Freedom's Forge

by Arthur Herman

  Reuther never came back. Instead, a few days later he sent back a message. Reuther’s people were having trouble figuring out the specifications from the drawings alone, it said. They needed to get into the aviation shops to measure the machines directly.

  Knudsen had to laugh. “If they were real tool designers,” he explained to his colleague Sidney Hillman, who had worked in the garment industry and knew nothing about heavy manufacturing, “they could read drawings. As for going into the plants, that’s nonsense. Those plants are too busy to permit such interruptions.”28

  So the Reuther Plan died a merciful death, despite its influential support. The Knudsen Plan was less spectacular but more rooted in reality. The Air Corps had figured it would take at least twenty months to convert existing auto plants to large-scale airplane assembly. Getting them ready to stamp out parts and subassemblies would take far less time. The Knudsen Plan let airplane makers make airplanes—even eventually planes they hadn’t themselves designed.† Automakers and their subcontractors would concentrate on making whatever would help save time for final assembly. In short, the production chain that Knudsen had worked out for Chevrolet would become the foundation for building American air power.

  In the tense autumn of 1940, however, few saw that coming. Instead, Knudsen and the commission found themselves under siege for being at once too weak and too powerful. Criticism was mounting that the NDAC had no real authority and no single leader—an issue Knudsen himself addressed in a memo in November, which Roosevelt ignored.29 On the other side, Knudsen and his team were blasted as shills for big business, whose members were scooping up the bulk of the defense contracts—and doing so with their profits intact.

  This would be a major criticism during the war and later. Out of nearly $100 billion worth of defense contracts, 70 percent went to America’s one hundred largest corporations, from Knudsen’s own General Motors, to Dow, DuPont, and General Electric.30 Senators James Murray of Montana and Harry Truman of Missouri became obsessed by the subject. They even insisted on the establishment of a Smaller War Plants Corporation, as a counterweight to what they saw as NDAC’s bias toward bigness.

  Knudsen would not be budged. His strategy of getting the biggest contracts to the biggest companies was deliberate, because, as he pointed out, companies like Ford or GE had the biggest and best engineering staffs. “This is a job calling for quantity and quality,” he told colleagues on the Advisory Commission; “it is absolutely necessary to have an engineering boss on every job.”31 In fact, Knudsen told Roosevelt point-blank that only corporations with their own engineering departments should get the most vital defense contracts. Those engineers would have had years of experience figuring out how to make things in the greatest number and the fastest possible time—an experience that was going to get more common as America geared up for war.

  The small businessman did have his place in the scheme of things, Knudsen believed, as subcontractors. A company like GM employed no less than 18,000; during the war Boeing wound up with more than 1,400 subcontractors for its B-29 project alone.32 The massive food chain of mass production would give the subcontractors plenty to do—and plenty of opportunity to grow. The war eventually would create more than half a million new businesses, while thousands of existing businesses boomed supplying orders from defense heavyweights like Ford and Westinghouse and B.F. Goodrich—and on the West Coast, Kaiser and the Six Companies.

  Still, Knudsen’s confidence rested on a belief that a free market would generate its own spontaneous order matching supply to demand, even in wartime. In 1940 Washington that belief was itself in short supply. “Decentralization [is] analogous to free enterprise,” to quote Alfred Sloan. “Centralization, to regimentation.”33 The New Deal had tried once to mobilize and energize the nation’s productive resources through regimentation, and failed. Now with war coming, it was the businessman’s turn.

  Many were dubious; some were outraged. President Roosevelt, to his lasting credit, suspended judgment. He had built his career on the conviction that government knew best, and on vilifying American business and businessmen, whom he had blamed for the Great Depression. “I welcome their hatred,” he told a campaign audience in 1936, and American business had paid him back with interest.34

  But now he was not so sure. When Knudsen returned to Washington that October, Roosevelt’s campaign for a third term was entering the most critical stage. His Republican opponent, Wendell Willkie, a corporate lawyer, was drawing more support than Roosevelt had anticipated. With Hitler dominating Europe from the Pyrenees to the Russian border, and Asia in flames, he and the country were facing unimaginable dangers—and unknown territory.

  Despite his affable front—“He calls me Bill!” Knudsen gushed to friends—Roosevelt did not trust the big Dane, although he had discovered to his surprise and pleasure that the former GM executive was a good poker player‡—and, more important, had no political agenda. “The way to get power down here is to grab it,” Jesse Jones had advised Knudsen, but Knudsen refused.35 In the long run, it would hurt Knudsen when bombs fell on Pearl Harbor. In the short run, it reassured Roosevelt that the big Dane just wanted to make America safe and strong. So Roosevelt let him stay.

  It was not a popular decision. Wendell Willkie accused him of failing to take charge of a growing crisis. The dean of American columnists, Walter Lippmann, warned the president it was time to declare a state of national emergency. “Mobilize the entire manpower, machine power, and money power of this country,” he wrote six weeks before the election, and let “everything else take second place.”36

  Yet neither then nor later did Roosevelt ever sign on to the idea of taking full charge of the economy in order to prepare for war—or appointing an all-powerful “war production czar.” Perhaps he also instinctively grasped that the war mobilization effort was too big a task for one plan or person—that, in Eliot Janeway’s phrase, “a victory small enough to be organized is too small to be decisive.”37 If the American people really did need Washington to tell them what to do, then the war was lost.

  In Roosevelt’s mind, it didn’t matter how confused and disorganized Washington was, as long as mobilization became an irresistible, overwhelming force across the country. And Knudsen was showing him how to do it.

  There was one criticism, however, to which Roosevelt could not shut his ears, which he finally brought to Knudsen himself.

  This was the call to shut down production of civilian durable goods so that all those resources and labor hours could go directly into war production. It was outrageous, journalists in The Nation and The New Republic grumbled, that Knudsen was letting Ford, Dodge, Packard, and others continue to make cars for commercial sale as if there were no international crisis. Were Knudsen and his Detroit friends serious about getting itself ready for war, or not?38

  So Roosevelt asked him, and Knudsen was probably more emphatic than in any other conversation he had with the president. Shutting down civilian car production now, with the winter of 1940 approaching, would mean shutting down the plants for months, to install the new machines and tools.

  “If they are shut down,” he told Roosevelt, “the toolmakers will scatter”—probably to companies like Boeing and North American and Consolidated on the West Coast. “If the toolmakers scatter, we will have a dickens of a time getting them back again. We will lose far more time if that happens than we will by keeping right on as we are.”

  Instead, he said, we have to bury the automakers under military orders now, far more orders than they can make with their present plants. They’ll have to grow their assembly lines and facilities, workers will be hired and trained, and the toolmakers will have to stay on until the time comes when America has no choice but to move to full-time war production. “When the time comes,” he assured the president, “and they have more facilities, we can shut down on them and they will still have their toolmakers.”39 American business would be ready to make anything from Army trucks and machine gun belts to merchant ship
s—and it was merchant ships that suddenly had everyone worried.

  It started with a plea for help from the British. That winter German U-boats were sinking their merchant ships three times faster than they could replace them—Stimson was told Britain had lost “four million tons of shipping so far”—even as British shipyards were being pounded by Nazi bombers.40 Churchill approached Roosevelt. The United Kingdom needed sixty new freighters to replenish her merchant fleet, he said. Otherwise she would be facing starvation, and the war would be lost. Could America help?

  Roosevelt wanted to say yes. The problem was that American shipyards had never built that many ships in so short a time. Even the most experienced, like Sun Ship Company in Chester, Pennsylvania, and Todd-Bath Iron Works in Maine, were used to orders less than half that size. Meeting Britain’s urgent demand would mean gearing up America’s merchant shipbuilding capacity to an entirely new level, after being in the doldrums for almost a decade.

  Still, the obvious place to turn was the nation’s biggest ship companies, the so-called Big Five. But the Big Five didn’t want the contracts. Their yards were filled with Navy orders, and their labor and engineering staffs were going to be stretched to the limit. This was partly due to Bill Knudsen’s efficiency in organizing Navy shipbuilding. Starting on June 5, 1940, he and NDAC cleared contracts for no less than 948 navy vessels, including 292 combat ships and twelve 35,000-ton Essex-class aircraft carriers. Then when the Navy realized at the end of October they would need 50 more destroyers than the 151 first ordered, Knudsen sat down and figured out the cost of additional facilities (ten slipways in six locations for $25 million) and sent a personal letter to Roosevelt making this a budget priority. Between battleships like the North Carolina and Washington (finished in July 1941), aircraft carriers, destroyers, cruisers, tankers, and coastal craft, the yards were working around the clock. That left no space for the British order.

  So new yards would have to be found. They would have to be modern facilities capable of laying keels, building merchant freighters, and then getting them down the slips faster than ever before. Knudsen’s point man on shipbuilding, Admiral Emory Land, started looking at the Gulf and the West Coast. It was a ticklish problem. Land wanted places where business and industry knew something about ships, but were not big or established enough to draw away labor from the vital Navy yards.

  There was also the question of what kind of ships to build. At a meeting of the NDAC, Admiral Land told them about having to adapt the original British designs to American capabilities, in order to get the ships built as fast as possible. Bill Knudsen raised a question that seemed obvious to him, and to others in the room. What if Land came up with a design not just for the British, he asked, but as a standard type for expanding the United States’ own merchant fleet?

  Admiral Emory S. Land sat for a moment and weighed the proposal. “Jerry” Land, born in Canon City, Colorado, had escaped the poverty of the dying mining boomtown with an appointment to the Naval Academy. Blunt, decisive, and outspoken, Land had spent a lifetime slicing through red tape—one reason he got on well with Bill Knudsen. Many a brave proposal for a way to get American goods back on the high seas either went up the food chain or died a merciful death depending on whether Land’s large letter L was scrawled on its front.

  Land thought about Knudsen’s idea, and then said no. Shipbuilding wasn’t like automaking, he explained. A single standard design might work at a single shipyard, but no one had tried to apply one for them all—let alone on such short notice. Land knew his merchant fleet was in desperate shape after a decade of depression. But he didn’t want it rebuilt around a hasty and possibly flawed design. These were “emergency ships.” Let the British have them as a temporary stopgap, he concluded, and the NDAC would have to think of something else for the American fleet.

  It was a watershed moment. If Land and the NDAC had endorsed Knudsen’s idea, it is doubtful whether anyone would have let Henry Kaiser build ships that were headed for America’s own merchant fleet. But emergency ships for Britain at British expense was another matter. Knudsen had the authority to veto contracts for more than $500,000. But not even Bill Knudsen felt able to stand in the way of this one.

  Because when Kaiser got wind of what was happening, he jumped at it. Just a year earlier, the Six Companies had constructed new shipways for Todd’s yards in Seattle, to build five new cargo ships on a different contract for the Maritime Commission. Kaiser and his engineers had learned not just about shipyard construction but also about the shipbuilding business. Kaiser had also forged a good relationship with the head of Todd, John Reilly—who also worked closely with Kaiser’s lobbyist in Washington, Tommy Corcoran. Now the British contract offered a chance to enter this lucrative arena, at a time when official Washington couldn’t afford to be choosy.

  A group of British officials came out to see Kaiser in California. He took them out to a series of forlorn mudflats around Richmond, California, on the eastern side of San Francisco Bay. Shivering in the cold, the Britons looked around in confusion.

  “But where are your shipyards?” one of them asked.

  “There are the shipyards,” Kaiser declared, pointing to the empty mudflats. “It’s true you see nothing now, but within months this vast space will have a shipyard on it with thousands of workers building the ships for you.”41

  Phones rang, telegrams were sent, and a contract was drawn up, not just for the ships but for two brand-new shipyards. The British, who were paying for the whole thing, were swayed by the ability of Kaiser and his Todd partners to raise whatever extra capital would be needed. Admiral Land believed that making emergency ships like these would be more an assembly process than traditional shipbuilding, which could take up to ten to eleven months for a single freighter.42 Land was expecting each of these to be finished in less than three. If anyone could do that, it was Henry Kaiser—even though he didn’t know a ship’s prow from its stern.

  On December 21, the day after the British contract was signed—the largest in U.S. peacetime history—Clay Bedford got a phone call. He was in Corpus Christi, Texas, building a large new air station for the Navy. Bedford had been there since June, supervising eight thousand workers and fighting the heat and flies and isolation.

  “Clay?” It was Henry Kaiser on the other line, calling from Washington.

  “Yes, sir.”

  “You’re going to build me a shipyard.”

  Bedford had never seen a shipyard, let alone constructed one. Unfazed, he asked his boss, “Where?”

  “Richmond,” Kaiser answered.

  A week later, Bedford’s top foreman, O. H. McCoon, stood in a driving rain and gazed gloomily on the series of mudflats that was to be the home of the Todd California Shipbuilding Corporation. McCoon ordered one of his men to drive a bulldozer into the marsh to clear a service road. The bulldozer immediately sank out of sight.43

  Such was the beginning of what would become the most famous shipyard in the world, producing the most famous merchant ship in the world—the Liberty ship. Yet even as McCoon and his men pulled out their lost bulldozer, events in Washington were changing the entire tempo of preparation for war.

  Bill Knudsen lived in a snug house near Rock Creek while he was in Washington. Two Filipino houseboys took care of his domestic needs, and one of the first things he did when moving in was purchase a piano.

  He called the fact that he could play the piano his best-kept secret. It contradicted the image of the tough former Bronx shipyard worker and boxer turned GM executive. Not only could he sight-read tunes from Cole Porter to Chopin, he also played the violin, clarinet, and xylophone.44 People were also amazed to learn Knudsen was an avid book collector who would stop by a bookstore window and dive in to pick up a rare copy of Edward Gibbon or the philosopher Spinoza.

  After breakfast his driver Joe would set off for Constitution Avenue and the office, where Knudsen usually arrived by seven. It was rare to see him home before midnight, although on most Fridays h
e would catch a plane to Detroit to spend the weekend with Clara and the family.

  On Tuesday morning, December 3, he was sitting in his office buried in files and reports when Ed Stettinius leaned in the doorway. There was an emergency lunch called at Stimson’s home, he said. They were to be there at one o’clock.

  It was an unusually warm day for December, and both men left their overcoats behind as they set out for Woodley, Stimson’s stately home on the edge of Rock Creek Park. Donald Nelson joined them, and in the dining room they found Stimson, Navy Secretary Knox, and an elderly man in a dark tweed suit. He was Cordell Hull, the secretary of state, and he was, in Stimson’s words, “in a very serious and gloomy state of mind.”45

  As Hull spoke, the gloom spread across the room. German sinkings of merchant ships and the bombing of London and industrial centers were slowly pushing Britain to its knees. The British might have ninety days left, Hull said, to hold out alone—and meanwhile Hitler was threatening the Balkans and Egypt. The only way Britain would make it was with more American aid—far more than they had received so far.

  “We need to stir up the country,” Stimson explained, “the business people of this country who are still asleep.” The trio of executives agreed at once. Stettinius would talk to his fellow steel executives; Nelson promised to fly off to Chicago to talk to people there. Knudsen would start at the National Association of Manufacturers meeting scheduled before Christmas in New York.46

  Then Stimson and Knudsen drove across town to another meeting at Treasury with Morgenthau, Jesse Jones, and their staffs. The new British aid requests were out, as were estimates on Britain’s remaining gold and reserve assets. The numbers covered a large blackboard. They showed that as of June 1, 1941, the British government would owe the United States $3 billion. It was also clear that Britain would be at least a billion short.