No Confidence

For its second Forum of Executive Opinion (TIME, Sept. 2), FORTUNE chose the crucial subject of U. S. rearmament. The 15,000 top-flight U. S. business executives on the Forum's permanent panel were asked how they thought the defense program was getting along. By a large majority (73.5%) they replied: the defense program is not doing so well.

Progress. Pondering U. S. defense accomplishments and future plans. 24.2% of the businessmen decided that they were as effective as could reasonably be expected, 51.9% thought they were only moderately effective, 21.6% were sure that they were comparatively ineffective. Blame for this state of affairs was put mainly on the Government.

Although only 7.1% of the executives thought that "inadequate interest on the part of industrialists" was the chief impediment to the defense program, 58.8% had friends who were chary about going heavily into war industry production. Their main misgivings, in order: i) difficulty of cooperating with an anti-business Administration; 2) delay in letting businessmen charge off the cost of new rearmament plants within five years; 3) fear that armament contracts will interfere with labor policies; 4) belief that armament profits will be too small to justify the risks involved; 5) a feeling that the emergency is not so acute as Franklin Roosevelt would have them feel.

U. S. Economy. A big majority (77.1%) of the businessmen flatly disagreed with the President, voted that the U. S. could not prepare for total war without seriously amending some of the New Deal's social legislation. But 58.1% thought that the U. S. standard of living could be kept at present levels during the rearmament period, while 39.7% were certain that it would have to be lowered.

Asked what steps would be necessary if they were required to increase their production one-third in the next six months, manufacturers said they would have to hire more men (71.1%), get a longer work week (38.3%), curb the labor unions (29.5%), train skilled labor (30.6%), increase the production of supplies (26%), get new financing (19.9%). If rearmament or war started a sharp rise in prices, some (34.7%) executives thought the Government should fix prices, others (24.9%) favored a voluntary move on the part of trade associations to hold prices down, others (26.7%) were willing to let prices find their own levels.

Taxation. Realistic was the attitude of the businessmen toward new taxes that must be levied to pay for the defense program. Only 10.5% favored leaving taxes where they are, relying on larger taxable revenues for the increase. A majority (56.3%) thought that the present tax system should be revised before attempting to levy temporary surtaxes.

The Draft. Although 60.2% of the executives felt that conscription would work some hardship on their business (6% said it would have a seriously adverse effect), they were solidly (84.1%) in favor of it.

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