McNair Paper Number 50 Chapter 6,Notes, August 1996
42. Donald M. Nelson, Arsenal of Democracy (New York: Harcourt, Brace and Co., 1946), 35.
44. Nelson, 186. Nelson and vice president Henry Wallace were called to the White House on 15 January 1942 to discuss war strategy and deficiencies in war production organizations. Roosevelt assured both men that when he had promised that the United States would be the "Arsenal of Democracy," he had not merely been making a phrase, and when he outlined the amounts of munitions and ships he was not exaggerating. The president made clear that "our fate and that of our Allies-our liberties, our honor . . . depended upon American industry." Nelson, 16-17.
45. 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), 686-687; 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), 100-104; 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 Military History Symposium (Washington, DC: Office of Air Force History, 1984), 95-96).
47. David Robertson, Sly and Able: A Political Biography of James F. Byrnes (New York: Norton, 1994), 316. Harold G. Vatter, The United States Economy in World War II (New York: Columbia University Press, 1985), 67, writes that the War Production Board inherited 6,000 employees in January 1942 from the Office of Production Management and the Supply Priorities and Allocations Board and employed 18,000 people just 6 months later. During World War II, the federal civil service more than tripled during the war, from 940,000 when Germany invaded Poland to 3,126,000 at its peak in mid-1943. The War Production Board was only one of dozens of newly created war boards that consumed civil servants. The War and Navy Departments had many times the number employed by Donald Nelson and his successors (in fact between them more than two million civilians). Jerome G. Peppers, Jr., History of United States Military Logistics 1935-1985 37-38.
48. See Nelson, 194, for media expectations; Kreidberg and Henry, 686-687; Koistinen, 95-96; James F. Byrnes, Speaking Frankly (New York: Harper Brothers, 1947), 15-16. Byrnes writes that he told Roosevelt on 12 January 1942 that Nelson "will last only as long as it is recognized that he has your complete confidence." Byrnes was an associate justice of the Supreme Court at that moment and had been a new dealer congressman and senator from South Carolina. He was an intimate of Bernard Baruch and also a close ally, friend, and confidant of Roosevelt's.
49. War Production Board, Wartime Production Achievements and the Reconversion Outlook (Washington, DC: 1945), 7. Nelson's policy, followed by his successors, was to avoid overregulation, to impose only those controls within their authority that would significantly speed victory, and not to impose restrictions that added little. He promptly dropped those restrictions that proved "unworkable or outlived their usefulness" (War Production Board, 13).
51. Nelson, 211. On 3 March 1942 Nelson directed that contracts were not to be competed for, but rather negotiated. This saved an enormous amount of time (Nelson, 369). Cost-plus fixed-fee contracts were the norm. These had a legal limit of 7 percent fee, but most often the fee was only 5 percent, and the Army Air Forces usually paid only 4 percent (Nelson, 79). This award system, of course, does not encourage controlling costs, since profits are directly tied to costs.
52. Nelson 212-224. The aircraft industry expanded more than 4 times during the war from fewer than 500,000 people to more than 2 million, but production exploded by almost 50 times (Nelson, 227-228, 235-236).
55. War Production Board, 10-13.
56. Herman M. Somers, Presidential Agency: The Office of War Mobilization and Reconversion (Cambridge: Harvard University Press, 1950), 159.
57. Koistinen, 95-96. Nelson admits that small businesses were slighted during the war and did not get their fair share of the contracts. Many small firms, because they could not get an allocation of raw materials, were bankrupted. But Nelson argues that he did not have the manpower to go to the 184,000 manufacturing firms in existence at the outset of the war. About 100 giants received the vast bulk of the contracts, and the subcontracting was left to big industry. Nelson's justification was that time was the issue, that winning the war was the goal. Nelson's orders on 23 February 1942 and 5 May 1942 that stopped production of more than 400 civilian products using iron and steel further added to the suffering of many small firms that could not convert to war production (Nelson 269-271). See Kreidberg and Henry, 686-687, for a critique of Nelson. They assert that "either Mr. Nelson was the wrong man for the job or else the [War Production Board] was created so late that it was impossible for its chairman to successfully challenge existent, entrenched agencies which were made subordinate to [War Production Board]." Further: "The frequent reorganizations of [the War Production Board], together with the tangled maze of its relationships with other agencies, continued to delay, harass, and anger businessmen who needed decisions. [The War Production Board] was so fully occupied with directing the flow of materials that by 1943 it had relinquished overall control of economic mobilization." The Industrial College Study noted that "almost from the beginning" Nelson's authority was challenged by other agencies, most notably the War Department. Before the War Production Board was 6 months old, the Army and Navy Munitions Board "almost succeeded in a coup to require its concurrence in the principal actions by the War Production Board." The report cited a "running fight" between the military and the Board fought out in the media by spokesmen from each. The War Department "belittled the principal officials of" the War Production Board "and challenged its technical ability. Under cover, other efforts were made to bring about the removal of" board officials [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), 100-101, 104]. Somers argues that Nelson had been given the powers the president had been granted by the Congress under Title III of the War Powers Act, but Nelson did not seize all he could, and the president himself "diluted and diffused the powers given to Nelson" (24).
58. Kreidberg and Henry, 686-687. Nelson deliberately refused to procure for the Army and Navy, arguing that had he done so the warriors would have been critical of such a move because people associated with the War ProductinBoard from industries producing the tools of war would have been buying systems from their former industries, and as importantly, it would have taken too long to train War Production Board civilians in these arts (Nelson, 196-199). The War Production Board history asserts, however, that it was not without influence here, but that its approach was to collaborate and coordinate, but never to dictate. The board "assisted other agencies, or enlisted their help"-two nondynamic verbs. The board said that it "cooperated" freely with agencies all over the land and was careful not to take any "important actions which would affect the field of jurisdiction of another agency without prior consultation with that agency. . . . For example, in contrast to the British policy of centralizing munitions procurement in civilian hands, procurement in this country was handled by the military services, which received direct appropriations from Congress. But procurement policies were determined cooperatively by the Procurement Policy Board, on which [the War Production Board] sat with the Military. Through this Board, the [War Production Board] made special efforts to secure such distribution of both prime and subcontracts as would promote maximum use of the nation's materials, labor and facilities." Regarding people, a vital concern to the War Production Board in order to maximize production, the Board worked with the War Manpower Commission to guide labor to where it was most needed through its Production Urgency List-which was frequently updated-and also collaborated with Selective Service to determine which workers in war industries were actually essential and should therefore be exempt from the draft. The Board also certified to the War Labor Board when and where wage increases were justified to attract an adequate labor supply (War Production Board, 15-17).
59. Vatter, 72-73. According to Vatter, Administrative Order 2-23 gave the services just what they wanted, the right to "direct production themselves." It stipulated that the War Department, through its Services of Supply and the Army Air Forces, was to carry on "its supply functions of research, design, development, programming, purchase, production, storage, distribution, issue, maintenance, and salvage." (The Navy's order was 2-33 in April.). The Secretaries and their flag officers were thus armed "with a hunting license . . . to freely trespass upon the territory the President had assigned to the War Production Board." There ensued a "running fight" between the War Department and the War Production Board that lasted until Nelson was removed. Vatter agrees that a "rough division of labor emerged where the Services of Supply assumed the ultimate decision-making power over all finished goods, leaving more or less to the [War Production Board] the domain of vital raw materials and semifinished products." Vatter argues that money and time could have been saved and less money and time wasted had Nelson stood his ground. Vatter does not note that Administrative Order 2-33 stipulated that the War Department was to carry out these functions in accordance and compliance with the policies and directives of the "War Production Board." So, the War Production Board "surrender" that Vatter refers to was not an unconditional one. The War Department, however, took it that way and pushed their prerogatives to the limit.
61. Alan Milward, War, Economy and Society: 1939-1945 (Los Angeles: University of California Press, 1979), 122-123. "Locomotive factories were turned into lorry factories in spite of the fact that within a year American locomotives would be required in many parts of the world." Later: "The best efforts of the War Production Board . . . could not enforce priority decisions when so high a proportion of the programmes emanating from industry and the armed forces were unrealistic in their conception." Milward cites other problems, in addition to the unrealistic estimates of raw materials needs, the chief one being strategic shortsightedness. The services "fought strenuously against all raw material allocations to the Soviet Union." [When keeping the Soviet Union in the war was literally vital to the cause.] And, for one gross example that will stand for many, the navy "insisted on aluminum being made available for furniture on its ships instead of being allocated to aircraft manufacture."
62. Nelson, 206, wrote: "It wasn't up to me . . . to tell industry how to do its job; it was our function to show industry what had to be done, and to do everything in our power to enable industries to do it, placing our chief reliance on the limitless energy and skill of American manufacturers." Nelson firmly believed that whatever he did had to be done "within the framework of American tradition." Not just defeat the enemy, but do it "in our own way." He believed that the United States "had to prove that . . . our system of political and economic freedom was in fact more efficient, more productive, more able to respond to the demands of a great emergency than the dictatorial system of our enemies. If we failed to do this, we might win the war in a military sense yet lose everything that we had fought for." Nelson acknowledged that he had vast powers but wanted not to use them. The one he used most often was to order industry to end production of less important materiel in favor of producing essentials (Nelson 208-209).
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