History
Truman named Charles E. Wilson, president of General Electric and a government mobilization chief in World War II, to head the ODM. Wilson became one of the most powerful people in the federal government, and the press began calling him "co-president".
Wilson quickly took control of the economy. All raw materials were under the control of ODM, which rationed them to the civilian economy. Production quotas were set, and businesses ordered to supply the government with goods and services. Companies which failed to meet their production quotas were threatened with seizure by ODM. Companies found to be secretly diverting raw materials to civilian uses were severely punished through the withdrawal of lucrative government contracts, fines, and the imposition of government supervisors on-site at the workplace. Defense plants, concentrated at the time near existing manufacturing centers and where electrical power was plentiful, were dispersed across the Southeast and Deep South. The government restricted investment in new plant equipment so that only investments meeting national security needs were made. Additionally, ODM invested millions of dollars in new plant and equipment to rapidly expand production capacity. Strict price controls were placed on all goods and services, and wages were subject to federal government approval and control. Black marketeers were severely punished with fines and jail sentences. Wilson's austerity program worked: By 1951, inflation had fallen back to 1.9 percent, and the economy was no longer threatened with recession.
Nevertheless, national production capacity continued to lag. In August 1951, additional controls were placed on the economy. Any manufacturer seeking raw materials had to first obtain a permit from ODM before purchasing such materials. ODM also began to control the use of steel for building and automobile production, even significantly restricting the building of public schools to divert additional steel to national defense needs.
Read more about this topic: Office Of Defense Mobilization
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