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    "label": "Report, The Road to Tokyo and Beyond, Third Report to the President, the Senate, and the House of Representatives by the Director of War Mobilization and Reconversion",
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    "title": "Report, The Road to Tokyo and Beyond, Third Report to the President, the Senate, and the House of Representatives by the Director of War Mobilization and Reconversion",
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    "ocrText": "diverted from war production and, therefore, to maintain many\nshoes, certain foods, and other items. Automobiles might have to be\nrestrictive orders on production, distribution, and prices. After\nrationed for a brief period until such essential users as the police\nVJ-day, the job before us will be to move resources out of war pro-\nforce, doctors, nurses get taken care of; also refrigerators to hospitals\nduction into civilian production. Thus after VJ-day, many War\nand houses in tight areas.\nProduction Board controls will be a hindrance rather than a help.\nBut there are exceptions even to this generalization. Unless VJ-day\nDanger of Deflation\nis much longer delayed than expected, a few materials will still be too\nVJ-day will bring a sharp contraction in munitions employment.\nshort to permit unrestricted bidding for them. Not only would prices\nWorkers will be discharged from plants making planes, shells, tanks,\nrise, but also essential requirements might not be met; speculative\nguns, and ships. Also overtime will drop and shifts from high to low\nhoarding might prevent the necessary flow of materials into the indus-\nwage industries will be speeded up. This will result in a drop in the\ntrial economy. Crude rubber and tin, the supply of which comes\nincome and hence in the purchases of these workers.\nlargely from Japanese-held areas, are cases in point. Hence, con-\nTo be sure, many workers have built up savings during the war\ntinued allocation of a handful of commodities may be necessary after\nalso unemployment compensation benefits will tide them over the\nVJ-day.\nunemployment period. But even liberal unemployment benefits are\nFurther, we may have to continue our efforts in directing the pro-\nlow compared with wages, and families whose incomes drop will cur-\nduction of low- and medium-priced textiles and shoes-at least until\ntial their expenditures-they will not buy quite so much groceries,\nsupplies come much closer to demand than they now do. And to pro-\nthey will put off getting shoes or clothes: they will introduce economies\ntect liberated areas and foreign economies which depend on the United\ninto their scale of living. Such curtailment of expenditures could\nStates for supplies, manufacturers may have to continue to set aside\nbring about secondary unemployment-in retail stores, in textile\ncertain proportions of their output for export. We may also have to\nproduction, and so on. As one group of workers is laid off, others are\ncontrol exports to protect domestic supplies of short items.\ninevitably affected.\nThe controls after VJ-day will have one common purpose-to\nThis presents a real danger. The remembrance of the depression\nsmooth the transition between a war and peacetime economy.\nis clear to most of us. At the first development of widespread unem-\nWhether controls are necessary and for how long will be determined\nployment, even those who are not unemployed may feel economically\nby when VJ-day comes. Suppose the Japanese were to surrender a\ninsecure and will freeze on to their savings and spend less. This\nyear from now. By that time, most of the kinks will have worked out\nwould be bound to deflate demand; manufacturers would be less\nof the reconversion process, most if not all of the bottlenecks in peace-\nanxious to expand; and instead of coming out of the war with an\ntime production will have been broken, and a chain of supply will\nexpanding economy and jobs for released veterans and war workers\nhave been established from producers of raw materials to manufac-\nwe will face another depression.\nturers of end products to wholesalers and retailers. Under such cir-\ncumstances, retention of bottleneck-breaking and scheduling functions\nInflation Danger\nwould be superfluous. But if VJ-day were to come two or three\nBut there is another possibility; economic history may well repeat.\nmonths from now, before industrial supply-chains had been reestab-\nDuring and after every war, prices have risen sharply then declined\nlished, those functions would be temporarily useful to keep the\nsharply. (See Chart: Prices-Before and After the Wars.) So far\npipe line flowing evenly and maximizing production.\nduring this war we have managed to hold prices in check. We cannot\nPrice Controls\nafford to give up the fight just when it seems won. The point is that\ncash and cash-assets are at record levels (p. 39). and that most people\nAgain in price control, the timing-the state of reconversion-will\nafter VJ-day will still have good incomes. Expanding expenditures\ndetermine how many exceptions must be made to a general policy of\nof this group could offset contraction in purchases of the unemployed\nremoving ceilings. Today specific shortages persist in many seg-\nand indice an inflationary price spiral. Moreover, once production\nments of the standard of living-food, textiles, shoes, and in all dur-\ndid gret started, manufacturers, wholesalers, and retailers, might buy\nable goods, housing, automobiles, electrical appliances. None of these\ninventories, fearing prices would rise. This would lead to a repetition\nshortages is likely to be corrected in the next three months. There-\nof the 1919-20 boom and collapse.\nfore a quick defeat of Japan would not immediately alter the need for\nThus, we must be prepared for inflation and deflation, or for a\nsome price controls; nor would it do away with the necessity to ration\ndelayed inflation after an immediate deflation following VJ-day.\n52\n53"
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