Little -- and Late

How is U.S. rearmament going?

From worried U.S. industrialists who have the big job of rearming the nation, came the shocking answer: not very well. In fact, big-scale arms production has not even started. With the threat of global war deepening by the hour, the bitter truth is that the U.S. right now--after five months of a shooting war--is producing fewer weapons than it was when the Japs struck Pearl Harbor.

Many industrialists have no war orders at all. Many others, months after getting "letters of intent" of war contracts to come, still have no blueprints nor contracts needed to start production. Almost unanimously, businessmen agree that the trouble lies with the inability of the armed services to make up their minds what arms they want and how many.

The U.S. got a false sense of furious activity when Congress, after the start of the Korean war, appropriated $11.6 billion extra for defense and the Defense Department announced that it was "obligating" the money for guns, tanks and planes. By last week, it had obligated an estimated half of the $30 billion appropriated for arms this fiscal year. But the catch lies in the fact that "obligation" without blueprints and contracts is meaningless as far as adding to the supply of weapons is concerned. Such a small part of the huge emergency appropriations has actually been spent that the Treasury, which is engaged in deficit financing, has run a smaller deficit during the last five months than it did in the same months last year.

In & Out. To date, $1 billion has been obligated for tanks and automotive equipment. Some $400 million has been obligated for electronics, but Admiral and Zenith, two of the largest television manufacturers, have no war orders. One manufacturer, who took over a huge war-surplus plant on a rush war job of the highest urgency, had to wait two months for the blueprints of the weapon he was to make.

New England, which turned out almost 10% of all U.S. World War II production, so far has about $1 billion in war contracts--only 3% of the money Congress voted. General Motors, which turned out one-tenth of all U.S. war goods last time and was working on $1.2 billion of orders at the time of Pearl Harbor, had less than $750 million worth last week.

Even in the aircraft industry, which got the biggest share ($5 billion) of the obligations so far, the step-up in production has been hardly noticeable. The industry is still awaiting the word on what types of planes will be ordered. Despite the flood of pictures of production lines (see cut), the lines are the same ones in operation before Korea--and they are not moving much faster. Even if the industry meets the Defense Department's goal of a rate of 6,000 planes a year by the end of 1951, it will still only match the production rate of 1940, a year before Pearl Harbor. The big hitch: a constant change in specifications.

Upside Down. Many of the changes reflect the military's praiseworthy desire to have the latest models before freezing production on a mass basis. But production men know that models have to be frozen sometime or rearmament will never get rolling. And there is always a "lead time" of months between the time orders are placed and plants are ready for production. Most businessmen maintain that the U.S. is even now not in the lead-time period, simply because the orders have not been placed.

Last week, Washington's war planners were talking a lot tougher, e.g., by mid-1951 automobile production might be cut back as much as 50%, television production as much if not more. But the Washington planners were still putting the cart before the horse. Even in a state of full mobilization there is little sense in cutting back civilian production until actual war orders are issued. Premature cutbacks will merely cause layoffs and the closing of plants and in the end, U.S. production will be hurt more than helped. Once war orders go out in big enough volume, civilian production will be cut back automatically and the weapons will begin to pour out.

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