majority, however, called for an end to the government’s peacetime use of private contractors to supply key military goods such as weapons, ammunition, explosives, and warships. In doing so, they combined emotionally charged rhetoric with colder economic calculations. Both were used by Senator Homer Bone (D-WA), a well-known champion of public utilities. When contractors testified that the private sector was always more efficient, Bone responded that the record of the power industry in the Pacific Northwest had taught him otherwise. But Bone also made more moralistic arguments. In 1917–18, he recalled, some American “boys were butchered in the war, and thousands of men made multimillionaires overnight.” Given this record of such reprehensible inequalities, Bone asked, “Why should we blink at socialization?”108
Such suggestions were actually less radical than they might seem because peacetime munitions manufacture was already semi-nationalized. After 1918, the War Department’s own arsenals had returned to their traditional role, which was to supply the Army with most of its needs for small arms, artillery, and ammunition. Meanwhile, the Navy was sending a large fraction of its modest orders for new warships to its own yards, which Secretary Daniels had worked so hard to expand. These GOGO munitions facilities were examined carefully by the Nye Committee, which determined that they were competitive with private sources. The committee also asked the ICC to estimate what it would cost to expand the GOGO operations enough to supply all the peacetime needs of the Army and Navy. According to the ICC, it would take only about $24 million in additional investment in the Navy shipyards to fully nationalize peacetime warship construction. For an additional $23 million, the ICC estimated, the Army and Navy could expand their GOGO operations enough to create a peacetime government monopoly in the manufacture of finished small arms, smokeless powder, and aircraft.109
As the results of the Gallup poll in March 1936 suggest, most Americans supported some kind of increased regulation of the arms industry, if not all the Nye Committee’s specific proposals. Surveys of college students and church groups in 1935, when the committee’s hearings were widely publicized in the national media, found that more than 80 percent of those surveyed favored heavier government controls over munitions. First Lady Eleanor Roosevelt supported the Nye Committee’s recommendations, including the call for nationalization.110
Veterans, who had been calling for major reforms since 1918, continued their efforts. At VFW-sponsored dinners across the country in 1935, officers demanded a policy of “profit for none” in any future war. Two years later, the American Legion was still pushing Congress to pass powerful wartime profit controls, so as to avoid any repetition of the Great War, when “some twenty-two thousand individuals at home stepped from the shadows of financial obscurity into the millionaire class.” Such language continued to prevail among veterans, well after the Nye Committee hearings came to an end. At a local VFW event in 1937, Louisiana state senator Ernest Clements roused the assembled veterans by recalling that twenty years earlier, the nation had suffered “a hundred thousand soldiers dead to make a bunch of skunks American millionaires.” In any future war, Clements demanded, the government must “take over munitions plants.” This call brought loud applause from the assembled VFW men.111
The real question in the mid-1930s was not whether the government should strictly regulate war profits and build weapons in its own facilities, but exactly how far this should go. Some government officials, including NRA chief Hugh S. Johnson, indicated that they could support a full nationalization of peacetime munitions production with the understanding that in wartime, the government would need to contract with the private sector.112 This idea was supported by Ernest Angell, a New York lawyer and Great War veteran who published a lengthy magazine piece on the issue in 1935. Angell did not oppose some kind of extension of peacetime nationalization, but he pointed out that any such move would have to grapple with the technical question of “at what point in the stream of production a proposed government monopoly shall take over.”113 The Navy might not have much trouble taking over all the production of finished warships and guns, which it already knew how to make. But such a scheme would still presumably require lots of private suppliers, who would sell the Navy most of the elements it needed, such as steel products, turbines, boilers, valves, and cable.
In the end, most of the Nye Committee’s recommendations were not enacted by Congress. The committee’s investigations did contribute to the passage of the 1935 Neutrality Act, which banned munitions exports to nations at war. But Nye’s efforts to ramp up domestic regulation of the defense sector failed, in the shorter run. The government would not impose comprehensive price and profit controls until after a new world war had begun. Nye’s nationalization scheme was resisted by civilian leaders and military officers in the War and Navy Departments, who preferred to maintain their more flexible systems of mixed public and private production. The military was backed by President Roosevelt, who had close ties to the Navy and opted to distance himself from Nye’s more populist approach to the issue.
Although Nye was thwarted in 1936, it would be a mistake to understand the defense sector of the 1930s as an area that was immune to the progressive push for more regulation and public enterprise. This was obvious in warship construction, which, as the Nye Committee noted, was already semi-nationalized.114 Here there was already a difference from the years before the Great War, when about 80 percent of new warships had been built by private contractors. After the 1922 Washington Naval Treaty, which limited warship construction, it was unclear how much of the Navy’s modest orders would go to its in-house shipyards and how much to the struggling private yards. The private shipbuilders lobbied for more work, but their efforts were countered by those members of Congress who had one of the eight Navy yards in their districts. In the late 1920s, Congress settled on a fifty-fifty policy, which called for half the ships to be built by contractors and half by the Navy yards.115
The policy of building half the warships in the Navy’s in-house yards was solidified in March 1934, when Congress passed the Vinson-Trammell Act. One of the most important pieces of legislation passed during the interwar period, Vinson-Trammell authorized the Navy to begin a major new building effort that would provide it 1.2 million displacement tons of warships, the maximum allowed under the 1930 London Naval Treaty. Its passage represented a victory for the proponents of a big Navy, including President Roosevelt and Congressman Carl Vinson (D-GA). It was also a victory for public enterprise. According to the law, every other warship needed to be built in a U.S. Navy yard, “unless … inconsistent with the public interest.” (The same level of public production was not required for aircraft, even though the Naval Aircraft Factory had been a major producer during the early 1920s. According to the new law, only 10 percent of Navy planes should come from in-house sources.) Vinson-Trammell also regulated profits, by capping contractors’ earnings on Navy shipbuilding work at 10 percent of production costs.116
Thanks to the generous appropriations provided by Vinson-Trammell, along with tens of millions of dollars from New Deal agencies, the private shipyards became much healthier. At companies like the Bath Iron Works, in Maine, and Newport News Ship, in Virginia, this was a welcome end to what had been more than a decade of inactivity and financial struggles.117 However, the private yards were none too pleased by the statute’s requirement that production be semi-nationalized. This clause was protested by the National Council of American Shipbuilders, which soon found itself trying to contain an even bigger threat—the Nye Committee’s call for allout nationalization.118
Having dodged that bullet, the National Council of American Shipbuilders rededicated itself to lobbying against the semi-nationalization required under Vinson-Trammell. Some of the council’s arguments, which stressed that the costs of the GOGO facilities appeared to be competitive only because they were never fully accounted for, were very similar to the ones used by the private electrical utilities in their battle with the TVA. “If navy yards are to be used as yardsticks,” the private shipbuilders complained to Congress in 1937, “then the yardstick should be exactly 36 inches long.” The council also pointed to the private yards’ modest profits, which, since the mid-1910s, had averaged only 5.5 percent of sales, barely half the 10 percent limit imposed by
