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

by Herman, Arthur

  If Knudsen was the big loser, the winner was Donald Nelson as SPAB’s executive director. The creation of SPAB involved a larger personnel shake-up. Ed Stettinius was appointed to replace Harry Hopkins in running Lend-Lease. Knudsen’s right-hand man, John Biggers, was moved to London to oversee that end of the Lend-Lease knot.32 At the same time, the first round of curtailment of civilian production had begun.

  First came the auto industry, with a drastic cut by more than half. Then in October nonessential construction was ordered halted, to divert materials to defense plant construction. On October 21 manufacturers had to stop using copper in almost all civilian products, followed by sharp cuts in refrigerators, vacuum cleaners, metal office furniture, and similar durable goods.33

  Yet in the end, SPAB did no better than its predecessors. The Army and Navy would fight it tooth and nail over what it saw as misplaced priorities in the allocation of materials, as they would its successor agency, the War Production Board. Don Nelson’s efforts to tell them they could not have everything they wanted, exactly when they wanted it, and that a military buildup without a strong civilian sector (one with enough lumber, for example, to build houses for war plant workers or enough heavy equipment to repair roads and bridges) was impossible, would make him the most-hated man on Constitution Avenue.34 As for SPAB, it became another lump in Washington’s administrative alphabet soup until it was washed away by Pearl Harbor.

  Still, Knudsen could look down at his own schedule with some satisfaction. Things were on track. The critical period of retooling was almost over. Although the increase in the output of machine tools was not yet visible, by year’s end the value of machine tools put out by the industry would be nearly double that of 1940—just as Fred Geier had promised. Likewise, the nation’s munitions output would double in the second half of 1941.35

  No one who read the newspapers knew it yet, but the tap was about to be turned on. In January 1941 defense spending rose to triple what it had been during the previous six months. By July it quintupled, and December it jumped another twelvefold. America, the isolationist nation still at peace, was fast approaching Nazi Germany in its defense output. In 1942 it would roar past it.

  Every month of the second half of 1941, $2 billion of munitions were being stamped, milled, riveted, punched, or rolled out. While Walter Lippmann and others bayed about unreadiness and the need to move forward, and while agency heads in Washington were panicking, across the country the war production curve was moving steeply upward. America was poised to produce arms in quantities no one had ever thought possible. The explosive rate of growth Knudsen and his colleagues triggered from mid-1940 to the end of 1941 eased after 1942, although the numbers of planes, ships, tanks, and weapons would continue to explode (see Appendix A). As historian Geoffrey Perret later put it, “Without the accomplishment of those eighteen months who can doubt that the war would have lasted substantially longer than it did and taken more lives than it did?”36

  It was all due to Knudsen and his team. They had created, in effect, an almost self-perpetuating mechanism that fed upon its own individual dynamic elements. Theorists of the science of complexity would call it emergence. Economists have another term: “spontaneous order.” It was the most powerful and flexible system of wartime production ever devised, because in the end no one devised it. It grew out of the underlying productivity of the American economy, dampened by a decade of depression but ready to spring to life. Out of what seemed like chaos and disorder to Washington would come an explosion of innovation, adaptation, and creativity—not to mention hard work—across the country.37

  Now it was up to America’s military to get ready to use it—and that moment was coming faster than anyone realized.

  On a cold blustery Thursday evening in late 1941, Knudsen attended a dinner in the North Lounge of the Carleton Hotel. Vice President Henry Wallace of SPAB was there. So was SPAB’s executive director, Donald Nelson, Lend-Lease’s Ed Stettinius, and Frank Knox, the secretary of the Navy.

  After dinner Knox gave a speech to the assembled distinguished guests.

  “I feel I can speak very frankly, within these four walls,” Knox said. “We are very close to war. War may begin in the Pacific at any moment.”

  It was true. In June, Roosevelt had imposed an oil embargo on imperial Japan, and in July he had frozen Japan’s assets in America—a virtual casus belli if ever there was one for the resource-starved island nation. In October some two thousand Japanese Americans were ordered evacuated from the West Coast. American naval intelligence had discovered that the Japanese were gathering troop transports in their harbors in Indochina—possibly for a strike against British Malaya and Singapore, or the oil-rich Dutch East Indies, or possibly even farther out. On Monday the new Japanese premier, General Hideki Tojo, formally rejected an appeal from Secretary of State Hull for settling America and Japan’s differences amicably.

  “But I want you to know,” Knox continued, striking his fist into his palm, “that no matter what happens, the United States Navy is ready! Every man is at his post, every ship is at its station. The Navy is ready. Whatever happens, the Navy is not going to be caught napping.”38

  Knudsen’s driver picked him up and took him back to his Rock Creek Park home. It was the evening of Thursday, December 4, 1941.

  Three days later, in far-off Hawaii, the roof caved in on Knox’s prediction.

  America was about to begin the test of total war.

  * * *

  * Another was Stalin’s Russia. In 1938 almost one-quarter of all foreign sales were to the Soviet Union, and in 1934 Bryant Chucking Grinder saw more than half of its total sales going to the Workers’ Paradise.

  Photo courtesy of the Detroit News Archives

  America is in production now.

  —William S. Knudsen, January 16, 1942

  A LITTLE BEFORE 2 P.M. on December 7, 1941, the phone rang in the secretary of war’s house. It was the president, who said excitedly, “Have you heard the news?”

  “Well, I have heard the telegrams which have been coming in about the Japanese advances in the Gulf of Siam,” Stimson replied.

  “Oh, no, I don’t mean that,” Roosevelt cried. “They have attacked Hawaii. They are now bombing Hawaii.”1

  The next day, December 8, Adolf Hitler declared war on the United States. War had come to America without warning, and from both directions.

  No one had quite figured out how this was going to work. At the prompting of Undersecretary Robert Patterson, the Army had finally worked out its so-called Victory Plan in September 1941, which for the first time envisaged the United States going full out in a war in the Atlantic and Europe. It still saw Japan as a problem to be put off until at least July 1943.2

  That timetable had suddenly, catastrophically speeded up. Japan’s strike at Pearl Harbor had left eight battleships either sunk or smoldering wrecks, plus two cruisers and four destroyers. On December 10 the first Japanese troops landed on Luzon in the Philippines, after Japanese bombers had flattened the U.S. air force there on the ground. When Knudsen had asked General Marshall back in the summer of 1940 what was the most important thing he needed to get ready for war, he replied without hesitation, “Time.”3 Time had just run out.

  On the Tuesday after Pearl Harbor, a somber Roosevelt summoned Knudsen to the White House. He had already seen Knudsen’s report on production in 1941. The numbers were impressive: 19,290 planes, 50,684 aircraft engines, 97,000 machine guns, 9,924 40mm Bofors antiaircraft guns, 3,964 tanks, and more.4 Now the president said he wanted those numbers accelerated. He needed 30,000 planes in 1942 instead of the 18,000 Knudsen and his team had projected. He wanted 45,000 tanks, and 75,000 in 1943; 20,000 antiaircraft guns; and 8 million tons of merchant shipping instead of the 1.1 million tons produced in 1941.

  “Can we do it?” Roosevelt wanted to know.

  “Yes, sir,” Knudsen answered at once. He and his team had figured out that 45,000 planes of all types for 1942 was not out of the questio
n.

  “And the other stuff—ships, guns, ammunition, all the other things. You can step up them, too?”

  Knudsen assured him he could.

  The next day, Roosevelt told the country in his State of the Union speech that America would produce 60,000 warplanes in 1942 and 125,000 the following year, and threw a couple of zeroes onto the other production numbers, as well. “These figures,” the president said with dripping irony, “will give the Japanese and Nazis an idea of what they accomplished in the attack at Pearl Harbor.”5

  If those numbers didn’t shock Hitler and Tojo, they certainly shocked Knudsen’s assistants. Babe Meigs, his airplane man, was particularly miffed. “I am astounded,” he blurted out, “at the scheduling of 60,000 airplanes and 125,000 for next year. I presume this is done for propaganda purposes.” Every expert had told him 45,000 “is an all-out, almost impossible, figure to shoot at.”6 How in the world were numbers like that possible?

  Knudsen told him what he had reminded the president: that he had promised Roosevelt 18,000 planes in 1941 and exceeded it. They could do this, too, now that the plants, machine tools, and small tools were up and running. “After that’s settled,” Knudsen added, “the manufacturer himself can do much more for successful production than any number of committees that can be set up”—including OPM itself.

  Those numbers were a way for the president to get the maximum effort out of American industry and the rest of the country, to show the rest of the world that America meant business. “Let’s go ahead on the basis of what the president wants,” Knudsen said, “and adjust our plans” accordingly.7 America’s industrial might would do the rest.

  But that wasn’t all that was bothering Meigs. Merrill Church Meigs was the ex-publisher of the Chicago Herald and Examiner, and just four years younger than Knudsen. He had grown up on a farm in Malcolm, Iowa, and worked as a threshing machine salesman for a company in Racine, Wisconsin, but his true passion was for the internal combustion engine. Racing cars had managed to gratify that urge until one day in 1927, when he learned about Lindbergh’s solo flight across the Atlantic. “I had never been on an airplane in my life,” he later said. Now he became obsessed by them. He flew on American Airlines’ first flight from Chicago to New York, and paid the airlines to fly on their regular airmail routes. Babe Meigs became the country’s first great advocate of civilian air travel, running ads in his newspaper and pushing for creating a passenger airport in downtown Chicago, only ten miles from the Loop (known today as Meigs Field).8

  He passed his exam for a pilot’s license in 1929 at the ripe age of forty-six. When rival publisher Colonel McCormick did the same, Meigs did him one better by getting a commercial pilot’s license. He would offer to teach flying to anyone with a passing interest, and often did (one of his students was a senator from Missouri, Harry S. Truman).

  When Knudsen’s original airplane expert, Dr. George Mead, became too ill to continue, Meigs was probably the best-known amateur aviator in America after Lindbergh himself. Babe Meigs’s intimate knowledge of airplanes, his enthusiasm, and his commanding presence and voice made him an unusual but brilliant replacement. “He could make any cloud look bright,” said one Ford executive who worked closely with him.9*

  Meigs didn’t just know advertising and aviation. He also understood the ways of Washington, and worried Knudsen didn’t. So after the meeting, he went down to Knudsen’s office and explained the facts of life.

  “You’ve made enemies here,” Meigs told his boss, “even though you don’t know it.” And now that America was in the war, he said, “if you think the New Dealers are going to let anyone from private industry, and you especially, get credit for this production job—”

  “I don’t care who gets the credit,” Knudsen interrupted, “just so this job gets done.”

  “Yes,” Meigs fired back, “I am sure that is how you feel—but they don’t feel that way. You’re my boss, and I have no business talking to you this way, but I was a publisher before I came here and I know how these New Dealers operate. They have already started to smear you, and they are getting ready to take over this defense program.”

  Knudsen scoffed at the idea. But Meigs reminded him that the liberals’ dislike went further back than just the heat they were applying now. The CIO had fought bitterly with Knudsen when he was at General Motors. New Dealers didn’t like it when he had dared to criticize the Wagner Act.† They especially didn’t like the way he sought to prevent the outright conversion of the auto industry—even though Big Labor’s man on OPM, Sidney Hillman, supported his decision.

  “Whether you believe it or not,” Meigs went on, “they are out to get you—and they are shooting to kill.”

  “Why should anyone be shooting at me?” Knudsen wanted to know.10

  Meigs could see he wasn’t getting through. But CIO conspiracy or not, the criticism of Knudsen and the OPM’s methods reached a crescendo after Pearl Harbor, starting with the unions.

  “Why should the agencies of government in Washington today,” said CIO chief Philip Murray, “be virtually infested with wealthy men who are supposedly receiving one-dollar-a-year compensation?” Such men were only using war mobilization to pad their old companies’ profits and those of their cronies, the critics said. “Patriotism plus 8 percent,” they called it, while others argued that the only way to overcome the conflict of interest was to create a British-style Ministry of Supply with complete powers over all wartime production.11

  Knudsen had a very different take on who posed the main threat to an all-out war effort. He knew that Sunday, December 7, was supposed to mark the start of a nationwide railway strike, until the news from Pearl Harbor intervened.12 He also knew that on December 16 a strike was called at Reuben Fleet’s Consolidated plant in San Diego, where engineers were desperately trying to get a new heavy bomber, the B-24, out the door and into the air—anyone who thought the American labor movement was going to forget its grievances in order to go all out against the Axis was about to get a cold dose of reality.

  Knudsen, however, had no time to deal with critics. On January 2 the Japanese took Manila. Three days later Knudsen booked a plane to Detroit. That afternoon he assembled every automobile executive he could get hold of, including some who had been there for the dramatic meeting at the New Center back in October 1940.

  He said he knew many of them were already under contract for war production, from tanks to aircraft engines. The numbers were rising rapidly; they would rise even faster in 1942. Now he was going to ask them to make one more effort.

  From his pocket he pulled out a memorandum from Undersecretary Patterson. It was titled “Items of Munitions Appropriate for Production by the Automobile Industry.” He produced another from the Navy from the other pocket.

  This was about getting the automakers to figure out ways to produce another $5 billion in additional war materiel that had no obvious connection with car production, Knudsen declared.

  “We want to know where some of these things will flow from,” Knudsen said. “We want to know if you can make them or want to try and make them. If you can’t, do you know anyone who can?”

  Knudsen put his glasses—an old-fashioned pince-nez with a thick black ribbon—firmly on his nose and began reading.

  “We want more machine guns,” he said. “Who wants to make machine guns?”

  A couple of hands went up hesitantly. Knudsen went down the list.

  Who wanted to make turbine engine blades? “Someone ought to be able to forge these things.” More hands went up. And so on, until Knudsen had checked off every item on his list.13

  A secretary recorded each company executive’s name as he made his selection. Knudsen’s friend Charlie Wilson of GM, for instance, pledged to take on some $2 billion worth of contracts, including building tanks at four different plants. Chrysler and Ford took another $2 billion, while Ford offered to help out others with the machine tool bottleneck by supplying certain simple parts for new tools.14

&nbs
p; Knudsen was pleased, but when he returned to Washington, the outrage was palpable. Bureaucrats were shocked; commentators were volubly outraged. The director of OPM was accused of putting the nation’s defense “up for auction,” as Time magazine phrased it. The same voices who criticized what he had done wanted to know why all this hadn’t been done a year ago, so that every company capable or willing to manufacture important war materiel was already hard at work at it.

  Of course Knudsen knew the truth. A year ago, a month ago, America had not been at war. No one had had the authority to compel anyone to do anything, not even participate in surveys of the national inventory of machine tools or available factory space for conversion to defense work.15 And no one had had the authority to tell industries to go ahead and retool for war work in ways that would have involved a breach of existing union contracts. Indeed, doing that would have invited even more labor trouble.

  Indeed, no one had that authority even now. The consequences of Roosevelt’s refusal for the past year and a half to cede authority over rearmament to any single person or agency—his insatiable desire to keep his options open—had finally been exposed. Yet it was Knudsen’s head on the public chopping block.

  Then a new problem arose. Days after Pearl Harbor, Roosevelt had given SPAB some authority to close down unnecessary civilian production. The man in charge was Leon Henderson, who was also the head of Office of Price Administration, and the industry he targeted was everyone’s favorite target, the auto industry. Henderson ordered the complete cessation of new car and truck manufacturing as of January 15. The 450,000 civilian vehicles now in the carmakers’ inventory and the other quarter million still on the assembly line were not to be sold through dealers, Henderson decreed. Instead, they would be rationed out to high-priority users like doctors, hospitals, fire and police departments, and the like.