Exploration of the Future

A tall, spare economist from the University of Denver, Dr. Abraham David Hannath Kaplan, returned from an economic expedition into darkest Reconversion last week with an assurance to U.S. businessmen that in the early postwar world they have little to fear. His report was his book The Liquidation of War Production (McGraw-Hill; $1.50), second of the projected series by the research division of the Committee for Economic Development.

In his book, Economic Explorer Kaplan pointed out the landmarks by which each businessman must guide himself in his travels into the future.

The liquidation of war production, wrote Dr. Kaplan, is divided into three parts. The first obstacle is called Contract Cancellation and Settlement, is similar to the one business traversed after the last war, and can therefore be quickly recognized. If the war ended tomorrow, uncompleted contracts would total $80 to $100 billion. But since the war is not quite ending tomorrow, this barrier must be gradually reduced in size whenever any part of it no longer serves a military purpose. Any prolonging of war contracts is a hindrance to speedy reconversion. At the war's end the whole obstacle must be bodily removed as quickly as possible, even though this will wrench loose a sensitive and complicated network hooking together the Government with more than 17,000 direct suppliers and some 70,000 indirect producers. Dr. Kaplan recommends swift and persistent surgery, that war contracts be cut out as rapidly as possible in the time that remains.

The second sector in Dr. Kaplan's geography lesson in the reconversion territory is Disposal of War Supplies. Best estimates now are that these will total some $60 billion at the end of the war, enough to terrify most U.S. businessmen. But Explorer Kaplan points out that only a small portion of this is of the type likely to be offered for sale to U.S. consumers; three-quarters of it will be combat ordnance. Of the $15 billion merchantable goods, about one-half will be sold where it stands, across the oceans. The remainder suitable for the home market amounts to less than two months' normal retail sales --which should terrify no one.

Daring Statesmanship. Having thus made familiar two dangerous-looking areas, Dr. Kaplan tackled the third sector, War Plant and Equipment. As he analyzed the problem, about half of the $15.5 billion of war plants built by the Government are large facilities in such lines as shipbuilding, aircraft, aluminum and magnesium. If ingenuity fails to convert such facilities to peacetime use, he recommends courage in boldly dismantling those which cannot economically serve the people. Probably not more than $5 billion can be readily transformed into peace factories. Since $5 billion represents only about two years of normal investment in plant expansion, the end of the war will probably find the U.S. underequipped rather than overequipped.

In peroration, Dr. Kaplan wrote that the totals, big as they sound, are manageable; their size is no cause for defeatism; that the task of reconversion, while one of the most complicated economic tasks the U.S. has ever faced, is not an impossible one.

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