WHEN a business decides to close down a line of activity it transfers to other departments such assets as are usable and liquidates the remainder at the best price obtainable. But when the United States reduces its military establishment it cannot merely sell off its excess property for the highest possible price. Maintenance of employment at home and the requirements of a constructive foreign policy are far more important than the cash which may be realized. The prospect of immediate financial gain must be balanced against the more distant but very important effects which the sale will have on both domestic business and world trade.
Though it is impossible to say how large the surpluses will be at the end of the present war they are likely to be big enough to exert a damaging effect on postwar production if they are merely dumped on the world markets. When and how should they be sold? How, particularly, should they be sold abroad? And, more difficult still, what methods of payment should be arranged, in a world economy suffering from a shortage of dollars? Unquestionably there will be dire need for some of them in the foreign nations devastated by the war; and countries eager to expand their economies will undoubtedly want some also. At the same time, foreign businessmen fear the sudden sale of surplus goods for the same reasons that our own do. And some foreign governments will have surplus property of their own to get rid of.
It is logical to look to our experience after the last war for help in answering such questions, but the search is not very rewarding. Surplus property in 1919 was infinitesimal compared with the amount expected to be in existence when this war ends. Its value was perhaps only 2 or 3 percent as much; and it was less widely scattered. Furthermore, neither our methods of disposing of our surplus last time nor many of the economic policies of that period can now be regarded
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