Keep From All Thoughtful Men
Page 24
The second part of this recommendation is that the agencies responsible for program planning review with the War Production Board periodically [review] their programs, taking account of the over-all demands that they represent upon the resources of the economy. The purpose of this periodic review is to adjust the program to productive capacity as the latter is best seen and forecast at the date of review. This joint analysis by the WPB, responsible for intensifying the productive effort of the nation, and by the agencies responsible for the formulation of the plans upon which the programs are based, should serve the purpose of formulating at periodic intervals the long-range program that is feasible and that can become the basic blue-print to direct the efforts of the productive system.
APPENDIX 5
General Somervell’s Comments to War Production Board Proposals of 31 August 19421
Memorandum for Mr. Nathan, Chairman Planning Committee War Production Board:1. In response to your memorandum of September 8,1942, I have reviewed the memorandum of August 31, 1942 by Mr. Simon Kuznets on Principles of Program Formulation and Planning Committee Document No. 151 by the same author. In document No. 151 the author states:
2. That his data are subject to a wide margin of error. That on the basis of these data production goals and capacities are about:
GoalsBillionsCapacities
1942 $55 $45–$47
1943 87.4 $75–$80 differences ranging from about 10% to 20%.
3. That the real solution lies, of course, in the introduction and maintenance of a more careful system of scheduling and of production control. But whatever decision is made, the paramount task should still be that of better scheduling and production control rather than securing a more feasible set of production objectives.
4. I am in agreement that his data are unreliable. I am of the opinion that the variations between Mr. Kuznets’ “probabilities” and production goals are not percentage wise enough to justify a wholesale change in goals. Only a few months ago this office was urged by your statisticians to increase the goals. I am in complete agreement as to the real solution as offered by Mr. Kuznets. I am in complete disagreement with your conclusion that Mr. Nelson cannot secure proper scheduling within “a reasonable time.” His program as outlined to me will definitely provide for this and is susceptible of accomplishment.
5. Some observations on other sections of the reports may be of interest to you.a. Industrial facilities pages 9 and 10. The construction program calls for about $23 billion of which $17 billion are for strictly military objects such as camps, etc., powder factories, and other facilities having no civilian counterpart, leaving $6 billion for industrial facilities. Obviously these could not be reduced by $5 to $6 billion as stated in the report. There have been too many ex-cathedra remarks on the subject of cutting facilities and some of the action taken as a result has actually reduced production of vital articles and caused some of the “imbalances” to which reference is made.
b. Direct military construction page 11. I do not know Mr. Kuznets’ military background nor what weight should be given to his opinions on either the availability or suitability of existing structures for barracks, etc. The Department will welcome a list of structures that have been overlooked. The statement that there has been an inadequate screening of such projects will bear analysis on the basis of the list.
c. Merchant ships page 11 and 12. This whole paragraph suggests an inadequate basis for the ship building program. If any subject has been thoroughly reviewed, it is the necessity for transports. It is little short of farcical to throw doubt on the size of this program and to suggest that it be “the first in the field of end-products to be subjected to critical scrutiny.”
d. Naval vessels and airplanes. The Navy and air force [sic] will no doubt comment on these sections of the report.
e. Production Strategy and Military Strategy and the memoranda of August 31, 1942. To me this is an inchoate mass of words. To suggest that military members of the super-super board should have nothing to do with production shows a complete lack of understanding of the problem. I should much prefer to trust to proper decisions from the President, Mr. Nelson, and military personnel knowing something of production, than to this board of “economists and statisticians” with military men without any responsibility or knowledge of production to fill in the “missing link.”
6. . I am not impressed with either the character or basis of the judgments expressed in the reports and recommend they be carefully hidden from the eyes of thoughtful men (emphasis added).
APPENDIX 6
Simon Kuznets’ Reply to Somervellʹs Comments on His Feasibility Proposal (Sent under Robert Nathan’s Hand)1
Your memorandum of September 12 concerning Planning Committee Document No. 151, “Analysis of the Production Programs,” and Document No. 157, “Principles of Program Determination,” has been received and read with a great deal of interest. In view of the gravity of the problem discussed in these Documents, I hesitate to take your memorandum seriously. However, I shall attempt below to deal with it point-by-point.
Point 1 (reference to point 2-b in your memorandum). Your summary of Mr. Kuznets’ dollar totals is correct. However, your conclusion from these figures that the variations are not percentage wise enough to justify a wholesale change in goals overlooks the explicit statement on page 4, Document 151, that if the unfilled objectives from 1942 are carried over into 1943 the program in 1943 appears to be at least 25 percent above the total that seems feasible.
Point 2 (reference to point 3 of your memorandum). Yes, about a year ago we did urge an increase in the goals. I am more convinced than ever that it was a good policy, especially toward overcoming the “business as usual” attitude. When we were urging that the sights be raised, we simultaneously suggested over-all objectives which we regarded as feasible. We never pressed for an independent set of claims unrelated to available resources. The fact that we once urged that the sights be raised is no reason for now adopting an ostrich-like attitude when goals are established that are above probability of achievement.
Point 3 (further reference to point 3 of your memorandum). In justification of our conclusion that we are not likely to have a proper scheduling within a reasonable time, I call your attention to the actual production records and schedules of recent months which indicate an intolerable unbalance in the production and scheduling by the Procurement Services of end items in relation to objectives, of complementary items in relation to each other, and of components in relation to end items. Attention has been called to this situation for some months by the Office of Progress Reports of the War Production Board.
Point 4 (further reference to point 3 of your memorandum). Mr. Kuznets qualified his estimates by indicating the margin of error to which they are subject—a practice customary in any thoughtful and well-considered analysis. The degree of unreliability in the estimates stems largely from both the limited quality and quantity of the data derived from your department and other primary sources. The data were the best available to the War Production Board. If you have any information beyond that which we have already received from your department which would enrich our knowledge of this problem, I would greatly appreciate your making it available to us. For two years we have been greatly handicapped in the analysis of problems within our purview by the difficulty of securing reliable data from the procurement agencies on raw material requirements.
Point 5 (reference to point 4-a of your memorandum). The industrial facilities referred to on pages 9 and 10 of Document 151 cover all productive plants, whereas under direct military construction we only include barracks, naval bases, and other non-industrial construction. Your point, therefore, that there is only a $6 billion program for industrial facilities rests upon a misconception of terms. We have and are continuing to over-extend ourselves in the building of fabricating facilities. The action already taken to cut facilities unfortunately held up some expansion of critical raw materials, thus further aggravating a serious imbala
nce which was then apparent. We shall probably be faced with idle industrial capacity because of lack of materials, mainly because sponsors of new fabricating facilities refused to be realistic.
Point 6 (reference to point 4-b of your memorandum). The comments with reference to direct military construction on page 11 of Planning Committee Document No. 151 referred to a report of a special committee set up by Messrs. Nelson, Forrestal, and Patterson to review the construction and facilities program. As I recall, you were present in Mr. Patterson’s office when this committee was set up and, I believe, a copy of the committee’s report was provided to you. A very careful study of the mechanisms for screening projects led to the conclusion that such screening was inadequate. The committee recommended the creation of an authoritative Board to review all facilities, to which you objected.
Point 7 (reference to point 4-c of your memorandum). To our knowledge the War Production Board has never been given an adequate statement of the Armed Service requirements for merchant shipping extended over a period of time far enough into the future to provide the basis for a reasonably formulated merchant shipping program. If such statements are available, we shall greatly appreciate having them made available to us. Scattered information which we have been able to assemble indicates a serious deficiency of shipping space relative to what is needed to move a substantial portion of armament we are scheduled to produce.
Point 8 (reference to point 4-e of your memorandum). I regret that the memorandum of August 31, which spells out the significant problems in relation to objectives and production planning, was not phrased so as to be comprehensible to you. Mr. Kuznets, in Document 157, not only does not suggest that military members of the Board should have nothing to do with production problems, but, on the contrary, insists that they should concern themselves intimately with them. The point is that this Board should make possible joint consideration of strategic, production, and political problems in the broad sense, and that such problems be a matter of concern to every member of this Board, be they representatives of the military strategy groups or production organizations. There is at present no such body to arrive at an aggregate program, taking into account all of these factors. Apparently you have changed your mind since May 15, 1942, for on that date you wrote to Mr. Nelson proposing “a combined Resources Board . . . to include not only representation of War Production Board and the British Supply Ministry but also of the armed services of both countries. The board should consider all available resources and requirements in the light of known strategical objectives with a view to matching resources against requirements so as to best meet these objectives.”
Point 9 (reference to point 5 of your memorandum). I appreciate your frankness in stating that you are not impressed by the character or basis of judgments expressed in this report. Your conclusions from it, however, that these judgments be carefully hidden from the eyes of thoughtful men is a non-sequitur. Also, I am obliged to be frank with you in expressing my disappointment in your reply. The problems discussed are important and their intelligent consideration is urgent. The author of the Documents is recognized nationally as one of the ablest and soundest authorities on our national economy and upon its ability to produce for peace or war. I think it would be most unwise to bar these problems, which have been given careful consideration by the staff and members of the Planning Committee, from people who have responsibility for the success of the war effort and the welfare of this country. (emphasis added)
The basic findings of the report have been overlooked in favor of minutiae, with the resulting failure in your memorandum to deal directly with the important problem of program determination, which you so clearly recognized in your memorandum of May 15. The problems of mobilizing our economy for war are so big as to demand that contributions made by intelligent and thoughtful men be met with the most earnest consideration, not only so that all relevant information can be brought to bear, but also so that the problems can be settled in a helpful atmosphere of mutual trust.
Perhaps only time can serve to bring into proper light the importance of this subject. But I am convinced that in the not-too-distant future thoughtful men will sit down together and work objectively on these problems. The Planning Committee and its staff will be glad to take part in such conferences at any time. In the meantime, we shall continue to work on the basis of our conviction that in mobilizing our national resources for a war effort of this magnitude we must be conscientiously forward looking and deal forthrightly and aggressively with major problems, before they become so critical that they disrupt our National effort. On the other hand, to engage in a “Round Robin” of critical correspondence would be a waste of time.
/s/ Robert R. Nathan
cc: Mr. Donald M. Nelson
APPENDIX 7
Letter from Robert P. Patterson (Under Secretary of War) to General Somervell, Post 6 October Feasibility Meeting1
Memorandum to General Somervell:1. It seems probable that we will be told by WPB that the military production program now outlined for the year 1943 is considerably beyond the capacity of the nation to fulfill within the time objectives. The position of WPB will be that the military requirements (Army, Navy, and Maritime Commission) for 1943 would involve production of some $95 billion and that the maximum military production actually to be expected will not exceed $80 billion. These figures in dollars will be backed up with figures in raw materials and in manpower.
2. It is also likely that WPB will recommend or direct that the production objective for 1943 be reduced to a point within striking distance of estimated maximum production for that year. The figure specified as the aggregate limit of the military program is apt to be between $80 billion to $85 billion.
3. The WPB position, that production objectives ought not to be far in front of estimated maximum production, is believed to be sound as a general rule. Otherwise our scheduling of production cannot represent reality, and it is generally agreed that without realistic scheduling we will continue to suffer from maldistribution of materials, thus cutting down the actual output of finished weapons.
4. If a cut in military production objectives is to be made, it will be borne by the Army and the Navy.2 It is safe to say that with the shipping situation what it is, the program of the Maritime Commission will not be touched, and it is also plain enough that the program for expansion of production of raw materials will not be cut below its present size. The reductions to be made in the Army and Navy programs, in order that the total objectives for 1943 may be brought down to the limit set by WPB, will be for decision by the Joint Chiefs of Staff, presumably with approval of the President. The reduction will be governed by considerations of military strategy.
5. I should suppose, in the light of the most recent military developments, that no reduction in the aircraft program would be considered by the Joint Chiefs of Staff. Supposedly, no reduction in the program for escort vessels, for smaller naval craft, or for aircraft carriers would be ordered. The most likely places for reduction would be in larger naval vessels with distant completion dates, in Army coast defenses, and in antiaircraft guns to be located in our own cities. It may also be necessary to re-examine our ammunition program, to make sure that present requirements are in line with probable needs. Cuts in other programs will probably be rendered necessary, particularly in lines where considerable savings in copper and in alloy steel will be brought about.
6. I should like to discuss the foregoing with you and with General Clay.
/s/ Robert P. Patterson Under Secretary of War
APPENDIX 8
Minutes of War Production Board 6 October Meeting1
Production Board Meeting XXXIV
October 6, 1942
Present: Board Members, Alternates, and Staff
Mr. Donald M. Nelson, Chairman
Vice President Henry A. Wallace, Chairman, Board of Economic Warfare
Mr. Robert P. Patterson, Under Secretary of War, acting for Mr. Henry L. Stimson, Secretary of War
Mr. Jesse H. Jones, Secretary of Commerce
Lieutenant General William S. Knudsen, Director of Production, War Department
Mr. Isador Lubin, acting for Mr. Harry L. Hopkins, Special Assistant to the President supervising the Defense Aid Program
Mr. Leon Henderson, Administrator, Office of Price Administration
Mr. John Lord O’Brian, General Counsel, War Production Board
Mr. W. L. Batt, Vice Chairman, War Production Board