- Home Front U.S.A pg. 15-17Secretary of War Henry L. Stimson, a Republican in a Democratic administration, understood exactly what was necessary to meet production requirements. "If you are going to try to go to war, or to prepare for war, in a capitalist country," he said, "you have got to let business make money out of the process or business won't work." The government therefore chose to work on big business's terms ... The government also granted firms immunity from antitrust prosecution if they could show that cooperative arrangements would enhance essential war production.
An even more important incentive for business was the cost-plus-a-fixed-fee system, whereby the government guaranteed all development and production costs and then paid a percentage profit on the wartime goods produced.
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Inevitably, governmental priorities changed. Under the influence of business interests, there was a good deal of centralization and concentration. Contracts wen tot the largest firms, whose operating officers often knew officials in Washington. There were obvious advantages to relying on the nation's major companies, for they already had the labor pools and assembly lines that could most easily be converted to war production. They also already had research staffs that could be quickly mobilized to make the necessary refinements in war items. The large firms subcontracted tasks to smaller companies, but even so, many of the nation's smaller firms, blocked from supplies of scarce materials and unable to produce civilian goods, had to close their doors.
America's economy already exists in a pretty concentrated state. I wonder though if more can't be done. In what capacity should "entrepreneurship" be encouraged? In that spirit to what degree should it be allowed and encourage within the centralized monopolies?
Does this mean that the conversation of "startups" must be killed? What about venture funding and the entire industry around it? Can startups be classified as "small business" if their potential to scale quickly means they are potential giants? We have seen impressive feats in the startup space in recent times surely it couldn't be in the same class as "mom and pop shops".The corporation's creation was an attempt to legislate a vision of society in which the small entrepreneur had a chance, bu that vision gave way in the face of the demand for rapid production to assit in the conduct of the war. Though small businesses hoped for a revival in the postwar period, the creation of an early version of the "military-industrial complex" during the struggle provided a framework for favored the industrial giants, in wartime and in the ensuing years.