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The number of jobless, 3,500,000 at year's end, was swelling week by week; yet jobs went begging because no one would take them at the low wages offered. The earnings of corporations dropped lower than they had been since 1942, yet Wall Streeters boomed the stock market to the highest peak in seven years. The repeal of the excess-profits tax, which had been blessed as a spur to production, was being damned by consumers and cartoonists as one reason goods were being held off the retail market till the new year.
The Primrose Path. The beginning of 1946 looked deceptively like the entrance to a path of profit. In bonds and savings accounts, U.S. citizens now have some $130 billion, and they are eager to spend much of it. Even the conservative estimates of public demand seemed fantastically high.
At best, U.S. automakers never made as many as 5,000,000 cars a year. Yet now there was an estimated demand for some 6,000,000 cars a year for the next few years.
Washing-machine manufacturers, who had never made more than 1.9 million a year, now must set their sights on 2.5 million a year. It was the same story all down the line, from suits to soap flakes, there was overwhelming demand. Loudest of all was the demand for housing.
No more than 937,000 houses have been built in any year of U.S. history. Now there is an estimated demand for 16,000,000 units.
The public not only needs these things; it also has the money to buy them. In buying them, it will create prosperity and thereby more power to buy. On this charming primrose path what mantraps were waiting?
The most immediate trap was that the nation may not prove able to organize the work that it needs and wants done. Having accomplished a superlative job of organizing the work of reconversation, the U.S. might seem certain to succeed in the task that lies ahead. Yet on at least two scores there was reason at 1945's end to doubt how well the work will be organized.
Mantrap No. 1. The opportunity to building 16,000,000 houses (the accumulated deficit of the war years piled on the years of depression) may prove a liability. For in the building-materials industry, neither management nor labor, with their high rices and restrictive preactices erected as self-protection, is prepared to build fast of efficiently. And neither of them yet seems aware of the magnitude of the job required. If they built at the peak boom rate of 937,000 houses a year, the 16,000,000 houses could be built in 17 years—but meantime practically all the other houses in the U.S. will begin collapsing of old age.
Just to stand still—to preserve the present housing shortage without allowing it to grow worse—the U.S. will need to build far mroe than 937,000 houses a year. If the U.S. is to have the units which it needs, then approximately 1,290,000 houses will have to be built each year as replacements (assuming an average life of 30 years per house). If the present shorage is to be made up in 20 years, the average number of houses built will have to be around 2.9 million for the next two decades. Building labor, with its featherbeding practices and limitations on union membership, is not keyed for such an effort. Neither are the makers of brick, the hewers of lumber or other manufacturers. Neither are private builders or Government planners.