The Atlantic Report on the World Today: Washington

ON THE WORLD TODAY

HURRY, hurry, hurry,” urged Bernard M. Baruch six months ago in advocating immediate Congressional action on industrial reconversion. No one listened. Congress adjourned on June 23 without taking any action. The Majority Leader in the House told members that no legislative program was planned for August, and that even if the recess ended officially August 1, they need not return on that date.

Now Hitler has taken Baruch’s place as a spur. Congress is back again, rolling up its sleeves to enact reconversion in double-quick time. There is a sense of urgency which came over the Capital when the turmoil inside Germany was first reported.

It is high time that Congress got busy. Hitler could easily throw this country into chaos by a sudden decision to quit. We have at least 60 per cent of our resources in war production. When the European war ends, perhaps 40 per cent of our war production will be cut back, and this will mean widespread unemployment if plans for a changeover to peacetime work are not facilitated.

Why, then, has Congress been dilatory? In great part because of War Department assurances that the road to victory will be long and hard. Yet the War Department itself will not be caught napping by the advent of peace. It had its lesson in the last war. Not till three weeks before the armistice did the War Department begin thinking about demobilization and post-war policy. The result was chaos and the total absence of a military policy for peacetime.

In this war there has been no such slackness, and post-war plans have long been in the outline stage at the War Department. Moreover, a special committee was set up by Congress six months ago to lay down a post-war military policy. If it is necessary for the military arm to prepare for peace, surely it is even more necessary for the civilian arm. The military authorities, however, do not think so. They blocked Donald Nelson when the War Production Board head wanted to put tentative reconversion orders into effect, only to be forced later to agree on a compromise.

How many jobs on X Day?

In fairness to the military, it must be said that it is harassed by real shortages, and it traces those shortages to the workshop feeling that the war is about over. General Somervell, head of the Army Service Forces, has given the figures. They show that peak war production was achieved last November. Since then there has been a falling off, though the loss is felt only in particular items: heavy and medium artillery, radar equipment, heavy trucks, tires.

Civilian authorities, however, do not agree with the military that the best antidote is to play down the good news and frown on reconversion. They feel that the drift from the war plants, on the contrary, would be arrested in great part by the knowledge that reconversion plans had been perfected, that jobs would be available on X Day. The fear behind the quitting is the fear of joblessness.

We have had examples of what is expected. When the Navy suddenly canceled an order at Brewster’s Long Island plant four months ago, thousands of men were thrown out of jobs, and the WPB had to work feverishly to find substitute work. The incident showed a deplorable lack of coöperation between the military and civilian agencies.

Some industrial thinkers in the WPB hierarchy support the military in the matter of reconversion, though for different reasons. They are called “even starters” — or men who want all industry to reconvert at the same time. What shall be done in the transition period is never explained. But, as Mr. Baruch has pointed out, demobilization and reconversion must be a continuous process in order to maintain economic stability.

Banking: old and new

The monetary conference at Bretton Woods set the post-war security conference an efficient example. Its proposals may mean the end of economic isolation. Of course, those provisions must still be ratified by the participating governments, and some observers doubt that ratification in this country will be obtained. Certainly a good deal of opposition has arisen in Congressional and in banking circles. Wall Street to a man is antagonistic to plans which will route so much short-term and long-term banking through the Monetary Fund and the Reconstruction Bank.

As in Congress, there is still a core of traditional banking opinion in Wall Street, and the new scheme flies in the face of orthodoxy. It is an attempt to unite domestic expansion with international equilibrium maintained in common. The details are highly technical, but the goal is to help every country maintain full employment.

Here in Washington the goal is regarded as very much an American interest, for, with the immense wartime increase in our productive capacity, the post-war planners are counting on eight billion dollars of export trade and five million jobs from foreign trade alone. We shall never get these, however, without the short-term and long-term banking facilities provided for by the Bretton Woods mechanism. That will make sense to Congress when the provisions are explained to it, despite Senator Taft’s darkling threat of a Senate rejection of the agreements. Internationalists, of course, think of the contribution of the Conference to international harmony.

A monetary link is said to be premature till some kind of commercial link is made. The statement is of the order of the chicken and egg dispute. Economic collaboration must begin somewhere, and it might as well be in money as in commercial practice. But commercial pacts as well as money pacts are necessary in a world that must strive for full employment in order to hold off revolution and war.

This country feels that commercial dealings should be based on non-discrimination. In other words, we object to such private agreements as the Ottawa pacts, whereby there is one tariff system for the insiders and another tariff system for the outsiders.

Our point was made in the Atlantic Charter and in the master agreement covering Lend-Lease. To be sure, Mr. Churchill attached a reservation, “with due respect to existing obligations,” but, according to persons who were present at the Atlantic Charter meeting, the reservation was intended solely as a constitutional safeguard. Mr. Churchill simply felt that he had no power to rescind existing British obligations by international compact. The monetary accord arrived at in Bretton Woods should aid in developing equality of treatment in trade dealings.

Cartels and Lend-Lease

But there are two other prerequisites to the successful achievement of universalism in economic relations. One is a retreat from our attitude towards cartels. The other is the maintenance of Lend-Lease till the war with Japan is over.

All the departments of our government appear to be fighting the recrudescence of international cartels after the war. And there is much public sympathy for the campaign. Cartel is a poisoned word, like trust. But there is the need of overall arrangements in the modern world, when man has to face the problem of apportionment of markets in particular lines, such as air transport, oil, shipping.

As for Lend-Lease, there is a tremendous pressure inside the Administration to wind up Lend-Lease when the war with Germany is over. The election alone seems to call for it, in the eyes of some of the Democratic managers. The Administrator of LendLease, Leo T. Crowley, is also a Democratic boss. Lend-Lease should have been under a man with no political axe to grind, like Price Controller Chester Bowles.

At any rate, the British are disturbed over LendLease prospects. They say that if Lend-Lease food should be cut off, they would have to turn their resources over to the export trade in order to buy food. In that event they will be inhibited from putting their full weight into the Pacific war. You can almost read the headlines in some of the more rabid newspapers should that contingency occur. However, it is going to be a hard job to convince Congress that LendLease should be continued.

THE MOOD OF THE CAPITAL

The mood of the Capital is sharply divided into private and public reactions. Privately, no doubt exists any longer that Germany is headed for a crack-up. Publicly, the feeling expressed is that we still have a long, hard row to hoe. Washington is afraid of absenteeism and quitting arising out of any public avowal that the news is good. This attitude leads to some strange results, such as Secretary Stimson’s rebuke of Mr. Churchill for his “over-optimism.”

The effect of an early victory on political chances is always a lively subject for conversation. Some people think that the President will benefit either way. A delayed victory lends force to his plea that he should be allowed to retain his job as Commander-in-Chief while the boys are “on their way.” An early victory might seem to make the plea a boomerang. Against this, there will be the outbreak of gratitude in his favor. But with so many factors indeterminate, many voters may not make up their minds until late in the campaign — even in its final days.