Sovereign Soldiers. Grant Madsen

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Sovereign Soldiers - Grant Madsen American Business, Politics, and Society

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after the First. They realized as quickly as any other American official that no matter how well the global financial system might be designed, it had to take into consideration the economic realities of the countries joining it. If individual countries did not enter into the global system on roughly equal grounds and with largely stable domestic economies, then the global system itself could exacerbate problems within domestic economies, creating a political backlash against the global order. Under such circumstances, the international component of Wilson’s scheme would not mitigate nationalist impulses within individual countries but exacerbate those impulses.

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      Even as they observed the consequences of the peace, many army leaders worried initially about the poor American performance during the war. Much like the Spanish-American War, American victory in the First World War concealed a host of failures. Most obviously, American industry had dramatically underperformed its potential. As early as 1914, a handful of prominent figures (Theodore Roosevelt, Henry Cabot Lodge, Elihu Root, and the editors of the New Republic) had recognized the link between industry and war and had warned that the country remained woefully unprepared.18 While Wilson had cited military preparation as a reason to pass the Revenue Act of 1916, he spoke only to the immediate needs of soldiers and sailors.19 No comprehensive plan for coordinating industry ever went into effect during the war.20

      In fact, contrary to the lore that emerged after the war, American entry had little to do with a “munitions industry” because no munitions industry really existed before it. Indeed, even after it began no munitions industry really emerged to feed it.21 Many industrial powerhouses ignored the war altogether—most conspicuously the auto industry where neither the Dodge brothers nor Henry Ford ever converted their factories to make tanks. Each continued to turn out cars and hold onto domestic market-share rather than supply this new weapon for the war effort.22

      The War Department made up for what couldn’t be bought by ordering as much as possible of what could. The result was a predictable mess. American industry produced over thirty million 75-mm artillery shells, for example, but only twelve million fuses for those shells. Similar mismatches abounded.23 More worrisome, American industry rarely produced what mattered most for victory. While American soldiers used about 2,250 artillery pieces during the war, only 100 of them came from the United States. With the Dodge brothers and Henry Ford setting the (unpatriotic) standard, not a single American tank made its way to the front. America was home to the Wright brothers, yet the country managed only one thousand observational airplanes (by contrast, the French produced almost sixty-nine thousand combat planes). In many cases, General Pershing chose to buy or borrow what he could from the French and British. In all, the army consumed roughly eighteen thousand ship-tons of material in the war, of which ten thousand came from continental Europe.24

      Surprisingly, the slapdash procurement was not the army’s largest logistical problem. As odd as it seems in retrospect, the country had almost no merchant marine in the early part of the century: less than 10 percent of the country’s exports traveled on American ships. Thus, despite mass conscriptions and rapid mobilization, fewer than two hundred thousand troops had arrived in France during 1917. In early 1918, more than one million soldiers waited in the States for transport across the Atlantic.25 In the end, most American soldiers made the voyage aboard British vessels (but only after the British extracted strategic concessions on the battlefield from Pershing in exchange for their ships).26

      The chaotic procurement eventually led to inflation. Part of the price rise resulted from the influx of European gold in the first years of war. But American entry in 1917 exacerbated matters. Government propaganda encouraged Americans to borrow from banks and buy Liberty Bonds that would help fund the war. The newly created Federal Reserve flooded the banking system with liquidity (in essence printed money) to make sure banks could accommodate the demand. The expansion of the money supply had predictable results: retail prices rose 17 percent in 1916, another 17 percent the next year, and an additional 15 percent in 1918. Wilson did not attempt to impose price controls, using exhortation and patriotic appeals to encourage “fair prices” instead.27 But prices kept rising because borrowing kept going. All together the war cost about $33 billion: new taxes generated $11 billion of that; borrowing covered the remaining $22 billion.28

      The combination of poor coordination, haphazard purchasing, and industrial foot-dragging meant that the American economy saw almost no real economic growth between 1914 and 1920 despite the massive demand created by the war. Inflation made it appear as if the economy had doubled in size; once adjusted for inflation, that growth disappeared.

      Wilson’s main effort to coordinate the wartime economy came in the creation of the War Industries Board (WIB); unfortunately, the board existed as a “clearinghouse for the self-regulation of business” rather than an agency with command-and-control powers.29 Predictably, it was ignored. Matters did not improve much until March 1918, when Wilson elevated the charismatic Bernard Baruch to be chairman of the WIB. While the WIB still struggled to control industry, it at least succeeded in launching the public career of Bernard Baruch. Already known as a genius financier, his staunch Democratic credentials—and his campaign contributions—made him a logical choice when Wilson sought a figure to run the War Industries Board. From this point forward he remained in public life, advising presidents through depression and later wars.30

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      Figure 2. U.S. real and nominal growth of GNP in World War I, 1914–1920. Source: Historical Statistics of the United States: Colonial Times to 1970, Bicentennial Edition, Part 1 (Washington, DC: Department of Commerce), Series F 1–5. Gross National Product, Total and Per Capita, in Current and 1958 Prices: 1869 to 1970, 224.

      “If not depressed, I was mad, disappointed, and resented the fact that the war had passed me by.” Eisenhower had managed to find the dark lining in the silver cloud of world peace. The war had ended and, from his perspective, so had his chance to fight: he was “putting on weight in a meaningless chair-bound assignment, shuffling papers and filling out forms.”31

      Eisenhower’s anxieties about missing the war mirrored the army’s sense of drift in the postwar period. “Where-oh-where was that welcome they told us of?” MacArthur wrote to a friend after finally arriving home in the spring of 1919. “Where were those bright eyes, slim ankles that had been kidding us in our dreams? Nothing—nothing like that.”32 Once again, no sooner had the fighting stopped, than many Americans moved to put the war behind them. Indeed, a kind of antiwar fervor spread through the country, questioning the “real” motives for war.33 Army leaders had hoped the war had finally made the military an acceptable part of American society. They put forward proposals for enacting universal military service, only to realize how out of step they were. Congress responded with the National Defense Act (June 1920), which cut the army back to 280,000 men (it would be cut further to 125,000 in 1923). A future war would, Congress declared, require the same kind of sudden conscription that had marked preceding wars.

      Daniel Read Anthony (R-KS), chair of the House War Department Subcommittee, hoped to reduce federal expenditures to as close to zero as possible. Specifically, he looked for “possibilities of cutting down the future development of tank, airplane and similar expensive units” for future savings.34 He helped send the newly formed tank corps to oblivion by subsuming it under a jealous infantry determined to keep this new weapon outside of the American arsenal. Other countries would quickly jump past the United States in understanding and utilizing this critical new weapon.35 “The peacetime Army was poor,” recalled Clay. “It had no vehicles, no equipment.… I can remember when we didn’t have our target practice for the entire year simply because we didn’t have ammunition.” In its place, the army had “only a certain sincerity, particularly among the younger officers, who had been the junior officers

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