Defense Production Act of 1950

The Defense Production Act (Pub.L. 81-774) is a United States law enacted on September 8, 1950 in response to the start of the Korean War authorizing a broad set of governmental powers, including requisition of property for national defense, expansion of productive capacity and supply, wage and price stabilization, settlement of labor disputes, control of consumer and real estate credit. The Act has been periodically reauthorized and amended, particularly in 2001, and presently remains in force.

History
The Defense Production Act of 1950 (Public Law 81-774) was enacted due to "Rising wages and prices during the Korean War [which] caused serious economic difficulties within the United States. In an effort to expand production and insure economic stability, the Defense Production Act of 1950 (Public Law 81-774) authorized Governmental activities in various areas, including requisition of property for national defense, expansion of productive capacity and supply, wage and price stabilization, settlement of labor disputes, control of consumer and real estate credit, and establishment of contract priorities and materials allocation designed to aid the national defense. Under section 712, the Joint Committee on Defense Production was established to serve as a 'watchdog' over Federal agencies administering the various programs authorized by the act. The members of the committee were drawn from the Senate and House Committees on Banking and Currency." --- The Defense Production Act Title III Program "authorities were first used extensively during the early 1950s to expedite expansion of industrial capacity for many strategic and critical materials, machine tools, and a number of other critical items needed to satisfy evolving defense requirements. Despite (or, perhaps, partially because of) enormous successes in expanding needed domestic production capabilities, use of Title III declined markedly during the late 1950s and early 1960s and eventually ended altogether by the end of the 1960s. Congress revived and modernized the Title III authorities in the mid 1980s, and these authorities have been used since that time to promote improvement and expansion of industrial capabilities needed for national defense purposes."

"Today's Title III Program differs in fundamental ways from the original program established in 1950. First, the original program was created in response to the national emergency resulting from the Korean conflict and Cold War tensions. Today's program focuses primarily on promoting the transition of new technologies from research and development to efficient and affordable production and the rapid insertion of these new technologies in defense systems."

"Second, the original program was based on virtually unlimited authorities to encourage private investment in materials production and supply. Today's program is subject to a number of restrictions to ensure that Government action is needed and that Title III authorities are the best means to meet the national defense need. Moreover, proposed Title III actions are subject to prior review by Congress and are funded with moneys appropriated for Title III purposes."

"Third, the original program was supported by a funding ceiling of $2.1 billion (in 1950s dollars) and was permitted to obligate these funds based on probable ultimate net cost to the Government rather than total contract liability. Today's program has been funded at an average annual rate of $20-$25 million and has been required to obligate funds at 100 percent of contract liability."

"Despite the significant differences between the original program and today's, the basic purpose of the Title III authorities has not changed - to expand domestic production capabilities to meet defense needs." And, some would argue, to specialize these domestic production capabilities only towards defense needs, assuming that control of global finance, trade and port facilities will continue to feed the civilian sector, and that there is no need, e.g. for US self-sufficiency in oil.


 * Korean War Era.
 * Program Decline.
 * Revival of Title III.
 * Current Programs (2000).

=Reauthorization== On Wednesday, June 13, 2001, the U.S. House of Representatives -- the Subcommittee on Domestic Monetary Policy, Technology, and Economic Growth and the Committee on Financial Services -- conducted a hearing regarding Reauthorization of the Defense Production Act of 1950 (DPA).

Peter T. King, Chairman of the Subcommitee, presiding over the hearing, stated:


 * "The Defense Production Act is a little-known bill of great national significance. It has provided vital support to the United States military in every conflict since it was enacted in 1950 during the Korean War. It also holds the promise of helping to mitigate civil emergencies during peacetime.


 * "DPA gives the President a vital set of tools to insure the constant readiness of those portions of our industrial base that support national security. The tools include production priorities and financial incentives, but also extend to monitoring the increasing effects of globalization on the defense base. It falls under the jurisdiction of this subcommittee, and I should say that to date the subcommittee is unaware of any significant adverse impact on the economy caused by DPA. All Administrations since President Harry S. Truman have used it carefully and prudently.


 * "It's important to note that in the reauthorizing of DPA and monitoring, this subcommittee makes no judgments about particular defense programs. Those decisions are left to the President, who has delegated the job to the appropriate departments: chiefly the Defense Department, of course, but where appropriate the Departments of Commerce, Energy, Transportation, Agriculture and so forth, under the administration of the National Security Council and FEMA.

-- "On Friday, October 5, 2001, the President signed into law the 'Defense Production Act Amendments of 2001' which extends the Defense Production Act of 1950, through September 30, 2003, and the authorization of appropriations for that Act." ,
 * "At this stage I believe the DPA should be reauthorized virtually unchanged from its current form. Through a mishap of timing, the legislation did lapse briefly in 1990 during the buildup to Desert Storm. That was quickly corrected, however, as the Defense Department used the production priorities extensively to acquire items as diverse as computers and communications equipment, satellite-based mapping systems and materials to help protect our troops against chemical weapons. Fortunately, we do not appear to be in that situation now, but geopolitical situations can change quickly. Also, civil emergencies are particularly hard to predict." See emergency response.

Other Related SourceWatch Resources

 * Defense and its definition
 * Homeland security
 * Military-industrial complex
 * State of national emergency