THE NOME NUGGET
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THE WASHINGTON
MERRY-GO-ROUND
By Drew Pearson and
Robert S. Allen
WASHINGTON — As pointed
out in a previous Merry-Go
Round article on national de
fense, taxes and the sit-down
strike by industry, the bottleneck
of American rearmament is fac
tory expansion.
In order to produce more plan
es, guns and tanks, new factories
-are necessary. And part of the
delay has resulted from a wran
gle over how taxes shall be paid [
ct> these new plant expansions.
In fairness to industry, it
should be noted that many of
the leaders have gone ahead and
financed their own plant expan
sion without waiting to see what
the tax picture would be. In fact
some industrialists were far
sighted enough to begin more
than a year ago. Companies
which did this include: New
York Shipbuilding, Newport
News Shipbuilding, Bethlehem
Shipbuilding, Bath Iron Works,
Federal Shipbuilding, Midvale
Steel, Carnegie-Illinois Steel,
Bethlehem Steel, Rausch and
Lamb, General Electric, Ford In
strument Company, Edo Aircraft
Grumman Aircraft, Brewster
Aeronautical, Eclipse Aviation
and Walter Kidde.
Probably the list takes in
many others. And because of
their far-sightedness these firms
not only are reaping good profits
for themselves but also doing a
service for the Government. For
instance, the Elco Company of
Bayonne, N. J., put up an $800,
000 plant extension about a year
ago in order to manufacture mo
tor-torpedo (“mosquito”) boats.
As a result, it is now turning j
over to the Navy one new, and
badly needed mosquito boat each
week.
However, among many other
manufacturers there has been in
excusable backing and filling ov
er factory expansion and how
the new plants will be taxed and
financed. There is no question
but this dickering has definitely
slowed up the defense program.1
GOVERNMENT ARMS PLANTS
There are three general means
of operating factories for nation
al defense.
ONE is the arsenal, completely '
owned and operated by the Gov-1
emment such as the Frankford
Arsenal in Philadelphia, or Rock;
Island Arsenal. 111. For the most
part private industry objects toj
too many of these government '•
arsenals.
TWO is the factory complete
ly owned and operated by pri
vate industry. This was the prac
tice employed during the World
War.
THREE is a compromise sys
tem whereby the Government
buys the ground and erects the
factory, then lets the private
manufacturer step in and op
erate the plant for a manage
ment fee.
Of these three plans, the first,
namely government arsenals, is
bitterly opposed :by business,
w’hile the second, that of private
factories, is vigorously opposed
by the Government. And because
private munitions plants were
torn down after the World War,
the United States finds itself in a
serious predicament today.
For instance, take the question
of powder—most essential of all
ingredients to a national defense
program. At the end of the
World War. the United States, by
herculean effort and by spending
vast sums of money, was pro
ducing 496,000,000 pounds of gun
powder annually. In addition,
new factories were being built
which in another three months
after the Armistice would have
upped our powder production byj
another 500,000,000 to a total of ;
one billion pounds. In compari
son with this billion pounds, how
ever, the annual production of
powder in the United States to
day in a paltry 20,000,000 pounds.
Reason for this is that private
industry tore down its powder \
factories after the war.
POWDER SHORTAGE SERIOUS
Powder is the bottleneck of
national defense. Without it not;
a shot can be fired, not even a j
revolver. And today’s powder1
shortage is most serious. It is to
avoid these shortages in the fu- j
ture, not only in regard to pow- ]
der, but also other essentials of
modern warfare that the Govern
ment is anxious to build some of
its own plants, or at least obtain
a lien on them in order to pre
vent their destruction after the
war is over. Therefore, the plan
proposed by Judge Robert Pat
terson, newly appointed Assist
ant Secretary of War, is to let
the government erect the factor
ies, keep them permanently in
case of future emergency, but
lease them to private industry.
This also would solve the tax
problem, because industry would
have no need to ask for early
amortization on its emergency ex
penditures.
The duPonts have been high
ly cooperative under this plan,
and are going to operate a gover
ment built powder plant in south
ern Indiana. However, some oth
er industrial leaders are opposed
even to this compromise plan,
and there has been some lobby
ing around the National Defense
Commission to keep government
out of the munitions business in
any manner, shape or form.
Although private industry
looks askance at the idea of the
government building too many
munitions plants, this opposition
is a mere bag of peanuts com
pared to its vigorous, 100 percent
disapproval of the tax reserva
tion placed in the new tax bill
by the House of Representatives
and the Treasury.
This reservation would give tax
benefit to private manufacturers
who had expanded plant facilit
ies; but in return for those bene
fits the Government would exer
cise a certain amount of control
over the future disposition of the
factory. In other words, if it was
built for the emergency and if
tax benefits were granted be
cause of that fact, then the Trea
sury contends that the plant
should not be torn down immed
iately after the emergency or con
verted to something ese without
the approval of the government.
This, private industry says,
threatens to put the government
right in the middle of the muni
tions business, and the National
Defense Commission, without
calling it a “sit-down,” has warn
ed that such threatened control
might prevent capital from flow
ing into the national defense pro
gram.
• I
THREAT OF NAZI CONTROL
Apparently industrialists seem
to think that these government
owned plants might be held over
industry’s head in the future,
and that once the government
has its own factories, Congress
might go ahead and operate
them in competition with private
business. In fact, the definite fear
is that the United States might
do what has been done in many
European countries, such' as Ger
many, Italy and France, where
the munitions industry is virtual
ly owned and operated by the
Government.
NOTE —To some War Depart
ment observers it would even
seem that they feared this pos
sibility almost more than the
possibility of the Nazi control
DEFENSE DELEGATES WELCOMED BY CANADIANS
^ ^ ...
Mayor Fiorello LaGuardia of New York, head of the U. S. group attending the first meeting of the
•joint board for defense of Canada and the United States, was welcomed upon arrival at Ottawa, Ont.
Canada, by rear Admiral Nelles, commander of the Canadian navy. In the center, smiling, is Com
mander Sherman of the U. S. Navy.
of industry in the United States
—a situation which might even
tuate if our national defense pro
gram is delayed.
WICKARD’S HOGS
When Claude Wickard, new
Secretary of Agriculture, went
back home to Indiana the other
day, local newspapers pursued
him for details about his private
life. In one case he was called to
the telephone to answer a ques
tion put by a lady reporter.
“I want to know what you are
doing, Mr. Wickard,” she said.
Wickard explained that he had
been working on his farm that
morning.
“But what kind of work?” the
lady persisted.
“I’ve been working with the
hogs,” said the Secretary.
“Feeding them, or something
like that?”
“No,” said Wickard. “Do you
want me to tell you just what
I’ve been doing?”
“Yes, please do,” was the eager
reply.
“Well,” said Wickard, “I’ve
been working with breeding
stock.”
"You’ve been what —?”
Wickard repeated the state
ment.
“Oh. dear,” replied the lady,
“let’s talk about something else.”
(Copyright, 1940, by United
Feature Syndicate, Inc.)
Election Returns
All the precincts of the Second
Division have sent in their of
ficial returns of the General El
ection held September 10th. Fol
lowing are these totals includ
ing the absentee votes already
counted:
Cole . 349
Dimond . 832
McCain . 423
Roden . 661
Boyle . 749 J
Humpheries .. 361
Hesse . 670
Miller . 433
Cochqan . 706
Egbert . 192
Gillette .. 220
Anderson . 253
Ball . 432
Cross . 504
Lyng .. 602
Ost . 390
Smith . 614
Stangroom . 612
Taggart .. 455
Whaley . 628 j
For liquor control . 579 j
Against liquor control . 599 j
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