Another Nelson Needed, Not Necessarily Admiral Horatio Nelson

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Empire of Wealth by John Steele Gordon.

After the attack on Pearl Harbor, the United States dramatically increased military production. The operation was coordinated by Donald Nel­son, who had been the executive vice president of Sears Roebuck and would now head the newly created War Production Board:

“In the first six months of 1942, the [U.S.] government gave out more than $100 billion in military contracts, more than the entire gross national product of 1940. In the war years, American industry turned out 6,500 naval ves­sels; 296,400 airplanes; 86,330 tanks; 64,546 landing craft; 3.5 million jeeps, trucks, and personnel carriers; 53 million deadweight tons of cargo vessels; 12 million rifles, carbines, and machine guns; and 47 mil­lion tons of artillery shells, together with millions of tons of uniforms, boots, medical supplies, tents, and a thousand other items needed to fight a modern war.

“The Ford Motor Company alone produced more war matériel than the entire Italian economy. By 1944 its Willow Run plant was turning out B-24 bombers at the rate of one every sixty-three minutes. Henry J. Kaiser, who at first knew so little about ships that he referred to the front and the back instead of the bow and stern, brought the techniques of automobile mass production to shipbuilding. He reduced the time needed to build a liberty ship — the standardized freighter of seventy-two hundred tons and thirty thousand parts — from 244 days to 42. A total of 2,710 were produced during the war, each, in Roosevelt’s words, ‘a blow for the liberty of the free peoples of the world.’

“At the Tehran conference in 1943, Joseph Stalin, of all people, offered a toast ‘to American production, without which this war would have been lost.’

“The United States accomplished this awesome feat of industry by turning the world’s largest capitalist economy into a centrally planned one, virtually overnight. Central planning has always proved dismally inefficient at producing the goods and services needed by a consumer economy (largely because the consumers have so little say in what is pro­duced). But central planning has done far better at producing the instru­ments of war.

“When the president first moved to put the American economy on a wartime footing, he relied on the alphabet soup for which the New Deal had become famous. 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 1941 but coordinated poorly if at all with one another. In addition, the navy and the army (of which the air force was a part until 1947) continued to operate their separate supply administrations, which often worked at cross purposes with each other and furiously resisted any out­side interference from other parts of the government. And with the American economy finally booming again (unemployment fell below 10 percent in 1941 for the first time since 1931, and continued to fall rapidly all year), American companies were not interested in dancing to any tune called by Washington.

“With Pearl Harbor, the president quickly realized that a different approach was needed. In early January 1942 he called in Donald Nel­son, who was the OPM’s director of priorities. Nelson had been the executive vice president of Sears Roebuck, earning $70,000 a year when he went to work for the government at $15,000. Roosevelt told Nelson he wanted him to take over the job of organizing war production.

Tank manufacture (Chrysler)

“‘I will if I can boss it,’ Nelson replied.

“‘You can write your own ticket,’ the president promised him. Nelson, Vice President Henry Wallace, and the president discussed the shape of the new agency that would 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 decided that War Production Board would have to do instead.

“Nelson went back to his office and drew up an executive order creat­ing the WPB and giving it the powers he thought necessary to make the American economy into a war machine and himself the powers as chair­man needed to make it an effective and efficient bureaucracy. The presi­dent signed the order, and Donald Nelson became, with some exaggeration, the CEO of the American economy.

“He was perfectly suited to the job. Born in 1888 in Hannibal, Mis­souri, he had taken a degree in chemical engineering and planned to get his PhD in the subject, but he went to work for Sears Roebuck as a chemist and stayed for the next thirty years. He soon moved over into management and rose steadily.

“During the 1930s Sears stocked in its stores and sold by catalog more than one hundred thousand items, from hat pins to prefabricated houses. (Franklin Roosevelt had once joked that the way to convince the Soviet Union of the superiority of the capitalist system would be to bomb it with Sears Roebuck catalogs.) For years it was Nelson’s job at Sears to learn what items were needed by the retail and catalog operations, find out who would sell them or make them at the best price, and see that the merchandise got to where it was needed, when it was needed. It was the perfect training for his new job as head of the WPB, for Nelson had developed a familiarity with the width, depth, and breadth of American industry that was second to none.

“At the WPB, Nelson had three overwhelming priorities. First, he had to find out from the services and the Allies what was needed to win the war. Second, he had to inventory the raw materials the country had on hand, together with the country’s industrial resources. Finally, he had to find ways to fill any gaps between supply and demand. …

“The most politically difficult job facing Donald Nelson was deciding what was to be produced first and what could wait. The army air force wanted one sort of plane, the navy needed another, and both wanted them now. But there wasn’t enough aluminum available in the early days of the war to produce all the aircraft needed, and it was Nelson who had to decide who waited.

“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 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, along with requisitions for the necessary raw materials. By the end of 1942 the WPB was the largest of the wartime bureaucracies in Washington, with twenty-five thousand employees. It used as much paper every day as a good-sized newspaper.”

Empire of Wealth  
author: John Steele Gordon  
title: Empire of Wealth  
publisher: Harper Perennial  
date: Copyright 2004 by John Steele Gordon