offices, the Corporation endeavored to obtain prime contracts for small business, make loans and leases, arrange subcontracts for small plants, provide them with technical information, assist them in obtaining materials for essential civilian production, make surveys and reports, and render various types of business services. Later it assisted small businesses in contract terminations, and provided aid not only to small-business men, but also to veterans, in obtaining surplus property.

Many of these functions which were carried on by the Corporation could not be measured statistically. For example, one of the most important accomplishments of the Corporation-and perhaps its chief achievement-was that of making the procurement officers of the military services in Washington and in the field much more aware and conscious of small business in the awarding of war contracts. The extent of this influence obviously cannot be measured statistically although it was a very real factor. Similarly, it was practically impossible to measure the benefits to small business resulting from persuading a large prime contractor to subcontract more of his work. There is no measure for the aid granted to small businesses in helping them carry through an appeal under a war agency restriction order, and so forth.

With these limitations on the legislative authority and actual powers of the Corporation, as well as the difficulties in measuring its accomplishments in mind, the statistical record of the Corporation may be examined.

CHAPTER II. WAR CONTRACTS

The most important function carried on by the Corporation was that of helping small plants obtain war contracts. In addition to the constant pressure which it exerted on the military services to place more of their contracts with small firms, the Corporation adopted four definite courses of action in helping small plants get into war production.

1. Prime contracts awarded with assistance of SWPC

Of these four, the most important consisted of the arrangements which the Corporation entered into with the military services to recommand individual small plants for specific prime contracts. Although the details of these arrangements were modified from time to time, their essential features were as follows:

(a) The SWPC established liaison specialists in the central offices of the military services which placed war contracts. All military prime contracts flowed across the desks of these liaison specialists. It was their function to earmark those specific prime contracts which could be handled by small plants.

(b) These earmarked prime contracts were then "fanned out" to the various SWPC regional offices in whose areas were located small plants capable of producing the item involved.

(c) The SWPC regional offices would then, on the basis of information supplied by their district offices, designate certain small firms as capable producers of the item. Special emphasis was placed on those capable small producers which were urgently in need of work.

(d) The designated small companies would then be requested to make bids for the prime contract.

In addition to these formal steps, the Corporation frequently assisted small firms in determining whether or not they were capable of producing a given item and, where necessary, assisting them in obtaining needed equipment and machinery. Also the Corporation helped small firms in the actual placing of bids, including the preparation of specifications.

This work was conducted on a very extensive scale and absorbed most of the personnel of the Corporation. In its lifetime the Smaller War Plants Corporation examined a total of nearly 205,000 procurements.

As is shown on chart I, nearly 60,000 prime contracts with a value of nearly $6,000,000,000, were awarded to small plants with the assistance of the SWPC through November 1945, the last month for which such information was compiled. Of this total, two-thirds (40,012) were War Department contracts with a value of $4,700,000,000. More than 10,000 were Navy contracts and the balance of over 7,000 were contracts with other Federal agencies, primarily with the Maritime Commission. (See table 2.)

This assistance program, as is shown on chart II, did not really get under way until the beginning of 1943, since several months were required to recruit a staff and to complete the arrangements with the military agencies. From January 1943 to the end of the war more than 1,000 contracts were awarded with the

PRIME CONTRACTS

assistance of the SWPC in each bimonthly period. And during 11 bimonthly periods more than 3,000 contracts were awarded. The peak activity came in the 4-month period. February through May 1945, when 11,800 contracts with a value of $1,400,000,000 were awarded. As the chart shows, the increase in the contracts awarded in 1945 over the levels of previous years was particularly striking.

Small manufacturers throughout the country received the benefits of this assistance from the SWPC, although, as is to be expected, the more industrialized areas received a greater share of the contracts awarded. In the table below the distribution of prime contracts is compared by major geographic areas with the distribution of industrial activity of small plants, as measured roughly by the 1939 value added by manufacture of plants with less than 500 wage earners.

Oct Dec. Feb.Apr. Jun.Aug.Oct. Dec. Feb. Apr. Jun. Aug.Oct. Dec. Feb.Apr. Jun. Aug.Oct. Nov. Jan. Mar. May Jul. Sep.Nov. Jan. Mar. May Jul. Sep. Nov. Jan. Mar. May. Jul. Sep. Nov. 1942

1943

1944

1945

Prime contracts awarded with the assistance of SWPC, distributed by areas

The similarity between the two sets of percentage figures is striking. In other words, the geographic pattern of contracts awarded with the aid of the Smaller War Plants Corporation was almost exactly the same as the prewar pattern of industrial activity of small plants in the country.

The SWPC made every effort to procure contracts for the distinctly small firms. This can be seen in the following table which shows that more than one-half of the number and one-third of the value of prime contracts awarded with the assistance of SWPC went to firms employing less than 100 wage earners. tracts with concerns having over 500 employees were negligible.

Distribution by size of plants

[Values in millions of dollars]

Con

2. Prime contracts taken and let by SWPC

Under the authority of Public Law 603, the SWPC was authorized to take prime contracts on its own account from procurement agencies and to distribute them as subcontracts to small firms. Essentially, this was only a means of last resort-a potential club over the heads of the procurement agencies which could be used in extreme cases.

Actually no extensive use could ever have been made of this power. To have embarked upon any ambitious program of taking prime contracts and then distributing them to small business as subcontracts would have duplicated much of the work of the military agencies themselves. Such duplication would never have been permitted either by the Budget Bureau or by Congress. Consequently, the corporation made only infrequent use of this power, although its existence undoubtedly strengthened the hand of the corporation in dealing with the procurement agencies.

During its life, the SWPC took only 12 prime contracts with a total value of $35.5 million. These prime contracts were divided by the corporation into approximately 260 subcontracts which were given to qualified small firms designated by the field offices as urgently in need of work. Nine of these prime contracts were completed and deliveries made to the satisfaction of the procurement agencies. On VJ-day two which were still active were terminated by the procurement agency. The other prime contract with the Federal Public Housing Administration has been in an inactive status pending the development of the housing program.

3. Subcontracts

From its inception the corporation was actively engaged in obtaining subcontracts for small plants from large prime contractors. War production required a vast number of parts and components-the so-called bits and pieceswhich—which were singularly well adapted to production by small plants. In carrying out this program, the SWPC engaged in a variety of different types of work. It tried to persuade the large prime contractors to subcontract as much of their work as possible; it suggested to the prime contractor specific ways in which he could increase his subcontracting; it brought to his attention the names of qualified small plants which could produce items that might be subcontracted; it assisted the small firm in placing bids and specifications before the prime contractor; and it worked continuously to find additional small firms that could serve as subcontractors.

The results of this contact work between big business and small plants cannot be measured statistically, but it is known that a very large amount of subcontract business was placed with small firms as a result of the efforts of SWPC. The available figures show that through October 1945 the Smaller War Plants Corporation assisted in the awarding of more than 52,000 subcontracts with a value of $30.6 million. (See Table 4.)

These figures, however, tell only a small part of the story. They understate greatly the actual number of subcontracts awarded with the aid of the SWPC because in large part they represent only the first subcontract arranged between a small firm and a prime contractor. When that first subcontract had been completed and the small firm had gone to work on a second subcontract for the prime contractor, such "repeat subcontracts" were seldom reported by the small firm or the prime contractor to the SWPC. To have obtained such data would have involved placing an impossible burden of statistical reporting on American business.

4. War production pools

During the war nearly 250 war-production associations or facilities groups received Government clearance. Thirty-two of these were certified formally under the provisions of the Smaller War Plants Corporation Act (Public Law 603). In addition, the Smaller War Plants Corporation aided materially in the development of many of the other pools, since they were composed principally of small manufacturers. The associations represented more than 2,000 companies employing over 140,000 workers. It has been estimated that they secured over $600,000,000 in war contracts.

Many small businesses which could not have otherwise participated in war production were able to do so by means of pools. By joining up with other small firms they could collectively turn out war goods which, individually, none of them would have been able to produce. Nearly 100 pools were still in existence at the end of 1945.

As a result of these more or less formal procedures as well as the constant pressure on the procurement agencies exerted by the Corporation, the proportion of the value of prime contracts awarded to small firms rose steadily as the war progressed. Thus, as may be seen in chart III and table I, from November 1942 to December 1943-the first year of the Corporation's activity in the field of prime contracts-only 12.8 percent of the prime contracts awarded by the War Department went to firms employing less than 500 workers. In 1944 when the Corporation was under a new leadership, the proportion rose to 20 percent. In the next 6-month period, from January 1945 to June 1945, when war production was running at high levels and the policies of new management had become fully effective in operations, the percentage rose to 26.7. In the last months of the war effort following VE-day, the percentage rose to even higher levels-30.4 percent. Although the data are less complete, prime contracts let by the Navy Department to plants employing fewer than 500 wage earners showed a similar trend. From April 1943 (first date information was available) to December 1943, 8.5 percent of the Navy prime contracts went to small plants. In 1944 it rose to 11.6 percent and in the first 7 months of 1945 it increased to 12.8 percent.

The data presented in chart III strongly suggest that the efforts of the SWPC, particularly from the beginning of 1944 to 1946, contributed materially to the substantial increase in the share of prime contracts which were obtained by small plants.

ARMY AND NAVY CONTRACT AWARDS

TO SMALL PLANTS*

AS PERCENT OF TOTAL VALUE OF ALL AWARDS

The Smaller War Plants Corporation was granted the power in Public Law 603 to make loans and leases to small businesses for the "manufacture of articles, equipment and supplies, and materials for war and essential civilian purposes." During its life the Corporation, as shown in chart IV, authorized nearly 6,000 loans and leases, amounting to over a half billion dollars. More than 3,200 of these loans were authorized in the last half of 1944 and in 1945.

The Corporation received over 26,000 inquiries regarding financial assistance and processed more than 9,000 applications for loans. The difference between the 9,000 applications and the 6,000 loans actually authorized represented appli