of the first six post-war years than during the war years of 1943-4.

The physical volume of America's total output of farm products, industrial goods and services, per head of the population, has remained below the level of the wartime year of 1944 throughout the post-war period; by 14.4. per cent during the most nearly normal peace years of 1947-8; by 15.2 per cent in the recession year of 1949; by 10.3 per cent in 1950, when the great new armament boom began; and still by 5.2 per cent in 1951, when one-sixth of all the nation's products were absorbed for Cold War use.*

`In a world where our Strength and institutions are being closely compared with those of Russia', Professor Sumner H. Slichter wrote in the Atlantic Monthly of June 1950, 'a steady and substantial rise in output is the best answer the United States can give to those who question its strength or the merits of its economy'.

America has been unable to give this answer—because, once again, her economic order has found no sufficient stimulus in peace for the full use of her tremendous productive capacities.

* From official data in National Income, 1951 Edition, and Survey of Current Business; both by U.S. Department of Commerce, Washington.

The World The Dollar Built:
The World The Dollar Built

Corporate Power

The Captive Audience

Business Of Government

The Dangerous Drift

America Needs Foreign Aid

The Urge To Arm

Cold War At Home

Too Little - But Too Much

Income Pyramid

Read More Articles About: The World The Dollar Built

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