Army Surplus: Supply and Demand

By William Leslie

The end of World War II triggered the biggest yard sale in the history of the United States military, the likes of which had never been seen before—and probably will never be seen again.

During WWII, the U.S. spent $288 billion in 1940 dollars, equivalent to $6.5 trillion in 2024 dollars. By the end of WWII, much of that money was gone. It had been spent on bombs, on airplanes that had been shot down, on soldiers’ salaries, and aid to our Allies. However, some of the money had been spent on things that were still around: things like military bases, buildings, trucks, food supplies, and reportedly, hundreds of thousands of body bags that weren’t needed because of the abrupt end of the war in the Pacific. Some equipment, such as navy ships, could be mothballed.

Between 1945 and 1947, the U.S. military shrank by 87 percent, from 11.9 million servicemen to 1.6 million. Nevertheless, the war’s end triggered an enormous sale of surplus material at a magnitude never before seen—and probably never to be seen again.

The U.S. had learned from the previous war. After WWI, ships, airplanes, and large guns were mothballed for future military use, but most were obsolete long before the next war. Surplus sales after WWI, which had been at a small fraction of the original cost, had caused howls from Congress and the American public. To many in the military, it was better to do nothing than move quickly and look foolish, so sales did not proceed rapidly. The Navy and Army (and soon, the Air Force) were reluctant to identify surplus before they knew the size of their future authorized personnel, and Congress was slow to define the size of peacetime armed forces.

After a series of politically motivated fumbles, Congress created the Surplus Property Administration to manage the disposal of an estimated $90 billion of government property in more than 5,000 locations in every state and overseas. Perhaps 90 percent of those assets were in the 48 states. Many overseas assets weren’t included because they were needed to reconstruct war-torn countries or had little or no application for civilian use. Bombs, tanks, and some communications equipment couldn’t be sold to just anyone.

The list of items available for sale to the public would fill several phone books. Some examples included:

• 47 million yards of jute burlap strips – previously destined to become camouflage — in six colors, stored in 33 rail cars.
• A 300,000-square-foot manufacturing plant in Burlington, N.C., complete with an airport.
• A Navy landing craft, LCVP #C-9596, 36 feet long, in Attu, Alaska.
• 500,000 wristwatches
• 57,000 herringbone twill fatigue jackets
• Hundreds of Higgins boats
• Real estate that had held POW and Army training camps

Two Boeing B-17 Flying Fortress bombers in flight. Photo: Getty Images

To limit the profits of businesses that participated in surplus sales, the government sometimes set a ceiling on the price at which goods could be retailed. For example, when the Army sold 4,000 rowboats designed for infantry assaults, it set a maximum retail price of $75. It’s unknown whether such controls were effective—but it seems unlikely.

The government didn’t have the time or the personnel to handle the retail sales of small quantities of goods. At first, most surplus sales were reserved for businesses, although this was later relaxed. That meant that an Army dentist, recently released from the service, couldn’t buy his dental equipment from the Army. He typically had to go to a wholesaler of dental equipment who had just purchased the surplus equipment. However, to help him with the purchase, GI loan programs would finance the equipment purchase to start a business. Items for personal use, such as vehicles, were typically sold at a predetermined price. Items intended for resale by businesses were sold based on a written bid.

Eleven designated districts were created, each serving multiple states. District 1, headquartered in Boston, handled assets in Connecticut, Maine, Massachusetts, New Hampshire, Vermont and Rhode Island. District 11, in Seattle, handled sales in Oregon, Montana, Idaho, and Washington State. Unfortunately, that meant that an ex-fighter pilot who traveled hundreds of miles to try to purchase a Piper Cub might be awarded a plane located 500 or more miles away.

Overseas assets had a different hierarchy of claims: First, overseas agencies of the federal government; second, reconstruction relief agencies, such as the UNRRA – the United Nations Relief and Rehabilitation Administration; third, U.S. veterans living overseas; and fourth, Allied governments. This meant that most vehicles in Europe at the war’s end were turned over to local governments to replace government vehicles destroyed in the war. This served to speed the recovery of a devastated Europe. The French postal service might request 1,000 jeeps for use by their postal service. The German forestry service could request 200 Dodge trucks to restore logging operations.

Sales of assets to other governments were problematic. In many cases, it was unclear who had the authority to decide for a particular city, state, or country. And if a foreign government wanted to buy, what currency was acceptable for payment? And what exchange rate would be used? Overseas sales resulted in some very bizarre results.

• The U.S. sold all of the assets in one European district to a local government for $400,000. That government immediately resold most of the assets to private sector companies, who shipped them to the U.S., selling them at huge profits.

• President Truman argued for faster surplus sales to restore foreign economies. Although $5 million in materials in Italy had been identified by the summer of 1945, just 10 percent had been designated suitable for sale to civilians, and little had been released.

• Espiritu Santo, an island in the South Pacific, was an enormous Allied base with as many as 40,000 soldiers and sailors and eight movie theaters. It was famously the home of VMF-214, the “Black Sheep” squadron. After the war, an attempt was made to sell hundreds of vehicles, thousands of pieces of equipment and mountains of building supplies to the local government, a joint venture between the French and the British. Their target buyer’s perception was that there was no way that the U.S. would ship the assets to another market, and they refused to negotiate a price. Frustrated, Navy Seabees built a ramp and dumped the surplus into the ocean. That place is now known as Million-Dollar Point and is a popular location for scuba divers, who find bulldozers, cranes, trucks, crates of clothing, and cases of Coca-Cola.

• There were 137 bombers and nine fighters that were interned by the Swiss during WWII and were sold to the Swiss for scrap.

• Hollywood stunt pilot Paul Mantz bought 475 bombers and fighters in the U.S. for $55,000, or $115.79 per airplane. He reportedly sold the fuel in the tanks for more than that and then sold airplane parts worldwide for years. Some parts were sold back to the U.S. military, which had misjudged their needs. Ultimately, he sold the rest as scrap metal for $160,000. Mantz died in a plane crash during filming of 1965’s The Flight of the Phoenix, starring Jimmy Stewart.

In 1946, Congress pivoted responsibility to another entity, the newly formed War Assets Administration. An estimated $28 billion in personal property suitable for sale to the private sector remained to be sold. A primary concern for Congress was to avoid the disruption of businesses that were returning to manufacturing products suitable for the private sector.

For example, in December 1945, surplus medical supplies were estimated to total 50 percent of annual U.S. production. Medical suppliers, who had worked so hard to support the war effort, were obviously sensitive to the timing and pricing of sales. To protect U.S. auto manufacturers, the trucks, jeeps, and motorcycles that had made their way to Europe would not be returned to the U.S. At least, that was the goal.

Camp Adair, Ore., was typical of the real estate to be sold. It included 89 square miles of land and 1,700 buildings. Adair was rapidly constructed in the year following the attack on Pearl Harbor as a training facility and briefly as a camp for German and Italian prisoners of war. Following the war, much of the land was repurchased by the farmers who had sold it to the Army just a few years before. Some buildings were sold for nominal prices and moved to other locations.

American Allies faced similar issues in dealing with surplus. In 1946, Cranfield Aeronautics College, located north of London, requested a modern aircraft with a hydraulic wing fold as a learning aid for its students. In 1963, students there decided to wheel their Corsair down to the local village pub under the cover of night. This naturally caused a buzz of amusement in the village, and the college set out to retrieve the bird with a tractor. Shortly after the incident, the plane was transferred to the Fleet Air Arm Museum in Yeovilton. It was the only survivor of around 2,000 of this plane type delivered to the British. The rest were scrapped. In 2000, restoration of the Corsair began, revealing layers of paint last seen in 1946.

What do you do with a surplus B-17 Flying Fortress from WWII? If you’re Art Lacey,
you use the hulking bomber as a tourist attraction for your service station in Milwaukie, Oregon, of course

And then there’s Art Lacey of Milwaukie, Ore., who in 1947 decided he needed a massive, decommissioned Boeing B-17 Flying Fortress atop his new 48-pump gas station.
Over 12,000 bombers were manufactured for the war, with 4,735 lost in battle. That left thousands of B-17s to be scrapped or sold to people like Art Lacey, who purchased a surplus bomber in Oklahoma. His B-17, dubbed “Lacey Lady,” became an instant tourist attraction and served as a service station canopy in Milwaukie, just a few miles south of Portland, for nearly 70 years.