Three days later Stacy May was looking out the window of his apartment, which overlooked the Japanese embassy, listening to the first reports of the attack on Pearl Harbor and watching embassy officials burn papers on their lawn.67 The United States was now at war and May was one of the few who understood what was going to take place in America. Starting the next day the country began turning what von Hindenburg called its “pitiless” industrial might toward war. If America’s World War I production had shocked von Hindenburg, he would have found himself dumbstruck at the avalanche of munitions that soon began flowing out of America’s “pitiless” factories. On some level this bothered Stacy May. A one-time pacifist who had volunteered to be an ambulance driver in the First World War so as not to be thought of as shirking his responsibilities, he knew that his work made much of what would become known as the production miracle of World War II possible. May also understood that there was evil in the world, however, and that the United States had to confront it. Long after the war, when he was asked about his previous pacifism, he simply replied, “I was wrong.”68
CHAPTER 6
The War Production Board and Two Wars
In the immediate aftermath of the attack on Pearl Harbor, Roosevelt accepted that both Office of Production Management (OPM) and Supply Priorities and Allocations Board (SPAB) were failing in their primary responsibility to increase munitions production efficiently. To ensure that new astronomical production goals were met, he created a new organization to replace both SPAB and OPM: the War Production Board (WPB). To head the WPB, Roosevelt first selected Supreme Court Justice William O. Douglas. After what some thought was rather unseemly political maneuvring by Harry Hopkins, however, Roosevelt dropped Douglas in favor of Donald Nelson, a man Hopkins thought would be easier to manage and control.1 In selecting Nelson for the head job, Roosevelt purposely pushed Knudsen out of the leadership role. In doing so, he did not show him the courtesy of personally informing Knudsen that he was being cast into the wilderness.
To soften the blow, Roosevelt, at Nelson’s urging, made Knudsen a lieutenant general in the Army and sent him on a roving mission to increase production in factories across the country.2 Though Knudsen had his detractors as head of OPM, in this new role he received nothing but well-earned praise: if there was one thing Knudsen knew, it was how to build things. In fact, understanding how to build things was so important to him that when his teenage son asked for a car, Knudsen delivered it to him in pieces and told him to assemble it himself.3 Over the course of the war, Knudsen visited thousands of plants. It was later estimated that on average these visits increased the productivity of each plant by between 10 and 20 percent.4 In other words, he single-handedly increased war production by billions of dollars.
Nelson’s predecessors and their organizations were doomed to failure because Roosevelt was never ready to confer on them the power necessary to achieve required or expected results. By comparison, some have termed the executive order creating the WPB as an almost perfect instrument.5 In Executive Order 9024 (16 January) Roosevelt placed almost total power and authority to direct the country’s mobilization in the hands of Donald Nelson. The chair of the WPB was given full powers to direct all federal departments and agencies in all matters dealing with war procurement and production. The key words, however, did not come until the end of the order when Roosevelt did what he was never prepared to do before—turn over ultimate power: “The Chairman may exercise the powers, authority, and discretion conferred upon him through such officials or agencies and in such a manner as he may determine; and his decisions shall be final ” (emphasis added).6
This was the ultimate power to control every facet of the economy and the mobilization of the country for war. Unfortunately, Nelson was not the man for the job.7 Given more power than any of his predecessors—or, for that matter, more than anyone thought Roosevelt would ever allot to another individual—he seemed to be in mortal fear of ever using it.8 As part of this executive order, Nelson received the power to control all Army and Navy procurement and contracting functions. Inexplicably, though, and with almost disastrous results, one of his first acts as chair was to abrogate this responsibility and hand it back to the military.9
On 12 March 1942 Nelson made an agreement with Under Secretary of War Robert P. Patterson to “perfect the governing relationships between the Army and the War Department” (he made a similar agreement with the Navy on 12 April).10 In the agreement, Nelson laid out the overall responsibilities of his organization as giving general direction and supervision to the war supply system in accordance with strategic directives and plans. The agreement also allowed the War Department to retain its role in procurement, however, although the military was supposed to use WPB directives to guide its purchasing programs.11
Nelson had high hopes that this and his similar agreement with the Navy would lead to a harmonious partnership between the WPB and the military contracting authorities and that it would provide a jump-start for increased production. As he explained to the Truman Committee on 21 April 1942,12 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 five minutes, because it would have been impossible to have gotten the kind 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 Navy. As a matter of fact, we enhanced that authority.13
After the war, Nelson presented other reasons for his transfer of procurement and contracting authority back to the Army and Navy. According to him, the shifting of the massive procurement machinery would have led to unconscionable delays in war production during the critical early months of 1942. He further maintained that it would have been difficult to separate contracting from inspection of the finished products for conformity with military designs geared to strategic and tactical needs.14 Finally, Nelson claimed the complicated and time-consuming process of getting the mass of laws altered to accommodate the shift of procurement responsibilities to a civilian agency.15
These reasons now appear as hindsight justifications for what many, even at the time, regarded as a disastrous decision. It is unlikely that there would have been any delay in war production because the assumption of contracting power by WPB did not require the elimination of one organization and the creation of another. Nelson could have accomplished this transition slowly and smoothly by starting with a small oversight group to manage the overall contracting system in order to ensure that orders remained within the economy’s ability to meet them. Furthermore, the problem of separating inspections from contracting appears to have been a fabrication. When civilians finally did seize total control over production with the advent of WPB’s successor agency, the Office of War Mobilization and Reconversion (OWMR), allowing the inspection function to remain with the military did not prove to be a problem.16 Finally, virtually all the legislation required to shift procurement authority to the WPB was already prepared and there was a compliant Congress waiting to approve it. In fact, when these laws eventually were submitted for a vote, they were debated and cleared Congress in a single day.17
Despite Nelson’s high hopes for harmony between the military and WPB, his decisions to allow the Army and Navy to control contracting almost crippled war production. The services saw an opportunity to reinstitute the defunct Industrial Mobilization Plan (IMP), which would have placed them in charge of all production, including that part of total production required to keep the civilian sector functioning, and they were quick to act.18 Their job was made easier when Nelson compounded his mistake of allowing the military to let contracts without supervision with two other mistakes that were just as serious. First, he decided to
maintain the priorities system that had been in place under OPM; second, he allowed the Army and the Navy to establish their own priorities for contracts they let.19
A case can be made that Nelson had to allow the services to maintain contracting responsibility because they already had the organization and staffing to accomplish this task, while the WPB was still in its infancy and not prepared to assume that responsibility.20 Even if one accepts such a proposition, however, the WPB was sufficiently staffed to provide oversight of both the size of the military’s overall contracting activities and of the priorities system. The result of Nelson’s failure to assert control of military procurement was growing chaos throughout the entire production system since military orders far outstripped industry’s capabilities.
Reorganizations within WPB and the Army
As Nelson was completing his negotiations with the under secretaries of the Army and Navy, both the War Department and the WPB itself were reorganizing to meet the circumstances of global war.21 For the most part, the WPB did not change its previous OPM structure very much. The biggest change was in the overall leadership (Knudsen out, Nelson in) and the increased power conferred on WPB that had been denied to its predecessors.22 Virtually all the bureaucratic organization that made up SPAB and OPM survived to be incorporated into the WPB.
Organizational units dedicated to production, purchases, civilian supply, and materials went on much as they had for the past year. The groups responsible for planning and requirements received increased power, and were made into separate committees reporting directly to Nelson: the Requirements Committee and the Planning Committee. The Requirements Committee took over the supervision of most of the allotments of raw materials from the materials branch. Hence, it was responsible for organizing the priorities system. This committee eventually came under the control of Ferdinand Eberstadt, who managed to simplify the priorities system through the institution of the Controlled Materials Plan (CMP); the CMP, in a single stroke, restored some semblance of order to the production scheduling chaos.23
To run the Planning Committee, Nelson selected Robert Nathan, who promptly hired Simon Kuznets as the committee’s chief statistician and economist. 24 The other members of the group were a study in contrasts. Thomas Blaisdell, earlier a teacher of economics and later a staff member of the National Resources Planning Board, was quiet, even-tempered, well-informed, and scholarly. After coming to Washington in 1933, he had acquired broad experience in a half-dozen different jobs, including the directorship of the Temporary National Economic Committee monopoly studies of 1938–39. The final member of the committee, Fred Searls, was tough-minded and conservative, a highly successful mining engineer. Formerly vice president of the Newmont Mining Company, in 1941 he became a consultant with the ordnance branch of the War Department and held that position during the entire period of his service on the Planning Committee. Serving without administrative responsibilities, this committee dedicated itself from the beginning to the job of evaluating planning for the optimum utilization of America’s economic resources for the war effort. Stacy May was allied to this group, but in a distinctly separate office, as director of the WPB’s office of progress reports.25
The Planning Committee was freed from all administrative duties and was specifically designed to analyze what was happening in production and to study the impact of the Victory Program on the American economy. According to Nelson, who formed the committee at the end of February, this committee was to, “Assist him in developing plans and policies for maintaining the proper balance and relationships of the war production program and in determining the fullest use of the materials, facilities, and services needed for the realization of the program.”26 The formal order establishing the committee added the task of “anticipating future trends of war production and recommending to the WPB Chairman policies for overcoming obstacles to the full realization of the war production program.”27 In a memo to Nelson in early April, Nathan laid out what he viewed as the Planning Committee’s central task: “To evaluate and plan for the most effective utilization of our economic resources and the largest effective dedication of those resources to the war effort. This means that it must plan for maximizing total production, and for applying the largest feasible proportion of that total output to the war effort. This objective entails both the establishment of over-all programs and the creation of mechanisms to implement these programs.”28
Nathan did not hesitate to use his broad mandate: within weeks of the Planning Committee’s creation, it was conducting a wide variety of production -related studies. In addition to completing Nelson’s first demand—to look at the feasibility of the entire munitions program in relation to shipping capacity—Nathan also had teams looking into a number of other areas, including military construction, the construction of new industrial facilities, rerating of military and civilian programs, manpower issues, raw materials flow, and a host of others. To convey some idea of the scope of the Planning Committee’s activities, a nugget from Time magazine’s comment at the time is priceless: “Most important, in WPB’s second week, was a step which went almost unnoticed outside its own offices. On Nelson’s desk each morning bald statistician Stacy May began to place a fat progress report: day-by-day, company-by-company of deliveries of armaments and armament parts stacked against the quotas. Before this, a lazy or corrupt producer could sit motionless for months without having anyone the wiser. Under Nelson’s WPB, any failures show up at once in the morning report on his desk.”29 Despite this wide range of interests, the Planning Committee made its most important contribution in the sphere of long-term production planning: analyzing trends in civilian production in relation to national income, studies of national income and GNP, the examination of industrial capacity, and all other resource factors that operated as limiting elements of production. These studies, largely the work of Simon Kuznets and Stacy May, aimed to bring production objectives into line with overall capacity, and led to specific recommendations that had far-reaching effects on the magnitude and composition of the nation’s production program.30
Unlike what one might expect from a policy group made up of statisticians and economists, Nathan’s natural forcefulness ensured that the Planning Committee would aggressively push to have its recommendations followed. In an almost perfect example of understatement, the official history of the WPB states, “As many of the recommendations touched on important organizational and personal interests, this prodding for action resulted in opposition to the Committee by a few affected individuals in the services.”31 If one replaces the word “opposition” with “all-out bloody bureaucratic warfare” one gets much closer to the true picture. Even as the WPB and its subordinate Planning Committee mobilized the nation to wage a global war, WPB was waging its own internal war, mostly against the Army’s Army Service Forces (ASF) and its leader, General Brehon Somervell. Eventually WPB would win the battle over feasibility, but only at considerable cost. When the dust settled, the Army, and to a lesser extent the Navy, accepted reduced production goals, but Nelson and the WPB were crippled and the Planning Committee was completely dissolved.
Army Reorganization: Creation of Army Service Forces
In mid-February 1942 General Marshall called his staff together, briefed them on his plan to reorganize the entire Army, and gave them two days to comment on his plan.32 The reorganization had been long in coming, but the catalyst appears to have been a 25 July 1941 memorandum from General Leslie McNair to Marshall, in which the former outlined the situation of a number of newly established bases, and discussed the broad questions of their command, operation, and administration. McNair concluded that several agencies and departments oversaw these bases and therefore no one controlled or coordinated them.33 McNair’s memorandum, although confined to the organizational problems of the country’s new bases, came on top of a push by the Air Force for greater autonomy, broader command problems being experienced by the newly established Army General Headquarters, and the expanded burdens
being imposed on the Army by an increasingly complex global situation. In this unsettled command and organizational environment, McNair’s memorandum became the spark that lit the slow fuse toward reorganization. 34 Throughout the summer, the Army staff debated various reorganization proposals, all foundering either on the problem of Air Force autonomy or the command relationships between Washington and the possible theaters of war. In late July Colonel William K. Harrison Jr., the War Plans Division’s representative on one of the reorganization committees, put forward his own idea for reorganization, on which he apparently had been working privately since late 1940.35 Eventually, Harrison’s memorandum became the basis of the Army’s 1942 reorganization, but at the time it was killed by the chief of the War Plans Division, General Gerow, who later stated that he did not believe that Marshall was ready for the huge upheaval the plan’s adoption would cause.36
On 30 August, in place of the Harrison memorandum the War Plans Division offered a revised version of the structure the Army was currently working under. Although McNair concurred with this approach, he did so with serious reservations.37 By mid-September, however, McNair had reversed himself and come out against the War Plans Division’s recommendation. It was left to the Air Staff, however, to finally kill off the plan. In late October, General Spaatz, chief of the Air Staff, writing for Army Air Force Chief General “Hap” Arnold, prepared a detailed memorandum pointing out that, while the proposed organization might work in peacetime, it would fail utterly in the event of the United States being drawn into the current global conflict.38 The report concluded “that the functioning of GHQ [general headquarters] as now contemplated is not in consonance with the proper operation and control of theaters of operation, and is restrictive of the responsibilities charged to the Army Air Force.”39
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