Today, we are facing intensifying ecological, social, and political crises: the steady erosion of workers’ rights, pervasive racial injustice, ballooning inequality, ever-rising health care costs, growing disillusionment with democracy, and catastrophic climate change, to name but a few. It is critical we use every policy tool at our disposal. And while nationalization is certainly no panacea, and not universally applicable, it should be destigmatized and seriously considered as the solution to a variety of social ills.

A Brief History of Nationalization

In a new report for the Next System Project, I document the long and rich tradition of nationalization in the United States — from railroads, telephones, and arms manufacturers (such as Smith & Wesson) during World War I; to the Tennessee Electric Power Company (TEPCO) and gold and silver during the New Deal; to literally hundreds of companies in a wide swath of sectors during and after World War II; to steel mills during the Korean War; to passenger and freight railroads in the 1970s; to Continental Illinois Bank and the savings and loan industry in the 1980s; to banks and car manufacturers in the 2000s. While it would be impractical to reproduce this lengthy history here, a few illustrative examples may be useful.

In December 1917, President Woodrow Wilson nationalized the nation’s railroads — at the time one of the country’s largest industries, employing around two million people and accounting for approximately one-twelfth of the entire economy. Under private ownership, the rail system was falling into disarray. The vast array of competing companies were in financial distress but continued to prioritize returns for their shareholders over investment in tracks, trains, and stations. Coordination problems flourished alongside crumbling infrastructure and poor service.

Following the government takeover, the rail network was integrated, badly needed repairs were made to tracks and stations, and thousands of new cars and engines were ordered. Wages were also increased, ensuring that organized labor fully backed the effort. After the war, railroad unions endorsed an ultimately unsuccessful effort (the Plumb Plan) that would have instituted permanent public ownership and operation of the railroads through a multi-stakeholder board with equal representation from workers, officials, and the public.

During World War II, the government nationalized hundreds of companies. John Ohly, author of the definitive account of wartime nationalization, writes that “seizing plants developed into a major government business … In the three months before V-J Day the government was taking over approximately one plant a week, and in a score of other situations seizures were averted only at the last minute or because the war ended.”