APPENDIX C: ECONOMICS OF THE PACIFIC WAR – THE NEW DEAL MOBILIZED
December 1941 – August 1945
Management of the US Wartime Economy: Guns and Butter: Inflation and ‘General Max’: Production Line and Management Systems: Productivity, Entrepreneurs, Management, Labor, Blacks and Women: Managing the Scientists: Expansion of America’s Productive Capacity: US Aircraft Production: Tanks, Artillery, Trucks, Ordnance and the Problem of Obsolescence: Electronics, Radio, and Radar: Was the Depression a Boon or Hindrance to US War Mobilization? Japan’s Wartime Economy
Management of the US Wartime Economy: On 6 January 1942, four weeks after the attack on Pearl Harbor, Roosevelt addressed the largest radio audience in the nation’s history. “The superiority of the United States in munitions and ships must be overwhelming… The United States must build planes and tanks and ships to the utmost of national capacity… Speed will count. Lost ground can always be regained - lost time, never. Speed will save lives; speed will save our freedom and our civilization - and slowness has never been an American characteristic. Let no man say it cannot be done, it must be done, and we have undertaken to do it.”1
Ten days later the Roosevelt administration fundamentally changed the way in which the US economy was managed with the establishment of the War Production Board (WPB) by executive order on 16 January 1942. It considerably expanded the powers of the Office of Production Management (OPM) that itself had only come into existence in January 1941, some seven months after the appointment of Donald Nelson, formerly Executive Vice President of the retail giant, Sears Roebuck and Company, as the head of the procurement office of the Treasury in May 1940.
As the manager of Sears Roebuck, Nelson had been responsible for the purchase of tens of thousands of products. His secondment had only meant to be for two or three months but he was soon impressed by Treasury Secretary, Henry Morgenthau’s evaluation of the world situation suggesting that “within a relatively few months the kind of world in which we could live might collapse.”2 Nelson took the hint and, fired up with enthusiasm, stayed on to become one of the war’s key behind-the-scenes orchestrators. As he later admitted, it gave him ‘a grandstand seat… at the most stupendous show in history.’3 Nelson’s experience in buying for Sears Roebuck immediately proved useful to the Army and Navy Quartermaster who he instructed in the dark arts of feeding orders to large numbers of manufacturers at seasonally quiet periods in order to keep prices down.
In spite of the dispersion of orders about 100 major companies received the vast bulk of government contracts. Nelson argued that speed was essential; the nation could not afford to be sentimental about supporting small producers in a time of national emergency. In reality many smaller industrial operations benefitted considerably from the subcontracting of work by larger industrial groups. Nelson was also mindful of the need to control profits; FDR, the New Dealer, did not want to be seen to be lining the pockets of war profiteers. With this in mind, on 3 March 1942 Nelson ordered that contracts should be negotiated not competed for. Cost-plus, fixed-fee contracts would be the norm. A legal limit of 7 per cent margin was imposed, though 5 percent was normal and the Army often got 4 per cent. However, like Roosevelt, Nelson believed that the power of the Army should not become overbearing; as Nelson explained: “We had to get our nation’s tremendous productive machine harnessed… but we had to do it within the framework of American tradition...”4
Compromises between those in the public and private sectors were not solely along the lines followed by Nelson in his move from Sears Roebuck to government. Indeed, the necessities of war sometimes inevitably aligned FDR closely with the industrialist elite; and sometimes this was closer than his New Deal colleagues and supporters would have liked. For example, a Bureau of Budget memorandum noted, “numerous industrialists serving in the (civilian mobilization) agencies sided with the armed services” rather than with the New Deal politicians and bureaucrats. The memo went on to speculate that “they did so in part because they feared the excessive strengthening of the government agencies and they resisted planning devices originating with or supported by academics, other professionals and New Deal Reformers.”5 Arguably views such as this were as much a part of internal power struggles as a dispassionate analysis.
Things were not always clear-cut. For example, making the transition from one side of the public/private divide did not necessarily result in anyone consistently adopting the ideologies of the other side. Morgenthau, the wealthy Jewish son a New York property mogul, educated as an architect and agronomist, became a close confidante of President Roosevelt and was appointed Treasury Secretary in 1934. As a conservative economic thinker opposed to Maynard Keynes, he restrained Roosevelt’s instincts for more full-blooded New Deal economics, and was probably one of the main causes of America’s failure to get back to full production before World War II. However in the devising of war bonds, Morgenthau became the key figure responsible for finding ways for the US government to finance the war effort.
As early as the first quarter of 1940, the Roosevelt administration had realized the US economy needed to be geared up to the possibilities of war. In essence FDR started to prepare some two years before the Japanese attack on Pearl Harbor. Nelson, successively appointed to head the Office of Procurement Management (OPM) and then the War Production Board (WPB), became responsible for public investment in war production, the allocation of scarce raw materials and the prohibition of non-essential goods. Oil products, metals and rubber were rationed. Speed was essential. Roosevelt prepared his public for the national priorities and sacrifices ahead. As Roosevelt said in an later address to the country on 6 January 1942, “The superiority of the United States in munitions and ships must be… so overwhelming that the Axis nations can never hope to catch up with it… all out scale production will hasten the ultimate all-out victory… speed will save lives; speed will save this nation which is in peril; speed will save our freedom and civilization…”6
The WPB provided the organizing bureaucracy for a board that consisted of representatives from the Army and Navy as well as civilian agencies such as the Office of Price Administration and the Department of Agriculture. The WPB managed twelve regional offices and 120 field offices. It grew into a 20,000 strong bureaucracy and by summer of 1942 needed to be rationalized. That this mighty bureaucratic force did not become all powerful in pursuit of the national wartime goals set out by FDR was largely because Nelson failed to control competing agencies such as the Office of War Mobilization, created in May 1943, and the Army and Navy whose leaders demanded a large measure of operational autonomy through the Army Navy Munitions Board (ANMB). In effect the WPB’s main potency came in the allocation of materials while the Army and Navy Departments operated largely independently through the joint ANMB; a freedom that had been effectively handed over in Administrative Orders 2-23 and 2-33 respectively in the spring of 1942.
To a large extent Nelson was overwhelmed by the competing demands of hundreds of governmental agencies. These included New Deal agencies such as the Reconstruction Finance Corporation, which incorporated other agencies such as the Defense Plant Corporation, the Defense Supplies Corporation, and the Metal Reserve Company. Other pre-WPB organizations also fought turf wars; the Board of Economic Warfare and the Office of Defense Transportation were notable adversaries. Powerful individuals such as Winston Churchill’s great friend Bernard Baruch, head of the Office of Lend-Lease, also had the power to thwart the War Planning Board. Even Roosevelt undercut Nelson by the creation of new agencies such as the Petroleum Administration for War and the War Manpower Commission. As output of munitions fell to just half of the target eight months into the war, criticism mounted and inevitably led FDR to listen to other voices. In February 1943 Nelson narrowly avoided being toppled in a putsch by the Army faction led by Stimson who wanted him replaced by Bernard Baruch.
Other moves were afoot to reduce such grip as Nelson did have on the war economy. While Roosevelt needed to get the institutions of war planning in place, the Army itself needed to reform and this perhaps inevitably resulted in a shift of power. When Marshall was appointed to the role of Chief of Staff on 1 September 1939, he had found himself directly responsible for 30 major Army commands and 350 smaller ones. As he put it, he needed “a drastically complete change, wiping out Civil War institutions.”7 He implemented a ruthless streamlining to three commands - Army Ground Forces, Army Air Forces and Army Services of Supply. To this last command he appointed General Brehon Somervell.
The son of a doctor from Little Rock, Arkansas and grandson of a plantation owner, Somervell won a place at West Point where he excelled in every discipline graduating sixth in his class of 107 in 1914. Having served in France during World War I, his career took him down peculiar paths: river navigation survey work for the League of Nations, economic survey for Turkey, President of the Mississippi River Commission, and the Work Progress Administration (WPA) administrator in New York. He gained a reputation as a brilliant manager, with talents that he would bring to the organization of army supply in all its aspects from procurement and economic mobilization to supply. Structurally he moved responsibility for construction from Ordnance to the Engineers and also set up a new bureau, the Transportation Corps. The US Army Air Force meanwhile, which consumed some 30 percent of the War Department’s budget, set up its own supply systems.
As the war developed it was General Somervell, who had concluded a concordat outlining the modus operandi with Nelson’s War Production Board, who increasingly held the strings of procurement strategy. Indeed in a report after the war it was concluded, after the agreement made with the Army, described by Nelson as “the Magna Carta of our operation”, that “the military was relatively unrestrained in its placement of contracts.”8
As Nelson’s grip over the competing military and civilian interests at the War Production Board declined, power over the war economy gravitated toward the Office of Economic Stabilization (OES) following the appointment of James Byrnes, a former South Carolina Senator and Supreme Court Justice. Working closely with the President in the White House, Byrne gained Roosevelt’s confidence by getting a firm grip on the problem of rising prices to the extent that Roosevelt turned the OES into the Office of War Mobilization (OWM) in May 1943. In a piece of classic political chicanery, FDR avoided the sacking of Nelson by forcing the War Production Board to report to the newly established OWM. Eventually Nelson became such a nuisance in Washington that Roosevelt sent him out to China with Patrick Hurley in September 1944, nominally to prepare a report on the Chinese economy. On hearing the news, Treasury Secretary Henry Morgenthau reflected, “You get three years in Washington to find out whether or not you are a schlemiel (Yiddish for habitual bungler).”9 Morgenthau’s assistant, Harry Dexter White, gleefully added, “and if you are you get promoted.”10
The Office of War Mobilization’s remit gave Byrnes awesome power; it was tasked “to unify the activities of the federal agencies and departments engaged in or concerned with production, procurement, distribution, or transportation of military or civilian supplies, materials, and products and to resolve and determine controversies between such agencies or departments”11 Byrnes, who became arguably the most powerful man after Roosevelt in wartime America, was a southerner. Born in 1882 in Charleston, South Carolina, Byrnes, after the early death of his father, was brought up by his mother, a dressmaker of Irish descent. He abandoned his Catholic faith to become an Episcopalian and a lawyer. He moved into politics winning a house seat for the Democrats in 1910. His first run at the Senate was thwarted by the Klu Klux Klan who exposed his Catholic upbringing in the deeply protestant south, but he won the Carolina seat at the second attempt in 1930.
He was an ardent New Dealer. An astute politician, Byrnes spoke for the President in the Senate arguing for much of the New Deal legislation, and in Carolina he pushed through the Santee Cooper hydroelectric dam project. He was appointed an Associate Justice of the Supreme Court in 1941; Roosevelt soon after brought his loyal friend into the White House. Byrnes accrued real power over the economy, not only because of his friendship with Roosevelt and because his office resided in the White House, but also because he had the character to seize it. He was an astute politician and fixer who knew the inner workings of government, could deal with the legislature and at the same time understood how to locate and use the levers of power.
On one occasion in January 1945, when the Joint Chiefs of Staff overruled the Joint Production Committee regarding their demand that the Army and Navy cut their orders for 40 additional oil tankers, Byrnes overruled the Joint Chiefs. Similarly, when the Joint Chiefs tried to influence shipping priorities, the Office of War Mobilization wrote to Admiral William Leahy, Chairman of the Joint Chiefs, making it clear that “responsibility for making final decisions as to the proper balance in the employment of manpower and production resources to obtain maximum war efforts rests with this office.”12
In January 1944 the President even wrote to Byrnes, “You have been called ‘The Assistant President’ and the appellation comes close to the truth.”13 Roosevelt, by now in sharp decline, was delighted. He told a friend, “since appointing Jimmy B… he for the first time since the war began, had the leisure to sit down and think.”14 By contrast at the beginning of the war, Roosevelt occasionally went so far as to intervene directly in planning issues. Famously he pushed through the urgent building of light carriers after Pearl Harbor and was probably quicker than anyone to recognize the importance of landing craft, raising this item to the “most urgent category.”15 Roosevelt was prescient. As the theater chiefs, Nimitz, MacArthur and Mountbatten, planned their respective advances in Asia and the Pacific there were never enough landing craft to go round and they became the frequent subjects of political tugs of war.
Perhaps the largest contribution to the war effort made by the wartime bureaucracies was in the direction of government spending toward new construction expenditure. In 1939 the private sector outspent the public sector by US$3.9bn to US$2.5bn; by 1942 the position was reversed with the public sector spending US$10.7bn to US$2.8bn for the private sector. Regarding the dramatic increases in government power over the economy, Donald Nelson reflected that “business was fearful and labor was anxious.”16 Ultimately however, the Roosevelt administration fumbled its way toward a reasonably efficient allocation of resources and a war economy mobilization to match.
Curiously the administrators and government who had sided with the ‘all-outers’ (i.e. the factions that favored all-out war mobilization) and who were against the industrialists who wanted to maintain their civilian production, switched sides after Pearl Harbor. After the outbreak of war with Japan it was the industrialists who became the ‘all outers’, driven by a potent motivational mix of patriotism and profit perhaps, certainly pushing for more resources for the war effort, while Nelson and his cohorts in government sought to sustain an adequate production of civilian goods. Nevertheless it would be a mistake to conclude that this change in American industry, alongside the rise in the power of military procurement agencies, represented the creation of a quasi-command economy, and wrong to think that it was the root of America’s successful wartime mobilization after Pearl Harbor. Roosevelt always was keen to avoid the Army acquiring “too much power… (the economy) should be left in charge of the civilians.”17 The structure overseen by Roosevelt with the multiple layers of management bodies was a recipe for power struggles and backbiting. Roosevelt liked it that way; it kept the power of the military at bay and him in charge.
Guns and Butter: The impact on employment and economic activity after the outbreak of World War II was dramatic. Unemployed Americans were brought back into the labor force and ten million new workers entered the production industries. The percentage of the civilian population in employment increased from 47.6 per cent in 1940 to 57.9 per cent in 1944 as teenagers left school early, women left home to work for the first time and older employees came out of retirement. Working hours in manufacturing also increased from an average of 38.1 in 1940 to 45.2 in 1944. Inevitably war had a significant impact on America’s economic performance. In the decade to the end of 1941, the US economy had in effect stagnated with the index of industrial output falling from 100 to 98. From 1940 to 1945 US GNP grew from US$100bn per annum to US$213bn per annum. Military expenditures rose to 20% of GDP in 1941. These formal figures do not tell the whole story however.
In spite of the rapid expansion of the US economy in the war years, there was only a modest rise in domestic consumption and living standards. Unemployment of 9.5 percent, about 9 million people, did indeed disappear within a year of the start of the war as defense employment rose from 1.8 million in 1940 to 25.7 million in 1942 reaching a peak of 39.4 million in 1944. The total labor force of the US rose from 54m to 64m in the war. How happy people felt at swapping the insecurity of unemployment for the fears of death or injury in military service is difficult to estimate. As the Austrian economist Ludwig Von Mises famously noted, “War prosperity is like the prosperity that an earthquake or a plague brings.”18 Nevertheless, the losing of wars is rarely conducive to improved living standards let alone psychological comfort. Generally war is more of a plague on those who lose.
Inevitably, given the demands of the war economy, some products were in short supply; gasoline for private vehicles was rationed, rubber based domestic products such as car tires were scarce, while nylons were also in short supply. At the start of the conflict, the War Production Board had to scrounge for raw materials; patriotic appeals were made: “Give us your scrap metal and help Oklahoma boys save our way of life.”19 Economic growth fed almost entirely into war production that represented 2 percent of total industrial output in 1939, 10 percent in 1941 and 40 percent in 1943.
In spite of these supply constraints, rationing and rising prices, it is notable that both the quality and the amount of food consumed by the civilian population grew. Average per capita consumption of food increased from 1,548 lbs in 1939 to1,646 lbs in 1946. Net wages of industrial labor rose by 21 percent from 1939 to 1944, though less fast than corporate profits that doubled. Nevertheless based on these figures, the US war economy in World War II was seemingly able to sustain ‘guns and butter’ rather than ‘guns or butter’ as was the case with Japan at the start of the Pacific War and Germany after 1943 when it moved to a ‘total war’ economy. In Britain too, real personal consumption fell by 30 percent during the war.
Neither did the war dent agricultural production in spite of the withdrawal of some 8 million employees from the farm sector. Shortage of agrarian labor led to a rapid mechanization of the farm sector. Over the course of the war usage of mechanical power and machinery increased by 44 percent.
Adjusted for the degree to which investment and products produced were in effect ‘waste’ (i.e. military equipment), various figures for wartime GNP have been produced. While the US Council of Economic Advisors annual report in 1990 concluded that GNP rose by 189.1 per cent between 1939 and 1945, economic historian Simon Kuznets adjusted GNP to account for war construction and ‘durable munitions’ to show a rise of just 114.3 per cent. It is interesting to note that the stock markets as measured by the Standard and Poor’s Index rose by just 25 percent over the course of the war, mainly in the last two years.
By midsummer 1944 it was clear that America was entering a new age of prosperity. Stores were full of goods, the war was clearly being won, people were in a festive mood. The beach resort of Coney Island was jam-packed. Finding a hotel room at short notice was near impossible. 1944 turned out to be another record year of farm production with output 30 percent higher than the pre-war average. It was the third year of good weather in a row. Manufacturers, now replete with raw materials, started to turn back to producing for the domestic market and ramped up volumes of tractors, harvesters and other farm equipment. In Washington all the talk was now about reconversion; the return to a normalized peacetime economy. The price of farmland jumped by an average of over 42 percent above the levels of the late 1930s; in Kentucky and Colorado values rose by over 70 percent. Frederick Lewis Allen wrote: “The United States is now being swept by a wave of prosperity that makes 1920 look like a ripple.”20
Inflation and General Max: That America’s wartime expansion occurred without it causing significant inflation was made possible by the fact that the US economy prior to the start of World War II was operating at less than 70 per cent of capacity. For example the aggregate level of demand in the construction industry that had peaked at an annual US$11.0bn in 1926 fell to 25 percent of that in 1933 and had only recovered to US$7.0bn in 1942. At its peak of US$13bn in 1943, demand for construction was just 15.3 percent higher than almost two decades earlier.
Thus, according to the US Bureau of Labor Statistics, although prices in the US rose by 11.35 percent in 1942, annual inflation dropped to 7.64 percent in 1943 and to just 2.3 percent in 1945. As Losman, Kyriakopoulos and Ahalt noted in The Economics of America’s World War II Mobilization  “increases in total output and in war material in particular resulted from the employment of previously idle labor and capital, the tremendous expansion in physical capital stock, the reallocation of labor from agriculture and elsewhere to industry, the expansion of the labor force as housewives joined in record numbers, and significant increases in labor productivity.”21
On 28 April 1942 Roosevelt explained in one of his legendary ‘fireside chats’ that the government was “now spending, solely for war purposes, the sum of about US$100m every day in the week. But, before this year is over that almost unbelievable rate of expenditure will be doubled.”22 Price controls would be needed. The President had already sent Congress a seven point plan calling for higher taxes, rationing, limitation of consumer credit, sale of war bonds and price controls. However he declined to go the ‘whole hog’ with Bernard Baruch’s call for forced savings and wage controls. Eventually Congress was forced to pass tax-raising bills to help damp down inflation. However in December 1943 the House watered down Morgenthau’s plan to raise US$10.5bn to just US$2.14bn.
Price controls issued in 1942 under the name General Maximum Price Regulation quickly became known as ‘General Max’. Newsweek noted that US citizens were “about to find totalitarian economic control has entered their democratic way of life.”23 Price control was a struggle however. James Byrnes, who was responsible for the control of wages and prices at the Office of Economic Stabilization, later averred, “the fight to hold wages… and prices was a bitter struggle… Senators, Representatives, labor leaders, businessmen, farmers, and spokesmen for groups of all kinds would present their special cases.”24 When thwarted, special pleaders tried to outflank him by going direct to the President. Byrnes however successfully held the line on inflation. Bruce Caton called him “the super-umpire.”25
For the remainder of the war the US press would rail against the hardships of war. Newsweek predicted that Americans “will have to sacrifice for the duration the traditional way of life.”26 In reality, for the vast majority of Americans who had been forced to suffer the depredations of the recession, the arrival of war and full employment brought benefits to their standard of living. Above all the psychological uncertainties about job security were removed. Millions were saved from the dead-end lives that the extended depression had threatened. Inflation did not ravage incomes and with a few exceptions consumer products were plentiful. As John Kenneth Galbraith concluded, “never in the long history of human combat have so many talked so much about sacrifice with so little deprivation as in the United States in World War II.”27
Although prices rose sharply for a few years after the war the US economy made the readjustment to peacetime demands with relative ease. It was an outcome that would not be repeated following the Vietnam War when ‘crowding out’ by military expenditure ushered in a long period of high US inflation from 1967 to 1997.
“Powerful enemies must be out-fought and out-produced,” President Franklin Roosevelt had told Congress after Pearl Harbor. “It is not enough to turn out just a few more planes, a few more tanks, a few more guns, a few more ships than can be turned out by our enemies. We must out-produce them overwhelmingly, so that there can be no question of our ability to provide a crushing superiority of equipment in any theater of the world war.”28 It was a promise that was fulfilled during World War II with both extraordinary energy and efficiency.
Production Line and Management Systems: In looking at the speed of takeoff of America’s wartime rearmament, perhaps the key differentiator between the US and other industrialized economies was their expertise in production line and management systems. Henry Ford had played the critical role in transforming the production line. Having left Cadillac in 1902 Henry Ford founded his own company the following year. From 1,708 cars produced in 1903, Ford increased production to 308,000 by 1914 catapulting his company to a 60% share of US auto output. The transformative technology was a flow system of production whereby workers fitted standardized parts with custom made tools to a car that travelled along an assembly line.
This idea, commonplace now, was revolutionary at the time. Previously automobiles had been produced in batches with workers moving from one vehicle to another using general purpose tools. Essentially motor manufacture had been a craft production system – barely a step up from the production of horse drawn carriages. Ford thus developed a production system that focused on vertical integration, little handwork, automation, use of unskilled labor in assembly, moderate quality at low cost as well as high volume. Mass production had arrived.
Of almost equal importance were the development of management organization, branding and financial engineering by Alfred Sloan of General Motors. Though he recognized the astonishing rise is volumes and productivity achieved by Henry Ford’s assembly line revolution, Sloan understood that the management of a vast new industry by a one-man fiefdom was fatally flawed. By the end of the 1920s Sloan’s GM brands, Chevrolet, Pontiac and Buick had overtaken Ford in market volumes. Both of these giants, joined by Chryler (Dodge and Plymouth) not only survived the depression but gobbled their competitors market share through pricing and investment in new assembly-line technologies – notably the electric servo-motors that powered conveyer belts that brought parts to the work stations of assembly workers.
Although the technological and management innovations led by Ford and Sloan were broadly disseminated before World War II, America was the only country to implement the new mass technologies for war production. It was the auto manufacturers who led the way. In 1942 Ford, GM and Chrysler ceased to produce motor cars. Trucks continued to be built but the remainder of their capacity and new production was entirely geared to war – to the production of tanks, engines, munitions and most importantly aircraft. The Big Three brought their flow system technological expertise to bear on the militarization of the economy.
By comparison, Germany, Britain and Japan, in spite of their significant increases in military output, remained wedded to the batch system of manufacture – a system that was still semi-craft like in its structure. It is instructive to look at photographs of the aircraft assembly facilities of Ford, Heinkel and Mitsubishi. [See attached] At the Willow Run Plant Ford broke down the assembly of B-24 Liberator Bombers in 20,000 separate operations for the 500,000 parts involved not including rivets (700,000). Previously aircraft manufacture had been a hand-craft business. Significantly airframe weight produced by US employee per month increased from 21lbs in 1941 to 96lbs in 1944. The result was that the rate of growth of US aircraft production during the war was 298% greater than Britain, Germany or Japan.
In addition to transforming the systems of manufacture, the automaker also transformed their users into engineers with at least modest technical skills. Model Ts and their successors, Model Bs and ‘8s’ were designed to be repaired by their owners. The Model T came with a 64-page owners manual written in question and answer form showing how everyday tools could be used to solve some 140 problems that could occur with their cars. The need for self-training increased as the Great Depression made self-help an affordable necessity. By 1941 the US auto industry had trained a generation of mechanical engineers who were familiar with piston heads, carburetors and monkey wrenches. Thus, in a war that was highly mechanized from the outset, America, as soon as it had committed itself to compete had overwhelming industrial advantages.
Productivity, Entrepreneurs, Management, Labor, Blacks and Women: The result of America’s significant advances in productivity in the 1930s enabled the US Army, Navy and Marines to expand their manpower from 189,000 troops, 125,202 sailors and 19,432 marines in 1939 to 8.3m, 3.4m and 0.5m respectively in 1945. It was a massive shift of manpower to the military achieved without damaging the nation’s economic potential. Furthermore it was an armed force that was infinitely better equipped in terms of skills to fight a mechanized war than it would have been in 1930.
Nevertheless the rapid mobilization of the nation toward military production beginning in 1938 required a massive expansion of training in modern skills. The sudden increase in demand caused dislocation even in a labor pool with 10m unemployed. In Harper’s magazine in July 1940, one writer noted: “an ironic commentary on our contemporary economic difficulties is that, with more than ten million unemployed, there is even now an increasing number of fields of activity short of skilled labor.”29 Another observer wrote, “Manpower is like gasoline. There’s plenty but not where you want it.”30
However where opportunities for training were created, thousands rushed forward. When in July 1940 the New York City Board of Education advertised for 10,000 people with mechanical experience to partake in a 10 week refresher course, some 5,000 applicants swamped the recruiting desks on the first day with many waiting in line all night to seize their chance. Within a week 20,000 applications had been submitted. In other cities similar programs were launched to produce a target of 150,000 machinists, lathe operators, welders, aviation mechanics, electricians and radio technicians. Sidney Hillman, the labor representative on the National Defense Advisory Commission, did much of the work of coordination of this training activity. Hillman, a political refugee from Lithuania who arrived in the United States in 1905, was an immigrant who made good and fervently wanted to contribute to his adopted country. The quietly spoken, pragmatic labor leader, a devout supporter of Roosevelt, was a brilliant leader who was able to bring the unions to support the war effort.
The training of labor enabled a rapid increase in the workforces of the major companies that benefitted most from war contracts. At the start of the war General Electric (GE) had 34 manufacturing plants covering 29m sq.ft. but, in addition to increasing the capacity of existing facilities, by 1945 the company possessed 68 plants covering 41m squ.ft. The workforce meanwhile had grown from 76,000 to 170,000 over the same period. War also brought industrial concentration. While small firms benefitted from improvements to the economy, it was the ‘whales’ that gained most. In 1940 the top 100 firms accounted for 30 percent of industrial output; by 1945 the top 100 dominated the industrial landscape with 70 percent of all factory product.
As for the development of the huge cadre of new managers required by the newly burgeoning defense industries, this was done in the time-honored tradition of ‘training on the job’. As Henry Kaiser observed, “You find your key men by piling work on them. They say, “I can’t do any more,” and you say, “ Sure you can. “So you pile it on and they’re doing more and more. Pretty soon you have men you can rely on absolutely.”31 During the war productivity grew rapidly. Frank Bacon, President of Cuttler-Hammer, which moved from controls for trolley cars and elevators to manufacturing control switches and motors for warships as well as magnetic clutches and brakes, increased its number of supervisors from 84 to just 86 even though total employment at the company jumped from 3,000 to 7,000. One of them boasted, “All key men are averaging 50% more hours and 100% more effectiveness.”32
The war also spawned a new type of entrepreneur. Henry Kaiser was typical of the new breed. Having grown his business in the construction era of the New Deal, he grasped with both hands the opportunities presented by the war economy, leaping aggressively into shipbuilding and steelmaking. While disdaining bureaucracy and traditional elite channels, Kaiser nevertheless played the Washington game brilliantly and was one of the first men to employ lawyers and lobbyists to gather information and cultivate contacts. In a babble of flattery Frazier Hunt described Kaiser as “a sort of Henry Ford; he’s colossal; he’s completely unbelievable… He’s the Master Doer of the world.”33 Men of a similar vein included Howard Hughes and William Bechtel. They were the new titans who developed the west of America into the industrial powerhouse that was to become so familiar in the post-war world. California became the new land of opportunity. San Diego, Los Angeles, San Francisco, Seattle and Portland were transformed.
In the work of expanding and training the wartime labor force, Hillman also enlisted the help of Owen Young, the legendary retired Chairman of General Electric and founder of Radio Corporation of America (RCA) who had been Time magazine’s ‘Man of the Year’ in 1930. Young developed a plan for training by US industries working in coordination with the government’s defense agencies. In spite of opposition from the AFL (American Federation of Labor) metal and machinery unions, Young pushed through his program by late summer of 1940. Young’s work would prove vital in getting the US workforce prepared for the vast demands of economic mobilization for the war that lay ahead. He, like Knudson, and most of the corporate executives who flocked to work for the government defense agencies, were so called ‘dollar-a-day’ men who did their duty out of patriotic zeal; not that this endeared them to the many of the Roosevelt ‘New Dealers’ who viewed the entry of businessman into government with deep suspicion.
Neither businessmen nor the New Dealers were able to overcome the racism inherent in the employment of Blacks either in the military or industry. Even in 1943, as the labor crunch grew more serious, there was a reluctance to employ blacks. As Harold Ickes complained “here are ten per cent of our people who are not even considered for defense jobs.”34 Even though blacks in the 1940 census were more American than the whites with 99.4 percent of them being born in the US, compared to just 70 percent of the white population, many managers regarded them as ‘not American’. J.H. Kindelberger, president of North American Aviation, could have spoken for the broad cross-section of industry when he said, “Negroes will be considered as janitors and in other similar capacities… It is the company policy not to employ them as mechanics and aircraft workers.”35
A survey conducted by the Bureau of Employment showed that 51 percent of all prospective job openings were barred to blacks; in the aircraft industry that figure rose to 58 percent. Discrimination was not helped by the exclusion of blacks from many unions. Resistance came as much from American workers as from the union bosses. As one female worker told a reporter, “I just can’t get used to working with niggers. I’ll be so glad when this war is over and we don’t have to do it no more.”36 In some cities race relations deteriorated rapidly and in Detroit, where the Union of Auto Workers (UAW) had 55,000 blacks out of 450,000 members, it exploded into civil violence in the summer of 1942. In the fights and riots that enveloped the city several people were killed, 700 were injured and 1,300 arrested. Millions of dollars of damage was done to the city and in one of the war’s main production centers, output temporarily fell by 40 percent. Similar race riots took place in New York, while in California whites and Mexican Americans fought in the streets.
The same discrimination did not apply to women who were welcomed into factory jobs, skilled and unskilled. An aviation industry that was reluctant to employ blacks recruited 20,000 women in the course of the war. James Kindelberger, who was so damning of black workers, showed no prejudice against women workers; quite the reverse. “Employment of women has been a boon to the aircraft industry,” he averred. He went on to say to a bemused woman reporter, “Listen girl, I’ll deny that I ever saw you. But if you want to know how I feel… If I had my way now, I’d say ‘to hell with the men. Give me the women.”37
The call for manpower in the armed services enabled women to take an active role in areas of the economy that had long been a male preserve. By January 1942 the numbers of unemployed had declined to 3.6m and was falling fast. However a survey showed that there were still 45.2m people available for work; 31.9m consisted mainly of housewives but the remaining 13.9m consisted of women who were willing and able to work. The role of women as welders on slipways producing Liberty Ships has already been noted in Appendix B: Oil, Raw Materials and Logistics: ‘Just start swinging’. Agriculture was another area of the economy where women stepped up. An astonished grower recalled that “The women were the tops. I’ve never seen better pickers or cutters.”38
The aircraft industry soon picked up on the quality of female workers. Frances De Witt was offered a job at Consolidated Aircraft after taking a three-week craft course. She recalled that “I never did anything more mechanical than replace a blown-out fuse. But after the war broke out I wasn’t satisfied with keeping house and playing bridge.”39 At Consolidated a supervisor was surprised to find that production rates improved in units that recruited a large percentage of women. Other industries to benefit included food processing and textiles. Where manual dexterity and attention to detail were required, such as in the assembly of aeronautical instruments, General Electric found that women were the best. An additional advantage of women workers was that they were less likely to leave. At some plants annual turnover of employees could be as high as 100 percent as recruiting officers took men off to war.
Managing the Scientists: It was not just manual skills but also intellectual ability that was put to better use during the war. America’s aeronautical advances were also aided by the efforts of Dr. Vannevar Bush, the son of a Massachusetts preacher who took a PhD in Electrical Engineering at MIT (Massachusetts Institute of Engineering). The energetic, politically astute academic became President of the Carnegie Institution in Washington in 1939 and in August was appointed to the National Advisory Committee for Aeronautics. This cash starved group had developed a creditable performance in the supervision of standards for commercial aviation manufacture but lacked the resources to provide much assistance to the rapidly developing military aircraft sector.
Bush wanted government financing to fund scientists to develop high risk but promising research projects that the military had overlooked. Bush, who had become disturbed at the lack of American efforts to re-arm in the face of the Nazi threat, had initiated efforts to coordinate and mobilize the science community to develop technologies and products to combat the emerging external threats. He hooked up with FDR’s close confidante, Harry Hopkins, with whom he struck up a close relationship and got himself in front of the President. The resulting National Defence Research Committee (NDRC) co-opted top scientists from US industry including Frank Jewett who was president of Bell Telephone Industries as well as the National Academy of Sciences, James Constant, a former chemist and president of Harvard, and Karl Compton, president of MIT.
In 1941 Professor Bush was put in charge of the Office of Scientific Research and Development (OSRD) into which the National Defense Research Council was merged. This body took charge of the management and dissemination of British technology, notably radar and nuclear research. The OSRD also organized the development of nuclear fission technology until it was taken over by the Army Corps of Engineers, code named the ‘Manhattan Project’, in 1942. The ‘Manhattan Project’ spent more than half of the US$3.8bn spent on military research and development during the war. Universities that participated in the research program included MIT, the California Institute of Technology, Harvard, Columbia, Berkeley, Johns Hopkins and the University of Chicago. Enterprise research institutes and departments were also recipients of the government’s largesse including at Western Electric, General Electric, Westinghouse, RCA, Remington, Rand and Eastman Kodak. The scale of US government funding was such that it filtered down into to all areas of the military industrial complex and ended up producing weapons and equipment that were generations ahead of Japan’s by the time that World War II ended.
Another NDRC member, James Conant, president of Harvard, recalled that “I shall never forget my surprise at hearing about this revolutionary scheme. Scientists were to be mobilized for the defense effort in their own laboratories.”40 The result was that Bush managed to finance and co-ordinate US scientists and pushed them forward to unleash a tidal wave of military technological innovation. Bush’s only regret was that it came ten years too late: “If we had been on our toes in war technology ten years ago we would probably not have had this damn war.”41
Expansion of America’s Productive Capacity: While the story of the building of America’s Liberty Ships is perhaps the most extraordinary example of the rapid expansion of America’s industrial capacity in World War II, it was a story that was replicated across the entire industrial landscape. Americans had a genius for mass-production. As German armaments minister Albert Speer commented, “The Americans know how to act with organizationally simple methods and therefore achieved greater results.”42
Japan like Germany had shown in many areas of weaponry that they had skills to produce superior weapons to the Allies; examples were the ‘Zero’ in its early years, the ‘Long Lance’ torpedo, their cavernous submarines and the battleship Musashi, the most technologically advanced warship of its day. However adherence to engineering perfection, bureaucratic sloth, reverence for hierarchy and the restraint of individual initiative held back their economy from ramping up production of standardized products. As Maury Klein in his seminal work on the US war economy [Call to Arms, 2013] has concluded, “The American strength in weaponry lay far more in quantity than in quality, and the military determined to exploit that advantage to the fullest.”43
Apart from the unprecedented expansion of America’s commercial fleet, the US battle fleet also underwent a transformation. Naval historian R.H. Connery has noted, “Between July 1st, 1940 and June 30 1945, the Navy added 10 battleships, 18 large aircraft carriers, nine small aircraft carriers, 110 escort carriers, two large cruisers, 10 heavy cruisers, 33 light cruisers, 358 destroyers, 504 destroyer escorts, 211 submarines, and 82,028 landing craft of all types.”44
It was an expansion mirrored in the production of other weaponry. Between 1919 and 1930, the United States produced 33 tanks; between 1935 and 1940, US industry produced 1,000 tanks; over the next five years to 1945, 87,619 tanks were produced. Given that a heavy tank comprised some 40,000 individual pieces, the effect on America’s subcontracting industry can easily be imagined. Materials in a tank included steel, nickel, brass, copper, aluminum, rubber, leather, glass, cotton, plastic, tin, lead, etc. A basic chassis would need rolled plates, castings, forgings, rivets, bolts, wire, tubing, bearings, motors, instruments and batteries. The $2bn worth of contracts placed by the military in 1942 represented a 2,000 percent increase over expenditure in 1940.
During the course of the war, a US Army that, at the start of World War II, had just 80 semi-automatic rifles and whose standard infantry piece was a single bolt weapon designed before World War I, was provided with 17.4 million rifles and 315,000 pieces of artillery including mortar launchers. The scale of munitions production was equally impressive. The Army Ordnance Department procured 574 million rounds of small caliber bullets (20mm to 40mm), 222 million rounds of medium caliber ammunition (57mm to 105mm) and 29 million rounds of large caliber shells. In addition US industry produced 90 million hand-grenades and 26 million mines.
American expenditure on munitions rose from US$1.5bn in 1940 to US$38bn in 1943 while Japanese expenditure over the same period rose from US$1.0bn to US$4.5bn.
In 1939 the US Army Air Force comprised 400 aircraft. By comparison Germany’s Luftwaffe had over 4,000 aircraft and Japan a similar force. Between July 1940 and July 1945, the US aerospace industry produced 295,000 aircraft of all types - some of them, such as the Boeing B-29 Superfortress, pushing the boundaries of technology and logistics to unprecedented levels of complexity. Production of fighter planes increased from a rate of 7,500 per annum in 1941 to 96,000 in 1944. Bomber production increased from about 3,000 per annum to 35,000 over the same period. By the end of the war America produced 40 percent of all the aircraft produced by all the belligerent nations, allies included, in World War II. The US also transported enough materials to Britain and Russia to make them the second and third largest producers of aircraft during the war.
In response to the massive demand for war matériel, metallurgical industries also boomed. Production of magnesium rose 3,000 percent while aluminum production rose 440 percent over pre-war production from 500 million lbs to 2,700 million lbs in 1943. Demand for chemicals, steel, copper and synthetic rubber grew by similar proportions. As in the manufacturing industry productivity growth was dramatic. Reflecting the amount of pump priming investment done in the New Deal 1930s it is noticeable that while the power industry met a 75 percent increase in demand between 1939 and 1944, generating capacity increased by just 25 percent. Apart from power generation fixed capital investment growth was impressive. Investment in new industrial capacity rose from US$2bn in 1940 to US$4bn in 1941, peaking at US$8.5bn in 1942.
It was not just in heavy industry that demand was lifted. Textile, leather and clothing companies were also significant beneficiaries of the military spending spree. Military demand for socks rose from 25m pairs in 1941 to 73.2m in 1944 while the sale of black leather shoes to the armed forces increased from 3.2m pairs in 1942 to 10.2m pairs in 1944. A similar increase in demand was experienced by the pharmaceutical industry; purchases of sulfadiazine tablets (used to counter urinary tract infections) increased from 35.9m in 1942 to 463m in 1944.
The importance of US manufacturing to the outcome of the war with regard to America’s allies was immense. US production was such that it was able to supply three of the other major combatant nations, Britain, Russia and China, with a high proportion of their weapons. Although ‘Lend-Lease’ is most known for its supply of military equipment to the British, for Roosevelt the maintenance of the Soviets was almost as important. As Hitler’s Panzers swept across the Russian steppes in the summer of 1941, Roosevelt wrote to Henry Stimson, his Secretary of War, “I deem it to be of paramount importance to the safety and security of America that all reasonable munitions help be provided to Russia, not only immediately but as long as she continues to fight the Axis powers effectively.”45
It is estimated that the US produced 60 percent of all the weaponry produced by the Allies in World War II. In contrast to the belittling of foreign assistance in post-war propaganda, at the Tehran Conference in December 1943 Joseph Stalin admitted, “from the Russian point of view, what the President and the United States have done to win the war. The most important things in this war are machines… The United States… is a country of machines. Without the use of these machines… we would lose this war.”46
US Aircraft Production: Unlike other industries, the aircraft business enjoyed relative prosperity in the 1930s and was in comparatively rude health when war broke out in the Pacific. In part this was due to the rapid advance of aircraft technology during this period. There were nine major airframe makers (Douglas, Boeing, North American, Lockheed, Consolidated, Curtiss, Republic, Grumman and Bell) who vied with each other to incorporate the latest advances in aeronautical science into their products. A similar technological race was also evident in aero-engines (Pratt-Whitney, Curtiss-Wright, Allison, which was part of General Motors, and Lycoming) as well as in instrumentation (Kollsman, Pioneer and Sperry).
Companies that did not innovate were quickly put out of business. Even the Ford Motor Company, which enjoyed some success in the post World War I period with Tri-motor, an aviation manufacturing venture, it was forced to exit the market after it failed to reinvest in its initial success. The air industry was considered to be the main high technology growth area of the future and as such attracted substantial sums of venture capital. Towards the end of the 1930s the US aircraft manufacturers were also helped by the global demand for their products and technology. Early rearmament in Europe by Britain and France spurred production. America’s production of 3,800 aircraft in 1938 was far more than its industrial competitors. However the figures are somewhat misleading to the extent that 70 percent of production was focused on recreational light aircraft. The technology and manufacturing processes here were not easily transferrable to the military sphere where tolerances and specifications were much more exacting and ‘cutting edge’.
The other unique aspect of the aircraft industry was its resistance to mass production. The scale of unit demand was still limited enough and the technological developments so rapid that almost all components had low-production runs. The result was that planes were essentially hand built bespoke products with no two aircraft of even the same model being produced identically. There were no assembly lines. Aircraft workers put together an airplane, saw it take-off, then tramped back to their hangar to start another. As Henry Ford’s production guru, Charles Sorensen, noted after an inspection of Consolidated Aircraft’s B-24 bomber factory in San Diego, “Here was a custom-made plane put together as a tailor would cut and fit a suit of clothes.”47
William Knudson sought to change this at a meeting in Detroit in October 1940 where he outlined his vision, which called for the construction of ten huge aircraft production facilities in which the mass production techniques of the auto industry could be brought into play. Knudson, who had been appointed Chairman of the National Defense Advisory Commission (NDAC) and its successor, the Office of Production Management (OPM), had been a senior Ford executive. He was one of Henry Ford’s bright young men who had helped pioneer the concept of moving assembly line production at the Ford Highland plant in 1913 before being lured to General Motors (GM) by Alfred Sloan in 1931. Knudson gave few favors to his previous employers when he forced them to cut automobile production by half with the aim of bringing output down to 1934 levels. Up to 200,000 people would be thrown out of work pending their transfer to the defense sectors. From 1941 onwards Ford, GM and Chrysler would sustain growth building aircraft, army trucks, jeeps, tanks, armored cars and their related engines and parts. General Motors alone would have 60 plants in 35 cities producing military related goods.
Alongside this, employment in the aerospace industry grew from 500,000 to 2m during the course of the war; production meanwhile grew by 3,000 percent. Operating out of offices at Wright Patterson Air Force base in Dayton, Ohio the Anglo-American Joint Aircraft Committee, comprising senior industry executives with British and American air force officers, coordinated joint ventures and standardized products as well as resources allocation. Thus ten new production facilities for airframes and engines were coordinated into newly formed joint ventures.
Manager Plant Location Plane/Engine:
Glenn Martin Omaha B-26
North American Kansas City B-25
Consolidated Fort Worth B-24
Douglas Tulsa B-24
Ford River Rouge Pratt-Whitney R2800
Buick Chicago Pratt-Whitney R1830
Studebaker Chicago, South Bend, Fort Wayne Wright B2600
Wright Lackland, Ohio Wright B2100
Allison (GM) Indianapolis Lycoming P680
Packard Detroit Rolls Royce ‘Merlin’
The war began a prolific investment boom in aeronautical capacity. It was decided to pursue both air-cooled and liquid cooled engines. The large rotary air-cooled engines designed and built by the Americans were more powerful but larger and less aerodynamic whereas Rolls Royce engines were more efficiently packaged. Packard, with orders for 9,000 Rolls Royce Merlin engines, 6,000 of them for the British, invested US$30m for a new plant. However it would take time to build the manufacturing infrastructure. By October 1941there was a backlog of US$2.8bn unfilled orders for airplanes, engine and parts.
New production methods were adopted. Tom Girdler, a director of Aviation Corporation, a 76 percent owner of Vultee, which took over Consolidated Aircraft in December 1941, threw caution to the wind in building a state of the art 3,000 ft aircraft assembly line along which planes moved as parts were fitted to them. A separate sub-assembly plant delivered wings and fuselage. The plant building B-24 bombers operated on three eight hour shifts a day; it worked six days a week and only closed on Sunday because of a shortage of parts.
Similarly Ford’s Charles Sorensen built a bomber plant at Willow Run, some 22 miles west of its giant River Rouge facility, that was a mile long with more space than the entire pre-war capacity of Consolidated, Boeing and Douglas combined. On its floor stood 1,600 machine tools and 7,000 fixtures and jigs. Overhead conveyer belts carried tail and nose sections. It aimed to be the world’s largest aircraft factory capable of producing an astonishing 1,000 aircraft per month though it suffered considerable teething problems not least because of the increasingly irascible, obstinate and interfering octogenarian Henry Ford. A year late, the plant did eventually turn out a B-24 bomber every 63 seconds and produced 8,685 planes in aggregate. Meanwhile at River Rouge, Sorensen was able to increase capacity from 2,000 engines a day, a level thought to be impossible to a peak of 9,000.
In California eight companies including North American, Lockheed, Douglas and Boeing formed a collective called the Aircraft War Production Council that shared everything from technology to parts. In the spirit of war cooperation the job got done without endless negotiations. Thus when the completion of Douglas’s Navy dive-bombers was delayed by a lack of braiding wire used to eliminate static, North American rushed it over from their stock room. The planes went off to play the crucial role at the Battle of the Coral Sea and the Battle of Midway. Kindelberger recalled that often “planes were delivered ahead of schedule because we threw everything we had into the pot.”48 The issue of post-war competitive advantage was shelved for the sake of the war effort.
In the first year of the war America managed to produce 47,826 planes and came close to doubling that number with 85,898 built in 1943. Between 1939 and August 1945 America produced over 35 percent more aircraft than the Axis powers combined; 303,713 aircraft compared to 111,787 for Germany and 76,320 for Japan. (Remarkably Great Britain produced 131,549 aircraft, significantly more than Germany.) Of America’s total, 99,950 were fighters versus just 30,447 produced by Japan. The weight of production in bombers was even more crushing; America produced 97,810 bombers against 15,117 for Japan.
Knudson’s pragmatic approach worked well though it did produce an ‘ossification’ in product development; when a standard design was signed off and set into mass-manufacturing process, it gradually became outdated. At intermittent stages a new design and manufacturing facility would have to be signed off before an old product could be ditched. This was not a problem confined to the United States. Japan with far fewer resources was much less able to progress along the technological curve than its main enemy. The classic example was the ‘Zero’ that started the Pacific War as the dominant fighter but quickly became obsolete. The addition of more powerful engines and guns simply made it less light and less maneuverable, the attributes that had made it such a brilliant fighter plane in the first place.
Tanks, Artillery, Trucks, Ordnance and the Problem of Obsolescence: The problem of obsolescence in mass manufacture of military equipment is illustrated by the manufacture of tanks. The M-4 ‘Sherman’ tank was put into mass manufacture in 1942. This highly effective weapon with the most modern specifications was a world-beater when it was first produced. However by the time of the Normandy landings in 1944 Sherman tanks were massively outgunned by the more modern German designs, developed in response to the intense fighting with the Soviet Union on the wide-open plains of the Russian steppe. It was generally estimated that it took five Shermans to kill one Panzer; a German ‘Tiger’ tank cost more. When this was discovered the Tank Ordnance Centre rushed a new heavy tank design into production, the M-26 Pershing, with which the American Army was able to push across the Rhine.
As with aircraft, artillery, the tank’s static cousin, had seen a quantum progression in technology across the twentieth century. The development of high tensile steel and complex alloys had allowed the construction of barrels that could withstand the shock of ever increasingly powerful propulsive explosive that had been developed by the chemical industry. These technologies were combined with huge advances in milling and casting techniques to produce previously unheard of fine tolerances. Thus by World War II, a medium weight artillery piece could fire a 30lb projectile for 12 miles to hit with an accuracy of 30 yards. It was a measure of their importance that in World War II, excepting death by disease particularly in the Pacific War, artillery accounted for 82 percent of casualties.
Given this effectiveness, it is perhaps not surprising that munitions was the single largest category of military procurement for the American forces, exceeding in cost even shipbuilding or aircraft programs. The number of guns produced was staggering; heavy field guns (155mm and above), 7,803; tank guns, 156,547; anti-aircraft (60-120mm), 49,775; light artillery (37-105mm), 54,532; mortars (60 – 155m), 105,054. The number of tanks produced was 2,464 heavy (50+ tons), 57,027 medium (30+ tons) and 28,919 light (12+ tons). The manufacture of trucks exceeded these numbers by a large factor. US manufacturers produced 812,262 heavy trucks (4+ tons), 428,126 medium trucks (2+ tons) and 988,167 light trucks (0.5 tons). The increased rate of production was equally impressive. In 1942 American factories churned out 24,997 tanks and in the following year increased the output to 29,497. By comparison Japan produced just 2,515 tanks during the course of the entire war, though it needs to be added that most American-produced tanks were not deployed in the Pacific Theater which was topographically poorly suited to tank warfare. America manufactured 257,390 antitank and antiaircraft guns compared to 13,350 produced in Japan. US automakers rolled 2.38m trucks off their assembly lines while Japan managed 165,945. The United States also made 6.5m rifles to use the 40bn bullets produced. In some areas America may have lacked the technological finesse of their German and Japanese counterparts but they made up for this with the production of reliable war matériel in vast quantities.
Quantity aside, tank technology also underwent a transformation as the United States, left well behind in the technological arms race into the 1930s, began to hit its straps two years into the war as investment in research and development turned into product. In the early stages of the war the British found that the 37mm guns on the American tanks they used in North Africa were massively outmatched by Germany’s technologically more advanced weapons. The lack of inter-war technological investment in armaments was clearly shown up; US industry and the Ordnance Department scrambled to develop competitive products with the development of 50 and 75mm caliber cannons for mobile operation. Prompted by a visit by a Captain Crawford of the Ordnance Department, in 1941 Westinghouse Research Laboratories developed gyroscope stabilizers that enabled tanks to fire accurately while on the move. Previously when traversing rough terrain, the shaking of the gun platform was so violent as to make accurate fire impossible; tanks had to come to a halt to fire. Tests showed that an experienced gunner could hit 70 out of 100 times with the new device fitted to a tank moving at 15mph while no hits were recorded without the stabilizer. In June 1941 Westinghouse signed a contract to produce 55 stabilizers per day, a figure that was increased to 125 per day after a decision to increase tank production to 1,800 per month.
Innovations with technically less complex weapons also proved a success. Time magazine reported that “The Jeep positively will not fly but there is a widespread notion in the Army that it can do anything else.”49 It’s four wheel drive combined with an engine providing just 42 horsepower could cover rough terrain at speeds up to 60 miles an hour. The all-purpose vehicle could carry troops, weapons, field communications equipment and cargo, and pull light artillery pieces. An initial order for 4,500 vehicles was soon followed by one for 16,000 units at a cost of US$900 each.
Electronics, Radio and Radar: Throughout the Pacific War, America maintained a significant advantage in radio technology and communications. A major leg up to the development of these technologies had come in World War I when the American Army in Europe, despairing of the French telephone system, had built its own telephone network under advice from AT&T.
Radio expertise developed during that war created a pool of patents that were turned over to a newly created business, Radio Corporation of America (RCA). The President of RCA, David Sarnoff, rapidly grew the consumer and retail possibilities of the new technologies and, along with competitors, invested heavily in research and development. The result was that by 1940, there were 26m radio sets in America and an additional 4m radios installed in automobiles. At the World Fair in New York, opened by President Roosevelt on 3 April 1939, RCA demonstrated a wondrous new consumer device that they called a television. By end of the year RCA had also established the world’s first television broadcasting station. GE built a kitchen with talking devices and the Westinghouse stand featured a robot and mechanical dog. America was in the process of developing a mass consumer electronics industry. The result was that America, by comparison with Japan or indeed any other country, possessed a broad pool of technological expertise at all levels from research, manufacture, usage, repair and maintenance.
The depth of technical expertise in these areas was a boon to the development of radio communication for ships and airplanes as well as radar detection equipment. Also ‘radar was adapted for a variety of uses from aircraft-recognition responders, proximity fuses, detection countermeasures, and range finding.’50 With substantial private resourcing of investment in these new technologies America had the technical and management expertise to mass produce military products in the radio and communications sectors.
By 1940 Westinghouse alone was able to offer 19 different radio products. When the Navy asked for ten-band radio transmitters for carrier-based bombers, Westinghouse developed the AN/ARC that contained 4,600 precision components in a container no bigger than a humidor. Meanwhile GE supplied nearly every Army bomber with a 75-watt radio called SCR-287. A compact radio with five frequencies of which four were pre-tuned, the SCR-287 was used in tanks, airplanes and battlefield command posts. GE also developed the ultra-robust, waterproof TBX radio used by Marines in amphibious landings.
Radar sets for the Navy were developed from the spring of 1941 when they commissioned the building of 400 shipboard units. Within six months the first sets were deployed on US destroyers. Air based ASB radar units were also manufactured for use by carrier planes. Westinghouse eventually produced 18,000 units and coped with over 2,000 component and design upgrades. Radar would eventually play an invaluable role in the critical undersea war. In the air the development of radar chaff and the production of electric noise to jam enemy radar also proved invaluable in reducing bomber losses. The linkage of GE’s SCR-584 radar to automatic gun directors on anti-aircraft weapons also helped stem the losses caused by kamikaze. Expertise in radio and electronics was also helpful in the development of mass production techniques for essential war devices such as timers and fuses. GE developed a plastic fuse and would eventually produce 29m of them at a cost of 25c each, compared to the one pound aluminum fuse costing over a dollar.
In some areas British technology was more advanced but, in the wake of ‘Lend-Lease’, Churchill felt obliged to hand over to the US Britain’s intellectual capital in the form of pioneering radio technologies. America had the funds and manpower to realize their full potential.
Was the Depression a boon or hindrance to US War Mobilization? In looking at the US economy in the context of the operation and eventual success of the prosecution of World War II, it is interesting to note that in terms of the development of US military capabilities the depression of the 1930s had good and bad consequences.
First, although the 1930s has often been thought of as a lost decade in the history of the US economy, in reality it was a decade of rapid development in technology and applied engineering. These factors that significantly raised the US economy’s potential for economic growth, combined with a large amount of spare capacity in the US economy, laid the preconditions that made possible the rapid expansion of the American war economy after 1941. As Alexander Field convincingly argues in Economic Growth and Recovery in the United States: 1919 – 1941 , the 1930s “made possible the successful prosecution of the Second World War.”51
The hindrance of the depression was that despite technological advances in the commercial sectors, very little had been transferred to the military sector. Desperately under resourced, by the time that Roosevelt woke up to the escalated international crisis in 1939, US defense capabilities were wholly inadequate both in scale and technological sophistication. The United States, by far the world’s largest economy in 1939, was a military pigmy with armed forces less powerful than nations such as Belgium and Holland. From this date onwards the US began a desperate rush to play catch-up.
By 1941, when Japan’s intent to adopt the ‘go-south’ strategy became clear, combined with its signing of the tripartite pact with Hitler, it led Roosevelt to the conclusion that war was all but inevitable. During the course of that year the President pursued two strategies. He attempted to arm twist Japan into retreating from their ‘go-south’ strategy and in particular their invasion and occupation of French Indochina. In addition he demanded their pull back from China. Both he and the Japanese knew that the US bargaining chip was only the potential, not the actuality of US military power.
When Japan’s access to oil was embargoed in July 1941, an act of war in all but name, Roosevelt and his advisers knew that Japan would almost certainly have to fight; FDR knew that the possibility of a complete surrender by Japan to US terms was the most unlikely of long shots. At best Roosevelt hoped to gain 4-6 months delay to the opening of hostilities that would give time to propel the US economy further along the road to rearmament. Even spring or summer of 1942 would have been too soon however, because it took until the first quarter of 1943 for the avalanche of war material to arrive. What was most remarkable in the economic transformation that was eventually achieved was that America managed to move to a war economy more rapidly than its totalitarian enemies.
In spite of the intrigue, machinations and power games, which was the grist of daily life in Washington during the war, somehow, Morgenthau, Knudson, Baruch, Eberstadt, Nelson, May, Jones, Somervell, Hillman, Ickes, Byrnes and the rest of the bureaucrat ‘Generals’ in Washington managed to cobble together a system that worked. Whatever the politics and internecine feuding involved, the astonishing outcome of the American war machine, as shown by the production and assembly of the largest array of war matériel ever produced, was testament its success. Nonetheless, if the bureaucrats set the preconditions and organized the enabling of war production, America’s astonishing productive advances in World War II were ultimately achieved by the energies of the US private sector and its citizens.
In this transformation, the depression was actually a boon to America. Militarization of its economy was cost free in the sense that spare capacity of labor, capital and equipment could be turned to war endeavor without the difficult ‘guns or butter’ choices faced by Germany or Japan. In spite of much harrumphing by the US press, American citizens were only a little inconvenienced by war, except for the hardships and possibility of death and injury for those serving on the front lines in the army, at sea or in the air. Given that some 12.2m Americans served in the armed forces in World War II of which just over 400,000 died there was a 1:30 chance of not surviving war. For the twenty-nine out of thirty who survived, as the war progressed, living standards actually rose, particularly after 1943.
Rearmament and increased prosperity were also achieved with minimal impact on the level of inflation. In part this was enabled by the absorption of the spare capacity provided by the depression and also by the remarkable productivity gains achieved through the widespread application of technology and the techniques of mass manufacture developed largely in the auto industry. Exceptionally in World War II, unlike in subsequent wars in Korea and Vietnam, there were no deleterious consequences for living standards to turn American citizens against its foreign military expedition to regain its imperial assets and to crush Japan, its Asian geopolitical competitor. Almost uniquely in the annals of warfare, America’s militarization of its economy and the fighting of a global war from 1941 - 1945, on a scale never seen before and unlikely ever to be seen again, was achieved with a rising tide of economic benefit to its citizens.
Japan’s Wartime Economy: Japan’s commercial fleet started to lose 30,000 tons per month within six months of the December 1941 start of the war (360,000 tons annual rate) and 50,000 tons per month by 1943 (600,000 tons annual rate); at these levels losses were unsustainable. If naval and army cargo ships and warships were included however, the alarm bells should have sounded much earlier. In November 1942, Japan lost an aggregate tonnage of 151,000 tons of shipping of all types, which amounted to an annualized figure of 1.8m tons, some 400 percent more than Japanese shipyards had the capacity to produce. Annual net tonnage losses for all shipping was to rise from 233,000 tons in 1942 to 943,000 tons in 1943 and 2.1m tons in 1944.
It would be a mistake to think that, just because the Japanese economy was running at full capacity in 1941, their capacity to produce military goods had peaked. From 1939 to 1944, annual Japanese production of aircraft rose 630 percent from 4,467 units to 28,180 units. Ultimately military production was able to grow because the Japanese government imposed a draconian reduction in living standards on their citizens. By 1945 the calorie intake of the average Japanese citizen had halved over the course of the war and the population was well on its way to starvation. The Japanese economy was also running its stocks of raw materials down to zero. The ‘end of run’ nature of the Japanese military production in 1944 was demonstrated by a complete collapse in production across all sectors in 1945.
In 1941, Japan, the world’s sixth largest economy, with a US$196bn GDP, had already committed itself to a total war economy with China, the fifth largest economy, GDP US$250bn. With its economy running at full capacity and eating into the living standards of its citizens, Japan’s leaders embarked on a strategy to go to war with the US, the world’s largest economy, US$1,100bn and Great Britain, at US$344bn, the fourth largest. In the background was the Soviet Union, perhaps Japan’s most natural enemy, and the world’s third largest economy (US$359bn), with whom Japan had negotiated an uneasy neutrality as recently as 1939 after their defeat by the Soviets at the Battle of Nohoman.
Against this collective economic might of the Allied powers (US$2,053bn), Japan and its allies, Germany (US$412bn), Italy (US$144bn), Austria (US$29bn) and Vichy France (US$130bn), had a collective GDP of US$911bn. The Allies not only had an aggregate GDP more than double that of the Axis but, unlike Germany and Japan, the Allies could coordinate their productive assets. By comparison Japan was effectively blockaded from Germany. As the war continued and the economies of both Germany and Japan degraded, the Allied superiority vis-à-vis the Axis powers grew to 3:1 in 1944 and 5:1 in 1945. Uniquely too, America could finance its militarization at almost no cost to the domestic standard of living. In the course of the war the US government spent US$300bn (in 1944 dollars) with little impact on inflation. In modern day terms the American government’s spend was US$9.6bn over four years at 2007 prices. (To put this in perspective, the US government during the ten years of the Iraq-Afghan Wars 2003 – 2013 is estimated to have spent US$6.0bn at current day prices.)
Conclusion: It is often written that Japan had no possibility of winning a war against a vastly larger US economy. Indeed the US economy in 1941 was some nine times larger than that of Japan. This was not the whole story however. Firstly, in 1905 Japan had defeated an Imperial Russia that was a significantly larger economy. Secondly in 1941 Japan was not pitted against Japan alone. In aggregate the Allied powers had double the GNP of the Axis powers – a significant but not overwhelming advantage. Lastly at the end of 1941 the US economy was not fully geared for war – indeed, as has been noted in Chapter 4, the US Army was scrambling to make up for twenty years of isolationist neglect – its main ally Great Britain likewise.
In terms of preparedness Japan stood at a significant advantage. However, Japan too had problems. Its economy was operating at full capacity to provide for the full-scale war in which it had been engaged in China since 1937. A squeeze on Japan’s domestic consumption was already apparent. Critically, Japan did not have the wherewithal to sustain a long war. Even internal estimates by the Institute of Total War Studies concluded that Japan could only sustain a war with China for a further five years; a war with the West in addition was economically sustainable for just two years.
Ultimately Japan’s failure to execute a war strategy that would bring the United States to the negotiating table within two years, meant that Japan’s economy was stretched to breaking point after 1943. It was only the sacrifice of the living standards of the Japanese on the home front that enabled the war effort to stutter on. All the time the US economy was getting stronger while the Axis economies were being dismantled. From a 2:1 GNP advantage in 1941, the Allied powers established a 4:1 advantage in 1944 and a 5:1 advantage in 1945. From this point American victory was inevitable as long as Americans sustained their will to fight – as indeed they did.