New GOCO plants were also the central mechanism for several other military-industrial expansions. One of the most important of these was in the explosives industry, which produced the smokeless gunpowder and TNT needed for ammunition and bombs. During World War II, American explosives plants made over two million tons of TNT and nearly two million tons of smokeless powder. This immense destructive power was manufactured almost entirely by new GOCO plants, representing a government investment of about $3 billion.54 These plants were among the largest and most expensive of all the facilities built for the war effort. Even if the socalled Manhattan Project is left out, the GOCO explosives facilities accounted for seven of the twenty most expensive new American war plants. Their operators, including Du Pont and the Hercules Powder Company, ranked among the most important of all the nation’s military contractors (see Table 2).
At the heart of the explosives program was the relationship between Du Pont and the U.S. Army’s Ordnance Department, which had been business partners for decades. In early September 1939, the Ordnance Department chief, General Charles M. Wesson, approached Du Pont to ask if the company would be willing to manage a large new GOCO smokeless powder plant with the capacity to produce 100,000 pounds a day. This level of output would triple the nation’s existing manufacturing capacity. Wesson’s proposal was approved quickly by Du Pont’s executive committee, even though several company officials worried that taking munitions contracts might generate more of the controversy over war profiteering that had bedeviled the company since the Great War.55
Meanwhile, Du Pont was negotiating with British authorities over big powder contracts and the financing of new plants. In a deal finalized after the crisis of May 1940, the British government paid for a large new powder plant, which Du Pont would build in Tennessee. This $26 million smokeless powder plant started producing at full capacity in February 1941. (A month later, the American government took it over from the British. Renamed the Chickasaw Ordnance Works, it became part of the Ordnance Department’s growing network of GOCO explosives plants.)56
On the heels of the British deal came a bigger one, with the War Department. In late June 1940, Du Pont agreed to build and run a smokeless powder facility on a five-thousand-acre site in Indiana, near the Ohio River. This was the very first big new American GOCO facility contract to be signed in World War II. The Du Pont project in Indiana was a model for the many large greenfield facilities that would spring up all over the country over the coming months. By the spring of 1941, when powder production began, more than 27,000 people were working to finish the construction of the sprawling Indiana plant. After several expansions, the facility would end up costing the U.S. government nearly $180 million. By the second half of 1942, when the plant employed about 9,400 workers, it was making smokeless powder at a rate of nearly a million pounds per day.57
These early smokeless powder plant projects, which made Du Pont the leader of the explosives program, were only the first of many similar wartime projects for the company. Indeed, by the time of Pearl Harbor, Du Pont, together with its Remington subsidiary, had become the military’s leading GOCO plant manager. It built and operated huge new explosives plants in Illinois, Alabama, and Oklahoma. Similar GOCO facilities in Kansas, Wisconsin, Virginia, and Tennessee were run by Hercules and Atlas.58 All in all, the Ordnance Department’s explosives and ammunition program encompassed seventy-three GOCO plants, which, at their peak, employed about 400,000 people. By the time of Pearl Harbor, seventeen of these facilities were already up and running; another thirty-two were already under way or planned.59
The War Department also relied on new GOCO plants for tanks. Here, the lead contractor was the Chrysler Corporation, the highly profitable, younger competitor of GM and Ford. Chrysler’s participation was arranged by Knudsen, the OPM chief, not long after he left GM for Washington. In early June 1940, Knudsen persuaded Chrysler president K. T. Keller to take the tank job. Keller then took a team of engineers to the Army’s Rock Island Arsenal, which provided Chrysler with 168 pounds of old blueprints. By August, Chrysler was breaking ground on a 690,000-square-foot GOCO tank plant on farmland in Warren, Michigan. Like most other operators of big GOCO plants, Chrysler worked under CPFF contracts, in which the government reimbursed all authorized production costs and allowed for profit in the form of a fixed fee.60
Figure 2. Photo of M-3 “Grant” medium tank production at the big U.S.-owned, Chrysler-operated tank arsenal outside Detroit, Michigan, ca. 1941. This plant was one of the first, and one of the most important, of the dozens of large new government-owned, contractor-operated (GOCO) factories built for World War II. FSA/OWI collection, Prints & Photographs Division, Library of Congress, LC-DIG-fsa-8b00695.
The GOCO plant managed by Chrysler became known as the Detroit Tank Arsenal (see Figure 2). It ended up manufacturing twenty thousand medium tanks (including M3 “Grant” and M4 “Sherman” models), more than a quarter of total American production. The second-biggest tank builder was another new GOCO facility, built in 1941–42 in Flint, Michigan, and operated by GM. (Another important source of tanks was the long-suffering locomotive and railcar industry, which used British and American tank contracts and direct capital investments to help return to profitability).61
The big automakers also became major players in the aircraft industry, starting in 1940, as contractors for aero engines, subassemblies, and finished planes. Meanwhile, the established aircraft industry firms, which had been handling the rearmament orders of the last two years, grew into truly big businesses. As in other parts of the growing war economy, this was mostly a GOCO affair: public capital paid for the new plant, which was run by private companies to fill military contracts.
In the aircraft industry, the government paid for nearly all the wartime expansion. One important piece of the effort was the so-called Knudsen Plan, which took shape in the final weeks of 1940, after Knudsen met with executives from the automobile and aircraft industries. The Knudsen Plan provided for four large new GOCO bomber plants to be built in the Midwest—far from the reach of enemy forces. These plants, located in Fort Worth, Tulsa, Kansas City, and Omaha, were paid for by the Army’s Air Corps and built under the direction of the Army Corps of Engineers. They were operated by experienced airframe manufacturers: Consolidated, Douglas, North American, and Martin. The big automakers also joined the effort, as suppliers of large subassemblies, including wing and tail sections.62
Most of the subsequent expansion of the aircraft industry was financed with funds that ran through a civilian entity: the Defense Plant Corporation (DPC). A new subsidiary of the RFC, the DPC was established in early August 1940. It was born amid negotiations between the RFC and the Wright Aeronautical Corporation over the terms of a deal to finance the construction of a giant new aircraft engine plant. This became the first major DPC contract. In October 1940, Wright executives agreed to a deal that had the DPC pay for a 1.7 million-square-foot plant at Lockland, Ohio. The facility would remain government-owned, with the company leasing it for the nominal sum of $1 a year. Dozens of similar $1-a-year lease arrangements were made in the following months by the DPC, especially as it paid for large new plants in the aircraft industry.63
By early 1941, the DPC lease arrangements had almost entirely displaced an alternative, the Emergency Plant Facilities (EPF) contract. Because that scheme required contractors to find private financing for new war plants that would be acquired by the government over a five-year period, it was much less effective than the simpler DPC method of direct government ownership. The EPF contracts were used in the aircraft industry to begin eleven major projects in 1940–41, including an expansion at Boeing’s Seattle plant, to enable it to make more B-17s.64 But most of the EPF deals were converted into DPC contracts. Few private bankers were interested in serving as financiers for war facilities, especially those that would eventually