Remarks at a Conference of the Industry Advisory Councils of the Department of the Interior.

THANK YOU very much. My first visit to this auditorium, Mr. Secretary, was on a "Meet-the-Press" program, when I was a United States Senator, making some investigations in the Second World War. It was not a very satisfactory meeting for me. I hope this one will be more satisfactory to you. It came out all right, though. They got me into more trouble than any man has ever gotten into in the history of the world!

Mr. Secretary, and gentlemen of the Conference:

I am glad to meet with you gentlemen here today.

I know that you are all ready to do everything you can to help out in this time of emergency--and I want to emphasize that statement: The country never has been in a greater emergency--and I know you will do a good job. You have a fine man to work with in Oscar Chapman. He is thoroughly familiar with the natural resources you gentlemen are here to advise us about, and we could not have a better man in charge of the mobilization of those resources for the defense effort.

Now, I want to say to you that every man that I have asked to help in this project has been a man of ability and patriotism, and don't let anybody tell you anything else.

I appreciate very much the fact that you are willing to come and help us with our mobilization problems. It shows that when our country has a big job to do, people are ready to pitch in and help. And let me tell you now, our country does have a big job to do--just about the biggest and the hardest job in history.

One of the worst difficulties we have to overcome is the feeling that we can relax because we are not in an all-out war. That is a terrible mistake. We cannot afford to relax. We have three enemies to overcome, one abroad and two at home.

Aggression is the first one. We are shooting that one out in Korea, as we did in Greece and Berlin and other places.

Number two is inflation. That is a home product we are taxing and by controls curing inflation--we hope.

Number three is the worst of all, and that is relaxation. You can't cure the tendency to relax every time there is a lull in the hostilities. The Secretary of the Treasury was talking to me at the Cabinet meeting recently, in which he said that every time it looks as if we are winning, either the fight against inflation or the fight against aggression, you can see the country relax as the crisis and securities and things of that kind go up and down. You must meet this situation head on. And the thing that you gentlemen can do is to overcome the worst of our three enemies: relaxation.

Our mobilization problem is different in some ways from what it was in World War II, but it is just as urgent and just as important to our national survival.

Today, the danger is worldwide, but the actual fighting is limited to a small area, where we are trying to keep it. We are trying to keep the conflict limited and to bring it to a victorious end just as rapidly as possible.

But peace in Korea will not put an end to the global danger of Soviet aggression. We must build up enough military strength-enough military strength actually in existence-to convince the Kremlin that it ought not to start a world war.

We must prepare ourselves to mobilize quickly for war in case the Kremlin is reckless enough, in spite of everything, to plunge the world into a general conflict.

Our defense experts--both military and civilian--have developed a definite, concrete plan to do these two things. This plan provides for bigger, active Armed Forces, and lays the foundation for complete mobilization if that should become necessary. We must carry out that plan as rapidly as we possibly can. We want to reach our goals just as fast as the men can be trained, the plants built, and the equipment and supplies turned out.

During the next couple of years, while we are building up this military strength, we shall be diverting materials, converting plants, and disrupting normal life for businessmen and consumers. It will not be as drastic a shakeup as if we were in a global war, but whatever the situation calls for must be done. Our continued existence as a nation may depend on how well we carry out this program.

In the next year or two, the military production program is going to require extensive use of production controls and a good strong anti-inflation program. So far, we have only begun to feel the effect of military demands on our supplies of raw materials, manpower, and plant capacity. But we are going to feel this effect severely in the months to come. The largest part of the problem is still ahead of us. Now, I want to emphasize that: The largest part of the problem is still ahead of us.

Since last June about $26 billion worth of orders have been placed for military equipment and construction. Only a small part of that has been delivered as yet. Moreover, we still have about $58 billion worth of orders to place, in the next 14 months, under our present military plans.

You can easily see, therefore, that the demands of military production on materials and manpower will be going up month by month for a long time. That is why it is urgently necessary that the Congress continue for 2 years more the production controls authorized by the Defense Production Act.

It is also urgently necessary for the Congress to extend the authority for inflation controls-controls on prices, wages and credit, and rents. And by that I mean adequate authority to do the job--authority not crippled by a lot of special exemptions for special groups. This is absolutely vital for the future of this great Nation of ours.

Most of you are businessmen who understand the terrible effects that the inflationary spiral could have on our economy if it is not kept in check. Now you have got a leading businessman in control of that very thing. You know how extremely important it is to hit inflation and hit it hard. To do that we will have to use price and wage controls for the next 2 or 3 years at least.

There are some people who think we can now abandon price and wage controls and still stop inflation. They say that heavy taxes and other so-called indirect controls can do the whole job from here on. But as bigger and bigger military orders hit our economy, that will be dearly impossible.

Of course, heavy taxes are needed, and I'm doing my best to get the Congress to enact enough taxes to keep the budget in balance. I would be delighted if each one of you would urge your Congressman and Senators to raise taxes.

I am serious about this; I think you ought to be asking the Congress for higher taxes. But when you do that, be sure to urge them to extend price and wage controls, too. It all goes together, if we are going to meet this situation.

The plain fact is that when you expand production, as we are doing now in this country, people have more money to spend. And when that expanded production goes into military goods, there aren't enough civilian goods for people to spend the extra money on. This creates an inflationary gap. That is what is going to happen over the next year or two. There is no escaping it. It is going to get worse before it gets better. And those who are spreading the foolish notion that we can get through this period without price and wage controls are doing the country an immense amount of harm.

We hope that this period will not be long and that the time will come in 2 or 3 years when we can begin to take controls off. We are moving as rapidly as we can to expand the productive capacity of the country. Assuming that the Kremlin does not bring on a world war, we hope that our productive capacity will soon be great enough so that we can carry the defense program and still produce an ample supply of civilian goods. When that time comes, we should be able to do without controls.

If we are to bring that about, you gentlemen here must help us. You are particularly concerned with producing various types of raw materials and minerals, fuel and power. Increased capacity to produce these vital materials is basic not only to our defense, but to the kind of economy we want to have in the future.

I see no limit to the economic future of this country. I have said that time and again and have been called a dreamer and a visionary for doing it, but it is coming about.

In the first half of this year, we are producing goods and services at an estimated annual rate of about $307 billion. This is about the same, allowing for price changes, as the annual rate achieved in 1944--the peak production year of World War II. The present rate is almost $40 billion higher than what we did in 1948. But we have not yet reached the ceiling. We have the resources and the technology to grow by about 5 percent a year over the next few years. In about 3 years this would lift our output to about $350 billion, measured in present prices. And we can go far beyond that.

That is the sort of picture I ask you gentlemen to keep before you during this emergency period. The world is in a dangerous condition, but we know what we must do about it. It will take patience and determination. It will take good solid American patriotism--the kind that puts the national interest ahead of the selfish interest.

The people of the United States, together with the people of the other free countries can win a victory in the struggle with Soviet communism. I'm just as sure of that as I'm sure I am standing here.

What it will take is hard work by everybody in the country, willingness by everybody to carry his fair share of the load.

That is what we are asking of you gentlemen here. And I am very sure that you are going to do your part.

Thank you very much.