( 169 ) 



The existing wealth of the nation was a more important 

 source of fighting materials than either increases in total pro- 

 duction or reductions in consumption. During a war total 

 production may increase but little, but the production of war 

 materials must increase greatly. In other words, there is a 

 great shift in the type of goods produced. There could be 

 little or no shifts in the production of food and clothing, 

 which are normally produced and consumed on a current 

 basis. Contrary to popular belief, current stocks are rela- 

 tively unimportant. The important reduction must come in 

 that type of production which can be postponed because of 

 very large inventories. Producing war materials at the ex- 

 pense of reducing inventories of capital goods is equivalent 

 to utilizing production of the past. 8 



With rising food prices, each consumer reduces his pur- 

 chases of items other than food. War, through advancing 

 prices, inevitably reduces the standard of living; the real 

 cause of the lower standard is war and not, as is almost uni- 

 versally assumed, the rising prices. 



During World War II many proposals have been advanced 

 for painlessly depriving civilians of goods and services. The 

 nation is using decrees, support prices, priorities, price-fix- 

 ing, rationing, subsidies, and the like to increase food produc- 

 tion, shift industrial production, and reduce the civilian 

 standard of living. Under this system our problem seems to 

 be how the most goods can be taken away from the most 

 people with the minimum amount of squeal regardless of 

 the cost in terms of human labor. 



War reduces the standard of living of civilians. Formerly 

 the task was accomplished by price. Now it is undertaken 

 by administrative action, but price is so potent that it 



3 Of course, when inventories are reduced in an emergency, they must be 

 built up again afterward if the pre-war standard of living is to be restored or 

 raised. 



