Freedom's Forge (31 page)

It was good training for running SPAB, and later the War Production Board. Nelson was conditioned to see the big picture behind the steadily rising mountain of data: how to coordinate the flow of materials from a myriad of sources to an equally complex network of suppliers and manufacturers, and then how to move the finished goods to the distributors on a nationwide scale so that ultimately they reached the customer on time—in this case, the Army and Navy and the Army Air Forces.
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This also meant a myriad of toes to be stepped on, in trying to coordinate the intermeshing of an entire economy for one purpose, winning the war. But Nelson in his quiet way persisted, defying newspaper columnists, congressional investigators, outraged labor leaders, Army and Navy brass, and furious businessmen who thought they were being shortchanged or overburdened by Nelson’s system—and sometimes both. As one of his own staff, and one of his fiercest critics, admitted, “The most striking thing about the whole war production program was not that there were so many controls but that all of them fell within the established patterns of industry.”
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One of his first big battles was with organized labor. Walter Reuther and others hoped that Nelson’s appearance on the scene would revive the idea of joint labor-management committees, to handle the war
conversion process and give unions a direct say in how the factories and production lines would be run. Nelson’s dealings with the National Recovery Administration, however, made him wary of opening the door to the union way of doing things. “My experience,” he once said, “was that whenever you set up a joint committee, industry and labor representatives get together to see how they can screw the public.”
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Instead, he insisted that WPB take as little or as much advice on production or conversion from separate industry committees and labor committees as it needed, and reserve for itself the final decision. As for the unions, they should keep their hands to themselves, and concentrate on getting workers work, pay, and adequate housing—in that order.

Another big battle was over antitrust.

Roosevelt’s assistant attorney general Thurman Arnold was a crusader on the subject. He had fired off investigations into some of America’s biggest corporations, from Standard Oil to DuPont and Alcoa, and firmly believed that without Justice’s heavy supervising hand, America would never be safe from their anticompetitive collusions.

The new system devised by Knudsen and sustained by Nelson broke every one of Arnold’s rules. Defense contracts were no longer based on competitive bids. There was no time. They were negotiated instead on a cost-plus basis, with the company negotiating the contract based on what the government would pay up front to get what it needed—planes, tanks, TNT, uniforms—instead of the company forgoing what it could to gain the contract in the first place.

In the mind of Thurman Arnold, this was a clear invitation to corruption. “The vast government spending for war production,” Arnold thundered, had “created a great opportunity for conspiratorial agreements between businessmen.”
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He was also livid to see big-business executives serving as “dollar-a-year men” directing contracts toward their old industries, if not their old firms. General Arnold smelled a rat everywhere he sniffed. He started smoking them out in August 1940 by filing an antitrust action against no fewer than twenty-two major petroleum firms, for restraint of trade.

Donald Nelson, then coordinator of defense purchases for Knudsen, sensed disaster. The Army desperately needed gasoline, the Air Force
special 100-octane aviation fuel. Everyone needed butyl petroleum for synthetic rubber and toluene for explosives. If executives in companies like Sun Oil, which was also building oil tankers for the Navy, had to devote their time fighting lawsuits and watching their backs with the Justice Department instead of focusing on production, America’s rearmament would never get off the ground.

Knudsen agreed with Nelson. “The Production Express can’t afford to be late,” he said. Even Leon Henderson got the point, and had to explain to Arnold that national defense was a bigger priority than whether oil companies were forcing their filling stations to sell only their products (the main point of Arnold’s suit).
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Arnold, however, refused to yield. The lawsuit against the oil companies dragged on for a year and a half. Finally, in 1942 Nelson convinced Roosevelt that the standard antitrust rules would have to be bent if America was going to arm itself and keep a civilian economy going at the same time.

So Franklin Roosevelt, the bane of American business, issued an executive order suspending antitrust prosecution against companies deemed vital to defense production. Arnold and his allies fought back hard. But Roosevelt had an unexpected ally in the antitrust fight. The midterm elections in 1942 brought in a flood of Republicans, who sided with Nelson against the trust-busters. From 1943 on, Thurman Arnold troubled the defense buildup no more.
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Nor was Nelson afraid to defend his dependence on the dollar-a-year men, whom he now appointed and controlled. Early on, the Truman Committee pushed hard to abolish them, or at least enforce a rule that “no person shall be employed in any position in which he will make decisions directly affecting the affairs of his own company”—which could mean Bill Batt could offer no advice on the manufacturing of vital ball bearings, even though his former company was one of their biggest producers, and no Goodyear executive on loan to the War Production Board could make decisions affecting the rubber industry.

Nelson said no. If such a rule were enforced in a draconian way, nothing could ever get done. “On this job we must get the maximum results from American industry,” he patiently explained. “To do that we must have down here men who understand and can deal with industry’s intricate structure and operation.” He also pointed out that
of the three hundred or so dollar-a-year men appointed since August 1940, more than 70 percent were technical engineers, production and operations managers, and heads of research divisions—not golf-playing board chairmen. As for making these men quit their jobs and become federal employees (another Truman idea), there was no way Washington could recruit top-caliber people with a meager civil service salary. These men would face daunting financial hardship if they went to Washington. The war effort’s tap into business talent would slow to a drip.

In fact, what it would mean in practice is that only people of truly independent means could afford to serve. “And I don’t think the Congress would like to limit the War Production Board to the ranks of the very wealthy,” Nelson concluded, with a wry smile.
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Truman backed off. The dollar-a-year-man system remained in place for the rest of the war. In the end, even severe critics had to admit it largely worked. It provided not only expertise but opened an easy line of communication between the government issuing the orders and the businesses carrying them out. When a man such as GE’s Charles Wilson weighed in with the electronics firms, they tended to sit up and listen. Bill Knudsen had pointed the way with his direct and intimate dealings with his friends in Detroit. Donald Nelson stuck to the Knudsen model to the end.

Of course, the ways of Washington sometimes baffled even the best business minds. The vice president of one New York bank applied for a post in the Office of Economic Warfare. He waited a long time in vain. Then one day the OEW’s director showed up at the bank to ask its president if he knew any likely candidates for the very same job. The president mentioned his vice president, and the man was hired on the spot.

He moved to Washington and soon found himself inundated with the usual paperwork related to the OEW. A month or two passed, and a letter arrived forwarded from his old New York address. It was a rejection letter, regretfully turning him down for the very post he now occupied.

Now familiar with Washington bureaucracy, this came as no surprise to him. The surprise was he had signed the letter himself.
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In 1942—the year of Midway, Guadalcanal, and Operation Torch—the production numbers began to hit, just as Knudsen had promised.

In 1941 the United States had made 3,964 tanks—more than twice the number of the past three years. In 1942 it produced 24,754. In 1941 it produced 617,000 small arms and 97,000 machine guns. In 1942 the numbers swelled to 2.3 million and 663,000, respectively. Whereas the previous year saw 318 B-17 and B-24 heavy bombers coming off the assembly line, 1942 saw 2,618—along with 136,000 aircraft engines, 92,000 20mm antiaircraft guns (versus 2,042 in 1941), 20,000 75mm guns, and 10 million rounds of small-arms ammunition. As for total production of airplanes, it reached 47,873—just shy of the 50,000 Roosevelt had asked for just two years earlier, and which all the experts had said was impossible.
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Before 1942 was out, the United States was producing more war materiel than all three Axis powers—Germany, Italy, and Japan—combined.
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In September the president got his own front-row view of what was happening. Roosevelt’s visit with Henry and Edgar Kaiser was part of a nationwide tour of America’s defense plants to see Nelson’s “congregation,” in the WPB director’s phrase, in action.

His first stop was on September 18, at the Chrysler Tank Arsenal. K. T. Keller’s and Eddie Hunt’s experiment in making tanks the Detroit way had grown into a full-blown operation. It was already producing more than three thousand of the M3 Grants when in March 1942 Chrysler got the go-ahead to make one thousand of the new M4 tanks, dubbed Shermans, a month.

Albert Kahn had given them another 500,000 square feet of factory space to accommodate the new machine tools and parts, and expanded the test track where the big thirty-ton armored vehicles were put through their paces. When Continental Motors’ version of the nine-cylinder Wright engine was called out for airplane production, Chrysler engineers found a way to fasten together five of their own 200-horsepower six-cylinder car engines, then put an engine drive
gear at the end of each crankshaft, then mesh the gears with a single big one doing the work of pushing the drive shaft.
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When the Chrysler production version of the Sherman came off the assembly line on July 22, it was the first of 7,500 with the “multibank” engine. American tank commanders and gunners never liked the Chrysler multibank engine because its size left less space for ammunition and supplies. But in the Tunisian desert, the British outfitted their Eighth Army with them, and at least one British officer pronounced the M4A4 “the finest tank in the world.”
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Keller also took Roosevelt to watch the graveyard shift engaged in gear cutting, and to watch an engine and transmission being installed in a Sherman. He also saw fifty of Chrysler’s tanks running the test-track course—all business as usual at eleven o’clock at night.

Chrysler’s success with the tank arsenal earned it its first Army-Navy “E” pennant for production excellence on August 10, 1942. The “E” award, too, had been Knudsen’s idea, as a way to give manufacturers public recognition for the best war production achievements.
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Another would be won by Fisher Body at its nearby plant in Flint, where production miracle worker Bud Goodman was making Shermans the GM way.

Goodman was only thirty-seven when he took over the Fisher Tank Arsenal. After quitting the University of Illinois when his father died, he had taken a job at Fisher as a metal finisher. He never looked back. Now in 1942 he was welding Shermans together with a new process that saved four-fifths of machining time, then bending them into shape using a 480-ton metal press. For the final assembly, huge thirty-ton jigs hoisted the tanks in the air and turned them around, as
Time
magazine said, “like ducks on a spit.”
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Roosevelt set off for nearby Ypsilanti, where he watched Ford engineers
doing amazing things with B-24 bombers, inside the biggest indoor plant in the world.
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Then there was a stop at the Allis-Chalmers plant in Milwaukee, which had been the scene of the bruising strike a year and a half earlier, but where men and women were now turning out aircraft engines by the hundreds. Nearby was the A. O. Smith factory, where Knudsen’s friend Larry Smith had shown him the right way to weld armor plate and where now the mighty iron pipe assembly line was turning out hundreds, eventually thousands, of one-thousand- and two-thousand-pound bombs to be dropped on Nazi Germany’s factories and cities.
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Roosevelt also stopped in Minneapolis at the Federal Cartridge Corporation, which was making .30- and .50-caliber machine gun rounds, and noted the high number of women already doing jobs that used to be considered fit only for men. Later the presidential train pushed on to Texas, where Todd Shipbuilding was making Liberty ships in Houston, Consolidated was erecting an enormous airplane plant in Fort Worth, and, at Port Neches, B.F. Goodrich was helping to build a synthetic rubber plant that government experts said would be producing up to 800,000 tons of butyl rubber by 1944. The actual number would be closer to 1.4 million tons.