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World War II and the Monopolies

How War Strenghtened Monopoly

(27 July 1946)

From The Militant, Vol. X No. 30, 27 July 1946, p. 6.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

Just 250 giant corporations out of a total of 75,000 manufacturing corporations now control more than two-thirds of all usable industrial facilities in the United States. The holdings of these 250 “giants of industry” today equal the total for all corporations in 1939.

“It is clear that during the war these large companies have come to dominate not only American manufacturing but the entire economy as a whole,” is the conclusion of the Senate Small Business Committee’s study, Economic Concentration and World War II. (See The Militant, July 20.)

How was this increase in concentration of wealth and economic domination achieved during World War II?

This, says the Senate Committee’s report, was “due largely to the distribution of the great bulk of the war contracts to a small number of great firms. It was the distribution of the nearly 200 billion dollars of prime supply contracts which was the key to the control of productive resources during the war.”

“Companies obtaining prime contracts secured thereby the instruments of economic power,” say the reports.

They received vast amounts of government funds “in the form of substantial profits” for goods whose “sale was assured.” They received priorities for most of the raw materials and supplies. “They were granted the power of determining how much ... should be passed down to subcontractors, who and how many the subcontractors should be, and how much of the allocations each should receive.”

In addition, a company with prime contracts had the right “of expanding its own facilities under the extremely favorable amortization and carry-back provisions provided by the tax laws.” It was the few companies receiving most of the contracts “which operated most of the Government-owned facilities built during the war, and these companies generally obtained options to buy the plants after the war.”

Who Got the Contracts?

Who got these prime contracts? The report says: “From June 1940 through September 1944 prime contract awards amounting to $175,000,000,000 (billions) were made to 18,539 corporations. NO LESS THAN TWO-THIRDS OF THIS VAST AMOUNT ($117,000,000,000) WENT TO THE TOP 100 CORPORATIONS.” (Our emphasis).

These top 100 companies by September 1944 held “75 per cent of the prime contracts outstanding” on that date.

One company, General Motors, with $13,812,700,000 (billions) in war contracts, obtained 7.9 per cent of the total.

The top ten corporations together got 30 per cent of all prime contracts: the next ten, 12 per cent: the third ten, 7 per cent.


But the ownership and control of these 100 top corporations – the “Who’s Who” of the dominating corporations in every industry, steel, auto, oil, chemicals, aircraft, rubber, etc. – is in turn vested in a mere handful of “financial interest groups,” as the report calls them.

“Eight more or less clearly defined large interest groups” – the Morgans, Rockefellers, du Ponts, Mellons, Kuhn-Loebs and the Chicago, Boston and Cleveland banking combines – actually control the bulk of the giant corporations and their assets, says the report.

It is this tiny oligarchy of just eight families and financial combines who actually determined the policies of the war, controlled war production and received the overwhelming bulk of the war profits and loot.

What did the top 100 companies who got most of the war contracts secure in terms of permanent economic gains?

The report states: “The Nation’s manufacturing facilities in existence in 1939 had cost about 40 billion dollars to build. To this capacity there was added by June 1945 about 26 billion dollars of new plants and equipment. Roughly two-thirds of this 26-billion-dollar plant expansion was provided directly from Federal funds ... About $20,000,000,000 of the $26,000,000,000 wartime plant is usable for the production of peacetime products.”

Of the government-built wartime facilities, “Big Business, having received the great bulk of the prime contracts, also operated nearly all of these facilities. The concentration that existed in the operation of these facilities actually exceeded the concentration of prime contract awards.”

Not less than 83.4 per cent of the value of the privately-operated, publicly-financed facilities were operated by just 168 corporations.

These corporations have the options to buy these facilities, under most generous provisions of amortization through tax deductions in a period of from three to five years. And, anyway, points out

the report, only “Big Business has the money to buy” these facilities.

Control of Research

But there was one other very significant lever of economic power on which the top giant corporations got an even stronger hold during World War II – scientific research and development.

The federal government during the war awarded contracts for scientific industrial research amounting to nearly one billion dollars. Just 68 corporations secured 66 per cent of these funds. The top ten alone obtained 37.1 per cent of the total.

“This means,” the reports concludes, “that the large corporations which carried on the great bulk of the federally financed wartime industrial research will have control, through patents, of the commercial applications of that research.”

Thus, by grabbing up most of the war contracts, most of the government-financed facilities, and most of the federal funds for research, the giant corporations enormously strengthened their monopoly strangle-hold on America during World War II.

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