ation.

There is no reason why it should not be stopped altogether, if it proves dangerous, until the fear of a glut of the labor market has been removed. Young people in large numbers are not likely to seek employment for the first time during the next few months. Many who would now be seeking their first jobs are in the army; most of the others have been drawn into industry by the dearth of labor and the high wages which the war has brought. Thus it is that of the five streams into the labor market, two are subject to the absolute control of a single authority, a third is subject to indirect control by the same authority, and the remaining two are for the time almost completely arrested. The rate of flow into the labor market can be checked to respond to the ability of industry to absorb men. If it is not done, it will not be because of a lack of authority.

If the government should do nothing more than merely arrest demobilization, all the men in the army and war industries might be restored to ordinary pursuits without friction. But a policy which aimed only at supplying man-power to an industrial system left to effect its own accommodation to new conditions would be long drawn out. It would quite likely find expression in doling out handfuls of men here and there as needed. Its weary course might run through a series of years. Under it the man-power held back would go to waste. would become seriously disgruntled over having to remain in the army. To have a fair prospect of success, such a policy must be associated with another which aims to hasten the return of industry to its ordinary channel.

Men

This accommodation of industry to the new conditions of peace can be hastened by many things which the government can do. There is no time to discuss them here in detail; they must be passed in the briefest review. First, and most essential, it can gather and organize information about the extent and localization of the resumption of industry and the employment which it may be expected to offer. Second, a proper scheme of priorities in the discharge of men can be made of great value. To cite a single example, managers of independent enterprises should be released early, for their planning will find a visible result in jobs for others later on. Third, the cancellation of war contracts can be premised, among other

things upon an effort to arrange the rate and priorities in such a way as to speed the resumption of industry. And fourth, by a judicious withdrawal of the control which the government has exercised over priorities and over prices, much can be done to remove the incubus of hesitation which threatens to slow up the industrial machine.

A program such as this is modest enough. A far more ambitious and effective one might have been adopted had the powers-that-be taken thought in time. The government might, for instance, have hit upon some simple and inexpensive scheme for removing the risks which attach to the uncertainties of transition and thus have quickened business endeavor. It is hard to see how even so expensive a thing as a policy of governmental underwriting of the risks of business for the transition period could have been an extravagance. If one concern hesitates because of an uncertain market, others may be expected to do the same. As a result employees will not be paid, and employers will not find ready markets. So industry is arrested. By effective guarantees the government could remove risks and stimulate all to produce together. If all went ahead, each would find a market for his wares. Nearly all would be able to sell at a profit, and the cost to the government, compared with the salvage from waste and the increased product for society, would be negligible. Such a plan would necessarily entail an approval of risks by the government. This would insure against the greatest danger which attends a rapid conversion or reconversion of so large a part of the productive equipment of the country to peace uses. It would be an absolute preventive of too many concerns engaging in one line of production and too few in another.

But for so ambitious a program the time is past. For that reason the success of the resumption of industry upon a peace footing rests largely with the rank and file of the people. Our industrial system is still one which is maintained by voluntary co-operation of the individuals who make up society. They must go resolutely ahead, even if the difficulties are great. The prospect of falling prices tends to deter merchants from replenishing stocks and manufacturers from renewing production. Though the dearth caused by the war has created a great need for goods both in this country and abroad, this

does not constitute an effective demand. The latter requires the addition of an ability and a willingness to pay. But the war has not promoted ability, and willingness shrinks before the anticipation of lower prices. Besides, an attempt is made to notice the consumer, upon whom the whole edifice rests, to do two contradictory things. He must spend and thus start an impulse which runs through merchant and manufacturer to the hidden springs of industry and produces abundance. But he must likewise save; for in taxes and bonds the government must find from ten to sixteen billion dollars next year, and both conversion of plants and arrested industrial expansion cry for funds with which to go forward. In the face of such conditions, if industry is to return to its wonted pursuits and the men who come home are to be received with jobs, there must be no hesitation. He who hesitates invites unemployment, idle factories, the waste of wealth, the arrest of social progress, and violence and anarchy in the land.

In this trying situation there is one device which should stand the nation in good stead. If we find that the flood of man-power is coming faster than it can be accommodated, a reservoir may be erected to take the surplus until the stream is once again able to accommodate it. National, state, and municipal governments alike need public works. Railroad extension and betterment, the renewal of wear and tear on plant and equipment, the construction of highways, and like projects are abundantly worth the doing. They may be made to provide what we may call "buffer employment" at a time when the threat of a glut of the labor market and of industrial disorganization is most acute. Since the control which sanctions such projects imposes conditions, they can be used to stabilize and standardize labor employment. If this device is properly used, employment can be found for the excess of labor which ordinary industry cannot take; it can expand as this surplus increases, contract as it contracts, and fade away into nothingness as the expansion of peace-time industry makes unnecessary a buffer against unemployment and its conse

quences.

The intent in what I have said has been merely to formulate the issues involved in the problem of demobilization. I should account it an analysis of a problem and its resolution into alter

natives with the contingencies upon which each depends. If one is disposed to object to my terminology and call the account "prophecy," I shall interpose no objection. However much of truth or falsity this analysis contains, it is a mere outline that lacks the fullness and detail of reality. That can come only later. But as the weeks go by new elements will display themselves in a rapidly shifting scene. The situation will come to hold more of promise or of dread. Fact will follow in the wake of analysis or prediction. History will show wherein we have erred in conceiving of and attacking this problem. We are now about to see whether in the wake of war there comes dearth and industrial strife or peace and prosperity.

[330]

DISCUSSION ON THE DEMOBILIZATION OF LABOR IN WAR

INDUSTRIES AND IN MILITARY SERVICE

W. H. WEBSTER, President, Rathbone, Sard & Co., Albany, N. Y.: During the past two weeks I have discussed with various agencies of the government the subject of the demobilization of war industries and military service. I was assured in the first place that as far as the demobilization of war industries was concerned it was a matter for the War Policies Board, and the Labor Board, and that the American Federation of Labor was working hand in hand with them. I discussed the subject with the American Federation of Labor, members of the War Policies Board and others, and I was assured beyond the shadow of a doubt that as far as the machinery for helping a man to find a job was concerned, it was perfect. The only thing that evidently had not been taken into account was to produce the job for the man that was out of employment. Finally it came to the point of passing it back to the manufacturers of the country. There is no doubt whatever that if the manufacturers will take upon themselves the burden of reconstruction, will invest their capital without any government control or help, that if they are justified in doing it, if they are big enough men to take the burden on their shoulders and demobilize industry the way they mobilized industry in the period of the war to help win the war, it can be done.

The average manufacturer however is going first of all to look the field

over.

He wants to know just exactly what has taken place during the war period. In 1914 this country was facing an impending depression in business due to a greatly increased supply of manufactured goods over the available market and the demand. If the European war had not come at the time that it did come there is no doubt that there would have been a great business depression, that a great many men would have been out of employment and only the fact that the European war came when it did, prevented that business depression. During the period of the war we have built up an enormous industrial machine, so much so that our increased manufacturing facilities in eight of the principal manufacturing cities throughout the country have increased 94.66 per cent. In addition to that the increased output is 112 per cent. It stands to common reason that the manufacturers of the country are going to take these circumstances into consideration before they attempt a policy of reconstruction. If the depression that was impending in 1914 had come it would have meant a depreciation of values in industries throughout the country. There is no doubt whatever that the increased manufacturing facilities which we now have cannot continue after demobilization. We must get back to normal production based on the normal law of supply and demand. A continuation of the inflated values which we have had during the period of the war can be nothing but injurious, and must lead to a very serious condition. During the past year the acceptances discounted by the Federal Reserve Bank