The Fight Begins

Should the Federal Government subsidize its war-built aluminum plants to keep them running? Last week this thorny problem was dropped into the lap of Congress.

The case for subsidies was made by Surplus Property Boss W. Stuart Symington. He urged subsidies as one means of breaking monopolies and making operation of the plants attractive to private business. Under his plan, plants would be leased on terms which would give the operator 15% of its profits but would require the Reconstruction Finance Corp. to stand most of the losses.

Symington intimated that such a program was necessary because Alcoa was the only company which could or would buy some of the $700,000,000 worth of U.S. owned aluminum plants; everyone else was afraid they could not get bauxite, could not buck Alcoa in the retail market, etc. There had been only two specific offers to date--from Reynolds Metals and Columbia Metals--to lease the plants. But the companies would lease them for five years on one condition: that the Government guarantee the market for aluminum, i.e., buy up and stockpile all aluminum the companies could not sell.

Three Congressional Committees last week stewed over the deal. Some Congressmen thought it outrageous to suggest that the Government guarantee markets against private competition. Then President Truman joined in: he did not think subsidies for surplus plants were a good idea either.

But the most vocal case against subsidies came from Alcoa. I. W. Wilson, Alcoa's white-haired, bespectacled vice president, told a Senate Committee: a calculating, subsidized lessee would "spend money with abandon to capture customers and markets and to create a sales organization which would be useful to him when he purchased the plant, sell below cost, drive Alcoa . . . to the wall, and capture customers for later use. The more he spent during the period of the lease, the better. The Reconstruction Finance Corp. pays the bills."

Then Wilson gave Alcoa's solution. It offered to buy or lease the Government's Hurricane Creek, Ark., biggest U.S. alumina plant, make and sell alumina (raw material for aluminum) to anyone who wanted it at a price, which the Government would set.

There was small chance that the antitrust division would approve of this. But some decision has to be made soon. Until a policy is reached, plans for disposing of other war-born giants like Geneva Steel and the magnesium plants would also be stalled in their tracks.

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