Taxpayers and Bargains

The discussion of the nation’s first major postwar economic problem advanced one step last week. Jesse H. Jones, who bosses all the major Federal lending agencies, discussed what should be done with the U.S. Government’s vast hoard of war plants and equipment.

His Defense Plant Corp. alone owns all or part of 1,753 war plants worth $9 billion, DPC represents everything from 10% of U.S. steel capacity to 100% of a synthetic rubber industry bigger than the entire prewar domestic market. Until U.S. businessmen find out how the U.S. Government plans to dispose of this industrial machine, much of their own postwar planning is planning in a vacuum.

Last week, at a New York Board of Trade banquet, “Uncle Jesse” told 1,200 businessmen some of his own ideas on what should become of his war plants. Reassuringly—and for the umpteenth time—he insisted that “Government should get out of active industry as soon as it can.” Reassuringly, he said he thought a good deal of Government equipment could go to build up the economies of foreign nations. Then he enunciated a principle dear to the heart of the average Congressman: that “to avoid monopolies and too much concentration, local people should have the first call on such plants.”

But when Jesse Jones got down to plant prices the businessmen really began to listen hard. Most U.S. industrialists are torn between: 1) a longing to pick up a fine new plant cheap, 2) a horror of having competitive plants and equipment dumped on the market too cheap. Said Jones: “Business will do well to recognize the taxpayer’s investments when negotiating for Government-owned plants . . . and not expect too many bargains.”

From a political standpoint, or that of a shrewd bargainer, this concern for the taxpayer seemed sound. But as an overall policy for getting Government plants into private hands this had to be weighed along with other considerations.

By war’s end the taxpayer’s stake in these plants will represent, in dollars, almost a third as much as the entire U.S. industrial plant before the war. Sold too cheaply, it can cheat the public and break a significant part of U.S. industry; held for too high a price, it might do even more damage by wrecking any quick reconversion to peacetime production, and perhaps lead ultimately to much government competition with business. Come peace, Jesse Jones and colleagues will have a tremendous responsibility. For business skill of the first water will be needed to liquidate the monstrous estate of the defunct war—shrewdly enough to get the heirs their money’s worth and swiftly enough to save the heirs from ruin.