McNair Paper Number 50, Chapter 5, Notes, August 1996
1. Donald M. Nelson, Arsenal of Democracy (New York: Harcourt, Brace and Co., 1946), 87-88.
2. Marvin A. Kreidberg and Merton G. Henry, History of mIlitary Mobilization in the United States Army, 1775-1945 (Washington, DC: Headquarters, U.S> Army, 1955), 683; Bureau of the Budget, The United States at War, Development and Administration of the War Program by the Federal Government (Washington, DC: Government Printing Office, 1946), 22. These weak institutions, such as the Office of Emergency Management and the National Defense Advisory Commission, did not bar the president or Congress from actions. In the last half of 1940, for example, Congress appropriated $10.5 billion for munitions contracts, nine times the total expenditures for both the Army and Navy for fiscal year 1937 (which ended on 30 June 1938) (Somers, 9).
4. Kreidberg and Henry, 683-684; Nelson, 20-21. Nelson underscores the point that in May 1940, "business was fearful, labor was anxious" of an extensive increase in government power and authority.
5. Kreidberg and Henry, 683-684; Nelson, 66; Emergency Management of the National Economy: Vol. XIX Administration of Mibilization WWII (Washington, DC: Industrial College of the Armed Forces, 1954), 29 (hereafter cited as ICAF). The seven advisors did more than just counsel the president; they helped advance mobilization by solving problems as facilities, machine tools, and materials became tight. Unemployment was evaporating, and people with jobs wanted to spend money. Businessmen wanted to manufacture for this market and were reluctant to expand production facilities for munitions work when there might be no war. Labor also wanted to be rewarded in the tighter employment market. Sidney Hillman, a key labor leader, on 2 July 1940, about 5 weeks after being appointed to the Commission, established a Labor Policy Advisory Committee with representatives from the American Federation of Labor, the Congress of Industrial Organizations, and the railroad brotherhoods. (One of these men, Joseph D. Keenan, later became a vice chairman of the War Production Board). Hillman and his partners worked successfully to solve labor relations problems before they became issues. They helped prevent strikes by removing trouble spots before breakdowns occurred. There were strikes during this period, but fewer than there would have been had Hillman not worked his powers of persuasion on an increasingly militant labor force (Nelson 308-311). Nelson reports elsewhere that Roosevelt deliberately failed to appoint a chairman, thinking he could direct the Advisory Commission, and when the president chaired meetings, infrequently as it turned out, progress was made, but in his absence little could be jointly accomplished (Nelson 82-86).
6. Nelson, 92-93. The Commission understood the intimate relationship between raw materials and industry and soon after being formed drew up a list of 14 strategic and 15 critical materials, some of which were not available (or barely so) in North AmericaCfor example rubber, silk, tin, manganese, quinine, magnesium (Nelson, 94-97).
7. Herman M. Somers, Presidential Agency: The Office of War Mobilization and Reconversion (Cambridge: Harvard University Press, 1950), 14.
9. The common policy of the United States, United Kingdom, and Soviet Union on the verge of the war was to "follow a much more 'intensive' rearmament rather than the approach adopted by Germany, which stressed a relatively high level of allocations to mechanization and reequipment, compared with the German policy of creating a large fighting force based on only limited military stockbuilding. . . . The low proportion of German military stockbuilding to armed forces personnel reflected an essential weakness of Germany's war preparations. . . . After 1940 German munitions production rose only slowly whereas Allied production multiplied. As a result, when German production finally accelerated in 1943-4, it was already too late to close the gap." Even with the reverses in 1941 and 1942 the German number of work hours were virtually unchanged from that of 1939. While the percentage of German women in factories was already higher than it would be in Britain, it did not rise between 1939 and 1943. Mark Harrison, "Resource Mobilization for World War II: The U.S.A., U.K., U.S.S.R., and Germany, 1938-1945," in Economic History Review XLI, no. 2 (1988): 175-177, 187, 190.
10. Nelson, 106. In 1940, Nelson, a senior Sears executive, was seconded to the Department of the Treasury where he was acting director of the Procurement Division. Here he was authorized to make purchases for all government departments except the Army and Navy. He soon became associated with the Advisory Commission as Coordinator of National Defense Purchases (and later Director of Small Business Activities), but he was not a member at the outset [Nelson, 82-86, and Emergency Management of the National Economy: Vol. XIX Administration of Mobilization WWII, hereafter cited as ICAF (Washington, DC: Industrial College of the Armed Forces, 1954), 20]. Coordination of purchases was desirable to prevent government agencies from competing with one another for supplies, and thus bidding up the price. By this time orders were pouring in from overseas, the armed services were spending more. Consumers had more money in their pockets and were eager to buy. There were also standardization problems. In 1940 Douglas aircraft company was making seven different variations of one aircraft for seven different customers, creating major production problems (Peppers, 32-35).
12. ICAF, 23-25. Of course, none of these recommendations came without debate. The authors of the Industrial College study argue that the "process of getting the country squared away for rearmament was accompanied by prolonged and vitriolic debate over the terms on which various interests would participate in the defense program." Labor seriously distrusted managementCwith good reason, assert the authorsCand management was suspicious of labor. "Business was accused by labor and politicians, and by others of conducing a 'strike of capital' until they were able to get contracts on their terms. Everybody was clamoring for the Government to knock heads together, i.e. other people's heads."
13. Nelson 99, 105. Nelson brought much organizational capability, expertise, and additional personnel with the right skills to this group, added a statistical section in October 1940, and must have seemed like the superstar because it was he who eventually became the industrial mobilization "czar" (although he, too, was to be chopped down well before the end of the war).
14. Baruch, who wanted industrial committees (there were 57 on the War Industries Board during World War I), saw the lack of a priority setting apparatus in the Advisory Commission as a major problem, and perceived the failure to establish a mechanism for controlling prices as critical. In general, he saw as crucial the lack of an individual with real authority to make decisions in this critical period. See Nelson, 90-91.
16. Kreidberg and Henry, 684-685.
18. Kreidberg and Henry, 684-685. Nelson wrote that the Office of Production Management was ready for the "oxygen tent" by mid-summer of 1941. Nelson, 139.
19. Somers, 16-17. The Office of Production Management also had an oil unit, but it could not control this basic industry because of competition from Ickes. The Federal Power Commission was also a competitor. When the Office of Production Management tried to control power for defense purposes, the Federal Power Commission argued back that only it had statutory authority to allocate electricity. Only the president could resolve such disputes. Even the services sabotaged the efforts of the Office of Production Management by providing Knudsen with "unrealistically small, inadequately calculated, and internally inconsistent" figures, although this was done out of incompetence rather than maliciousness.
22. Paul A. C. Koistinen, "Warfare and Power Relations in America: Mobilizing the World War II Economy," in James Titus, ed., The Home Front and War in the Twentieth Century: The American Experience in Comparative Perspective: Proceedings of the Tenth Air Force Academy Miltiary History Symposium (Washington, DC: Office of Air Force History, 1984), 93. "Desiring to exploit growing civilian markets, fearful of creating excess capacity or disturbing intra-industry power patterns . . . doubtful or distrustful of the president's foreign and domestic policies, industrial America set the terms for cooperating with the Roosevelt administration." Koistinen asserts that the Advisory Commission and Office of Production Management were a "facade of broad interest group representation," but were "actually dominated by industry." Decisions that were made by the "dollar a year men" in these organizations "reflected the attitude of their firms and organizations. " Koistinen notes that the "nation's giant corporations" received the "overwhelming percentage of defense and war contracts." True enough, but where else would one turn in a national emergency? Was this the time to remake industrial relations, or to win the war?
23. Somers, 17. The most severe critic of the infighting that went on in Washington in this era is Bruce Catton (who may have ghosted Nelson's book). Catton was an eyewitness to the infighting and recorded the displeasures of those who were responsible for making the Office of Production Management and the War Production Board work. He found throughout the war that the industrial sector remained undemocratic and that only an "armed truce" existed between American industry and the government on one hand and management and labor on the other. He cites one example that will serve for many. Business put up a terrific fight over establishing joint management/labor committees to suggest ways to enhance production. Manufacturers called this a plan to "Sovietize American industry." Catton argues that there were many good suggestions that came out of this partnership, but that poor relations between labor and management limited the potential. See Bruce Catton, The War Lords of Washington (New York: Harcourt, Brace and Co., 1948), 150, 147-148.
25. Nelson, 123, 139. Machine tool production expanded more than six times during the war (Peppers, 63-65). The surveying done by the Office of Production Management was considered less than superficial by Bruce Catton. He writes about a meeting chaired by Knudsen soon after the Japanese attacked Pearl Harbor in which the industrialist tells automobile manufacturers that he needed to know where war production would come from. Catton quotes Knudsen regarding machine guns: "We want to know if you can make them or want to try and make them. If you can't, do you know any who can?" Catton remarked: "Here we were eighteen months after the beginning of the defense program and a full month after Pearl harbor; and the 'Office of Production Management' which had been set up to marshal the nation's industrial strength, was desperately asking, 'Who can make what (Catton, 107)?'" Catton was hardly unbiased in these matters, but all sources agree that the Office of Production Management was a failure and so was Knudsen (with Sidney Hillman) as its Associate Director.
28. Koistinen , 93-94; ICAF, 68-75.
29. Kreidberg and Henry, 621-623, 625. See also Charles E. Kirkpatrick, An Unknown Future and a Doubtful Present: Writing the Victory Plan of 1941 (Washington, DC: Center for Military History, 1990), 52-53. In the case of the Army the resulting effort was called the Victory Plan which became the blueprint for both the general mobilization of the Army as well as the concept by which the United States would fight the war. The leader of the Army's effort was Major Albert Wedemeyer, an officer well schooled in the German art of war. To him it was more than a logistical question. To answer it properly he believed he had to discern the national objective, the military strategy to achieve it, the military forces required to execute the strategy, and the equipping and training of those forces. See Kirkpatrick, 1, 60-61.
30. Kirkpatrick, 107-108. Compare with Kreidberg and Henry, 623.
31. Kreidberg and Henry, 625, and James C. Gaston, Planning the American Air War, Four Men and Nine Days in 1941 (Washington, DC: National Defense University Press, 1982), 9. The Army Air Force planners thought that 17,550 fighters would do the job, but built almost that many P-47 Thunderbolts (15,863), 14,686 P-51 Mustangs, and 33,000 P-40s, P-38s, and P-39s. The number of Very Heavy Bombers (3,740) came close to the number of B-29s built (3,898), but the total of heavy bombers, about 20,000 was less than two-thirds of the total B-24s and B-17s actually built 30,882). See R. Elberton Smith, The Army and Economic Mobilization (Washington, DC: Center of Military History, 1985), 27. As it turned out the ground force was barely large enough to fight the war, and at the end of the war there were no more combat troops in the United States to send anywhere. All of the Army's ground forces were committed to battle by May 1945 (a total of 96 percent of all tactical troops were in overseas theaters). The Army had dispatched the last of its new divisions from the United States in February, 1945, 3 months before V-E day. No new units were in the United States or were being formed. There was no strategic reserve (Kirkpatrick, 113)! The War Production Board, responsible for producing the Arsenal of Democracy, saw the problem this way: "By late 1944, the manpower recruitment drive was a race in a squirrel cage. Men were desperately needed not only in the textile mills and lumber camps and coal mines and steel mills, but also in the tire plants, lead mines and smelters, ship repair yards, rocket and shell loading plants, foundries, many chemical plants, most of the aircraft plants, and elsewhere. By early 1945, and after the German offensive in the Ardennes and the step-up in Selective Service withdrawals of previously deferred industrial workers, there was scarcely an industry which was not short of manpower or afraid it was about to lose its skilled workers. The German collapse staved off what might have been a desperate manpower shortage" [War Production Board, Wartime Production Achievements and the Reconversion Outlook, (Washington,DC: 1945), 8-9]
32. Duncan S. Ballantine, U.S. Naval Logistics in the Second World War (Princeton: Princeton University Press, 1947), 56. Of course this, like all of the plans, was modified as the war progressed. The Navy's plan was short of landing craft and destroyer escorts (and the Army Air Force's plan was short of escort fighters). The Navy had received a big boost in construction funding and authorization a year previously when the president signed the Two Ocean Navy Expansion Act on 19 July 1940, which authorized a vast increase in ship construction and up to 15,000 airplanes. At this point the Navy was authorized 35 battleships, 20 aircraft carriers, and 88 cruisers in addition to hundreds of destroyers and other smaller ships. Peppers, 13-14. See also Robert H. Connery, The Navy and the Industrial Mobilization in World War II, (Princeton: Princeton University Press, 1951), 11-30 for the Navy's logistics organization, 31-54 for naval planning, 76-111 for industrial mobilization before Pearl Harbor was attacked, and 154-178 for revitalizing the Army and Navy Munitions Board.
33. ICAF, 68-75; Nelson, 155-156, 159-160, 162-163. Nelson is, of course, a key source for writing on the Supply Priorities and Allocation Board. His work there was as effective as Roosevelt's tortured administration allowed it to be, and his reputation came out of this period and position quite high. So much so that he was made the "czar" of war production in the next phase. I tend to see his writing here as objective. When he writes about his experiences, and especially his fights, when he was Chairman of the War Production Board, I am more skeptical. See also Kreidberg and Henry, 685-686.
35. Nelson, 163. See also War Production Board, 13-14. Nelson later in his volume charged the Army with an attempt from 1942 onward to "gain control of our national economy." Their establishing of priorities was a tool in their approach. Nelson, 362-367. In the end, however, with the initiation of the Controlled Materials Plan in fall 1942, the military, along with the commander in chief, did secure their priorities. The Controlled Materials Plan was indeed administered by the War Production Board, but the armed services received the raw materials to be distributed as they saw fit to their prime contractors based on the priorities they deemed strategic.
36. Somers, 113-114. "If any single issue constantly loomed larger than any of the rest, it was that of priorities." Somers writes that the priority machinery broke down very early in the war and that it was reformed often. See also Nelson, 107-109.
37. ICAF, 76-77. Regarding the relationship between money and time, Nelson wrote: "The hardest lesson for us to learn in 1941 was that a lot of money was not enough" (Nelson 152-153).
38. United States manufacturers produced 4.7 million automobiles in 1937, and virtually none in 1942. The capacity to build that many automobiles (more than the entire rest of the world combined, in fact 78 percent of the cars produced in the world and 64 percent of the trucks and buses) was an asset beyond rational value once converted. The output of aircraft was tiny by comparison. Only 3,100 aircraft were produced in the United States in 1937. About 30 times that number would be produced in 1944. See Bureau of the Census, Statistical Abstract of the United States, 1941 (Washington, DC: Government Printing Office, 1942), 900. See Nelson, 53, for the statistics on world automobile output.
39. ICAF, 78-80. Koistinen comments on the frictions between the Supply Priorities and Allocation Board and the Army and Navy Munitions Board (which now was an executive agency under the president). He writes that the uniformed military on the Munitions Board bult a parallel structure to Nelson's board so that the military could analyze and dispute and fight for their view of a proper prioritization. The leader of the Munitions Board, Ferdinand Eberstadt, was trusted by the uniformed military and by their service secretaries. Whenever he could, his board prioritized production and construction through its contracting authority. Eventually bad blood developed between Eberstadt and Nelson, with the former joining the War Production Board ostensibly to work for Nelson, who eventually fired him ( Koistinen, 95).
40. Nelson, 184. Conversion was indeed the issue because the United States had a negligible munitions industry in 1939, but it was the manufacturing center of the world. In automobiles, steel, and petroleum products, no country came close to the United States (Nelson, 35).
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