U.S. v. PRIVATE INDUSTRY

The Government Is Getting Out of Business

AS part of his campaign platform, Dwight Eisenhower promised to take the Government out of competition with private enterprise wherever possible. Since the Federal Government was running some 100 types of business, in which it had sunk $40 billion (TIME, July 13, 1953), keeping this promise has turned out to be a big order. Nevertheless, the Administration has chalked up notable progress. Last week, in its biggest single step to eliminate competition with private business, the Government sold 24 of its synthetic rubber factories. Thus, with a pen stroke, it turned over to 15 companies virtually all of a $310 million industry, and netted a $39 million profit.

The Administration has also revived last year's plan to get the Government out of the business of running two "atom cities"--Oak Ridge, Tenn. and Richland, Wash. At the request of the Atomic Energy Commission, the Democratic heads of the Joint Congressional Committee on Atomic Energy last week introduced bills to end Government ownership and operation of Oak Ridge and Richland. The responsibility for schools, streets, etc. would be handed over to local residents, eventually saving the Federal Government upwards of $1,500,000 yearly.

In scores of other nooks and crannies of Government, less dramatic ways have been found to eliminate competition with private business. The Defense Department has shut down 24 scrap-metal operations, seven bakeries, nine laundries, a chain factory, a caustic-soda plant, four cement-mixing plants, a tire-retreading plant, two garden nurseries and four ice plants. The Navy, which has been manufacturing uniforms for years, has closed its clothing factory. It is bringing in more private yards to overhaul its ships, has boosted such contracts from $34 million in 1953 to $82 million in fiscal 1955.

Some time this year the Navy will close the coffee-roasting plants it started in 1858 because it was not satisfied with the quality or cost of commercial coffee. It will put on a stand-by basis the Boston Ropewalk, a cordage factory it opened in 1834 because good rope was not available commercially. The Air Force is now contracting with private businessmen for 50% of all maintenance of engines, radios, etc., v. 21% in 1952. Government motor pools are being dried up; in San Antonio the Fourth Army has started using public taxis and buses for most official business trips.

The General Services Administration has found new ways to handle its chores with the aid of private businessmen. Suppliers now deliver fuel oil and coal directly to users instead of to Government dumps, thereby eliminating extra freight and handling charges. GSA also hired commercial truckers to distribute supplies from central depots to scattered Federal agencies, found it worked so well that it is now using them in more than half the nation. To help the Government sell a $90 million chunk of its surplus real estate, GSA called in private brokers to find clients and to close sales. Elsewhere, the Government has gotten rid of a whole grab bag of business activities it got into because nobody else could or would. It liquidated the Island Trading Co., a copra and trading firm (1954 sales: $3,000,000) set up by U.S. occupation officials in the Southwest Pacific, at a net profit to the U.S. of $1,100,000. In the Virgin Islands the Government sold its rum distillery (Government House brand) and its famed resort hotel, Bluebeard's Castle.

Despite this progress, the get-out-of-business program still has far to go, against plenty of opposition. Government agencies, the Hoover Commission recently found, are almost impossible to kill. "REA is an example . . . Although more than 90% of the nation's farms are electrified, the sponsors of the REA program foresee no end to the need for ever-increasing amounts of Government loans for rural electrification." Many another agency is dragging its feet. Probably the worst offenders are in the Defense Department, where empire builders try to justify their activities by crying "national security."

Actually, many "defense" operations bear little or no relation to national security, e.g., the Federal Government still owns and operates about 168 icecream plants in 36 states, 23 in California alone. Such nonessential activities drain off men and money that could better be used for the defense of the nation. But cutting back almost any Government activity brings protests from Capitol Hill. For example, Massachusetts' Senator John F. Kennedy has already protested to the Navy against shutting down the Ropewalk, on the grounds that it is necessary to the "national interest." In the huge, amorphous layers of Government, not even the experts can calculate how much money has been saved to date by the get-out-of-business campaign. But the most encouraging thing to businessmen is less the money savings than the fact that the longtime trend to get the Government into business has finally been reversed.

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