Financial History Issue 123 (Fall 2017) | Page 21

Mobilizing the industrial econ- omy for the Great War required the creation of a new kind of gov- ernment-business relationship. Civilian and military organizations had to adopt new methods of plan- ning and coordination. The pro- cess was not pretty and did not go smoothly. But thanks to the efforts of hundreds of manufacturers, an index of industrial production that stood at 100 in late 1914 rose steadily to about 140 by early 1917, then ranged between that level and about 175 until late 1918. Real GNP increased by more than 25% during that four-year period. After a slow start, American industry finally geared-up to produce large quanti- ties of many military items. Sources differ on the precise numbers; most suggest quantities of around three million rifles, 200,000 artillery shells, 3,000 airplanes, 1,500 machine guns, 500 artillery pieces, 80 tanks and several hundred thousand pounds of smokeless powder, other explo- sives and toxic gas. The memory and knowledge of the years of American neutrality and the shorter period of active military involve- ment informed and guided both individu- als and institutions when they were forced to confront another military conflict some 22 years after the signing of the armistice. But that is a story for another time.  supposed to take the lead role in coordinating the needs of the military with the resources of the nation’s manufacturers. How- ever, the members of both were not appointed until October. The Council’s five ex-officio mem- bers (cabinet Secretaries) and the Committee’s seven presidential appointees (from industry, labor, medicine and academia) did not hold their first meetings until December. And they only began A woman working in an American aircraft factory, 1917. operating in earnest after the United States severed diplomatic relations with Germany in Febru- ary 1917. successes in cajoling various contractors It may be too harsh to criticize govern- to meet the needs of the Army or Navy. ment officials for establishing the CND/ By the winter of 1917–1918, President Wil- NDAC as makeshift organizations with no son, Secretary of War Newton Baker and clearly defined lines of authority. As noted presidential advisor and NDAC mem- earlier, the United States had no experience ber Bernard Baruch came to realize an in mobilizing for what had truly become the important limitation of the Board was its first “World War.” The CND and NDAC inability to bridge the fundamental dif- organized themselves into various com- ferences in organization and operations mittees to oversee functions such as trans- between civilian and military organiza- portation, communications, munitions and tions. Washington needed to maintain the medicine; and its leaders recruited knowl- ability to use private business to harness edgeable men to oversee its activities. the economy for war. But it also saw the Unfortunately, these committees oper- need to adapt the military’s procurement ated very independently; they failed to coor- system to the one used in the much larger dinate their activities with each other or and still very functional private economy. with the Army’s similarly-uncoordinated Beginning in March 1918, newly- and independent bureaus of Quartermaster, appointed WIB Chairman Baruch revised Ordnance and Signal, among others. Even the WIB’s organization and altered many of while acknowledging these flaws, it’s easy its practices. The Clearance Office figured to see that their formation and eventual out how to coordinate various government staffing sent a valuable signal that the fed- agencies’ supply requirements more effec- eral government was finally ready to take tively, while the Requirements Committee seriously the challenge of mobilizing the provided a more accurate picture of future economy for war. demands. The Priorities Division became a After watching the bureaucratic inertia source of centralized authority to channel of the CND/NDAC for only five months, the flow of manufactured goods to meet the in July 1917, President Wilson superseded demands of war. Importantly, it included those groups and their committees with representatives from government offices the War Industries Board (WIB). Unfortu- for Food, Fuel and Railroad Administra- nately, his Executive Order saddled it with tion whose leaders had statutory authority the same type of difficulties as its predeces- the WIB did not have. sor organizations. The WIB had no formal Military officials achieved a new level of authority over the action of any civilian or effectiveness as they reorganized their pro- military party; it did not include represen- curement systems to match the capabilities tatives from important civilian agencies, of the civilian economy. Thus, by June such as the US Shipping Board or the 1918, mobilizing the economy to produce Aircraft P roduction Board; and it operated the materials needed to prosecute the war through a bewildering array of dozens of was finally becoming an efficient and effec- subcommittees largely headed by business- tive task. Plans were in place to expand men seeking to protect their own interests. production to even higher levels in 1919. Over time a group of effective lead- But the signing of the armistice in Novem- ers enabled the WIB to achieve some ber made that final surge unnecessary. Michael A. Martorelli is a Director Emeritus at Fairmount Partners and a frequent contributor to Financial His- tory. He earned his MA in History from American Military University. Sources Brandes, Stuart D. Warhogs: A History of War Profits in America. The University Press of Kentucky. 1997. Farwell, Byron. Over There: The United States in The Great War, 1917-1918. W.W. Norton & Company. 1999. Koistinen, Paul A.C. Mobilizing for Modern War: The Political Economy of American Warfare, 1865–1919. University of Kansas Press. 1997. Kreidberg, Marvin A. and Merton G. Henry. History of Military Mobilization in the United States Army, 1775–1945. Department of the Army. 1955. www.MoAF.org  |  Fall 2017  |  FINANCIAL HISTORY  19