Mr. Ferdinand Eberstadt, Vice Chairman, War Production Board
Mr. Milton Katz, Solicitor, War Production Board
Mr. J. S. Knowlson, Vice Chairman, War Production Board
Mr. Charles E. Wilson, Vice Chairman, War Production Board
Mr. Ernest Kanzler, Director General for Operations, War Production Board
Mr. G. Lyle Belsley, Executive Secretary, War Production Board
By Invitation
Lieutenant General Brehon B. Somervell, Commanding General, Services of Supply, War Department
Rear Admiral H. L. Vickery, Vice Chairman, U. S. Maritime Commission
Brigadier General Oliver P. Echols, Assistant for Procurement Services, Office of Chief of Air Corps, War Department
Mr. Will Clayton, Assistant Secretary of Commerce
Mr. Paul V. McNutt, Chairman, War Manpower Commission
Lieutenant William A. Weber, Assistant to the Vice Chairman, U.S. Maritime Commission
Mr. Wayne Coy, Assistant Director, Bureau of the Budget
Mr. Donald R. Belcher, Assistant Chief in Charge of Planning and Statistics, Navy Department
Mr. A. I. Henderson, Deputy Director General for Industry Operations, War Production Board
Mr. Robert R. Nathan, Chairman, Planning Committee, War Production Board
Mr. Simon Kuznets, Chief, Program Analysis and Research Section, Planning Committee, War Production Board
Mr. Wilbur Nelson, Administrator, Mining Branch, War Production Board
Mr. Stacy May, Director, Statistics Division, War Production Board
Mr. Joseph L. Weiner, Deputy Director, Office of Civilian Supply, War Production Board
Mr. Thomas C. Blaisdell Jr., Member, Planning Committee,War Production Board
Mr. Fred Searle Jr., Member, Planning Committee, War Production Board
Mr. Frederick Roe, Assistant Executive Secretary, War Production Board 1. Gold Mining2
2. Feasibility of the War Production Program
In reviewing the development of the war production program, Mr. Nathan pointed out that appropriated funds increased during 1941 from 20 billion dollars in March to 50 billion dollars in June and to 80 billion dollars in December. After Pearl Harbor, the acceleration increased and by the middle of 1942, appropriated funds have mounted to approximately 225 billion dollars. The magnitude of the increase has, of course, created serious problems.
Mr. Nathan emphasized that in reviewing the feasibility of the war production program, the Planning Committee has assumed that: (1) the country must engage in an all-out war effort and do everything possible to attain maximum production of munitions; and (2) the civilian economy must be reduced to the lowest level consistent with the largest possible production of munitions.
He pointed out that an overly large program has the advantage of acting as an incentive to total production and heretofore it has compelled curtailment in civilian economy and conservation in war production. However, as far as metal consumption is concerned, most of the possible curtailment in the civilian economy already has been accomplished and there is not the continued need for the same degree of pressure in this direction as prevailed many months ago. Much pressure for conservation can now be expected from the fact that some plants will be operating below capacity. On the other hand, an overly large program has these disadvantages:1. Creation of lack of balance in end items, complementary items, and components. This is already in evidence.
2. Creation of excess fabricating capacity. This results, in turn, in wastage of materials entering into construction and impairment of the morale of labor, and management as plants slow down and close down.
3. Failure to meet the objectives of the most important segments of the program while meeting less urgently needed items, relatively easy to produce. An outstanding example at present is the aircraft program which is not receiving all the machine tools and metals required to meet the objective; merchant shipbuilding is being similarly restricted.
4. Lack of flexibility with consequent difficulty in introducing new items whose needs are dictated by battle experience.
5. Increased difficulty in effectively controlling the flow and distribution of materials.
6. Inability to coordinate and integrate the production program of the United States with those of other nations.
Mr. Nathan pointed out that the study of the Planning Committee (1PB Document 146), although necessarily not precise as to every detail, does indicate some serious basic problems. Existing schedules for 1942 call for over 14 billion dollars of construction and over 40 billion dollars of munitions. It is currently estimated that the construction program (based on schedules) will be met, but that munitions production will fall short of schedules by 7 billion dollars, or 17 percent. Objectives call for munitions production to a value of 22 billion dollars during the last four months of 1942; it is estimated that only 15 billion dollars will be produced.
For 1943, objectives shown in the report call for war construction and munitions production of 87.5 billion dollars of present purchasing power. Recent reviews of these objectives indicate they underestimate the actual program by several billion dollars. If the deficiency in 1942 production were carried over to 1943, another 7 billion dollars would be added. In addition, present plans call for 18 billion dollars of non-munitions items such as pay, food, et cetera, so that the total outlay for war purposes in 1943 would have to aggregate 115 billion dollars, requiring average monthly expenditures of 9.5 billion dollars. Because total war expenditures in December 1942 are estimated at not over 6.5 billion dollars, expenditures in December 1943 would have to amount to well over 12 billion dollars to achieve this average. For war construction and munitions alone, expenditures next year would have to average 8 billion dollars per month. Since expenditures for these items in December 1942 are estimated at not over 5.5 billion dollars, they would have to rise to 10.5 billion dollars in December 1943.
Studies of the Planning Committee indicate that a rate of gross national output of about 148 billion dollars prevailed in the first half of 1942 and that a level of 168 billion dollars might be reached in December 1942. Admitting that comparisons of the national product of various countries are imperfect, Mr. Nathan pointed out that with total war expenditures of 115 billion dollars in 1943 and civilian outlays reduced to the 1932 level, gross national product would have to reach 183 billion dollars and war expenditures would amount to 63 percent of the total. The total might be accomplished, but the composition appears wholly impossible. To achieve this level of war expenditures for the year as a whole, monthly outlay would have to rise throughout the year to a level of 196 billion dollars in December 1943, of which war expenditures would represent 147 billion dollars. Consumer outlays would fall to the wholly untenable level of 35 billion dollars, or one-third below the 1932 figure. If the 1932 level of consumers’ outlays were to prevail in December 1943, the gross national product would have to reach 213 billion dollars. This means war expenditures would absorb not less than 75 percent of the national product in December 1943, an impossible portion. This compares with 27 percent in the first half of 1942, and a likelihood of 46 percent in December 1942. It is estimated that 1942 war outlay in the United Kingdom will be 44 percent of that country’s national product. For Canada, this figure is estimated at 43 percent and for Germany, 50 percent. Whether any economy can devote much more than one-half of its output to war production is extremely doubtful. The Planning Committee regards as an outside and all-out and stimulating objective a total of 75 billion dollars of munitions and war construction and 18 billion dollars of non-munitions expenditures in 1943.
Exhibiting charts on the supply and requirements of metals (Document 149), Mr. Nathan forecast that on the basis of present schedules, there would be a serious shortage of alloy steel and copper, which will increase cumulatively through 1943. He pointed out that the estimates in these charts reveal large deficits in the next two or three quarters in these metals and in carbon steel and aluminu
m and, therefore, indicate that scheduling of production has not been closely correlated with available supplies. He stated further that although the overall shortage of key metals is serious, it is even more severe when considered in specific shapes and sizes, such as aluminum extrusions and forgings. Moreover, supplies already had been estimated optimistically, especially in view of delays now being encountered in completing expansion projects.
Discussing the feasibility of the present war production program from the point of view of labor requirements, Mr. Nathan pointed out that analysis is complicated by lack of authoritative information on the proposed size of the Army. Assuming a total armed strength of 10 million by the end of 1943 and a war production during the year of 75 billion dollars, a labor deficiency by the end of 1943 of 7 million workers, relative to the normal labor force, is indicated. To achieve objectives, not what is feasible, would necessitate a steady rise in production to a rate in December 1943 of 126 billion dollars, which would call for an additional labor force of at least 7 million, making a total labor deficiency of 14 million, a gap that is probably impossible to fill. The potential reserve of labor in women, older people, and others is considerable, but while the overall shortage may be partially overcome, labor problems in specific occupations, industries, and areas are certain to be acute and prevent the attainment of present objectives. Mr. Lubin pointed out that if munitions production and war construction aggregate not more than 75 billion dollars in 1943, the labor supply probably would be adequate. Mr. Nathan again emphasized that the shortage in specific areas would be more serious than revealed by the overall analysis.
Examining the Feasibility
Examining the feasibility of the program in terms of available facilities, Mr. Nathan pointed out that the question can hardly be answered from an overall analysis, but inadequacies of facilities in specific areas are already indicated and will impose major limitations upon production. In machine tools, for example, critical items of high quality and special type tools will be in inadequate supply for most of the 18-month period ending December 1943. Scheduled completion dates for 30 percent of all facilities projects have been postponed by an average of 3 months. Even with the scarcity of statistical data on facilities, Mr. Nathan stated, it is clear that inadequacy of facilities will limit production in specific and important areas in 1943, especially during the early part of the year.
In concluding his presentation, Mr. Nathan urged the development of better scheduling and the provision of an administrative mechanism to combine strategy and production.
Mr. Weiner pointed out that if a national product of 183 billion dollars a year is feasible at all, it could be achieved only by moving large masses of the population into areas of intensive production. This would require substantial increases in housing, transportation, and other facilities which would absorb large amounts of materials and therefore restrict, for an extended period, the proportion of national product originally conceived for direct war expenditures, probably nullifying for the time being the benefits of the increase in output.
Mr. Coy inquired whether the Army and Navy admit that the present program is too large to be feasible. General Somervell replied that while the report of the Planning Committee demonstrates the absolute necessity of utilizing all possible means to achieve the program, he believes that 90 percent of the munitions program for 1942 will be completed by the end of the year, in contrast to only 70 percent as estimated by Mr. Nathan and, consequently, it will be necessary to carry over a smaller deficiency into 1943 than that estimated by Mr. Nathan. Moreover, excluding the deficiency to be carried over from 1942, the program next year is not materially larger than the Planning Committee estimated as feasible. General Somervell said he is not so despondent about the War Production Board as to feel that with more effective controls over the distribution or materials to be attained through the quota system of allocating materials to each agency, production goals cannot be met. Because of continuing changes in specifications which are being effected daily, it is unwise to assume that the supply of alloys will be inadequate. The amount of copper which can be saved through the substitution of steel cartridge and shell cases may well be larger than estimated. The production and fabrication of aluminum, too, may exceed expectations.
In General Somervell’s opinion, requirements, which are the needs of the soldiers and sailors, should not be reduced, and all efforts must be concentrated on increasing supply. It would be most difficult, involving millions of recomputations, to reduce the requirements program or change the schedule prepared by the Joint Chiefs of Staff in any way, since all items in the program are important. Military requirements have been computed realistically, not theoretically; they have been fully coordinated.
To a comment by General Somervell that he was not impressed with the dollar figures in the Planning Committee report, Mr. Henderson replied that the dollar and national income figures seem to be the best common denominators of capacity. General Somervell predicted that it will be possible to reduce dollar costs by 10 percent from existing prices.
General Somervell saw no need for the creation of a new organization in which strategy and production possibilities could be correlated as recommended by Mr. Nathan. Already there are the Combined Chiefs of Staff, the Joint Chiefs of Staff, the Combined Production and Resources Board, the Munitions Assignments Board, the Army and Navy Munitions Board, and the War Production Board. He failed to see what benefit would be derived from a board composed of an economist, a politician, and a soldier who does not know production. Mr. Nathan emphasized that the production authorities should not and could not question strategy, but he inquired whether the Joint Chiefs of Staff, in establishing military requirements, had taken full account of feasibility.
General Somervell said the supply programs submitted to the War Production Board adequately represent the material expressions of strategy, and he saw no need for the Board concerning itself with strategic considerations. In reply to a question from Mr. Coy as to what steps should be taken if production falls below the strategic requirements set by the Chiefs of Staff, General Somervell stated that all that need be done is to change the supply programs presented to the Production Board.
Admiral Robinson stated that the Army and Navy will be able to keep the production program in balance and expressed confidence that the entire munitions program will be more effectively scheduled.
Mr. Patterson expressed the view that a body consisting of production and strategy authorities would not be more fruitful in adjusting the program than the existing mechanism, and he urged that no new agency be created for this purpose. However, he stated that it would be beneficial to have the officials of the War Production Board meet with the Joint Chiefs of Staff from time to time for an exchange of attitudes. Mr. Lubin pointed out that failure to meet the production schedules on time means that the Joint Chiefs of Staff will not have the munitions available in the time required by them, and the Joint Chiefs of Staff should be informed of this.
Mr. McNutt pointed out that despite repeated efforts, the War Manpower Commission has not been able to obtain reliable data on the manpower needs of the Army and Navy. He inquired of Admiral Robinson and Mr. Belcher whether they could inform him of the number of men which it is planned will be in the Navy at the end of 1943, but they were unable to give him this information. Mr. McNutt said that as far as manpower is concerned, the existing Boards referred to by General Somervell have not been fully coordinated. General Somervell promised Mr. McNutt that the War Manpower Commission would be informed of the Army’s manpower needs. Mr. McNutt pointed out that already there is a serious general shortage of manpower and that the specific shortages are even more critical; although labor shortages exist in 35 areas, 500,000 workers are idle in New York City. The Chairman observed that the War Production Board had not been informed of the recent proposal to increase the size of the Army, although this proposal vitally affects the production program.
Mr. Henderson pointed out that he
had been one of the first to advocate the largest possible military program, but that in order to meet the established program the nation has been forced to sacrifice expansion of certain basic materials such as steel and copper. In his opinion, it is most unlikely that the nation can support a war outlay in 1943 of more than 90 billion dollars, and he inquired whether such an outlay, involving a production of 90 million tons of steel and a supply of over 2,600,000 tons of copper, is not enough to defeat our enemies who have limited resources. Mr. Patterson pointed out that comparisons with our enemies have limited significance because we were forced to start our armament program at later date and, in addition, we now have to supply not only the needs of our own Armed Forces.
Mr. Coy inquired whether the size of the Army should not be determined by the probable supply of available equipment and whether the men who could not be fully supplied should not be retained in production. General Somervell replied that the size of the Army should not be determined by the availability of equipment and that it would be useful to train, even with partial equipment, all the men the Army can induct. Mr. Coy inquired as to the magnitude of probable future increases in the program. As recently as September 17, the President had indicated that he contemplates raising the 1943 airplane objective by 6,000 airplanes and 8,000 gliders, and Mr. Coy predicted that further additions to the munitions program would be made from time to time.
The Chairman stated that his policies and actions had been based on the strong conviction that the most the country can produce is the least with which it can be satisfied. Every effort must be made to obtain the maximum production, provided the program is not thrown out of balance. Giving effect to the recent proposal for augmentation, the airplane program alone would call for an expenditure of over 30 billion dollars in 1943, or 40 percent of what the Planning Committee regards as a feasible total for munitions and war production. A program of this magnitude is bound to impinge on other items and appropriate adjustments will have to be made. In addition, if essential civilian functions, such as transportation, communication, repairs, and maintenance, are curtailed too severely, it will be impossible to support the maximum war production program.
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