Marching Orders

The mighty U.S. productive machine began to get its marching orders last week. The aircraft industry was asked to cancel all vacations (see Aviation), stand by for a possible $1.5 billion in orders as soon as Congress acts on President Truman’s $10 billion war fund. The electronics industry got word of a forthcoming $500 million order for radar and other military parts, which would soon force some cutbacks in television and radio production. To meet the desperate need for tanks, the Army notified General Motors’ Cadillac division to get ready to turn them out.

For the auto industry, this did not mean conversion. Cadillac would not use any of its present facilities to make the tanks, but would use the Fisher bomber plant in Cleveland, which has not been in production since World War II. Moreover, it would take Cadillac nine months, the Army warned, to make its first tank. For the time being, the Army would have to rely on its own $70 million Detroit tank arsenal. The only plant currently producing tanks, it is turning out only a meager twelve a day, half of them the heavy, 48-ton General Patton (see cut). The arsenal last week ordered its single eight-hour shift stepped up to two ten-hour shifts, boosted its orders for air-cooled engines from Continental Motors and for transmissions from G.M.’s Allison, sought heavy armor from several steel castings firms.

Credit Crimp. Even without conversion, tightening steel supplies had already cut the U.S. auto industry down from its peak production (last week it turned out 181,156 units v. 184,791 the week before). This came in the face of the biggest rush for cars in five years; used-car dealers were once again displaying new “used” autos at $500 and more above list prices. “Scare buying” of all consumer goods kept spreading; U.S. department-store sales jumped 21% in a week. In New Bedford, Mass., a telephone operator who caught the fever drew out her savings to buy a sewing machine which she did not know how to operate and a spinet piano which she could not play, as well as a portable radio and an outdoor barbecue pit.

The industry hardest hit by the war to date was the housing industry, whose peacetime expansion had been founded on easy Government credit. Last week President Truman stiffened the terms. He slashed in half a $1,250,000,000 increase previously allotted for mortgage insurance, ordered 5% down payments required from veterans—who previously could buy new homes for nothing down, without even paying cash for closing fees. He also slashed by 5% the amount of FHA mortgage insurance available for non-G.I. buyers. (The immediate effect was to start a rush to buy homes, and the scare sent house prices rising.) The President was hoping to divert to war uses some of the lumber, steel, aluminum and other scarce materials now going into housing.

Guns & Butter. Other material shortages were bound to increase as the Government stepped up its stockpiling of 71 strategic metals, minerals and materials. To make sure that U.S. industry did not hoard them, the President planned to use the broad controls he sought from Congress over industry’s inventories, production and expansion.

The powers President Truman sought were either too broad (if the war were confined to Korea) or too narrow (for all-out mobilization). Businessmen hoped that Washington would use them to bring about a gradual and orderly mobilization which would leave the U.S. economy flexible enough to meet new conditions as they arose. For war had found the economy with a potential for both guns and butter greater than ever before.