The defence effort, including the aid-to-Britain programme, dominates the economic life of the United States today. Whereas expenditures for defence materials were running at a level of about $2 billion a year during the first half of 1940, they are now running at an annual rate of about $13 billion. This six-fold increase in the level of defence expenditures has already resulted in a net increase in employment of about 2½ million, not counting in this figure an increase in the armed forces of nearly 900,000.

The formulation of any labour policy for the existing emergency must be built around the nature of the problem that is created by the emergency itself. Our problem is to transform the billions of dollars that have been authorized or appropriated into ships and planes, tanks and shells—into the thousands of items that are needed to meet the requirements of our own Army and Navy and Maritime Commission, as well as of the democracies of this and other continents. This means that we must mobilize the human and economic resources of the United States so that these munitions may be made available as efficiently and as quickly as is possible.

The first step in approaching this problem is to determine what resources are going to be needed. I am concerned in this discussion exclusively with our labour resources and the problems that affect labour.