4 MISC. PUBLICATION 570, U. S. DEPT. OF AGRICULTURE 



of those commodities such as peanuts and flax, the production of 

 which has been greatly expanded to meet special war needs. As 

 expressed in the Steagall Amendment, it is already a part of national 

 policy to maintain farm purchasing poAver during the transition by 

 supporting farm prices at 90 percent of parity for 2 years after the 

 Avar, but programs to implement that policy may be required. 



The manner in which these problems are handled can affect greatly 

 the prospects for dealing successfully with the long-run issues in- 

 volved in later achieving and maintaining full employment. Assum- 

 ing, however, that the turbulent seas of the transition period can be 

 navigated with reasonable success, what of the years that lie beyond I 

 The widespread discussion of the importance of maintaining full 

 employment after the war is evidence itself of the fear that unem- 

 ployment may again become a major problem not only for individual 

 citizens and business concerns but also for the Government itself. 

 Much could be written about what individuals and business enter- 

 prise might do to maintain full employment after the war, but this 

 publication is addressed primarily to the problem of what the Gov- 

 ernment can and should do to help private enterprise do the job. 



THE PROBLEM 



If an increasing labor force after the war is to remain fully em- 

 ployed at jobs being made ever more efficient by the march of science 

 and technology, the purchasing power of that labor force must be 

 constantly expanded to enable it to buy and consume its expanding 

 output of goods and services. So far as the Government's relation to 

 this process is concerned, there are at least two alternatives in do- 

 mestic policy short of a completely regimented economy. If full 

 employment is to be maintained, the Government can either exert its 

 influence to create the kind of "economic climate" or environment in 

 which private spending will maintain sufficient purchasing power, 

 or, failing in that, supplement private spending with public spending. 



When individuals, business firms, or governments spend money for 

 the goods and services produced by labor, they contribute to the main- 

 tenance of employment. This is true of the man who buys a haircut 

 or a new suit of clothes ; of the housewife who buys a dozen apples 

 or a vacuum sweeper ; of the family who pays for a railroad ticket, a 

 hotel room, or restaurant meals for a vacation ; of the business firm 

 which buys the material and hires the labor to manufacture furniture, 

 radios, and farm machinery, or to erect a new factory; of a local 

 school district which buys a new school bus or adds more books to the 

 library ; of the city government which installs a new sewage-disposal 

 plant or builds a city auditorium ; of the Federal Government when 

 it buys a battleship, builds a new post office building, or constructs a 

 giant dam. All of these types of expenditures, and many thousands of 

 others like them, create jobs and bring about a demand for labor. 



The total production of all such finished goods and services is called 

 the gross national product. In the prosperous year of 1929, the total 

 value of the gross national product was 99.4 billion dollars. Of this 

 total amount, more than 70 percent was sold to individual consumers, 

 about 18 percent was sold to business firms largely in the form of 

 plant and equipment, and the remaining 11 percent was purchased 

 by Federal, State, and local Governments (table 2). By 1933, in 



