The expenses of the Ordnance Salvage Board were less than 6 per cent of the money received from sales and transfers. This sales cost compares favorably with similar costs in the mercantile world.
The fact that a large part of the money spent by the Air Service during the war was represented after the armistice by finished airplanes and airplane engines precluded any considerable recoupment of the war expenditures from sales of surplus materials afterwards, since, at present, planes and engines have small commercial utility. Aviation engines are too light and too powerful for ordinary tasks, and no real market for airplanes has yet existed in the United States. Consequently, the sales of air service surplus were virtually limited to commodities having commercial use, such as tires, photographic equipment, linen fabric, fur used in making aviators’ clothing, and the like. Some of these surplus commodities, however, went at good prices. One New York concern bought 372,500 Chinese dogskins for approximately $700,000. Nearly 5,000,000 board feet of surplus mahogany, used in making propellers, sold for $150 a thousand feet. Great quantities of small tools from the airplane factories, millions of yards of cotton fabric, and nearly 4,000,000 pounds of long-staple cotton sold at good prices. The Government realized $700,000 from the sale of 20,000,000 feet of spruce, fir, and other soft woods used in the manufacture of airplanes. One large sale of airplanes and engines was recorded. For $380,000 the Nebraska Aircraft Corporation of Lincoln, Nebraska, bought 280 Standard J-1 training planes without engines and 280 Hispano-Suiza engines to drive them.
To sell its surplus in the United States the Air Service set up field disposal agencies at Boston, New York, Buffalo, Chicago, Detroit, and Dayton. The property declared surplus was valued at approximately $115,000,000. Up to the present (July, 1921) goods to the value of $97,000,000 have been sold from this surplus, and there is an unsold residue valued at $18,000,000. The average recovery has been 62 per cent of the cost.
The disposition of the property acquired by the United States Spruce Production Corporation in the forests of the Pacific Northwest was delayed by the congressional investigation of the affairs of that official organization. The cost value of all salvageable property was calculated at approximately $19,000,000, of which $7,000,000 represented the cost of three railroads for hauling logs. The rest of the investment was represented by sawmills, roads, hotels and barracks for woodsmen, hoisting engines, drying kilns, and nearly 100,000 other items, among which were 22,000,000 feet of lumber produced and on hand. The lumber of commercial grades was promptly sold, and the Air Service arranged to take over the 3,088,000 feet of airplane lumber stock, for a consideration of approximately $1,000,000. The sale of the remaining property has gone on slowly, and the recovery has been low in ratio to the original cost.
The sale of surplus engineering materials brought to the Government the unusually high average recoupment of 87 per cent of the cost of manufacturing the supplies. The reason is that the largest and most valuable part of the surplus consisted of railroad construction materials and rolling stock. The railroads of the world, and particularly those of Europe, had been neglected during the war, and their rejuvenation had become a necessity even paramount to that of reconstructing general industry. Such governments as those of France and Poland were glad of the chance to secure American locomotives, cars, and cranes at the cost of their manufacture. The largest single sale of engineer supplies was made to the French Government, which paid approximately $63,000,000 for 485 freight locomotives and nearly 20,000 freight cars. By the spring of 1920 surplus engineering supplies which had cost $128,000,000 had been sold for about $110,000,000. Large quantities of excavating machinery and other contractors’ equipment were transferred to the Bureau of Public Roads.
Surplus chemical warfare materials, on the other hand, proved to have low salvage value. After the armistice the Chemical Warfare Service found itself with some 1,000 carloads of surplus materials on its hands. These materials had cost $11,000,000. Of the surplus, obsolete gas masks and other accumulations valuable to no one and therefore unsalable, accounted for $2,000,000. The rest consisted principally of raw materials and machinery. Certain of its raw chemicals the Service was able to dispose of to the artificial dye industry at a profit. The outside gas-making plants attached to the Edgewood Arsenal were sold by auction to manufacturers of chemicals.
Though the sales of surplus factories, machinery, raw materials, and scrap and junk were of intense interest and concern to industry and business generally, the great masses of people in this country knew little or nothing about them. The wage earners, the millions drawing salaries of moderate range, were not beneficiaries—not immediate beneficiaries, at any rate—of the bargains the Government was offering. The trade journals were filled with advertising and reading matter about the sales of the war surpluses, but the newspapers seldom had anything to say about them. No doubt there were hundreds of thousands of Americans who, immediately after the armistice, reading about the excess stores which were overflowing the Government’s enormous warehouses, expected to benefit personally and at once by the situation. It was the opportunity of a lifetime to pick up a new stock of kitchen utensils for a song, or a lawn mower, or a new Dodge car at a knock-down price, or, at least, new supplies of underclothing and other garments, or of food at figures which would make the corner grocer squirm. But as the weeks and months went by and none of these opportunities ever presented themselves, it became obvious to any thinking person that the Government itself must be in league with the profiteers and must be holding out its stocks in order to let the gouging go on without hindrance.
Those who jumped to such a conclusion were not aware of the restrictions which their own representatives, the men in Congress, had thrown about the sale of government property. Just as the law forbade (with certain exceptions and qualifications already noted in this volume) the government executives to buy supplies except from the best bidder in a competition for the business, so it forbade them to sell supplies except to the best bidder. The buyers therefore had to compete with each other for the surplus stocks, either in auction sales or by sealed bids submitted after goods had been duly described and advertised. And since the Government had its own sales expenses to consider and therefore could not hold auctions to dispose of single cans of tomatoes or advertise for bids for individual hams, the ultimate consumer, unless he were prepared to purchase by the carload, was as much out of it as if the supplies were stored on the moon.
Not until July 29, 1919, did Congress come to the relief of the ultimate consumer by passing an act authorizing the War Department to sell food, clothing, and household supplies at retail. Within ten days the Surplus Property Division (of the Division of Purchase, Storage, and Traffic, which had charge of all food, clothing, and general supplies) inaugurated a plan of direct selling by parcel post. Price lists and order blanks were sent to the 58,000 post offices of the United States, and the postmasters were instructed to receive orders and cash and send consolidated requisitions and payments to the Surplus Property Division. This plan was not a success, thanks principally to the postmasters’ unfamiliarity with such work; and a few weeks later it was abandoned altogether in favor of the army retail stores. Through these stores the masses of consumers at last came into direct touch with the surplus war supplies.
The store system was established on September 25, 1919. At the stores a consumer might buy food and other supplies over the counter in such quantities as he chose; or, if he lived too far away to visit the store, he might order from it goods to be delivered by parcel post, postage prepaid and goods insured at government expense. At first the Army established twenty-five stores, and these did so well that additional stores and branches were added, until by the late winter of 1919–1920 there were seventy-seven places where consumers might go and buy, at reduced prices, the goods which their tax payments and bond purchases had enabled the Government to procure. The stores were operated under the supervision of the fourteen zone supply officers.