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

by Herman, Arthur

  This was the kind of bold action critics of Knudsen had been urging for more than a year. The results were exactly what Knudsen would have predicted. More than 400,000 auto workers suddenly found themselves out of work, and 44,000 auto dealers around the country had to lay off employees. Many, if not most, had to shut their doors. Instead of speeding the nation toward readiness, stopping civilian car production had led to chaos.16

  Still, the blame fell not on Henderson but on Knudsen. Why hadn’t he forced Detroit to convert to war production faster, to prevent it hitting it all at once—or at least taken steps to protect these workers thrown out of work and their families, who were facing a future without a paycheck? One of the most vociferous critics was America’s best-known protector of the afflicted and downtrodden, the First Lady herself, Eleanor Roosevelt. One day, quivering with indignation, she cornered him at the White House. What was he going to do about this?

  Knudsen gave her a look “like a great big benevolent bear,” she said later, “as if to say, ‘Now, Mrs. Roosevelt, don’t let’s get excited.’ ”

  “I wonder if you know what hunger is?” she wanted to know. “Has any member of your family ever gone hungry?”17

  Knudsen could have replied no, because he had been working since the age of eight, including setting rivets in a Bronx shipyard. He also could have told her that those unemployed workers and their families would soon enough have plenty to do, as the war production schedule he and his colleagues had hammered out began to take effect and jobs became plentiful and workers scarce, but he didn’t. Yet he would have been right.

  Thanks to war work, by D-day total employment in the Detroit area would more than double. The big migraine for Michigan’s war contractors was a worker shortage as their employees headed for more lucrative jobs in the Kaiser shipyards and elsewhere. Without the migration of thousands of rural newcomers from the South and Appalachia—for whom war work represented a huge economic opportunity—it was hard to see how the big production numbers the automakers eventually made could have ever been achieved.18‡

  At the time, however, Mrs. Roosevelt was not mollified. She described her encounter with Knudsen in a speech to a national meeting of 4H directors, adding this: “The slowness of our officials in seeing ahead … is responsible for the whole [defense] mess.”

  Washington insiders sadly shook their heads. If the First Lady felt free to criticize the director of OPM this openly, his days must be numbered.19

  Knudsen remained oblivious to what was happening. When a staffer offered him a list of talking points with which to respond to media critics, Knudsen tossed it in the garbage. He was only focused on the growing demands of his job and on January 16 was huddled with the SPAB people going over the new production numbers. At four o’clock the door popped open and a messenger handed a note to Vice President Wallace. He read it and passed it along to Don Nelson. Then both men rose and announced that they had an urgent call at the White House, but urged everyone to continue the meeting.

  The remaining men talked for another hour or so, then Knudsen headed for his office. John Lord O’Brian, former federal judge and general counsel for OPM, was working down the hall. Like Meigs, O’Brian had been urging Knudsen for months to publicly defend OPM’s record and himself from the flurry of attacks in the press. O’Brian had finally gotten Knudsen to agree to go on the radio and give the American people a concise report on what OPM had achieved in the ten months of its existence, and what it was planning to do next. The live broadcast was scheduled for that evening, on CBS radio.

  Suddenly O’Brian looked up to see Knudsen standing in his door with a torn piece of news ticker paper in his hand and a dazed look on his face.

  “Look here, Judge, I’ve been fired!”20

  It was true. The ticker paper said that President Roosevelt had announced the creation of a new defense production agency, called the War Production Board, and the abolition of both its predecessors, OPM and SPAB. The chairman of the new agency, the news report said, would be none other than Donald M. Nelson.

  As O’Brian read the news, Knudsen asked him, “Let me use your telephone, will you, Judge?”

  “What are you going to do?”

  “Call the president.”

  “I wouldn’t do that,” O’Brian warned. “Sit down, and let’s talk this thing over.”

  But Knudsen had the receiver in his hand. “I’m going to call the president. I tried to get him before I came in here, and Hopkins said he had left his office and he was not to be disturbed. I’m going to call him anyway.”

  O’Brian finally dissuaded him from making the call, sensing Knudsen would never get through. The only other thing left to do was to cancel the CBS broadcast. Knudsen said he had already had his secretary, Bill Collins, make the call.21

  O’Brian sat with the disconsolate Knudsen until the former head of America’s defense effort went home. What hurt most was that the president hadn’t had the stomach to fire him to his face. Just a month ago, two days after Pearl Harbor, FDR had declared, “This country now has an organization in Washington built around men and women who are recognized experts in their own fields … and are pulling together with a teamwork that has never before been excelled.”22 Too late, Knudsen realized Roosevelt’s promises, both public and private, always carried an expiration date.

  One of the first to get word of what had happened was Jesse Jones. He went straight to Knudsen’s Rock Creek house. When one of the Filipino houseboys opened the door, Jones found Knudsen sitting at the piano, disconsolately picking out a tune.

  Earlier Jones had been on the phone with Harry Hopkins, who told him about the firing. “It was done in a brutal way,” Hopkins said. “I know it must have hurt Knudsen deeply. Get hold of him at once and ask him not to make any statement.”23 Hopkins thought they might be able to get Knudsen a brigadier general’s commission to go to the War Department to help out Patterson and Stimson with their production problems.

  That was poor recompense for a man like Knudsen, Jones retorted.

  “I have heard Knudsen make two-minute speeches and I have heard him speak for an hour,” Jones said, “and he is one of the most inspiring speakers I have ever heard.”24 There had to be someplace where he could be useful, not only to businessmen but to “the fellow in overalls.”

  Jones stayed for dinner and tried to get Knudsen to think about the future, but the big Dane was “a brokenhearted man. I think he would rather have died than to have been ejected at so desperate a stage in the war.” Jones coaxed him into a game of cards, but Knudsen’s mind wasn’t in the game, so they stopped. At midnight Jones said he was going home. But first he found himself impulsively picking up the phone. “Give me the White House.”

  With Knudsen listening, Jones got Harry Hopkins on the line.

  “Knudsen will accept a three-star generalship in the Army and report to Bob Patterson to help in promoting production for wartime production.”

  Hopkins was incredulous. No one could give away a military commission bigger than a one-star brigadier.

  “I repeated that it would have to be lieutenant general,” Jones wrote later in a memorandum.25 Jones was used to getting his way at the White House, but it is doubtful his ultimatum would have worked—except that exactly the same idea had occurred to Stimson and Patterson. Both were less than thrilled when they heard the news about Nelson heading the new war production agency; and both agreed that Knudsen had been shabbily treated. It was Patterson who thought there should be a place for him in the War Department’s procurement system as a mobilization troubleshooter. “He’s just the man we need,” Patterson firmly said.26

  So with Jones pushing and the War Department pulling, Knudsen got his appointment—the only civilian in history to be made a three-star general. “If you want me to stand sentry downstairs, or anywhere else, I will do that,” the big man told Roosevelt in their final interview at the White House. They shook hands and parted satisfied, Roosevelt because Knudsen hadn’t made a maj
or stink about his dismissal; Knudsen because he still had a job to do, one that would take him back where he always wanted to be: on the factory floors of America.

  “American ingenuity is at work day and night finding new methods of production…. American industry was raised on a free land, and the spirit of competition that built our machines, which we are now gearing up to a world-record effort, will respond if we all cooperate and keep our thoughts focused on one object—to preserve our American way of life and beat the invaders.”

  The words were from Knudsen’s CBS speech to the nation, the one he never got to give.

  “We build things in America—that is why most of the world is looking toward us, hoping and praying that we will come through. When we think of our boys in the Arctic or in the jungle standing up to overwhelming odds; when we think of our allies, the British, the Russians, the Dutch, and the Chinese, bravely bearing the brunt of the totalitarians; then we know the tide will turn…. America is in production now.”27

  Knudsen was gone. The New Dealers thought they had won. They were too late. America was indeed in production now, with 25,000 prime contractors and 120,000 subcontractors making products they had never dreamed of making, and thousands more to come. And nothing the people in Washington or the Axis could do now would stem the tide. A new “Rule of Three” would take root in the American munitions business. In the first year after a production order, output was bound to triple; in the second, it would jump by a factor of seven; at the end of the third year, the only limits on output were material and labor—whether it was trucks or artillery pieces or bombs or planes.28

  Indeed, for the Axis the issue from now until the end of the war would be trying to catch up. Too late, Hitler realized the industrial monster he faced. In May 1941 he had berated generals and industry leaders alike for their failure to coordinate their wartime needs. Germany was already spending one-quarter of its national product on munitions, and two-thirds of all industrial investment, but Hitler sensed they were falling behind in the race to the production finish line.

  Four days before Pearl Harbor, he had issued a Führer decree ordering German industry to start a program of “mass production on modern principles,” which meant Knudsen principles. Hitler specifically mentioned the example of Soviet factories—but he was really thinking about the United States.29

  In February the Führer named his friend Albert Speer to carry out this production miracle, as armaments minister of the Third Reich. Speer pledged that he would demonstrate to the German people that by converting their entire economy to all-out production of tanks, planes, and munitions, the Third Reich could still win the war. As armaments minister, Speer had the formal power to order which factories would produce what, and to move materials and workers to whatever industry he believed needed them—everything, in fact, that people in Washington wanted for an American production czar. He also had control over wages and prices, and the full resources of Goebbels’s Propaganda Ministry to mobilize public opinion, as newsreels began to show factories turning out munitions in record numbers—just as they were doing in the United States.

  What Speer lacked was Knudsen’s secret weapon: America’s prodigious industrial base built around free enterprise, which now was giving its full attention to war production. Speer was an architect by training. He knew nothing about how to lay out a factory or run an assembly line. Likewise, Germanic pride made many key industries resist the transition to American-style mass production. Tank and aircraft factory workers remained faithful to the traditions of quality craftsmanship, as did their managers, which ensured they never made enough. The German car industry, including the Opel factories the government had seized from General Motors, sat half-idle through the entire war.§ And constant meddling and changes of priorities by the German military ensured that time and energy and materials were lost in a limitless bureaucratic maze.

  Still, by stripping down every civilian factory and seizing every resource he could lay his hands on, and by grabbing every worker he could round up within the Nazi empire, Speer eventually got his production miracle. German production by 1944 surged by nearly half.30 Yet Germany would still lose the war—and in the process Speer would reduce Europe to a barren wilderness.

  Meanwhile, the smoke had cleared around Pearl Harbor. No fewer than eight modern battleships—California, Arizona, Nevada, West Virginia, Tennessee, Pennsylvania, Maryland, and Oklahoma—four destroyers, and two light cruisers were either sunk or too badly damaged to operate at sea. Pearl Harbor’s docks, warehouses, and naval facilities had been bombed and left in flames. More than one hundred planes had been destroyed, and more than four thousand Americans were killed or wounded.

  Someone would have to rebuild America’s premier Pacific naval base, and get it ready for war on a scale no one had seen before. It was an ideal job for the Six Companies and Henry Kaiser. They had already had one sad reunion in January 1942 in San Francisco. Charlie Shea had finally succumbed to the cancer that had been killing him for years. Among the pallbearers were Kaiser, Felix Kahn, Harry Morrison, and Hoover Dam architect Frank Crowe. With Shea gone and buried, they threw themselves into rebuilding Pearl Harbor with a will.

  Taking the lead was Shea’s old firm, Pacific Bridge, which set to work repairing the bombed-out dry docks so that the Tennessee, California, and the other crippled giants could be towed in and repaired. The Japanese bombs had left the battleships wedged against each other in their concrete moorings like broken toys jammed in a drain. Pacific Bridge’s teams joined with workers from Utah Construction to blast each concrete piling to pieces in order to get them out, while being careful not to inflict more damage on the stricken behemoths. Then more teams came in to weld on steel plate patches and make them seaworthy enough to float to safety.31

  Pacific Bridge and Utah had the most taxing job, but Morris Knudsen had the most ghoulish. MK’s engineers, cranes, and bulldozers had been hard at work for more than a year on a massive underground fuel facility for the Navy, gouged out of the side of the mountain overlooking Pearl. It was still unfinished when the Japanese bombers hit. Now one of its massive pits served as a mass grave for hundreds of those killed in the surprise attack.

  Out of destruction and chaos came new order. Within two weeks new runways on Ford Island had been laid out. Docks were being built that would become home to a fleet of warships four times larger than the one destroyed on December 7 (including every battleship the Japanese thought they had sunk that day except two, Arizona and Oklahoma). Thousands of workmen labored round the clock pouring cement, tons of it, all across the harbor—almost half a million barrels’ worth. As it happened, it was Kaiser cement, which Henry Kaiser had been stockpiling on Hawaii since the previous December. Now, it was vitally needed right where it had been stored.32

  It was not there by accident. Three years before the Japanese attack, Kaiser’s partner Harry Morrison saw the Six Companies’ next big opening in government contracts when in 1938 the Navy decided it was time to shore up its presence in the Pacific. It was adding new airfields and submarine bases at various outposts that later would ring with meaning for Americans: Wake Island, Midway, Guam, Cavita, Samoa, and Pearl Harbor’s Ford Island.

  The Navy knew someone good was going to have to build those airstrips and facilities, so it asked the biggest corporations it knew to submit bids. The Six Companies were the first.

  Morrison flew out to Washington from Boise to press their case. White haired and sunburnt in his Stetson and cowboy boots, he strode into the Navy building looking like a character from a John Ford western. The board was impressed with his presentation, but it was a consortium put together by Turner Construction of New York that finally won the contract worth $15 million.

  Morrison shrugged off his disappointment. He knew it was a huge undertaking, and wondered if Turner Construction and its partners were really up to it. They would have to ship materials and heavy equipment thousands of miles to remote parts of the Pacific, then import thousands o
f laborers and construction crews to get the work started. Even with Felix Kahn’s brother Albert supplying plans from his office in Detroit, the executives at Turner might be in over their heads. Eventually they were going to need him, and Henry Kaiser.

  Sure enough, in early 1940—just half a year into the project—Congress decided to triple its size and scope. Worries about aggressive Japanese moves in the Pacific meant the work on Wake, Guam, and Samoa would get top priority, and Turner was crying uncle—their resources were stretched to the limit. The Navy called on the big man from Boise to help out.33

  Morrison in turn divided up the work with his Six Companies partners. Steve Bechtel took over the work on Guam and Cavite in the Philippines; Morrison gave himself Midway and Wake. Kaiser had the easy part, supplying everyone’s cement—although he had an enormous row with the Navy when he proposed shipping the tons of his cement around the Pacific not in bags but as bulk cargo. Navy people, with visions of tons of hardened concrete in the ship holds, were flabbergasted. But Kaiser explained that it would not only be cheaper but meant transport ships could be loaded in one-fifth the time. The Navy still balked. So Kaiser silenced their objections by saying he would handle the shipping and assume the risks himself. And so in October 1940 the first shipments of cement began to arrive in Pearl Harbor, on their way to construction sites thousands of miles away in the western and central Pacific.34

  On Christmas Day—the president had just given Bill Knudsen his new assignment as head of OPM, and the Arsenal of Democracy speech was still four days away—the first ship carrying Morrison’s people appeared off Wake Island. It was loaded with two thousand tons of materials and machines, in addition to towing a four-thousand-square-foot barge laden with supplies and other equipment. In command was veteran MK engineer Dan Teeters, accompanied by his wife, Florence, who would be one of only three women on the island.