ORDNANCE DEMOBILIZATION
When the average man speaks of munitions, he means ordnance and, even
more specifically, guns and ammunition. In this he is nearly half
right. Technically, the word “munitions” includes army supplies of
all sorts, even to candy and cigarettes, and in this sense the word
is used in these volumes; but of the total war business transacted
for the Army, the procurement of ordnance supplies constituted 42 per
cent. Ordnance was by far the largest class of munitions. Four thousand
American manufacturing plants worked on ordnance contracts during the
war. Nearly 3,000,000 men labored in these mills.
The mere size of the war ordnance industry would have made the problem
of its demobilization a great one, but it was also complicated with
peculiar difficulties. The production of most ordnance materials
differed radically from that of any articles known in normal American
industry. The Quartermaster Department procured for the Army food,
clothing, shoes, hand tools, and many other supplies which, though
they were frequently of special design, nevertheless were not much
unlike the sorts of commodities with which the contractors were already
familiar. The Engineer Corps used many materials commonly employed in
the peaceful pursuits. Outside of ordnance, the manufacture of aircraft
alone took our industries into virgin fields of endeavor.
Therefore, those factories which were making for the Army products
essentially similar to products consumed by the civilian population,
were ready after the armistice to resume their places in normal
commerce with slight internal adjustment. But the ordnance
factories--they were a different story. In ordnance production the
war had witnessed some factory conversions of the most violent sort.
Manufacturers of printing presses built gun carriages of new and
difficult design; makers of sewing machines and automobiles undertook
the difficult task of producing hydropneumatic recuperators for
absorbing the recoil of field guns; producers of typewriters and water
meters manufactured time fuses for shell; women’s cloak factories sewed
silk powder bags; a phonograph maker produced aërial bomb sights; and
one producer turned from the modern business of making corsets and took
up the ancient occupation of tentmaker. For nearly all these factories
the ordnance contracts virtually implied the physical reëquipment of
their plants for quite different manufacturing processes. For them,
too, demobilization meant a not less severe dislocation of equipment
and processes in changing back again to their former work.
It was the problem of the Ordnance Department after the armistice to
manage the liquidation of its great war business--to halt the work, to
dispose of raw materials and materials left half completed when the
wheels stopped, to do something with the special factories and even
the complete towns built by the Government or for the Government in
the prosecution of the war enterprise, to recoup the millions advanced
to finance the ordnance producers, and finally to settle with cash
the obligations of the Government to the producers incurred when the
contracts were terminated.
Although in size and intricacy this problem was appalling, there was no
hesitation in setting about solving it, no period when the enterprise
hung in neutral, going neither forward nor backward. Ordnance work
was reaching new peaks of production when the Ordnance Department in
Washington took the first steps toward its dismemberment. In late
October, 1918, when the Argonne-Meuse offensive was striking home and
it was becoming evident that the curtain might at any time fall in
the theatre of war, the chief ordnance officers held a secret meeting
one Sunday afternoon in Washington and for the first time considered
the possible demobilization. At this meeting the Chief of Ordnance
appointed a commission to make a rapid study of the organization of the
Ordnance Department to determine whether that organization was fitted
to turn without change to the stoppage of work and the restoration of
the industry to its former basis. This same commission later became
the Ordnance Claims Board, the agency which supervised the entire
demobilization of ordnance industry. It was, of course, like all the
other bureau claims boards, subsidiary to the War Department Claims
Board. The Ordnance Claims Board was formally created by order on
November 2, and thus had been in existence for nine days when the
armistice was signed. Its chief was Brigadier General W. S. Peirce.
Its members were Colonel R. P. Lamont, who was president of the
American Steel Foundries Corporation before and after his military
service in the World War; Colonel G. H. Stewart, an ordnance officer
of the Regular Army; Lieutenant Colonel M. F. Briggs, counselor at
law, New York; Lieutenant Colonel F. R. Ayer, recorder of the Eastern
Manufacturing Company, of Bangor, Maine; and Mr. Waldo H. Marshall,
president of the American Locomotive Company, New York.
This board found an existing organization--the field administrations
of the thirteen ordnance manufacturing districts--admirably adapted to
the work of closing up the war business. The district organizations had
been created to give the Ordnance Department a mechanism by which it
could keep in immediate contact with the process of manufacture without
congesting the headquarters in Washington to the point where competent
management became impossible. They had been likened roughly to the fire
exits of a theatre, distributed to prevent crowding at the front doors.
In the district organizations were employed 33,000 civilians, uniformed
officers, and enlisted men, and through this great force the office in
Washington kept in as intimate touch with the work, the trials, and
the accomplishments of its producers as if it had been employing the
services of but a single factory. The ordnance field men knew the war
factories as they knew their own offices. They were acquainted with the
contractors, with the subcontractors, with the shop superintendents and
foremen, and often with the workmen themselves. Obviously they were
qualified to judge at what rate production could be stopped without
injury to the industry or its workmen and to determine the settlement
adjustments that would be fair to both sides.
It is worth while pausing a moment to examine the thirteen ordnance
districts and to note their headquarters cities, their extent, the
characteristic sorts of ordnance supplies produced in each, and the
chief production officer of each.
_Toronto._ Embraced the whole of Canada. Produced principally shell
machined and ready for loading, particularly 75-millimeter shell. As
noted in the preceding chapter, all industrial demobilization in Canada
was carried out by the Imperial Munitions Board, two of the members of
which were special representatives of the War Department Claims Board,
sent to Canada after the armistice for this purpose.
_Bridgeport._ Included Connecticut and four Massachusetts counties.
Primarily the small-arms district, producing all the pistols and
revolvers, all the bayonets, all the automatic rifles, more than a
million of the service rifles, most of the heavy machine guns, and
almost all the small-arms ammunition delivered under war contracts. Mr.
Waldo C. Bryant of Bridgeport was chief of the district.
_Boston._ Included the rest of New England. The chief producer of
soldiers’ belts, haversacks, mess kits, and other personal ordnance
equipment; produced small-arms ammunition heavily, and produced also
boosters and adapters (for shell) and carriages for 155-millimeter
howitzers. Mr. Levi H. Greenwood, chief of district.
_New York._ Included New York City, Long Island, and nine other
New York and twelve New Jersey counties. The prime producer of
trench-warfare ordnance. Produced much toluol and was a finisher of
shell, fuses, and cartridge cases. Loaded more than one-third of all
artillery ammunition shipped abroad. Chief, Mr. George J. Roberts,
vice-president of the Public Service Corporation of New Jersey.
_Philadelphia._ Included eastern Pennsylvania, part of New Jersey, and
all of Delaware. The chief service-rifle producer and a chief producer
of high explosives. Immense shell-loading activities. Chief, Mr. John
C. Jones, president of the Harrison Safety Boiler Works.
_Baltimore._ Included all of Maryland but two western counties, and
all of the District of Columbia and the states of Virginia and North
and South Carolina. The leading shrapnel-loading district and a great
shell-loading area. Contained the largest of the ammonium nitrate
plants. Produced all the 37-millimeter guns. Chief, Lieutenant Colonel
A. V. Barnes, formerly president of the American Book Company.
_Rochester._ Embraced all the state of New York not in the New York
City district. Chief production was in Lewis machine guns, Enfield
rifles, 75-millimeter field guns, shrapnel, picric acid, and optical
glass. Chief, Mr. Frank S. Noble, executive officer of the Eastman
Kodak Company.
_Cleveland._ Northern Ohio and three northwestern counties of
Pennsylvania. Produced completed big guns, shell fuses, 75-millimeter
gun carriages, mounts for railway artillery, and 6-ton tanks. Chief,
Mr. Samuel Scovil, former president of the Cleveland Electric
Illuminating Company.
_Detroit._ Included the state of Michigan. Produced gun recoil
recuperators, artillery vehicles, large-caliber shell, and
trench-mortar shell. Chief, Mr. Fred J. Robinson, president of the
Lowery-Robinson Lumber Company.
_Chicago._ Included northern Illinois and the band of states to the
northwest as far as Montana. Produced caterpillar traction for the
tanks and artillery, guns, carriages, recuperators, projectiles,
and grenades; the district was also saturated with contracts for
machinery for the eastern munitions plants. Chief, Mr. E. A. Russell,
vice-president of the Otis Elevator Company.
_Pittsburg._ Included western Pennsylvania except three counties,
two counties of western Maryland, two counties of Ohio, and all of
West Virginia. The prime subcontract district for the production of
raw steel and steel forgings. Herein was located the Neville Island
ordnance plant project. Produced optical glass in quantity. Chief, Mr.
Ralph M. Dravo, of Dravo Brothers, contractors, Pittsburg.
_Cincinnati._ Southern Ohio, Indiana, and the South. Was the chief
nitrogen-fixation district and the chief producer of smokeless powder.
Included Dayton, with 200 factories exclusively engaged in munitions
production. Produced tanks, shell, fuses, optical instruments, and
machine tools for war factories. District chief, Mr. C. L. Harrison, a
Cincinnati capitalist.
_St. Louis._ Included southern Indiana and sixteen western states.
Produced black walnut, toluol, and picric acid. Chief, Mr. Marvin E.
Singleton, former president of the East St. Louis Cotton Oil Company.
After the armistice the manufacturing committees in charge of the
twelve American ordnance districts became, without essential change in
their organization, the ordnance district claims boards. Each board
consisted of seven members--business men and at least one lawyer--with
such technical assistants as they needed. The first executive act in
demobilization for these boards to make was to determine what war
contracts were to be terminated immediately, what ones were to be
tapered off with a minimum expense to the Government and a minimum
disturbance to industry and labor, and what ones were to be carried
through to completion.
It was often advantageous to allow the contractors to proceed
undisturbed. Some of these ordnance supplies, which would be valuable
and essential items of our military equipment for years to come, were
only just reaching the stage of production in the factories, after many
months of costly experiment and preparation. It was obviously unwise
to interrupt these projects with nothing to show for them except heavy
bills of expenses. Then, too, it was sometimes of financial advantage
to the Government to allow a contract to go through to completion. A
contractor in the Chicago district, for example, had nearly completed
the manufacture of several large machines for installation in an
eastern munitions plant. To cancel the contract would have cost the
Government $90,000 in a settlement and left on its hands a quantity
of semi-finished materials having only junk value. The Government
no longer had use for the finished machines; yet it would cost only
$14,000 more to go on and complete them. This was done, and the
Ordnance Department was later able to sell the machines to a private
buyer for more than $100,000, thus recovering practically all the money
it paid to the contractor.
To provide a basis of fact for all such acts of administration in the
demobilization, the district boards first took a rapid but thorough
inventory of the ordnance industrial situation. This they did by means
of questionnaires sent to all the contractors. Each questionnaire, when
returned to the district board, showed the status of the contract at
the time and how the contractor’s business and his employees would be
affected by a termination. The general ordnance policy was to permit
contractors (after the first emergency suspension which, it will be
remembered, had been requested immediately after the armistice was
signed) to continue their work on a diminishing scale for a few weeks,
while they made their arrangements to engage once more in commercial
work. Some of the contracts, including all the late, standardized
ones, provided for the termination of work upon thirty days’ notice.
If, however, the enforcement of this provision would create any
considerable amount of unemployment, the district boards allowed such
contractors to complete an average thirty days’ production, but to
spread out the work over a longer period of time.
There were variations of the general policy when it was applied
to special classes of ordnance industry. For instance, the many
contractors who were machine-finishing the artillery shell were
permitted to keep their plants in full operation until January
31, 1919, when the work had to cease abruptly. All source
industries--industries, that is, producing rough forgings and other raw
and semi-finished materials for ordnance manufacture--were taken from
war work forthwith. Then, too, as noted, in various classes of large
ordnance, or ordnance of exceedingly difficult manufacture, the orders
were greatly reduced and the contractors permitted to go ahead and
complete the residue, no matter how long it might take. Such ordnance
included gun carriages, recuperators, tanks, optical instruments, and
other supplies of the sort. This reduced production continued for more
than a year after the general stoppage of war industry. Some of the
Mark VIII tanks (the Anglo-American design) were delivered to the Army
as late as June 1, 1920.
So expeditiously was the work of termination carried on in the other
classes of manufacture (and these made up the greater part of the
ordnance industry) that by January 1, 1919, nearly all war ordnance
production had either been terminated altogether or was dwindling to
the vanishing point under specific agreements. After February 1 the
only war ordnance factories in operation were the exceptional plants
noted in the preceding paragraph.
Even as the ordnance industry was being stopped, the Government was
coming to an understanding with the ordnance contractors as to the
settlement of their claims. To this end, in most of the manufacturing
districts the board members traveled from city to city, addressing
large meetings of the contractors and explaining to them the general
liquidation policy adopted by the War Department. In its broad
outlines, this policy was as follows: The Government would take off
the contractor’s hands at cost all materials which he had specifically
purchased for his contract, but which he had not used. The Government
would reimburse him for all work done on his contract, for all
materials used, for all money paid out in wages, and for all legitimate
overhead expense, the Government in return taking over all materials in
the various stages of their completion. Further, the Government would
regard as proper costs whatever it cost the contractor to terminate
and settle his subcontracts, and would pay these costs. Finally, in
specific instances the Government would pay money in amortization of
the cost of machinery and tools bought especially for war use, the sum
to be proportioned to the amount of work completed. And whatever else
the contractor was out of pocket legitimately, the Government would
pay. When the various costs were brought together as a lump, to this
sum the Government would add 10 per cent as profit. It would, moreover,
allow 6 per cent interest on money which the contractor had invested
in materials, reckoning from the average time of purchase to the date
of the settlement; but it would not allow 10 per cent profit on this
investment in addition.
These terms received widespread acceptance, although they allowed
no prospective profits, and thereupon the various districts became
scenes of great activity as the ordnance officers worked with the
contractors to expedite the presentation of settlement claims by the
latter. Inspectors and agents employed by the district boards checked
manufacturers’ inventories, and boxed and set aside materials to
be delivered to the Government, while district accountants audited
the costs statements. Each field agent of a district board was made
responsible for a few specific claims. He stood at the contractor’s
elbow and helped him rough out his claim into proper form. A spirit of
amiability prevailed. For many reasons the contractor wished to make
his settlement as quickly as possible, and the district agent was there
to tell him what items in his claim were indisputable, and what ones
were likely to be contested, thereby holding up the final settlement.
When the district agent and the contractor had agreed as to a claim,
they submitted it informally to one of the members of the district
claims board for his opinion. If he thought his board would be unlikely
to allow certain items, the contractor could usually be persuaded to
omit such items. Claims prepared under such conditions presented little
difficulty to the various claims boards, and most of them went through
to settlement without a hitch in the proceedings.
Most contractors were willing to forego their technical rights in order
to save the Government from paying for useless production, but a few
were obdurate. One man, working under a contract with a thirty-day
termination clause, deliberately increased his rate of production
five times in order to collect a maximum amount from the Government.
When the Ordnance Department discovered his plan, it breached the
contract outright and allowed the producer to take his grievance, if he
continued to nurse one, into the courts. A rare instance of this sort,
however, is cited only to show by contrast the prevalent attitude of
industrial coöperation with the Government. Numerous producers omitted
from their claims many items the validity of which could probably have
been sustained in the future negotiations, but which were, however,
subject to close scrutiny and therefore a factor of delay in the
settlements.
The wheels of war industry had not ceased to turn before the Government
began to make advance payments in settlement of the industrial claims.
If the contractors were generous, so was the Government. The first
settlement made illustrated the War Department’s attitude right
through. A New York contractor had submitted a claim for about $15,000.
On January 20, 1919, he informed the New York District Claims Board
that two days later he had to meet a note for $10,000, a debt incurred
in prosecution of his war contract. A member of the New York Claims
Board took this claim in person to Washington and next day secured its
approval by the Ordnance Claims Board, together with an authorization
to advance $10,000 to the contractor pending the final approval and
settlement by the War Department Claims Board. The New York district
finance officer paid over the $10,000 in time to save the note from
going to protest.
As the weeks went on the New York manufacturer’s plight was duplicated
over and over again. The producers of ordnance supplies, after the
termination of their contracts, faced enormous financial obligations
which they would have to meet long before the machinery of liquidation
could act upon their claims. To such producers the system of advance
partial payments afforded great relief. The policy of advance payments
not only saved numerous concerns from financial ruin, but it
stimulated the general commercial reconstruction and resumption of
normal business by releasing large sums of money and putting it again
into circulation. And, it should not be forgotten, the system greatly
aided the Government to secure favorable settlement terms from the
contractors by offering the reward of early payments to those whose war
business was quickly liquidated.
Since the prime contractors’ subcontract settlements were acknowledged
costs which the Government was bound to pay in the prime settlements,
it was vitally important that the Ordnance Department intervene to
obtain for the prime contractors the most favorable terms possible
in the settlement of their subcontracts. Every subcontractor, of
course, had the legal right to insist upon the full performance of his
contract, and he was not to be coerced by the bogey of the Court of
Claims and its long-drawn-out procedure. He could go into the state
courts and enforce his rights within reasonable time. Therefore,
it is indicative of the spirit of war industry that the ordnance
district claims boards found little difficulty in settling with the
subcontractors on favorable terms. The prime contractors had no such
interest in these terms as did the Government, since, whatever the
subcontract settlement costs might be, the Government would have
to pay them. The agents of the district boards readily persuaded
the subcontractors, as a sporting proposition, to surrender their
prospective profits voluntarily and accept the profit of 10 per cent on
work actually done, even as the prime contractors, who had assumed the
chief risk in the first place, had been willing to do. The efforts of
the ordnance field agents in this direction saved the Government many
millions.
The first complete claim received by the Ordnance Claims Board came
from the Detroit district on January 10, 1919. The first claim to go
through to final settlement by the Ordnance Claims Board was passed on
February 20. The district claims boards sent the bulky and valuable
settlement papers to Washington by courier rather than entrust them
to the mails. When the system settled into its routine the Ordnance
Claims Board passed upon the average claim within a week after
its arrival in Washington. On the average the Government paid in
the settlement of ordnance contractors’ claims an amount equal to
about 12 per cent of the face value of the uncompleted portions of
the contracts. The average ordnance contract entailed a government
obligation somewhere between $100,000 and $250,000 in amount, but
many were much larger. The Marlin-Rockwell Corporation of New Haven,
Connecticut, one of the chief producers of machine guns and small
arms, presented a claim for nearly $14,000,000. One of the largest
war contracts was that with the American Car & Foundry Company, of a
face value of over $100,000,000. In contrast, the New York Ordnance
District Claims Board, which settled that contract, settled another (a
subcontract) for $1.50. The claim of the DuPont Powder Company against
the Ordnance Department was for about $3,280,000--this in settlement of
contracts with a value of $50,000,000. The New York Air Brake Company
presented to the Rochester Ordnance Claims Board claims aggregating
$9,000,000. The New York District board settled 206 claims for $1.00
each, the contractors voluntarily refraining from presenting any claims
above the statutory dollar which had to be paid to make the settlement
legal.
Many were the interesting episodes which occurred during the ordnance
liquidation. The St. Louis district was the chief source of black
walnut timber secured during the war. Walnut was used in making
gunstocks and airplane propellers. In hunting for walnut in this
district we discovered that we were gleaning where Germany had reaped
before us. The former solid stands of walnut in this district had been
cleaned out in recent years, much of the timber having been shipped to
Germany _via_ the Gulf ports. Yet our gleaning was successful. Walnut
trees, growing as individuals or in small groups, were still to be
found along the country lanes, in farm lots, at the edges of orchards,
and shading the grounds of the farmsteads. Nowhere were more than
thirty trees in a group discovered. Consequently an adequate supply of
walnut for the munitions plants depended upon a foot-by-foot search
of the entire American countryside in the walnut regions. In this
work the Government was assisted by tens of thousands of volunteers
aroused to the need by the widespread publicity. The Boy Scouts turned
their hikes into walnut-hunting expeditions. The country doctor, the
circuit-riding clergyman, the bee hunter, and the muskrat trapper all
made it their business to locate and report stands of walnut timber.
As a result unexpectedly ample quantities of the wood were secured
from regions supposedly denuded of it. On the day of the armistice the
timber dealers found themselves stocked up with enough black walnut to
meet all commercial demands for five years ahead.
One of the Ordnance Department’s timber cruisers located a grove of
black walnut trees shading the farm home of a woman living in Missouri.
She hated to sacrifice her trees, but listened to the appeal of
patriotism and accepted an offer of $1,100 for them. Then, when the
agent had left with her signed agreement in his pocket, she repented
of her bargain and grieved so much at her forthcoming loss that the
village minister suggested a remedy. He told her that the anticipated
proceeds of the sale would pay for an automobile in which she could
ride about the country and, amid the pleasant rural scenes, forget
about the devastation soon to be staged in her own front yard. She
acted on this suggestion, bought a car for $1,080, and in payment gave
a note which she agreed to lift when the Government took the trees
and paid her the money. The armistice intervened before the timber
cutters appeared, and the Ordnance Department canceled the contract
with the timber dealer. That left the woman with a half-used car, a
note maturing in the bank to meet which she had no funds, and a clump
of walnut trees for which the Government had no use. The St. Louis
District Claims Board could not relieve her distress, but a member
of the board brought the case to the attention of a meeting of war
contractors; and it was arranged for the Missouri lady to keep both her
automobile and her walnut trees.
The New York District Claims Board settled for $275,000 the claim of
the Wah Chang Trading Corporation, of China, which supplied a large
amount of antimony used in making shrapnel bullets. In the New York
district also there had been a contract with the Japan Paper Company
to supply paper parachutes for carrying floating signal lights. The
contract was not a large one; yet in its settlement it was disclosed
that there were about 10,000 subcontractors--individual Japanese
families working in their own homes in Japan. Under the circumstances
the board waived the usual rule that with every prime contract claim
must be filed statements of settlement certified by every subcontractor.
Each of the district claims boards maintained in its quarters a
progress chart which showed graphically each day the amount of
industrial liquidation accomplished and the amount remaining to
be done. In eleven of the districts this chart took the form of a
thermometer, the rising mercury showing the amount of completed work.
In the twelfth--at Cleveland--the chart was a representation of a
bottle containing a celebrated beverage that does duty in these dry
days for beer, and the task of the board was to empty this container.
On the first anniversary of the armistice the Ordnance Department’s
system of industrial demobilization had cleared up a large part of
the war business. The district boards had passed upon 94 per cent
of all contractors’ claims presented, and the Ordnance Claims Board
in Washington had disposed of 73 per cent of the ordnance claims.
The settlements at this time had cost the United States nearly
$131,000,000, but that sum had settled uncompleted portions of
contracts to the value of approximately $1,000,000,000; and, in finding
the net cost of the liquidation to the United States, from the sum
paid out in these settlements there was still to be subtracted the
receipts from the sale of materials taken over in the settlements.
By the end of 1919 the district boards had passed 97 per cent of all
claims and the Ordnance Claims Board 81 per cent. By that time the
total amount approved for payment in adjusting the claims was more than
$166,000,000.
In the latter part of 1919, however, a different system of settlement
went into effect. By that time about three-fourths of the ordnance
claims had been settled, in a spirit essentially of bargain and
compromise, the Government yielding points and the contractors yielding
them in order to reach swift agreements. Those who did the bargaining
for the Government were for the most part the original members of the
district organizations, the men who had been in touch with the industry
from the start. As the unfinished business diminished in quantity,
however, the members of the district claims boards one by one left the
government service and returned to their own affairs, until by the
autumn of 1919 the boards were made up largely of new members, most of
them uniformed army officers who bore no such intimate relationship to
the contractors. Within the Government, too, there was a growing spirit
of criticism of the bargaining method of settling the contracts, even
though the bargains had been highly advantageous to the Government. It
was felt that more conventional methods should be employed. The result
was a marked slowing down in the rate of industrial demobilization in
the Ordnance Department.
It seems fitting here to say a word for the men who manufactured our
ordnance during the war. The popular picture of a war contractor is
that of a man swollen with new wealth and spending his money in riotous
extravagances. This indictment, at any rate, cannot hold against the
ordnance maker. Instead of profiting, the average ordnance contractor
was glad enough to get out of the enterprise with a whole financial
skin. Many were not so fortunate. An impartial investigation made by
the Ordnance Department over its entire war manufacturing field showed
that not more than one contractor in three or four, when the business
was closed up, had anything to show for his war experience except the
self-satisfying sense of having served his country.
In the light of the fact that so few of them profited at all and so
many incurred actual loss, it is remarkable that they were not more
grasping in the demobilization settlements; but the eternal fact
remains that they were inclined to ask for less, rather than more,
than was coming to them under their legal rights. This attitude was
consistent with their whole attitude during the war. In the history
of American industry there is no chapter more creditable to it than
that of the attitude and accomplishments of the producers of ordnance
during the World War. These men entered the undertaking with a zeal
unsurpassed in any other part of the war organization. Working under an
urgency such as American industry had never before experienced, they
accepted the handicaps that had been placed upon the nation by its
own peace-loving traditions and worked together as a unit to overcome
the handicaps. They transformed their manufacturing plants with never
a thought for the business they would one day have to resume. They
undertook to produce, in quantities never before even projected,
intricate materials of warfare the very names of which were unfamiliar
to them. Despite the mounting costs of materials and labor, they
managed to hammer down the prices of rifles, machine guns, explosives,
shrapnel, and other important commodities, delivering to the Government
not only a superior product, but a product costing the Government less
than other nations at war paid for the same things. To accomplish this
result they threw their normal rivalries on the scrap heap, opened up
their trade secrets to each other, and virtually became partners in
the single enterprise of supplying the American troops with the best
munitions which American industry could produce.
As a rule, the profit-making war contractor was one who supplied
commodities essentially like those produced in normal times. But
supplies of this sort were almost unknown in the whole range of
ordnance. The typical thing was to find on the day of the armistice the
ordnance plant which had not yet come into full production under the
original contract. This was because of the difficulties encountered in
producing the more important items of ordnance. The months of the war
had been marked by the heavy expenditure of money in the expansion of
plants and the development of processes, and the armistice cut off the
development before it had reached the profitable stage.
The producers did not attempt to recoup in the business liquidation
that followed. These sentences are not intended to give a clean bill
of health to the whole body of ordnance producers--some few of them
sought to get more than they were morally entitled to get; some few,
like the country horse trader, adopted the age-old procedure of barter
by asking more than they expected to get. But where one man held out
for the last penny of his rights, there could be found half a dozen
others who put in no claims at all for money to which they were justly
entitled. The great steel-producing industry, in particular, showed an
aristocratic contempt of requiring its full due. Many steel producers
pocketed their losses without a word: in fact, the Government settled
a surprising number of ordnance contracts for the statutory one dollar
apiece and thus saved itself millions for which it was legally liable.
When the curious ordnance officers asked some of these contractors why
they did not claim their full rights, they responded that the victory
over Germany was compensation enough for them. As one of them expressed
it, the achievements of the American boys in France had given him his
run for his money.
In the Pittsburg district two steel producers had been engaged on
contracts for essentially the same sort of material and on about the
same scale. One was a small concern which had been kept at its wits’
end most of the time to finance its war enterprise. The other was one
of the largest corporations in the United States, with ample financial
resources. Into the Ordnance Claims Board came two claims terminating
contracts of approximately identical characteristics. One of the claims
was several times larger than the other, and naturally the Washington
authorities questioned the larger claim. They found that the latter
was a just claim in every particular. The discovery was made that the
smaller of the two claims had asked for an amount in settlement much
below what the producer was entitled to receive. The larger claim had
been submitted by the producer whose finances could not stand any
loss; the smaller by the great corporation referred to above. Both were
allowed in full.
Of the 317 large ordnance contracts in the Pittsburg district, the
Government settled 149, involving a total obligation of more than
$23,000,000, for $1.00 each. In this and other districts thousands of
subcontractors forgave the prime contractors their legal obligations
without the transfer of a penny. In the Philadelphia district the
prime contractors cleared up thousands of their subcontracts and said
nothing about them in their liquidation claims. These instances of
generosity were discovered only when the Ordnance Department checked
up to find out why the final settlement costs were so much lower than
the preliminary estimate of those costs, made in the first hurried days
after the armistice.
The record of American ordnance production was not a flawless one--it
was too large to be that--but in view of the general attitude of the
producers, it is submitted that to have participated in that war
industry was a distinguished honor.