PART TWO
DEFENSIVE WAR

On December 8, 1941, in an address delivered to a joint session of the two houses of Congress, the President said: "Yesterday, December 7, 1941--a date which will live in infamy-- the United States of America was suddenly and deliberately attacked by naval and air forces of the Empire of Japan." He related that even while the attack was in preparation and naval vessels in movement toward Hawaii, "the Japanese Government . . . deliberately sought to deceive the United States by false statements and expressions of hope for continued peace." He reported that Japanese forces had also launched attacks against Malaya, Hongkong, Guam, the Philippine Islands, Wake Island, and Midway Island. "Japan has, therefore, undertaken a surprise offensive extending throughout the Pacific area." He asked that "Congress declare that, since the unprovided and dastardly attack by Japan on Sunday, December 7, a state of war has existed between the United States and the Japanese Empire."

The Senate, without dissent, and the House, with one member voting nay, resolved that

. . . the state of war between the United States and the Imperial Government of japan which has thus bene thrust upon the United States is herby formally declared; and the President is hereby authorized and directed to employ the entire naval and military forces of the United States and the resources of the Government to carry on war against the Imperial Government of Japan; and, to bring the conflict to a successful termination, all of the resources of the country are hereby pledged by the Congress of the United States.

On the morning of December 11, Germany declared war against the united States. "The long known and the long expected," the President said in his message to Congress on the same day, "has thus taken place. The forces endeavoring to enslave the entire world now are moving toward this hemisphere." He mentioned, in passing, that Italy had also declared war against the United States. The President requested "Congress to recognize a state of war between the United States and Germany and between the United States and Italy." The House and the Senate acted on the same day.

Aggression against us in the Pacific an d declarations of war from Berlin and Rome gave an entirely different tone to domestic political debate as was evidenced by the Congressional discussion of our declarations of war. Those who had consistently predicted that we might

become victims of aggression and had advocated that we should prepare for the worst did not gloat. Those who had denied the likelihood of attack were the first to admit the error of their views. "The time for debate and controversy within America has passed," one member of Congress declared, and many others spoke in the same tone. "The time for action has come. Interventionists and noninterventionists must cease criminations and recriminations, charges and counter-charges against each other, and present a united front behind the President and the Government in the conduct of the war."¹ The Nation closed ranks. Unity of objective replaced division. To this outcome the prewar policy of the Administration doubtless contributed. That policy had followed great shifts in public opinion as influenced by the course of events and had not been pushed so rapidly as to antagonize irrevocably opposition elements.

Although the Nation was prepared more adequately than it would have been had the Government accepted the counsel of those who contended that the war could become no affair of ours, we were compelled to fight a defensive war for many months following the disaster at Pearl Harbor. The Japanese successes left our western approaches vulnerable and preference was given to the movement of forces to strengthen our defenses along the West Coast, Panama, Hawaii, and in Alaska. Our untenable position in the Philippines made it necessary to fight a delaying action there--Bataan fell April 9, Corregidor on May 6--and to concentrate our efforts in deploying forces to defend the route to Australia and in building up a force on that continent. Early in May in the Battle of the Coral Sea, Japanese movement toward Australia was checked, and in the next month in the battle near Midway heavy naval losses were inflicted on the Japanese.

Meanwhile, forces were being sent to the British Isles to aid in warding off a possible cross-channel attack and American aerial attacks against the continent were inaugurated on July 4, 1942. In Europe the war was not going well for the United Nations. The Russian winter offensive in the north pushed the Nazis back from Moscow. In the south, however, the Germans pushed the entire southern end of the Russian line eastward during the summer. They captured Sevastopol in July and advanced into the Caucusus. In September the siege of Stalingrad began. In North Africa, Rommel launched his offensive in May and drove the British into Egypt where they made a stand at El Alamein in July.

While the forces at our command were being deployed to check our enemies until we could attack, on every phase of the home front the tempo of activity was speeded up and measures were undertaken better to adapt the Government to the requirements of war. In the

declaration of war, Congress had pledged "all of the resources of the country" to "bring the conflict to a successful termination." The days of guns and butter were over. To fulfill the pledge of all of our resources, it was necessary to do much more than we had in the period of defense preparation. Our resources had to be devoted in large measure to munitions of war. They had to be diverted from all civilian uses save those essential to the maintenance of the civilian economy as a production organization to support the fighting front. New factories had to be built; new sources of materials had to be developed. To do all these things and others, new governmental organizations had to be developed; existing ones had to be reorganized and tightened up. More effective economic controls had to be exerted to make sure that things essential to war were produced. Means had to be devised to keep within limits the dangers of inflation ever present in war. Systems had to be set up to assure--by rationing or otherwise--the fair distribution of scarce commodities among the civilian population. Arrangements for recruiting workers for factories producing needed items had to be improved. Ways and means had to be devised to keep the people informed of what the Government was doing and to prevent the dissemination of information which would give aid and comfort to the enemy.

These and other like issues had to be dealt with during the first 9 months of 1942. Fortunately, we did not being the war without considerable administrative, as well as military, preparation. In large measure, it was only necessary to expand and refine the governmental machinery which had evolved since May 1940. The strain of total mobilization, however, required the development of some new governmental machinery, the establishment of a series of domestic political issues arising chiefly from the problem of assuring an equality of sacrifice in meeting the pledge of our total resources.

The chapters of Part II that follow outline broadly the major administrative developments of the first 10 months of 1942. In this period the principal adjustments required to fit the emergency governmental machinery built up before Pearl Harbor for the needs of war were made. The chief new agencies demanded by the conditions of war were established. The mobilization of national resources was rapidly extended toward more complete exertion of national effort.

Chapter V
Accelerating Production

The attack at Pearl Harbor and the war declarations which followed put an end to the inhibiting doubts which beset our national policy and action during the preceding year. Though few grasped the meaning of "total war" even after war was declared, all were ready to exert every effort and to make sacrifices for eventual victory. There was a single national purpose as clear and dominant as can be found in the history of any people.

On all sides it was recognized that war production was an extremely important factor in building the military power both of ourselves and of our allies. Even so, the President's clarion call for 60,000 planes, 45,000 tanks, 20,000 antiaircraft guns and 8,000,000 tons of shipping in the single year 1942 almost took the breath away from many war chieftains, industrial leaders, and production economists. "He set the sights so high indeed," said Hanson Baldwin, the military expert of the New York Times, "that it will be an industrial miracle if we achieve these goals." Baldwin thought that we might double, but would hardly treble, our plane production in a single year.

In spite of the doubts and timorous counsels of practical and expert men, the President set our goals high, and the Nation drove forward as a unit for "all-out" war production.

In this the Nation already had a running start in the production, contracts, controls, administrative machinery, and experience of the defense days. At the time war was declared we were already devoting about 15 percent of our industrial production to war, (chart 11), a start of the greatest significance both in speeding the production build-up and in determining the administrative machinery and the personnel of our war administration. The gradual development of administrative organization and processes in the defense period permitted

a smooth change-over to war conditions. Sharper definitions of responsibility,k broadening of authority, and renaming of existing agencies and officials could be accomplished without interrupting the acceleration of their activities.

Immediate Administrative Adjustments

The new drive for production under war conditions called for the immediate abandonment of the slow processes of debate, consultation, board action, and the inconclusive influence of advisory interdepartmental agencies, and for the substitution of administrators with authority to act with dispatch, and power to command both public agencies and private enterprises to do their parts in the national effort.

Within a few months after the outbreak of war, a series of changes in the war-production machinery of the Government of the United States was made. IOn some instances these changes were made by the President under the power he possessed to organize and reorganize the agencies within the Office for Emergency Management. In other

Chart 11. Industrial Production.

instances, he acted under authority granted by the First War Powers Act² which enabled him to reassign the functions of departments and agencies established by statute. The extension of this power by Congress permitted the accomplishment of some administrative changes which were overdue but had not been feasible earlier because of lack of power in the Executive to act.

The War Production Board was created with all the President's powers over industry, production, raw materials, factories, machine tools, priorities, allocations, and rationing. The Office of Production Management and the Supply Priorities and Allocations Board were abolished, and their duties and personnel were transferred to WPB. The Army-Navy Munitions Board was ordered to report to the President "through the Chairman of the WPB."³

All the powers of WPB were placed in the hands of one man, Donald M. Nelson. The "Board" itself was purely advisory, and served to bring around the council table for weekly meetings the top production representatives of the War, Navy, and Commerce Departments, the Board of Economic Warfare, and the Price Administrator as well as a representative of the White House.

The Office of Price Administration was placed on a statutory basis with power to stabilize prices, eliminate hoarding, and prevent speculation.⁴ All the powers of the OPA were assigned to the Administrator, Leon Henderson. OPA was also given the administration of rationing by Donald Nelson, through WPB Directive No. 1 of January 24, 1942.

The War Manpower Commission came into being on April 18, 1942, with broad coordinating and "directive" powers over manpower, labor assignment to industry, employment and training, and all agencies of the Government dealing with the use of manpower in the war effort were placed under the Commission.⁵ Such powers as the Commission had--and these did not include the right to draft, assign, or punish civilian workers--were entrusted to the Chairman of the WMC, Paul V. McNutt, "after consultation with" an interdepartmental commission representing War, Navy, Agriculture, Labor, War Production Board, National Housing Agency, Office of Defense Transportation, War Shipping Administration, the Civil Service Commission, and the Federal Security Agency. Other advisory committees were set up including a Management-Labor Policy Committee, a Women's Advisory Committee. The Committee on Fair Employment Practice, which had been established in june 1941 to eliminate racial discrimination

in employment, was a part of the WPB until July 30, 1942, when it was brought into WMC.⁶

The National War Labor Board was established on the foundations of the National Defense Mediation Board, on January 12, 1942.⁷ The Board was made up of 12 members, 4 representing the public, 4 the employee, and 4 the employer and was given final jurisdiction over all labor disputes and over wage and salary rates except as to the railroads.

The Office of Defense Transportation, the creation of which had been under consideration prior to Pearl Harbor, was set up under Joseph B. Eastman as Director to exercise the President's powers over the coordination and direction of all "domestic transportation systems."⁸ These powers were subsequently extended to cover "all rubber-borne" civilian transportation, including the use of private cars.⁹

The War Shipping Administration was created on February 7, 1942, to operate and maintain shipping owned by the United States and to allocate all vessels under the United States flag or subject to United States control, to provide insurance, and to administer priorities in shipping in accordance with such schedules as might be transmitted by the WPB.¹⁰ The Administrator was Admiral Emory S. Land. Lewis W. Douglas, as his deputy, handled ship utilization and priorities.

The National Housing Agency was created to bring under one Administrator, John B. Blandford, Jr., all the housing planning, construction, management, and financing agencies of the Government and to supersede the Division of Defense Housing Coordination which had been established within the OEM.¹¹

The Civil Service Commission on March 15, 1942, issued regulations to facilitate the recruitment of additional personnel needed to man the war agencies. All new appointments became "war service" appointments and could be made under rules and administrative arrangements permitting expeditious action. The action by the Commission was the culmination of a series of measures beginning in mid-1940 and was taken under broad authority delegated by the President.¹²

Reorganization of the Procurement Services

The creation of the WPB did not, as a matter of fact, shift the procurement activities from Army Ordnance, the Bureau of Ships, the Quartermaster, Treasury Department, the Bureau of Supplies and Accounts, the Navy Bureau of Ordnance, the Army Air Corps, the Maritime Commission, or the other independent procurement authorities which were concerned with placing contracts for war materials, construction, and supplies. The power to take over all these activities was assigned to the WPB by its Executive order, but Mr. Nelson had no intention of assuming the procurement and contracting functions. As he said to the Truman Committee:

I have gone even to the point of being overzealous in seeing that the contracting power is kept within the Army and Navy.

We had one of two courses to take when we took this job. Many urged that we set up a buying organization independent of the Army and Navy. I knew, sir, that that would be just dead wrong and didn't even consider it for 5 minutes, because it would have been impossible to have gotten the type of men that we wanted to come here and do that job with the contracting power without having subjected themselves to great criticism. So, in setting it up, we were very careful not to take a bit of authority away from the Army or the Navy. As a matter of fact, we enhanced that authority.¹³

It was also Mr. Nelson's view that the effort to take over procurement in 1942 would only have slowed up production which had already reached a monthly total of $2.2 billion by January.¹⁴

To handle the procurement functions thus left with the Services, the Maritime Commission, the Department of Agriculture, and the Treasury, there was need for immediate reorganization within each of these agencies.

The major reorganization was in the War Department. As part of the realignment of the Department in February 1942, General Brehon Somervell was placed in charge of the newly created Services of Supply, which was the title given to the basket in which were placed the Engineers, the Medical Corps, the Signal Corps, the Quartermaster, the Ordnance Department, and a number of other offices which were not part of the Ground Forces or the Air Forces. The SOS, which was later entitled the Army Service Forces, thus included all the procurement functions of the Army with the exception of specialized aircraft procurement, which remained with the Army Air Forces, and the coordination and control functions of the Joint Army and Navy Munitions Board which, under the chairmanship of Ferdinand Eberstadt, represented the Under Secretary of War and

the Under Secretary of the Navy. Due to the partial abstinence of the Navy, the ANMB never moved out of the War Department, and was in reality an agency of General Somervell's office.

The reorganization of the Navy Department came on January 30, 1042. As part of this shift, Vice Admiral S.M. Robinson was placed in charge of the Office of Procurement and Material and thus handled liaison with WPB on most procurement matters. While the Bureau of Ships, Bureau of Ordnance, and other major functional divisions of the Navy Department continued to exercise their autonomy in procurement matters, in contrast to the degree of central control imposed on procurement units in the War Department, Admiral Robinson did supply a center of leadership on Navy procurement at least in relationships with the WPB.

Treasury Procurement, which, in addition to the supplies needed by the Government of the united States for its regular services, bought nonagricultural and nonmunitions items for lend-lease, had been newly staffed and newly organized in 1940. this structure went into the war period with few changes except for the addition of personnel.

The Maritime Commission was divided into two separate organization to handle its work.¹⁵ This division was accomplished by setting up the War Shipping Administration to allocate tonnage, enforce priorities, administer marine insurance, and procure and manage the American-controlled merchant marine, public and private. All construction of ships, and this included some naval craft along with the stupendous program of merchant shipping, remained a function of the maritime Commission, and was placed under the immediate supervision of Rear Admiral Vickery. Rear Admiral Land remained as Chairman of the Commission and also served as Administrator of the War Shipping Administration, although construction, involving as it did both contract work and the management of the Government shipyards, absorbed the bulk of his time.

The reorganization of the food-procurement program came through the establishment in the Department of Agriculture of the Agricultural Marketing Administration which was designed to handle all lend-lease agricultural procurement, and to supervise the market expansion program, the market stabilization program, and market services and regulation.¹⁶ The actual procurement of lend-lease foods was through the Federal Surplus Commodity Corporation.

With these changes in the procurement agencies, all of which came before the end of February, the Government was organized for its war procurement tasks. The system comprehended to elements:

a half dozen independent procurement units which were, with the importation exception of the Army Service Forces, also users of the commodities procured and a coordinating unit, the WPB, with authority to take over the procurement functions, and to issue overriding directives.

Transition to War Production Board

In taking over SPAB, OPM, and the new powers which went to make up the WPB, it was Mr. Nelson's policy to rule gently and use as much of the prior personnel and machinery as possible. He feared the loss of momentum, and the delays incident to new organization and new men.

In place of the Director General and Associate Director General of OPM, there was now a single head with all power. In place of the debating and resolving SPAB, all of the authority and responsibility went to Nelson, though most of the same people still sat as his advisors in the WPB.

Personnel changes in WPB were minor except at the top. Mr. William S. Knudesen, though greatly handicapped by the mounting problems of his weak and bifurcated organization, had made a great contribution, especially toward the expansion of facilities. He went to the War Department with the rank of Lieutenant General to be the top advisor on production.

All of the OPM and SP AB activities were continued in WPB though the effort to tie labor into the operation was curtailed with the disappearance of Mr. Hillman as a codirector. He continued nominally to head the Labor Division, but actually dropped out of the picture. Mr. Hillman's health was bad, and he soon indicated his desire to resign. He remained, however, until further functions were transferred out of WPB in the creation of the WMC. At that time, the President recognized that the assignment was no longer in keeping with his stature and in a telegram to Hillman at a hospital in Washington asked him to become instead a "Special Assistant" to the President "in labor matters."

Another shift was the abandonment of Floyd Odlum's vigorous campaign for "contract distribution." Odlum disappeared, his elaborate organization was absorbed, for the time being, in other divisions of WPB and the papers and radio were no longer filled with his exhortations for the enlistment of the small manufacturer in munitions production.

In the shift from OPM to WPB the most important developments were, however, not the activities which were deemphasized or dropped, but the new activities which were given an organizational basis. These were the Requirements Committee, the Planning Committee,

and the pulling together in a single organization of Industry Operations and of Priorities. The FIeld Service was established, as was a Bureau of Government Requirements. Otherwise, the organization units devoted to production, purchases, civilian supply materials, and statistics went on much as before.

Under these new arrangements, the Planning Committee, under Robert Nathan, freed from all administrative responsibility, was designed to analyze what was happening, study the impact of the production program on the American economy, and make suggestions to the chairman on major policy matters. The Requirements Committee, on the other hand, was given a more restricted and immediately practical role. It was given the task of adding up the raw material requirements of all the claimants, getting the requests cut back so that they would not exceed the supplies, and then dividing up the supplies, commodity by commodity, among the claimants to as to produce the most satisfactory total result. Each 3-month period was treated as a separate unit, and the effort made to allocate to each claimant agency enough steel to go with its copper, enough nickel to go with its rubber. The Requirements Committee reflected another step in the institutionalization of arrangements for the allocation of our total resources among competing uses. This general objective had been one of the dominant purposes in the creation of the Supply Priorities and Allocations Board. With the rapid growth of munitions production and the increasing pressure upon our resources, it was imperative that better means be found to make allocations of resources. The Requirements Committee, like SPAB, was plagued by the inadequacy of data on which to base decisions and by the inadequacy of arrangements to assure that its broad decisions were executed in detail.

While the Planning Committee was a small cohesive group of men of broad comprehension of policy problems, the Requirements Committee was made up of representatives of the leading claimants, each fighting to keep the other fellow's piece of the material pie small and his own big. Though the decision always rested with Mr. Nelson's representative in this struggle, the lion's share went ot meet immediate military demands, to the undue sacrifice at times of equally good claims of the railroads, of housing for workers, mining machinery and agricultural tools, or of aid to the Allies.

In the new WPB set-up, the materials branches, like those concerned with steel, copper, and aluminum, were part of the same broad organization as the Requirements Committee. They were thus responsible for passing out the critical raw materials to the users in general accordance with the determinations of the Chairman of the Requirements Committee as certified to them.

The materials branches were primarily responsible also for inducing or forcing conservation in the use of their particular material, although there were also especial sections of WPB concerned with conservation and revision of specifications. While the WPB thus had some influence on the simplification of specifications to make production easier, the most effective work of this sort was done by civilian manufacturing experts who were made a part of the military procurement offices under the "infiltration" policy mentioned below.

The demands for steel, copper, aluminum, and other materials came to the producers and raw materia handlers through an entirely different channel. This demand started with the placing of contracts by the extremely active and independent procurement agencies--the Army Service Forces, the various Navy bureaus, the Maritime Commission, and Treasury Procurement. These contracts carried with them priorities; that is, rights to have components and materials ahead of anyone else who did not have an equal or higher priority rating. The final authority to control the issuance of priorities was in WPB. In order not to disturb a going system and cause delay, Mr. Nelson continued the priority system which had been built up under the Office of Production Management, and immediately authorized the Army-Navy Munitions Board to assign priorities to all Army, Navy, Maritime, and Coast Guard procurement. These priorities were "extensible"; that is, any contractor who had an "A" priority order could place that priority on any material which he in his own judgment decided that he needed to do the work. All other priorities, including a great many secondary priorities for military end products, were assigned through the Priorities Division and the industry divisions of WPB, all of which were now placed under the supervision of Mr. J.S. Knowlson. The priority power was thus officially delegated to him.

In the early days of WPB, manufacturers who needed priority assistance to get hold of steel, aluminum, valves, motors, wire, lumber, cement, wheelbarrows, refrigerators, paint brushes, or other items required for production would fill out an application explaining for what they needed the material or article, and on the basis of the rating on an approved list of the thing they were making, they would receive a high priority, a low priority, or no priority. Originally these applications, except for those handled by ANMB, all came in to Washington, as many as 130,000 a week during June 1942, and they were "processed" through the industry branches and the priority division, rated, and sent back to the plants and factories of America. Later on, a considerable part of this work was decentralized to the field.

The Impact of Unlimited Procurement

Under the traditional American system, industry does not produce war munitions until there are Government orders; Government orders are not placed until there are appropriations; and appropriations are not made until requests based on estimates and supporting information are submitted to Congress for action. In fact, in peacetime, the control over the whole process centers in the appropriation by Congress. It was natural, therefore, for procurement officers not to take vigorous action to raise war production before appropriations were available. Not only was this against the whole tradition of the past, but it would, if carried far enough, have been a criminal offense. But any restriction, real or imagined, imposed by appropriations, disappeared after the declaration of war. Appropriations were made in lump sums, so that appropriation language no longer limited the military agencies in their war activities.

Chart 12. Federal Appropriations for War.

While Congress had slowed up the building of training camps only a few months earlier, it now acted with great dispatch. Within 6 months, almost $100,000,000,000 was appropriated, and in the next 4 months another $60,000,000,000 was added (chart 12). Of these stupendous authorizations, the Army received $95 billion, the Navy $50 billion, lend-lease $5 billion, and the Maritime Commission $3.5 billion. Never before or since, have such immense financial authorizations been given in so short a period.

By spring the floodgates were open. Equipped with virtually unlimited financial authorizations, the procurement agencies went to work to place their contracts with the industries of America. This was not too difficult. Industry was now eager to get into war work,

especially as the WPB materials orders and limitation orders began to interfere with normal production of civilian items. The services were equipped with high priorities, which gave the contractors confidence that they would be able to get the materials and components they required, price arrangements were generous and elastic, and they manufacturers were not unwilling, under pressure, to sing additional contracts even when their plants were already full, hoping to expand, or find some other method of discharging their inflated obligations. With this combination of circumstances, over $100 billion of contracts were placed in the first 6 months of 1942.¹⁷ In other words, industry signed up to deliver for war more than the total production of the American economy in the Nation's most prosperous and productive prior year. At the time there were also some $20 billion of orders outstanding, mostly for munitions. The new orders included $68 billion for munitions, $12.6 billions for industrial expansion, and $6.9 billions for military construction.¹⁸

Under this flood of war orders, a number of things were bound to happen, and did happen.

First, it became utterly impossible to produce everything ordered at any time in any near future. It was an industrial impossibility. The total called for was in excess of our industrial capacity.

Second, there was a resulting collision between the various production programs and between the men who were responsible for them. Merchant ships took steel from the Navy, and the landing craft cut into both. The Navy took aluminum from aircraft. Rubber took valves from escort vessels, from petroleum, and from the Navy. The pipe lines took steel from ships, new tools, and the railroads. And at every turn there were foreign demands to be met as well as requirements for new plants.

Third, all semblance of balance in the production program disappeared because of the different rates of contracting and of production that resulted from the scramble to place orders. If there ever had been a planned balance between men, ships, tanks, planes, supplies, weapons, ammunition, and new facilities, and there is no evidence that there was, that balance disappeared in the differential time required to develop the orders, the differential energies of the various procurement officers, and the differential difficulties of getting production out.

Fourth, there was terrific waste in conversion. After a tragically slow start, many a plant was changed over to war production when it normal product was more needed than its new product. Locomotive plants went into tank production, when locomotives were more

necessary--but the Tank Division did not know this. Truck plants began to produce airplanes, a change that caused shortages of trucks later on. In some cases, plants were converted at great cost of steel and copper, when a fraction of the previous metals involved would have brought a greater return at some other place in the economy. The scramble for a production we could not attain, brought us waste instead.

Fifth, we built many new factories, and expanded many others, which we could not use and did not need. Many of these factories we could not supply with labor or with raw materials, or if we had, we would not have been able to fly the planes or shoot the ammunition that would have come out of them. But in the process we used up critical materials and manpower which might better have gone into something else.In the light of the tremendous contracts outstanding especially in the early part of 1942, however, these plants seemed necessary to some people, and under the system they were given high priorities. In most cases they were also financed by the Government. The result was, however, an overconcentration of contracts in the larger corporations and a failure to fully utilize the facilities of many small manufacturers whose plants could have produced "bits and pieces."¹⁹ It did not escape the attention of Congress that better utilization of small plants could have reduced the necessary expansion of facilities.

Finally, the priority system broke down because of "priority inflation." People with military contracts had the right to take more scarce materials and components than there were, so that a priority or an allocation became nothing more than a "hunting license." In other words, those who were issuing priorities did not limit their high-ranking authorizations within the allocations given them by the Requirements Committee. In fact, there was very little connection between the two, partly because the allocations were based on a quarterly time schedule, while the priorities carried no terminal date and were good at any time.

Whether it would have been possible, within the time available, by better planning of procurement to prevent the consequences of indiscriminate placement of contracts without delaying the advance of production is a complex question. The determination of the construction program for ordnance plants, for example, required not only that we know in what quantities and at what times a particular ordnance item would be needed, but also that the output rate of plants

producing by new methods an on unprecedented scales be predicted. Control over other types of procurement would have required types of data, such as the usage of materials in the manufacture of particular items, and administrative techniques not yet developed. Whatever the hypothetical possibilities might have been, the general policy in the first few months of the war was to permit the placement of contracts until difficulties developed. Then the War Production Board proceeded to deal with the problems born of experience.

Chart 13. Productive Facility Expansion by Source of Funds.

Facilities

The problem of factory construction and expansion received early attention. In the middle of March 1942, the Planning Committee reported that facilities expansion was out of balance and would run ahead of all possible use. In spite of control measures initiated by WPB, the same warning had to be repeated on May 6 and again on June 12. In April Order L-41 prohibited all further facilities expansion without prior WPB approval. Under this order, projects initiated on request of the services received automatic approval. A number

of expansions were stopped, however, like the Higgins Shipyards project, and a rather ineffective committee was set up to cut back all facilities which could not come into production by the middle of 1943.²⁰ The problem was discussed in the War Production Board itself, and it was generally agreed that further expansion of facilities was undesirable with certain exceptions designed to meet specific critical shortages. The chief expansions of this sort were for aviation gasoline and synthetic rubber.

As a result of these efforts, there was a sharp reduction after the

Chart 14. Manufacturing Facility Expansion by Industry.

middle of 1942 in facilities expansions initiated. Six months later actual construction and then tooling up began to drop off as well. By this time we had finished building the bulk of our aircraft, ammunition, steel, aluminum, magnesium, petroleum, shipbuilding, and other plants, as well as our military camps and establishments and wartime housing, street, water and sewer works.

Eventually the facilities program was brought into reasonable balance more by material shortages, suasion, and debate than by the exercise of controls.

Feasibility

The effort to bring the total of all war production programs somewhere within the realm of possibility was also initiated by a report of March 17, 1942, from the Planning Committee and the Bureau of Research and Statistics. After extensive discussion of the question, Mr. Nelson took the whole problem to the President and insisted that the services must review and revise their programs themselves to bring them into "do-able" limits.

The major difficulty at the time was steel plate. To meet this difficulty, the President on July 4 authorized Mr. Nelson to cut back the ship program in accordance with his judgment and to work out the details.

Production bottlenecks became even more serious during the summer of 1942 when many programs were in difficulty and scores of production lines were closed down because of competition for components. The solution of the problem of keeping the production program within the limits of feasibility did not come until later in 1942.

Materials Control

The excessive demands placed on the production system in the early months of 1942 brought out latent weaknesses in priorities procedures which had been adequate for a less ambitious program. These procedures, in a variety of forms, had the common objectives of channeling the available supply of materials into the types of production considered most essential. The system of controls went through a series of trial-and-error evolutionary changes. Soon after the establishment of WPB, its staff began a thorough investigation to devise more suitable methods of control to meet the requirements of large-scale production for war. At the outset, it inherited from the Office of Production Management a system of controls which, after additional growth, included the following major elements:

1. PROHIBITIONS

   1. Materials orders prohibiting the use of scarce materials in the manufacture of given articles, such as chrome in auto trim

or baby carriages. About 400 of these were issued during the war, the bulk of them in 1942.
2. Limitation orders which limited or prohibited the manufacture or use of specified articles except on military contracts. About 350 limitation orders were issued during the wear, most of them in 1942.

3. Inventory limitation orders.
2. PRIORITIES

   Priorities were general instructions to producers and dealers requiring them to fill orders bearing a higher rating before the fill orders of a lower rating. In any industrial queue, those with priorities went directly to the head of the line, no matter how many others were there ahead of them.

   The system started in the summer of 1940, when special military orders were given priorities, and the Army-Navy Munitions Board issued a "critical list." This was extended in March 1941 by Priority Administrative Order No. 1 issued by OPM. ^The first priorities were simply A, B, and C, each letter with 10 subdivisions, which took precedence in that order. As soon as the A's began to crowd each other in some factories, new systems of lettering came in with A-1-a, etc., and finally AA's and AAA's.

3. ALLOCATIONS

   Allocations were used as the basis of control where the entire supply of a commodity like copper of wood pulp was brought under accounting control by the War Production Board and was completely budgeted on a time and quantity basis, and withdrawals for any purpose were prohibited except in accordance with a WPB authorization.

4. APPORTIONMENT

   Apportionment was used as the basis of control where the WPB in effect took direct ownership of a specified commodity, like crude rubber, and issued the material to specific manufacturers as required.

5. ORDER BOARD (DELIVERY) CONTROL

   In some individual factories, WPB reviewed orders on hand, canceled or rearranged deliveries; determined in what order things would be manufactured or delivered.

6. SCHEDULING

   In "scheduling," WPB worked directly with the management to get out required production on a timetable, arranging to have required material and components on hand to meed the timetable.

7. OVERRIDING DIRECTIVES

   Specific orders to deliver a specific article or quantity of commodities at or during a given time in spite of all other orders or controls were known as "overriding directives". (Used for components for escort vessels, landing craft, to deal with unforeseen emergencies.)

8. INTEGRATED CONTROL

   Finally, the effort was made to limit procurements by manufacturers of a selected list of critical materials to a quantity in balance to complete articles required on a balanced program basis. (Production requirements plan and later controlled materials plan.)

These eight types of production controls were developed step by step starting with I and II and ending up with VI, VII, and VIII. In the end, all eight were being used side by side, or layer on layer, though th major emphasis shifted from priorities (II) to integrated control, scheduling, and, in emergencies, to overriding directives (VI, VII and VIII).

Production Requirements Plan

Under PRP, mentioned above as the first example of integrated control, the effort was made to introduce a horizontal control of materials for each plant directly by the War Production Board. Under PRP, each manufacturer filed a schedule of his products, showing the items and their priority rating, a list of critical materials used by him for these items and of the quantities on hand, a statement of his orders ahead and their priority rating, and finally, a statement of his material, and other requirements on a monthly basis for the immediate future. These PRP schedules, or "books," were filed in Washington, where the totals required of each critical material were added up to see whether and how much they overran the total national available supply for the months ahead. This total picture was then reviewed by the Requirements Committee and its staff. Broad allocations of critical items were made by programs. On this basis, the individual schedules were then cut down, and the individual manufacturer given authority to procure so much steel, and so much aluminum, copper, or other materials, or so many components containing such materials, during the ensuing 3-month period. Under this plan, it was possible to relate the amounts of different commodities given each plant so that if copper had to be cut, a particular plant would not be given steel which it could not use in view of its copper cut. Also, inventories were taken in to account on a plant basis in relation to the work of that plant. This Production Requirements Plan system was first developed

and used voluntarily by a few manufacturers as early as December 3, 1941, under the Office of Production Management. When the priority system broke down in the spring of 1942, PRP was, on June 2 by order of the War Production Board, made mandatory for all metals industries (some 30,000 plants) beginning with the third quarter of 1942.

There were, however, grave doubts as to the workability of the system both within WPB and in the services. Inasmuch as the system, if it succeeded, would completely supersede the vertical system of special military priorities elaborately built up by the Army-Navy Munitions Board, the opposition of the Army and the ANMB to the plan may have arisen from mixed motives.

The opponents of PRP thought the system would be too complicated to administer, especially from a central point; that the general run of manufacturers could not fill out the blanks as they did not know what part of what metals went into which priority articles; that the manufacturers of components seldom knew where their products would ultimately go; and that the system would get in the way of future changes in the war production program,k or of new contracts, as the cutting up of the steel pie, for example, would rest on the individual orders already on the books of the producers when the apportionment was made. It was pointed out that a producer who failed to file, or whose "book" was lost, would be closed down even if he was making a critically needed part for a Norden bombsight.

The proponents of PRP admitted that the first few quarters would be far from satisfactory, but maintained that industry would soon learn, and would be greatly relieved to escape from the old welter of priority paper. As to future changes and new contracts, these would carry with them their own new allotments. The Production Requirements Plan planned to hold back a considerable "kitty" to meet emergencies and to deal with errors, and was confident that complete accounting, a full use of excess inventories, and the development of balanced apportionments would gain so much material for the programs that needed help that priority inflation would be cured, and a great increase in production would result.

In any case, with the situation getting rapidly worse, and with no alternative insight, Mr. Nelson decided to go ahead with PRP, and issued his order accordingly.

Reorganization of War Production Board

After the usual "honeymoon period" of public and official approbation, criticisms of WPB began to be hear. These arose chiefly from within WPB, from the Army, and from Congress and the Truman Committee.

With WPB there was a considerable feeling of frustration. Businessmen within WPB "could not get decisions," were harried by "impractical planners," and by "other division," and by "politicians" who "knew nothing about the business." Moreover, they were "investigated to death" and "suspected." The economists and career public servants were dissatisfied with the "resistance to conversion," the lack of "comprehensive production plans based on strategy," and the freedom of the WPB industry branches which enabled each one" to have its own policies and its own strategy for winning the war."

From the services, chiefly the Army, case the criticism of "bad" and "weak" management, blame for every procurement muddle or production delay, and the continual insistence that the real needs of the war were being sacrificed to "soft civilian desires."

Congressional criticism centered on slowness in conversion, production delays, injury to small business, kow-towing to the Army, and the inefficiencies and special interests of dollar-a-year men. The most celebrated "case" of the Congressional investigations was Mr. Guthrie, a businessman who resigned from WPB on March 14 because of disagreements arising over "the conservation fo wool, the rate of conversion to war work of the refrigerator, radio, carpet, upholstery, automobile fabric, tire cord, and nylon industries, and the delays in the allocation of cotton textile manufacturing capacity to war and essential civilian production."²¹ While Mr. Nelson permitted Mr. Guthrie to resign to maintain peace in the family, the public excitement created was electric. The Planning Committee report on conversion, which in effect agreed with Mr. Guthrie on important matters of policy, was released to all WPB branches, almost as a directive; limitation orders began to pour out; and many of the "business as usual" executives disappeared from the scene. Things moved so fast from this point on, that Mr. Nelson was able to say on April 21 that the conversion program would be completed by the end of May.

In this connection, Mr. Nelson stated to the Truman Committee:

I purposely set up the WPB so that there are all shades of opinion in it . . . I think we must have all shades of opinion from businessmen who are conservative, businessmen who are liberal, professors, economists, public servants, people of all kinds, because this job of conversion, this job of shutting off civilian production is not an easy thing, sire, nor is it to be toyed with lightly * * * Only time will tell, and only history can record, whether we have been too slow or too rapid. In my opinion, it is about right.²²

On the whole, these criticisms helped rather than hindered the WPB, and the resulting "exposures" seemed to enhance rather than lessen the stature of the Chairman.

On July 4, 1942, Mr. Nelson showed to the President and secured his approval of the first systematic and comprehensive reorganization of WPB, developed in part to meet the criticism of his organization and in part to fit its developing work load. The organization inherited from the OPM had been continued, with the modifications already noted. With the major push of contracting well under way and with measures in motion to deal with other immediate problems, attention could be given to the further adaptation of the organization.

The new organization differed from the old in the following important particulars:

The number of executives reporting to the Chairman of WPB was reduced from eight to three, not counting the eight staff agencies.

New emphasis was given to connections with the military and with the international agencies in the materials and production fields.

Far greater emphasis was placed upon the industry and materials branches, with the expectation that each would be the primary center of control within WPB for programming, and priority administration, for the industry it represented, subject, of course, to the broad policy controls of the Requirements Committee and the Program Bureau.

All the industry branches and the materials branches were brought into a single family under the Director General for Operations, to whom the Priorities Bureau as well as the priorities power was assigned. This put an end to the independent materials division, tied the materials branches in with the industry branches, and with the administration of priorities.

All requirements and program functions, except those of the Planning Committee and of the Office of Civilian Supply, were brought together under the new post of Vice Chairman for Program Determination. This officer, working closely with the Chairman, was to review all production programs, bring them within feasible limits, cut the critical materials pie up among the claimants in accordance with approved programs, and give such determinations, allocations, and policy instructions to the Director General for Operations as he might need in managing the priorities and supervising the activities of the industry branches.

The Office of Deputy Chairman on Program Progress was provided far, designed to make a continuous critical and constructive study for the Chairman of all major production schedules in relation to programs, and of all activities of the War Production Board in relation to the policies of the Chairman. This part of the plan, however,

was never put into effect, although certain of the functions were carried on in the Office of the Chairman and in the planning and statistics divisions.

At one time it had been planned to place the Planning Committee and the Office of Civilian Supply in the program set-up, and the Statistics Bureau in the program progress office. Mr. Nelson decided, however, after discussion with the heads of the three agencies that they should continue to report directly to him.

The position of labor in the WPB was considerably strengthened by the creation of a Labor Advisory Committee attached to the Labor Production Division, and the establishment of labor advisors from the Labor Production Division to serve in and work with each of the more important industry divisions.

The reorganization plan as thus prepared was based on the Chairman's own experience in the Office of Production management and the War Production Board. The technical work was entrusted to the WPB Office of Organizational Planning. An advisory committee of business executives reviewed and approved the outlines of the plan. The Bureau of the Budget, though approving the plan, saw three weaknesses:

(1) the failure to combine both programming and operations under a single deputy to the Chairman, (2) the too great adjustment of the plan to fit individuals, and (3) the failure to make a larger place for labor.

The plan as a whole was, however, well received by the staff of WPB, and the country, and went into operation gradually.

Field Organization

A field organization with about 100 district offices grouped under 14 regional headquarters had been set up under OPM, and was continued and expanded under WPB. This field organization had 4,000 employees in August 1942 when its structure was redefined under the new organization of WPB. These employees were primarily engaged in explaining WPB regulations and forms to the businessmen of America, "processing" their papers, helping them to make out applications for materials, establish contacts with procurement representatives, break production bottlenecks, solve technical problems, and to secure contracts or subcontracts, or machinery or money and thus to get into war production. The field offices made surveys of open capacity in factories, took par in the conservation programs, looked for unused inventories, aided the scrap iron and aluminum drives,²³ set up the local Labor-Management Committees, aided in the preparation

of appeals, and issued local publicity to speed up production. They were also one of the channels between the producers and Washington, performing services for the manufacturers, and gathering information for Washington. Many contacts were direct, however, especially in the case of the big corporations who had their representatives in Washington. Until early in 1943, when field offices were authorized to make priority decision up to specified limits, virtually all decisions were made in Washington, and the field was, in fact, an advisory and service agency without power.

Within WPB in Washington, the field organization did have a single point of contact through an Office of Field Operations under the Vice Chairman for Operations. The field operation was a waif through 1942, however, having little or no part in top management counsels, and finding itself continually confronted with new decisions, programs, and regulations which were often first heard of in the field through the newspapers. Certain of the divisions of WPB in Washington, moreover, were inclined to send out their own experts into the field to handle their own contacts direct. This was perhaps natural under the circumstances, because the organization was new, the men did not know each other, and the central divisions wanted technical work done precisely as they directed without interference of "coordination" with overlapping programs. This frustration was greatly increased by the striking difference in organizational structure in Washington as compared with the field. Operations in Washington were set up largely on an industry and commodity basis, with some functional staff services or program units; the field was set up with operations on a functional basis of its own geared somewhat to the programs. As a result, in the early days, a Washington operations branch chief had no opposite number to look to in the field, and an engineer in the field had a dozen conflicting demands on his time from as many administrative units at Washington.

The fine accomplishment of the field organization in these days is more a tribute to the quality and spirit of the men engaged in the work than in the soundness of its structure or supervision.

Appeals and Enforcement

An important feature of the War Production Board as it developed was the establishment of the Appeals Division, under Arthur N. Holcombe, which reported to the program Vice Chairman, and had jurisdiction over all individual appeals from manifest hardship cases arising under the application of WPB orders by field representatives or branch chiefs in Washington. The Appeals Board took testimony, heard the arguments of aggrieved businessmen, labor leaders, their attorneys and Congressmen and local political officers, as well as the

technicians of WPB, and rendered decisions which were, as a matter of policy, never overruled by Chairman Nelson, though they frequently amounted ot individual amendments of administrative determinations or of general rules.

No doubt in part because of the existence of this impartial safety valve, and in part because of the eagerness of most industrialists to do what they were told was for the best interests of the country, the general problem of enforcement of WPB regulations was not too serious. A few test cases were successfully carried through the courts by the General Counsel, John Lord O'Brian, who was completely responsible for all legal work both in Washington and in the field, having stipulated form the first that no lawyers could be appointed in WPB except by him and in his department.

Under this system, enforcement was largely administrative and persuasive and appeals were handled by an impartial tribunal within WPB rather than through the courts.

Operating Policies of WPB

The War Production Board took over form the Office of Production Management or developed a number of operating policies of considerable importance. These related especially to the priority power, the limitation of its own scope, the use of other agencies, dollar-a-year men, industry committees, labor, and the civilian economy.

Though it is difficult to do justice to these policies in limited space, a brief comment on each is required.

From the very first, Mr. Nelson maintained that "the priority power is indivisible." He repeatedly fought to prevent any other agency of the Government from being given the right to determine who should have, and when they should have, any materials, machines, factories, or components. In this fight, he was in the main victorious although several agencies ultimately acquired the power of allotment within totals set by the WPB and thus subject to its control on major and over-all allocations.

Another important policy of the WPB was the limitation of its own scope. The orders defining the powers of WPB were extremely broad. They covered the entire economy. Nonetheless, it was the Chairman's policy not to exercise or develop those powers unless they controlled production to the needs of war. Illustrations of such self-limitation are found in WPB cooperation in developing both the War Food Administration and the War Manpower Commission despite the fact that these agencies cut directly into WPB operations. Similarly in the international field, WPB made no effort to occupy the primary position, though the power was there.

The War Production Board was also eager to make use of other agencies as far as possible. The Chairman left procurement to the former procurement agencies as has been explained above; and as part of this policy encouraged the transfer of WPB's ablest procurement men to the procurement offices where they were generally absorbed.

This WPB policy, of relinquishing control of its staff members to the procurement agencies, came under the scrutiny of the Truman Committee, which leaned strongly toward the view that all procurement was a business function and must be under the control of businessmen, not career military men. Mr. Nelson insisted that this had been achieved under his policy, and that the civilians whom he had sent from WPB and the business world to the Army and the Navy had done and were doing for the services exactly what the Congress was after. While the Truman Committee was never satisfied, Mr. Nelson stuck to his guns, and continued to leave the procurement function, the making of specifications and the contracts, entirely in the hands of the services, strengthened as they were by the addition of many men of outstanding experience from the business world and from WPB.

The War Production Boar delegated the review of defense contracts to the Joint Army and Navy Munitions Board. On March 10, 1942, WPB delegated the whole system of military priorities to the ANMB, though this soon brought on an inflation and collapse of the system. WPB delegated the enforcement of consumer rationing to the Office of Price Administration, and assisted the War Manpower Commission to develop its controls over manpower, although manpower factors eventually became a major element in the strategy of industrial production.

The greatest resignation of power by WPB, however, was its readiness to let the grand outlines of the production program be determined by the services without their development of firm, comprehensive, or balanced programs related to military strategy or industrial feasibility. Mr. Nelson found that neither the Army nor the Navy had comprehensive plans, and he decided that to demand them would only slow up the war effort. The War Production Board knew little about the strategy considerations. Apparently this was also true of the procurement officers, who let landing craft fall disastrously behind at a crucial period, while they were pushing for other things which used up the steel. When Mr. Nelson found that the failure of the military to plan or to keep reasonably within the productive capacity of American industry was leading to a dangerous situation, he called for a show-down, for the limitation of facilities construction, for the cut-back of contract authorization, and established in the Controlled

Materials Plan a substitute for the priorities system, which tied together the allocation for critical materials and the "tickets" issued against the allocation. This is described in a later chapter. He also set up definite scheduling in the factories under WPB control for many of the critical items like airplanes, motors, valves, and even certain types of ships. But in working all this out, WPB left it entirely up to the services to make their own cut-backs and their own distribution of priorities within those reduced programs.

The problem of dollar-a-year men came up early in Mr. Nelson's administration. On January 28, 1942, 2 weeks after taking over the WPB, he told the Truman Committee, whose January 15 report demanding a single head for war production and criticizing dollar-a-year men was just out, that he could not possibly organize war production without the dollar-a-year men furnished to the Government by industry. He also stated that no man form an industry would be permitted to make a decision involving his own company, and that the head of no industry division or branch would come directly from that industry. While this policy did serve to protect the WPB from letting each industry run its own affairs to suit itself, and flout the public interest, it meant that many an industry branch was under the direction or nominal direction of a man who knew little or nothing about the industry or its important elements and personalities.

A somewhat similar problem arose in setting up industry advisory committees. These were established for every major industry, with over 750 before the end. In order to guard against antitrust suits and to protect the integrity of WPB, the OPM policy of regarding these committees as purely advisory was reaffirmed and strengthened. In addition, the members paid their own expenses, were given no confidential information or decisions, and were carefully selected to] represent all sections, sizes, and levels of the business.²⁴ Paid employees of trade associations were excluded. Under these policies, private industrial and business associations were not used by WPB to assist in mobilizing war production. This same policy was followed throughout the Government with two exceptions: the Office fo Defense Transportation which relied on the organized railroad industry to run the railroads; and the Petroleum Administration for War which relied on the organized petroleum industry to run the oil industry.

The labor policy of WPB was a mixture from the first. The Chairman clearly wanted to bring labor into the operation although he had difficulty in discovering a satisfactory method. Particularly difficult was the question of the responsibilities of these men. Should they serve as "representatives" of Labor, or should they perform functions for the Government in the manner in which business men were supposed

to operate? He set up a Labor Division, followed this by attaching labor advisors to the industry branches, and trying to put men suggested by organized labor in certain administrative posts. Working with labor, he set up the Labor-Management Committee program to increase labor-management cooperation throughout the country. Finally, under pressure from CIO, he set up two labor vice chairmen, one to deal with manpower (Clinton Golden), and one to deal with labor and production (Joseph Keenan). In spite of these moves by the Chairman, the rank and file of WPB manifested no desire to work with labor, and the labor representatives felt that they were "on the outside looking in." The Chairman's efforts were greatly impeded because labor leaders, like corporate general mangers and presidents, wanted high posts and titles, and, unlike men from industry, were not able to free themselves full time and work continuously until they became part of a working team, although there were a few exceptions.

War Production Board policies on the civilian economy were consistent from first ot last. The Chairman was convinced that the highest levels of industrial production come only form an economy that is well supplied with machinery, repair parts, power, and transport facilities, homes for workers, water, sewers, and utilities, and a generous standard of necessities. And within limits, he was determined to let each man determine those necessities for himself. mr. Nelson was always far ahead of the industry branches of his organization in pushing for conversion of the metals industries to war production, although he never went as far as some of his economists. He was always in opposition to the Army on short-sighted restrictions of steel for the railroads, for agricultural machinery, and for industrial spare parts. To help him watch the course of events and to protect these and other aspects of the civilian economy, the Chairman maintained and listened to a separate organization, the Office of Civilian Supply, which operated under Leon Henderson and Joseph Wiener during the period under review. This organization was maintained intact in spite of its partly direct accomplishment, its continual friction with the Requirements Committee, with the industry divisions, and with the Army--this being its chief accomplishment--and the questions of the Bureau of the Budget as to whether the agency was still necessary.

It was recognized, however, that the Office of Civilian Supply, although it had no program of civilian requirements in those days, was the foremost proponent of speedy conversion and all-out war production and the most effective critic within the WPB of special interests and special industries.

The end result of Mr. Nelson's program for civilian consumption

may be summarized as follows: We stopped making most kinds of durable goods, like autos and washing machines and ordinary housing and made our old equipment do; we maintained or slightly increased the production of food, clothing, repair and maintenance items, although far less than the consumers would have gladly bought with their greatly increased earnings. As a result, those who wanted to buy new cars and houses could not get them, and those who formerly had plenty of choice foods, shoes, clothing, and service, found they had to share them with others who under full employment had the money to buy.

The Army and the Economy

As shown by the Industrial Mobilization Plan, it was the doctrine of the Army that the military should take direct control of all elements of the economy needed for war, once war was declared. Under "total" war, this would include total control of the Nation, its manpower, its facilities, its economy. Starting with this simple and "logical" concept, and being absolutely certain from 1939 on that war was coming, it was natural that the generals and colonels and majors, even those drawn from civilian life, were dissatisfied with the President's slow approach to war mobilization and with his reliance upon civilian personnel in all of the posts which were concerned with labor, industry, public opinion, and the economy. In spite of these decisions by the President, the Army never gave up the effort to increase its control in these areas.

In December 1941, when OPM and SPAB were approaching their end, the Secretary of War, the Secretary of the Navy, and the two military chiefs of staff sent the President a strong proposal calling for the creation of a new top priorities committee which would eliminate most of the civilians, especially those who were sending materials to our allies abroad and to neutral nations, and would substitute complete control by the military. When this suggestion fell by the wayside with the creation fo WPB after the declaration of war, General Somervell found time to prepare an elaborate plan for the organization of WPB which would have placed complete control of WPB and of the economy under the Joint Chiefs of Staff. This was sent to Mr. Nelson on May 15, 1942. In rejecting the central idea, Mr. Nelson wrote a long and closely reasoned letter which said "The battle for production is the primary responsibility of the Chairman of the War Production Board in much the same sense that the military battles are the primary responsibility of the military chiefs.

When the effort to take over the WPB failed, the Army decided not to disband the Joint Army and Navy Munitions Board, which had

always been considered as an interim organization, slated for absorption by an over-all agency like WPB, but to keep the agency to champion the requirements of the services against the civilians. The Army also suggested that Mr. Nelson take over aggressive and efficient Mr. Ferdinand Eberstadt who was the chairman of the ANMB as his deputy in charge of WPB operations. When Mr. Nelson did not take General Somervell's advice on the July 4 reorganization of WPB, however, Mr. Eberstadt declined the appointment because the Requirements Committee and the program functions were not designed to be under him, but were independent of and above the post of Director General of Operations which was offered him.

The inability of the Army and the Navy to make any comprehensive, consistent, balanced, or reasonably stable plans, coupled with the tremendous advance contracting in the spring and summer of 1942, and the unrestrained use of the priority powers delegated by WPB to the ANMB, intensified the Army's and Navy's difficulties with civilian control, and civilian difficulties with the Army and the Navy. The Army seems to have made many complaints on production delays to the President, a few of which were relayed to WPB in one form or another. On several occasions, the Army secured letters from the President so directing WPB as to limit its controls and to expand the powers of the ANMB. An illustration is a letter of May 1, 1942, under which the Army sought not only to assume control over a new system of high military priorities through the ANMB but also the right to review and reject any granting of similar top priorities to other than military items.

Though this right of review was rejected by WPB, the matter was in disputer for many months, and the ANMB so handled its new high-ranking priority system, established in June in accordance with the President's letter, that the production of many essential but non-military items, like locomotives and freight cars, and even some maritime items was seriously upset for a time.

The relation of military operations to war production was not understood in 1942. Memoranda were written severally by advisors of the Secretary of War, of the Director of the Bureau of the Budget, and of the Chairman of the War Production Board all insisting that production schedules must rest on military strategy, and that any other method of approach was indefensible and wasteful. The military concluded from this approach that the economy must be controlled by the military, because strategy could not be confided to civilians, and many a priority argument was closed by junior officers with hints of strategy considerations which could not be disclosed. The civilian advisors, however, argued that the civilian tops of the WPB must not only be informed of strategy, but that they must participate

in its final formulation, because strategy must rest in part on production possibilities. The futility of the argument at the time was not disclosed until General Marshall, in his epochal report of June 30, 1945, indicated that the major strategy of the war was still under discussion until the middle of August 1942, when the invasion of Africa was determined upon. In fact, it was not until May 1943 that the plan of invading Northern Europe "was translated into firm commitments."²⁵ In other words, the whole production build-up of 1941 and 1942 was not, and could not be, based on strategy, because strategy was inevitably being constrained by our enemies and by the plight of our Allies. We were manufacturing munitions "for the shelf," for equipping armies and squadrons, and not for specific operations the strength and date of which could be forecast even by the chiefs of staff.

Allied Cooperation

An important war production development of 1942 was the establishment of a series of cooperative international agencies designed to bring about a quicker and more economical use of the combined resources of the major Allies. These agencies were:

The Munitions Assignments Board, which had the power to determine to what nations munitions should be dispatched as they came from the factory.

The Combined Shipping Adjustment Board with units in Washington and London, which served as bases for the exchange of information on shipping allocations within the United States and United Kingdom shipping pools.

The Combined Raw Materials Board, which conferred on the raw material resources and needs of the world under the control of the Allies, and developed a working arrangement for their international apportionment.

The Combined Food Board, which conferred on the food resources and needs of the world and developed a working arrangement for their international apportionment.

The Combined Production and Resources Board, which conferred on the war production needs, resources, and problems of the Allies and developed working arrangements for the better use of certain resources and facilities.

These five boards working in the field of munitions, shipping, resources, and war production were balanced in the military field by the combined Chiefs of Staff, the creation of which was announced by Mr. Churchill on January 27, 1942. The first three boards above

were announced the previous day in Washington, while the two latter boards were established on June 9, when Mr. Lyttleton, the British Minister of Production, was in Washington.

The structure of these boards is of interest in international affairs. Except for the Munitions Assignments Board, the board members in each case were made up of the responsible United States and United Kingdom administrators in a given field and there was a single staff for each board made up of alternate United States and United Kingdom experts. In theory at any rate, when a combined board sat, deliberated, and reached a decision, which by nature had to be unanimous, each member of the board could move back to his own office and carry out his end of the agreement reached.

Soon after the creation of the boards, Canada was brought into the Food and Raw Materials Boards. The U.S.S.R. never joined, but secured its goods under "protocols," which were signed from time to time.

The experience with these boards frequently demonstrated to the American members the admirable nature of the staff work and the excellent coordination of the policy lines available to the British members. The British members and staffs were seldom, if ever, uninformed on recent top-side decisions, and never in pursuit of contradictory major policies. The British, moreover, appeared to be acquainted with major military strategy and programs of which our members, including the military, were often innocent.

---

The United States production build-up which commenced with the attack on Pearl Harbor and extended through the summer of 1942 was one of the great accomplishments of the war, and one of the major elements in making possible the offensives which brought the final victory.

Up until Pearl Harbor, the monthly rate of increase in war production and construction had been not over $100 million a month. For December this was raised to $440 million, and from that point on each month showed a gain over the prior month of something like $400 million for a period of 9 months, when the rate was markedly reduced for a time. For the period under review, war production per month arose form less than $1.5 billion to almost $5 billion, and the percentage to about 33 percent, a stupendous shift-over of the American economy within a period of less than a year.

This result was accomplished by national unity and determination, high production goals, unlimited authorizations by Congress, and the

gradual evolution of the War Production Board, with its controls of materials, components, and other aspects of industry.

During this period, the new facilities for production and military purposes were in the main completed, although the control of facilities was inadequate, and considerable waste was incurred.

The major part of war production came, however, from the conversion of nonwar industries to war production. Although the change-over was delayed by "business as usual" pressures, conversion was completed about as fast as the procurement officers could get orders in shape.

When war production began to absorb some 20 percent of the total economy, simple priorities proved no longer adequate as a protection of military requirements. From this point on, the various war programs came into sharper competition with each other, and controls had to be devised over facilities, machine tools, steel, aluminum, copper, other materials, and components. Even with these controls bottlenecks could not be avoided, and efforts were initiated to establish integrated production control.

In the creation of the War Production Board, all power over procurement, except for food, and over production and industry were placed in the hands of a single administrator responsible to the President alone. Procurement--the making of the contracts for production--was delegated to the armed servicers, the Maritime Commission, and other procuring agencies, however; and the WPB endeavored to control the size of the procurement program and through a series of controls over the use of materials to manage the economy. During this period, no controls over manpower were used.

The structure of WPB followed this philosophy, and placed its emphasis on planning, the balancing of requirements for materials, and upon the operations of its industry and materials branches.

While certain policies were under continual fire by the Army, and various sins of omission were brought to light, especially by the Truman Committee, on the whole the War Production Board held the respect of industry and the confidence of the American people, as the nation pushed forward successfully to meet the ambitious production goals set by the President.

Table of Contents ** Previous Chapter (4) * Next Chapter (6)

Footnotes

1. Hamilton Fish, Congressional Record, vol. 87, pt. 9, p. 9520.

2. Adopted by Congress, Dec. 18, 1941.

3. Executive Order No. 9024, Jan. 16, 1942, 7 Federal Register 329; Executive Order No. 9040, Jan. 24, 1942, 7 Federal Register 527; Executive Order No. 9215, Apr. 7, 1942, 7 Federal Register 2719.

4. 56 Stat. 29.

5. Executive Order No. 9139, Apr. 18, 1942, 7 Federal Register 2919.

6. Presidential Letter of July 30, 1942. (FEPC established by Executive Order No. 8802, June 25, 1942, 6 Federal Register 125.)

7. Executive Order No. 9017, Jan. 12, 1942, 7 Federal Register 237.

8. Executive Order No. 8989, Dec. 18, 1941, 7 Federal Register .

9. Executive Order No. 9156, May 2, 1942, 7 Federal Register 3349.

10. Executive Order No. 9054, Feb. 7, 1942, 7 Federal Register 837.

11. Executive Order No. 9070, Feb. 24, 1942, 7 Federal Register 1529; Executive Order No. 8632, Jan. 11, 1941, 6 Federal Register 295.

12. Executive Order No. 9063, Feb. 16, 1942, 7 Federal Register 1075.

13. U.S. Congress. Senate. Special Committee Investigating the National Defense Program. 77th Cong., 1st sess., Hearings on S. Res. 71, pt. 12, p. 5089. Statement of Donald M. Nelson.

14. Ibid., p. 5228.

15. Executive Order No. 9054, Feb. 7, 1942, 7 Federal Register 837.

16. Executive Order No. 9069, Feb. 23, 1942, 7 Federal Register 1409.

17. WPB Report on Production, 1942, p. 27.

18. Ibid., p. 27.

19. Up to December 1942, 71 percent of all war contracts had been awarded to the 100 largest contractors. See in this connection U.S. Congress, Senate. Economic Concentration and World War II. Report of the Smaller War Plants Corporation to the Special Committee to Study Problems of American Small Business. 79th Congr., 2d sess., No. 6.

A Department of Commerce survey in the spring of 1943 indicated substantial unused capacity in the hands of small business firms. Survey of Current Business, July 1943, pp. 19-24; Sept. 1943, pp. 19-24.

20. WPB, Minutes, June 16, 1942.

21. U.S. Congress. Senate. Special Committee Investigating the National Defense Program. 77th Cong., 1st sess., Hearings on S. Res. 71, pt. 12, p. 4959.

22. Ibid., p. 5083.

23. The scrap rubber drive was initiated by the Petroleum Coordinator, working through the gasoline distributors.

24. The representatives of distant small business, however, generally were absent.

25. U.S. General Staff, General Marshall's Report: The Wining of the War in Europe and the Pacific. Washington, D.C., G.P.O., 1945, p. 10.