Can Our Foreign Customers Pay?

by MILO PERKINS

WHERE can we find the customers to buy the goods which our vast industrial plants can produce after the war? That is the key question facing us as we approach victory and peace and Uncle Sam ceases to be the biggest customer American industry ever had.

Most of our customers are here at home. They can take over 90 per cent of our total production of goods, but they probably cannot take more than half of our heavy goods production, once we pass the early “catch-up” period. This is the area in which we shall have our greatest overcapacity. Although we cannot hope to sell to foreign customers all the remaining half of the heavy goods we can produce, we must sell great quantities of machinery and transport equipment and machine tools abroad if we are to avoid large-scale factory shutdowns here at home.

When a factory man loses his job, the situation is much more serious than it appears on the surface. It means the loss of three jobs elsewhere in our economy. But when a factory takes on a new man, it creates roughly three jobs in the non-manufacturing field. Few of us realize that only a fourth of our working force is engaged directly in manufacturing, in good times and bad. Before the war, manufacturing provided about 10.5 million direct jobs. At the peak of our war effort that figure reached 17 million. If we are to maintain relatively full employment, we must keep the number of factory jobs at 14.5 million or more. A drop of 2 million below this figure could mean 8 million unemployed throughout the country.

Foreign customers for our heavy goods industries, therefore, are vitally important to full employment here at home. In terms of need, the peoples of the world can use American goods in volume for many, many years to come. Their problem is to find a way to pay for them. Fortunately, they need most the very goods whose total production we shall find it hardest to sell here. These are the heavy goods we produce most efficiently because of the mass market within the United States. Low unit costs resulting from mass production and mass distribution of standardized items give us a competitive edge in world markets — a tremendous advantage in seeking a large export trade.

Government and private spokesmen have set as a target a figure of 10 billion dollars’ worth of American exports a year. That would be nearly double our exports in 1929. Is 10 billion dollars too high? Can we reach it?

It is a far less daring goal than many of the goals of military production which we set for ourselves after Pearl Harbor. It took audacity to make sure of victory in this war. Our giant Air Force, our far-flung Army, our majestic Navy — these bear witness to our boldness of vision and determination right after the Japanese attacked us. That enough men had the foresight and stamina to set their sights as high as they did in those dark days was as true a miracle as the miracle of production that enabled us to reach our goals. A durable peace and a sound prosperity will require even more vision, even more stamina. It’s far tougher to build up peacetime markets than to fill the insatiable wartime demand for armaments.

In less than three and a half years we have virtually doubled our output of goods and services. None of us can now weigh all the effects of this increased output on the next fifty years of our history. All we can be sure of is that it will make life very different for each of us for the rest of our lives.

From one end of our economic spectrum to the other there is general agreement that we are a bigger nation than we were in the 1920’s. When the CED businessmen talk about the necessity for an annual income of 140 billion dollars, they are really saying that we must increase our 1939 national income by nearly 100 per cent in dollar terms if the private enterprise system is to survive.

It makes sense to think in big figures about our post-war trade both at home and abroad. We’ve already built the industrial base for it. The real question is whether there are businesslike ways for the men and women of other lands to earn enough dollars year in and year out to buy the goods they need from us, or whether we must play Santa Claus to reach and maintain a very high level of exports. There is a good chance that it can be done on a businesslike basis.

Foreign nations now have more than 20 billion dollars in gold and dollar balances on hand. Some of this has been accumulated during the war, as in South American countries, where we have bought more goods than we have sold since Pearl Harbor. This important backlog of purchasing power is the international equivalent of our wartime domestic savings, and enough will be spent for the purchase of American goods to help finance a large volume of United States exports in the early post-war years. My concern, however, is with the problem of how foreign nations can earn enough dollars for the long pull ahead.

There are three vitally important ways in which other nations can earn access to 10 billion dollars’ worth of American exports every year for many years to come: —

1. By selling us their goods,

2. By selling us their services,

3. By developing their own economies along lines which will improve their credit standing with us.

Imports and prosperity

Sales of foreign goods in the American market depend more on our own domestic prosperity than on our tariff schedules, important as those are. Other nations sold us an average of 4.25 billion dollars’ worth of goods a year from 1925 to 1929, when we were relatively prosperous. Their sales dropped to 1.5 billion a year from 1932 to 1935, when we were in a depression. They rose to 2.5 billion a year when domestic recovery got under way from 1936 to 1938. In other words, there can be no health in world trade without a robust economy in our own country.

For our imports tend to rise and fall with our own internal prosperity or depression. When we are prosperous at home we need more goods from other nations. And so we buy them. The greatest single contribution which we can make to an expanding world trade after the war will be to run our own economy full blast.

That will require lower and lower prices and higher and higher wages just as fast as technological progress permits. It will require a climate in which business profits will be adequate to encourage the risk of capital on specific enterprises. For business as a whole, however, profits and individual incomes must be kept at a level where the country’s total savings, after reasonable reserves, flow back into new investments — both domestic and foreign. The important thing is to keep our savings in motion. If any considerable amount of savings remains idle, rather than being reinvested, even a large public works program will not stabilize the economy at a high level of national income.

Public works ran only 3.25 billion dollars in the highest year of New Deal spending. Based wholly on their own merits and not as a substitute for private employment, they ought to run 5 or 6 billion dollars a year after the war. Don’t balk at that figure. Bear in mind that it is considerably less than one month’s wartime expenditure of 8.5 billion dollars and that we need the roads and the schools we have been unable to build during the war. But public works alone cannot fill the gap in a major unemployment crisis.

An imaginative program on the part of business and government working together to keep savings and investment in balance is the most important single job we must undertake to keep our economy expanding. Unless investments roughly balance savings, the total amount spent in the economy falls and income and jobs decline. If savings should outrun investments, after we have done all we can to encourage new investment, then prices will have to be cut or wages will have to be raised, particularly among the low-income groups, until increased buying power restores the balance. Otherwise, we shall have a first-class depression on our hands.

If we can reach and hold the 140-billion-dollar national income which has been widely accepted as a bold but attainable goal for the post-war years, the market here for foreign goods would rise, on the basis of our pre-war experience, to some 6 billion dollars annually, in terms of 1942 prices.

That may seem a little high in view of the wartime development of synthetics which are bound to displace part of the natural products we used to import, such as rubber and silk. But less dependence on imports of those materials will be offset by greater dependence on imports of certain vital metals and minerals, such as copper, zinc, and lead, whose domestic sources are being seriously reduced by our huge war demands. Our imports of petroleum and high-grade iron ores also are certain to rise as the years go on.

In fact, a deliberate policy of conservation of depleted natural resources through larger imports of key raw materials in the years ahead makes sense in terms of our strategic necessities. We can do it gradually and thus avoid unnecessarily sharp dislocations in our domestic industries. But we should be guided by the supply on hand and the probable time at which we might be unable to maintain that supply.

In addition to substantially increased imports of the metals and minerals I have mentioned, we can expect, with a high national income, much larger purchases of many customary imports both to feed our industrial machine and to supply consumer demand. Authoritative estimates indicate that we should be in a position to use far more tropical foods, meat and meat products, pulpwood and wood pulp, raw wool, and metals such as bauxite, chromite, and manganese, than we imported in the pre-war days.

What is more, prosperity at home creates a vast market for luxury goods from abroad; prosperity at home means that we can afford to buy them. The determination on our part to remain at work on a profitable basis after the war is the most outstanding assurance we can give to other nations. Given that assurance, they will know they can sell us the exports mentioned above on a steady, continuing basis. From the sale of these exports they can earn about 6 billion of the 10 billion dollars a year they will need to buy the goods they want from us.

As our own productivity and gross national output increase over future years, we shall be in a position to take a steadily rising volume of goods from abroad. An increased flow of imports into this country would tend to affect some of our marginal industries which depend on high tariff protection. As we find new and more profitable uses for the labor and capital involved in such industries, tariffs can be lowered. As a matter of national policy, it might well be in the general interest to facilitate such shifts. The closer foreign wages come to the American level, the less opposition there will be to increased imports.

Trends in foreign trade policies

Progress toward laying the foundation for a durable peace has been made in the United Nations Charter. The renewal by Congress of the Trade Agreements Act, plus the authority to reduce import duties by 50 per cent of present levels, is one of the encouraging events on the international economic front. Our acceptance of the Bretton Woods Agreements is another milestone. Establishment of the International Monetary Fund as part of the agreements, with its plan for a stabilized international monetary system, will do much to create a climate in which trade among nations can flourish.

In so far as the United States is concerned, each of these steps has a significance far beyond any specific authorizations in the measures. They indicate that we are sincerely interested in economic coöperation to expand world trade and that we are doing our part toward removal of barriers which impede the free flow of goods. In an international situation where there are so many forces working for economic spheres of influence, for the retention of exchange controls, for restrictive trade practices and state trading, these concrete steps toward freer world trade are welcome.

These commitments for peace invest us with bargaining power to talk business with Britain, for example, on issues such as the sterling bloc and its disposition or modification of the Ottawa Agreements, which hitherto have given trade preferences to British Empire countries. And augmented by our own power to lend money abroad, they also put us in a better position to bargain with the Soviets.

After suffering two invasions in a generation, Russia desperately wants peace and security. Her living standards have been sharply reduced by Nazi destruction. She must, therefore, step up her production of consumer goods at home as rapidly as possible. If the United States and Russia can establish a trading and investment relationship which will help us to expand our foreign trade on a profitable basis and help the Soviets to accelerate their industrialization program at the same time, the cause of world peace will be well served. In such a climate there is every likelihood that Russia will coöperate in developing policies acceptable to us in countries bordering on the Soviet Union.

If our State Department uses its new bargaining powers with vigor and shrewdness, as much as 60 per cent of our exports and imports might flow within this freer trade pattern. The remaining 40 per cent would probably be subject to international commodity-agreements, state-trade controls, and various kinds of contractual relationships among businessmen in different countries just short of unbridled competition. The stable handling in peacetime of large war-born surpluses, such as rubber, will require something more than the forces of free competition to assure orderly marketing. It will require noncompetitive trade accords worked out jointly by governments and businesses to avert economic chaos. The sooner we face such facts the better.

The success or failure of the State Department on the international front should be apparent within the next two or three years. Its best efforts will be fruitless, however, if any of the following conditions develop: —

1. If there is widespread starvation in Europe in the next two years, followed by revolution.

2. If we fail to plan boldly for the full use of our resources here at home.

3. If there is a rebirth of isolationism on a regional basis leading to tightly controlled spheres of influence and fear of another war.

If we fail to persuade the other major powers to take positive steps toward the development of freer world trade, we ourselves shall drift inevitably toward restrictive trade controls under government sponsorship as a matter of self-preservation. The foreign trade policy developed by the new Labor Government in Britain will have a profound effect upon the world trade pattern of the future. Is there a fighting chance of success for the kind of world we want?

We hear frequently that Britain — which must have large exports in order to eat, whereas we must have large exports for full prosperity — is acutely worried about United States trade competition after the war and is therefore fearful of loosening her present trade and exchange controls.

The answer to this dilemma surely lies in a much larger international trade with increased export opportunities for every one of the United Nations. Modernization of plants to achieve maximum efficiency will be vitally important, particularly in Britain. It is not a matter of recapturing pre-war markets. Rather it is for us and our allies to move forward toward the building of great new markets.

We must use our power and our leadership to help build new markets in foreign countries through increasing industrialization, through the encouragement of education, through increasing the skills of workers and getting acceptance of the principle that they should be paid more money as their efficiency increases. All this would lead to low sales prices based on mass production and mass distribution in other countries as well as in our own. Unless the United Nations can build up mass distribution adequate to absorb their mass production, they cannot long remain united.

Travel dollars

Along with a broadening trade front, we are certain to see new and far-reaching developments in the field of travel. A travel dollar spent in other countries after the war by one ol our citizens is a dollar available for the subsequent purchase of American goods.

The Chilean who builds an attractive tourist resort in the southern part of his country, where the fiords are much like those of Norway and where the Andes rival the Alps, can earn American dollars for American machinery just as truly as the Chilean who sells us copper or nitrates. This is the second way in which other nations can earn dollars to pay for what they buy from us. They can sell us services which we shall have to pay for in our own American currency. Major in the field of services will be travel services. Americans go abroad freely and frequently for business and for pleasure, for scientific as well as for cultural purposes.

Our sights are much too low in this field. We spent nearly 700 million dollars on foreign travel in 1929. Experts are now telling us that if we maintain a 140billion-dollar national income, this figure could go to 1.5 billion dollars after we get well into the post-war years. I think they overlook the dynamics of new forms of travel, the effect that air travel is bound to have in the years ahead. I believe Americans will be spending upwards of 2 billion dollars a year on travel in foreign countries ten to fifteen years from now. And I think that this will be the case even though American transportation companies get a bigger slice of the tourist trade of the future than they got in the past.

Let’s go back in our minds to 1906 and imagine that we were then setting out to displace rail travel entirely with automobile travel. If a network of hard roads had appeared overnight and if the money with which to buy a car had then been available to all customers of the railroad, the maximum market would have been 5 or 6 million automobiles. Yet within a generation we had nearly 30 million cars on our roads and people still were using the trains.

And why? Because more convenient ways of getting from here to there create a situation in which people move about who did not travel before. Nobody in 1906 could have foreseen, in his most optimistic imaginings, a 5-billion-dollar tourist industry in the United States alone. Yet that sum is what we were spending annually for motor vacation travel here in our own country in the years just before Pearl Harbor.

In the 1950’s the average American with a twoweek vacation should be able to fly anywhere he wants to go in a day or two, have ten days abroad with his family, and not spend much more per travel mile than the present cost of traveling by Pullman in his own country. Week-ends for business sessions in the capitals of the world will become commonplace. Technical men supervising new plants abroad will soon be going back and forth between countries as freely as they used to travel from state to state. Many will want to take their families with them.

These things have always happened when quicker transportation came into being. Given a peaceful world, it is almost impossible to be too optimistic on this score. We do have the highest per capita income in the world, and our advanced stage of scientific development will give us more leisure than other nations will have for a long time to come. We can expect to spend more on foreign travel, therefore, than any other people for the rest of this century.

Wide-awake businessmen in other nations who want American machinery to build up their own industries wi11 set out to earn dollars through the scenic and cultural attractions of their homelands. It is an easy way to earn dollars. Countries in South America and in the Far East, which have not had highly developed tourist industries in the past, have a great new opportunity with the advent of air travel. So does Russia, particularly in the southern parts of the Soviet Union.

Enterprising men who realize the extent to which the automobile and good roads accounted for the preponderance of American tourist dollars spent in Canada and Mexico will build drive-yourself car accommodations next to their airports, with or without interpreters and drivers. They’ll build good roads and native inns and organize the best ways to see the sights in ten days.

If millions of Americans travel abroad every year and if more Americans work abroad, we shall gradually acquire an international education that will do much to promote world peace. For peace is surest in a world where folks know each other as folks. This is the best cure for excessive nationalism.

It will take three or four years after the war is over before tourist travel can be resumed on a large scale. But travel is one of the real hopes for the long tomorrow. Other nations can earn 2 billion dollars and more a year selling us travel services during the next generation. Even now travel dollars are important in the foreign trade picture. But they are military rather than civilian travel dollars. American soldiers are spending millions of dollars in foreign lands right now, some of which will be available for the post-war purchases of American goods.

With the resumption of tourist travel, I should like to see us make a change in our customs regulations. At present an American can bring in from foreign lands $100 worth of goods duty free. This limit should be raised to at least $300. Our loss in customs revenues would be inconsequential. It would be a painless way of helping other countries to earn some extra American dollars. Millions of Americans would gradually take a new interest in increased imports as they came to know more foreign goods at first hand. Handmade specialties brought in as gifts by tourists today are likely to become imports tomorrow as more Americans become acquainted wilh them.

Two billion dollars earned by selling us services and six billion earned by selling us goods. We are getting close to our 10-billion-dollar figure. We can reach that figure and go beyond it with the dollars to which other nations can get access by developing their own economies along lines which will improve their credit standing with us. As the possibilities are added up, it would seem that the chances to make money in this shrunken world will be very much larger than ever before.

Making foreign investments

After this war, we should invest between 2 and 3 billion dollars a year in other nations. We have the surplus capital, and the foreign nations will want the industrial development. Dollars will be available both from private sources and through the ExportImport Bank and the International Bank for Reconstruction and Development.

Of major importance in creating a climate favorable to long-term foreign investment will be repeal of the Johnson Act, which prohibits loans to countries in default on World War I debts, as well as an early and intelligent settlement of international indebtedness growing out of the present war. This is also an appropriate time to review our Securities and Exchange Commission regulations so that any unnecessary obstacles to the extension of private credits abroad can be removed.

Only through industrialization can China, India, and the South American nations increase their horsepower per person, their production of goods and services, and the purchasing power of their peoples. Investment of American dollars in such countries will be an additional outlet for our savings and an important way of helping to stabilize full employment within the United States. The operation on a world-wide basis will be similar to the one within the United States some years back when the East rendered this sort of assistance to the South and West.

Our investment policy should be carefully considered. First of all, loans should be for productive purposes which will increase the real wealth of the foreign nations. It will be to our commercial advantage to foster sound industrialization based on the location and extent of raw materials, labor supply, transportation facilities, and a careful analysis of potential markets.

American investments in foreign cotton mills, in chemical plants, in food-processing plants, or in furniture factories make sense. Some projects can best be financed by loans and some can best be financed jointly by American and foreign capital taking their business risks together on a common-stock basis.

The indirect use of American credits for any expansion of armaments abroad would be a catastrophe. We hold powerful economic counters in the present game of international politics. With the other United Nations, we should use them to encourage peace and to discourage any preparation for another war. International trade expansion is geared directly to confidence in a durable peace. The world needs factories to work in and houses to live in. It has had enough of tanks and bombers to die in.

This does not mean that a few courageous acts by government leaders can give us any ultimate assurance of peace. Quite the contrary. Peace will remain forever in a state of perpetual becoming. Every attitude of every individual on this planet is constantly undermining or underwriting it. We can keep the peace only by keeping the individual underwriters of it in the majority. That is a continuing responsibility for each of us.

In considering foreign nations as credit risks we cannot avoid looking at their internal wage policies. Industrialization of underdeveloped nations creates a new class of skilled workers which incidentally can lay the basis for middle-class democracy. Whether a nation exploits its workers to produce sweatshop goods in order to capture export markets quickly, or whether it pays them more money as their productivity increases, so that they can consume more of the goods produced both in their country and in ours, makes a substantial difference to us as a lending and investing nation. The hope for the private enterprise system lies in broadened markets — in more customers — right around the world. Underpaid workers don’t make good customers.

Before the war Japan bought American cotton and American textile machinery at American prices and then exploited its workers so successfully that many Japanese products could undersell ours in world markets. Canada, on the other hand, used her imports of American goods to raise Canadian living standards. We helped to industrialize Canada and developed one of our most satisfactory customers. In 1940 we sold her 700 million dollars’ worth of goods. If the per capita purchases of China and India had been on a comparable basis, our exports to those two countries would have reached 45 billion dollars in 1940. The greater the industrialization in a foreign country, the bigger the market for American goods.

Industrialization abroad will admittedly cut off a few American exports, like cotton textiles. But we can make up the loss many times over in exports of other American goods which countries just beginning to industrialize cannot yet make for themselves. This development of new exports will continue as long as we can maintain our present lead in technological progress.

Only those nations which are making progress in educating their people and raising their standards of living are good credit risks for the long pull. It is not altogether a matter of human justice, important as that is. It is a matter of broader markets, among ordinary folks, without which the private enterprise system cannot survive. If there aren’t obvious rewards for building this kind of system in other lands, some other system will offer the necessary rewards to secure its own adoption. The mark of a virile system is its capacity to extend itself.

We need investment outlets for American savings that cannot be used here at home. Fortunately there are excellent opportunities for American capital to earn good money abroad on a sound basis. But the days of hit-and-run finance in foreign countries are over. Those nations are no longer interested in foreign capital which goes in to make a killing and which will then pull out in a hurry. But they welcome American capital which will operate in partnership with local capital, or American capital which goes in on its own to stay and grow with the country.

The success of American capital abroad in the future will be possible only under a strong and intelligent foreign policy clearly set forth by the United States government and clearly understood by our people. American business cannot compete successfully in foreign markets under present world conditions without vigorous diplomatic assistance from our government. Unless it receives this positive support from a rejuvenated State Department in the future, American business will be out of business so far as any substantial and continuing volume of foreign trade is concerned.

Returns from foreign investments

In the past decade American capital has become increasingly aware of its responsibilities when it invests abroad, and of the desirability of working with local capital and local management. In many cases American management has led the way in improving the lot of native labor. Direct investment by American corporations abroad, with returns varying with business conditions, has been more satisfactory and profitable on the whole than investment in foreigndollar bonds, as many widows and orphans learned to their sorrow after the 1929 crash.

Contrary to popular belief, private foreign investments made by Americans in the period between the two wars paid off. Although many individual investors lost money, there was a substantial net return to American investors as a group. True, private foreign investments made in Europe did not work out so well as those made in other parts of the world, because of mounting trade restrictions and war.

Nevertheless, Department of Commerce records show that total earnings on direct foreign investments averaged 6.9 per cent in the period 1920-1929 and 7.4 per cent in 1938-1940. During the decade of the 1930’s, earnings remitted to the United States averaged 4.3 per cent. Throughout the depression years, service was maintained on some two thirds of our total foreign bond holdings. With current interest rates so much lower than they were in the 1920’s there is every reason to expect a good repayment record in the years ahead.

If we succeed in creating abroad an economic climate friendly to our capital, we shall find ourselves continually increasing our foreign investments. In an expanding world economy, each year will bring new borrowers who are good enough credit risks to keep the expansion going. The problem of repayment will then take care of itself. Most of our individual foreign investments will have to pay off if confidence is to be maintained. However, this individual repayment can take place at the same time that there is a heavy net flow of American capital to foreign countries for additional investment.

Our own industrial expansion in the United States has been financed that way for 150 years. Some businesses have gone broke, but most of them have paid off, and because of that average record on debt repayment there has been enough confidence to assure a continuing increase in our total investment financed by debt, decade after decade.

The possibility of a similar dynamic expansion on a world-wide basis in the century ahead offers us a greater opportunity than the development of our own country did in the century behind us. No one has yet been able to prove, even on paper, that the private enterprise system can work in a static economy. We have the capital, the technical skills, and the surplus plant capacity in our heavy industries to hasten the industrialization of the world and to avoid a domestic depression in the process.

If we hasten that industrialization, we shall gain new markets for our goods and skills, and outlets for our excess savings. At the same time we shall be creating the circumstances for a durable peace. If we retard it, other nations will resent our failure to work with them, and in the recrimination that follows we shall see a rise in nationalism and be faced with another war. As the closing decades of the nineteenth century witnessed the unprecedented growth in industrialization of our own country, so the twentieth will witness a similar growth in other countries right around the world. A safe world is a world in which all nations play their part in this progress.

Establishment of the International Bank for Reconstruction and Development, which is part of the Bretton Woods setup, will also encourage investment in productive enterprise and in the development of natural resources around the world. The Bank will be in a position both to guarantee loans by private sources and to make direct loans out of its own resources. Discussions during the Bretton Woods Conference showed how eagerly many of the underdeveloped countries look to the Bank for help in their programs of industrialization. And we are the biggest stockholder in the Bank.

The Bank can handle loans for power development, for irrigation projects, for highways, and for airports better in many cases than private capital. Investment in factories and small businesses, like dry-cleaning establishments, can be handled more effectively through non-governmental channels. We must not be doctrinaire about such matters in the future. What will count most will be getting the best job done by the best possible means in each specific case.

Conclusion

Imports of 6 billion dollars, services averaging 2 billion dollars, foreign investments of between 2 and 3 billion dollars — all these can supply foreign customers with the necessary dollars to buy 10-billion dollars’ worth of exports from us every year for many years to come on a perfectly sound basis. A 10-billicndollar export trade would mean a sizable increase in jobs here at home. It is a goal worth shooting for.

It makes good business sense to aim for an economy that is well above the break-even point. Every businessman knows that the money that comes in after payrolls and overhead have been met is what counts most. Relatively little extra will show a good profit. Dividends can be paid only from the cream on the top.

What is true for the individual business is also true for the nation. In setting our sights for 10 billion dollars’ worth of exports instead of the 5 or 6 billion dollars we might expect to reach without any special effort, we are working for the extra dividends it will mean in employment and in profits for the nation as a whole. For many American businesses these extra billions will mean prosperity in their own corporate operations.

The challenge of this century is to speed the day when every human being on this planet can satisfy his simple physical wants. A century ago, there wasn’t enough to go around. That is not true any more. Science, together with our improved techniques of industrial management, is our assurance that there now can be enough to go around. Our unprecedented productive capacity and our huge savings have thrust upon us a large responsibility. We can tip the scales toward building the kind of world in which the total resources of this planet will be used for higher living standards and not for another war.