December 1991 | Volume 42, Issue 8
In a fireside chat on December 29, 1940, Franklin Roosevelt called upon the country to become the “arsenal of democracy,” a phrase that would prove enduring.
The President, coaxing a still deeply antiwar country toward what he thought its real self-interests to be, wanted American industry to gear up for war production in order to help those countries fighting the Nazis and Japanese. He presented the idea as the best way for the United States to remain neutral. Within a year, of course, Japan made the case for neutrality moot and the United States needed weapons for itself as well.
When Roosevelt made the speech, the arsenal was largely empty. The Navy, to be sure, was the equal of any in terms of ships, but it lacked the munitions to fight for any extended time. The Army had only three hundred thousand men, and its equipment was so antiquated that George C. Marshall wrote that its status had been reduced to “that of a third-rate power.”
But the arsenal did not stay empty for long. Just four and a half years after the phrase was coined, the United States had twelve million men under arms. Its navy was larger than all other navies in the world combined; its air force ruled the skies of the entire globe. In those years American industry turned out 6,500 naval vessels, 296,400 airplanes, 86,330 tanks, 64,546 landing craft, 3,500,000 jeeps, trucks, and personnel carriers, 53,000,000 dead-weight tons of cargo vessels, 12,000,000 rifles, carbines, and machine guns, 47,000,000 tons of artillery shells.
The United States accomplished this astonishing industrial feat by turning the world’s greatest free-market economy, virtually overnight, into a centrally planned one. Centrally planned economies have always proved dismally inefficient at producing goods and services wanted by consumers, but they have done far better producing instruments of war. The Soviet Union can’t manufacture adequate examples of some of the simplest consumer items (locally produced condoms, for instance, are known in the Russian vernacular as “galoshes”). Its nuclear-powered missile submarines, however, are highly respected examples of the most complex machines ever developed. When total war had to be fought, total control of the economy was essential.
When Roosevelt first moved to put the economy on a wartime footing, he relied on the alphabet soup that had been so much a part of the New Deal. It didn’t work. The NDAC (National Defense Advisory Commission), the OPM (Office of Production Management), and the SPAB (Supplies, Priorities and Allocations Board) all came into existence during 1940 and 1941 but coordinated poorly with one another. In addition, the separate supply administrations of the Army and Navy continued to operate, often at cross purposes, while they both furiously resisted any outside interference from nonmilitary parts of the government.
Further, American industry, finally booming again after eleven years of depression, was not interested in dancing to Washington’s tune.
After Pearl Harbor Roosevelt quickly decided that a different approach was needed. Although William S. Knudsen and Sidney Hillman were co-heads of the OPM, the office in charge of the effort, in early January 1942 the President called in Donald Nelson, the OPM’s director of priorities.
Nelson had been executive vice president of Sears, Roebuck, at a salary of seventy thousand dollars a year, before going to work for the government at fifteen thousand dollars. Fiftythree years old, he was a large-boned man, a little overweight (at a time, of course, when men were virtually expected to be overweight). His quiet demeanor, spectacles, and thin hair gave him the air, in the words of a contemporary, “of a Middle Western Buddha.” There was nothing Buddha-like about his private life, however. Twice divorced and twice widowed, he was married a total of five times.
“I’m tired of the way this production thing has been muddled,” the President told Nelson. “How would you like to take over the job?”
“I will if I can boss it,” Nelson replied.
“You can write your own ticket,” Roosevelt told him, “and I’ll sign it.”
Nelson, Vice President Henry Wallace, and the President discussed the new government agency that would be created to take over the functions of the earlier ones. Nelson suggested calling it the War Production Administration, but Roosevelt suddenly realized that its initials would then be WPA and knew that that would never do, so he settled on War Production Board instead.
Nelson went back to his office and proceeded to write the ticket Roosevelt had promised him. He gave the War Production Board the powers it needed to turn the United States economy into a war machine. He gave himself as chairman the powers he thought he needed to make it all work. When he took the plan back to Roosevelt, the President signed it as Executive Order 9024. With that, Donald Nelson became, in effect, the CEO of the American economy. He was fitted for the job.
Nelson had been born in Hannibal, Missouri, in 1888. He graduated from the University of Missouri with a degree in chemical engineering and planned to get his Ph.D. But first he went to work as a chemist for Sears, Roebuck, where he stayed for the next thirty years. He soon left the laboratory behind him, moving over into management and rising steadily through the corporate ranks.
During the 1930s Sears stocked in its stores and sold through its catalogue more than one hundred thousand items, ranging from hatpins to prefabricated houses. For years it was Nelson’s primary job at Sears to learn what items were needed by the retail and catalogue operations, find out who could make them or where they could be purchased, and see to it that the merchandise appeared where and when it was needed. It was, of course, the perfect training for heading the War Production Board, for Nelson developed a familiarity with the width, breadth, and depth of American industry that was unmatched by anyone else in the country.
Once he went to work at the WPB, Nelson had three overriding priorities. First, he had to establish what the services and the Allies needed in order to win the war. Second, he had to inventory the raw materials the country had on hand together with the country’s industrial resources. Third, he had to find ways to fill any gaps.
One immediate critical shortage was rubber. Natural rubber came mostly from plantations in Southeast Asia, then largely in Japanese hands. The collecting of wild rubber in Brazil—an industry that had collapsed early in the century, when it could no longer complete with plantation rubber—was revived. In addition, several latex-producing plants that could grow in the United States, such as guayule, were cultivated. But it was synthetic rubber that saved the day. Nonexistent in 1939, our synthetic-rubber industry in 1945 turned out 820,000 tons.
The most difficult job facing Nelson was deciding what was to be produced first and what could wait. The Army Air Corps wanted bombers; the Navy needed pursuit planes. Both wanted them now. But there was not enough aluminum in the early days of the war to produce all the aircraft that were needed. The WPB had to decide which came first and take any resulting heat from the armed services.
The WPB was divided into several “industrial branches,” each responsible for a particular industry and charged with knowing exactly what every plant in that industry could produce, what it was producing at the moment, what it was already committed to produce in the future, and what inventory it possessed. These data were sent up the line to WPB divisions in charge of overall materials, allocations, production, and procurement decisions. It was at this level that the individual orders for equipment and matériel were weighed against one another, approved, given a priority, and sent to the plant that was to produce them, together with an authorization—also given priority—to draw on supplies of scarce raw materials.
Considering the task at hand, it is not surprising that the WPB was soon the largest of the wartime bureaucracies in Washington with more than twenty-five thousand employees by the end of 1942. It used as much paper every day as a good-size newspaper. What is surprising, perhaps, is that the system worked at all, but work it did as the American economy expanded by 125 percent between 1940 and 1944, from $88.6 billion to $199.2 billion.
What is astounding is how little the civilian economy was disrupted by the immense demands of war production and by the fact that about 20 percent of the male population of the country was in the armed forces.
And while certain products (such as new automobiles) were impossible to find and others (such as tires, gasoline, and red meat) were severely rationed, the civilian economy continued to supply the needs of the civilian population at a far higher level than that of the economy of any other belligerent. In the midst of total war the United States economy produced both guns and butter (or at least margarine). Indeed, at war’s end the civilian portion of the American economy was about the same size it had been in 1939.
Donald Nelson’s name is known today only to specialists of the period. But in large measure he was responsible for the American superweapon that won the war. That weapon was not the atomic bomb but the American economy. Thanks to Donald Nelson and his legions at the WPB who did an immensely complex, largely thankless job, the United States was able to win the Second World War using the same, simple strategy Ulysses S. Grant had used eighty years earlier: Assemble overwhelming men and matériel, and pound the enemy into the ground with them.