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Special Message to the Congress Presenting a 21-Point Program for the Reconversion Period

September 6, 1945

To the Congress of the United States:

I regret that you have been compelled to cut short your recess period. I know, however, that you have been just as eager as any of us to meet the problems which naturally have crowded down upon us with the surrender of the Japanese.

You have cut short a well-merited vacation in order to do so. I hope that the American people realize as fully as I do, that from the very first days of the emergency, the Congress has most energetically and patriotically devoted its time, energies, and capabilities to the immediate problems of war and to the long-range problems of peace. The legislative branch of the Government is entitled to its full share of credit and glory for the victory of the Allied armies. I wish to take this opportunity on behalf of the Nation to congratulate you on the great victory which has been won--in which you played so important a part.

The Congress reconvenes at a time of great emergency. It is an emergency about which, however, we need have no undue fear if we exercise the same energy, foresight, and wisdom as we did in carrying on the war and winning this victory.

The sudden surrender of the Japanese has not caught us unawares. President Roosevelt, as early as the Fall of 1943, began to set up machinery which he foresaw would become necessary to meet the reconversion period. The Congress in its wisdom has adopted some of that machinery by statute, and has improved and added to it. As a result, Government agencies, for some time, have been able to plan for the immediate and long-range steps which now have to be taken.

As the Congress has undoubtedly noticed, many steps were taken immediately after the surrender of the Japanese. Many more have been taken since.

The process of reconversion will be a complicated and difficult one. The general line of approach to the problem is to achieve as full peacetime production and employment as possible in the most efficient and speedy manner. The following policies have been laid down and will be followed:

(1) Demobilize as soon as possible the armed forces no longer needed.

(2) Cancel and settle war contracts as quickly as possible.

(3) Clear the war plants so as to permit contractors to proceed with peacetime production.

(4) Hold the line on prices and rents until fair competition can operate to prevent inflation and undue hardship on consumers.

(5) Hold wages in line where their increase would cause inflationary price rises. Where price ceilings would not be endangered, collective bargaining should be restored.

(6) Remove all possible wartime government controls in order to speed and encourage reconversion and expansion.

(7) Keep only those controls which are necessary to help reconversion and expansion by preventing bottlenecks, shortages of material, and inflation.

(8) Prevent rapid decrease of wage incomes or purchasing power.

The major objective, of course, is to reestablish an expanded peacetime industry, trade, and agriculture, and to do it as quickly as possible.

Obviously during this process there will be a great deal of inevitable unemployment. What we must do is to assist industry to reconvert to peacetime production as quickly and effectively as possible so that the number of unemployed will be swiftly and substantially reduced as industry and business and agriculture get into high production.

The Government is now doing what it can to hurry this reconversion process.

Through contract termination procedures it is providing quick payment to contractors.

It has released controls on practically all materials which are necessary for peacetime production, reserving only those few in which there is still a critical shortage.

It has made arrangements for credit facilities for industry.

By plant and surplus property disposal, it is helping private enterprise to get started again.

In the consumer field the Government has released controls over articles which were needed for the war in such large quantities that civilians had to go without.

For the information of the Congress, I am submitting as an appendix to this message a report by the Director of War Mobilization and Reconversion showing what has already been done by the Federal Government in reconversion.1

1Mr. Snyder's report, dated September 4, 1945, and entitled "The Transition: Phase One," is printed with the message in House Document 282 (79th Cong., 1st sess.).

There is much that the Congress can do to help this process and to tide over the period between now and the time when reconversion is completed and civilian jobs are plentiful in a stable economy that provides full production, full employment, and a high standard of living.

I. UNEMPLOYMENT COMPENSATION

The end of the war came more swiftly than most of us anticipated. Widespread cut-backs in war orders followed promptly. As a result, there has already been a considerable number of workers who are between jobs as war industries convert to peace. Other workers are returning to a 40-hour week and are faced with a corresponding reduction in take-home pay.

This has led to a natural feeling of uneasiness among the rank and file of our people. Let me emphasize that there will be no reason for undue timidity. A vast backlog of orders may soon make possible the greatest peacetime industrial activity that we have ever seen. But this can happen only if the Congress and the administration move vigorously and courageously to deal with the economic problems which peace has created. Then there need be no reason to fear either the immediate future or the years that lie ahead of us.

Determined action now will create the atmosphere of confidence which is so vital to a rapid reconversion with a minimum of unemployment and hardship.

No matter how rapidly reconversion proceeds, however, no amount of effort or planning will be able immediately to provide a job for everyone displaced from war work. Obviously, displaced war workers cannot find jobs until industry has been regeared and made ready to produce peacetime goods. During this lag the Government should provide help. The cost of this transition from war to peace is as much a part of the cost of war as the transition from peace to war--and we should so consider it.

This course is recommended not only as a matter of justice and humanity, but also as a matter of sound business. Nothing would be more harmful to our economy than to have every displaced war worker stop buying consumer goods. And nothing would be more conducive to a large-scale cessation of buying than the feeling on the part of displaced war workers that all their income had stopped and that their remaining financial resources had to be hoarded.

For one group of those who may become unemployed in the near future--the demobilized veterans--the Congress has already made special provision. Any veteran who has satisfactorily completed 90 days of service is now entitled by law to a weekly unemployment allowance of $20 for as much as 52 weeks depending on the length of his service.

By contrast, there are more than 15,000,000 workers not protected under our present unemployment insurance laws. There are many millions more for whom protection is inadequate. Many of these have been unable to accumulate adequate savings.

On May 28, 1945, I recommended to the Congress that the Federal Government immediately supplement the unemployment insurance benefits now provided by the several States. That is the only feasible way to provide at least a subsistence payment in all parts of the United States during this coming unemployment period.

As I pointed out then, the existing State laws relative to unemployment insurance are inadequate in three respects:

(1) Only about 30,000,000 of our 43,000,000 nonagricultural workers are protected by unemployment insurance. Federal Government employees, for example, such as Federal shipyard and arsenal workers, are not covered. Nor are employees of small businesses and small industrial establishments. Nor are the officers and men of the merchant marine who have braved enemy torpedoes and bombs to deliver supplies and the implements of war to our armed services and our allies.

(2) The weekly benefit payments under many of the State laws are now far too low to provide subsistence and purchasing power for the workers and their families. Almost half of the States have the clearly inadequate maximum of $15 to $18 a week.

(3) Many of the States pay benefits for too short a period. In more than one-third of the States, for example, 18 weeks is the maximum.

I recommended then, and I urgently renew my recommendation now, that the Congress take immediate action to make good these deficiencies for the present emergency period of reconversion.

Specifically, coverage should be extended to include Federal employees, maritime workers, and other workers not now insured. This additional compensation during the present emergency will have to be financed entirely by the Federal Government, but the benefits should appropriately be administered by the States.

I also recommended, and I now repeat that recommendation, that the Congress provide, through supplementary Federal emergency benefit payments, additional unemployment benefits so as to bring them up to adequate standards in all the States. All payments, however, should be made through the existing unemployment compensation machinery of the several States.

During this emergency every eligible worker should be entitled to 26 weeks of unemployment benefits in any one year. The maximum weekly payment for those workers whose previous earnings were high enough, should be not less than $25 per week.

If the Congress decides to take this very necessary step, it will also wish to reconsider and increase the unemployment allowance provided for veterans.

There has been so much misrepresentation about this temporary proposal that I think I should categorically state what the bill does not do.

It does not give everyone $25 a week. Under it, an applicant must be ready, willing, and able to work and must have earned wages high enough so that the percentage rate will yield this maximum figure.

It does not federalize the unemployment compensation system. It leaves it with the States.

It is not intended to take the place of the permanent amendments to the unemployment compensation system which are now being studied by the Congress. It is an emergency measure designed to expand the present system without changing its principles. It is designed only to meet the immediate pressing human problems of reconversion.

This recommendation is not to be confused with the broader question of extending, expanding, and improving our entire social security program of which unemployment insurance is only a part. I expect to communicate with the Congress on this subject at a later date. But I sincerely urge that we do not wait for consideration of such a complex question before enacting this much needed emergency legislation.

2. FAIR LABOR STANDARDS ACT

In addition to those workers who will temporarily lose their jobs, there will be millions of others whose incomes will fall sharply with the end of war production. These will be added to the several million wage earners who even now have hourly earnings much below what is necessary for a decent standard of living.

The inadequacy of these wages, in many cases, has been temporarily concealed by wartime increases in take-home pay resulting from overtime work. As these props to income are removed, however, low wage earners will be hard pressed to feed, clothe, and house their families. This flies in the face of a sound public policy. Failure to correct this situation will slow down, if it will not actually stop, our drive toward an expanding market for business and agriculture.

The foundations of a healthy national economy cannot be secure so long as any large section of our working people receive substandard wages. The existence of substandard wage levels sharply curtails the national purchasing power and narrows the market for the products of our farms and factories.

In the Fair Labor Standards Act of 1938, the Congress adopted a program intended to provide a minimum wage standard for a large number of American workers.

In that statute, the Congress declared it to be our national policy to eliminate, from interstate industry, wage levels detrimental to the maintenance of minimum standards of living. The establishment then of a minimum wage of 25 cents per hour represented a first step toward the realization of that policy. The goal of 40 cents per hour, which under the act was to be made effective by 1945, was actually made fully effective more than a year ago by the voluntary action of the industry committees.

I believed that the goal of a 40 cent minimum was inadequate when established. It has now become obsolete.

Increases in the cost of living since 1938 and changes in our national wage structure, require an immediate and substantial upward revision of this minimum. Only in that way can the objectives of the Fair Labor Standards Act be realized, the national purchasing power protected, and an economy of full production and abundance preserved and maintained for the American people.

The high prosperity which we seek in the postwar years will not be meaningful for all our people if any large proportion of our industrial wage earners receive wages as low as the minimum now sanctioned by the Fair Labor Standards Act.

I therefore recommend that the Congress amend the Fair Labor Standards Act by substantially increasing the minimum wage specified therein to a level which will eliminate substandards of living, and assure the maintenance of the health, efficiency, and general well-being of workers.

The scope of the Fair Labor Standards Act also should be clarified and extended. In view of changes which have occurred since 1938, I believe it is no longer necessary to exclude from the minimum wage program the large number of workers engaged in agricultural processing who are now excluded. There now exists a twilight zone in which some workers are covered, and others, doing similar work, are not. Extension of coverage would benefit both workers and employers by removing competitive inequities.

Our achievements in this field during the last seven years of establishing minimum wages have been gratifying; but we must continue to move forward, step by step.

I urge that the Congress act promptly. The wage structure on which businessmen may make future plans should be settled quickly.

3. WARTIME CONTROLS

One of the outstanding achievements of the war has been the success of the Government in holding the line against inflation. This is the first time in any major war that the United States has been able substantially to stabilize its economy.

That fact now permits us to enter into the difficult period of readjustment without the threat of a disastrous price collapse.

For this result much credit is due to the Congress, which in the face of great insistence from many interested pressure groups refused steadfastly to take the easy way.

Great credit is due to the Office of Economic Stabilization, the War Labor Board, the Office of Price Administration, the War Food Administration, the War Produc