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The pinch is already on those durable consumer goods (like automobiles) that compete with arms for materials. But Mr. Keynes thinks the U.S. can still avoid both general price fixing and inflation, especially if Leon Henderson keeps a strong hand. "His is the most difficult job," said the mellowed Cassandra. "You must give him every support."
Although the U.S. defense boom had not yet reached the point of retail-price inflation, Keynes's New Deal disciples were already giving his basic idea a startling twist. A few Administration corners buzzed with it. Provoked by 1 ) the problem of U.S. morale, and 2) the perplexing question of what will happen to the economy when defense spending ends, the New Dealers thought about killing both birds with one stone by giving U.S. youth a Keynesian lien on the Peace.
Too extravagant to be mentioned out loud yet, the idea was a sort of prepaid Bonus: to issue bonds to the boys in the training camps. Trainees now receive $30 a month after four months service. But the minimum-wage law puts a floor of around $50 a month under wages. If the trainees were put under the Wage-Hour Law (ignoring the cost of their room & board), all of them would qualify for a pay boost of $20 a month.
Such a $20 pay increase could not be paid in cash, since now is no time for more consumer spending. The boys would get bonds which could not be transferred, but which the Government would redeem—with interest—beginning in five years.
At $20 a month, this would come to $240 a year, or considerably more than most of the trainees (or their families) have been able to save in a year. At the rate of 1,000,000 trainees a year for five years, a cushion of $1,200,000,000 of deferred purchasing power would have been stored up under the economy.