production, it will be necessary to steer a course of public policy that will avoid the extremes either a hampering rigidity or a chaotic looseness in the economic system during the transition. Such a public policy must meet questions like the following:

How may the tremendous productive facilities mobilized for the war effort now be resolved in a constructive way so as to achieve a more flexible, better balanced economy-one in which new business enterprises may be encouraged, small business be enabled to survive and the economy cushioned against violent post-war fluctuations? That question will loom large in the disposition of Government-owned industrial facilities and in making capital available to new and small business enterprises.

Apart from the efforts of individuals to help themselves, how far should public agencies go in expanding their existing programs for aiding the unemployed and sustaining consumer purchasing power? Where labor has been concentrated in special war areas and special war jobs, how may the Government help in the relocation of the workers' families so as to restore a balanced peacetime production with normal living conditions, without regimenting the workers and their families?

What should be the Government's responsibility in seeking to achieve a healthy balance of commodity prices with wages and farm income; in reducing the dangers of inflation or deflation?

What ought the Government do to restore confidence in the international market and permit the resumption of commercial interchange in the family of nations?

What changes in the tax system are needed to stimulate new investment and venture in sound enterprise, encourage consumption at a high level and supply the revenues for necessary post-war expenditures?

To what extent can the National, State, and local governments fill in the gaps in employment by speedily inaugurating public works and public services, many of which had to be deferred while we concentrated on the war effort?

These questions are illustrative of the continuing problem of achieving the proper combination of private initiative and public regulation to keep our economy dynamic enough for progress, yet stable enough to protect the national welfare.

CONGRESS AND THE ADMINISTRATIVE AGENCIES

Looking to the restoration of peacetime conditions, Congress is obligated to assume the initiative, not only in providing for the overall administrative machinery to expedite the transition but also in defining the policies and functions which the executive agencies are to carry out.

War has involved a succession of emergencies requiring quick, drastic, on-the-spot decisions. Such decisions have usually been accepted and followed with little question during the war by those whose lives and property are affected. Up to a point, overlapping jurisdictions and makeshift policies could be condoned as inevitable under the stress of war.

Of the agencies created by the Administration under its war powers, a few are suitable for the conduct of post-war adjustment activities,

but even these will require legislative sanctions to continue into the peace. Others definitely have a war emphasis which makes them unsuitable for carrying out the functions of demobilization and may even hamper the post-war adjustments if continued in their present form. It is generally recognized, moreover, that there is room for a streamlining and coordination of the existing Government agencies so as to reduce overlapping jurisdiction, duplication of effort, and inconsistencies in administrative policy.

OFFICE OF WAR MOBILIZATION AND RECONVERSION

From its studies of the administrative agencies and the testimony of administration executives, the committee is convinced of the need for bringing the transitional program-liquidation of war production, demobilization, and reconversion-under central policy guidance. There must be a point where authoritative decision within the administration will coordinate the work of the agencies engaged in the settlement of contracts, the disposal of surplus property, the facilitating of reemployment in peacetime production, and the continuance or relaxation of wartime controls through the transition and immediate post-war period.

Since the problems of reconversion cannot be treated separately from those of conducting the war program, it is logical that the functions of the present Office of War Mobilization should be expanded to become those of an Office of War Mobilization and Reconversion. The Director of this Office should be charged with the formulation of the over-all policies necessary to effect the economic transition from war to peace, and with the responsibility for seeing that the policies are adhered to by the operating agencies.

Within this Office there would be placed the Office of Contract Settlement, which was created by the Contract Settlement Act of 1944; the Surplus War Property Administration, now acting under Executive order, and any surplus property administration created by statute; the Retraining and Reemployment Administration, now acting under Executive order, and any such administration created by statute. The committee believes that action should be taken by the Congress promptly to establish all these offices by statute.

The Director would promote and assist in the development of demobilization and reconversion plans for the agencies, keep the various agencies informed of the plans of other agencies, and settle any controversies which might develop between them in the development or administration of plans.

It is proposed that the Director have studies and reports made for him so that he can determine the need for simplifying and consolidating or eliminating of executive agencies which have been established for war emergencies and which may no longer be needed. The Director should also have studies made so that he can determine the need for relaxation and removal of emergency war controls.

The committee recommends that a specific study be made for the submission to the President and Congress of the present functions of the various executive agencies in the field of manpower and develop a program for reorganizing and consolidating these agencies.

In carrying out his functions, it is recommended that he consult and cooperate with the State and local governments, industry, labor, and agriculture.

In the committee's recommendation (contained in H. Rept. No. 1759) was included provision for an advisory board of twelve, who should represent the general public and the public interest in assisting the Director in the development of policies and in the exercise of his responsibilities. Specific provision was made that three members should have experience in business management, three in labor, and three in agriculture.

The committee's recommendation provides for legislative sanction and general policy guidance for the administrative organization charged with direct responsibility for reconversion matters.

II. CONTRACT TERMINATION AND SETTLEMENT

As was noted earlier, the committee has already submitted a report on contract settlement and its recommendation of the legislation which, with minor changes, has now been enacted.

It is believed that the new contract settlement law will expedite conclusive settlements for both prime and subcontractors; and that at the same time it will protect the Government against overpayments and fraud to the fullest extent consistent with its primary objective of clearing the way for speedy resumption of civilian production. We hope that with this legislation the practices of the contracting agencies will be effectively coordinated under uniform policies, through the Director of Contract Settlement and the Joint Contract Termination Board; that the early removal and storage of war inventories and machinery will be speeded up; that adequate interim financing will be provided to enable contractors to resume production and employment; that the procedures for appeal will do justice to the interests of both the contractors and the Government.

It remains to be seen whether these objectives will be fully realized. The committee intends to keep in close touch with the administration of the contract termination law. When the operations under the act have proceeded far enough to permit passing of judgment, the committee expects to issue an interim report, indicating the results of the initial experience, and to make any recommendations which seem in order with respect to the modification of the Contract Settlement Act.

The reports reaching members of the committee indicate that a great deal of preparatory work has already been done looking toward the day when contract termination telegrams can be sent out to war contractors. Not only have procurement agencies made detailed preparation of schedules both as to the timing and the arrangements by which war contract work shall be cut off, but war contractors on their part have in many instances already available in their files. specific instructions both for their own organizations and for the subcontractors which will greatly expedite their procedures.

All of this preparatory work is highly encouraging. At best there will remain many complications and delays between the stoppage of the flow of war production and the resumption of other work.

III. DISPOSAL OF SURPLUS GOVERNMENT PROPERTY AND PLANTS The following discussion, taken in part from the committee's report on surplus disposal, dated August 10, 1944, outlines the nature and scope of the problems encountered, and presents the committee's views regarding the ways in which war surpluses can best be disposed of with constructive rather than harmful effects upon the national economy. The committee's recommendations were incorporated in H. R. 5125.

SURPLUS SUPPLIES

In the Statistics of War Production it is estimated that the output of war munitions from July 1, 1940, to June 30, 1944, was approximately $130,000,000,000. It is impossible, of course, to obtain an accurate picture of what the surplus is going to be at the end of the war, but it is not necessary to wait for an accurate statement in order to set up legislation for the control and disposal of surplus goods. For lack of information on the size of the surplus at the end of the last war large quantities of goods were withheld from the market until after they had spoiled or until a sharp rise had occurred in the price of supplies due to a lack of balance between supply and demand. Various estimates have been made as to the amount of supplies which will be left over. The most reliable estimates range from $50,000,000,000 to $60,000,000,000.

Aircraft and ships account for approximately one-half of the procurement program. Guns, ammunition, and other combat munitions not suitable for civilian use account for about one-fourth of the total. Thus only about one-fourth of the total output has been in the form of goods which could be used by the civilian economy, and it may be assumed that about the same proportion of the surplus supplies will be in this category. The principal groups included in this estimated $15,000,000,000 of miscellaneous stocks are clothing, textiles, and other soft goods; motor vehicles; foodstuffs; stock piles of raw materials; machinery, tools, and equipment of wide variety. It is also probable that about one-half of this surplus will be abroad, most of which will be disposed of there.

One of the most careful estimates which have been made indicates that the amount of these supplies which could be merchandized in the domestic market would probably be about $6,000,000,000. This total, which would include raw material as well as finished goods, compares with the normal monthly retail sales of $4,000,000,000 in the country as a whole before the war. In this great variety of commodities left over at the end of the war there will, however, be many items in quantities representing a number of months' supply. The disposal of these items offers many difficulties and great care must be taken to prevent disastrous effects upon employment and industry. There are many commodity lines held by the armed forces in which there have been serious wartime shortages, as in motor vehicles and in consumer goods made of war-controlled materials. It is in the public interest to make these goods available without unnecessary delay, for the use of consumers, within ceiling prices established by the Office of Price Administration.

Technical progress made during the war points to the development of improved products which may render some of the surpluses relatively obsolete. In these cases there will be no justification for trying to maintain war prices. On the contrary, it is in the public interest for such goods to become available to lower income groups which have not heretofore had access to them.

Such a policy of encouraging rapid disposal for consumer use is not inconsistent with the timing of sales to avoid glutting the market in quantities beyond the capacity to absorb them.

Difficulties will arise in treating the wide variations in the types of goods which will be included in these surplus stocks. Because of the great diversity it is obviously impossible to lay down one definite policy of procedure which could be followed in all instances.

The committee is advised that with growing experience, continuing progress has been made by the procurement agencies in bringing procurement more closely in line with requirements. By the same token the attainment of peak production capacity has created sufficient confidence so that procurement of munitions which do not require a long production period is being stabilized at an average of 6 months' reserves. On top of such controlled reserves we shall be left with matériel which has proved superfluous because of changes in military strategy, and with the inventories of raw materials, goods. in process, and finished goods which will be held by contractors for the Government account.

The committee urges the importance of continuing this close reexamination of the war-procurement program. The best way to hold down the surplus and its threat to post-war markets is to keep procurement close to actual requirements, including prudent reserves.

Surplus abroad. The bulk of the goods now held abroad from present indications will be needed there for reconstruction and rehabilitation. This is particularly true of foodstuffs and clothing which will form part of the relief requirements set by the United Nations Relief and Rehabilitation Administration. These estimates include 9,500,000 tons of foodstuffs as North America's share in European relief for the first 6 months after the peace. About 30,000,000 people will be outside their native lands as the result of labor drafts or other causes. It is probable that there will be a temporary deficit in food supplies and clothing in many localities during the immediate postwar period. Hardly less needed than the foodstuffs and textile goods will be the trucks, transportation equipment, and tools to restore some semblance of order among the population and to enable them to resume normal living conditions.

The committee believes that a part of the overseas surplus can and should be paid for at a fair price and on such terms as appear economically feasible to facilitate and protect the transactions. A constructive result to be sought from these sales on favorable terms is the development of a preference for American products, for future trade. To this end, some attention should be given to the possibilities of peacetime exchange of commodities, rather than putting the sole emphasis on relief.

GOVERNMENT-OWNED WAR PLANTS

The problem of absorbing into American industry the Government's investment of $15,000,000,000 in industrial facilities has no precedent. In World War I the Government made only a negligible direct outlay