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 of all American war contracts, as we are often reminded, went to just two or three dozen big industrial corporations.2 Together, the progressive and corporate legends tell how the automakers and other leading industrial corporations converted quickly from civilian to military production, as they secured even more economic and political power.
In fact, the American war economy was not a private affair. Public authorities—civilian and military—managed the work of industrial mobilization. These public officials included not only Knudsen and his peers at agencies such as the War Production Board (WPB) but also public financiers, including the governments of France and Britain, the War and Navy Departments, and the new Defense Plant Corporation (DPC). War and Navy Department officers placed and managed most of the war contracts; they also served as the top managers of wartime industrial supply chains. Military agencies acted as powerful general contractors, as they ordered thousands of components, from hundreds of smaller and midsize manufacturers (those with fewer than ten thousand employees) as well as big corporations, and directed their flow into finished aircraft, ships, tanks, trucks, and guns.3 So, while it is true that American capitalism supplied the Allies with mountains of munitions, it did so with immense amounts of support, supervision, and guidance from the agencies and officers of the U.S. government.
In the end, America’s remarkable war production represented the triumph of compromise. Much to the irritation of many business leaders, the U.S. government went well beyond simply buying munitions, by building acres of public-owned industrial plant and establishing an array of powerful regulatory agencies. Progressives complained that corporations profited too much from the war, but their warnings that the war would promote monopoly proved overblown. The mobilization relied heavily on the contributions of midsize manufacturers, which often dealt directly with the Navy and War Departments as prime contractors, besides serving as subcontractors to bigger corporations. All in all, the American militaryindustrial machine was something much more than the creation of American big business; it was led not just by corporate executives like Knudsen but by a diverse cast of private and public officers. It took the combined efforts of politicians, entrepreneurs, workers, soldiers and sailors, and bureaucrats to build the arsenal of democracy.
Phase 1: Rearmament, 1938–40
One of the most important battles of World War II occurred in June 1942, when the American and Japanese navies faced off near Midway Island, in the middle of the Pacific Ocean. At Midway, American forces managed to sink four Japanese aircraft carriers while losing only one of their own. By winning at Midway, the United States managed to turn the tide of the Pacific War. This victory occurred just six months after the disaster at Pearl Harbor and only weeks after Allied forces suffered humiliating defeats in Southeast Asia.
The results at Midway are difficult to reconcile with stories of American war mobilization that emphasize inaction before Pearl Harbor. Indeed, at Midway, the Americans relied on ships and aircraft that had all been built or developed in the 1930s. Two of the three American aircraft carriers at the battle, Enterprise and Yorktown, had been ordered from the Newport News Shipbuilding Corporation, a Virginia company, in 1934; they were launched in 1936. The third, the Hornet, was ordered in 1939 and—after a speedy construction effort by Newport News—launched in December 1940. These carriers were platforms for what would turn out to be the decisive weapon of the battle at Midway: the “Dauntless” SBD dive bomber, made in southern California by the Douglas Aircraft Company. The Navy ordered twelve dozen of these planes in April 1939, almost half a year before