CONTENTS Smith, Prof. Warren L., Department of Economics, University of Michigan (former member of the Council of Economic Advisers) - Melman, Prof. Seymour, economist and professor of industrial engineering, Reuther, Walter P., president of the UAW and cochairman of the Alliance Lewis, Dr. Wilfred, Jr., National Planning Association, Washington, D.C. Alexander, Archibald S., Bernardsville, N.J., former assistant director, economics bureau, Arms Control and Disarmament Agency-- Goldfinger, Nathaniel, director, department of research, AFL-CIO_ Alexander, Archibald S., Bernardsville, N.J., former assistant director, economics bureau, Arms Control and Disarmament Agency.. Goldfinger, Nathaniel, director, department of research, AFL-CIO_ Lewis, Dr. Wilfred, Jr., National Planning Association, Washington, D.C. Melman, Prof. Seymour, economist and professor of industrial engineering, Reuther, Walter P., president of the UAW and cochairman of the Alliance 123 "Arms Firms See Postwar Spurt-Leaders Show Little Interest in Applying Skills to Domestic Ills," from the Washington Post, De- "Defense Firms Leery of Civilian Work-'No-Risk' Contracts Heighten Appeal of Arms Business," from the Washington Post, "French Testing a Train That Uses Suction and Travels Quietly,' "Pentagon Places Cost of Cutbacks at 212,000 Jobs," from the New "Shift in San Diego-Defense-Oriented City Strives To Ease Impact of Pentagon Cutbacks," by Bill Sluis and George Grimsrud, from 40 Appendixes: Appendix 1-Public Law 90-490, 90th Congress, August 6, 1968... Appendix 3-"Budget Alternatives After Vietnam," by Charles L. Schultze, from Agenda For the Nation, Kermit Gordon, editor. Appendix 4-"Proposed Reductions in Military Overkill and Waste,' memorandum to the U.S. Senate Armed Services Committee, May 2, 1969, from Seymour Melman_ Appendix 5-"500 Planes A Day,' "A program for the utilization of the automobile industry for mass production of defense planes, by Walter P. Reuther... Appendix 6-"Are War Plants Expendable?", a program for the con- Appendix 7-Manpower Development and Training Act of 1962, as Appendix 8-Brief Operational Outline and Section-by-Section Anal- Appendix 9-Research Sponsored by the U.S. Arms Control and Page 159 177 200 237 261 277 307 337 385 POSTWAR ECONOMIC CONVERSION MONDAY, DECEMBER 1, 1969 U.S. SENATE, COMMITTEE ON LABOR AND PUBLIC WELFARE, The committee met at 10:30 a.m., pursuant to call, in room 4332, New Senate Office Building, Senator Yarborough (chairman of the committee) presiding. Present: Senators Yarborough (presiding), Randolph, Williams, Kennedy, Nelson, Eagleton, and Hughes. Committee staff members present: Robert Harris, staff director; James Murphy, professional staff member; and Mrs. Joanne Newman, minority staff member. The CHAIRMAN. The Senate Labor and Public Welfare Committee will come to order. We will begin the hearings on the conversion of war production to peacetime uses. This country has the greatest wartime industrial capacity that the world has ever seen. In the past 30 years, we have produced more war materiel than anyone in the past had ever dreamed possible. After World War II and Korea, we failed to convert our war energies to peacetime uses. We kept on preparing at a great rate for wars and future wars. We prepare for war at a rate that practically forces us to look for a war to use our war materiel in. Our country has suffered from this failure to convert our industry to peacetime uses. Again we are hopefully on the threshold of peace. We have been involved in what has become one of the unpopular wars in American history. We are living in an era of rising human expectations at home-of hopes and dreams. Will our dreams again turn to ashes? Clearly, if we fail to recognize our problems to meet them face to face and to come to grips with them-we will fail. That is why we are beginning hearings this morning on economic conversion of wartime industry. Our Nation must plan now for tomorrow's peace. Economic conversion sounds very complicated and in some of its details it is. But the broad question involved is so simple that everyone should understand it. How can we use the production capacity-and jobs-which fueled the war machine to make peacetime America a better place for all its citizens? In 1964, this committee published a compilation of material entitled "Convertibility of Space and Defense Resources to Civilian Needs: A Search for New Employment Potentials." Since that time there has been a major escalation of the war in Vietnam with a further commitment of our resources to that effort. At the present time, it is estimated that we are spending well in excess of $30 billion a year in Vietnam. I believe the Department of Defense has said that. My own opinion, based upon my years in the Senate, is that we are spending about $36 billion a year, $3 billion a month, or $100 million a day, on the war in Vietnam. If we bring peace to that troubled land, much if not all of these expenditures will be transferred to other uses. Obviously, the military contractors will wish to spend the money on other vast military contracts; some people will want the bulk of the money saved used for tax reductions; others will want to use this part of our national product to solve some of our more pressing problems at home-problems of health, education, housing, and urban unrest. I might mention one little phase of health, that 50 authorities in 50 States have certified to HEW that they need right now $5 billion for new hospitals in America, and $11.5 billion for remodeling old hospitals, such as the great hospitals of the past in New York, Boston, and other places, that are now obsolete. They have certified to need this year $16.5 billion for hospital construction and remodeling. That is one phase of health alone. It doesn't touch our needs in the field of education. It illustrates what needs we have in this country that are unmet. Then there are the workers presently employed to produce war goods, and in the case of Vietnam especially, munitions. The budget this year calls for $3,200 million for education, for all education, while it calls for $5 billion for munitions. For 52 million schoolchildren in America, if you divide them into that $3,200 million you have an expenditure of $44 a year per schoolchild in elementary and secondary education, while the same budget asks for $5,200 million to fight the 240,000 Vietcong and North Vietnamese that the Defense Department says are either in South Vietnam, just over the border in North Vietnam, in Laos and Cambodia, where they could infiltrate in. If you divide that 240,000 Vietcong and North Vietnamese either in South Vietnam or in one of the three adjoining countries into the $5,200 million asked for ammunition, the budget request amounts to $21,666.66 for 1 year, for ammunition alone, to shoot at each North Vietnamese. That is the difference. The ammunition alone is the figure I am referring to, not the total cost. Where will the jobs be for these workers? Where and in what industry? That is what we want to study, to find out what we will do with the money. Why be afraid to end the war? There are some facets of industry that are afraid to end the war. When the Korean war ended there was little thought and less action taken on the problem of reconversion and the whole country suffered. We do not wish unwittingly to allow repetition of past mistakes. In 1945, I served as a military government officer under Gen. Douglas MacArthur in occupied Japan, and as a part of my duties visited many Japanese war plants and personally signed orders authorizing their conversion to peacetime industry. Japanese industry now is a marvel of this world. |