2. “What price patriotism?”
In the middle of the crucial month of September 1942, as the German Sixth Army of some 330,000 men launched a ferocious, all-out assault against Stalingrad, and as American marines and warships battled furiously to hold the Pacific island of Guadalcanal, the resolutions committee of the National Association of Manufacturers held a private meeting at the Hotel Pennsylvania in New York City. The purpose of the meeting was to prepare a 1943 program for presentation at the December NAM convention.
Some of the more patriotic members of the resolutions committee urged that the NAM program concentrate on one issue, winning the war. James D. Cunningham, president of Republic Flow Meters Company, pointed out that “if we don’t win the war, there won’t be a postwar.”
Lammot du Pont, chairman of the Board of du Pont de Nemours & Co., spoke in reply. A respectful hush fell over the resolutions committee as he began his remarks.
“Deal with the government and the rest of the squawkers the way you deal with a buyer in a seller’s market!” du Pont said. “If the buyer wants to buy, he has to meet your price. Nineteen hundred and twenty-nine to 1942 was the buyer’s market— we had to sell on. their terms. When the war is over, it will be a buyer’s market again. But this is a seller’s market. They want what we’ve got. Good. Make them pay the right price for it. The price isn’t unfair or unreasonable. And if they don’t like the price, why don’t they think it over?”
As his audience listened intently du Pont asked, “Are there common denominators for winning the war and the peace? If there are, then, we should deal with both in 1943. What are they?” The famous industrialist proceeded to answer his own question:
We will win the war (a) by reducing taxes on corporations, high income brackets, and increasing taxes on lower incomes; (b) by removing the unions from any power to tell industry how to produce, how to deal with their employees, or anything else; (c) by destroying any and all government agencies that stand in the way of free enterprise.
The majority of the members of the NAM resolutions committee were in hearty agreement with the views expressed by Lammot du Pont. So were certain other big businessmen.
From the inception of the U.S. defense program in the summer of 1940 many leading American industrialists had stubbornly refused to manufacture weapons of war except on terms which they themselves dictated. Failing at first to get agreement from the Administration on exorbitant profits, special tax privileges and other concessions they demanded, these industrialists staged what came to be known as the “sitdown strike” of American capital.
“In the great capital sitdown strike of 1940, which delayed the signature of defense contracts and the start of them from May 1940, until the beginning of October,” I. F. Stone writes in his book, Business as Usual, “the aviation industry was used as a front for the rest of business in its fight for special tax privileges on defense contracts.”
The Temporary National Economic Committee investigating Concentration of Economic Power in the United States gave this description of the dilemma with which the Roosevelt Administration was confronted in getting war supplies manufactured:
Speaking bluntly, the Government and the public are “over a barrel” when it comes to dealing with business in time of war or other crisis. Business refuses to work, except on terms which it dictates. It controls the natural resources, the liquid assets, the strategic position in the country’s economic structure, and its technical equipment and knowledge of processes. The experience of the [First] World War, now apparently being repeated, indicates that business will use this control only if it is “paid properly.” In effect, this is blackmail . . .
The TNEC report added:
Business apparently is not unwilling to threaten the very foundations of government in fixing the terms on which it will work. It is in such a situation that the question arises: What price patriotism?
The attack on Pearl Harbor and the fact that the American nation was now engaged in a desperate struggle for survival did little to alter the attitude of many American big businessmen toward the war. Profit, not patriotism, remained their paramount concern.
“The present grave lack of steel is the responsibility of the large steel companies which have sought to perpetuate their monopolies,” Senator Harry S. Truman, then Chairman of the Senate Committee Investigating National Defense declared early in 1942. “Even after we were in the war, Standard Oil of New Jersey was putting forth every effort to protect the control of the German government over a vital war material . . . Yes, it is treason. You cannot translate it any other way.”
Among the prices paid to secure the cooperation of big businessmen in the American war effort was that of turning over to them almost absolute control of Government war production agencies.
The extent to which these agencies were dominated by big business interests made a profoundly disturbing impression on William Allen White when he visited the nation’s capital in the summer of 1943. “One cannot move about Washington without bumping into the fact that we are running two wars— a foreign war and a domestic war,” wrote the dean of American journalists in his Emporia Gazette. White continued:
The domestic war is in the various war boards. Every great commodity industry in this country is organized nationally and many of them, perhaps most of them, are parts of great international organizations, cartels, agreements, which function on both sides of the battle front.
One is surprised to find men representing great commodity trusts or agreements or syndicates planted in the various war boards. It is silly to say New Dealers run this show. It’s run largely by absentee owners of amalgamated industrial wealth, men, who either directly or through their employers control small minorit)^ blocks, closely organized, that manipulate the physical plants of these trusts.
These “managerial magnates,” declared William Allen White, were determined at all costs “to come out of this war victorious for their stockholders” . . .
Here are a few of the “managerial magnates” and the posts they occupied in the U.S. war agencies:
William S, Knudsen, President of General Motors: Chairman of the War Production Board *
* The political orientation of some General Motors executives was indicated by William S. Knudsen’s comment in 1933 that in his opinion Hitler’s Germany was “The miracle of the 20th century”; and by GM Vice-President James Mooney’s acceptance in 1938 of a medal from Adolf Hitler. During t!ie war, James Alooney acted as the liaison between General Motors and the U. S. Government, in connection with war contracts. General Motors received contracts aggregating almost 14 billion dollars, or approximately one-twelfth of the total contracts awarded.
Edward J. Stettinius, Jr., Chairman of the Board of U.S. Steel: Chairman of the War Resources Board
James V. Forrestal, President of the Dillon, Read & Co., Investment Bankers: Under Secretary, and then Secretary of the Navy
William H. Harrison, Vice-President of American Telegraph and Telephone Company: Director of Production, Office of Production Management
Philip Reed, Chairman of the Board of General Electric Company: Director of the Consumer Goods Division, War Production Board
Williain M. Jeffers, Fresident of the Union Pacific Railroad: Director of the Office of Rubber Production
Ralph K. Davies, Director of Standard Oil Cojnpany of California: Deputy Petroleum Administnuor
Sain H. Husbands, Director of the Anglo-California National Bank: President of the Defense Plant Corporation of the Reconstruction Finance Corporation.
Charles B. Henderson, Director of the Western Pacific RR: President of the Aletals Resources Corporation of the RFC
Donald M. Nelson, Executive Vice-President of Sears Roebuck & Co.: Chairman of the War Production Board
Leo T. Crowley, Chairman of the Board, Standard Gas & Electric Co.: Administrator of the Foreign Economics Administration
Charles E. Wilson, President of General Electric Co.: Executive Vice-Chairman, WPB
William L. Batt, Chairman of the Board of American Management Association, President, SKF Industries: Asst. Vice-Chairman WPB
Donald D. Davis, President General Mills, Inc.: WPB Vice Chairman
T. P. Wright, Vice-President Curtiss-W right Corp.: Aircraft Resources Control Office
Walter S. Gifford, President of the American Telephone & Telegraph Co.: Member War Resources Board and Chairman Industry Advisory Committee of Board of War Communications *
* As early as August 1941, Representative John M. Coffee read into the Congressional Record a list of the names of forty-two presidents of large corporations who were acting as important officials in the armament program. Throughout the war these business leaders and hundreds of lesser executives of their enterprises held key posts in all government bodies connected with planning war production and purchasing war supplies. A postwar study of the War Shipping Administration revealed that 186 of its 312 officials had been on the payroll of shipping and shipbuilding companies, and that many of the remainder had been employed in associated fields like marine insurance and naval architecture. The case of the WSA was typical rather than exceptional.
Inevitably, with control of the armaments program in such hands, war production became overwhelmingly the monopoly of the few most powerful industrial concerns in the United States. So concentrated was this monopoly that, according to statistics later released by the Senate Smaller War Plants Committee the leading loo corporations in America received approximately 70 per cent of all the war contracts.
By the summer of 1945, twenty-six billion dollars’ worth of new industrial plants and equipment— mostly subsidized with government funds— had been added to the nation’s manufacturing facihties. The interests which acquired ownership of these colossal new industrial resources were indicated in a report of the War Assets Administration:
The 250 largest war manufacturing corporations operated during the war 79 percent of all new, privately operated plant facilities built with Federal funds . . . these companies have acquired 70 percent of total (surplus) disposals . . .
“It is quite conceivable,” the Temporary National Economic Committee had prophetically stated before America’s entry into the war, “that the democracies might attain a mihtary victory over the aggressors only to find themselves under the domination of economic authority far more concentrated and influential than any which existed prior to the war.”
And on April 29, 1938, in a message to the Congress, President Roosevelt had given this eloquent warning of the dangers inherent to American democracy in the concentration of such economic power in the hands of a few men:
Unhappy truths abroad have retaught us two simple truths about the liberty of a democratic people.
The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than the democratic state itself. That, in its essence, is fascismownership of government by an individual, by a group, or by any other controlling private power . . .
Among us today a concentration of private power without equal in history is growing . . .
The Second World War resulted in an unprecedented acceleration of the concentration of private powxr in the United States.
The basic and most ominous paradox of the American war eflFort was the fact that while the nation was helping to destroy fascism abroad, the economic base for fascism was being laid at home.