of the Ordnance Department’s biggest contracting office, in Detroit.
Quinton and his fellow officers believed that the contractors should be subject to special forms of economic regulation, which might include price and profit controls, as well as compulsory orders. As one AIC study group concluded in 1937, even if the War Department did not favor increased nationalization, it did agree with the widespread public calls for “rigid control of the private munitions industry.” Top military procurement officers, like many other Americans, wanted to limit war profits but without completely abandoning the profit system. As Colonel Charles Harris told Congress, more than a little awkwardly, in 1937, “it is the idea to disturb the normal process as little as possible…. On the other hand, the War Department is strongly opposed to profiteering…. On the other hand, the War Department believes in a fair profit.” Two years later, Colonel James H. Burns promised the Chamber of Commerce that the military wanted to minimize any economic “regimentation” in wartime. Echoing the rhetoric of Herbert Hoover and other conservatives, this was music to the ears of most business leaders. Somewhat less reassuring, perhaps, was Burns’s added qualification: “if we permit unreasonable prices and profits we … ruin the morale of the country.”129
Business leaders also had reason to be concerned about the military’s reliance on Baruch’s vision of industrial mobilization, which was less voluntaristic than it seemed. As Baruch reminded the cadets at the U.S. Military Academy at West Point in 1929, the wartime state would have the power to allocate critical materials. This was “the iron fist in the velvet glove” that the government could wield to encourage private firms to do its bidding.130 This attitude worried business leaders, as did Baruch’s notion that as a last resort, the government could always just commandeer private property. As Baruch reported to a friend in 1924, executives such as Elbert Gary of U.S. Steel had insisted that “the taking over of industries was a communistic scheme” that should not be allowed even in wartime.131 On this question, military officers sided not with Gary but with Baruch. During the 1930s, top War Department officers often noted that the IMP and other emergency schemes would provide ample coercive powers. Some of them echoed Baruch’s “iron hand in the velvet glove” rhetoric; others described a “big stick available for use on the recalcitrant if necessary.” For the officers, the wartime state’s coercive powers were “like a policeman’s club—always in sight but little used.”132 From the point of view of many business leaders, this was disturbing. It remained unclear who might be using the club, for what purposes it might be used, and who might be on the receiving end.
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In the late 1930s, as international skies darkened, many Americans grew pessimistic about the future of domestic politics. Progressives worried that war mobilization might lead to American fascism. In 1939, Interior Secretary Harold L. Ickes warned that conservatives might use the war emergency to “destroy both American democracy and the social reforms of the New Deal.”133 Such fears reflected the political defeats suffered by New Dealers over the previous two years. Despite an overwhelming victory in the 1936 elections, President Roosevelt had struggled to expand the New Deal.134 His early 1937 effort to add justices to the Supreme Court bolstered conservative criticisms that he was an autocrat. Then, government spending cuts had caused an economic downturn. After the 1938 elections, the House contained eighty-five more Republicans, who thwarted Roosevelt’s plans. Moreover, the business community’s ongoing public-relations campaign bore fruit. By the eve of World War II, Americans polled by Gallup blamed the Roosevelt administration for the recent recession; they also favored a “more conservative” government, more friendly to the private sector.135
Business leaders, while encouraged by these favorable developments on the domestic political front, feared that American entry into World War II might revitalize the Left. Most U.S. companies in the mid-1930s were content with neutrality from a financial point of view because they were not producing arms for export. Even Du Pont, which had made military explosives for decades, had become much more interested in civilian markets. In 1937, the Du Pont corporate board, which worried about the company’s “evil reputation” as an armaments maker, only barely turned down a motion that would have had the company stop munitions work entirely.136 Even in 1938, as the Munich crisis took Europe to the brink of war, American companies feared the political costs of taking military work. Furthermore, they anticipated that such work might not be especially profitable, given that the defense sector was often the target of intense regulation.
Business leaders remembered the Wilson administration’s war policies, the Nye Committee, and the origins of the TVA. Their memories made them especially wary of war. Charles R. Hook, the NAM chairman and president of the American Rolling Mill Company, explained it in mid-1939: “Business men are normal human beings,” no less horrified by the prospect of mass killing than any of their peers. Beyond this, they stood against war because it would bring tax increases, along with a “government invasion of private rights.” This had occurred on many occasions during World War I, Hook recalled, most obviously during the government takeover of the railroads. What the business community really wanted, Hook explained, was “to continue the democratic system which includes the system of private enterprise under which the nation has flourished during the last century.”137 War would make this more difficult.
Yet Hook and his fellow business leaders could not avoid war. Well before the Pearl Harbor attacks of December 1941, they began participating in a massive industrial mobilization. To the consternation of business leaders, the World War II mobilization would feature many of the same government policies that had occurred during World War I and the interwar period. Indeed, in many respects, Roosevelt went beyond Wilson. One critical area in which this was true concerned the way that the United States went about expanding its capacities to manufacture munitions. More than anyone had anticipated, this process relied on direct government ownership of industry.
Chapter 2
Building the Arsenal
When World War II began in Europe in September 1939, the United States had the potential to produce vast numbers of warships, planes, tanks, and other weapons for use in the defense of England, France, Poland, and other allies. The United States possessed the world’s largest national economy, abundant natural resources, and world-class manufacturers. But Americans disagreed about how this potential should be realized. Progressives, recalling the record of corporate profits in World War I, hoped to avoid policies that would boost the fortunes of big business. They believed that the government should maintain tight controls over war production; some even wanted the government to make much of the matériel. By contrast, conservatives worried that the war might reenergize the New Deal. They believed that private industry should lead the production effort, with the government providing the cash to buy the arms but otherwise staying out of the way.
Popular legend holds that conservatives won this political battle. To make this point, historians often relate an anecdote about William S. Knudsen, who, at the start of World War II, was president of the General Motors Corporation (GM). A Danish immigrant and former production manager for Henry Ford, Knudsen left Detroit in mid-1940 for Washington, where he served as a top industrial mobilization official. Just after the Pearl Harbor attacks, in January 1942, Knudsen presided over a meeting of executives from leading American manufacturing companies, including his peers from the automobile industry. As the story goes, Knudsen used the meeting to conduct a sort of informal auction of war contracts. He read from a list of new military requirements, asking the executives to volunteer to convert their plants to make mountains of machine guns, artillery shells, and all sorts of other munitions.1
The Knudsen story confirms progressive as well as conservative myths about the American industrial mobilization. It describes a business community rolling up its sleeves to lead a patriotic effort to punish the Axis. The story also appears to demonstrate how war contracts were being handed out to big business leaders by their friends in Washington. Indeed, more than half of the aggregate value
