Freedom's Forge: How American Business Produced Victory in World War II

by Herman, Arthur

  Right up to May 13, 1940, Roosevelt was still unwilling to challenge a Congress, and a vast majority of Americans, who were deeply opposed to getting involved in another shooting war, anywhere and under any circumstances. He began thinking about retirement. Two terms as president were enough, he was telling friends; time to retire to Hyde Park and write his memoirs. In January he told Treasury Secretary Henry Morgenthau he didn’t want to run again, “unless things get very, very much worse in Europe.”16

  On May 14 they very much did. Roosevelt realized he had to act.

  Less than twenty-four hours after getting Churchill’s telegram, Roosevelt summoned Morgenthau and Army Chief of Staff General George Catlett Marshall to his office. For the past months, the pair had been locked in a brutal battle over the Army budget. In 1939 defense spending topped $1 billion for the first time since 1918. The armed forces had grown to 334,000 men from 291,000. Still, Marshall knew that was barely a quarter of the 1.2 million the British and French had mobilized to stop the German invasion—and they were losing the war.

  All the same, the Treasury secretary wanted another $6 million cut out of the Army’s appropriations for 1940. He was worried about the United States reaching its debt limit. Marshall was worried about the United States’ survival. He had pleaded and begged to have the money restored.

  Now Roosevelt wanted some answers. What were they finally going to do about the 1940 Army appropriation?

  Morgenthau weighed in again with his arguments about fiscal prudence, hammering again and again on the point of the debt limit. Then Marshall stood up and said, “Mr. President, can I have three minutes?”

  Roosevelt nodded yes.17

  From Virginia Military Institute to West Point to General Pershing’s staff during the Great War, George Marshall had dedicated his life to the Army. He was a soft-spoken, taciturn man, known to be smart and serious but hardly eloquent. Now he gave the speech of his life. France was about to collapse. Then it might be Britain’s turn. The United States would be facing the Nazi empire alone.

  America simply didn’t have enough planes, enough soldiers, enough tanks or artillery or machine guns, he said, to fight a war with Germany.

  “If five German divisions landed anywhere on the coast,” Marshall told the president, “they could go anywhere they wished.”18 If, meanwhile, trouble heated up in the Pacific over Japan’s ambitions there, the situation would be even more hopeless.

  It was time, Marshall concluded, for the president to get serious about arming America for war. He had to get together a group of industrialists to draw up a plan for defense preparation and production. There was not a day to spare. They should be brought to Washington that same week.

  “If you don’t do something,” Marshall concluded, “and do it right away, I don’t know what’s going to happen to the country.”19

  Roosevelt was convinced. Within hours he sent an urgent message to Congress, asking that the $24 million appropriation for the Army be expanded to $700 million. He said, “This nation should plan at this time a program that will provide us with 50,000 military and naval planes…. I should like to see this nation geared up to the ability to turn out at least 50,000 planes a year.”

  The country was stunned. Charles Lindbergh, a key figure in the opposition to getting entangled in Europe and self-appointed guru on all things relating to aviation, dismissed the numbers as “hysterical chatter.” Republican leader Senator Vandenberg of Michigan warned that “it would take more than appropriations to make a national defense.” The president of the Air Transport Association of America said it was “fooling the people” to raise unrealistic hopes about how many planes could be made and when they could be delivered.20

  Meanwhile, Secretary Morgenthau called a meeting of American airplane executives at the White House for May 18. He wanted to know what they thought they could produce in terms of warplanes, and how many.

  Morgenthau’s visitors included executives from Glenn Martin of Baltimore and Lockheed of California, as well as Douglas, North American, and Consolidated. They had taken one kick after another from Roosevelt’s administration, from stripping away their airmail contracts to divesting them of their civilian airline routes, the so-called big breakup of 1934. With the Depression in full swing, they had only a thin trickle of military orders, fifty or sixty planes at a time; it was all that kept them alive. In 1938 they had barely supplied the Army Air Corps with ninety planes a month.21 Now the White House was telling them they wanted planes by the thousands.

  What kind of planes do you want? they asked. Morgenthau could not tell them. They wanted to know exactly how many were needed and when the delivery date would be. Again the Treasury secretary drew a blank. The executives went home, more confused than ever.22

  Meanwhile, news from Europe grew steadily worse. On May 20 the Germans reached the Channel. The British army in France was cut off. Unless they were able to retreat to the closest port still not in German hands, Dunkirk, they would have to surrender. Churchill began to plan for a German invasion. Britain’s odds of surviving, which Roosevelt had privately set at fifty-fifty, now looked like running to zero.

  On the seventeenth, Churchill had drafted one last telegram to Roosevelt. In it he warned the president that if Britain lost the war, it might mean that Germany would seize the Royal Navy, the single greatest armed force in the world. “I could not answer for my successors,” he wrote, “who in utter despair and helplessness would have to accommodate themselves to the German will.” In other words, Churchill was saying, if Britain lost, Roosevelt would find himself facing a German fleet large enough to patrol in force right off America’s Atlantic shore.23

  A man of many gifts and strengths, on policy matters FDR was a procrastinator. He preferred to put off decisions—or at least to keep news about them from going public—as long as possible, especially the big ones. But on May 23 he sensed his options had run out. He called the one person whose advice in this hour he trusted, the person he believed could figure out a way to get America ready for a war it didn’t want and hadn’t yet been declared, but which now seemed inevitable.

  Bernard Baruch was a wealthy financier and longtime Democratic fund-raiser, and Roosevelt’s point man in dealing with Wall Street and big business since the beginning of the New Deal. More relevantly, Baruch had been head of the War Industries Board that had coordinated the effort to arm America during World War I—for which the Nye Committee had ruthlessly raked him over the congressional coals.

  But as assistant secretary of the Navy, the young Franklin Roosevelt had watched Baruch pull that war production effort back from the brink of chaos in the summer of 1917 and impose some rational order on a process that had baffled and frustrated both the American military and American business alike. Now Roosevelt wanted Baruch to do it again.

  Baruch turned him down. He knew no modesty, and he had anticipated this moment for a long time. Back in March 1939, his friend Winston Churchill had warned him, “War is coming very soon.”24 Baruch had briefed the short-lived War Resources Board on what it had to do to get America’s major corporations involved in war production. He had drawn on his experience of securing the right raw materials, organizing the multitude of contracts needed to produce ships, trucks, guns, uniforms, and ammunition, and getting them shipped from points around the country to America’s armed forces.

  But the sixty-nine-year-old financier sensed that putting it together this time was a task too complicated even for him. In the previous war, Baruch’s War Industries Board had managed to build mountains of war materiel. The problem was, almost none of it was ready in time to fight the war. Three million American soldiers had had to fly French airplanes, carry British rifles, and crouch behind British machine guns. Of the 10,000 75mm artillery pieces the War Department ordered, only 143 ever reached the front—and not one American-made tank.25

  The pressures of time, materials, and distribution had been immense then, when America’s economy was strong and growing. They
would be far worse now for an American industrial base that had deteriorated for a full decade. In addition, the country needed to build a modern air force as well as a two-ocean navy—and fleets of transport ships to bring it all into action.

  Someone else, Baruch told Roosevelt, would have to take charge.

  The president wanted to know whom he should call. “Who are the three top industrial production men in the United States right now?” he asked.

  “First, Bill Knudsen,” Baruch replied. “Second, Bill Knudsen. Third, Bill Knudsen.”26

  When Roosevelt announced his plans for 50,000 planes a year, Hitler branded the number a fantasy. He scoffed, “What is America but beauty queens, millionaires, stupid records, and Hollywood?”27

  He was about to find out.

  * * *

  * Airplane makers like Curtiss and Boeing and Glenn Martin had little choice. Military contracts were the only way they could survive during the Great Depression. Boeing, however, felt the full force of the government’s revenge. In 1934 its leading executives, including Pratt & Whitney founder Fred Rentschler, found themselves banned from the industry for five years—unprecedented for an act of Congress. A disgusted Bill Boeing quit the company he had founded back in 1917 from a barn on the shore of Lake Union. His partner Phil Johnson had to find work manufacturing trucks in Seattle, then moved to Canada to operate the airline that would become Air Canada.

  William S. Knudsen, as he appeared as head of Chevrolet, 1921–22.

  My business is making things.

  —William S. Knudsen, May 28, 1940

  ON A FREEZING cold day in early February 1900, the steamer SS Norge pulled into New York Harbor.* It was carrying five hundred Norwegian, Swedish, and Danish passengers looking for a new beginning in a new world. One of them stood eagerly on deck. Twenty-year-old Signius Wilhelm Poul Knudsen braced his Scotch-plaid scarf tight against the cold and yanked a gray woolen cap more firmly on his head.1

  William McKinley was president. Theodore Roosevelt, fresh from his triumph at San Juan Hill in the Spanish-American War, was governor of New York. The United States had just signed a treaty for building a canal from the Atlantic to the Pacific—in Nicaragua.

  New York City was about to break ground for a subway system. And six cities—Boston, Detroit, Milwaukee, Baltimore, Chicago, and St. Louis—had agreed to form baseball’s American League.

  Young Knudsen’s first sight after passing the Verrazano Narrows was the Statue of Liberty, holding her barely discernible torch high in the fog. Then, as the ship swung past Governors Island, objects loomed out of the icy mist like giants from Norse legend.

  They were the office buildings of Lower Manhattan, the first skyscrapers—the nerve centers of America’s mightiest companies. Almost half a century later, Knudsen could recall each one.2

  There was the twenty-nine-story Park Row Building, topped by twin copper-tipped domes and deemed the tallest building in the world. There was the St. Paul Building, completed in 1898, twenty-six stories, or 312 feet from ground floor to roof. There was the New York World Building with its gleaming golden dome. In a couple of years, they would be joined by the Singer Building, rising forty-seven stories; the Woolworth Building at fifty-seven stories; and then, looming above them all, the Standard Oil Building, its 591-foot tower topped by a flaming torch that could be seen for miles at sea—a torch to match that of Lady Liberty herself.

  “When you go to Europe,” Knudsen liked to say, “they show you something that belonged to King Canute. When you go to America they show you something they are going to build.”3 No king or emperor had built these mighty edifices, the twenty-year-old Danish immigrant told himself. No king or emperor had built this country of America. It was ordinary men like himself, men who worked hard, who built with their minds and hands, and became rich doing it. Signius Wilhelm Poul Knudsen was determined to be one of them.

  He was one of ten children, the son of a Copenhagen customs inspector who had made his meager salary stretch by putting his offspring to work. Work for Knudsen had begun at age six, pushing a cart of window glass for a glazier around Copenhagen’s cobblestone streets. In between jobs, he had squeezed in time for school, and then night courses at the Danish Government Technical School. Bill Knudsen was still a teenager when he became a junior clerk in the firm of Christian Achen, which was in the bicycle import business.4

  Knudsen’s first love was bicycles. With one of Achen’s salesmen, he built the very first tandem bicycle in Denmark. In a country with more bicycles than people, he and his friend became minor celebrities. Soon they were doing stints as professional pacers for long-distance bicycle races across Denmark, Sweden, and northern Germany.

  But Knudsen had bigger horizons. He knew America was the place where someone skilled with his hands and with a head for things mechanical could flourish. So he had set off for New York, with his suitcase and thirty dollars stuffed in his pocket. Years later, when newspaper articles described him as arriving as “a penniless immigrant,” he would archly protest. “I wasn’t penniless,” he would proudly say. “I had saved enough to come with thirty dollars.”

  The Norge disgorged its passengers at Castle Garden, the southern tip of Manhattan. Before putting his foot on American soil for the first time, he paused for a moment on the gangplank to gawp at the new world around him.

  A voice barked out from behind, “Hurry up, you square-headed Swede!”5

  From that moment, Bill Knudsen used to tell people, he never stopped hurrying. That is, until he became a living legend of the automotive industry—bigger in some ways than Henry Ford.

  Knudsen landed a job not very far from where he had disembarked, in the Seabury shipyards in the Bronx’s Morris Heights. Ironically perhaps, his first job in America was in the armaments industry. Knudsen found work reaming holes in steel plate for Navy torpedo boats for seventeen and a half cents a day, then graduated to join a gang of Irish riveters as the “bucker-up,” the man who held the chunk of steel behind the hole as the red-hot rivet was hammered into place.

  After a long day at the yards, he would go home by a steam-driven train on the Seventh Avenue Elevated to 152nd Street, where he had a shabby room in a boardinghouse run by a Norwegian immigrant named Harry Hansen. There he would wash away the soot and sweat, then head downtown to the beer gardens along the Bowery or to the saloons on Christopher Street in Greenwich Village, which was still a village. There a nickel bought him a dinner of roast beef, smoked fish, pickles, bread, and sliced onions.6

  “If I had to start over again,” he said many years later, “I would start exactly where I started the last time.” But it was sweaty, brutally tough work with brutally tough men. Bill Knudsen was big, almost six foot four. So his landlord was amazed when he came home after his second day in the yards with welts across his face, and an eye that was nearly swollen shut.

  “What happened to you?” Hansen wanted to know.

  “I got into a fight—with a little fellow,” Knudsen muttered. “If I could have got my hands on him, I would have broken his neck. But I couldn’t. He just danced around and did this—” He waved his arms around like a boxer, and then pointed to his wounds. “And then did this! Where can I learn to do it?”7

  So Hansen handed him over to a fellow Norwegian named Carlson, who taught boxing at the Manhattan Athletic Club at 125th Street and Eleventh Avenue. There Knudsen strapped on a pair of boxing gloves for the first time. Soon he became so adept at the pugilistic art that he was presiding champ of the shipyards—no small feat—and did amateur bouts at the Manhattan Club and all around New York.

  From building ships he graduated to repairing locomotives for the Erie Railroad, and then in 1902 he got the opportunity he had been waiting for. It was a job building bicycles for a firm in Buffalo called Keim Mills. Buffalo was already New York State’s fastest growing industrial town, and John R. Keim was a Buffalo jeweler who had bought himself a bicycle factory. Knowing nothing about bicycles, he left the running of it to
his shop superintendent, a Connecticut Yankee named William H. Smith.8

  Knudsen packed his suitcase and boxing gloves and took the train to Buffalo. If he imagined working in a bicycle plant meant making bicycles, however, he was disappointed. With the new century, the business had fallen on hard times and Keim was turning his machines over to other work. Some of it was for an inventor of a steam-powered horseless carriage called the Foster Wagon. Since Knudsen knew about steam engines, he found himself making engines for Foster.9 In the process, he also learned about machine tools, the machines that made machines, and about toolmaking—and how diagramming out tool-work problems on paper could speed up the manufacturing process.

  After his work with machine tools, Knudsen took a course on steelmaking at the Lackawanna Steel Company plant, and later he and Smith developed their own steel alloy. Soon he was supervising the making of brake drums for a Lansing, Michigan–based company called Reo Motor Company, run by Ransom E. Olds. Olds had been making his version of the horseless carriage since 1896, but by 1904 he was finding plenty of competition from an upstart entrepreneur operating out of Detroit named Henry Ford.

  Smith and Knudsen learned that Ford, who had been in business barely a year, was looking for someone who could make steel axle housings for his cars. They immediately bought train tickets out to Detroit and met Ford himself at his plant on Piquette Avenue. They spoke amid the placid and rhythmic clop of horses’ hoofs and carriage wheels from the street outside, and came back with an order worth $75,000—the biggest in Keim’s history.10