The problems of small business in a war economy are basically those of business in general. The cooperation of everyone with government is necessary to the National defense effort. Government regulations and restrictions, I think, will be accepted cheerfully in that light.

Yet small business finds it difficult, and relatively costly, to comply with numerous government regulations and other requirements. There will be special wartime problems of prices, personnel, and deliveries. Taxation will be heavy, retained profits small. In an "all-out" national effort, sacrifice must be demanded of all business, large and small.

A modern war cannot be waged without every one in the end being poorer. Because the very existence of the small-business competitive system is involved, small business is ready, I believe, to make those sacrifices.

Thus far, the defense effort has meant increased production, sales, and profits, both in defense and consumer goods.

As we strive for more guns, however, the flow of certain consumer goods may have to be reduced, because: first, materials, such as aluminum, tin and steel, needed by defense industries, will be restricted to that end; second, workers and managers will be drawn from consumer goods industries to defense; and third, shortages of shipping will curtail supplies of imports and coastal trade commodities.

Consumption Goods Problem

While not of immediate significance in the United States, the British concentration of production of consumption goods in a reduced number of factories working full time gives an idea of what may happen to small business in a war economy.

Up to recently, the British Government has been concerned as we have, with expansion and central control of industries directly contributing to the war effort. Now to obtain further manpower, materials and factory space, the Government through the Board of Trade has designated "nucleus" firms in nondefense lines to operate at full time while other competing plants are closed down.

The drastic reduction of consumer goods available in Britain, coupled with the skimming off of purchasing power by heavy taxation and, forced savings, without this concentration would leave these plants operating at only fractional capacity, a loss both to the owners and to the economy.

By concentrating the orders of 5 or 6 firms, say, in one plant, the minimum needs of the population are met, a profit is earned, and labor is freed for defense industries.

Safeguards are provided for the preservation of goodwill of the closed plants, a fair distribution of profits, and for their speedy reopening after the war.

There are, of course, many problems in working out these arrangements, but despite those problems, both management and labor have accepted the policy, recognizing that the requirements of war are paramount.

The application of the same principle to the closing of many retail stores is now under study in Britain. The purpose is to bring retail service into balance with the greatly reduced volume of goods now available to civilians, and to free clerks and owners for defense work.

While the British pattern may foreshadow things ultimately to come, there seems little necessity in the United States for such drastic measures within the near future.