Donald Nelson knew this. He also knew what Knudsen had foreseen: that the key to winning this war of mass production was America’s free enterprise industrial system. That meant keeping the drive for war production as voluntary as possible, so that the right incentives—which included the profit motive—found the right people to do the job. That also meant keeping the civilian economy as strong as possible, something that his critics in the War Department sometimes didn’t seem to understand.
When they complained about the amount of newsprint being consumed for advertising and want-ad space, he pointed out that those ads might enable a defense worker to find an apartment or lead a military wife to a department store sale so she wouldn’t have to spend as much on a new hat or a pair of shoes. When the Army pushed for funding only those synthetic rubber facilities that produced for military use, Nelson had to explain that without tires for autos, buses, and trucks, none of those defense workers would be getting to work. Likewise with gasoline and aluminum and other critical materials: Unless civilian producers, often the smaller businesses, could count on their share, the entire infrastructure on which the military counted for its planes, tanks, and machine guns would slow down and grind to a halt.41
Explaining elementary economics was never easy in Washington. Nelson had his work cut out for him. At one point a story circulated in the papers quoting a high Army official that the WPB’s policy had created a shortage of 100-octane aviation fuel so severe that important overseas military operations had to be suspended. Nelson looked into it, and the story wasn’t true.42 But people continued to act as if it were true, and the presence of spot shortages of raw materials—a perennial problem in any war (and, it should be added, any economy with price controls)—was taken as evidence not of the extraordinary demand generated by war production, or of the market-distorting effects of the Office of Price Administration, but of extraordinary incompetence on the part of Donald M. Nelson.
Indeed, Nelson and his people did face shortages that were painful and sometimes seemed chronic. Aluminum was a perennial sore spot, because of its demand in the aviation industry in unprecedented numbers. In 1939 the United States had only one producer making some 327 million pounds a year. By 1941 the need for aluminum had all but doubled. Nelson’s dollar-a-year man in charge, Alcoa’s Arthur Bunker, was under siege from the press and Capitol Hill from almost the moment he arrived in Washington.
Yet in just a year Bunker was able to hit the numbers with the help of Jesse Jones’s Defense Plant Corporation, which financed expanding facilities to meet the future need. By October 1943 the output had reached the point—2.25 billion pounds—that one WPB official was quoted as saying America had aluminum “coming out of our ears.” By then American companies held 42 percent of the world’s aluminum manufacturing capacity.43
Copper was a problem, too. In 1942 the shortage of this cheap but absolutely vital metal for making electrical wiring and brass for ammunition shells was so severe that the Army released 2,800 former copper miners from active duty to help. Then Nelson’s men found a substitute: silver. Releasing it from vaults where it was being kept as a currency reserve, Nelson and the WPB made it an industrial metal—one that would eventually help to turn the tide in enriching uranium at Oak Ridge Laboratories for the Manhattan Project.44
The most serious shortage Nelson struggled with, however, was steel. Nothing seemed to help in getting on top of the situation. America’s steel industry had taken a terrific pounding since the Great Depression. Annual production had slipped from 63 million metric tons in 1929, the year of the Wall Street crash, to barely 30 million. Under Knudsen at OPM and Nelson at SPAB, national output had jumped 5 million tons a year—but it wasn’t nearly enough. A nation at war was going to need at least 80 million tons, and more.
On January 1, 1942, steel plate producers had a 4.5-million-ton backlog in unfilled orders.45 There was an ongoing push to increase steel production by expanding and modernizing plants and pushing new technologies like the electric-arc melting furnace.46 Even with the federal government and the Defense Plant Corporation paying more than half the bills, steel’s production cycle was one of the slowest in heavy industry. Facilities going up in late 1941 wouldn’t be ready to produce until 1943 or even 1944. Nelson tried collecting and reusing metal scrap, but the results were never enough.
As fall turned into winter, the shortage in shipbuilding was looking critical, especially on the West Coast, far away from the major suppliers. In the Midwest it was starting to slow tank and tank engine production, including at the Chrysler plant.47 Machine tools, trucks and large landing craft, even vital new plant construction and expansion, might be next.
Then, seemingly out of nowhere, Henry Kaiser proved to be the hero of the hour.
* * *
* So was Congress. At one point in 1943, there were no fewer than seven bills pending before Congress proposing ways to reorganize the War Production Board—and most of them started by getting rid of its director.
† The Army Air Corps officially switched its name to Army Air Forces in June 1941.
‡ Chrysler’s other major contribution was its reengineering and production of the 40mm Bofors antiaircraft gun. Chrysler’s engineers got it into production in little more than half the time its Swedish creators required, and saved more time and money by broaching the gun barrel, instead of using the traditional rifling methods, cutting manufacturing time from three and a half hours to fifteen minutes. The Chryslermade Bofors became standard armament on Navy ships, more than doubling the amount of antiaircraft coverage by 1943, and then doubling it again in 1944.
§ For details, see Chapters 12–13.
‖ The managers rushed their start date a day early, to March 31, 1941, so no one would think it was an April Fools Day joke.
Henry and Edgar Kaiser (second and third from left) with FDR at the Vancouver shipyards, September 1942. Clay Bedford stands behind Edgar. UPI photo file
The day of the West is at hand.
—Henry Kaiser
FOR DON NELSON, the steel shortage was an urgent but temporary worry.* For Kaiser and other industrialists on the West Coast, the steel shortage had been chronic for almost a decade. Steel giants like Bethlehem and Republic and Carnegie-Illinois were eastern or Midwest-based (Carnegie-Illinois was in Duquesne). There simply were no major steel mills west of the Rockies.
Even as he was laying down the first shipways in the marshes of Richmond, Henry Kaiser had decided to change that. On April 21, 1941, just as Lend-Lease was getting under way, he wangled an interview with the president himself and showed him plans for a $150 million steel production complex. He forcefully argued it could draw all the power it needed from the hydroelectric dams Kaiser and Six Companies had already built, so he could produce the kind of steel plate he and others needed for the Liberty ships.1 Roosevelt liked his enthusiasm and pushed Kaiser on to a panel of government engineers who, in effect, told him he was crazy. He had no definite site; he had no financing; no plans for the plant’s postwar use. A plant in Southern California, they argued, would also be vulnerable to possible Japanese attack or even sabotage. Above all, they cried, Kaiser knew nothing about producing steel.2
Henry Kaiser had never let that stop him before, and it did not stop him now. With his main energies still focused on Richmond and Portland, he continued to make phone calls and meet with Washington lobbyists, to get his dream realized—and to teach a lesson to the executives of Big Steel, who were hostile from the start. His biggest obstacle was still his old nemesis Bill Knudsen, but in mid-February 1942, Knudsen was gone. Facing a 4.2-million-ton steel shortfall just two months into the war, Donald Nelson and the WPB felt they had no choice but to approve.
The final hurdle was Jesse Jones. The crusty old Houston cotton broker didn’t care much for Henry Kaiser, or his business methods. He knew Kaiser was already making, on a fee basis, between $60,000 and $110,000 for every Liberty ship he was building. Jones’s Reconstruction Finance Corporation h
ad already loaned him $28 million for a magnesium plant out in Utah, which was having huge problems getting started.3 Now Kaiser was asking for $100 million to start up a steel plant in Southern California, more than 175 miles from the nearest iron source.
It was unprecedented; it was almost outrageous. But Jones eventually agreed to the loan, provided Kaiser move it fifty miles inland for security reasons (Kaiser wanted something closer to the coast, like Terminal Island) and that he secure the loan with the fees from his shipbuilding. Kaiser said yes—in part, as Jones later wrote, “because if he had not done so, probably 90 percent of [the Liberty ship fees] would have been taken from him in excess profit taxes.”4
Still, it was a sweet deal that was finalized on March 19, 1942—two weeks after the internment of upward of 100,000 Japanese Americans on the West Coast calmed any remaining fears of possible sabotage. Kaiser’s portion of the capitalization came to just under $100,000. All the rest, almost $111 million in the final tally, would come from the government. There was only one more condition, Donald Nelson said. The new mill would have to have a turbo-blower for the main blast furnace.
Kaiser said at once, “Why, that’s no problem. We’ll build our own.” He and Nelson and the others shook hands, and then Kaiser and his lawyer Chad Calhoun ambled out into the hall. As they headed out of the Social Security Building, Kaiser turned to Calhoun as his characteristic grin faded.
“What’s a turbo-blower?” he asked.
Calhoun couldn’t believe his ears. He assumed Kaiser would know. “Well,” he stammered, “it’s probably a turbine and a blower,”—and left it at that.5
Kaiser’s grin was back. “Then couldn’t we build one at Joshua Hendy?”
So he wired his engine wizard Charlie Moore out in Sunnyvale, who wired back: “Regarding turbine blower, can build unit in three to four months.”
That suited Kaiser. That was enough time, he figured, to get the plant built and ready to run—because he was determined to have that plant “blown in” before the end of the year.
The following day he called up his chief engineer George Havas. “George,” Kaiser said, “you’re going to build me a steel mill.”
Havas, who like Kaiser had no experience in the business, asked, “What kind of steel mill?”
“Oh, just a small one,” Kaiser reassured him, then added, “At least at first.”6 The only other question Havas had was where to build it. The location they finally chose was three miles west of Fontana, California, deep in the heart of the San Bernardino Valley.
It had three things going for it. The first was it was in the middle of nowhere, where land was cheap and space plentiful: “Think big,” Kaiser liked to tell his men, “don’t allow operations to be cramped.” For a trifling sum, he was able to snap up two thousand acres of hog farms and orange and walnut groves. By the end of April 1942, ground had been broken and Havas’s men were laying out the plant.7
The second was that Fontana sat close to the junction of three major railroads. That meant Kaiser could bring his iron ore and coal from Utah and then ship the finished plate up to the shipyards.
Third, labor in Fontana was cheap. People were desperate for a better job than picking oranges. The day the employment office opened, it was swamped with applications. In charge of the entire operation was Tom Price, an old Boulder Dam hand and the third man Kaiser ever hired. Price had been down in Panama, getting ready to launch still another Kaiser project in the Canal Zone, when he got the call from Kaiser. He was on the next flight out and, together with Havas and another rising Kaiser star, Gene Threfethen, ran the entire show.8
It was an enormous undertaking—but by now Kaiser people were used to that. Kaiser had to bring in workers from Morris Knudsen to lay down an additional seventy miles of rails to connect him to the main lines. There were no natural water sources, so Kaiser’s men had to dig their own wells and devise a way to recycle every drop of the 160,000 gallons of water they would need to produce one ton of steel. The San Bernardino council was eager to get the plant, but worried about the soot and smoke drifting over their fair valley. So Kaiser had Price install a smokestack-scrubbing device on Fontana’s chimneys, making it the most advanced antipollution technology in the country.9
Then Tom Girdler gave Kaiser vital Republic Steel engineering drawings for building the main sections of the plant, and also sent out some of his own people to help out. Hundreds of new technicians had to be brought in, men never seen on a Kaiser site before. There were experts in coke ovens, blast furnaces, open hearths, rolling mills, and conveyor belts, plus engineers to install the turbo-blower used to speed the heating of the blast furnaces to the necessary degrees Fahrenheit.
“Most of the men who were hired from other companies,” Tom Price remembered, “came at the same salary they had been receiving.” So why did they come? For some it was a matter of patriotism. For others it was curiosity, and the desire to be part of a steel mill that they knew would be like no other. “They were inspired by Kaiser,” Price said simply, “and wanted to be part of his dream…. The men believed it, government officials believed it. It was a love child. How could it fail?”10
When it was done, Fontana had ninety coke ovens handling 1,720 tons of coal a day. In addition, Havas and Price installed a 1,200-ton blast furnace for smelting the raw ore into 438,000 tons of pig iron, which a giant conveyor system then carried to six massive 185-ton open hearths where the real work of making iron into steel was done. There Kaiser’s turbo-blower played its part in getting the Fontana plant producing 472,000 tons of steel plate every year—almost 10 percent of America’s capacity shortfall, and enough to supply shipyards up and down the West Coast.11
The scale of the achievement became clear when weighed against the WPB’s other big steel plant venture, with U.S. Steel, in Geneva, Utah. Its builders had almost a year head start on Kaiser, yet Kaiser finished almost five months ahead of them. Geneva cost the government $220 million. Fontana came in at less than half that.
December 30, 1942, dawned bright and clear as Kaiser and his wife and son Henry Jr., and a dozen dignitaries from Washington and the San Bernardino County Council marched to a raised platform overlooking the vast complex. Almost eight thousand workers and onlookers had gathered, along with Kaiser’s usual brass bands and fireworks.
At precisely 1:15 P.M., Henry Jr. asked his mother to throw the switch that would start the first “blow-in” of the famous turbo-blower of the main blast furnace—which Kaiser had named “Bess,” after his wife.
Then Kaiser spoke. His voice was taut with emotion as he spoke of how brave men had come to California in the 1840s in search of gold, and in the process opened up half a continent. “Today, we take another, a baser metal and process it for the service of mankind.” Then he said:
“The westward movement which began so long ago has not come to an end on the Pacific slope. It is poised now for the next great thrust. The day of the West is at hand.”12
His partner Charlie Moore of Joshua Hendy put it slightly differently. “It’s sort of a disease with us guys out here, building things this way and busting records,” he told Fortune magazine. “Nothing can stop this area now. The West is on its way.”13
Moore was right. Arming for total war was transforming the region, starting with California. The value of its manufactured goods tripled, to a figure three times the national average, from 1941 to 1945. The personal income of Californians doubled—even as millions of new immigrants poured into the state in what at least one historian has dubbed “the second gold rush.” Much of the funding flowed from defense contracts. In 1940, Washington had spent roughly $1.5 billion in California. In 1945 it was $8.5 billion, almost all defense-related. But for every two dollars from the government, a third dollar—or roughly one-third of the cost of California’s arming America for war—came from private banks and the businesses themselves.14
Meanwhile, the auto industry and Detroit were far ahead of them.
On February 10, 1942, a
crowd of workers and managers had come together at the end of the assembly line at the River Rouge plant. A Ford V-8 came down the line, ready to be driven out of the factory. There was nothing unusual about that; what was unusual—and what had drawn the press and photographers—was that there was no car behind it. It was the last civilian production car at Ford. From now on, said the press, “the same assembly line that made Ford automobiles is now to be used for staff cars for Army officers”—as well as Navy service trucks, bomb service trucks, and, the most famous wartime vehicle of all, the jeep.
There was a little ceremony, even a speech. Then an army of technicians sprang into action. One by one they ripped out the machine tools and their fixtures, clearing the way for the new ones for trucks and military vehicles, which were stacked up in their packing cases outside.15 The American auto industry, a business bigger than the economies of every country except Germany, Russia, and Great Britain, was moving to full-time war production.
The fact that the auto industry would wind up producing 20 percent of all U.S. munitions in the war was due ultimately to two men. The first was Bill Knudsen. It was he who first called on his friends, rivals, and colleagues to start making parts for airplanes back in October 1940, who had pulled together the Automotive Council for War Production three weeks after Pearl Harbor, and who called together more than eight hundred executives for its first meeting on January 24, 1942, to tell them the time had come to switch to full-time production—a meeting he was never able to attend because his job was no more.
The second was the man WPB’s Don Nelson named to run the full-time conversion at that same meeting. He was Ernest Kanzler, whose success in overseeing the conversion Nelson later dubbed “nothing less than a miracle.”16
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