U.S. Mobilization for World War II (Great Events from History: North American Series)
Article abstract: The prospect of involvement in war prompts conversion of domestic production to meet military needs.
Summary of Event
In June, 1940, German forces overran France. U.S. industrial mobilization became necessary when large British orders for military supplies were received. European events also aided the Roosevelt Administration in passing a number of military appropriations bills. Although more money was becoming available for war production, U.S. industry was reluctant to exploit this market. Conditioned by the static economic situation of the Depression, many capitalists expected such conditions to return after the war.
Expanding plants for wartime production was seen as a risky, short-term investment. The Roosevelt Administration tried in various ways to persuade industrialists that this was not true. The federal government offered to finance expansion through low-interest loans from the Reconstruction Finance Corporation. The Revenue Act of 1940 provided an incentive in the form of a 20 percent per year depreciation of new defense plants, instead of the former 5 percent tax write-off. Most important, however, was the “cost-plus” provision incorporated into government defense contracts. Private industry was guaranteed the cost of producing particular military hardware, plus a profit of a certain percentage of the cost. This plan proved lucrative to industry but led to excessive waste...
(The entire section is 1543 words.)
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