Official Preview

How big will be the problem of reconversion in 1945? And what policies will the Government adopt toward it?

Last week War Production Board's chairman, Julius Albert Krug, undertook in an official report to answer these questions. "Cap" Krug's picture of the job ahead:

P: For the last eight months of 1945, munitions production will run at an annual rate of $54 billion--more than 90% of the peak rate of 1944 and almost the rate of 1943.

P: But as cutbacks increase, there will be many cases of local unemployment and industrial dislocations, in spite of the fact that the U.S. is now much better prepared for reconversion than it was on Armistice Day 1918. WPB has already cleared the way for manufacturers to place orders for machine tools.

P: Many industries will not have to reconvert. Makers of steel, bearings, bolts, nails, hand tools will have no changes to make except in the detailed specifications of their product; 77% of the output of tractor makers is still tractors; 65% of the output of textile mills is still of prewar type; even 36% of the output of the automobile industry is still "motor vehicles and parts."

P: Less than 13% of civilian workers are engaged in occupations which will be directly affected by cutbacks: the 6,600,000 who produce aircraft and ships, ordnance, etc.

P: To speed reconversion, WPB is removing restrictions on materials as rapidly as possible. Of 650 orders and schedules in effect on April 1, 1945, 156 have been revoked and 83 more are likely to be revoked within six weeks.

P: Present production of durable goods for the civilian economy is at the rate of about $7 billion a year; by a year from now it should be $16.7 billion (about 30% of 1939). Production of consumer goods and services will also expand as labor becomes available, because it is estimated that last year consumers got only $98 billion of the $120 billion worth of goods they would have liked to purchase.

Danger Ahead. At the conclusion of his report Cap Krug said his biggest mouthful:

"The danger confronting us, as I see it, is that we will overlook the natural resilience of the economy. If we were to attempt in Washington to see that every manufacturer, wholesaler or retailer got his exact share of released manpower or materials . . . we should get in the way of reconversion rather than speed it. . . .

"In any readjustment from a war to a peacetime economy, temporary dislocations are inevitable.

"We must not be stampeded by such dislocations into elaborate controls or special dispensations. Our economy is a jigsaw pattern of interlocking buyers and sellers, producers and consumers. The pieces of the jigsaw will move into place best if we give people scope and leeway.

"Finally, let me repeat, war production is still our first job."

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