Freedom's Forge (15 page)

Then there were the tax laws. Every American company’s investment in new plant construction, tools, and other physical resources necessary to produce a plane or tank or aircraft, even with a contract, took sixteen years in order to be fully deducted as a business expense. Knudsen saw at once that these amortization rules (Knudsen had to get John Biggers to explain to the president and Cabinet what amortization meant) made the short-term investment in plant, property, and equipment necessary for the defense buildup almost impossible.
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“Mr. President,” Knudsen said, “do you want statistics, or do you want guns?” If the latter, he explained, then amortization should be drastically shortened to five or six years. Hitler’s German companies, he pointed out, worked on a seven-year rule. Companies would get their investment back quicker, and be more willing to take risks on manufacturing things that had no commercial value to them but were crucial to the defense effort.

“The government can’t do it all,” Knudsen told Roosevelt. “The more people we can get into this program”—in other words by offering incentives instead of threats—“the more brains we can get into it, the better chance it will have to succeed”
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Knudsen also insisted that a “letter of intent,” meaning an official War or Navy Department letter stating the government’s intention to do business with a particular firm before a formal contract was drawn up and signed, should be enough to get a company advance funds from their bank—and to protect the company’s out-of-pocket expenses in case the contract never went through. It was a practice he borrowed
from the British, and critics would hound him for it, decrying the fact that he had abandoned the costly, time-consuming process of competitive bidding. But Knudsen sensed that the time for slow, deliberate action was over. The government had to be willing to work with those companies willing to work with it.
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Roosevelt was deeply dubious. He pointed out that never in the history of the United States had such a provision been made for government contractors. Knudsen replied it was time to shatter precedent. Otherwise, he said, they might never get a job of that size done in time. Roosevelt’s 50,000 planes a year would remain only a pipe dream, while Hitler’s Luftwaffe ruled the skies over Europe.

With Stimson firmly backing Knudsen, the White House at last conceded. In the next weeks and months, people would catch a glimpse of Knudsen cornering some industrialist after an NDAC meeting and saying, “George, in that plant of yours—Plant Number Four, I mean—I’ll make sure you get the tools, see?” There would be a grateful handshake, perhaps an appreciative pat on the back.

Then at parting, “I’ll see that you get a letter. I won’t forget.”
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At the same time, everyone else’s attention was on what was happening in Britain.

On any given day in July 1940, Winston Churchill half expected to see German paratroopers landing on the outskirts of London. On July 12 there was a serious discussion in the War Cabinet about whether the government should encourage the populace to attack German invaders with scythes and stones.
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Meanwhile, fighting off German air attacks on British shipping in the Channel became a top priority. In Washington the British demands for war materiel, especially planes, came with alarming frequency. Knudsen was forced to confront a new truth. American industry was going to have to satisfy the needs of war on both sides of the Atlantic at once.

Matters came to a head on July 23 at a meeting in the Treasury Building. Knudsen began peppering the British Purchasing Commission’s Purvis with questions about how many planes the British would need, and when. Purvis gave his answer: 1,000 planes a month. Britain
was putting all its own production into making fighters, Hurricanes and Spitfires, in order to halt what was promising to be a massive German onslaught from the air. It needed every other kind of plane America could provide, from bombers to trainers.
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Knudsen swallowed hard. Right now America’s aircraft manufacturers were barely producing 550 a month, with 250 a month slated for overseas. He promised that the United States could hit that number for Britain by the end of 1941, by which time the Army Air Corps could count on 2,000 a month for its own force. President Roosevelt’s call for 4,000 or more a month still looked a long way away, but this would get things started.

The next morning, however, Purvis stopped by Treasury Secretary Morgenthau’s office. The truth was, he said, 1,000 a month might not be enough. By the end of 1941—assuming Britain survived—they would be needing closer to 4,000.

Henry Morgenthau was a dry, precise man who refused to be surprised. In spite of himself, however, he had to smile.

“Pass the ball to Knudsen,” he said. “He’s the kind of production man who will rise to a challenge like that and meet it.”
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So Purvis did. Once Knudsen had recovered from his shock, he promised he would see what he could do.

The result was a sharp change in the direction, but not the pace, of aircraft production in the United States. Almost incredibly, the U.S. now agreed to slow its own buildup in order to keep Britain in the air.
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For all of 1941, one-third of all warplanes produced in the United States—and one-half of all tanks—would be slated to be sent to Great Britain. It was an extraordinary sacrifice of priorities, for the sake of preventing Britain’s defeat. Still, figuring out how to achieve production numbers like that meant more late nights at Knudsen’s Federal Reserve office huddled with his aviation expert, Dr. Mead.

Knudsen and Stimson were already pushing for radical changes in the work schedules for America’s aircraft plants: adding a night shift, for example.
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Still another question haunted the back of Knudsen’s mind. By the end of 1940, British wartime orders in the United States would be almost half of what the federal government itself was spending on armaments.
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How was Britain going to pay for all this? Already he
sensed that a day of reckoning was coming, even supposing Britain survived. And as Stimson’s reports were telling him at the end of July, those chances did not look good. The problem of how to supply a customer, in this case Britain, who might suddenly lose the ability to pay arose for the first time on that sweltering morning of July 24. It would not go away until the passage of Lend-Lease eight months later.

At the same time, Knudsen was getting grief from the other direction. The Army was starting to panic. There was real fear that the British demands for planes and tanks and guns would not leave enough for the Army’s own revised mobilization plan. On the twenty-fifth Knudsen and Stimson met to discuss the complaints against NDAC from various Army administrative heads who felt the agency was moving too slowly—while Harold Vance, Bill Harrison, and the others felt the men in uniform were shutting them out from major purchasing decisions.
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For example, the rising star of Stettinius’s team handling materials and supplies was the former president of Sears and Roebuck, Donald T. Nelson. Tall, owlish, and bespectacled, Nelson was a little shocked at the Army’s intransigence regarding uniform buttons. It told him that it had to have horn or ivory for its uniform buttons, as in the First World War. Nelson pointed out an American company called Rochester Button was ready to make thousands of perfectly fine celluloid buttons, and that horn and ivory had to be imported from South America or Czechoslovakia—the latter now under Nazi rule. Horn or ivory, the Army said, and for the time being that was where things stuck.
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Then there was the problem of what to do about tanks.

Purvis and the British were starved for them. Churchill told Purvis to ask Knudsen and the Americans for help. So on August 6, 1940, Knudsen called a summit meeting with Purvis, British and American officers, and representatives from the truck, railroad, and heavy equipment industry, including American Car and Foundry, the only private company currently making tanks in America besides the Army’s own Rock Island Arsenal. Knudsen made them put their heads together and come up with a bulked-up version of the Army’s current light tank. It would carry a 75mm gun—equal to the heaviest German tanks at the time—and a 30mm gun mounted on a turret. Purvis announced that this new model, the M3 Medium, would be acceptable
to His Majesty’s Government. But it would want no fewer than one thousand a month.
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The Army officials were stunned. American Car and Foundry was barely making thirteen a month of the old model. How on earth could they ever meet numbers like that—not only for Britain but for the United States? They were discussing possibly asking Baldwin Locomotive, one of the country’s leading manufacturers of heavy equipment, when Knudsen cleared his throat.

“How about a car company?” he asked.

As everyone else in the room looked at one another, Knudsen went back to his office. Donald Nelson watched from around the corner as Knudsen picked up his phone. “Give me Detroit,” he asked politely, and within minutes he was connected with K. T. Keller at Chrysler.

“We have a problem, K.T.,” he said. “We have to make more tanks than any corporation has ever made in the past. Can you do it?”
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Kaufman T. Keller was Detroit old school. He knew Knudsen from the automobile’s pioneering days and knew the respect his old boss, the ill and retired Walter Chrysler, had for the industrious Dane. Keller replied, “Sure. When do we meet?”

Tomorrow, Knudsen answered. With that he flew off to Detroit and the pair spent the day bent over a desk sketching out plans for a facility that would be able to produce up to five hundred tanks a month.

It was an impossibly formidable task. Chrysler was moving into uncharted territory for an American car company—and neither Keller nor his engineers had ever seen a tank. But two priorities stood out at once. Knudsen and Keller agreed there was only one person who could design the right facility: Albert Kahn. The second was that it would not just have to be a new factory, but a new way of making tanks, as well.
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It was Chrysler’s engineers, not the Army’s, who would have to figure out how.

At Knudsen’s insistence, on August 9 the other members of NDAC met to approve his and Keller’s plan, and the War Department immediately authorized $20 million for construction.
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It was also agreed that the tank engines would come not from Chrysler but Continental Motors, a nearly defunct automotive company based in Muskegon. Knudsen knew their president, Jack Reese, like he knew everybody. He figured if anyone could come through, it was Jack Reese.

Continental was a dying business when the War Department contract for two hundred engines a month arrived. Reese was a cigar-chomping fireplug of a man who, like Knudsen, worked best in shirtsleeves and a hat. Reese had been made president in 1939, and was Continental’s last hope of turning the company around.
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In addition to firing executives who collected salaries but didn’t do any work, one of his plans had been to sell the company’s big Detroit plant and transfer everything—machines, workers, tools, the works—to the more efficient operation in Muskegon.

A year had passed, and Reese found no buyers. That proved lucky for the Army, because now Reese had an empty facility in which to start making tank engines. Even better, Reese and his engineer offered to redesign the 440-horsepower aircraft engine they had already starting tooling up for in order to get back in business, to fit into the M3 tank. The Army specified an air-cooled engine, and this was an air-cooled engine, even though it had been designed for the skies, not fighting on the ground. Still, the Army jumped at the chance to get into production months before anyone thought they could. The Continental end of the deal was signed.
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Across town at Chrysler, Keller’s chief engineer was on the job. Ed Hunt was, like Reese, a physically formidable man, built low to the ground with a natural glower and no-nonsense attitude. Army officers called their visits to Chrysler to see him “going to Fort Hunt.” The first time he and Keller showed up at Rock Island Arsenal, outside Davenport, Illinois, the Army showed them several hundred pounds of tank blueprints. Hunt emphatically shook his head.

“I’ve never seen a tank on the hoof,” he said. “If I’m going to build ’em, I’m gonna have to see one. How about it?”
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That afternoon, Hunt, Keller, and their Army escorts took one of their prototypes out for a run. When they were done, Hunt stepped out and asked, “Is that what you want?”

“Yes,” the general said, “but lots of them.”

K. T. Keller glanced at Hunt. “All right, Ed. How about it?”

The Chrysler engineer thought for a moment. “Well,” he finally said, “I guess we’d better not get any bright ideas of our own. We’d better let the Army design ’em. We’ll just make ’em.”

The final design of the M3 came out in early 1941. By March, Chrysler’s new facility, dubbed the Detroit Arsenal Tank Plant, was finished—just seven months after Keller broke ground for it driving his own tractor. Hunt and his associates put in fourteen- and eighteen-hour days, making their first tank entirely by hand. Albert Kahn’s dream factory took shape overhead and around them, with empty bays where the ordered machine tools would eventually go.

The Chrysler men then discovered the Army-designed M3 had problems. Certain elementary engineering mistakes had crept in, which the Army’s Ordnance Board had missed. There were tank treads that worked fine on regular roads but slipped and slid in muddy ditches. There were air-cooled engines, which Continental was contracted to build and Chrysler to install, but which were time-consuming and expensive to machine, and which required cool air to cool. That was going to be in short supply in Egypt’s Western Desert, where the M3 would first be deployed.

Then there was the problem of the chassis springs. Hunt and his men scratched their heads over the drawings. They had never seen springs like this: certainly nothing like anything used by the automotive industry, not even for the heaviest trucks. They looked into every manufacturing nook and cranny. Then one of Hunt’s assistants came up with the answer, in a railroad manual dating back before World War I. They were so-called volute springs originally designed for freight cars. The railroad industry had abandoned them long ago. Now the Army was using them for its vaunted M3 tank.
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