Monday, January 20, 2014

Postblogging December 1943, II: Towards A Cold War

Wing Commander R__. C__., RCAFVR, O.C.
L__. House,
Isle of Axholme,
Lincolnshire, U. K.

My Dear Sir:

Father of my Beloved: I take up the brush in my feminine hand on no occasion of sad news, but rather because fortunate winds are blowing. That friend of whom you have been previously advised, had an acrimonious dispute with his employer over a New Year's engagement. It was the breaking point in their relationship, and he is now definitive that he wants out of his contract. He  appealed to us, as we were warned  he might, on the basis of blood and obligation incurred so many years ago. Because our friend is so much in the public eye, he can scarcely be seen visiting lawyers, or even have lawyers visit his hotel room. Your beloved cousin, my Uncle, has gone East to arrange meetings with H. C.'s lawyers and plot our next step, but it will take some time. 

 Uncle remains intent on resuming his correspondence in February, naturally enough. Indeed, he is attempting to draw our friend into his beloved electrical engineering investment scheme, and may have more news on this in his next.

Let me also assure you that James and I are also well. Your wife may have informed you that she summoned Judith back from Pasadena instant upon her arrival in Santa Clara, and she certainly did not leave California until I was under a watchful matron's eye. It seems like rather a fuss to me, but she and Judith are so stern, and so motherly, that I cannot bear to defy them. Nevertheless, Judith and I did accompany James on his trip to Tacoma, which, by the way, went very well indeed. I shall append an amusing story about it once I have finished doing secretary's service to Uncle.

We do, however, have news that may yet cast a shadow over your heart if the war winds on too long. While James is here on the West Coast for the duration of his assignment only, we have resolved that I will not be crossing the Atlantic again this war, and we have begun to prepare a residence en famille. The old house, unfortunately, is far beyond the available resources of material and labour. Moreover, even if we could repair it, it would only distress Great-Uncle's last days. Fortunately, the old coach-house will do quite well enough for three (for now), at least once the stables have been converted into something more domestic.

The only drawback is that the work is quite visible from the road. The locals are understandably curious about what the owners of 'Arcadia' intend, and less understandably opinionated about how matters should proceed. One of my contractors has amused himself by setting up a hand-lettered "Suggestion Box" at the gate. Oh, the rural round....

One final familial note. Let me see: I need a coining from Uncle's rather threadbare pseudonym system. Will it suffice to say that Miss "V.C." is the daughter of Mr. "N.C." of Chicago for you to know a young lady whom you last saw in pigtails? Well, pigtails no longer, and her father is wide awake to the implications of the high rejection rate of his product by the Army.

From Miss Ewe's Holiday

Chicago may continue to be windy and broad-shouldered, but this is one branch of butchering-to-the-world that is well past time to be retired into a shadowy investment trust. So now he reconsiders his social-climbing choice not to send his daughter to the Poor Clares, and I have the rather large charge of teaching her proper literary accomplishments. This is rather much to pack into a senior year, but the thought is that we might enroll her in Stanford, as I shall be Santa Clara for at least another year, war or no war. The agreement is that Miss V. C. will be allowed to believe that she is being prepared for missionary work unless and until she deduces the family secrets for herself.

Now, as I have mentioned, filial duty requires that I continue to prosecute Uncle's campaign to persuade the Earl, through you, that it would be a mistake to sink money into poor Cousin H. C.'s steel plant and "prefabricated house" schemes.

Aviation, December 1943

Briefing for October [That's what it says]

The Summary is not needed here, but the “Down the Years in AVIATION’s log reports that back in 1938, the Department of Commerce was looking at a $700 plane. The idea of a cheap plane is news to me, and alarming. Should aeroplanes really be marketed like automobiles?

An Alcoa ad asks, “How Good is that Spot Weld?” Destructive Metallographic testing is destructive, but Radiographic testing is not. Employ both methods, therefore, to establish quality …. And then occasional radiographic testing afterwards.

RCA ad: “Electronics is the so-called “dream science of tomorrow.’”The point seems to be that RCA is already doing the 'dream science of tomorrow.' Has any living mouth ever uttered a phrase such as 'dream science of tomorrow' without irony?

Line Editorial: “Free Enterprise: The Opportunity and Obligation to Compete” James H. Mr. McGraw, Jr.  thinks that in the real, as opposed to ideal world, competition cannot be perfect. Various factors put severe limits on the price sensitivity that perfect competition would require. Only the most extreme price sensitivity could prevent booms and depressions, and therefore we cannot count on competition alone to cure depressions, but, still, we must stand for as much competition as we can have, including the annoyances of anti-trust legislation. At which point the son of the man who founded the company finally finds his point, which is that unions are getting too powerful.

Aviation Editorial: “’44 Musts for ’54 Markets”

What will the industry look like in 1954? It certainly won’t compete with steel or food, but it will be big, depending on how the private airplane works out. Uncle thinks that investing in aeroplanes in 1946 would be akin to investing in shipbuilding in 1919. Twenty years of peace will not be good for the aviation sector!

America At War

15th AF now attacking Germany from the south. In a recent month, 20,000 tons of bombs were dropped on Germany by the Allies, and 1,387 German fighters were shot down. Fighter escort is increasing in strength, and the Army Air Force no longer has any intention (if it ever did) of fighting the B-17s and B-24s through without escort.  . . . What will happen in this respect when the new Boeing B-29 goes into action—in whatever theatre it moves first—remains to be seen.” So subtle is the scholarly pen that uses a parenthetical to change the past!
Here at home, the main thing is the industry’s 10% increase in production. “Nearly” everyone is betting on production hitting 9000 per month “before this year ends” and some will even go so far as the planned rate of 10,000. Donald Nelson says that the rapid rise from the old plateau of 7000 has been a great relief, and is due to increasing efficiency and standardisation of models.

On the Pacific front, the carrier force is “nearly as large as the battleship force,” which you can infer, the paper says, from memory or from old newspapers. The number of fleet carriers “can” be doubled in 1944, and the number of auxiliaries tripled, while the  new 45,000 ton carriers will appear in 194.

E. E. Lothrop and John Foster, Jr. “Let’s be Practiical about Postwar Plane Markets.”  The demand will be at best  a third of current levels. As Uncle says.

Agnew E. Larsen and Joseph S. Pecker, “What is the Helicopter’s True Commercial Future?” It will be a long time before people are commuting by helicopter, and, when they are, they will be built by automotive manufacturers, not aircraft.

Myles V. Cave, “Sighted Wreck, Repaired Same,” a member of a “fourth echelon” repair team, Cave’s team wanders rural England repairing American planes where they crash land.

Then they make time with the Doughnut Dollies. There are going to be a few angry scissors wielded on this photo Stateside!.

“They’re Trained to Fix it Under Fire." 

And in the Forest of Arden . . . 

James Montagnes, “Crew Competition Speeds Maintenance.” It’s what the RCAF does. Included is a photo of a “circular log-book desk.” Girls sit at the centre and ‘data’ is handed in from outside.

Edward G. Thorp, “Autopilot Gives Instant Control,” I have prepared a longer summary of this article for James, but here is a Kodak of the artwork. I know that when I first heard  "Minneapolis-Honeywell autopilot," I envisaged something not too far different from the cheery robot of the advertisements, but it turns out to be quite an elaborate  device spread all through the aircraft.

“Latest Machine Tools”

Gigantic machine tools! Because boys will be boys.

"Side Slips," Aviation's humour column, has a story about those charming ladies who are taking so many of the airline jobs nowadays. Normally, they’re pretty reliable, but one day one of these lovelies misses an important meeting. Why? Her supervisor asks the next day. “Had a date,” was the calm reply. “And with men as scarce as they are, a gal who wants to get married finds any date a lot more important than a dull old meeting.” I am not sure that she does our sex any credit, but the young lady in this story is not alone in her sentiments. All the boys overseas are to be snapped up by Doughnut Dollies, of course.

Or, worse, Englishwomen!

Aviation News

Allied strategic bombing gets ever heavier versus Germany, with 2000 planes sometimes seen in a day. The Me 410 is the German answer to the Mosquito. The AAF is getting ever more independent. “Air superiority is the first  requirement” of overseas operations. Navy Carrier Force Bigger, More Coming. The paper can’t help quoting “some” whothink that the carrier will turn out to be a “one war weapon.”

“West Coast Manpower Utilization Improves, But Materials Still Exceed Personnel” This is pursuant to ongoing discussion of the 9000 a/c interim target. One study shows that output is up 4,360 percent in West Coast plants, but labour is up only 933.%. On the other hand, North American Aviation has been refused permission to hire another 10,000 hands. The 37,000 available would be enough if they were just used more efficiently, says C. E. Wilson, chairman of the Aircraft Production Board of the WPB. Apparently, NAA was denounced by citizens of Dallas.

I was so appalled at this that I threw the paper out the window and it was caught by a shipfitter in the middle of his shift down at the Oakland yards. Then he went back to refinishing the coach-house stable. 

“Branch Stores, Incentive Pay Applied to West Coast Manpower Problem.” A recent house-to-housecanvassing campaign culminated with an Army-sponsored rally brought 40,000 Washingtonians to a job fair at the University of Washington Stadium. It sounds as though a grand time was had by all, but Boeing was able to recruit only 2700 of 9000 required in the last six week period. The “branches” are of Pacific National Bank and a Seattle department store, set up inside of Boeing plants to ease the living burden on employees. This actually makes sense. Not all of the absenteeim at the yards is men slipping out to work on the black market. Some of it reflects the near impossibility of getting domestic things done. Canvassing is also being tried in LA, and “two thirds” of the 50,000 boys who did summer work are to be retained on special programmes scheduling school work around part-time shifts.

“Boeing of Canada Retools," it will make Ansons as Mosquito trainers. To meet the volume of work, wing assemblies are being outsourced to Portland, Oregon and Nelson, B.C. facilities. I note the latter because I well remember that little town from our honeymoon.

“New Montreal-Britain record:” is reported by TCA 11hr, 56min, by a Lancaster transport of that airline.
Aviation Manufacturing
“Record 8,362 Planes Made in October, New High in Heavy Bombers”

“Transport Conversions Deemed Too Expensive.” B-17s and B-24s are not going to be converted into commercial transports, relieving would-be manufacturers of postwar airliners.

Raymond Hoadley, “Aviation Finance,” My, Goodness. A lot of money is flowing into aviation firm’s coffers. Boeing has paid out $1 dividends twice this year! Bell did a ten percent (1 share for every ten held), and even hardly-worth mentioning Beech did a $1 dividend.

“McGraw-Hill presents the 23 editors of Aviation, Air Transport, and Aviation News.” I find it amazing that Aviation has a single editor, but, in fact, the number is 23.

Fortune, December 1943

The cover illustration features Gothic angels to the fifteenth century design of German social revolutionary Tilman Riemenschneider, while the globe is the latest icosahedron globe projection by economics Professor Emeritus Irving Fisher of Yale. Inventor of the “Index Visible,” which made him a fortune, and founder of the American Eugenics Society, he also does geography! He is a modern Renaissance man, with interests in taxation, physical culture, and prohibition.

The Fortune Survey

“By the end of 1943, Americans will have saved the tidy sum of $84 billion.” It will be in the form of bonds and bank savings, but also in the form of paid-off debts, family and other private debts included.
So what kind of desires has this money built for future living? The paper decides to ask:

But first, consumer confidence :
Do you feel..
Oct 35
April 35
July 38
May 39
Feb 41
Feb 42
Jan 43
Dec 43
Better off
Worse off

People are very negative this Christmas. 

So what are they going to buy? The paper asks, what are you going to buy first. Cars rank highest, at 21% overall, but fully 13% of Americans are going to buy themselves homes. “A step that, if carried out in a short period, would revolutionise our living.” 

The paper explains. 

If 13.3% of families did build, this would lead to the construction of 4.7 million units, but the highest annual housing construction number in the US was 937,000, in 1925. The home-construction industry currently hopes, as opposed to expects, to build 500,000 housing units (so including suites in apartment buildings and hotels) a year after the war. This would meet the rate of increase in families, which is half a million per year. I do not have to pull out my slide rule to calculate a staggering deficit of completed homes, unless the construction rate increases markedly. This is the vision that leads dear "Cousin H. C." to pursue his vision of the prefabricated home. Uncle just observes that unemployment has idled many men who could be building homes. 

Clearly this is a serious matter if people's opinions at all reflect concrete intentions. So the poll’s compiler points the high place of other home furnishings on the list as indicating a "domestic inclination." Even 6% of Coloureds expect to buy refrigerators, and 1.4% of the high income group propose to buy air conditioning. I suppose that air conditioning will rapidly become the new way to be the envy of the neighbourhood. 

It is also pointed out that extending the poll results to the whole country on the basis of “first choice” sales and using 1941 prices, total spending is “only” 28 billion out of the $83 billion "out there."
21 billion

6 billion

468 million

232 million

158 million

Washing Machine
141 million

Air Conditioning
53 million

Fur coat
53 million

30 million

Radio, Phonograph,
And stereo
20 million

117 millioin

The concern is suggested by the prominence of fur coats on the list. This is a “first off the top of my head” list, and people might rethink so large an investment as a house in the cold light of morning.  Fortune is also gloomy about people being  gloomy. The poll indicates a large growth in the sense of hardship over the year. If people are anxious about victory, or their jobs, or the future more generally, surely they will save rather than spend?

"Half-smile wistfully for Daddy, everyone! Cheese!"

“The Farm Column”

As late as 1939, Glenn E. Rogers, Third Vice President of Metropolitan Life, was called America’s largest farmer, with nearly 2 million acres of America’s best farmland worth $120 million under his care. But in the first nine months of 1942,  Metropolitan’s farm sales have jumped to 6.6 million, to $15.6 million in the first nine months of 1943, leaving only $25 million foreclosed farms on the firm’s books. Less than a quarter of the 10,399 foreclosures of the Depression remain on the books. East of the Mississippi and on the West Coast, none do. It is the Missouri Valley that remains the laggard. Will this avalanche into a speculative boom? Possibly. It depends.

“Business At War”

The Building Trades are coordinating in Washington.  Discouraged by the current “private depression,” they are excited about postwar prospects, figuring that $8 billion will be spent on residential construction in the first postwar year, $12 billion in the second, and $18 Billion in the third. Two-thirds of new housing will be in the $3000-$6000 class, The Association will cut costs on labour to encourage this buying group and through standardisation. The Association seems pessimistic about the amount of money available to fund house building, though of course much depends on the way that this finance is mobilised.

“Trials and Errors”

Is the President isolated by Harry Hopkins, who has pushed the Adminsitration to the right, or by Wallace, who pushes it to the left? Or by both? What is his guiding principle? The New Deal? Hopkins torpedoes that. As bad as times are, worse is to come, due to the “Balkanization that threatens the U.S” For there is a terrible "Negro crisis" brewing in this country. (Other kinds of Coloured folk will apparently continue to know their place.) The Negroes are angry with Roosevelt, and so are the labour unions, and since they are against each other, the President is haqpless! Meanwhile, out on the Pacific Coast, everyone is pro-Russian, whilst in the Mid-West, the President is losing the all-important Polish vote. He is losing the coal miners, and those who oppose the coal miners even faster! All in all, the President is weak and rudderless, and the country is doomed.

Signed, Eliot Janeway. 

I have to admit that I giggled when"the West" was pronounced to be monolithicallly pro-Russian.

“Britain’s Balance Sheet”

Unlike the United States, which has made good its war production from unemployed labour and machinery, Britain has had to redirect existing capacity. Last year, the national income was 5.7 billion. Consimers spent 2.79, the government 3.47. The difference was made up by depreciation and by borrowing, with a deficit of 560 million. Now, it is unlikely that Britain will  ever  be able to produce as much as it did last year. Hours will have to fall from the current 52 hours/week currently, and at least some of those fighting or employed will not seek employment after the war. Technological advances will have increased output per head by 10 to 12%, and taking this into account, the postwar target should be a national income of 5.2 billion. How is this to be earned? Industry must transition to peacetime production. On the basis of prewar trends, that production will have to go to exports, which will have to be up to 33% greater than prewar due to liquidation of foreign holdings. This is too high: there must be artificial curtailment of domestic demand, so that imports do not rise too high. The Economist distributes the 5.2 billion as follows: 920 million to the Government, in very large share for national security but also social assistance; 3.464 to consumers, just equal to 1938, 816 million to liquidate wartime debt. This looks good for the British consumer, but the figure is overall, and the needs of reconstruction are massive.
And imports. The self-sufficiency school wants to cut back, but a highly conservative long-pull estimate  is 750 million in imports, far below 1938 –and far below the 950 million required for full employment. To cover so much in the way of imports, exports must rise 50 percent over 1936. The paper makes it sound as though this is an unlikely achievement. I hope for the sake of our future that it is too pessimistic.

“That Refrigeration Boom”

The prewar market was large, and the thought is that there is a backlog in demand. But the postwar market may be igger for other reasons. For while industry insiders are talking about getting back to the 4 million units sold in 1941 for $600 million retail, only 28 million of 40 million housing units in the country are wired  for electricity and can so take refrigerators, while only 18 to 19 million are currently equipped with refrigerators. So other insiders think that saturation may reach 100%, that is, that all housing units will be electrified in a surprisingly short time, and a refrigerator will be as universal a fixture as an indoor convenience is rapidly becoming. And then there is the prospect of 2 refrigerators in every household!  

In short, if turnover continues to be every five years or so, the future market may be four times the size of the prewar. Manfacturers are concerned that they may miss out on sales, due to a resumption of the "refrigerator wars" between the through distributorships and the department stores, which have a powerful tool in the form of their mail-order catalogues.  

 Meanwhile, Willard Morrison, the inventor behind the “DeepFreeze” line is getting into delivered frozen pre-prepared foods, which he thinks could be the Next Big Thing. There is considerable evidence that others agree with him, with Sears, Roebuck and others trying to get into the business., while restaurant chains might get into the act as well, distributing some of their signature specialties from central kitchens. All of this will require great care to maintain the cold-chain, and here is more good news for manufacturers, as currently much of this is done by ice. The future clearly belongs to "reefer" trucks and trailers with powered refrigerators

And then there is air conditioning. It was a bust prewar, but some households bought, and it might well make a comeback postwar. Uncle notices rather vague talk of combined heating and cooling units, and the market opportunity for them in large hotels. He adds, "department stores" and "office buildings." James,  meanwhile, points out that an entire number of his touchstone "Principles of Automatic Control" series from The Engineer was devoted to temperature control. In short, when a modern version of Macy's is thrown up, it will likely have a furnace and massive rooftop air condiitioners, and these will be connected by the sort of devices that Honeywell is putting into aeroplanes. It is a fairly precious form of electrical engineering, but goes to Uncle's stated preference for investing in the kind of gadget that goes into everything,.

“A Fleeting Opportunity”

Air Chief Marshal Harris of Bomber Command, and General Anderson of 8th Air Force agree that there is a fleeting opportunity to make the invasion a walkover by strategic bombardment. Harris talks in terms of enough bombers to put up a thousand plane force 10 nights per month, and 8th wants to achieve the same strength. There are only 40 industrial centres in Germany worthy of strategic bombing. Once they are all obliterated, the production war is effectively over. Hamburg has been done, and the Battle of  the Ruhr has shut Essen down. The next, logical step is Berlin. It is calculated that 15,000 tons of bombs are needed to eliminate Hamburg. So far, 8000 tons have been dropped there; and 4000 against a like total for Berlin. We have a long way to go. Will our forces be enough? Will the higher command allow the air forces the freedom to wage this great strategic bombardment on their own terms?

And now for a British-eye view of events this tumultous month.

The Economist 4 December 1943

“Out of Touch?” The Government might be out of touch.
“UNRRA Decides,” Something about postwar reconstruction and Germany’s part in it. Will Germany re-industrialise, or will its neighbours be encouraged to take over its place?

“Special Areas?”  The problems of the Special Areas may reassert themselves after the war. This would be a pity, as they have skilled labour and coal. But perhaps they have to get away from heavy industry and move towards “lighter” and “consumer” manufacture? Or coal-chemical? Or agriculture, focussing on “protective” foods?

“The Great Migration” has been set loose in Europe by the war. It will be an effort for the UNRRA to put the people  somewhere that they will want to stay.

Notes for the Week

“Three Power Meeting” focussed on the Pacific; “The Mosley Debate,” the paper supports the decision to release Oswald Mosley, now being debated; “Advance in Italy,” is slow because the creeks have risen and the mountains are unexpectedly mountainous. “Slow Motion,” the paper is concerned that there is not enough action on the Russian front. “Target Berlin:” 10,000 tons have now been dropped on the target.  But it is equal in size to Greater London, with only two-thirds of the population. It will take a great deal more than 10,000 tons of bombs to level it, compared with Hamburg. “The Mnister of Production,” and “Hush, Hush;” the question of how full employment was not achieved in the prewar period (“in 1939”), and might be achieved in the future under the Beveridge report is contentious in various ways, the paper reports. The Latins, as Uncle would say, are excitable; “Freedom to Starve;” Austrian émigré socialists are in a tizzy. Apparently there has been a defeatist/treasonous revival of interest in either or both of ‘Greater Germany’ and a ‘Danubian Empire.’Socialists advance dismiss the idea of a lack of Austrian vitality. But is this fair? Actually living in the Vienna in 1938, one got every impression of “lack of vitality:” unemployment, under-nourishment, an even  more-rapidly falling birth rate than everywhere else. Will Austrian freedom mean freedom to starve? The future Austria must live under a larger economic framework, whatever the socialists say. “New Measures for Mining,” there will be conscription by ballot, but this is just an admission of failure. What would solve the problem? Owners: a subsidy by effort, not production, so that the less economical pits will not be penalised for staying open under present conditions. Miners think that higher wages will remedy things, but this is regrettably impossible, as all workers would then want higher wages, and there would be inflation.  “Higher Milk Prices,” Dairy farmer are to be rewarded for their hard work with higher prices, part of which will pay the labour that works for them. “Portuguese Islands,” and “Exports” both concern our social triumph. Now that we are winning, General Salazar has condescended to be seen in public with us. It seems perverse that we had to be winning the war before we got the bases that would have helped us win them.

“American Survey”

“Subsidies and Taxes” The paper is very jealous of our American holidays, muttering of a “pre-Christmas spending spree of breath-taking proportions." This in respect to the lead item, covering Morgenthau’s attempts to get his budget through the House. The House refuses to take it seriously, and talks about the agricultural subsidies as a giant slush fund. Much of the agitation reflects, the paper thinks, jealousy on the part of farmers directed at the higher incomes of labour. The Mineworkers’ successes are singled out; but the paper goes on to add that the main victims of price increases will certainly not be farmers or labour, but rather upon fixed incomes. In short, because some pensioners and also the coupon-clipping rich will suffer, the miners cannot be allowed a pay raise.

“Hard Knocks for the Army” I must say that I feel rather badly for General Patton, who has had to keep up the side, with all the braggadocio which the army seems to expect of its generals. The paper agrees; everyone agrees. The issue now is the “Army authorities” who tried to deny the incident in the first place. There is also talk of the wasteful drilling of oil wells in the far Yukon.

“Petrol Civilisation” A nice segue to the the paper being alarmed by waning American oil reserves and looking to the Truman Committee looking to the Middle East. The dwindling away of American petroleum also now concerns Mr. Ickes.

“Canada’s Empty Spaces” Are nowhere near so vast as is supposed. The country will graciously take skilled workers, though.

“Hungarian Policy” Is to loot the Jews to pay off the gentry.

“Irish Retrospective,” An economist who lectures at Dublin is quoted to the effect that all of Ireland’s troubles are down to the potato,  which first made its labour “disgracefully” cheap, and then failed, leading to all those deaths, evictions and emigrations. The little potato is an unmitigated evil, although I have proclaimed a truce for the duration with its delicious, French-fried golden specks of starch.

“Germany at War” the old apprenticeship system is breaking down, as young people can get on in the factories directly. The Party seeks to reinstitute proper discipline. Even in Germany, the younger generation lacks all decorum! I shall have to twit Uncle about this.

The Business World

“The Dollar Problem –II” Is that the dollar is too strong and the pound is too weak.

The Economist, 11 December 1943

“Power and Peace” Something about the postwar settlement? My eyes quite glazed over when the illustrious name of General Smuts was raised. “First Come, First Served?” Perhaps some part of capital reconstruction will be put off to meet consumer demand for “clothing, shelter and maintenance?” The paper disagrees, seeing little need of such fripperies. Well, we of the weaker sex find this cold comfort, as, naked and homeless, we march to shining factories to make a better future. Like a dog to a bone, the paper returns to the same subject with “Consumption and Investment,” invoking the name of Lord Keyens on the proper balance of consumption and investment. This seems to me like the ‘supply and demand’ upon which The Engineer likes to dilate, Having met both, I would take Mr. Keynes over The Engineer in a heartbeat.

Notes of the Week

“The Turks in Conference” Uncle made a joke to the effect that the Turks have stopped our breath with their “Stay out of World War II” mazurka. The Economist, as economists will, keeps looking at its watch and wondering when it will be over. That’s  not the point! I nudge the paper, hard. Settle down and enjoy the performance. We then segue to Persia, as it is right next door, and Russia and Britain are having a spat. I hope there shan’t be tears, and thank the heavens that Fat Chow has reached Istanbul.

Unfortunately, for us, Fat Chow now knows that he will be allowed to marry my sister when he returns to Hongkong, and he is full of fire. his new friends have opportuned him with the prospect of great things out of a visit to Berlin, and even if they labour under misapprehensions about Fat Chow, they are not wrong about this. Fat Chow has passed his package on to courier and agreed to go through with the invitation. My heart is in my throat.

 “Policy for Agriculture.” Labour has intimated a policy that might lead to higher wages for farm labour. The paper is appalled, as this would lead to higher food prices, and so what the poor, naïve labourers think would be good for them would actually be bad! My slide rule is not up to the task of determining whether low food prices make for disgracefully low labour prices in degenerate Ireland, or competition and progress in old Manchester. Perhaps both. It has taken some distance to help me appreciate how obsessed Britons are becoming with potatoes.

“Italian sideshow:” if we are not take Rome by the time that the spring fashions are released, attention will turn to Paris, by way of beachwear. I know, Father, I am in danger of only amusing myself!  Speaking of the excitable set, Norwegians and Yugoslavs are &tc.

American Survey
“Industrial Incentives –Two Models” by Our Correspondent in Ohio. Two Cleveland firms offer very different models. The Heintzs offer high bonuses to executives and high wages to labour. Lincoln Electric, by contrast, offers bonuses to labour as high, or even higher, than their wages. Mr. Lincoln is now publicly defying the Navy Board’s demand that he return $3.25 million of his 1942 corporate profits of nearly $5 million on the grounds that they have gone out as bonuses, whereas Heintzs' is in the pink, as their money has gone out as wages, much of it for overtime (84 hours a week being the standard!), but also as a dizzying array of “benefits” ranging from health insurance to piped-in music in the plant to pensions to steam bathes.

I asked aloud how one could work so many hours and the fellow painting the ceiling pointed out that right at that moment he was well into his fourth hour of overtime for the week at the Richmond Yards. Only someone as cynical as Uncle would suspect that the Heintzes are padding their cost-plus contracts by neglecting to check the time cards.

I wish that I had remembered to clip the ad in Fortune that announced the discrete services of a firm in Philadelphia experienced in the matter of arranging the immediate private sale of war-work firms ahead of the looming peace.

“Down on the Farm” Farm incomes have risen very quickly in the last two years, from $761 in 1941 to 1320 last year, perhaps to reach $1500 this year. Distribution has become less unequal, although the upper 10% receives 37% of all income. “Much” of the increase has been eaten up by the increase in the cost of living. I quote, because the estimated increase in living costs over the same period is from $823 to $981, and this seems an odd definition of "most." Poorer farmers are living better than ever, because they could never afford the standard of living permitted by current rationing before. Richer farmers are feeling the effects of rationing and shortages, and instead saving. Farm debt declined in 1941 by 1.6%, in 1943 by 5.4%, and in 1943 by 10%(!) “Nevertheless, black spots remain.” Farm homes are in poor shape and are not being maintained, the provision of medical care and rural education have declined due to call-ups, tyre and gas rationing have hit home, farmers are still not enrolled in the social security retirement scheme.

It is supposed that with all of these grievances, farmers will go back to the GOP.

“The Soldier’s Vote” The Senate has set aside a bill that would permit a single Federal ballot for absentee servicemen, merchant sailors and the like. That is, it will be the responsibility of the states, which are not expected to be able to organise a worldwide ballot. The paper manages to notice that if states administer their own ballots, Jim Crow will be extended to Coloured soldiers. It does  not appear to notice that the opposite is true! “Appears,” I think, will be the focus.

“Inflation in Eire?” The cost of living has risen 64%, the amount of money in circulated from 18 to 32 million, and bank deposits from 119 to 162. This does not mean, says Our Correspondent in Dublin, that there has been inflation. The national income has risen from 160 to 200 million since 1939, wages have increased 20%, but “there has been no vast expansion of working class incomes such as has taken place in Great Britain.” In fact, by attempting to control prices, profits and wages, much of the money seems to have been kept where it is meant to be, in the bank and Post Office accounts of tenants and landlords. No doubt with this sensible policy, the runt of our old archipelago home will soon catch up with the pick of the litter(?) (My dictionary says that I just missed a chance to drop “pelagic” into the conversation!)

“Latin American Coffee” Due to something about trade  balances, America will have to continue to import very large quantities of coffee from the Latins. Now there I go, writing “have to,” and dissolving into helpless laughter at the paper’s so missing the point.  Judith and the painter are looking at me strangely. The paper requires some straightening out about Americans and coffee!

“American Banking in Wartime” Apparently, more people have gotten out of debt, and more people have gone into debt than at any other time in the history of the Republic. I have no head for figures, but is that not how it must work? Anyway, money in circulation has now passed $19 billion, and bank deposits have increased largely, and, it is now supposed, will remain at this higher level in the future as more people accustom themselves to bank savings. Money is not being invested as much as it should be. (There is some discussion of how the Federal Reserve works that makes this no clearer to me.) 

Meanwhile, the public debt stands at $168 billion, up from $96 billion  a year ago, but spending is still only 10% higher than it was in 1916, and the projected deficit is down, for tax revenues have  been gigantic. “The reverse side of the national debt picture concerns the individual who is paying his share of the war costs, buying his share of the Government’s obligations, putting money in the bank, opening bank accounts at an unprecedented rate, and paying his debts. 

Do not laugh, sir! We have three such individuals living in the cabin! Tho’ I do not know if they would be so diligent had they not their wives to nag them. Just last week I drove with Mrs. Kelly into San Jose to help her open up a “joint savings account.” (And to inspect the Dorsa plant, where Henry might have a lead on a post-demobilisation job.) If the experiment goes well, she says, she might even take up cheque-writing, like “the Missus.” I very much doubt that I shall be Mrs. Kelly’s “Missus” for very much longer, though I have been asked to stand godmother, and that I will most gladly do, letting lightly pass the deception as to my being a Roman communicant. . . .

There is more. A Congressman supposed in public last spring that people are borrowing to pay their income tax. Not only is this not true, but the most unlikely investment trusts are springing up to find a place for money once spent, on for, example, car loans. Americans might have a reputation for being terrible spendthrifts, but “total consumer installment loans” have fallen from 1,428 billion to 928, commercial loans to 281 from 521, small loans from 481 to 363, industrial from 253 to 170, credit union loans from 173 to 114. Even pawnbrokers are complaining that no-one needs their services!

Business Notes

Professor Varga of Soviet Russia pooh-poohs Mister Keynes and Mister White’s stabilisation fund scheme for restoring world trade, and expresses a preference for the gold standard. This is either as demanded by the theory of true communism, or just possibly might have to do with Russia’s status as the world’s greatest gold producer. Apparently, Mr. White’s scheme would be even worse than Mr. Keynes, in case you are interested in knowing who to back as thefirmest bulwark against World Bolshevism. The paper jokes about this more cruelly than I!

“Cavilling for the Pits” The paper notices the scheme of a random lot to condemn the victims to the coal mines and applauds, but suggests that perhaps something should be done about accommodation in the mining villages. If we are condemning boys to be coal-miners (for I think their parents are wiser about their prospects of liberating them from the mines than is the paper), at least we should arrange for them to have pleasant miners' cottages.

“Post War Foreign Investment” and “Shipping Freight Markets” appear as issues in this number. Expect fuller comment from Uncle by the usual channels.

“Pre-fabrication of Houses” In Britain, as in America, the future belongs to prefabricated houses, all alike in appearance and size. Honestly! Do no women write for this paper at all? Seek your economies elsewhere.

“US Patent Reform” The paper is quite disappointed that the report of a recent American Commission refrains from scolding Cousin Jonathan, instead endorsing the American patent system in every respect and calling for its emulation by the world. I  do hope that a Commission of the same philosophy is struck to study American real estate law!

The Economist,  18 December 1943


“Shall We Be Poorer?” Lord Woolton has suggested that Britain will emerge from the war a poorer country. You might have noticed the controversy, and the paper shares its opinion, which is that he has the right of it, as Britons shall have to scrimp and save to rebuild the nation’s productive power for 3 years or so. That being said, the paper thinks that he makes too much of the national debt, which, after all, is only an accounting identity(?) But the bombing and the sunk ships and the liquidated investments (I feel a  little guilty here.)

Moving on to concrete numbers, the paper quotes “Professor Bowley and Lord Stamp” as estimating that from 1911 to 1924, Britain’s total social income rose 1 to 2%, while income per head fell 5%.” Another way of putting it is that output per person working was 7% higher in 1924—27 than in 1911—13, while the income per head was about the same. Without unemployment and the rise of part-time labour, the national income might have been 10 to 15% higher.  After the next war, we can expect to see the resumption of the prewar trends overall. So, if unemployment is avoided, and foreign trade resumes, average income per person might be 10% higher in 1948 than in 1938, not all of which may accrue to the standard of living of the people. But without the war, the increase might have been closer to 25%! “The economic cost of the war . . . will lie in the fact that we shall be poorer than we might have been.” But wasn’t the paper concerned in 1938 that our low unemployment and booming economy was due to rearmament? These things go right over my head.

“Power and Fear” General Smuts thinks that Russia is the “colossus bestriding the continent” of Europe, or some such. Or to the contrary. Or he thinks so, and is wrong. Is it too womanly of me, sir, to find worries about the “Russian bear” old hat? And I am too young to own an old hat! I hope. Please don’t contradict me, or I shall be so very cross!

“India’s Economic Needs” Attempts to get more food out of Indian agriculture have simply driven up prices. While industry has done well, it is supposed that India needs a Ten Year Plan of investment in railways and rural electrification and such to accomplish an “agricultural revolution.” But the paper wonders if India, with all of its sectarian divisions, is capable of such a thing. Perhaps it would be better for it to continue to bear the white man burden for a bit longer? Or am I misquoting the poet? I am only my father’s daughter in this.

Notes of the Week

Latins are excitable.
“Sunday Entertainments Again:” The Lord’s Day Observance Society is campaigning against Sunday performances for the troops, invoking the Sunday Entertainments Act. The paper thinks that if the welfare of the troops is not to be left in the hands of “a few cranks and reactionaries,” the House should bloody well do something about it. Uncle wonders if the House ever listens to anyone other than vocal minorities of cranks.

The people of the Balkans are excitable. As are Finns, and Latins, specifically French in Algeria.

“The Influenza Epidemic” Early evidence is that there is not to be one. This year. But next year. . . Oh, please let this war be over by next winter.

“Wheat Supplies,” Another anxiety relieved, as the UNRRA reports that there is enough to meet the needs of the currently occupied countries. The supply will continue to be sufficient if the war ends next year; but production will probably continue to fall, the size of the next harvest cannot be predicted, and much depends on how much is diverted to feed livestock and to industrial users.

“Mounting the Winter Offensive” The German counter offensive in the Kiev salient goes on. “The danger to Kiev has considerably increased.” Looking back even after only two weeks helps put this in its proper perspective, but the fear was real enough!

American Survey

“California Boom”  Recent surveys show that most of the migrants brought in to work in Southern California’s aircraft factories intend to remain there after the war, even in the full knowledge that most of the plants will close, and that Federal and state authorities have warned that the area “may be one of the most seriously distressed industrial districts” for a few years. Of Los Angeles's 7500 factories, 2000 are new since 1939 and have never made anything save war goods. 1000 of them are in aircraft accessories, and 5000 others specialise in tools, dies and machines. Before the war, Los Angeles County was far less industrially developed than many eastern centres. To meet the sudden demand of the wartime aircraft industry, a whole southwestern feeder zone built up. I assume the chain of thought is that this is also threatened.

BUT, on the other hand, agriculture and “apparel” have built up to meet the needs of the region, power supplies have been secured, iron and steel production is up, molybdenum, tungsten, zinc, lead deposits have all been discovered, and the synthetic rubber industry is supposed to be capable of rapid expansion.
I think the real reason that Uncle left his bundle of old Economist numbers in Palo Alto is that at this point he couldn’t go on reading. Iron! Steel! Synthetic Rubber! Los Angeles to be the new Tyneside! It may have escaped the paper's attention, but California has already had a mining boom, while the synthetic rubber industry can only expand to the limit of public subsidy and at the cost of pound sterling are earnings.  At this point, the writer makes one small concession to modernity.The plastics industry might take off. Is this not a rather more logical "value added" use for the region's oil than is synthetic rubber?

“Third Party Threats” This week, Mr. Wilkie has refused to confirm or deny rumours that he has considered leaving the Republican Party for a third, while southern Senators were enraged and ready to revolt over accusations that they had “entered into an unholy alliance” with the Republicans to kill the Soldiers’ Vote Bill for fear that it would lead to Coloureds voting. 

Unfortunately for them, Senator Byrd declined to place himself at the head of the revolt, and it all blew over, subject to the President doing nothing further to press the issue of letting soldiers vote. The next para down, “Another Blitz,” points out that the Wilkie speculation has much to do with Mr.Landon and Mr. Hoover’s unwillingness to rule out having a terrible tantrum over the idea of approving of the Administration’s foreign policy. I will not be unladylike and express my opinion of The Engineer.

“NAM And the Future:” the annual meeting of the National Association of Manufacturers” was marked by Mr. Sloan of General Motors graciously committing to spend $500 million on expanding plant if there was tax relief on investments and the like. In the opinion of the Post-War Committee, industry will only be able to find new outlets of production if the most energetic measures are taken to open new methods of distribution and “consumer wants” are increased somehow. I confess to being a little perplexed by this, as it is quite clear  that consumers want new cars, new houses, and new everything else.
But, apparently, they will keep their money in mason jars unless taxes on enterprise are reduced. The altruistic instincts of the American common man are sound.

“Manpower Politics” The President has signed the bill that delays the drafting of fathers. This reaction to public opinion naturally leads those who are not fathers to suggest that there is a terrible shortage of manpower that makes the delay nugatory. In spite of cuts to war production, war industries are expected to need a million new workers by next July.

“Inflation and National Unity” Congress has allowed the 8 cent an hour increase for non-operating railway employees and a 35 cent a barrel increase in the price of oil, and Mr. Charles Wilson of the War Production Board and Secretary Byrnes are appalled at the lack of national unity. Mr. Wilson supposes that there will be a “right-wing reaction among some sections of capital,” but the paper holds the danger of reaction to be more general.

“Germany at War” Uncle found this dissertation on Germany’s difficulties in procuring strategic metals, and the lengths to which its metallurgists have gone in finding substitutes fascinating. His little margin note suggests that there might be profit in the substitutes, and new possibilities for his beloved electrical machinery if they prove economical, necessity being the mother of invention, and all of that.

“Motorways in Britain”
A thousand miles of new motorways are needed. The paper thinks that the road-building programme might take ten years or more.

“Premium Bonds in India” the Government of India’s anti-inflationary policies of forbidding the hoarding of essential produce and of selling gold on the open market have had some effect, and now it I is introducing a state lottery bond to soak up “redundant purchasing power.”

-There is trouble with China’s exchange apparatus (as you will have heard), in the coal mines in Britain, and with the “industrial ten,” the extra clothes coupons issued to employees in certain sectors of British heavy industry. Cotton workers will get a pay-raise.

The Economist, 25 December 1943


There is trouble over Brazilian loans; the Turks dance on. Jugoslavs, Bolivians, Swedes and Australians(?) are excitable. The idea of a National Minimum Income combined with the universal income tax is to be deferred in Britain.

“The Future of Coal Mining” is bleak, as no-one wants their son to be a coal-miner.

“The Baltic Front and Ukraine” it is hoped that the Russian offensive in the north will take pressure off of Kiev.

“A Liberal Revival?” The recent byelections have led to talk that it could happen, and the paper should like it, if it could, but it probably can’t. Isn’t the Secretary of State for Air the Liberal leader? I was only a little girl when Mr. MacDonald was accused of using the Air Force to assist him in campaigns, but I remember it because the pictures of him in flying gear were so dashing. Or am I thinking of another flying politician?

 “Property and Income” Mr. Beveridge is in trouble for saying that “80 percent of the private property in this country is owned by 7 percent of the population.” The paper explores the statistics and shows that it is true –and that it is  necessary to go as low as £1000 in holdings to encompass 7 per cent of the population. Matters stand a little differently with respect to income, but the same 7% draw 28 per cent of the national income.

American Survey

“Labour-Management Councils,” such as exist in Britain, are being tried in Massachusetts. The paper finds this worthy of almost a page and a half of prose, ending with the curious observation that the strongest proponent is the business partner of Lou Maxon, the man who flounced out of the Office of Price Adminsitration with a Parthian shot to the effect that it was a threat to the whole American way of life. So controlling wages is vital for national unity, while controlling prices is a threat to the American way. So much is clear.

American Notes

“The Home Front” Congress, railway workers and farmers are attacking the Administration’s apparatus of anti-inflationary measures, and the President is surely doomed. Does Mr. Janeway write for the paper in some guise?
“The Future of Contracts” If the war ended today, there would be $75 billion in outstanding contracts to be wound up. The speed of settlement is thus so very important that I can almost read this –no, my eyes just nodded.
Senator Butler of Nebraska and Colonel McCormick are ridiculous, at least to the paper. The Office of War Moblilisation has relaxed some price ceilings that are hindering the production of essential civilian goods. The paper is too decorous to talk of details, as did Time, but of course this concerns textiles and necessities.

“Family Allowances in Eire” The proposition is that raising children is too expensive, and that there is no intention to affect the marriage rate or birth rate, as this would sound all-too Romish, I imagine. It being supposed that the tax burden to pay for it will be met through excise taxes, Our Eire Correspondent feels that the effect will be nugatory, the extra money being spent on a stout at the pub coming back into the house in a cheque. If the paper is to continue to bemoan the poor American attitude towards Britain, it would do well to remember that Americans can read, and that many Americans have Irish connections.

“Palestine’s Inflation Problem” is much the same as India’s; too much money, too little goods, too little gold and silver to be sold at public auction to “soak up excess purchasing power.”

Russia at War

“The Third Winter” Russia is short of labour, and of tractor spare parts against the spring planting.

Business Notes

The demand for notes at the year’s end Christmas season is up to 1.018 billion, but supply is adequate to demand. Farmers are upset that increases to prices do not quite make up for increases in wages, but the minister points out that hitherto, their receipts have risen faster than their expenses, and to a much greater extent than the Ministry expected at the time due to increased efficiency and productivity, so the farmers are just going to have to live with it. Farmers, my dear Minister, are never going to just live with it. We shall complain and complain, and the price of oranges, dear sir! Uncle says that we cannot continue in citrus after the war. Neighbours look to almonds and even vines, but he is reluctant to go into a tree crop when there are so many houses to be built.

Now, as you will know, dear Father, I write this after Epiphany, and this means that I have two numbers of The Economist to hand that Uncle will weave into his summary/special pleading of next month. But now I am going to cheat, and discuss just one article from the 1 January number, first because it caught my eye with a phrase that always bothers me, and because I have recently been reading Great-Great-Grandfather's journals, and specifically his account of Mauritius during the Napoleonic Wars. Well, here is that 716 square mile Indian Ocean outpost, in the news again.

One Major Orde Browne reports to the Foreign Office that since its 415,462 people, including 268,885 Indians, and the remainder are Africans, Chinese, Europeans and mixed blood, and are “poorly paid, undernourished, sickly…” Thus, there is no point in increasing their wages, since this offers “little prospect of improved performance." Browne goes on to note that a high property qualification restricts the electorate to 10,000 of the population, and that it is scarcely suprising that the sugar interest for some reason dominates the legislature, as it does the economy. Unemployment is high, especially outside of the sugar harvest, as secondary industries scarcely exist. and wages, it is to be reiterated, are low while congenital illness is rampant. Since employers stopped extending a ration as part of daily pay in 1938,malnutrition has been added to the burdens born by the poor. There has been industrial strife, occasioned by the odd combination of labour shortages with a falling standard of living for labour. It seems that the working poor naively believe that their hunger and poverty might be remedied by increased wages.

Major Orde Browne, however, sees the flaw. Being foolish, the poor will simply eat their preferred white rice, a food low in "protective qualities," and remain hungry and sick. As he has already observed in his odd introduction, this will mean that higher wages will not fetch higher productivity. A more sensible policy would be to  allot some of the land currently being reclaimed in the northern corner of the island to subsistence potato farming lots. This will allow the native population to occupy themselves and feed themselves in such seasons as they are not required to work on the sugar plantations and perhaps in some vague way lead to diversification into tea and the like. 

Major Browne is too modest to completely spell out the advantages of his scheme, which will include maintaining the price of sugar land against the sale of the reclaimed sector, and further raising land values by shifting some of the existing acreage out of sugar.

Perhaps I have been round Uncle too long and have acquired his cynicism, but after talk about low wages and potatoes in Ireland and low wages and low food prices in England; and simultaneously of generous payments to farmers in England and America, I can only hope that Major Browne's sleep is haunted by images of starving "mixed blood" children. But I doubt that it is, and expect that he sleeps the sleep of the just, exhausted by the noble work of keeping the profits of landlords high and the wages of labourers low.

Now, as I have told you, your wife would not part with me until Judith was on hand, but, in spite of her concerns, did not forbid me to go to Seattle with James, who was called to an inquiry at the yards into the jury-rig of the steering system that either saved USS Lexington or nearly wrecked it. James was able to work out a nice little algorithm modelling the system, and the slide rule he used was so prepared that he was able to calculate the point where the rudder would 'stick' for every increment of power. The court was impressed by this demonstration of the correctness of Captain Stump's interpretation of events that it recommended that the Lexington jury-rig be extended to all ships of the class. Captain Stump was grateful, and James had occasion to speak with him about Wong Lee's son, with favourable results, provided he passes his course.

So much, then, for my husband's little professional triumph, and the chances of our man Wong's son. The amusing part is that there was an Army Signals Corps officer there, who, thanks to his minor movie star status, had landed an assignment making training films, in this case being loaned to the Navy to film an instructional movie on installing the manual emergency steering system.

You may guess to whom I refer, a distant relation not unknown at Santa Clara! It is a small world. In person, he looks only a little like his father, and is handsome and far more charming. Though in contrast to his father's vaunted intellect, he struck me as entirely at sea and, worse, uninterested in getting a grip on the process. Imagine my surprise when, after the session, he pointed out that James put the slide-rule away in a very 'feminine' case, and asked if it were mine! Which, indeed, it was.

This is a man to watch: incurious does not mean unintelligent. Even the affability may be a cover for ambition --of various kinds. Judith was able to procure a used telegraph pad from a Mexican hotel maid. I gather that certain persons sought an eye on the process. Were you aware that our soldier-film-maker corresponds with the Federal Bureau of Investigation? 

That, however, is only one thing to be distressed about. He is also much too gallant, both with Miss V.C., and with ranch house housekeeper, a girl of the same age. In the former case, I suspect his father's purposes. In the latter, it is a matter of a notch on the belt, as they say. While our gallant does not need to marry into money, the appearance of having done so will provide a more convenient explanation for the passage of some share of his father and grandfather's fortunes than some feather-bedded employment. And it will continue a family tradition, Uncle suggests, considering his father's decision to marry an actual engineer.


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