Creeping Mobilization

The war in Asia made its first impact on the U.S. economy last week. Personnel managers, worried about manpower, began totting up the reservists and draft eligibles on company payrolls. Manpower was already tightening; the Government reported last week that eight more areas had been removed from the "critical" (12% or more unemployed) list and five more had moved into the list of "tight or balanced supply."

On U.S. airlines, the wartime "bumping" rule was again invoked to give priority to military traffic. The Government placed seven U.S. overseas airlines on stand-by notice to ferry troops and materiel to the war zone. At the State and Commerce Departments' request, U.S. oil companies agreed to shut off completely the trickling flow of oil exports to the Far East.

Willys-Overland was handed a $22 million order for 8,350 jeeps, its biggest in five years. To Reo Motors went a contract to make 3,900 "Eager-Beaver" heavy-duty trucks for the Army at a cost of $24 million. But since both orders had been on the books before war's outbreak, and no new ones had been placed, automakers thought there was not yet any prospect of a cutback in civilian auto production; cars rolled off assembly lines last week at a record clip of 70 a minute.

To forestall any "hoarding" of cars, automen cautioned: "Don't get panicky. There's plenty for everybody." In fact, General Motors Chairman Alfred P. Sloan Jr. thought that the huge demand for cars would soon begin to taper off; he doubted that it would hold at its present peak beyond year's end.

No Need. Yet consumers still rushed to stock up on items which they feared might be cut back by war production; motorists grabbed up tires so fast that some U.S. tiremakers had to put their dealers on allocations. As General Tire & Rubber Co. explained in newspaper ads, the rush was needless. There was no real shortage; the rubber companies were at peak production and in May had hit a new record of 7,369,190 tires.

What did worry tiremakers was the possibility that Far East sources of natural rubber might again be overrun by enemy invaders. This fear last week drove the price of July rubber futures up to 35 1/2 a lb., the highest in 22 years and more than double the price of six months ago. But the U.S. acted swiftly to guarantee adequate stockpiles of synthetic rubber. At the urging of rubber manufacturers, the White House ordered back into production three of the Government's twelve idle wartime synthetic-rubber plants: a butyl plant at Baton Rouge, La., a butadine plant at Houston and the Port Neches, Texas, plant which makes general-purpose rubber. This would boost synthetic-rubber production by about 20% and bring total production to about 500,000 tons a year, enough to handle all civilian and military needs, barring global war. But it would also use up heavy supplies of benzene, a component of synthetic rubber, and thus create the prospect of shortages for industries which also use benzene in making nylon, plastics and detergents.

No Chances. The Munitions Board, taking no chances, was making a careful, detailed inspection of other World War

II plants. It was looking over nearly one-third of the 1,595 plants (munitions, chemicals, etc.) built by the Government in World War II at a cost of more than $12.7 billion. Some 270 of the plants have been kept under military management, another 200 are in reserve, either in stand-by condition or under private operation which provides for them to be converted to war production on 120 days' notice. Moreover, if industrial mobilization should become necessary, said Munitions Board Chairman Hubert E. Howard, the Armed Forces would place $41 billion worth of orders for weapons and supplies in the first six months.

But even without complete war conversion, the basic raw materials of heavy industry (steel, copper, lead, zinc) were already in such short supply that the Government had begun to consider imposing some system of voluntary allocations, which was likeliest to come first to the crucial steel industry. The Federal Reserve Board also was prepared to tighten credit to cut back civilian buying power whenever a rush for consumer goods got big enough to create scarcities.

Thus the prospect was not for any sudden slapping on of wartime price and wage controls, unless the emergency suddenly worsened; it was rather for a continuance and gradual broadening of the present creeping mobilization.

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