Since superiority in mobile armaments is the decisive factor in military success, and since mobile armaments depend upon industrial power, I shall endeavor to indicate very briefly the character and importance of the industrial resources of the United States as compared with those of Germany, particularly such primary factors as raw materials, power resources, aluminum, transportation, and labor.

It may also be noted that the food supply is obviously of the utmost importance in a war of considerable duration and that the United States possesses an abundance as compared with the meager supplies of Europe.

Abundance of Raw Materials

The United States produced in 1937 as much as 62 percent of the world's supply of petroleum; 50 percent of the cotton supply; 34 percent of the iron ore supply; 34 percent of the coal, (not including lignite and brown coal); and 33 percent of the copper. In none of these basic lines is there likely to be a serious shortage. (The present petroleum problem is merely one of transport.)

In many of the basic lines the United States normally produces very much more than is required for domestic consumption.

In the comparatively few cases in which supplies must be imported, the United States is in a position to secure all that is required--so long as control of the sea remains

in the hands of Great Britain and the United States.

The German situation on the other hand, without being bad, is certainly not bright. Germany and the occupied countries can produce very little copper. Germany normally requires many hundred thousand tons of copper for civilian and military purposes.

She is now obliged to replace copper by other metals or alloys which do not give the same quality of products. Generally copper is replaced by aluminum, and a large part of the German aluminum production--perhaps 25 to 30 percent--is used in this way. But the only result is to replace one shortage by another, since Germany's large aluminum production, is not sufficient for a great increase in airplane production.

Germany has only limited supplies of zinc and lead and she is likewise deficient in such important minerals as manganese, nickel, molybdenum, asbestos, chromite, and tin.

But the greatest German deficiency is in lubricants. This shortage has very grave consequences because railroad and motor cars, and machine tools, deprived of the normal means of lubrication, deteriorate rapidly.

The shortage of lubricating oils is so intense in Germany that in some cases in the occupied territories butter has been requisitioned for use in greasing military motor cars.

U. S. Has Large Power Resources

The power resources of the United States are incomparably greater than are those of Germany. Before the emergency the United States had a large unused capacity, especially in hydroelectric plants. Production can, moreover, be greatly increased in a short time in the Columbia River country where power is available at all seasons of the year.

This is a very unusual situation and is of the utmost importance from the standpoint of an intensive war production program. Nothing comparable exists in Germany or in all Europe.

The United States can also materially increase its effective power by developing in the East interconnecting systems comparable to those now existing in the Northwest.

But since they are close to the sea they are peculiarly vulnerable to air attacks. An adverse factor is also to be found in the fact that since the Norwegian transportation system is poor, the assembling of the necessary raw materials would be difficult.

Germany also is at a disadvantage with respect to steam power. For then the coal problem, already great, would be still further magnified. In contrast, if the United States were to build steam plants there would be available not only a vast amount of low-cost coal but also extensive reserves of oil and natural gas.

War's Outcome May Hinge on Aluminum

It would not be too much to say that the outcome of the war may be determined by the supply of aluminum, which is a limiting factor in airplane construction. I have had an unusual opportunity to analyze this major issue.

At the outbreak of the war, the, AngloAmerican group possessed a considerable advantage in aluminum production over the Axis powers. After the defeat of France, which shifted the production of France, Norway, and Switzerland into the Axis group, the advantage was lost for a time by the democracies.

At the present time, however, the AngloAmerican group has regained a substantial superiority, and, thanks to the great progress that has been made in the United States in recent months and the production program which has recently been decided upon, the Anglo-American group will have a twoto-one advantage within the next 12 to 16 months.

The following table, based on personal sources of information, are believed to be correct within a margin of 10 percent. Total production is in long tons, and the figures represent the annual rate of output.

The Key Transportation Problem

The fulfillment in the United States of an enormous armament program will place a very heavy load upon the railways. The problem is rendered more important by the fact that the railways will have to carry not only their normal traffic but also most of the traffic between the Pacific and the Atlantic, which ordinarily is carried by the merchant fleet.

I am convinced that fears of a railway transportation crisis are not justified. During the last three years there has been a very great expansion of maintenance work. And during the last 18 months large orders for rolling stock have been placed by all of the principal roads. No acute general shortage of railway facilities appears likely.

The state of German railways has undoubtedly grown worse during the war. The roadbeds are in a poor state. The rolling stock is worn by the lack of lubricants and suffers from the long-distance hauls required by the extent of German military operations. The necessity of providing Italy with coal, iron, and steel imposes on German railways an enormous burden.

The transports arriving from or going to Russia and certain Balkan countries must face additional difficulties because of the different gage tracks.

Supply of Labor Here is Ample

American reserves of hand labor are extremely large. There are still, apparently, some millions of unemployed. It would be easy to give more extensive employment to women, and perhaps to youths; at the same time additional immigration might be procured in case of need, especially from Latin American countries. It is also possible to expand greatly the labor supply in the armament industries by shifting both plants and labor from normal peacetime production to the output of war supplies.

The labor problem in Germany is very serious. The length of the working week runs as high as 60 to 70 hours. The German government now uses 1,300,000 war prisoners, whose output is notoriously low. About 700,000 Italians are also employed.

In the matter of quality the American worker is certainly at all times, and especially now, superior to the German worker. The German population cannot be said to be starving, but it is certainly not in the highest state of physical efficiency.

Resources of Occupied Countries

In comparing the American and German war potentialities, one must of course keep in mind the possibility that Germany may make extensive use of the occupied countries. However, when one thinks merely in terms of the number of people, the extent of the natural resources, and the volume of production in normal times, he is likely to have an exaggerated view of the importance of the occupied countries for Germany during wartime.

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Take the present situation in France. representative in France of a great American bank, who recently arrived in this country from Vichy, states that French plants have not been producing on the average more than 25 percent of capacity. My own impression based on information coming from good French sources is that in even the most favorably situated plants production does not at the most exceed 50 percent.

I cannot speak with the same degree of confidence with respect to other occupied areas, but there would seem to be no doubt that the conditions are essentially similar.

Resources of Russia Not Immediately Available

that

There is a widespread assumption Germany, either through peaceful collaboration or by means of the conquest of Russia, can in a short time draw from Russia all the supplies and materials which she is unable to produce herself.

As a result of extensive industrial experience in Russia between 1932 and 1936, I do not share this view. In spite of the tremendous efforts put forth by the Bolshevik regime to establish an effective economic system, the results have been far from satisfactory.

The railroads are both inadequate and inefficient. The highway system is still of a rudimentary character. While the industrial establishments have been built on the American scale and mechanized in the American fashion, in consequence of a lack of trained engineers, technicians, and foremen the operation of the plants has been wasteful and inefficient and the maintenance insufficient.

German Operations at Forced Draft

The United States has also a great general advantage over Germany at the present time from the point of view of expanding production. Germany is already a tired country. Not only has labor been working too hard, but German industrial establishments have long been operating at maximum capacity, and are undoubtedly in need of extensive rehabilitation. Any experienced industrial manager realizes what a long period of intensive production means from the standpoint of efficiency both with respect to labor and the plant itself.

In the United States, on the other hand, there is still much unutilized capacity in many lines, and even where the plants are in full operation the machines are seldom utilized 24 hours a day. Finally, only a relatively small part of the nation's productive resources is now mobilized for military purposes.

The Way to Win

The outstanding characteristic of the present war is the effective utilization of high-powered mechanical armament. It follows that to defeat Germany the other side must aachieve great superiority in the very lines in which Germany has heretofore had the advanvantage. If the United States is to be the arsenal of democracy, the nation must be So organized industrially as to be able to defeat Germany on the side of industrial production. That is to say, it must direct its efforts precisely to the points where Germany has hitherto acquired superiority and gained all her victories.

The United States must develop its war production on the American scale and in the American rhythm. The United States-assuming it is determined to make a victory possible-cannot be satisfied with merely equaling German war production in planes, tanks, ships, etc.; the German output must be exceeded, trebled or quadrupled.

At the start the rearmament progress was slow and full of disappointment. But now the situation has changed for the better. Mr. Knudsen declared on June 12, 1941, at a meeting