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p In addition to information on the militarisation of the entire economy, highly important is the study of the structure of military production and the degree to which individual US industries have been militarised.

p The structure of military production is thrown into relief by the pattern of military expenditures of the government, which is the sole user of military equipment (excluding arms exports). For this purpose, all military expenditures are first divided into two groups: (1) pay to servicemen, veterans benefits, and pay to civilian personnel; (2) purchases of equipment, spare parts and other materiel, defence 154 construction, research and development, operating costs, etc. The first group accounts for approximately 40 per cent of the Defence Department expenditures, the second, for 60 per cent.

In the first group, money is paid directly to persons within the above-listed categories, who spend it at their own discretion. It may be presumed that it is spent in general for the same purposes and in the same proportions as the earned income of other population groups. Consequently, the influence of this part of military consumption on the structure of the US economy is on the whole comparable to that of private consumption in general. In contrast, military expenditures in the second group are involved in the material equipment of the armed forces. The volume of this spending, i.e., purchases of goods and services by the Department of Defence, is illustrated by the following table.

Fiscal year Military expenditures, tbous. mil. dollars Fiscal year Military expenditures, thous. mil. dollars 1951 31.6 1961 25.6 1952 42.8 1962 29.3 1953 31.2 1963 29.4 1954 12.9 1964 28.8 1955 16.0 1965 28.0 1956 19.2 1966 38.2 1957 21.0 1967 44.6 1958 23.7 1968 43.8 1959 24.6 1969 42.0 1960 23.7 1970 36.0

p Sources: William L. Baldwin, The Structure of the Defense Market, 1955-1964, Durham, 1967, p. 6; Statistical Abstract of the United States, 1966, p. 253; ibid., 1968, p. 249; 1971, p. 246.

p Under the impact of rapid progress in military technology and changes in policy and military strategy, frequent and marked changes occur in the volume and structure of government demand for military equipment. Hence the changes in the degree of militarisation of the economy and in the scale and structure of war production. Changes in government demand for military equipment affect most those industries
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155 Table 24 Estimated Department of Defence Expenditures (1958 producers’ prices*) Branch of economy 1964/65 1966/67 Increment (+) or curtailment (—) in 1964/65- 1966/67, per cent mil. dollars per cent mil. dollars per cent Agriculture, forestry and fisheries ..... 2.6 16.6 248.2 18,840.7 2,052.7 520.6 149.9 61.0 954.7 84.7 87.7 87.5 310.7 314.7 3,449.3 218.6 401 6,945.5 969.8 354.2 0.6 47.1 5.1 1.3 0.4 0.2 2.4 0.2 0.2 0.2 0.8 0.8 8.6 0.5 1.0 17.4 2.4 0.9 3.1 21.6 275.2 29,265.6 4,200.4 877.2 488.7 368.2 1,306.4 99.0 124.6 226.7 457.5 562.7 4,257.8 236.6 867.9 9,655.7 906.0 523.5 0.5 53.8 7.7 1.6 0.9 0.7 2.4 0.2 0.2 0.4 0.8 1.0 7.8 0.4 1.6 17.8 1.7 1.0 +19.2 +30.1 -MO. 9 +55.3 -M04.6 +68.5 +226.0 +503.6 +36.8 + 16.9 +42.1 +159.1 +47.2 + 78.8 +23.4 +8.2 +116.4 +39.0 —6.6 +47.8 Mining ........ Construction ...... Manufacturing ..... Ordnance and accessories .... Food and kindred products ....... Apparel ....... Drugs, cleaning and toilet preparations . Petroleum refining and related industries . . Primary iron and steel manufacturing . . . Primary non-ferrous metals manufacturing Metalworking machinery and equipment . . Office, computing and accounting machines Electric industrial equipment and apparatus Radio, television and communication equipment .... Electronic components and accessories . . Motor vehicles and equipment .... Aircraft and parts . . Other transportation Scientific and controlling instruments . . 156 (continued from page 155) Branch of economy 1964/65 1966/67 Increment (+) or curtailment (-) in 1864/65- 1966/67 . per cent mil. dollars per cent mil. dollars per cent Services ........ 4,287.4 1,499.2 561.0 15,107.1 1,494.0 20.9 10.7 3.7 1.4 37.8 3.7 0.1 5,643.0 2,371.2 540.2 17,121.0 2,019.2 24.2 10.4 4.4 1.0 31.5 3.7 0.1 +31.6 +58.2 —3.7 +13.3 +35.2 +15.8 Transportation and warehousing .... Medical, educational services and nonprofit organisations . . . Government enterprises Imports ........ Stationery, business trips, etc ......... Total . . 40,017.5 100.0 54,372.0 100.0 +35.9

* Excluding transportation and distribution costs.
Source: Monthly Labor Review, September 1967, p. 15.

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which produce it in quantity. As illustrated by Table 24, more than a half of goods and services consumed by the military machine are supplied by the manufacturing industries: aircraft, missiles, radioelectronic equipment, ships, ordnance, ammunition, combat vehicles, transportation equipment, petroleum products, etc. In this table, the arms production of all government factories, i.e., arsenals, ship-building yards, etc., is listed under the item "Government Enterprises" excluding corresponding private industries, such as ordnance and small arms factories, shipyards, etc.

p Almost all branches of the economy are involved, directly or indirectly, in the manufacture of military equipment. Direct involvement is expressed in the production of military end-products, i.e., goods which directly meet the demand of the armed forces. Their production, however, requires corresponding materials and implements supplied by other industries taking thereby an indirect part in military production.

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p The varied contributions of individual industries to this production are illustrated by an inter-industry balance sheet showing the extensive commercial relationships between them and making possible an estimate of goods quantities to be produced by different industries per unit end-product of military denomination.

p In the US inter-industry balance sheet for 1958, military end-products are listed under total government consumption; therefore, its data shed no light on the share of individual industries in the manufacture of military end-products, nor do they illustrate the degree of their militarisation. US economists introduced certain corrections into the indices of the inter-industry balance sheet for 1958 to ascertain the degree of involvement of individual industries in the manufacture of military equipment. For example, the US economist Clopper Almon isolated military consumption from total government consumption to determine the inter-industry structure of military end-products in 1958 and 1963, and produced forecasts for 1980.  [157•1  As noted above, Richard P. Oliver also used data of the inter-industry balance sheet for 1958 to demonstrate the influence of Defence Department expenditures on the US economy.  [157•2 

p First, he analysed the volume and structure of Department of Defence spending expressing it in terms of prices of 1958. He listed under military expenditures only the Department of Defence spending and military aid, classifying them according to the three military departments and the basic budget items to illustrate the actual purchases of goods and services. Then purchases were distributed between industries under the standard industrial classification. Oliver also made certain amendments in the method of inter-industry distribution of military purchases used in drawing up the US interindustry balance sheet for 1958. For example, in compiling the outlay-output table of the balance sheet for 1958, spending on research and development was excluded from the industries actually involved and transferred under the 158 specific item on R&D. In Oliver’s estimates, however, research and development spending of individual industries was left in the industries involved, whereas the R&D item indicated the outlays of only specialised research and development institutions. Further, veterans benefits and purchases of real estate and other property were excluded from the structure of military spending.

p Second, data on purchases of goods and services were superimposed on an inter-industry model to determine the direct and indirect expenditures of individual industries for the manufacture of military equipment. At the same time, in view of the changes in production processes since 1958, corresponding amendments were made in spending coefficients. The levels of military production thereby revealed were correlated with the total for each industry.

p Third, calculated levels of military production were used as the basis for estimates of manpower directly involved in the manufacture of military end-products and supply of services and in the industries supplying implements and materials required for manufacturing military end-products. For greater accuracy, these employment estimates were co- ordinated with employment indices from a Department of Defence report on prime military contractors.

p The calculations carried out showed that every 1,000 million dollars of military purchases in the private sector maintained 82,000 jobs in 1965 and 73,000 in 1967. A reduction in this index was caused by rising prices and labour efficiency. Oliver’s estimates were meant primarily to show the impact on the US economy of the growth of military spending caused by the escalation of the Vietnam war. Oliver’s conjectural data on employment in the private military sector of the US economy are presented in abridged form in Table 25. They fail to indicate that proportion of employment in other countries which is attributable to US military purchases or employment of foreign labour.

p The table shows great variations in the extent of militarisation of individual industries. Such branches of the economy (excluding those of plainly military nature) as the aircraft equipment industry, other industries producing transportation equipment (including ship-building), radioelectronics are militarised to the extreme. The table contains no data on 159 the atomic industry, 70 per cent of which caters to military needs, according to US press reports.

p As Tables 24 and 25 illustrate, the US aggression in Vietnam boosted war production and changed its structure substantially. The share of conventional arms, apparel, transportation equipment, drugs, cleaning and toilet preparations, etc. in the total war production notably grew. Simultaneously, the relative role of corresponding industries in total war production grew along with their further militarisation. Taking it by and large, Oliver’s estimates understate the extent of militarisation of individual industries because in sizing up the volume of military spending he ignored such important items as the outlays of the AEG, NASA, etc. The US economist Harry Magdoff introduced certain amendments into Oliver’s method of estimating military employment; in particular, he added a half of AEG spending and all of NASA’s to "those of the Department of Defence, with corresponding corrections in view of price rises. As a result, it was found that the US total military employment in 1969 was 8.3 million: 3.5 million in active service, 1.3 million civilian personnel and 3.5 million employed in the war industry.  [159•1 

p The leading place in US total military production is held by the aerospace industry manufacturing weapons delivery systems. According to data in Table 24, aircraft and parts account for 17.8 per cent of the Defence Department expenditure. The table fails to give data on the manufacture of missiles, since under the standard industrial classification accepted in the USA, aircraft and missiles are itemised under different industries and even different groups of industries (aircraft construction is listed under transportation equipment, and missiles, under ordnance and accessories, and armour). Adding missiles to aircraft, the share of the aerospace industry will be much greater in US total war production.

p According to data of the US Aerospace Industries Association (whose corporate members are, as a rule, prime contractors for aircraft and missile manufacture and leading subcontractors), the total value of marketed products of this industry in 1964 was 17,300 million dollars, in 1965—20,700 160 Table 25 £ Estimated Employment Attributable to Department of Defence Expenditures in US Private Industries 1964/65 1966/67 Employment attributable (dircctlv or indircctlv) to the Military employment Military employment Vietnam build-up in 1966/67 share of
industry Branch of economy Total em ployment, thous. thous. % to total em ployment share of industry in military em- Total em ployment, thous. thous. % to total em ployment share of industry in military em- thous. % to total military employ- % to total em ployment in total em ployment attributable in in- ploy- in in- ploy- ment in in- to dustry ment. dustry ment. in in- dustry “Viet- % % dustry nam build- -up,% Total employment in private industries 54,483 2,101.2 3.9 100.0 56,670 2,971.5 5.2 100.0 1,008.8 33.9 1.7 100.0 Agriculture, forestry and fisheries . . . 5,034 48.5 1.0 2.3 4,075 75.0 1.8 2.5 32.8 43.7 0.8 3.2 Mining ....... 634 29.9 4 7 1.4 620 40.0 6.5 1 3 13.1 32.8 2.1 1.3 Iron ...... 28 1 6 5 7 0 1 29 2.2 7.6 0 1 0.8 36 4 2 8 0 1 Non-ferrous ore 53 3.8 7.2 0.2 56 5.6 10.0 0.2 2.0 35.7 3.6 0.2 Coal ...... 145 4.5 3.1 0.2 140 6.2 4.4 0.2 2.1 33.9 1.5 0.2 Oil and natural gas . . 291 16.4 5.6 0.8 276 20.9 7.6 0.7 6.4 30.6 2.3 0.6 Stone, clay, chem- H > Pi n o o 161 ical raw ma- g terials, mineral P fertilisers . . 117 3.6 3.1 0.2 119 5.1 4.3 0.2 1.8 35.3 1.5 0.2 =j Construction .... 3,119 60.0 1.9 2.8 3,277 67.9 2.1 2.3 5.0 7.4 0.2 0.5 » Manufacturing . . . 17,604 1,390.2 7.9 66.2 19,318 2,021.6 10.5 68.0 737.7 36.5 3.8 73.1 £ Ordnance and ac- c-3 cessories . . . 227 106.1 46.7 5.0 284 183.9 64.8 6.2 92.9 50.5 36.6 9.2 5 Food and kindred z products . . . 1,752 20.3 1.2 1.0 1,767 31.7 1.8 1.1 12.6 39.7 0.7 1.2 S Apparel ..... 1,395 16.1 1.2 0.8 1,457 46.5 3.2 1.6 30.8 66.2 2.1 3.1 H Drugs, cleaning a w and toilet prep- c arations . . . 218 3.2 1.5 0.2 241 10.2 4.2 0.3 7.4 72.5 3.1 0.7 £ Primary iron and n steel manufactur- o 2 ing ...... 934 55.2 5.9 2.6 943 82.8 8.8 2.8 30.3 36.6 3.2 3.0 o Petroleum refining S, and related indus- tries . . . 182 10.9 6.0 0.5 182 14.5 8.0 0.5 4.4 30.3 2.4 0.4 Metal-working ma- chinery and equipment ..... 293 24.0 8.2 1.1 342 38.3 11.2 1.3 16.5 43.1 4.8 1.6 General engineering equipment . . . 251 13.8 5.5 0.7 282 21.7 7.7 0.7 9.2 42.1 3.3 0.9 Office, computing and accounting machines .... 179 15.4 8.6 0.7 227 21.9 9.6 0.7 8.0 36.5 3.5 0.8 Electric industrial equipment and apparatus ..... 349 33.0 9.5 1.6 418 47.1 11.3 1.6 18.1 38.4 4.3 1.8 Radio, television and communica- ^ tion equipment . . 533 182.0 34.1 8.7 666 221.7 33.3 7.5 49.3 22.2 7.4 4.9 2 162 (continued from p. 161) ££ 1964/65 1966/67 Employment attributable (directly or indirectly) to the Military employment Military employment Vietnam build-up in 1966/67 share of in- dustry Branch of economy Total em ployBient, % to total em- share of industry in mil- Total em ploymerit % to total em- share of industry in mil- % to total military % to total em- in total em ployment thous. thous. ployment itary em- thous’. thous. ployment itary em- thous. employ- ployment attributable in in- ploy- in in- ploy- ment in in- to dustry ment, dustry ment, in in- dustry Viet- % % dustry nam build- -up,% Electronic compo- nents and accesso- ries ...... 280 71.5 25.5 3.4 379 99.0 26.1 3.3 31.1 31.4 8.2 3.1 Motor vehicles and equipment . . . 787 14.4 1.8 0.7 841 29.4 3.5 1.0 14.4 49.0 1.7 1.4 Aircraft and parts . 602 365.9 60.8 17.4 803 474.2 59.1 16.0 141.6 29.9 17.6 14.0 Other transportation equipment . . . 260 69.8 26.8 3.3 285 64.2 22.5 2.2 — — — — Scientific and con- trolling instruments 252 31.6 12.5 1.5 292 41.6 14.2 1.4 13.8 33.2 4.7 1.4 Services ...... 28,092 572.6 2.0 27.3 30,380 767 2.5 25.8 220.2 28.7 0.7 21.8 Business services, research and de- velopment . . . 1,778 92.1 5.2 4.4 1,970 126.5 6.4 4.3 35.7 28.2 1.8 3.5 c M > g r z o H pi pi n o Source: Monthly Labor Review, September 1967, pp. 10-11. 163
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million, in 1967—27,300 million, in 1968—29,800 million, in 1969—26,900 million, in 1970—24,800 million and in 1971— 21,700 million. The total manpower employed in the aerospace industry in 1969 was 1,354 thousand, i.e., 19.5 per cent more than in 1965.  [163•1  In the past few years the total output and employment in this industry have slightly fallen which is attributed mainly to the ending of the Vietnam war.

p The US aerospace industry holds a leading place in military production and in the manufacturing industry as a whole. Suffice it to mention that for the number of operatives and office personnel and for its gross output, it is far ahead of the automotive industry. Its main products are aircraft, missile and space vehicles. The greater part of the output of the aerospace industry consists of aircraft.

p Aerospace industry holds a leading place among other US industries also for the volume of research and development. In mid-1966, the aerospace industry employed 215,000 research scientists and engineers (who accounted for about 10 per cent of total employment in the industry), of whom 104,000 were concentrated at factories manufacturing aircraft and related equipment, 99,000 —at factories producing missile and space systems, and 12,000—at enterprises specialising in other hardware.  [163•2  The aerospace industry accounts for approximately 30 per cent of the total engineering and technical personnel employed in US private industrial companies.

p Roughly nine-tenths of the total aerospace output is consumed by the military machine, more than eight-tenths being purchased by the government and about one-tenth being exported. In 1960, the USA exported 1,726 million dollars’ worth of aircraft and missiles, in 1965—1,618 million, and in 1969—3,151 million.  [163•3 

p The US aerospace industry holds the dominating position in the capitalist world both in the volume and technological standards of output. The USA produces some four-fifths of the aircraft and missiles built in the capitalist world.

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p The USA closely concentrates on the development of the aerospace industry. Its corporations are granted various privileges and government financial and other aid through various channels which secures for them high monopoly profits and stimulates production.

p The US aerospace industry has immense productive capacities which are largely idle. Nevertheless, new capital investments are poured into this industry. It is kept in full readiness for mobilisation of its huge potential in an emergency. In May-July 1965, Wall Street Journal and other press organs in a series of articles assessed the preparedness of the US economy for waging a limited war. They said, in particular, that the aircraft industry had large potentialities for boosting aircraft production within a short period.

p The atomic industry is another leading branch of US military production. After the discovery of plutonium by the American physicist Glenn T. Seaborg in 1940, the USA went ahead with an atom bomb development project. An atomic pile was built in Chicago under the direction of the famous physicist Enrico Fermi. Its start-up in December 1942 marked the birth of the US atomic industry.

p In the period 1943-44, the USA rushed the development of the atom bomb within the framework of the Manhattan Project. New atomic piles and other installations were built. The United States was given great assistance in building up the industrial facilities for manufacturing the atom bomb by Canada and Great Britain which supplied materials and research personnel. In July 1945, the USA carried out the first testing of the atom bomb in the district of Alamogordo, New Mexico, and in August atom bombs were dropped on the cities of Hiroshima and Nagasaki in Japan.

p The US expenditures on the atomic industry totalled over 2,000 million dollars towards the end of 1946. In subsequent years, particularly after the successful testing of an atom bomb in the Soviet Union, the US imperialists continued to make large investments in the atomic industry. The assets of the Atomic Energy Commission as of June 30, 1969 were estimated at 9,454 million dollars.  [164•1  The AEG has at its 165 disposal about 40 industrial enterprises, laboratories and testing grounds situated in 20 states of the USA and in Puerto Rico.

p The Atomic Energy Commission was set up in 1946 as a monopoly government organisation for research into military and civil nuclear power engineering. In 1951, however, the AEG adopted a programme under which private firms were also invited to take part in nuclear power development. Twenty-five associations (incorporating 81 firms) were set up in the country to share in developing power reactors and producing nuclear weapons. The amendments made in 1954 in the Atomic Energy Act of 1946 led to a considerable increase in the number of private companies operating in the atomic industry. At present, private firms handle under AEG licences almost all operations involved in the production and use of nuclear materials except production of enriched uranium by the gas diffusion method, chemical processing of irradiated nuclear fuel and disposal of radioactive waste. These operations are the exclusive prerogative of the AEG and carried out at government enterprises. The AEG has also retained the functions of general direction and regulation of atomic industry development.

p As is illustrated by Table 26 showing the AEG activities in the period 1955-70 the biggest items of the AEG budget are expenditures for the development and production of nuclear weapons, reactor construction, production of special nuclear materials and raw materials purchases. The AEG invests large sums in the development of reactors for spaceships. For example, in the period 1957-65, the AEG spent 900 million dollars under the Rover nuclear rocket programme handled jointly with NASA.  [165•1 

p The US Administration continues to spend large sums on the development, production and storage of nuclear weapons, on operations involved in underground nuclear tests, as well as on measures to maintain its preparedness for resuming nuclear weapons tests in the atmosphere. Over the past few years, there has been a certain cutback in US expenditures for the purchase of uranium concentrate and the production of special nuclear materials, which have been stored in
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166 US Atomic Energy Commission Summary of Financial Data* Fisca 1 years 1955 1957 I960 1963 1965 1967 1969 1970 Employment, thoiis ........ 112 6 119.5 122 7 135.3 133 9 130 1 127 2 122 4 Federal government . 6 1 6 9 6 9 7 1 7 3 7 5 7 5 Contractor operatincr 82 9 98 2 104 6 115 0 114 8 113 6 108 9 106 0 Contractor construction and design . . . 23 6 14 4 11 2 13 1 11 8 q o 10 8 8 9 Cost of operations, mil. dollars Procurement of raw materials Production of nuclear materials Weapons development and fabrication ......... 1,289.5 193.6 588.4 258.7 1,918.3 397.8 762.8 337.2 2,619.1 716.5 731.3 505.4 2,713.2 447.9 652.4 696 6 2,569.8 261.1 571.3 763 1 2,447 162 521 737 2,566 101 495 898 2,504 490 896 Development of nuclear reactors 114.6 255.7 399.3 507.3 235.9 528 508 496 H weapons development ana IBDrication ......... 258.’ . 114. f 337.2 5 255.7 505.4 399.3 696.6 507.3 763.1 235.9 737 528 898 508 896 o o 496 § Development of nuclear reactors 167 Physical research . . . 48.2 28.9 10.3 34.0 12.8 6,487.3 4,645.8 707.1 505.5 629.0 1,209.9 69.7 33.1 8.9 38.5 14.6 6,907.9 5,392.5 792.6 411.6 311.2 1,898.7 132.8 48.9 7.1 51.2 26.6 7,344.8 5,458.2 1,271.2 288.6 326.7 2,649.6 198.5 70.5 5.0 67.1 37.6 8,233.5 5,447.5 1,885.9 318.2 581.8 3,134.8 237.0 84.4 3.6 80.3 33.2 8,871.0 5,464.0 2,370.2 636.1 400.7 2,624.6 292 95 2 89 20 9,062.0 5,368.0 2,841.0 611 243 2,199.0 332 99 108 25 9,454 5,333 3,077 602 442 2,616 336 2 100 > a w > o 124 I T] H 11 n W 0 9,728 o o 5,407 § 3,170 596 555 2,222 Biology and medicine research Community operations . . . Administrative expenses . . . Miscellaneous expenses and income, mil. dollars .... Plant investments (excluding depreciation) year end, mil. dollars Research and development facilities ...... Other ......... Construction in progress . . . Appropriations received .....

p * Data are given in round numbers, therefore, the. sum of specific data may be discrepant with the total.

Sources: U.S. Atomic Energy Commission, 1965, p. 409; Statistical Abstract of the United States ^ 1970, p. 529;.1971, p. 519.

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plenty. A part of productive capacities for manufacturing nuclear weapons have been laid off.

p The radioelectronics industry belongs among the biggest branches of US military production. Its products are of exceedingly great importance for manufacturing modern sophisticated weapons systems. Over the past two decades, the share of military equipment and instruments in its total output has sharply grown. The government has become the biggest consumer of these products. Radioelectronic equipment supplied under government, mostly military, contracts, accounts for approximately a half of the total volume of marketed goods of this industry.

p The expansion of US military production is accompanied by an increase in government demand for radioelectronic goods, which in turn stimulates the rapid development of the radioelectronics industry. In 1970, this industry employed a labour force of 1,169,000. According to estimates by the Electronic Industries Association, 10,700 million dollars’ worth of goods was produced in 1960, 18,500 million in 1965, 24,300 million in 1970, and 25,300 million in 1971.  [168•1 

p According to the American press, the US radioelectronics industry has substantial idle capacities which provide the basis for a rapid increase in production whenever necessary.

p The shipbuilding industry is yet another leading branch of military production. Over 60 per cent of its output is intended for the Navy. In the USA, ships are built both by government and private shipyards. In 1965, there were 950 private and 11 government shipbuilding yards in the USA. In 1969, private yards employed a labour force of 145,000, government yards, 92,000 (during the Second World War, the maximum labour force employed in private and Navy yards was 1,398,000 and 333,000 respectively). Private companies handle the bulk of shipbuilding. For example, in 1953-62, private and government shipbuilding yards accounted respectively for 54 and 46 per cent of all shipbuilding operations (new building, repairs, modernisation and overhauling of Navy ships in commission). In the period 1963-65, the share of private shipbuilding yards in these 169 operations grew to 08 per cent, while that of Navy yards dropped to 32. By the beginning of the 70s the share of private firms and general ship-building work had grown still more, amounting to over 70 per cent. It should also be stressed that since 1968 all government orders for new warships and other craft have been handled exclusively by private firms. The share of private companies in building Navy ships is in excess of four-fifths of the total cost of operations, while in repair and modernisation it is a little over onefourth of the total volume.  [169•1 

p The following causes are responsible for the upward tendency observed in the share of private companies in new construction. First, the cost of shipbuilding at private yards is from 8 to 32 per cent (depending on class of ship) lower than at government yards. Second, government contracts awarded to private shipbuilding companies are a major form of state-monopoly stimulation of the development of this industry and of its maintenance at a high level of mobilisation preparedness.

p The government enterprises handle the overwhelming share of work in the repairing, modernising and re-equipping warships and other sea craft. The share of private enterprises in these operations amounts today to roughly onethird.

p The highly advanced US shipbuilding industry manufactures the most sophisticated types of modern surface ships and submarines, auxiliary and transport vessels, meeting almost all of the Pentagon’s demand for new warships and transports.

p Shipbuilding is characterised by great disproportions in the total structure of output. In the late fifties and early sixties, the average annual cost of all operations the industry carried out for the Department of Defence was about 2,000 million dollars, of which approximately 60 per cent was spent on new construction, 25 on repair and modernisation and 15 on overhauling.  [169•2  By the beginning of the 70s the total cost of these operations has reached over 3 thousand million dollars.

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p In spite of its big military contracts the shipbuilding industry has large productive capacities chronically idle mostly due to a decline in the inflow of orders from shipping companies for merchant ships. Since the cost of shipbuilding at US yards is much higher than at foreign yards (mainly because of the relatively high prices of building materials and higher wages of American workers), US shipping companies tend to do business with foreign yards. In 1946, US private shipbuilding yards built 83 merchant ships with a total displacement of 645,700 gross register tons, whereas in 1960 they built 25 (389,200 tons) and in 1964, 16 (214,900 tons).

p In 1964, private yards operated at 40-55 per cent of capacity, and 11 Navy yards, at 63 per cent.  [170•1  The flow of military contracts associated with the escalation of the Vietnam war reanimated business on the shipbuilding market. However, the problem of chronically idle capacities at US shipbuilding yards remains unsolved.

p To stimulate the development of the shipbuilding industry, modernise it and implement various mobilisation measures, the Administration, in addition to profitable war contracts, gives private shipbuilding companies subsidies and other assistance. For example, in 1966/67, Congress appropriated 132,200,000 dollars in subsidies to meet up to 55 per cent of merchant ship construction cost at US shipbuilding yards.

p The manufacture of ordnance, small arms and ammunition also belongs among the main branches of modern military production. In 1963, the USA had in operation 112 ordnance and small arms factories and 75 ammunition factories. There was a large number of stand-by enterprises which periodically resumed production to maintain themselves in mobilisation preparedness.

p The escalation of the US aggression in Vietnam resulted in a sharp increase in the Pentagon’s demand for ordnance, small arms, and ammunition. To meet these growing requirements, the Administration stepped up the production of these goods at operating enterprises and reactivated many laid-off factories. As a result, the manufacture of ordnance, 171 small arms and ammunition markedly grew. The Department of Defence expenditures for procuring ordnance and small arms grew from 400 million dollars in 1963/64 to 500 million in 1965/66. Over the same period, spending on ammunition increased more than 550 per cent, reaching 2,800 million dollars. In 1966/67, 3,600 million dollars was spent on ammunition procurement.  [171•1 

p Data presented in Tables 24 and 25 illustrate the considerable increase in the production of ordnance and small arms and in employment in this industry. As a matter of fact, this growth was still greater, because the above indices illustrate the activities only of private companies and contain no information on the manufacture of ordnance and small arms by government arsenals.

p The automotive, oil and chemical industries are also highly important for the US military-economic potential. At present, military equipment accounts for a relatively small share of their output, as well as of the country’s total military production. In an emergency, however, the absolute and relative volumes of military production in the above industries will grow.

p The output of military and space equipment by the three biggest companies in the US automotive industry was worth about 850 million dollars in 1964, General Motors accounting for 426 million, Chrysler for 214 million and Ford Motor for 209 million. This industry manufactures a vast range of military goods, including combat vehicles, missile guidance systems, aircraft electronic computers, etc.

p The industries manufacturing military end-products are closely linked with those supplying raw materials, fuel and other requisite goods. It is quite natural, therefore, that business activity in the leading arms industries has a direct bearing on the scope and level of militarisation of the related industries.

p A report of the UN special commission of experts who studied the economic and social consequences of disarmament in the early sixties indicates the share of military consumption of oil and some other raw materials by all industrialised countries, including the USA (see Table 27). If, however,
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172 Table 27 Direct and Indirect Mililary Demand for Selected Raw Materials (as Percentage of Their Total World Supply 1958 and 1959) Average for industrial countries United States 1958 1959 1958 1959 Petroleum ........ 8.9 3.0 15.7 12.0 9.8 9.4 8.3 7.1 5.3 2.7 2.3 8.3 2.9 14.7 9.5 9.3 9.4 6.8 6.6 4.9 2.6 2.2 4.5 1.5 7.8 6.0 4.9 4.7 4.2 3.5 2.6 1.3 1.1 4.1 1.4 7.4 4.8 4.7 4.7 3.4 3.3 2.5 1.3 1.1 Natural rubber ...... Nickel . . ........ Tin . ....... Zinc and lead ...... Molybdenum ....... Bauxites ....... Manganese ........ Chromium ......

Source: Congressional Record, January 29, 1963, p. 1264.

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the corresponding indices for the USA are compared with its own consumption rather than with the total for all industrialised countries, a still higher level of militarisation of the industries manufacturing the above types of raw materials will be revealed.

p In the USA, the military industry accounts for 2-3 per cent of the national total steel consumption, more than 8 per cent of aluminium, about 33 per cent of nickel, approximately 85 per cent of titanium. In the past few years, synthetic materials and ceramics have been widely used in the armsmanufacturing processes. Metals and alloys, mostly steel, however, remain the main structural materials. In the early sixties, steel accounted in terms of weight for about 66 per cent of the total materials consumed by the aircraft industry; 70 per cent, by the missile industry, and 90 per cent, by the shipbuilding industry. Despite the contemplated reduction in the specific norms of metal consumption per unit cost of military products, the total consumption of almost all
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173 Table 28 Projected Aggregate Consumption of Metals for Military Purposes (thous. tons) Item I960 1980* Carbon steel ..... 994 1 824 Special steel .......... 214 319 Stainless nickel steel 35 136 Copper and alloys . . . 07 108 Aluminium ........... 111 103 Nickel alloys . . 7 1 18 0 Magnium .... 3 2 7 1 Titanium .... 3 1 Hi 7 Load ..... 20 3 32 7 Cadmium ....... 0 9 1 4 Cobalt ........ 0 8 2 1 Chromium ...... 3 1 8 8

* Estimated average growth rate of military demand. Source: Hans II. Landsberg, Leonard L. Fishman, Joseph L. Fisher, Resources in America’s Future. Patterns of Requirements and Availabilities 1960-2000, Baltimore, 1963, pp. 717-20.

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metals used in arms production will grow in the immediate future (see Table 28).

p Arms manufacture demands high-quality structural materials. Refractory metals (tungsten, molybdenum, niobium, tantalum) and novel light metals (titanium and beryllium) are of prime importance in the production of modern sophisticated weapons systems and space hardware.

Discussing the prospects for militarisation of individual US industries, it should be noted that its level will be determined by the volume and structure of government military demand.