The contract was signed on February 14, 1939, at almost the precise moment when further delay would have done us irreparable harm. As a matter of fact, the time had long passed when a garrison finish might be of any help to France; the chief benefit of this contract lay in the fact that it gave the Pratt and Whitney Aircraft organization a shot in the arm, and put us in such position that when, two years later, the Japs smacked us at Pearl Harbor, we could swing into full-scale production for the American account.
After Don Brown’s return to Hartford, his health forced him to turn more and more of his work over to me. In this I functioned, much as I had once done for Admiral Reeves, as a sort of chief of staff, seeking to do things in the way Don himself would have done them, had he been personally on the firing line. Somewhat earlier, when our difficulties had become serious, I urged Don to invite Fred Rentschler to return to our board as chairman where we could call on him for advice and get the benefit of his judgment. Now we three began working closely together—at least as closely as Don’s declining health permitted.
Don, a singularly attractive and lovable person, having come upstairs by way of the shop, always displayed a strong sense of responsibility for his men. The specter of shutdown weighed heavily on him and now, as the illness that was to prove fatal began closing in on him, his thoughts were still down on the factory floor.
One day he and I walked along an aisle between the machines. Don made some remark to the effect that he longed to be back there where the problems were of the kind a man could get his teeth into. Behind us we heard the voice of a young kid making some crack about how soft it was for guys that did nothing but sit on cushions in paneled offices and look wise. Don turned and brushed the kid away from the machine. After running it awhile in obvious enjoyment, he turned to the workman:
“Listen, son,” he said, not unkindly, “I’d trade jobs with you any day if I could, but you wouldn’t take the responsibility. That’s something you fellows never want to accept.”
Toward midsummer, we began to hear rumors that the French needed more equipment than our humming plant could deliver. By this time Secretary Johnson’s action had reacted to our advantage. The inventory of raw stock, semifinished, and finished parts which they had left on our hands when they canceled our order enabled us to get rolling without the protracted delay which would have been inevitable had our pipe lines been drained before the big freeze. And so, almost overnight, we had the machines humming again and the empty parking spaces around the plant filled up with cars. But this rumor of new plants was a horse of another color.
First of all, we had no capital with which to construct a new addition, nor did it seem likely we could get it had we wanted it—which we didn’t. Having faced the cold shadows of a vacant factory, we had no appetite for more of the same. The punitive attitude of our own government had completely dammed up all sources of private capital for expansion of munitions plants. Actually, the long depression had all but dried up investment in any private venture. The fear and uncertainty which had cast such a pall over the land had been intensified by the drift toward government domination of business and the rise of bureaucratic dictation.
Among other things, there was the sensitive factor of profit control. For instance, the Internal Revenue Bureau of Mr. Henry Morgenthau’s Treasury Department dictated, through its review of income tax returns and its rules and regulations, the amount a manufacturer might charge against the cost of his product for the use of his tools. The manufacturer, having in mind the many elements of this problem, such as the wear and tear on machines, the life cycle of the product he was selling, and many other complex factors, would charge against each item of manufacture what he judged to be its proper share of the cost of the tools. The more he charged, the less was his profit for a given year. In the long run the whole thing washed out. But the Internal Revenue Bureau, sitting in judgment of each case and anxious to prove high profit in order to assess higher taxes, was interested in reducing this depreciation charge as far as possible. Bearing no responsibility for the survival of a company, and having little knowledge of, or interest in, the technical details of the manufacturer’s problem, it tended to set up over-all rules which, even though applicable to one case, might be far out of line for another. And since munitions manufacturers were generally unpopular, they had two strikes on them from the beginning. Real investors, understanding this handicap, were not interested in risking their dollars on this kind of enterprise, nor were the enterprises interested in seeking their money.
Now, if the public policies of the period dried up the flow of capital to private industry, or even reduced it to a trickle, the Arms Embargo Act put the finishing touches upon the process. All Chancellor Hitler had to do to make a “belligerent” out of France was to open war on France, and since the French were now buying aircraft in the United States, the sooner he did the better. On September 1, 1939, Germany invaded Poland; on September 5, France declared war on Germany. President Roosevelt immediately issued his proclamation of neutrality, thus putting the Act into effect and cutting off shipments to belligerents.
Meanwhile, however, the frantic French, desperate by now, had, in a last-minute effort to buy time, insisted upon our creating a new plant and accepting new contracts. Our only course under the circumstances was to insist that they advance the entire amount of the cost of the new facilities, some eight million dollars, and finance the additional contracts for aircraft by advancing working capital under terms agreeable to us. However, under French law, the state was prohibited from investing its funds in a capital outlay on foreign shores. Further, the French, at the time, were pursuing the opposite policy at home; they were expropriating and nationalizing their own industry—a policy that reduced the country from a position of world leadership, following World War I, to one of abject dependence upon American aviation in World War II. How they could agree to go ahead with us under the circumstances we could not see, especially with the Arms Embargo Act hanging over them. But go ahead they did, and under our terms.