The Managers and Defense

From FORTUNE'S sixth Forum of Executive Opinion--sounding board for the nation's 35,000 top management men--came this week the first broad description of how defense is changing the pattern of U.S. business, as the managers see it.

Most surprising report came from men in commerce and retail trade. In this field 65.2% of FORTUNE'S businessmen said their supply of important merchandise items had been curtailed. Tightest were articles made of iron and steel, aluminum, other metals. But also short were textiles, rubber articles, many another item.

Of manufacturers, 14.1% reported that their normal operations had been hindered by priorities or shortages--chiefly of metals but also of chemicals, machinery and tools, transportation, paper, textiles, skilled labor. Another 36.8% had been threatened by priorities and shortages. Although only 3.5% had been forced to lay off employes, another 34.6% expected unemployment at their plants.

One widespread effect of shortages was a decline in plant maintenance; 23% of the manufacturers had. deferred repairs or normal additions, and most of these businessmen expected the delay to affect them seriously within a year or less. Of the manufacturers 37.7% reported themselves importantly engaged in defense work, illustrating the fact that FORTUNE'S panel is heavily populated with executives of large corporations (since only some 9,200 of the 185,000 U.S. manufacturers hold prime defense contracts).

The Forum also spoke its mind on theoretical questions. In the old guns-or-butter argument, the businessmen tended to favor guns only--though not overwhelmingly. A policy of curtailing consumer demand for scarce articles was supported by 59.1%; in favor of rapid expansion to meet both emergency and normal civilian demand were 39.2%. Notably on the anti-expansionist side were railway and utility men. But not all railway executives believe that their own present capacity is enough; 19.6% did not believe that they could handle this fall's traffic peak without delays.

For price controls of one type or another, the businessmen were in accord (only 11% opposed). Votes for specific types: over wages, 62.6%; raw materials, 52.3%; wholesale prices, 30.8%; farm products, 30.7%; retail prices, 27.8%; all-or-none, 14.3%. But, surprisingly, the financial and investment executives in FORTUNE'S group were almost evenly divided on the prospects of a serious inflation. Half thought that price and currency controls would prevent it.

Though competitors, three truck manufacturers (White, Diamond T, Autocar) set up a joint purchasing committee to speed their work on 9,347 standardized Army trucks and scout cars. The committee first got subcontractors tooled up without duplicating facilities, now places bulk orders for all materials.

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