The Army and Economic Mobilization

By R. Elberton Smith | Go to book overview

CHAPTER IX Survey of Army Purchasing: 1940 to 1945

The procurement of Army matèriel for World War II represented the greatest purchasing operation ever conducted by a single agency in the history of the American economy. The value of War Department procurement deliveries under supply contracts from 1 July 1940 to 31 August 1945 has been estimated at $117 billion, consisting of nearly $44 billion for the Army Air Forces and the remainder for claimants supplied by the ASF.1 Yet even this figure, which would dwarf by comparison the operations of the nation's most gigantic corporation, fails to suggest the true magnitude of War Department purchasing activities in World War II. In order to obtain the needed deliveries of munitions and to train and house its troops, the War Department was obliged to contract, directly or indirectly, for many additional billions of dollars in industrial facilities, machinery and equipment, and Army installations throughout the world. The combined value of total war production for the Army, including its air forces, during this period has been estimated at approximately $180 billion.2 Moreover, these figures do not take into account the fact that the value of purchase contracts originally placed with industry in order to achieve these results was much higher: the canceled value of the Army's World War II contracts which were terminated prior to completion ran from $40 billion to $50 billion. (See Table 60, page 696.)

No amount of statistical presentation can fully reveal the complexities of the Army's wartime purchasing operations. The expansion of Army purchases to more than one hundred times their previous annual rate in peacetime suggests only the quantitative changes which took place as a result of the war. The most difficult aspects of wartime purchasing were those which involved qualitative departures from peacetime methods of buying and which required the development of an entire new philosophy of pricing and contract placement, as well as the formulation of countless other details of purchase policy. The following pages attempt to portray the background and nature of the problems faced by the Army in its wartime purchasing activities and the policies which were developed in an effort to provide their solution.


The Interwar Period

The revolution in Army purchasing activities and policies brought about by World War II can be understood only by contrast with peacetime procurement. Army pro-

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1
Whiting et al., Statistics, "Procurements" 9 Apr 52 Draft, p. 14. These totals, computed from physical quantities delivered and unit costs of 1945, do not reflect final cost to the government; they do not, for example, take into consideration price changes or contract renegotiations. For other qualifications see source.
2
Civilian Production Administration, The Production Statement ( 1 May 1947). See Table 2, p. 6, which is subject to qualifications similar to those in note 1, above.

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