LAME DUCKS
But this vast sum is still far above the sum actually spent. On the day of the armistice there were great unexpended balances in practically all the appropriations granted to the Air Service, and these balances remained great after the liquidation of the industry. Since the unexpended balances eventually will be recovered into the general funds of the Treasury, it is proper to subtract them here; and by making the subtraction, we find that the war expenditure for the aircraft program was approximately $868,000,000. Yet even this was not net expenditure. From this amount there is still to be subtracted the millions received from the sale and transfer of surplus materials, the reimbursements on account of overpayments to contractors, and other items. The full subtraction of these credits leaves us with a net war expenditure for aircraft of approximately $720,000,000.
This figure, indeed, is an estimate; but it is a close estimate. It is an estimate because, at the time this is written (July, 1921), the liquidation of the war aircraft industry is not yet quite complete. Four contractors’ claims are still unsettled, and surplus worth less than $18,000,000 remains unsold. Therefore, even if the estimated cost of settling the claims and the estimated recovery from the sale of surplus are grossly inaccurate, such errors cannot greatly affect the total estimate. The last official financial statement on the war business of the Air Service, dated April 23, 1921, showed that the net cost then was $738,133,972.28, leaving in the Treasury at that time an unexpended balance of $419,936,801.20, and this cost was still to be reduced by recoveries from the sale of surplus and by reimbursements of overpayments made to contractors in the settlements.
Thus we have, as the cost of the war air program, the figure $720,000,000—not half the billion and a half alleged by the critics to have been wasted. But what happened to the $720,000,000? Was it wasted? What did we get for it? The answers to these questions may be a revelation to those who have accepted the common misstatement that the whole project ended in a colossal failure.
First, airplanes. For the money spent the Army received, not a few hundred airplanes, but approximately 19,000. When the money was appropriated, those in charge of the air program, and the public, too, expected these funds to produce airplanes in numbers sufficient to darken the skies. Well, here was the sky-darkening cloud of them—19,000 planes, produced and delivered to the Army. And at least half this number consisted of “service” planes, as distinguished from training machines. The average value of an airplane without engine may be conservatively placed at $6,000. Thus, the planes delivered on the war orders were worth $114,000,000, a sum which accounts for nearly one-sixth of the total war expenditure made by the Air Service. In round numbers, the American industry produced 12,000 of these planes before the armistice, and afterwards, during the termination of the work, completed production on 1,500 that were unfinished. The remaining 5,500 were purchased from the French, British, and Italian industries. Those who criticize the administration of this branch of our war industry commonly lose sight of the fact that all the foreign airplanes procured by us were bought with the funds appropriated for the Air Service.
Planes, however, are a small item compared with some of the other materials procured with the $720,000,000. The American industry produced 30,000 aviation engines before the armistice and more than 11,000 afterwards on war orders during the termination of the industry—the exact figure, representing the total war production, being 41,590. Of these, 20,478 were Liberty engines, 15,572 of which were produced before November 30, 1918. The Liberty engines alone represented over 8,000,000 horsepower. In addition, from the $720,000,000 spent, we bought several thousand aviation engines in Europe. In all we received approximately 45,000 engines for our money. At $6,000 apiece—a fair average price—this procurement accounted for $270,000,000 of the money. Planes and engines together accounted for $384,000,000, or more than half the total expenditure.
This was all value received. But we have still to consider many important items of expense necessary to the prosecution of an air project such as ours was. It took, for instance, $190,000,000 to maintain the Air Service of the American Expeditionary Forces. The appropriation procured 1,100 balloons both before and after the armistice, at a cost, say, of $11,000,000. As we have noted above, $75,000,000 went into buildings for the Air Service in this country, another great sum into motor trucks, still another into fuel and lubricating oils, and upwards of $80,000,000 into the development of raw materials for airplane manufacture—spruce, dope, and fabric. This last was a necessary and justifiable expenditure, in that it sustained the airplane industry, not only of the United States, but of the principal Allies as well. Too, the development of raw materials was on a scale which anticipated great expansion of the manufacture of airplanes in 1919 and 1920. And so we can go, item by item, through the list of sub-enterprises in the aviation project and find that we received great value for our money and that almost the only wastes were the to-be-expected war wastes, largely due to our unpreparedness for war. These wastes were represented in the high prices paid for materials produced in such a hurry on such a scale. These high unit prices, of course, took care of the cost of creating almost the whole manufacturing equipment of the industry. However, we secured the materials.
We may pause here, too, to correct another misapprehension which has had some currency: namely, that not only was a billion shamefully wasted on aircraft but it was wasted by the so-called dollar-a-year men called to Washington and placed in charge of the aircraft program. The only dollar-a-year men connected with that program in a conspicuous capacity were the civilian members of the Aircraft Board—Mr. Howard E. Coffin, chairman, and Messrs. Richard F. Howe and Harry B. Thayer, the other two members. But the Aircraft Board was advisory only in function and possessed absolutely no administrative or executive powers. It acted as a clearing house in the effort to coördinate the aircraft production of the War and Navy departments. The actual work of procuring aircraft—designing, contracting for, inspecting, and receiving materials—was always in the hands of the uniformed services. The Aircraft Board had no control of the spending of appropriations, except that of the relatively insignificant appropriation of $100,000 granted to it by Congress to cover its office expenses.
The industry which wrote the records of aircraft production was attaining great momentum when the armistice was signed, although it had not yet reached capacity production. It had, however, in the final thirty-one days of active hostilities, produced 1,582 airplanes (1,081 of which were De Haviland service planes for use in France), 5,177 engines (of which 3,034 were Liberty engines), and 249 kite balloons. The business of terminating this industry was difficult. The liquidation plan adopted was essentially like that used by the Ordnance Department. Before the armistice the production branch of the Air Service was organized into eight manufacturing districts, with headquarters respectively at Boston, Buffalo, Chicago, Dayton, Detroit, New York, Pittsburg, and San Francisco. Five thousand persons were employed by the district organizations. After the armistice the district production boards became district claims boards for the Air Service, and they conducted most of the actual work of terminating production and arranging settlements with the contractors. Their settlements went up for approval, first, to the Air Service Claims Board and, finally, to the War Department Claims Board.
The air service contracts outstanding on the first day of the armistice obligated the Government to accept completed materials to the value of $767,423,308.50. Completed materials and raw and semi-finished materials accepted by the Government in the settlement with the contractors after the armistice reached a value of $259,733,874.30. Thus the contracts and parts of contracts terminated in the liquidation accounted for a cancellation of work to the value of $509,689,434.20. In addition to accepting and paying for the materials, the Government paid in cash to the producers in settlement of their claims the sum of $94,013,776.51. Hundreds of contractors accepted the statutory $1.00 and relieved the Government of all financial obligation.