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42 St
or curtailment of peacetime production during the war. Likewise, a broad potential demand is developing for capital goods both because of the depreciation and obsolescence of equipment which could not be replaced during the war and because of the need to bring into production new products as well as postwar designs of existing products.
Modern history records the fact that after big wars there follows a period of great business activity. Only in duration and intensity does the pattern vary. All the circumstances point to a recurrence of such activity at the end of the present conflict, probably on a greatly intensified scale. No former war has seen such a great concentration of economic forces directed toward a single objective and one not in any way concerned with normal peacetime needs. Moreover, in the 25 years since the last conflict our productivity has enormpusly expanded in volume and variety. In World War I American industry was just preparing to change over to total war production at the time of the armistice. In the present conflict it has long since been completely converted. Our participation in the former war was only for a comparatively short period, already far exceeded in the present war.
PUBLIC CONFroENCE NECESSARY
Second, we may safely accept the additional premise that there is being accumulated an enormous backlog of potential purchasing power. Consumer short-term indebtedness has been greatly reduced, and the reser
January, J 945
voir of instalment purchasing power is again available. In addition, it is estimated that individuals and businesses have accumulated a backlog of wartime savings that will exceed 100 billion dollars at the end of 1944. Hence it seems likely that, at least temporarily after the period of reconversion is completed, there will be a period of intense business activity as compared with prewar standards. But to make this possible we must have a foundation of public confidence. If the problems incident to the transition are not solved effectively and realistically and, most important, promptly on the part of both industry and government, the trend of business activity may turn downward with a resulting prolonged period of serious unemployment. The kind of start we make and the direction we take after the armistice are of great importance.
THE BASIS FOR SOUND PLANNING
It is most important to recognise that this prospective upward trend of business activity will be largely synthetic in origin. It will not be based upon an economic balance between production and consumption. It will be the result of a backlog of potential demand supported by a backlog of purchasing power. To accept it as the pattern of economy for the longerterm position ahead would be unsound. To plan any business enterprise upon such an assumption would be far from realistic.
Business opportunity depends upon business aggressiveness and upon business leadership. But it also depends.