Plant Financing in a War Economy

Abstract

AS THE nation turned its attention to the problem of national defense in the summer of I940, the rising tide of government orders made it necessary for corporate financial executives to consider, first, in what ways working capital might be secured to finance the production of larger physical volumes of goods from existing facilities under rising-cost conditions, and, second, the extent to which new plant should be constructed and the methods whereby these facilities should be financed when present capital equipment was incapable of satisfying the demands of government procurement agencies. It is the purpose of this article to consider the latter of these two problems-the problem of new facility financing. Attention will be devoted first to an account of the extent to which plant facilities have increased, followed by an analysis of financing methods with an attempt to evaluate the effect of these financing methods upon the capital structures and policies of business concerns and upon the relationships between business and government.2