STATE OF BUSINESS: Stretching the Boom

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From Mobilization Boss Charlie Wilson this week came word of a significant change in the arms program. Said Wilson, in releasing his fourth quarterly report: instead of levelling off in 1953, as originally planned, the program will be stretched out. Some of the program will not reach its peak until 1955.

In part, the change of policy is merely recognition of the fact that arms production is woefully behind schedule. But the real significance is political. Arms production could be put on schedule by a tighter squeeze on civilian goods. That, however, would disrupt large segments of the economy, and in an election year, nobody, least of all Harry Truman, wants to do that. The President, in fact, is planning a $10 billion cut in the requested military budget for the next fiscal year (see NATIONAL AFFAIRS).

Despite this planned cut, Wilson insisted that he still viewed rearmament as a $50 billion-a-year affair (1951 obligations: $45 billion)—apparently for another three years. Some military goals, he said, would probably even be raised—and that was why the program was being stretched out.

The new stretch-out policy will have a profound effect on the entire economy. Many a manufacturer who has planned to hit peak output in 1953, and then cut back sharply, will have his schedules revised. The original peak will not be reached, but production will continue longer at the lower level, and there will be fewer cutbacks. In short, it looked now as if the armament-based boom would last much longer than most businessmen had thought.