Boom & Bust?

During the next four years, U.S. business will enjoy profits twice as great as in 1940. But in 1950, unless drastic steps are taken by Congress, the U.S. will have nearly 8,000,000 unemployed and will stand on the brink of a deep depression. So said Commerce Secretary Henry Agard Wallace, before a closed session of the House Appropriations Subcommittee over a month ago.

Last week Wallace's testimony (made to support a plea for more cash for Commerce) was released. Secretary Wallace based his analysis on a set of mysterious charts which were shown briefly to the committee, then tucked away so that kibitzers had no way of telling how right, or how wrong, they might be. Gazing into these charts, Henry Wallace explained:

In 1946 the gross national product will fall from its present level of $194 billion to about $159 billion, chiefly because of sharp cuts in Federal and local government spending.

Although gross income for U.S. business will drop in 1946, repeal of the excess profits tax will keep net corporate profits at the 1945 level ($10 billion). But wages and salaries, because of lost jobs and less overtime, will drop some $25 billion. Unemployment will soar to 7,000,000.

Business profits will rise slightly in 1947 and '48 to $11 billion after taxes, twice as high as 1940. Unemployment will drop to between 4.5 and 5.5 million. But by 1950 the present huge backlog of demand for goods will be gone. Profits will then drop (how fast and how much, Wallace did not say). Unemployment will rise to between seven and eight million.

Wallace concluded: ". . . if there were 7,000,000 unemployed and if business were getting an income after taxes . . . of twice the prewar, those . . unemployed would raise their voices so loud in the land that [they] might be heard."

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