gained perhaps in administrative efficiency, but I think it would be a minor gain.

On the question of how the over-all policy of the executive branch of the Government as a whole could be coordinated, I think from my position it would be an impertinence to offer advice.

Senator AUSTIN. Well, I gather that at least a part of your answer is that there is need for this information but that we have the means already of obtaining it. Is that so?

Mr. HINRICHS. I think we do. We have large amounts of information in the Bureau of Labor Statistics. There is additional information in the Bureau of the Census, and from the unemployment compensation and employment office registrations. It is a minor administrative statistical job to see that other necessary information is brought together and then the whole thing is fused with maximum

economy.

Senator TAFT. Mr. Hinrichs, I don't see very much that we can do about the difference of 54,000,000 at work or 57,000,000 at work when we come to the remedy, what difference it makes to us. What we have got to do is put as many to work as we can, as far as I can see. I don't see how we can possibly today conceive the number of people that we may put to work. It seems obvious that the first thing we must do is to stimulate private employment to the greatest possible extent by every possible measure.

Having done that, we don't know how many people will be at work, so far as I can see.

I think it is important that we have this background of what the number is, but I don't see how you can deal with it statistically when you come to put people to work, because you don't put people to work.

We have seen the private industry machinery varying almost as much as 50 percent off. If it goes properly, it employs a very large number of people; if it doesn't go properly it employs a low number of people; and so we have a function of getting that going. Then we are going to see how successful we are, it seems to me.

Mr. HINRICHS. I am in complete agreement with you, Senator Taft. I have been working on these figures and on various hypothetical forecasts for a period of a year and a half.

To my mind all of that work has only one value. It isn't the value of the figure as a figure. It is rather that it has sharpened up the definition of the problem. It has enabled us to lay our fingers on the places where something can conceivably be done about it. It has enabled me at least, to reach the decision that the best that we can possibly do is not going to produce more than enough jobs.

Senator HAWKES. When you say the best that we can possibly do, do you mean the best that private enterprise plus Government works and all those things can do?

Mr. HINRICHS. No. I mean the best that can be hoped for out of a perfectly normal volume of public employment, of which there is obviously going to be a considerable amount; teachers for one thing; and buildings for another; the normal year-in-and-year-out public employment, whether public works or Government work of any other

sort.

Senator TAFT. Work undertaken not to produce work but because you want the things?

Mr. HINRICHS. Right. And without any special emphasis on expediting or pulling forward work on projects which you would normally schedule for next year rather than this.

Now if you add together that kind of normal public employment to the private employment in sight, I think it can be taken almost as a certainty that that will not add up even to 54,000,000 jobs and certainly cannot provide fifty-five or fifty-six million jobs that I think we could fill with competent workers, if that number of jobs were available.

I know of four points at which we can do something with reference to the transitional period. First is the stimulation of withdrawals from the labor force. As Senator Taft has pointed out, the two most profitable areas in which to work are at the two extremes, among the young people going back to school and among older people, stimulating voluntary retirement.

Actually with reference to the younger persons there is a dual job to be done. We speak of it as a withrawal from the labor force. Actually that is, perhaps, partially a misnomer.

You can accomplish in a short period of time an effective reduction in the size of the labor force if you just turn off the spigot. Young people are coming into the labor force all of the time. If we can restore school-leaving age quickly to something like the pre-war schoolleaving age, in the course of time you will effect a reduction in the size of the labor force without having anybody now in step back out. It is important, therefore, in terms of public policy that the schools and everybody who can influence this process of school leaving shall be ready to help turn off that spigot and to induce youngsters to stay on in school. That may be quite as important, for example, in 6 months time, as the effect of a GI bill in getting people to go back into the schools and colleges.

We also want insofar as possible to induce people whose education has been interrupted to go back to complete their school period. That is one of the points at which you can do something about it.

A second variable is the rate of demobilization. There you are up against a decision in public policy which is very fundamental: whether you want to keep men in the armed forces beyond the period that their services are required by military necessity and beyond the period that is imposed by lack of transportation facilities and by the complexity of withdrawing them.

Senator TAFT. No matter whether you want to or not, you won't. Mr. HINRICHS. I think you will not. I think it is possible, however, to say that you can avoid with reasonable planning gluts on the market due to demobilizing large numbers of people into a very small labor market area.

The more nearly you can plan that demobilization program to disperse those people over the United States month by month, the less difficult the problem is going to be. A demobilization program that does not take that need of a civilian economy into account can do a substantial amount of harm.

But I think that when you

Senator TAFT (interposing). It is bound to be gradual, though, in numbers because of the necessity of bringing them back across the

ocean.

Mr. HINRICHS. In conversations that we have had with the Army people who are planning demobilization it seems to me they are planning a far better job this time than was done in the last war. În the last war the lack of a demobilization program contributed to our difficulties. People were discharged in rather large groups and into too few centers.

Senator TAFT. Do you think they ought to be required to go back to their homes?

Mr. HINRICHS. I am very loath to recommend anything in the way of absolute requirement with reference to people.

I can conceive of too many situations in which there is no earthly reason why men should go back to their homes. It would seem to me wise

Senator TAFT (interposing). You couldn't make him go back to his home, but you could only give him his railway fare to get there. Is that right?

Mr. HINRICHS. Well, I can conceive of a situation where a man was encouraged to move back to the general area from which he had come. Senator TAFT. He would start from there, not necessarily stay there, get back there and start again.

Mr. HINRICHS. I would be inclined to put it in such a way that it encouraged the man's choice to move in that direction rather than impose a military compulsion on him to report at some spot.

Senator TAFT. We don't want to just throw everybody on New York, for example, because they happen to land there.

Mr. HINRICHS. No. But I think it is important to work out a system of decentralization. I don't know the Army mechanics, and I don't know how it can be done. But if there can only be a few centers for demobilization then perhaps some system can be devised of pushing a man out from that point before he is allowed to return to it. I would very much prefer to see demobilitzation points scattered and then a larger measure of choice available to the

men.

A

I have mentioned two places where you can do something. The third is in the control of the rate with which war contracts are cut off. I didn't hear Mr. Moulton's testimony on that point the other day. I read the Brookings pamphlet. I think that Brookings is too optimistic with reference to the rate at which contracts will have to be terminated. They are quite correct in pointing out that the slowing down of civilian industry, or of war industry, is going to pass through two entirely different phases.

There is the incidental cancelation of contracts which is going on at present and will continue until the end of the war with Germany. Statistically it isn't going to have an important overall effect on the number of people employed in the munitions industries. With the war against Germany ending, you are going to move on to a new and lower plane of munitions production.

Such information as we have, and I regret to say my information is old on the subject, would indicate that the termination of the Japanese phase of the war would mean moving down to a lower level. I don't know whether it is administratively practicable to average that movement down over a longer period of time so as to reach a lower level at the end of the Japanese war than you would if you dropped

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sharply and then moved forward on a horizontal. Alternatively, you can conceive of dropping down a little more slowly and then shaping off to a lower point at the end.

There is a theoretical point where we can explore with the Army and Navy the feasibility of gradual rather than sudden termination of the total volume of munitions business. With the Japanese war won I see very little opportunity for gradual cancelation of munitions.

contracts.

Undoubtedly there will be an opportunity to complete some contracts for goods that have a use in civilian economy. Ships are a rather good example, perhaps.

Senator AUSTIN. Have you given any consideration to the human factor, the search for security that is likely to express itself when we have terminated the war with Germany and before we have terminated the war with Japan that will naturally be expressed in withdrawals, voluntary retirements, and separations from war industries by the workers themselves seeking post-war jobs, believing that it is now time to find a job that will be permanent in peace.

Have you taken that into account, that there is likely to be a large exodus from the necessary war plants in going contracts at the termination of the war with Germany?

Mr. HINRICHS. There may very well be, but the reduction in the number of people who will be required in the munitions industries is in the order of 3,000,000 people. I should be rather surprised if the voluntary withdrawals and the search for peacetime jobs resulted in larger shifts out of munitions industries than that.

Actually at the present time we have balancing reactions or offsetting reactions. We have already seen a good many instances of withdrawals from the labor force, but it is also a fact that the quit rate has dropped quite sharply where there have been cut-backs. The quit rate is high when there is absolute certainty that you can get a job across the street or somewhere else any day that you want it. The cut-back program has an effect at the same time of stabilizing your force and of making the man less willing to leave a job that he knows he has for a few more weeks.

In the second place, you have another very powerful force operating on the whole people in the munitions industries and that is that by and large the munitions industries are represented by the metal-working industries in the United States. Those have always been industries in which the earnings are higher than earnings in most other manufacturing employments. There are a few exceptions to that statement but not many.

It is a fact, therefore, that any individual leaving an airplane factory or an automobile factory now engaged in the manufacture of ordnance items is likely to be moving to his immediate economic disadvantage. There is still some pull being exercised by the munitions industries by virtue of the fact that earnings are higher there than they are in many other kinds of activities.

And I don't know which way the balance will fall, Senator. Because of these offsetting factors I have mentioned and the size of the reduction, I can hardly imagine any reason to believe that it will result in an inability of the munitions industries during the Japanese phase of the war to keep workers.

Senator TAFT. You mentioned three variables.

The CHAIRMAN. You said there were four.

Mr. HINRICHS. The fourth, and, obviously the most important constructive variable, is the rate at which private industry picks up and the rate at which reconversion takes place.

You have been giving a very considerable amount of attention to that problem. I appeared some time last fall before the committee concerned with some of the problems of contract cancelation, the disposal of surplus, and the other measures that may be necessary to stimulate reconversion and expansion of private employment. Obviously we are relying fundamentally on private employment to provide the overwhelming bulk of the jobs that are going to be filled. Now when you put the picture of the rate of reconversion, the rate of withdrawal from the labor force, the rate of demobilization from the armed forces, and the cancelation of contracts together, we cannot come out with anything other than a picture of an almost certain dip in employment that would reach its low point probably about 6 months after the end of the war with Japan.

The lower the level at which we can come out at the end of the war with Japan and that was why I emphasized the possibility of averaging down-the less serious the problem of that dip is going to be.

Senator TAFT. Have you any table to show why that dip occurs and how you reach that conclusion?

Mr. HINRICHS. I don't have such a chart or table with me. I would like if I might to send my figures to the members of the committee. I would prefer not to have them inserted in the record because I think that the statistical figures are valid only in the sense that I needed to make reasonable assumptions in order to focus my own mind on where the problems were and what you can do about them.

Senator TAFT. All we can ask for is trends; you couldn't estimate exactly.

I think if the thing were gradual enough, there might never be a drop-off. Gradual demobilization, I mean.

Mr. HINRICHS. I think the test centers on how war contracts are apt to be terminated. If the termination of war contracts is gradual then there may not be a dip, but there is a strong presumption that there will be a dip.

Now the nature of that dip and its timing has one other significance, and that is, if you are using a public-works program in any sense to fill the bottom of that V, it needs to be a program geared to produce jobs equally.

And when I talk about a public-works program, please remember that I am always thinking in terms of useful projects of needed public work in which there is a considerable backlog at the present moment.

Senator TAFT. It seems to me we could emphasize right now a tremendous amount of public works in the nature of repairs and replacements which can be done without a tremendous amount of engineering. The large job is not going to be ready for a year.

Mr. HINRICHS. It is precisely that which I think is important. The kind of works you mentioned are needed for your transitional period.

Let us forget what you may want at the end of that period. Works which are needed to meet the peculiar problems of the transitional