Table 9. Rough estimates of undeveloped land partly outside farms suitable and feasible of development for farming.. 10. Estimated per capita consumption of major agricultural commodities under conditions of full employment for 1950, 11. Estimated pattern of crop and livestock production with varying technology under conditions of full employment in 1950 with historical comparisons. 12. Additional farm production required in 1950 above the estimated demand to provide at least a low-cost adequate diet for all families with less than $1,500 income.. 13. Funds available in State unemployment reserves 15. Data and estimates supplied by State unemployment com- pensation agencies (through May 25, 1944)--- 16. Wage earners excluded from coverage by State unemploy- 17. Showing State coverage provisions, wage record systems and Chart I. Movement to and from farms, United States, 1920-42__. III. Number of farms increase, 1930–35- 690 690 691 691 POST-WAR ECONOMIC POLICY AND PLANNING WEDNESDAY, MAY 10, 1944 UNITED STATES SENATE, COMMITTEE ON POST-WAR ECONOMIC POLICY AND PLANNING, Washington, D. C. The committee met at 10 a. m., pursuant to call, in room 312, Senate Office Building, Senator Walter F. George (chairman) presiding. Present: Senators George (chairman), Vandenberg, Austin, Taft, and Hawkes. Also present: Scott Russell, counsel for the committee; Meyer Jacobstein, senior staff member, Brookings Institution; and Kurt Borchardt, special counsel, War Contracts Subcommittee, Senate Military Affairs Committee. The CHAIRMAN. The committee will be in order. STATEMENT OF DR. HAROLD G. MOULTON, PRESIDENT, THE BROOKINGS INSTITUTION The CHAIRMAN. Doctor, do you have a formal statement you wish to make? Dr. MOULTON. I think you have before you an outline of the problems of human demobilization and the post-war employment outlook. And, as I think you know, what we are giving you is in the main embodied in this pamphlet, Post-war Reemployment, published some weeks ago. What we were concerned with finding out was the probable magnitude of unemployment during the transition period. We were not here considering the long-run problem, but we focused attention on the 2 or 3 crucial transition years. Now, in working out the computations in this pamphlet we had to make a number of assumptions; and if the assumptions are reasonably correct, the rest of it is a matter of arithmetic. So I have set up here, in the outline supplied to you, the assumptions on which the calculations are based. I would like to begin with a brief statement about those assumptions. We assume first that the armed forces would ultimately reach 11 million. That might go as high as 11.2, but it is approximately 11,000,000. We took 11,000,000 as the total number in the armed forces after conferring with the services with respect to their plans. The next assumption relates to what the total labor force, including those in the armed forces, will be as of the end of this current year or at any time within the next year, roughly. So, as of December 1944, we estimate that the total labor force, including the 11,000,000 in the armed forces, will be roughly 611⁄2 million. Senator VANDENBERG. What do you mean by "labor"? Dr. MOULTON. Employed workers of all kinds. Senator VANDENBERG. Employed workers? Dr. MOULTON. Yes, sir. It also includes the unemployed available workers. Senator VANDENBERG. Does that include, for instance, store clerks? Dr. MOULTON. Yes; every type. Mr. RUSSELL. It includes a million unemployed. Dr. MOULTON. It varies during the year, but it includes those available and seeking work, even though they are temporarily out of jobs. Senator VANDENBERG. Does that include the number that are now working? Dr. MOULTON. Yes. If you take the 11,000,000 in the Army, that means about fifty to fifty-one million that, as of next December, would be in what we call the labor force. That figure of 61%1⁄2 varies a little in the course of a year. December is a relatively low period for total employment. Summer is the highest because a lot of the people who are at other times of the year in school, and so forth, are engaged in farm work, and so forth. The total labor force may be as high as 63,000,000possibly 63% in the midsummer period. We have estimated the size of the labor force as of December 1944 because that is the date which we are next assuming the war in Europe would end. Bear in mind that these assumptions were made a few months ago; but, in the light of present knowledge, there might be some question with respect to this assumption. However, in making our computations we did assume that the European phase of the war would terminate by the end of 1944. Senator VANDENBERG. Does "labor" include agricultural labor? Dr. MOULTON. Yes. That is in the total. The CHAIRMAN. That is all gainfully employed and those idle temporarily? Dr. MOULTON. That is right, and includes the armed forces. Dr. MOULTON. Now, we made another assumption, that the war in the Orient would last another year. If the whole picture as to the war termination were projected forward 12 months it wouldn't greatly change our analysis. If, however, both phases of the war should end simultaneously or nearly so, then that would modify some of the analysis that we have made. So it is subject to that contingency. The next assumption is that roughly 50 percent of the Army Ground Forces and war workers will not be needed for the oriental phase. That general assumption was made after extensive discussions with the military people as to what would be involved for the conclusion of the oriental phase. In other words, the war effort, roughly speaking, is a 50 percent proposition after the end of the European phase. We claim no special knowledge on that, but we are taking here what was given as the best judgment of the military people. The sixth assumption is that demobilization from armed forces cannot exceed 500,000 a month at the peak and will average somewhat less. Now, again, we make no pretense to special knowledge in that. This figure is based upon the judgment of Army people concerned with the problem. Senator VANDENBERG. Did you make any assumption in that connection as to how many are going to be permanently maintained in the armed forces? Dr. MOULTON. Yes; I come to that a little later, in figuring the amount that would need reemployment. Senator VANDENBERG. All right. Dr. MOULTON. On the basis of these general assumptions which we had to make we had to have a line on those things or else we couldn't make calculations-on the basis of those assumptions the demobilization would be very gradual and extend approximately over a 22-year period, beginning with the end of the European war to the final demobilization down to the limits of the peacetime force. There would be roughly 2%1⁄2 years required to reduce the total armed forces from 11 to 11⁄2 million. The estimate of the peacetime armed forces that we use is 11⁄2 million. Taking that away from 11 would be 92. Now, that might be 2,000,000. But somewhere in the range from 11⁄2 million to 2 million. And that is also based upon consultations with military people as to what seems to be involved from their point of view in that period. That is irrespective of what our permanent policy with respect to armed forces might be. But you would have from 9 to 91⁄2 million to return home, and on the basis of our assumptions as to the rate, demobilization would take roughly 2%1⁄2 years. If perchance the demobilization rate could be increased, especially in the later phases, it would reduce that period say from 221⁄2 years to 2 years. You remember after the last war, with only 4 million men involved, it was well over a year, virtually a year and a half, before the demobilization was complete. The limiting factor I would think would not be the shipping and transport facilities. In view of the size of our merchant fleet I should think we might, after the first few months at any rate, have available very great shipping space. But there is the job of mustering out, record keeping, and all the rest of that, which seems to be the limiting factor. The process of shifting from war to peace production would be equally staggered, thus minimizing the shocks incident to readjustment. In other words, already we are finding some release of materials. The limiting factor now, however, on civilian production is manpower. We have materials enough now to have a considerable resumption of private civilian production but the manpower is the decisively limiting factor. And there is a morale problem involved too, of trying to resume too fast; it isn't good for the war psychology. But manpower is at present the factor limiting the resumption of civilian production. After the end of the European conflict and the beginning of demobilization from the armed forces and war industries, that process of reemployment in private enterprise can proceed apace, being limited chiefly by the supply of labor, because the materials are going to be available. We hope on another occasion to show you, Senator George, a special analysis of the raw material situation that I think is very reassuring from the standpoint of availability of supplies, once we have the manpower with which to operate the plants for civilian purposes. The major unemployment problem would then seem to be confined chiefly to the great war industry centers, such as those producing aircraft and all types of ship construction, and that will probably not be serious there until after hostilities have ceased in the Pacific. That is to say, we will have to continue aircraft production and shipping construction until the very end, or at least very close to the end. Senator TAFT. I shouldn't judge more than 50 percent. In fact, the general information we get today is that the shipping already is being almost overdone. Dr. MOULTON. Yes. It is possible in the ship construction field you might well have a situation in which you could taper off. The aircraft is another purely military matter. Senator TAFT. I don't know anything about it, but I would think there would be a tremendous amount of aircraft available, on its way, and so forth, to be shifted to the Pacific. Dr. MOULTON. Well, I have asked that question of military people, and the assumption up to now seems to be that that would be the last thing to be cut down. To the extent that that could be done, tapering off prior to cessation of all hostilities, you would be easing the problem. If you turn to page 10 of the pamphlet,' we present a summary, on the basis of these assumptions, of the rate at which the demobilization would likely occur. You will have to accept our arithmetic for the purposes here at hand. It is all based on those assumptions. During the first 12 months following the European victory, about 6,400,000, according to these assumptions, would be demobilized from the armed forces and from war activities. Then the first 6 months after final victory there would be an additional 6,900,000 demobilized; the second 6 months after final victory there would be about 221⁄2 million-leaving about 2,000,000 to be demobilized during that final half-year period of that 22-year interval. That makes a total of 17,800,000. I want to pause here to call attention to the fact that you no doubt have seen figures running in terms of thirty to forty million who will be demobilized. Those figures that run in terms of thirty or forty million include, for example, all of the farmers of the country, because they are producing war goods, and are based on the naive assumption that all the farm workers would be immediately discharged into the urban labor markets. It is most likely that they are going to stay where they are. In fact, the farmers are hoping to get additional workers rather than the reverse. Senator VANDENBERG. You mean that out of the 61,500,000 in your second assumption, the problem is confined to 17,800,000? Dr. MOULTON. That is right. Senator VANDENBERG. All right. Dr. MOULTON. Now, the next question we have to face is the probable size of the peacetime labor force. Our estimate is based on the following assumptions: (1) That the bulge in employment of women, old men, and youth will be eliminated. During the war we have drawn into the labor force several millions of women and older men, and youths who have gone prematurely into the labor market. We are assuming that over a period of 3 years or so that this bulge will be eliminated. 1 "Postwar Re-employment: the Magnitude of the Problem," by Karl T. Schlotterbeck, The Brookings Institution, 1943. |