Therefore, our chief worry still is inflation.  While we control this inflationary pressure we must look forward to the time when this extraordinary demand will subside.  It will be years before we catch up with the demand for housing.  The extraordinary demand for other durable goods, for the replenishment of inventories, and for exports may be satisfied earlier.  No backlog of demand can exist very long in the face of our tremendous productive capacity.  We must expect again to face the problem of shrinking demand and consequent slackening in sales, production, and employment.  This possibility of a deflationary spiral in the future will exist unless we now plan and adopt an effective full employment program.

2.  General policies—­immediate and long-range

During the war, production for civilian use was limited by war needs and available manpower.  Economic stabilization required measures, to spread limited supplies equitably by rationing, price controls, increased taxes, savings bond campaigns, and credit controls.  Now, with the surrender of our enemies, economic stabilization requires that policies be directed toward promoting an increase in supplies at low unit prices.

We must encourage the development of resources and enterprises in all parts of the country, particularly in underdeveloped areas.  For example, the establishment of new peacetime industries in the Western States and in the South would, in my judgment, add to existing production and markets rather than merely bring about a shifting of production.  I am asking the Secretaries of Agriculture, Commerce, and Labor to explore jointly methods for stimulating new industries, particularly in areas with surplus agricultural labor.

We must also aid small businessmen and particularly veterans who are competent to start their own businesses.  The establishment and development of efficient small business ventures, I believe, will not take away from, but rather will add to, the total business of all enterprises.

Even with maximum encouragement of Production, we cannot hope to remove scarcities within a short time.  The most serious deficiencies will persist in the fields of residential housing, building materials, and consumers’ durable goods.  The critical situation makes continued rent control, price control, and priorities, allocations, and inventory controls absolutely essential.  Continued control of consumer credit will help to reduce the pressure on prices of durable goods and will also prolong the period during which the backlog demand will be effective.

While we are meeting these immediate needs we must look forward to a long-range program of security and increased standard of living.