Sleeping Beauty Treatment

Newly tough Donald Nelson had a hot new idea last week on what to do about small business in a total war that requires more materials and manpower than big business can find.

Significantly, Nelson's ideas amounted to the first admission from any top-drawer Washington war man that hope of getting any large volume of war orders for small industry is just about gone--though that hope is still personified by a $150,000,000 WPB adjunct, the Smaller War Plants Corp.* But Donald Nelson's realism may nonetheless offer the little fellow a better break in the long run than all the gentle small-business panaceas that millions of words, good intentions--and taxpayers' dollars--have so far produced.

What Don Nelson had in mind was a kind of Sleeping Beauty treatment, with small business put out of its suffering for the duration and Prince Charming kissing it back to life after the war. To the Senate Small Business Committee, struggling with plans for keeping the Beauty awake as well as alive next year, he suggested instead a War Liabilities Adjustment Agency that would: 1) relieve about-to-be-extinguished firms of their pressing current liabilities (leases, loans, etc.); 2) finance their re-entry into business after the war; 3) give them special breaks such as priorities on new equipment, technical advice, etc. when the U.S. can again afford having them in business.

Production Tsar Nelson made it clear that he wanted no part of this helping-hand job for WPB, which had troubles enough already with war production. What he wanted for himself was a clear conscience when and if he has to commit mayhem on small business to take over its equipment and manpower. The U.S. has over 2,750,000 small businesses (fewer than 100 employes) with a total payroll of more than 8,350,000 people. Though only 169,000 are manufacturers, they all consume manpower--and manpower in the long run may well become the most compelling U.S. shortage.

Meanwhile a mysterious fact about the problem emerged from the mountains of testimony heaped before the long-suffering Small Business Committee last week: though for more than a year one war agency after another has wept and cried "Wolf" about how many little men were about to fold up because of the war, so far the agencies set up to "save" small business have shown much less staying power than their proteges. All the experts had to admit last week that no one yet knew the score on "business mortality," but what little they did know made it seem little if any worse than usual.

The real trouble here is that--from the standpoint of total war--the U.S. would have been better off if more of the wolf-crying had turned out to be true. For the continued existence of many peacetime businesses, the painfully slow death of those that are really doomed, is almost a dead loss to the U.S. war potential. It is wasteful of man-hours, of management, of materials and of machinery--for scrap if not for production (see p. 84).

Don Nelson's point: hereafter the central war problem is not how many little businesses can be kept going, but how many nonwar businesses, big or little, have any war-useful resources. And if such war-useless enterprises can be put to sleep instead of to death, they and the U.S. will be better off.

*The Smaller War Plants Corp. was set up, not ostensibly as a relief agency for small businesses but as a contract placement and lending agency to get those with adequate plant facilities into war production. So far it has landed contracts for only some $7,000,000 for its proteges, has approved only two loans totaling $65,000. A major explanation of this picayune record may be the all-too-characteristic fact that, although the corporation was authorized by law in June, it did not get a head (Kansas City Little Businessman Lou Holland) until July, a headquarters (the Raleigh Hotel) until August, or an administrative order permitting it to employ a staff until September. Nonetheless the same trade sources that claim that 45,000 small manufacturers are fully equipped to handle war contracts they cannot land, also believe that not more than 15,000 will ever be able to get into war production because of materials and labor shortage.

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