in the matter of bringing to the required spot huge guns too
heavy to be transported in any other way. These will be fired
without leaving the rails. The truck gun-carriage is so
arranged as to withstand the recoil; this result is obtained by
placing on the ground, once the carriage is stationary,
supports which take the load off the wheels. The recoil is
transferred to the ground so that the rails do not suffer.
"Whether the object is to organize a supply line, to transfer
reinforcements, or to carry heavy material to its destination,
it may be of service to provide for the absence of normal lines
by laying down rails along the road. Both the Germans and
ourselves have done this very frequently. A narrow gauge of
sixty centimeters is generally used. A team of skilled sappers
takes about three hours to lay down about one kilometer of
railway."
AMERICA'S SHIPPING PREPARATION
The two great means of transport--railways and ships--furnished in this
war the greatest examples of modified state socialism which America had
yet seen. As to the general way in which they were controlled these two
services show a fairly close family resemblance, though the forms of
organization were technically quite different. The larger railroads and
the larger ships were taken possession of by the Government and were
operated by the same people, in general, who operated them before, but
under orders of the Railroad Administration and the Shipping Board
respectively. New ships and new railroad equipment were built on plans
made under federal direction, and in both cases the output was being
largely standardized. The heads of the Shipping Board and the Emergency
Fleet Corporation were men drawn from private business, while the
regional directors of the railroad regions and the federal managers of
the separate roads were railroad men, usually managing their own roads,
under the government's direction. Thus in both cases private enterprise
furnished the traditions and training of the personnel that made this
experiment in socialism.
Besides the points of likeness there were differences between the two
services. In the case of ship-building, the industry was virtually
re-created, so great was the expansion and the revolution in methods. In
the case of railroads the emphasis was, as has been seen, on the task of
utilizing an existing and limited plant to its utmost capacity for war
purposes.
WAR'S EFFECT ON SHIPPING
The following table, taken from a pamphlet distributed by the Emergency
Fleet Corporation six months before the conclusion of the war, gives a
perspicuous view of the shipping situation at the opening of military
operations in the United States:
THE WAR AND WORLD SHIPPING
Gross Tons
World's shipping (except German and
Austrian) August 1, 1914 42,574,537
Additional ships built, August, 1914-
December 31, 1917 6,621,003
German and Austrian interned ships
available for use of Allies 875,000
----------
Total 50,070,540
Losses since 1914.
Due to ordinary causes. 1,600,000
Due to mines, raiders
and submarines:
Allies 8,900,119[17]
Norway 1,031,778
Other neutrals 400,000
Total 11,931,897
----------
Balance actual tonnage available 38,138,643
Net decrease since 1914 4,435,894
Add 2 tons constantly required to
maintain each man in France
(1,500,000 men × 2) 3,000,000
Shortage for merchant traffic, at least 7,435,894
[17] To October, 1917.
Another table gives a view of the rates between the building and sinking
of ships among the Allied, neutral, and British nations from the
beginning of the war to April, 1918:
"The world's shipping suffered a net loss of 2,632,279 tons
from the beginning of the war to April 1, 1918, the greater
part of this having occurred since the beginning of the
unrestricted submarine warfare which brought America into the
war. This loss is partly due to England's having increased her
naval building at the expense of merchant tonnage. While naval
construction must not be neglected, some building capacity can
be turned back to merchant ship-building in case of extreme
need. However, in April, 1918, Great Britain and the United
States built 40,000 tons more shipping than was lost, and
American construction is still rapidly increasing."
AMERICA'S SHIP-BUILDING PROGRAM
American ship-building was planned on grandiose lines, partly to make
good the losses by submarine, partly to provide transportation for
American troops to Europe, and partly for propaganda purposes in
friendly and in enemy countries. The American program was an ambitious
one. Inflated figures were offered for popular consumption and
undoubtedly they were consumed and had their influence in securing a
successful close to the struggle. While reports were coming from Great
Britain telling of constant labor troubles on the Clyde and other
ship-building localities, every item of news from Washington spoke of
the marvelous achievements of American ship-building. One message read
after eight months of the war had passed: "For the first time in history
America has outdistanced England in her ship-building output."
Foreign critics called attention to the fact that American figures of
ship-building (1918) had a different basis of valuation from those of
other countries. In one case there were vessels completed and entered
for service, and in another there were vessels launched. The situation
is presented by the London _Economist_:
"British shipping, still in magnitude far beyond that of any of
the Allies, is declining; it is still being sunk faster than it
is being replaced. American shipping, on the other hand, is
rapidly expanding, and has already turned the scale against the
U-boats. The American Army in France as it is reinforced must
become more and more dependent upon American ships for
transport and supply. Up to the end of July the net loss in
British shipping due to enemy action and marine risks since
August, 1914, had been 3,851,537 gross tons. During the current
year to July 31 we have lost 583,600 gross tons more than we
have built. British sea power, the power to use the sea as
measured in merchant shipping, is wasting. On the other hand,
the net gain since August, 1914, in Allied and neutral
shipping--to which the United States have largely
contributed--was nearly 1,100,000 tons at the end of June this
year, and was showing a very remarkable rate of expansion.
Thanks chiefly to the United States, the Allied and neutral
monthly gain now more than offsets the British loss. The
critical corner has been turned. To those whose eyes look
beyond the war, and who already anticipate a great American
mercantile marine in competition with depleted British lines,
we would point out that after all its losses British merchant
shipping still amounts to over 14,000,000 tons gross, and that
America's ocean-going tonnage built and completing--exclusive
of captures--is as yet little more than 4,000,000. What the
relative positions will be a year hence--or two years hence,
should the war last so long--we do not venture to predict."
THE FOURTH OF JULY SPLASH
Reports of the Shipping Board's activity led to expectations of an
unprecedented number of ships to be launched, fitted and ready for
transport and trade purposes within a very short interval. Much
enthusiasm was created by the Fourth of July splash, 1918, when,
according to the New York _Tribune_, in twelve hours steel and wooden
ships hit the water in clouds of smoke and spray, at the rate of one
every seven minutes. The era of Mr. Jefferson Brick had undoubtedly
returned, for the _Tribune_ went on to expatiate in poetical exuberance
that the shores of "Puget Sound, San Francisco Bay, Columbia river, the
Gulf of Mexico, the Delaware, Chesapeake Bay, New York Bay, and all the
coast of New England and the Great Lakes were laved by the backwash of
the great ships of the Liberty Fleet rushing to their proper element."
The Bureau of Navigation estimated that by the end of June, 1918, 1,622
ships of 1,430,793 gross tons would be launched--more than double the
output of German yards in times of peace. One article refers to the
actual event as follows:
[Illustration: Copyright by Charles Phillip Norton
Building a Steel Ship in Seattle, Washington
American ship-building during the war was planned on a gigantic scale to
make good the losses by submarines and to provide transportation for
American troops to Europe. The _West Lianga_, shown above, an 8,800-ton
cargo carrier was launched within 55 working days and delivered, ready
for cargo, in 67 days.]
AMERICAN LOSSES--NEW TONNAGE BUILT
"At San Francisco on July 4th, Mr. Charles M. Schwab,
Director-General of the Emergency Fleet Corporation, said to
the shipworkers: 'If you stand up to your job, we'll make the
Kaiser take his medicine lying down.' Mr. Schwab also ventured
the statement that this Fourth of July shows the greatest
record of launchings for a single day in the world's history,
and added:
"'Every time we launch a cargo or troopship or tanker we add to
the certainty that German submarines can not win this war.
Already we have the U-boats on the run, and if we keep up the
pace we will have them beaten by next year. And when we achieve
this victory it will be you who will deserve the credit.
"'In 1915 all the shipyards in America turned out 215,602
dead-weight tons of shipping. The next year our output jumped
to 520,847 tons. In 1917 the hot pace continued until we very
nearly doubled the output of the previous year, completing a
total of 901,223. I am confident now that if we pull together
and every man stays on the job, we will produce more than
3,000,000 dead-weight tons in 1918--the greatest output of any
nation in the world in a single year.'
"Premier Lloyd George sent a cable to President Wilson on the
launching of the ships, in which he extended 'heartfelt
congratulations on this magnificent performance,' and in an
Independence-day speech Secretary of the Navy Josephus Daniels
said in part:
"'We are launching this day far more tonnage than that of all
the American vessels sunk by submarines since the war began. We
are launching today more than the Germans sank of the ships of
all nations in the last month for which we have the official
figures. The recent enemy submarine activities off our coast
resulted in the loss of 25,411 dead-weight tons of American
shipping. During this same time 130,000 gross tons of shipping
were built.
"'To give some idea of the tonnage situation with reference to
American shipping, it may be of interest to know that the total
tonnage of American vessels lost prior to the entry of the
United States into the war was 67,815. The total American
tonnage sunk since the entry of the United States into the war
is 284,408, or a total of 352,223 tons sunk during the whole
period of the European War. As against this loss, the gross
tonnage of merchant ships built in the United States since the
commencement of the European War is 2,722,563 tons, 1,736,664
gross tons of which have been built since the entry of the
United States into the war. In addition to the tonnage thus
built 650,000 tons of German shipping have been taken over.
This does not include the tonnage acquired of Dutch, Japanese,
and other vessels. It will be of further interest to know that
today there will be launched in the great shipyards of this
country over 400,000 dead-weight tons. These figures are in
addition to those previously given.'"
A SHIP-BUILDING CAPACITY OF OVER 1,500,000 TONS A YEAR
The war program of the Shipping Board implied a multiplication by three
of existing outputs. This increased output signified the possibility of
labor difficulties, and in order to prevent these an agreement was
reached between representatives of the labor unions, the Navy
Department, the Shipping Board and the Emergency Fleet Corporation, to
the effect that all disputes concerning wages, hours or conditions in
shipyards in ship-building plants should be determined by a committee of
three, one representing the corporation, one nominated by the President
and the third selected by Mr. Samuel Gompers. When this agreement was
entered into the United States reported a ship-building capacity of over
one and one-half million gross tons a year. Two years previously the
ship-building capacity was only five hundred thousand tons, but
according to the London _Economist_, a rate of four million gross tons a
year would have to be supplied if the American Army was to have
sufficient means of transport.
When this forecast was made on both sides of the Atlantic, it was
realized that so far as the marine situation was concerned the war had
become simply a question of ship-building against the submarine.
Military operations intervened to prevent a full test of our
ship-building strength, but there was full confidence in the United
States that American ship-building would by increased production make
the German submarine program an inconsiderable factor in the question of
terminating the war.
TRANSPORTING THE AMERICAN ARMY
When there came a demand for an increase of man-power to be sent to the
battle front few appreciated what this effort meant in its effect on
increased shipping activities. Half a million American soldiers crossed
the Atlantic in the first thirteen months of the war, after our entrance
into the war, and a million and a half in the last six months of the
war. The shipment across the Atlantic was at first anything but rapid.
There were only a few American and British troop ships chartered
directly from their owners. Then the former German liners were brought
into service and with this addition embarkations greatly increased.
[Illustration: Hog Island Ship-building Yards
The expenditure of millions of dollars and the labor of thousands of
workmen transformed in a short time a tract of marsh lands near
Philadelphia into one of the greatest ship yards in the world.]
Early in 1918 increased shipping facilities were arranged for with the
British Government. The results of this arrangement became visible in
the growth of troop movements for March, 1918. Then there came the great
German drive; after this every ship that could be secured was pressed
into service. More British troop ships were used. Accordingly, in May,
1918, more than twice as many men were carried as in April. The June
record was greater than that of May and before the first of July one
million had been embarked. During the summer the number carried was more
than 10,000 men per day. This record has only been excelled by the
achievement in bringing back the same men to the shores of the United
States.[18]
[18] For complete official figures of the troop movement overseas, see
Volume IV.
In addition to the transatlantic fleet there was an American
cross-channel fleet carrying men and cargo from England to France. This
fleet consisted of more than a third of a million tons by the end of
1918. One-fourth of these vessels were Swedish or Norwegian, while the
rest were American. This fleet comprised large numbers of small wood and
steel vessels built by the Emergency Fleet Corporation at the yards of
the Great Lakes and along the coast.
ACCELERATED SHIPPING
The Emergency Fleet Corporation turned over nearly a million tons of new
ships for military purposes, and besides Scandinavian and Japanese
tonnage was chartered. By doing this and by taking over lake steamers
the large tonnage figures were secured, but it must be remembered that
the Allies were largely concerned in the American troop movement. Of
every 100 men who went over, 49 went in British ships, 45 in American,
three in Italian, two in French and one in Russian shipping under
British control. Moreover, a way was found to increase the loading of
transports by as much as 50 per cent.
The duration of the voyage round trip was considerably decreased. In the
spring of 1917 the average turn around for troop ships was 52 days. Some
of the fast ships averaged under 30. The _Leviathan_, for example,
landed the equivalent of a German division in France each month. Most of
the cargo ships were American and these ships carried thousands of
articles of the most varied sort. Nearly one-half of all the cargoes
consisted of food and clothing. Then came the engineering and ordnance
supplies. A large number of locomotives were shipped, set up on their
own wheels so that they could be unloaded on the tracks in France and
run off in a few hours under their own steam. These locomotives were of
the hundred-ton type. Shipments of this type had never been made before.
When the armistice was signed the Army was prepared to ship these set-up
locomotives at the rate of 200 a month. The actual record shows that
1,791 were sent to France on transports.
Nearly 27,000 standard-gauge freight cars were shipped abroad, and motor
trucks to the number of 47,000; rails and fittings were sent to France
aggregating in all 423,000 tons. Moreover, the Army shipped nearly
70,000 horses and mules. The increase in the shipping of cargo from the
United States was consistently maintained from the start of the war, and
at its cessation it was undergoing marked acceleration.
BRITISH SHIP-BUILDING
Ship-building in England was taken over by the government early in the
war. This plan was described by many as an example of a blundering
surrender to Socialism and a concession to bureaucratic tendencies.
These critics pointed to the fact that in 1914 British shipping tonnage
had reached the figure of 19 million tons, an increase of over 10
millions in 15 years; and this was done in spite of subsidized
competition from abroad and lack of reasonable encouragement at home.
The policy of government interference was regarded as simply a method of
discouraging English initiative in this industry. A writer in the London
_Outlook_, Mr. E. T. Good, described the project in a most unfavorable
light:
"On top of foreign subsidized competition our people are to be
subjected to Government competition at home, and their whole
position and prospects rendered uncertain, if not impossible.
This new government undertaking can have nothing but a
chilling, blighting effect upon our splendid ship-building and
engineering trades, and it will not give us one additional ton
of shipping. The government policy--or lack of policy--is such
that no one knows what to expect next. There is no certainty.
There is no continuity of policy. There is no encouragement.
There is no common justice for British enterprise. Whilst
Germany, France, Italy and other nations are preparing large
subsidization schemes for their shipping and ship-building
trades, our government excessively penalizes our industries and
enterprises, and gives no hint of any fair dealing in the
future. Before the war German subsidized liners were permitted
to come into our harbors and take on board British passengers
at 'blackleg' rates, and without paying even a due share for
the upkeep of our ports and lights. Now our government, whilst
paying neutral shipowners--our future rivals--freights up to as
much as 500 per cent. above the Bluebook rates paid to our own
vessels, is taxing our shipping people up to the eyes--doing
all that it can to render it difficult, if not impossible, for
our companies to increase their fleets and maintain British
supremacy after the war."
[Illustration: Copyright by Underwood & Underwood
Launching the City of Portland on the Columbia River, near Portland,
Oregon
Most of the cargo ships that carried supplies to our troops after we
entered the war were American owned, and carried thousands of articles
of the most varied sort. The _City of Portland_, shown above, was a
three hundred foot wooden motor vessel.]
It must be remembered that Great Britain's shipping problem was a matter
of extreme complexity. There were first of all the submarine sinkings.
There was the lack of labour for ship-building. There was, besides, the
fact that the tonnage available for ordinary imports was considerably
lessened by the commandeering of merchant ships for the carriage of
government material. The following statement of the problem was
presented by the British Premier himself in August, 1917:
"In addition to this, the Shipping Controller has taken steps
for the quickening of ship-building. The tonnage built in this
country during peace times is, I think, on an average
something a little under 2,000,000. In 1915 the ship-building
came to 688,000 tons. In 1916 it was 538,000 tons. In this year
a little over a million tons, nearly 1,100,000 tons, will be
built in this country and 330,000 tons will be acquired abroad,
so that this year the tonnage which we shall acquire will be
1,900,000. This is purely mercantile marine. Bear in mind the
condition under which the tonnage is built. It is the fourth
year of the war. There is a difficulty in labor and great
difficulty in material. You require steel for guns and shells
for the Navy, because the ship-building program of the Navy has
gone up considerably in the course of the present year. In
spite of that fact the ship-building of the country in this
year will not be very far from what it was in the days of
peace.
"Even now we have not got enough tonnage for all essential
purposes. We have got to provide tonnage for France, Italy and
Russia, as well as for ourselves, and we need more ships
instead of fewer ships. And I am not going to pretend that
there will not be at best a rate of diminution of our shipping
which will embarrass us in the struggle, and therefore it is
essential, not merely that this country should build, but that
the only other countries which have a great ship-building
capacity should also build. If the United States of America
puts forth the whole of her capacity, and I have no doubt, from
what I hear, that she is preparing to do it in her own thorough
and enterprising way, I have no doubt at all that we shall have
sufficient tonnage not merely for this year but for the whole
of 1918 and, if necessary, for 1919 as well, because America
can expand very considerably her ship-building capacity if the
real need ever arises for her to do so."
BRITISH BUREAUCRATIC METHODS
On the whole it must be allowed that after the results were published
there was a great disappointment, particularly as the government had put
forth roseate plans for ship-building on a large scale. At the beginning
of the war there were 16 million tons gross of steamers of more than 600
tons each. A large part of this total was used in the service of the
Navy; and the balance, available for the carriage of food, materials and
exports, was lost during the submarine campaign. The government seemed
to show no ability to replace it. Sometimes it is contended that the
responsibility was to be charged up to the labor organizations.
According to the _Economist_ the situation was due to bureaucratic
methods of control.
In a debate in Parliament the whole subject was ventilated:
"From every quarter members with first-hand knowledge of
ship-building got up to tell the same story of
over-centralization, fussy control, conflicting orders, leading
all to the same result--discouragement of masters and men. Mr.
Mackinder, speaking for a Glasgow constituency, and Sir Walter
Runciman, speaking as a ship-owner--two men whose views on
economics are the poles apart--were in agreement here. The
fault, they declared, lay, not in the want of patriotism or the
inherent vice of the British workman, or even in the lethargy
of the British employer, but in the third and predominant
member of the ship-building partnership, the British
Government. Keeping the direction in its own hands, the
Government started with a preconceived theory of the standard
ship--a theory that might be of great value to a builder of
revolutionary ideas laying the foundations of a prosperity to
be enjoyed twenty years hence, but is of considerably less
value to a nation that is losing steamers at the rate of
fifteen or twenty a week, and wants new steamers now. When the
standard ship was first proposed, builders pointed out that in
practice each had a standard ship of his own, and they could
build most quickly by confining themselves to their own
familiar types. Mr. Macnamara told them that they were
Solomons, wise after the event, but that is less than fair.
They were wise from the beginning, and their predictions have
come true."
TRADE POLICY AS A WAR WEAPON
The building of ships under Government supervision and control was only
one side of Allied war shipping administration. Seaborne trade was
rigidly directed as a potent arm in bringing Germany's war power to
ruin. The industrial and economic effect of the marine blockade was
fully conceded by a number of German and Austrian newspapers.
_The Frankfurter Zeitung_ said:
"If the final peace does not return to us what our enemies have
taken and destroyed in the outside world, if it does not
restore to us freedom in our work and our spirit of enterprise
in the world, then the German people is crippled for an
immeasurable period. We demand restoration for all violation of
the law and for all acts of destruction. We demand
indemnification for all damages done, and we meet the plan of
differentiation with the demand for the most-favored-nation
treatment and equal rights; the plan of exclusion with the
demand for the open door and free seas; and the threat of a
blockade of raw materials with the demand for the delivery of
raw materials."
A true picture of the situation is given in the following passage from
the Vienna _Arbeiter Zeitung_:
"Even if Hindenburg's genius and German bravery won a complete
victory on land, even if the English Army fell into our hands
to the last man, and France was disarmed and had to submit to
Germany's terms, even then England and America could not be
compelled to the capitulation that the Pan-German word-heroes
prophesy daily. Even then they would blockade our coasts and
the war would continue at sea. And even if they could not or
would not do that, even if peace was concluded and all the
battles ended, they would still have a terrible weapon to use
against us. Our domestic economy can not exist permanently
without the wheat, the copper, and the cotton from America, the
nickel from Canada, the cotton from Egypt and India, the
phosphates from the North African coasts, the rubber from the
English tropical colonies, Indian jute, and the oilplants of
the South Sea Islands.
"There will be a scarcity of all these things after the war and
there will be great competition for them. If England and
America do not deliver to us these raw materials after the war,
then we as conquerors are conquered."
GERMANY'S POTASH BOYCOTT
Before we entered the war Germany viewed with great concern the effect
of the economic weight of the United States if added to the side of her
antagonists. She felt that if this country remained neutral she could
depend on us for raw materials. To be sure, German ingenuity had
produced ten thousand substitutes, due to the skill of German chemists,
ranging from bacteria fats to synthetic rubber. But even the War Office
in Berlin was under no illusion on this point. "We need copper and no
stripping of palace roofs, no raiding of door knockers or kitchen pans
can make up for the deficiency." Even the vision of economic
self-sufficiency in Central Europe had rifts in it. Raw material was so
important that, in the boot and shoe industry 1,400 factories in the
German Empire were amalgamated into 300. In the silk industry the spools
were reduced from 45,000 to 2,500. Out of 1,700 spinning and weaving
mills, only 70 were running at high pressure.
The plan, as outlined by German experts, to force the United States to
supply raw material was to cut off potash exports and certain
manufactured goods. "If America will sell us no cotton," was the threat
of the Berlin _Deutsche-Zeitung_, "she shall get no potash--the
indispensable fertilizer in which we have a world monopoly. If she
withholds her oil and grain, then she shall get no _dyes_, no drugs, no
glassware or optical instruments." But as a writer in the London
_Outlook_ stated, this threat could not be made an effective instrument
of trade control:
"There is potash in plenty in the great Republic, especially in
the alkali lakes of Nebraska and Southern California. Potash is
now obtained from the Great Salt Lake in Utah, and from the
vast kelp beds of the Pacific coast. American chemists are also
extracting potash (by the Cottrell process) from the dust of
cement-kilns and blast-furnaces. So the German monopoly will
pass, and many others with it. America will produce her own
dyes and optical instruments, though I may not linger on the
details of this supplanting.
"American genius has long been busy with these things; another
year or two will see her wholly independent of German supplies.
The potash monopoly--from the mines of Stassfurt in Saxony--was
undeniably a problem; there are still richer sources in Alsace,
as we all know Germany's resolve to hold that province through
thick and thin. America needs 500,000 tons of potash every
year, for the sandy soils of the Atlantic seaboard, and also
for the citrus fruits of Florida, the tobacco of Georgia and
the Carolinas, the potatoes and garden produce of Maryland."
SHUTTING OFF GERMAN TRADE
Pessimistic anticipations of German statesmen regarding the curtailing
of German trade were realized when the War Trade Board in the United
States began to deal with the question of American exports to neutrals.
The report of the Board, published in 1918, contains the following
passage:
"Neutral exports of foodstuffs to the Central Powers have
declined from last year's corresponding exports in amounts
estimated at from 65 to 85 per cent., depending on the neutral,
and there has been a decrease in the export of many other
important commodities.
"In November, 1917, we became party to Great Britain's
tentative agreement with Norway, as a result of which action on
our part 1,400,000 tons dead-weight of Norwegian shipping were
chartered into the service of the United States and Great
Britain for the period of the war. Shortly following, temporary
agreements were concluded with Holland and with Sweden. That
with Holland gives us the use, for periods up to 90 days, of
450,000 tons dead-weight of her shipping which had heretofore,
for a long period, lain idle. The agreement with Sweden gives
us the use for three months of tonnage estimated at 250,000
tons dead-weight which had not theretofore been employed in
services useful to us.
"Specific accomplishments of this character are, however, far
from constituting a full measure of the results achieved by the
War Trade Board. The elimination of enemy advantage from our
trade and, to a considerable extent, from that of the world,
the securing and conserving of commodities essential to
ourselves and those associated with us in the war, the bringing
of shipping generally into the services most useful to
us--these results can not be accurately stated or appraised at
the present time, nor have they been accomplished by any single
act or agreement."
[Illustration: Examining Cargoes for Contraband
An inspector is using the X-ray on a bale of cotton, it having been
found that smuggling of every conceivable sort was being carried by
German agents.]
THE TRADE LICENSE SYSTEM
The United States trade license system was extremely effective in
cutting off the business of firms whose controlling motive was the
advancement of German commercial interests. It was largely directed
against preventing pro-German firms in neutral countries from engaging
in the re-exportation process, a familiar practice in the earlier part
of the war. The policy of the War Trade Board is indicated in the March
(1918) issue of the _War Trade Journal_:
"To accomplish these results the War Trade Board, through its
Bureau of Imports, has adopted certain regulations in
connection with the importation of many of these raw materials,
to which it is the duty of every patriotic American citizen to
give complete and wholehearted support.
"Organizations have been voluntarily created in many of the
trades, such as rubber, wool, jute, tin, etc., to act as
consignees when required and to perform other duties in
connection with importations, under and by direction of the War
Trade Board.
"Every effort will be made to administer these regulations with
the slightest possible detriment to legitimate business
interests, but when it is considered that the transmittal of a
few pounds of rubber or copper to Germany may cost the lives of
scores of our men at the front, and that each day's supply of
wool, or food, or money to the enemy means another day's war,
with its accompanying toll of lives, the very thought of
hesitancy or weakness is inconceivable. The policy will be
'safety first' for our soldiers, regardless of every other
consideration. Persons and firms in this country, as well as
abroad, who before our entrance into the war had little
sympathy with the war-time commercial safeguards of the Allies
must be taught that these are now matters of the first
importance to this country, and violators of present
restrictions need expect no favors, regardless of how important
such individuals or firms may be in the business world. The
time has come when all must realize that the war is not limited
to combating the enemy on the battle fields of France, but must
be carried into our every-day transactions of life, and that
our business practices must be remolded, where necessary, to
meet existing conditions.
"It is unnecessary to mention other desirable results which may
be obtained by this import control, such as the gathering of
trade information or the conservation of tonnage by elimination
of non-essentials.
"No anxiety need be felt by importers that there will be any
serious restrictions of the importation of necessary articles
if the transaction does not involve dealing with an enemy or
ally of an enemy, or otherwise giving him aid or comfort."
THE ANTI-GERMAN TOY EPISODE
An example of the intense popular indignation against encouraging trade
with Germany was furnished when a Dutch boat arrived in New York in
1918, laden with 400 cases of toys made in Germany. The ship that
carried them had been guaranteed against submarines by the German
Government. Its arrival in America brought about a storm of indignation
strong enough to remind many editors of the famous Boston Tea-Party. One
of the consignees of the cargo refused to accept delivery of his share;
the _Manufacturers Record_ of Baltimore offered him its congratulations:
"It is none too soon to begin the campaign against the
importation of German-made goods. Imagine for one moment any
American mother giving to her baby toys made by Germany while
she thinks of tens of thousands of babies murdered by Germany
in this war. Every toy made in Germany and every other piece of
goods of every kind will for generations bear a bloody stain
which all the waters of all the oceans can never wash out."
Patriotic organizations passed resolutions on the subject. American
feeling as to German merchandise was well shown through the publication
of an editorial in the _Hardware Age_ against American use of German
toys. The paper received 4,000 letters on the subject and over 250,000
reprints of the editorial were sent out, all on request. On the subject
of German toys, it said, among other things:
"America has fed starving Belgium. We fed and clothed and cared
for her suffering people long before we became her proud ally
on the battlefields. Thousands of orphaned Belgian and French
children have been adopted into American homes. In the days to
come are we going to force these children to play with
German-made toys? God forbid! American toy manufacturers have
stripped us of the last vestige of an excuse for the purchase
of toys from the Huns. Our factories are making more toys than
we ever imported, and they are not the flimsy jim-cracks we
formerly bought from abroad. They are largely exercise toys
which develop a child's body, or mechanical or structural toys
which train the mind. Before the war we imported eight million
dollars' worth of toys from the Central Powers. Who will make
our kiddies' toys in the days to come? Once more, Mr. Buyer,
it's up to you."
SMUGGLING FROM NEUTRAL COUNTRIES
Considerable aid was afforded to Germany by her trade with neutral
countries. First, there was a good deal of direct re-exportation of
materials imported from abroad. Then there was an exportation of
domestic products, and the filling up of this deficit by importation
from abroad, mainly from the United States. Mr. J. L. Moore of Harvard
University, thought that smuggling deserved to be added to the source of
German supply from the outside, and he mentioned the fact that a member
of the Commerce Department of the Swiss Government was convicted of this
offense and served a prison sentence. His exposition of how neutrals
aided Germany is given in the following passage from the New York
_Times_:
"To direct and indirect re-exportation must be added, finally,
smuggling, which has always been a factor in the evasion of
blockades. In Switzerland a member of the Commerce Department
of the government was recently convicted of this offense and is
serving a prison sentence.
"That this aid was precious to the Central Powers and enabled
them to stave off starvation and consequent submission can be
corroborated in various ways. First, in spite of the enormous
volume of imports from the neutrals Germany was on the verge of
starvation during the last winter, the economic crisis reaching
its critical stage coincidentally with the political crisis in
the Reichstag at the beginning of July. The most potent cause
of this political upheaval was the economic destitution which
cast its melancholy shadow over the whole nation and increased
the desperation of people and Reichstag till it exploded in a
violent outburst of wrath against the government. Secondly, the
general impression of press and people in Germany and
Switzerland is that the most sensational part of the speech of
Erzberger, which brought the crisis into being, consisted of an
exposé proving the futility of the submarine policy and
impugning the judgment of the officials responsible for its
inauguration, inasmuch as the entrance of the United States
into the list of Germany's enemies, which resulted therefrom,
was likely to result in a curtailment of the imports obtained
through the neutrals, and without a continuance of these
imports Germany could not hold out long."
SURPRISING INCREASE OF NEUTRAL SHIPPING
The shutting off of the German commercial fleet from trade and the
employment of Allied shipping under government contract offered an
exceptional opportunity to small neutral countries to advance their
shipping business. This opportunity was eagerly seized. Norway reported
the establishment in 1915 of no fewer than 488 shipping firms. This was
followed in 1916 by an increase of 459. Some of these Norwegian firms
paid dividends as high as 400 per cent. Statistics from Sweden also show
a significant expansion. Swedish firms of inconsiderable capitalization
before the war became important companies, able to undertake
transatlantic trade on a large scale. It seems likely that these Swedish
transatlantic lines will constitute a formidable competitor to the old
established German companies--now that the war is over.
Corroborative evidence on the shipping situation in neutral powers is
found in the following passage taken from the New York _Journal of
Commerce_:
"Of great importance for an estimate of the future of our
shipping combines is the progress which the two largest Danish
lines--the Forenede, which sails to North America; and the
Estasiatisk Kompagni, which, as the name suggests, runs lines
to East Asia--have made during the war. The Forenede, for
instance, made in 1916, with a stock capital of 30,000,000
crowns, a net profit of no less than 40,000,000 crowns, of
which a good 10,500,000 crowns was allotted to the reserve and
emergency funds. The collective reserves of this company
amounted to more than 26,000,000 crowns at the end of 1916: and
its bank credits totaled 44,000,000 crowns.
"The large Dutch shipping firms have likewise made enormous
profits. The following table presents their results for 1916
(the Dutch florin, or guilder, is worth $0.402 United States
currency at normal exchange):
Reserve and
Stock Net Emergency
Shipping Firm Capital, Profits, Funds,
Florins Florins Florins
Holland-Amer. Line 12,000,000 26,500,000 10,200,000
Stoomvaart Mij. Nederland 19,000,000 18,600,000 8,800,000
Kon. Nederl. Stoomboot Mij 15,050,000 19,000,000 7,800,000
Rotterdamsche Lloyd 15,000,000 15,100,000 12,600,000
Kon. Holland Lloyd 10,000,000 10,900,000 2,000,000
"The example of the Holland-America Line shows best what
enormous progress took place in the inner consolidation of the
Dutch firms. The reserve of this company, which in 1913
amounted to 6,600,000 florins, grew to 24,800,000 by the end of
1916--in other words, the previous stock capital (which in the
meantime had been increased by 15,000,000 florins) by more than
double. In addition, the company has available funds amounting
in all to 21,700,000 florins. The reserves in the Nederland
Company, which have increased in the same period from 6,700,000
to 23,000,000 florins, exceed the capital by 4,000,000 florins.
The available funds of the Rotterdamsche Lloyd amounted at the
end of 1916 to about 25,000,000 florins, with a share capital
of 15,000,000 florins and a ready reserve of 16,000,000
florins.
"But the business successes of the neutral European shipping
firms are far surpassed by the earnings of the Japanese
overseas lines. Thus the largest Japanese shipping firm, Nippon
Yusen Kaisha, that sails from East Asia to all the important
shipping markets, had a net profit in the summer half-year 1916
of 19,780,000 yen (the Japanese yen is equivalent to $0.498
United States currency); in the winter half-year 1916--17
actually 22,150,000; in a single fiscal year it earned,
therefore, about 42,000,000 yen. The company's capital stock
amounted at the end of the fiscal year 1916--17, after a
previous increase through the distribution of free shares, to
27,500,000 yen, the net profits of this single company being
thus about 15,000,000 yen more than the amount of the capital.
"The company's fleet has grown considerably. The total
available reserves amount to nearly 63,000,000 yen. Of ready
money the company had at its disposal at the end of March,
1917, 55,300,000 yen."
GERMANS AT WORK IN SPAIN
Germany's astuteness in dealing with neutral countries was especially
marked in Spain. The country was filled with German propaganda and there
were skeleton German trade organizations ready to begin functioning at a
moment's notice. The extent to which this propaganda was carried on was
described by a correspondent of the _Saturday Evening Post_, Mr. I. F.
Marcosson, in an address to the National Machine Tool Builders'
Association at Atlantic City:
"The German propagandists have carried on a campaign on the
proposition of the Kaiser. It has been the finest selling
campaign that I have ever seen. They have organized it. Each
man had his territory, his selling territory; each man has his
line of samples, and that line of samples was the finest lot of
German gold and German 'hot air' that any propaganda has ever
produced.
"The Germans have sold Spain on the proposition of German trade
and German good-will, because they are giving the Spaniard, as
they did in business before the war, what the Spaniard had in
mind.
"Germany went into Spain to fill the Spaniard with 'hot air'
and to tell him he was the finest aristocrat in the world. And
he got it over. And if you had gone, as I have, from one end of
Spain to the other and looked into these great warehouses you
would have found hundreds of them jammed and packed with copper
and oil and cotton, and all the material with which to
re-establish a great industry. And today, whenever there is a
water-right for sale, whenever there is stock for sale, or
whenever anything can be leased, or a factory can be bought,
who buys it? =The Germans.=
"They have got the finest industrial secret service in Spain that I
have seen in my life. And to what end? All to the great end that
when the war is over, in Spain as in Holland and in Switzerland,
the wheels of German output will be going.... Germany will put on
the goods, as I have seen with my own eyes, 'Made in Spain,' 'Made
in Switzerland,' and 'Made in Holland.' Your own goods, machine
tools, are going out in the markets of the world now and
forevermore in competition with German-made stuff, made by German
hands, made by German capital, part with stuff that is marked
offensive, in competition with stuff that is marked as I have said
it would be marked."
[Illustration: Photo by Paul Thompson
An Antidote for the Submarine Pest
Quantity production of eighty-foot motor boats in a shipyard at Bayonne,
N. J., for use as scouts and submarine hunters.]
NO ECONOMIC BOYCOTT AFTER THE WAR
The official leaders of the Allied Governments soon found that the
scheme to start an economic war after peace had been negotiated had no
very strong support. President Wilson took a hand in subjecting the
Paris resolutions advocating this economic war to unfavorable criticism.
The British Trades Union by a large majority showed their disapproval of
them. The London _Economist_ also disapproved of the program of a
vindictive trade policy after the war, though it thought that an
economic boycott might be used as a threat to force Germany to make
peace. Lord Robert Cecil took the ground that it would not be wise to
attempt an economic war. The labor point of view was that an economic
war was bound to produce another outbreak of militarism. The Speaker of
the British House of Commons, who always occupies a non-partisan
position, in an address at Carlisle on war aims, showed no sympathy with
the proposal:
"We had heard of war after the war, and it had been suggested
that whatever the terms of peace might be we in England should
have no dealings with Germany, that we should boycott them
commercially, allow none of our raw materials to go to Germany,
that we should form a combination with our Allies, and that
together we should cut her off altogether and treat her as
though she were a leper. He did not believe in this idea. He
was out for peace, and when he said he wanted peace he meant a
lasting peace. He wanted peace founded on sound conditions,
which would stand wear and tear and last forever, if
possible--at all events, for many, many years, it might be
centuries; but a boycott of Germany would not be the way to
attain a peace of that kind. That would be a way of carrying on
the war, and although it would not be with the weapons we were
now using, there would be the same hatred and struggle between
one combination of nations and another, and it would leave the
world divided and engender seeds of hatred and dissent. In many
respects it would be almost as bad as the war at the present
time. He did not, therefore, accept that condition of things."
In explaining England's position as to war aims the Premier, Lloyd
George, made the following observations:
"Germany has occupied a great position in the world. It is not
our wish or intention to question or destroy that position for
the future, but rather to turn her aside from hopes and schemes
of military domination and to see her devote all her strength
to the great beneficent tasks of the world.... The economic
conditions at the end of the war will be in the highest degree
difficult. Owing to the diversion of human effort to warlike
pursuits, there must follow a world shortage of raw materials,
which will increase the longer the war lasts; and it is
inevitable that those countries which have control of the raw
materials will desire to help themselves and their friends
first."
AN IMPOSSIBLE PROGRAM
In the emotional atmosphere of the war period some astonishing economic
propositions were accepted as if they were axiomatic truths. Notably was
this the case in the discussion of Germany's program of peaceful
penetration in the economic sphere. It was undoubtedly linked up with
schemes of military aggression. There was wide discussion of the methods
to be used to guard against Germany's commercial policy. Sometimes these
proposals indicated the desire that those who opposed Germany should
take a leaf from her dog-in-the-manger policy. Strange conceptions of
international trade that suggest the mercantilism of the seventeenth and
eighteenth centuries were revived in order to guard against any attempt
on the part of Germany to secure a privileged industrial position after
the war. As early as 1916 there was the famous proposal of an
anti-German economic league contemplated in the Paris resolutions of
that date. In Great Britain the supporters of this policy also actively
advocated a system of imperial preference by which special advantages
would be given to countries within the bounds of the British Empire. The
result of upholding any double-barreled policy of this type is described
by the Edinburgh _Review_ as impossible of realization.
"Even if Belgium, France, and Italy alone took that course, the
whole policy of an economic boycott, or partial boycott, to
prevent German expansion or to punish German crimes would fall
to the ground. We cannot imprison Germany in an economic strait
jacket if her territorial neighbors are willing to trade with
her. As a matter of fact before the war the most important and
the most expansive portion of German export trade was with the
continent of Europe."
COMMERCIAL AVIATION
A great advance in aeroplane development was one of the most spectacular
results of war activity. The military side of this development must be
discussed in another place, but the fact that aeroplanes had to be
constructed substantial enough to carry a large amount of explosives
naturally brought up the whole question of the commercial side of
aeroplane employment. Although the aeroplane has been developed to a
remarkable extent for war purposes, it must not be taken for granted
that every type of aeroplane has its use for peace. In the military
machine regard has been paid rather to gun positions, bomb carrying
capacity and performance than to economy in operation and large cargo
space, which are the essential peace requirements. This aspect of the
problem was discussed by F. Handley-Page in an article in the
_Fortnightly Review_.
"The type of aeroplane for commercial work requires careful
consideration and design. In estimating the value of a
transport vehicle account must be taken of the respective
proportions of the load that are and are not remunerative. A
steam motor wagon that was only just able to transport the coke
for its own consumption would be useless for transport work.
The large quantity of fuel the aeroplane must carry makes this
point an important one regarding it. It affects very largely
the _type_ of aeroplane that must be chosen for each duty.
"The total lift of a large bombing aeroplane of medium speed is
about 20 lbs., while that of a small high-speed scout may not
be more than about 8 to 10 lbs. per horse-power. From these
lifts have to be deducted the weight per horse-power of the
aeroplane structure and engines. These leave a margin of about
11 pounds per horse-power in the case of the large machine and
of only about two to four pounds per horse-power in the case of
the smaller and higher speed machine. From these margins have
to be deducted the weight _per horse-power_ of the pilot and of
the fuel to be carried."
According to this expert's opinion there is little probability of using
for commercial purposes the small high-powered aeroplane. But if large
machines are used with a speed limit of 100 miles an hour and fitted
with twin engines, Mr. Page thinks that such machines will have economic
possibilities. Countries now far distant from one another can be brought
close together. For example Australia will be within a week of London,
and he thinks that passengers can be carried at the rate of about six
cents a mile. If air transport is to be systematized he is in favor of
strict state regulation:
"There must be no possible chance of the wildcat schemes of the
early railway days recurring, nor must aircraft or their pilots
be below a specified standard. The State must see that projects
doomed to failure owing to lack of financial or technical
backing are prevented from being placed before the public.
"Regulations must be drawn up which will insure that the
machines cannot be used for the public service until they have
received a certificate similar to that now issued by Lloyd's
for ships. Pilots must not be allowed to fly machines conveying
the public or mails, unless they have received a certificate
equivalent to that issued to the master of a ship by the Board
of Trade before he can take charge.
"The aeroplane will not compete with the telegraph system,
cable, or wireless, but will be a useful adjunct conveying
written signed statements, important documents, long reports,
and descriptive letters in the time of a week-end cable and at
a fraction of the cost.
"It will enable the business man to visit his overseas agencies
and friends, to discuss matters with them on the spot and
examine the requirements of their districts, at the cost of a
few _days_ instead of months of travel."
[Illustration: The Awkward Squad
"Left, right--one, two, three, four," was the slogan heard throughout
the National Army cantonments, such as this at Camp Dodge, Des Moines,
Ia., during the first days in teaching the recruits one of the first
lessons of the soldier; how to keep step.
Copyright International Film Service]
V--THE MONEY COST OF THE WAR
Over $210,000,000,000 Spent by the Belligerents--How This Stupendous
Sum Was Raised--What the War Cost Uncle Sam
By EDWIN R. A. SELIGMAN
Professor of Political Economy and Finance in Columbia University
The cost of a war may mean several different things. It may mean, in the
first place, the actual money cost, or expenditure in dollars and cents,
directly involved in prosecuting the war. Or, secondly, it may mean the
war cost, both direct and indirect, from the economic point of view. The
real cost of a war from this latter point of view may mean either actual
loss of lives and property or the diminution of the annual social
production. The wealth of a country measured in its social income may be
reduced either by the actual loss of territory, as in Germany; by the
impairment of its natural resources like the coal mines and forests, as
in France; by the reduction of labor power, due to the wounded workmen
or the results of starvation or privation, as in many countries of
Europe; or by the loss of economic efficiency due to a reduction of the
standard of life or to a changed attitude toward habits of work. The
real costs of war, although often incalculable, are none the less of
profound significance.
The actual money costs or expenditures of government for war include not
only the actual outlays for military and naval purposes, but also the
whole range of expenditures incurred in industrial life to prepare the
wherewithal for the Army and Navy; and they also comprise the sums
devoted to the maintenance of the families of the soldiers. All these
items are far greater in modern times than they used to be. It is a far
cry from the meeting of two savage tribes armed only with bows and
arrows or javelins, to the modern 16-inch guns, the dreadnoughts, the
airplanes, the submarines, the poison gas and the innumerable technical
adjuncts of modern warfare. The consequence is that the money costs of
the World War have far transcended those of all previous conflicts.
The attempt to present in figures the costs of the war meets with
several difficulties. In the first place the question arises as to the
period at which we ought to stop. In one sense the war ceased when the
armistice was declared. In another sense the war did not actually stop
until the peace was declared--in this case a matter of many months
additional. But even when peace was declared the war expenses were by no
means over. The process of demobilization is a slow one: moreover it is
necessary to continue for some time the policing of the conquered
countries; and finally comes the question of the pensions to the wounded
soldiers or to the families of the dead. It will be seen, therefore, how
impossible it is to state with any accuracy at the present time the
costs of the war, when those are still being incurred. Furthermore, the
figures ordinarily given contain additional inaccuracies. The richer
countries make loans to the poorer countries and these expenditures are
consequently counted twice in the total,--a procedure legitimate only on
the assumption that the loans will not be repaid. Again, in a country
like the United States, which has substituted an insurance system for
the pension system, the nominal expenditures appear smaller than is
really the case, because of the receipt of vast insurance premiums which
will ultimately all be expended again. Finally the figures make no
allowances for the change in the price level or the alteration in the
value of money. In a great war like the present, prices have risen: in
some countries they have doubled, in some countries they have more than
tripled, for reasons which it is needless to discuss here. What appears,
therefore, to be a great and increasing outlay from year to year may be
in reality due in part, at least, to this cause.
After making all allowances for these difficulties we may proceed to
state some of the facts as to the actual outlays of various countries.
THE COST OF THE WAR DAY BY DAY
In all the belligerent countries it naturally took some time for them to
get into their stride. This is especially true of Great Britain. The
figures of the average daily expenditures, as given by the Chancellor of
the Exchequer, amounted to almost $10,000,000 in the opening months of
the war and reached a maximum of almost $36,000,000 by 1918. These
figures, however, are not exact because they include all of the
expenditures. The real war expenditures may be arrived at by deducting
in each case the amount of the expenditures in the last year of peace,
ending March 31, 1914. Making these corrections, it appears that the
average daily war expenditures in England rose from about $9,500,000
during the first eight months of the war to about $33,500,000 in 1918,
then slowly receding in 1919. In France the average daily expenditures
were naturally somewhat less, rising from about $8,500,000 during the
first three months of the war to over $21,000,000 during 1917, the last
full year of the war. In Germany the daily expenses were approximately
the same as in Great Britain, rising from about $13,000,000 in the first
nine months of the war to $34,500,000 during the last six months of
1918. In the case of both Germany and France, it is not known whether
the figures comprise the total expenditures or only the pure war
expenditures. In the former event the daily expenditures of Germany
would be a little less than those of Great Britain; in the latter, they
would be a little more. In Italy and Austria-Hungary the daily
expenditures were naturally smaller, amounting at the maximum to about
$10,500,000 and $20,000,000 respectively. In Russia the daily
expenditures rose in 1916 to about $20,000,000 and in 1917, just prior
to the October revolution, nominally to $47,000,000. But, owing to the
great depreciation of the ruble, the actual expenditures were much less.
OUR WAR EXPENSES MONTH BY MONTH
When the United States entered the war the scale of its operations
became so stupendous that its daily war expenditures soon far exceeded
those of any other belligerent. In the second month of the war the
average daily expenditures for pure war purposes were $15,000,000 and
little over a year later they had risen to almost $50,000,000. By the
end of 1918, the daily average war expenditures reached the staggering
figure of $64,500,000.
[Illustration: The Economic Conference in Paris
Mr. Bonar Law talking with M. Clementel (Minister of Commerce) and M.
Doumergue (Colonies) in the garden of the foreign ministry.]
If, now, we attempt to present the statistics of the total cost of the
war we must be mindful of the difficulties mentioned above. The figures
are not entirely accurate, and cannot be made entirely accurate for the
following reasons: In the first place, the last date in the official
return differs from country to country. They are, however, all
subsequent to the armistice, with the exception of Russia, where we
have no trustworthy figures after the advent of Bolshevism. In the
second place, we do not know, except in the case of the United States
and Great Britain, whether the figures comprise the total expenditures
or only the purely war expenditures. Even making allowance for these
differences it will be seen that the total war expenditures amount to
over $232,000,000,000. In Japan and some of the minor belligerents,
there were virtually no war expenses. Inasmuch, however, as most of the
countries will continue to have expenses attributable to the war for
some little time in the future, it is probable that the total war
expenditures will amount, by the end of 1920, to almost
$236,000,000,000. From this must, however, be deducted the sums counted
twice, because advanced to their allies by the United States, Great
Britain, France and Germany. Making allowance for this, it is safe to
say that the total net war expenditures will be about $210,000,000,000.
WAR EXPENDITURES OF ALL BELLIGERENTS
In Millions
====================================================================
| From entrance | To | |
| into war | | |
--------------+----------------+----------------+----------+--------
Great Britain | August 4, 1914 | March 31, 1919 | £ 8,601| $41,887
| | | |
Australia | August 4, 1914 | March 31, 1919 | £ 291| 1,461
| | | |
Canada (inc. | August 4, 1914 |August 31, 1919 | | 1,545
Newfoundland) | | | |
New Zealand | August 4, 1914 | March 31, 1919 | £ 76| 365
| | | |
South Africa | August 4, 1914 | March 31, 1919 | £ 33| 243
| | | |
India | August 4, 1914 | March 31, 1919 | £ 119| 584
| | | | -------
British Empire| | | | $46,083
| | | |
France | August 3, 1914 | March 31, 1919 |fr 169,000| $32,617
| | | |
Russia | August 1, 1914 |October 31, 1917| ru 51,500| 26,522
| | | |
Italy | May 23, 1915 |October 31, 1918| li 81,016| 15,636
| | | |
Belgium | August 2, 1914 |October 31, 1918| fr 5,900| 1,387
| | | |
Rumania |August 27, 1916 |October 31, 1918| | 907
| | | |
Serbia | July 28, 1914 |October 31, 1918| | 635
| | | |
United States | April 15, 1917 | June 30, 1919 | | 32,261
| | | |--------
Entente Powers| | | |$156,050
| | | |
Germany | August 1, 1914 |October 31, 1919|mk 204,268| 48,616
| | | |
Austria- | July 28, 1914 |October 31, 1919|kr 119,504| 24,858
Hungary | | | |
Turkey |November 3, 1914|October .., 1919| | 1,802
| | | |
Bulgaria |October 4, 1915 |October .., 1919| | 732
| | | | -------
Central Powers| | | | $76,008
| | | |
Total | | | In |$232,058
| | | Millions |
====================================================================
HOW MONEY FOR WAR WAS RAISED
The question now arises as to the steps taken by the various countries
to meet these stupendous outlays. Of the older expedients, such as war
treasures, or the sale of public property there was naturally no
question. In only one country, viz., Germany, was there a war treasure;
but this was so small as to be well-nigh negligible. The only two
available resources were accordingly taxation and borrowing.
When we compare these two expedients, we are struck not only by the
great difference in the theories of war finance followed by the various
countries, but also by the diversity in the economic conditions which
largely influenced the choice. In a general way, it may be said that all
countries were compelled to rely to an overwhelming extent on public
loans, but that Great Britain and the United States raised a far greater
share by taxation than did other countries. Italy was able to raise by
new taxation only just about enough to pay the interest on the new
loans; Germany accomplished this only in part; while France was not in a
position to defray any of her war expenditures from additional taxation.
The same is true of the other belligerents, with the exception of the
British colonies.
Proceeding now to take up this matter in detail, we shall first attempt
to set forth the facts as to war taxation.
UNITED STATES
----------------------------+-------------+-------------+------------
| Monthly | |
|Expenditures | |
|exclusive of | |
|the principal| |
| of the | Monthly | Average
| public debt | War | Daily
|and of postal|Expenditures |Expenditures
|expenditures | [19] |
----------------------------+-------------+-------------+------------
| Million $ | Million $ | Million $
April 6--30, 1917 | 279 | 219 | 8.
May, 1917 | 527 | 467 | 15.
June, 1917 | 410 | 350 | 11.7
| ------ | ------ |
Total April 6--June 30, 1917| 1,216 | 1,156 |
| | |
July 1917 | 662 | 602 | 19.4
August 1917 | 757 | 697 | 22.5
September 1917 | 746 | 686 | 22.9
October 1917 | 944 | 884 | 29.5
November 1917 | 986 | 926 | 30.9
December 1917 | 1,105 | 1,045 | 33.7
January 1918 | 1,090 | 1,030 | 33.2
February 1918 | 1,012 | 952 | 34.
March 1918 | 1,156 | 1,096 | 35.9
April 1918 | 1,215 | 1,155 | 38.5
May 1918 | 1,508 | 1,448 | 46.7
June 1918 | 1,512 | 1,452 | 48.4
| ------ | ------ |
Total for fiscal year, 1918 | 12,697 | 11,977 |
July 1918 | 1,608 | 1,548 | 49.9
August 1918 | 1,805 | 1,745 | 56.8
September 1918 | 1,557 | 1,497 | 49.9
October 1918 | 1,665 | 1,605 | 51.8
November 1918 | 1,935 | 1,875 | 62.5
December 1918 | 2,061 | 2,001 | 64.5
January 1919 | 1,962 | 1,902 | 61.4
February 1919 | 1,189 | 1,129 | 40.
March 1919 | 1,379 | 1,319 | 42.5
April 1919 | 1,429 | 1,369 | 45.6
May 1919 | 1,112 | 1,052 | 33.9
June 1919 | 809 | 749 | 24.9
| ------ | ------ |
Total for fiscal year 1919 | 18,505 | 17,785 |
| | |
Total April 6, 1914 to June | | |
30, 1919 | 32,428 | 30,918 |
----------------------------+-------------+-------------+------------
[19] Obtained by deducting 11/12 of the annual (peace) expenditures for
1915--1916 exclusive of postal expenditures, i. e. 11/12 of $1,008--287
millions--60 millions. Secretary Glass in his letter of July 9, 1919 to
the Chairman of the Committee of Ways and Means excludes postal
expenditures in the first column, but fails to exclude them when making
the deduction for peace expenditures. He consequently arrives at the
figure of 30,177 billions as the cost of the war; making allowance for
this fact, and using the final corrected figures, we reach the figure of
$32,261,000,000 as the cost of the war to June 30, 1919.
WAR TAXATION IN OTHER COUNTRIES
Great Britain, as the wealthiest country at the outbreak of the war,
endeavored to raise as much as possible from taxation. From year to
year, as the expenses mounted up, more and more demands were made upon
the taxpayer. But the expenditures for the war were so enormous that it
soon turned out to be impracticable, even with the best of will, to
secure more than a comparatively small proportion of the total cost from
taxation. The figures usually advanced by the various Chancellors of the
Exchequer and repeated parrot-like by most commentators take the
proportion that total taxes bear to total expenditures. This method of
calculation, as will be seen from the table, shows that almost a quarter
of the total expenditures, or to be more exact, 24.9 per cent., was
derived from taxes. These figures, however, err doubly. In the first
place the significant problem is to ascertain the war expenditures, not
simply the total expenditures. These can naturally be obtained only by
deducting from the annual total expenditures the sums equal to the peace
expenditures, _i. e._, the expenditures for the last full year of peace.
In the second place, what is significant is not the total taxes, but the
war taxes; that is, the proceeds of the additional taxes raised during
the war. These again can be obtained only by deducting from the total
tax revenue the proceeds of the taxes during the last full year of
peace. If then we endeavor to ascertain how much of the war expenditures
were met by war taxes--and this is really the important problem--we find
that, immense as were the burdens resting upon the British taxpayer, the
percentage of war expenditures raised by war taxes is much smaller than
is usually stated. As a matter of fact, in the first year of war only a
little over 7 per cent. of the total war expenditures were raised from
taxes. With every succeeding year the percentage increased until the
last year of war, 1918--19, a little over one-quarter of the war
expenditures were met from war taxes. For the entire five years the
proportion of war taxes to war expenditures was slightly over 17 per
cent.
In the other belligerent countries the showing was by no means so good.
France struggled under a double difficulty. In the first place France
was invaded at the very outset of the war, and the territory occupied,
although relatively small in extent, represented the richest and the
most industrially developed part of the country. This operated largely
to reduce the ordinary revenues. In the second place the resultant
economic confusion, as well as the general political situation, made it
very difficult to impose any new taxes at all. The consequence was that
for the first three years of the war, the tax revenues of France did not
even suffice to defray the ordinary peace expenditures.
After a little while, indeed, France found it possible to levy some war
taxes; but these were exceedingly slight compared with what had been
accomplished in Great Britain. The result is that the new war taxes of
France were only just about sufficient to make up the deficit on the
ordinary peace budget--a deficit caused chiefly by the devastation of
the occupied territory. In France, therefore, we may say that as a
result no part of the expenditures was met by war taxes.
In Italy the situation was a little better. Italy had not been invaded
and its financial situation was not so desperate as that of France.
Moreover, Italy entered the war somewhat later and did not have to
endure a strain for so long a time. Italy consequently proceeded as soon
as possible to levy new war taxes; but as Italy had always been
relatively overtaxed, as compared with Great Britain, it was not
feasible to do as much. As a result, the war taxes levied by Italy were
just about sufficient to pay the interest on the war loans. While Italy,
therefore, did better than France, she also was not able to defray any
of the war expenditures proper out of war taxation.
The condition of Russia soon became worse than that of France and Italy,
and even before the October revolution, Russia was able to put very
little reliance upon revenues from war taxation.
Among the Central Powers the situation was much the same, but for a
different reason. Germany at the outset of the war had so confidently
counted upon victory and upon huge indemnities that it resolved to
defray its war expenses entirely from loans. It must, however, be
observed that in Germany a not insignificant part of the war expenses
were met by the separate states; and in these various states a
considerable increase of taxation was provided for at once. As the war
proceeded and the hopes of a speedy and complete victory gradually faded
away, Germany began to change her policy and decided, especially from
1916 on, to impose more and more taxes. The result was that by the end
of the war Germany had done a little better than France.
OUR WAR TAXES COMPARED WITH WAR EXPENDITURES
We come finally to the experience of the United States. When the United
States entered the war it was confronted by two rival theories of
public finances. One was to the effect that the war expenses should be
defrayed entirely by war loans, as had been the case in the early years
of the Civil War and as was true of many of the belligerents during this
war. The other theory was that the war expenditures ought to be defrayed
entirely out of war taxes. This was equally extreme and perilous as the
former theory, and labored under the additional disadvantage of being
impossible of achievement. The President went so far as to adopt the
fifty-fifty theory, namely, that half of the war expenditures ought to
be defrayed from taxation.
The prodigious profits made during the beginning years of the European
war and the resulting prosperity throughout the country enabled Congress
to levy taxes far higher than had before been attempted in our history.
Even with an immense addition to taxation, however, the proportion of
war expenses derived from war taxes was relatively small. Here, again,
we must observe the same caution as in the case of the British figures.
We must not compare total expenditures with total taxes, but war
expenditures with war taxes. War expenditures are easily ascertained by
deducting for each year the amount of the expenditures for the last year
of peace, the year ending June 30, 1916. In the case of war taxes,
however, it is more exact to deduct from the total revenues the tax
revenues for the year ending June 30, 1915. For during the year 1915--16
a number of taxes were already levied in preparation for our possible
entrance into the war.
As a matter of fact, during the first quarter of war ending June 30,
1917, the proportion of war expenditures derived from war taxes was less
than one-third or 30 per cent. If we exclude loans to Allies on the
assumption that they will all be repaid some day, the showing is
somewhat better--as two-thirds of the expenditures of that period
consisted of such loans.
As soon, however, as we struck our full gait the situation was less
satisfactory. The proportion of war expenditures derived from war taxes
during the year 1917--18 was less than one-quarter or more exactly only
24.8 per cent. and if we again exclude loans to Allies, only 30 per
cent. In the last year of the war the showing was still less favorable.
If we take the expenditures for the entire period of our participation
in the war the figures are respectively 21.7 per cent. and 27 per cent.
For the entire period of our participation in the war, less than
one-fourth (or exactly 23.3 per cent.) of the war expenditures were paid
out of war taxes. And if the loans to Allies are again excluded the
proportion is still under one third, or more exactly 32.5 per cent.
[Illustration: Copyright Underwood & Underwood
=Lord Reading=
President of the Anglo-French loan mission to the United States in 1915,
and special envoy of the British Government to the United States in
1917.]
This compares favorably even with the British figures. But it
conclusively shows how impossible it is even with the best of will, to
raise more than a relatively small part of war expenses from war taxes;
especially during the early period of a war.
CHARACTER OF WAR TAXATION
The next point of interest is that of the character of the war taxes
imposed by the various countries. Here again we notice a very great
difference. In all of the European belligerents on the continent, at
least as much additional revenue was raised from direct, as from
indirect, taxation. In France about as much new revenue came from
indirect taxation or taxes on consumption as from direct taxation or
taxes on wealth.
The situation is still less satisfactory in the other continental
countries.
In England, on the other hand, a different path was pursued from the
beginning. While it is true that a considerable increase of revenue was
derived from indirect taxes like customs and excise, the chief reliance
was placed on the increase of the income tax, on a new war profits tax
and finally, although to a minor degree, on an increase in the
inheritance tax.
When we come, however, to the situation in the United States we find the
democratic movement so strong that the overwhelming proportion of the
new tax revenue was derived from direct taxation on wealth rather than
from indirect taxation on consumption. In the great Revenue Act of 1917
over 79 per cent. of the new tax revenue came from direct taxation,
principally the income tax and the excess profits tax. In the second
great Revenue Act of 1918, the proportions were still more favorable,
the amount ascribable to direct taxation in 1919 being almost 81 per
cent.
UNITED STATES
Internal Revenue Receipts
In millions of dollars
Per Per
Year ending June 30 1918 Cent. 1919 Cent.
Income and profits taxes 2,839 2,596[20]
Munition manufacturers tax 13 .....
Estate tax 47 82
Corporate capital stock tax 25 29
----- -----
Total taxes on wealth 2,924 79.1 2,707 70.5
Distilled spirits 318 365
Fermented liquors 126 118
Tobacco 158 206
Stamp taxes 19 37
Transportation 71 234
Insurance 6 15
Excise taxes 37 78
Soft drinks 2 7
Admissions 26 51
Miscellaneous 8 22
---- ----
Total taxes on consumption,
transactions and
commodities 771 20.9 1,133 29.5
Total 3,695 .... 3,840 ....
[20] As the new taxes are payable in instalments, about 2 millions
of the 1919 tax will not be received until the fiscal year 1920.
Making allowance for this the proportion of taxes on wealth
really ascribable to the year 1919 rises to 80.6 per cent.
With the impossibility of securing more than a comparatively small
proportion of the war expenditures from taxation, it accordingly became
necessary to resort to borrowing. This was consequently done by every
country on a gigantic scale; although here again the fiscal and economic
conditions in the various countries were so different that they employed
quite diverse expedients.
Great Britain provided at the outset of the war for immediate needs by
the selling of short time securities, principally Treasury Bills. Before
long these had amounted to such a sum that it became necessary to issue
long time bonds. Accordingly, subscriptions were invited to the first
war loan, which was issued on March 1, 1915, followed by the second war
loan on June 1, 1915. These bore interest at the rate of 3½ and 4½ per
cent. and the amount issued was $1,703,000,000 and $2,883,000,000
respectively. On February, 1916, a continuous issue of War Savings
Certificates was inaugurated. On April 15, 1917, the third war loan was
issued at 4 per cent., followed on June 1, by the issue of 5 per cent.
bonds. Of these $4,811,000,000 were issued.
Beginning on October 2, 1917, a continuous issue of 4 and 5 per cent.
National War Bonds was made, the difference in the rate of interest
being due to the tax exemption. The temporary and short time paper was
gradually funded into these bonds. In the meantime the Anglo-French loan
of $500,000,000, of which England had one-half, had been contracted in
the United States; and with the entrance of the United States into the
war on April 6, 1917, continually larger sums were borrowed from the
American Government. During the period of the war the British debt rose
from £650,000,000 to £7,643,000,000 or from $3,115,000,000 to
$37,221,000,000. It is expected that $250,000,000 will be borrowed
during the year 1919--20, so that in all probability the debt of Great
Britain at the end of 1920 will amount to almost £8,000,000,000, or
$38,500,000,000, meaning that the war debt probably will amount to about
£7,500,000,000, or $35,000,000,000.
France was in a far less favorable situation than England at the outset
of the war. The total debt of France at the close of 1913 amounted to
fr. 32,594,000,000, or $6,291,000,000, and the ordinary budget had
closed with a large deficit. So that it had been necessary to issue a
loan during the spring and summer of 1914. When the war suddenly broke
out, precipitating an economical and financial crash, it became
practically impossible to issue another loan. The government was
therefore compelled to rely upon advances from the Banque de France,
which was permitted correspondingly to increase its notes issue. It was
not until November, 1915, that France saw her way to issue her first war
loan of 5 per cent. bonds. This was followed on August 6, 1916, by the
second war loan, also of 5 per cent. bonds, on December 15, 1917, by the
third war loan of 4 per cent. bonds, and on Dec. 15, 1918, by the fourth
war loan, also at 4 per cent. The first war loan issued at 88 yielded
$1,894,000,000; the second, at 83.75, yielded $1,981,000,000; the third
at 68.60 yielded $2,914,000,000 and the fourth at 70.8 yielded
$5,382,000,000. Meanwhile National Defense Bonds were issued
continuously from February 25, 1915, and foreign loans had been
contracted in England, in the United States and in Japan. The result was
that at the close of the year 1918 the French debt amounted to fr.
167,469,000,000 or $32,322,000,000. This meant that the debt due to the
war amounted to fr. 134,875,000,000 or $26,031,000,000. It is expected,
however, that a considerable sum will still have to be borrowed during
the year 1919, thus bringing the total French debt to 27 or 28 billions
of dollars.
[Illustration: While the Men Fought, Those Left Behind Bought Bonds
Not all brave hearts beat under khaki during the war. More than
$20,000,000,000 was raised by the four Liberty Loans and the Fifth
Victory Loan. Among those who bought bonds were hundreds of thousands of
wives and children of the men at the front.
Courtesy McClure's Magazine]
Russia was the first of the Entente Powers to issue public loans. On
September 14, 1914, it issued a 5 per cent. loan at 94, yielding
$259,000,000. This was followed at regular intervals by six more loans
prior to the revolution of 1917. After the revolution there was
considerable confusion which, of course, was much accentuated by the
advent of Bolshevism. The consequence was that the public debt of
Russia, which amounted for July, 1914, to $4,623,000,000, increased by
the time of the October revolution in 1917 to 49,288 millions of rubles
or 25,383 millions of dollars. This would mean a war debt of almost
twenty-one billions of dollars. As a matter of fact of course it is very
uncertain whether the debt will ever be redeemed at these figures.
The debt of Italy before it entered the war amounted to lire
13,636,000,000 or $2,621,000,000. Italy started at once with a so-called
mobilization loan followed by its first war loan in July, 1915, and
successive war loans on the first of January of each of the following
years. The result was that on October 31, 1918, the total debt amounted
to lire 63,093,000,000 or $12,177,000,000. By the end of May, 1919, the
debt had grown to 77,763,000,000 lire or $15,009,000,000 leaving as the
war debt lire 64,127,000,000 or $12,388,000,000.
Of the Central Powers, Germany started at once on October 1, 1914, to
issue a war loan at 5 per cent., having from the outset decided to rely
upon comparatively long time bonds rather than upon temporary or short
time securities as was the case in England and in France. There followed
in regular succession eight war loans bearing 4½ and 5½ per cent.
interest. As a result, the debt of Germany, which before the war
amounted to Mk. 4,732,000,000 increased on October 31, 1919, to Mk.
204,000,000,000 or $48,552,000,000; the war debt proper in Germany would
therefore amount to $47,426,000,000.
TOTAL WAR DEBT, UNITED STATES
When the United States entered the war it depended, for the time being,
on temporary war certificates. But at the beginning of June, 1917,
Liberty Loans were issued in continually greater dimensions. In the
table below the details of the four Liberty Loans and the Fifth Victory
Loan are given, showing that over $20,000,000,000 were raised from bonds
alone. To these is to be added the unfunded loans. It appears that the
total net debt of the United States, which in April, 1917, was
$1,190,000,000, increased by June 30, 1919, to $24,232,000,000, making a
war debt of $23,042,000,000. Inasmuch, however, as somewhat over a
billion dollars from the Victory Loan will be paid in the course of the
year 1919--20, and as still more will have to be borrowed temporarily,
the total war debt of the United States by the end of 1920 will amount
to over $25,000,000,000, including the nine billions advanced to the
Allies.
UNITED STATES
In Millions
Debt Less Annual
Cash in Interest
Treasury Charge
April 5, 1917 $1,189 $23
June 30, 1917 1,909 84
June 30, 1918 10,924 466
June 30, 1919 24,233 619
DEBT ON JUNE 30, 1919
Bonds
Pre-war bonds 833
War loans
First Liberty Loan $1,985
Second Liberty Loan 3,566
Third Liberty Loan 3,959
Fourth Liberty Loan 6,795
Victory Loan (notes) 3,468 20,455
Treasury Certificates 3,634
Old debt on which interest increased 2
Non-interest bearing debt 236
------
Total gross debt 25,485
Cash on hand 1,252
-------
Net debt (In Millions) $24,233
The other belligerents need not be treated separately. The total pre-war
debt, including Japan, whose debt was increased only by the money raised
to loan to Great Britain and France, amounted to almost $28,000,000,000.
The debt at the close of the war amounted to over $224,000,000,000,
making the net war debt somewhat over $196,000,000,000. When we compare
this with the total cost of the war, which, as we have seen, will amount
to about $210,000,000,000, it appears that almost the entire cost of the
war will have been defrayed from loans, the difference of well-nigh
$15,000,000,000 derived from taxation being due almost entirely to the
efforts of Great Britain and the United States respectively.
PUBLIC DEBT OF THE BELLIGERENTS
000,000 omitted
==========================================================
|Before | | After | War debt |
|the war| |the war | |
---------+-------+----------+--------+-----------+
Great |Aug. 4,| £650 = |Mar. 31,|£7,643[21] | $34,056
Britain | 1914 | $3,165 | 1919 | = $37,221 |
| | | | |
Australia|Aug. 4,| 97 = 472 |Jan. 31,|[22] 336 = | 1,162
| 1914 | | 1919 | 1,634 |
| | | | |
Canada. |Aug. 4,| 332 |Mar. 31,| 1,584 | 1,250
| 1914 | | 1919 | |
| | | | |
New |Aug. 4,|100 = 487 |Mar. 31,| 170 = 828 | 341
Zealand | 1914 | | 1919 | |
| | | | |
South |Aug. 4,|126 = 614 |Mar. 31,| 175 = 846 | 332
Africa | 1914 | | 1919 | |
| | ------ | | ------- | -------
British | | $5,070 | | $42,213 | $37,143
Empire | | | | |
| | | | |
France | July |fr. 32,594|Dec. 31,|fr. 167,459| 26,031
| 1914 | = $6,291 | 1918 | = 32,322 |
| | | | |
Russia | July |ru. 8,800 |Jan. 1, |ru. 49,288 | 20,760
| 1914 | = 4,623 | 1918 | = 25,383 |
| | | | |
Italy | May |li. 13,636|Oct. 31,|li. 77,763 | 12,388
| 1915 | = 2,621 | 1918 | = 15,009 |
| | | | |
Belgium |Aug. 2,|fr. 3,743 |Apr. 30,|fr. 9,787 =| 1,166
| 1914 | = 722 | 1919 | 1,888 |
| | | | |
Rumania | Aug. | 292 |Oct. 31,| 1,020 | 728
| 1916 | | 1918 | |
| | | | |
Serbia | July | 271 |Oct. 31,| 730 | 459
| 1914 | | 1918 | |
| | | | |
Japan | July |yen 2,494 |July 31,|yen 2,530 =| 18
| 1914 | = 1,190 | 1918 | 1,265 |
| | | | |
United |Apr. 5,| 1,190 |June 30,| 24,232 | 23,042
States | 1917 | | 1919 | |
| | ------ | | ------- | -------
Entente | | $22,327 | | 144,062 | 121,735
Powers | | | | |
---------+-------+----------+--------+-----------+--------
Germany |Aug. 1,|mk. 4,732 |Dec. 31,|mk. 204,000| 47,426
| 1914 | = $1,126 | 1918 | = $48,352 |
| | | | |
Austria- |Aug. 1,| 3,726 |Oct. 31,|kr. 137,858| 24,858
Hungary | 1914 | | 1918 | = 25,584 | [23]
| | | | |
Turkey | Nov. | LT 112 = |Oct. 31,| LT 455 = | 1,517
| 1914 | 485 | 1918 | 2,002 |
| | | | |
Bulgaria |Oct. 4,| 219 |Oct. 31,| 974 | 755
| 1915 | | 1918 | |
| | ------ | | ------- | ------
Central | | $5,556 | | $80,112 | 74,556
Powers | | | | |
| | | | |
Total | | $27,883 | | $224,174 | 196,291
| |In Millions |In Millions|
==========================================================
[21] Counting on repayments of one half of the loans to the Allies (£816
millions).
[22] Not including the debts of the separate states.
[23] Obtained by considering the debt of the new Austria as representing
70 per cent of the debt of all the states which constituted the old
empire.
[Illustration: French School Children Waiting to Welcome General
Pétain]
VI--AMERICAN BUSINESS IN THE WAR
Voluntary Coöperation of Experts and Loyal Support of Labor Put Our
Industries on a War Basis
By GROSVENOR B. CLARKSON
Director of the U. S. Council of National Defense and of Its Advisory
Commission
Modern wars are not won by mere numbers. They are not won by
mere enthusiasm. They are not won by mere national spirit. They
are won by the scientific conduct of war, the scientific
application of irresistible force.
--WOODROW WILSON.
War today means that for every man on the fighting line there must be
approximately ten men--and women--behind him in the factories, mills,
and mines of the nation that enters the conflict. It is an enterprise to
which military men alone have ceased to be called, for it enlists the
specialists of every industry and every science from the fighting line
clear back to the last line of defense.
When the American Marines were thrown into the battle line at the Marne,
a French general officer rode up to headquarters.
"How deep is your front?" he asked.
"From here to San Francisco," was the reply; and in that statement lay
the story of America's industrial and economic mobilization for war.
For America the actual arena of the war was 3,000 miles oversea, and
into this arena the Government of the United States threw 2,000,000 of
the most superb troops that the drama of warfare has known; and, what is
more, got them there on time to make possible the final smashing blow.
The organization, transportation, and clocklike delivery at the eleventh
hour of these irresistible citizen armies of the great Republic of the
western world is an epic in itself.
But here at home there were armies too. They were created without
mandates; they were welded into cohesive form by suggestion rather than
by order; they were galvanized from beginning to end by the mighty force
of voluntary coöperation; and they went into the home stretch with a
power which nothing could have stopped. These were the armies of
production--production mainly, it is true, of guns and steel plates and
soldiers' shoes; but production as well of energy, of thought that made
the sword a flaming thing, of optimism to offset the stupid pessimism of
people who criticized but had nothing tangible to contribute, of the
immortal spirit of "carry on," of, above all, unification.
In all of this endeavor, in all of this uprooting of the static national
life of peace time, the business man of America reached his apotheosis
and surprised even himself in his ability to merge his heart and nerves
and brain into the national interest in the most emergent hour of the
country's history.
In effect, America went into the war unprepared. The will to war was a
dormant thing throughout the nation. The country was swollen with
material success almost to the point expressed in Lincoln's phrase: "A
fat hound won't hunt." The evolution of the Government of the United
States, enjoying profound peace for more than half a century, except for
the minor military operations of the Spanish-American conflict, into a
great war-making machine in mercilessly short time was a task to
challenge the ability of even the most resourceful nation of the earth.
There, broadly stated, was the national picture in the spring of 1917.
War came, and almost with every day grew the need for increased
participation on America's part.
COUNCIL OF NATIONAL DEFENSE
The only federal agency in existence on April 7, 1917, capable of the
elasticity to mobilize industry, labor, and science for the national
defense was the United States Council of National Defense. This body,
composed of the Secretaries of War, Navy, Interior, Agriculture,
Commerce, and Labor, had providentially been created by Congress eight
months before. It was charged by Congress with "the coördination of
industries and resources for the national security and welfare" and "the
creation of relations which will render possible in time of need the
immediate concentration and utilization of the resources of the nation."
With it was to act an advisory commission of seven men, each to have
expert knowledge of some special industry, public utility, or the
development of some natural resource.
The Council was further charged with the following particular duties:
1. To supervise and direct investigations and make
recommendations to the President and the heads of Executive
Departments as to:
(_a_) The location of railroads with reference to the frontier
of the United States, so as to render possible expeditious
concentration of troops and supplies to points of defense.
(_b_) The coördination of military, industrial, and commercial
purposes in the location of extensive highways and branch lines
of railroads.
(_c_) The utilization of waterways.
(_d_) The mobilization of military and naval resources for
defense.
(_e_) The increase of domestic production of articles and
materials essential to the support of the armies and of the
people during the interruption of foreign commerce.
(_f_) The development of sea-going transportation.
(_g_) Data as to amounts, location, methods and means of
production and availability of military supplies.
(_h_) The giving of information to producers and manufacturers
as to the class of supplies needed by the military and other
services of the Government, the requirements relating thereto,
and the creation of relations which will render possible in
time of need the immediate concentration and utilization of the
resources of the nation.
2. To report to the President or to the heads of Executive
Departments upon special inquiries or subjects appropriate
thereto.
3. To submit an annual report to Congress, through the
President, giving as full a statement of the activities of the
Council and the agencies subordinate to it as is consistent
with the public interest, including an itemized account of the
expenditures made by the Council or authorized by it, in as
full detail as the public interest will permit, providing,
however, that when deemed proper the President may authorize,
in amounts stipulated by him, unvouchered expenditures and
report the gross so authorized not itemized.
PERSONNEL OF THE COUNCIL
Save for preliminary meetings late in the winter of 1916, the Council
and Advisory Commission did not get under way to any appreciable degree
until February, 1917, when both bodies began to meet separately and
jointly with the primary purpose of taking the national balance, chiefly
with regard to industrial resources. The permanent organization of both
bodies was made on March 3, 1917.
The Council of National Defense was composed as follows:
Secretary of War Newton D. Baker, Chairman.
Secretary of the Navy Josephus Daniels.
Secretary of the Interior Franklin K. Lane.
Secretary of Agriculture David F. Houston.
Secretary of Commerce William C. Redfield.
Secretary of Labor William B. Wilson.
The members of the Advisory Commission were:
_Transportation and Communication_:
Daniel Willard, Chairman, President of the Baltimore and Ohio
Railroad.
_Munitions and Manufacturing, including Standardization and
Industrial Relations_:
Howard E. Coffin, Vice-President of the Hudson Motor Car
Company.
_Supplies, including Food and Clothing_:
Julius Rosenwald, President of Sears, Roebuck & Company.
_Raw Materials, Minerals and Metals_:
Bernard M. Baruch, financier.
_Engineering and Education_:
Doctor Hollis Godfrey, President of the Drexel Institute.
_Labor, including Conservation of Health and Welfare of
Workers_:
Samuel Gompers, President of the American Federation of Labor.
_Medicine and Surgery, including General Sanitation_:
Doctor Franklin Martin, Secretary-General of the American
College of Surgeons.
The Director of the Council and the Advisory Commission during the
greater part of the war was Walter S. Gifford, now Vice-President of the
American Telephone and Telegraph Company, a most capable organizer, who
with the writer had been closely associated with Howard Coffin in a
pioneer industrial preparedness movement inaugurated in the spring of
1916 to examine into the capacity of industrial plants for military
purposes. This was an entirely volunteer movement of business men and
industrial engineers under the Naval Consulting Board of the United
States, acting with the full approval of the President and the War and
Navy Departments. Mr. Coffin's Committee on Industrial Preparedness did
a remarkable job in a very short space of time, and the creation of the
Council of National Defense was the logical sequence of the Committee's
work, its records being turned over to the Council. The writer was the
Secretary of the Council and the Advisory Commission throughout until
the early summer of 1918, when he became Acting Director, succeeding Mr.
Gifford shortly after the signing of the armistice.
[Illustration: Copyright by Harris & Ewing
=United States Council of National Defense and Its Advisory Commission=
Seated, left to right: David F. Houston, Secretary of Agriculture;
Josephus Daniels, Secretary of the Navy; Newton D. Baker, Secretary of
War; Franklin K. Lane, Secretary of the Interior; William B. Wilson,
Secretary of Labor. Standing, left to right: Grosvenor B. Clarkson,
Secretary, later Director, of both Council and Advisory Commission;
Julius Rosenwald, Bernard M. Baruch, Daniel Willard, Chairman of the
Advisory Commission; Dr. Franklin Martin, Dr. Hollis Godfrey, Howard E.
Coffin and Walter S. Gifford, Director of the Council and Advisory
Commission.]
PROPOSALS OF THE ADVISORY COMMITTEE
Although the Council and Advisory Commission did not, as has been
stated, make permanent organization until March 3, 1917, the Advisory
Commission on December 7, 1916, determined on the following proposals of
action:
To begin immediately a study to determine the most effective
flexible organization and mechanism for the securing of all
necessary information and for the clarifying, recording, and
classifying of such information when secured.
To begin immediately a study as to what media now exist which
can aid in the carrying out of the purposes of the council.
This study to be made in three divisions--governmental media
in the departments, governmental media outside the departments,
and civil media. As this study progresses it is believed that
the council can aid materially in the development of such
media, and can from time to time define (_i. e._, delimit and
delineate) spheres of activity in which existing organizations
may operate intensively without duplication.
To assist in the advance of the physical well being of the
people of the nation.
To begin immediately a study of the possibility of the
coördination of transportation, communication and surveys.
To continue the work done on the inventory of manufactures, of
medical equipment and officers, of supplies, and of resources.
To assist in the development of the "Personal Index" already
begun.
To set a fixed date (a date three months after the beginning of
action is suggested) on which an inspection may be made of the
work accomplished to that date. This inspection to be made
through the submitting to the commission of an actual problem
by the Departments of War and Navy, with the intent to
determine at that time what needed information is or is not
available.
To form a temporary organization to put the above proposals or
any part of them or additional proposals into effect at the
earliest possible date, with the intention of changing from a
temporary organization to a permanent organization as the
progress of the work makes this possible.
To begin a study of the best methods of expression of the work
of the council to the people of the nation.
To scrutinize all legislative action touching national defense.
To do any other thing or take any other action necessary to
give effect to the law under which the council and commission
are organized.
PRE-WAR ACTIVITIES
At this time there was consideration of plans to enroll labor in an
industrial reserve, and the question of mobilization of American
railroads for military purposes was seriously discussed against future
need. At the same time Commissioner Baruch stated that he had been
making a study of the steel and metal industries in connection with the
national defense, and wished for authority to consult further with the
leaders in those trades. The Director was asked to establish relations
in the interest of the national defense with civic organizations,
patriotic associations, and chambers of commerce.
At a meeting on February 12, 1917, plans were discussed to call a series
of conferences with the leading men in each industry fundamental to the
defense of the country in the event of war, and at the same meeting a
plan was laid down and afterwards agreed upon to split the Advisory
Commission up into seven separate committees as detailed above, the
Chairman of each committee to be given power to select the members of
his committee from either governmental or civil life, or both.
At a meeting on February 14, 1917, E. S. Stettinius, who, acting for J.
P. Morgan and Company, was the purchasing agent of the Allies at that
time, was called before the Council to confer with it on the manufacture
of munitions. In the same way during this early period men of the
authority and standing of Herbert Hoover, Admiral Peary, and General
Kuhn, who had closely studied the German armies, were called into
consultation by the Council, Mr. Hoover of course, discussing the
mobilization, distribution, and conservation of food supplies, and
Admiral Peary the development of the aeroplane and seaplane for modern
war.
On February 15th the Advisory Commission, further to progress its work
then already under way, requested detailed lists of materials, with
specifications and detailed dimensioned blueprints covering all
equipment needed for a force of 1,000,000 men and for the assumed force
of the Navy and Marine Corps with its numbers increased to emergency
strength. It also called for estimates of reasonable accuracy covering
the maintenance of a force of the size mentioned in the field during
each ninety days of active service. The information was desired in order
that approximations might be made as to the amounts of both manufactured
and raw material for which it would be necessary to draw upon the
resources of the country. The Advisory Commission later furnished
estimates of its own.
On March 3rd Chairman Willard of the Advisory Commission read to the
Council a list of men nominated by the Commission to compose a munitions
standards board. It is highly significant to detail the names of these
men with their occupations, for they were typical of the cream of
American industry which from that time on was enlisted in the
Government's interest:
W. H. Vandervoort, builders of special machine tools, and
President of the Moline Automobile Co.
E. A. Deeds, formerly General Manager for the National Cash
Register Co., President of the Dayton Engineering Laboratories
Co., and interested in many industrial activities.
Frank A. Scott, Warner & Swasey Co., Cleveland, manufacturers
of automatic machinery and optical instruments.
Frank Pratt, General Electric Co., Schenectady.
Samuel Vauclain, Baldwin Locomotive Works, Remington and
Westinghouse Cos.
John E. Otterson, Vice-President, Winchester Arms Co.
The Council duly approved these nominations.
[Illustration: Copyright Underwood & Underwood
Bernard M. Baruch
Known as the "Eye of Industry," because his task was to see that the raw
materials were brought to the factories and the finished products
shipped overseas.]
MEN OF VISION
It is impossible here to give more than a few instances such as the
foregoing of the way in which the Council and Commission, with
remarkable vision and perhaps even more remarkable disregard of
precedent when precedent got in the way of the national welfare, made
history in these pre-war days. Fully to tell the story of this period
would pack a large volume. I quote from a recent partisan criticism
directed by an American Congressman, as chairman of a congressional
committee to investigate war expenditures, against the Advisory
Commission particularly, which he characterized as the "secret
government of the United States" during this vital space of time:
It appears from the minutes of the advisory commission and the
council, which were kept separately, that practically all of
the measures which were afterwards considered as war measures,
were initiated by this advisory commission, adopted by the
council, and afterwards acted upon by Congress. In many cases,
a considerable period before the actual declaration of war with
Germany this advisory commission was discussing matters which
were thought to be new legislation, conceived by reason of the
necessities of war. For instance, on March 3rd, over a month
before the War declaration, the advisory commission indorsed to
the Council of National Defense a daylight-saving scheme, and
recommended a Federal censorship of the press. The question of
Federal censorship of the press was further discussed on March
24th, two weeks before the declaration of war.
On February 15th, about two months before the declaration of
war, Commissioners Coffin and Gompers made a report as to the
exclusion of labor from military service, and the draft was
discussed; the draft was also discussed on other occasions
before anyone in this country, except this advisory commission
and those who were closely affiliated with the administration,
knew that a declaration of war was to be made later. At a
meeting, on February 15th, this same commission of seven men
(none of whom had any official authority except as advisors),
recommended that Herbert Hoover be employed by the Government
in connection with food control. It was generally understood,
as appears from the minutes, that Mr. Hoover was to be in
control of this matter, although war was two months in the
future.
The advisory commission first met on December 6, 1916. Almost
the first thing the commission did was to take up the matter of
arranging an easy method of communication between the
manufacturers and the Government. On February 12th, for
example, Secretary Lane offered a resolution to the advisory
commission suggesting to them to call a series of conferences
of the leading men in various industries, so the industries
might organize and be able to do business with the council
through one man. In several meetings, long before the war was
declared, this advisory commission of seven men met with the
representatives of the manufacturing industries and formed an
organization of them for selling supplies to the Government,
which organization was well perfected before the war was
declared. This method consisted of having the representatives
of the various businesses, producing goods which the Government
would have to buy, form themselves into committees so that they
might be able to sell to the Government the goods direct, which
their industries produced. In almost every meeting that this
advisory commission had before the declaration of war, they
discussed and recommended to the council (which consisted of
six Cabinet members) these plans for fixing prices and selling
to the Government. When war was declared on April 6th, this
machinery began to move, headed by the advisory commission of
these minutes, the active Government of the seven men, who
were, in effect, as shown by United States, so far as the
purchase of supplies was concerned. So far as I can observe,
there was not an act of the so-called war legislation afterward
enacted that had not before the actual declaration of war been
discussed and settled upon by this advisory commission.
It should be said, of course, that no member of this Council
organization ever sold commodities to himself. But that is another
story.
MEN OF EXPERIENCE
I could not complete even a skeleton outline of the period in question
without certain other references.
Further to emphasize the quality of the business men being called to
Washington by the Council and Advisory Commission, I quote part of a
letter to Chairman Willard of the Commission from Commissioner Baruch of
March 23, 1917:
Mr. Daniel Willard,
Chairman, Advisory Commission, Council of
National Defense, Washington, D. C.
Dear Sir:
In pursuance of the authority given me and in order to be
prepared to meet the requests made of the advisory commission,
I have appointed the following committees. As the necessity
arises and the advisability becomes apparent, I shall add from
time to time other members to these committees, always bearing
in mind keeping them down to such a size that they will be
workable. It has been my endeavor to appoint on these
committees men of proved ability and undoubted integrity.
LEATHER.--Walter C. Garritt, U. S. Leather Co., Boston, Mass.;
George F. Johnson, Endicott, N. Y.; Theodore P. Haight,
American Hide & Leather Co., New York City.
RUBBER.--A. Marks, Diamond Rubber Co., Akron, Ohio; Fred Hood,
Hood Rubber Co., Watertown, Mass.; Stuart Hotchkiss, General
Rubber Co., New York City.
STEEL.--E. H. Gary, President, American Iron & Steel Institute,
New York.
WOOL.--J. F. Brown, Boston, Mass.; Sigmund Silberson, Chicago,
Ill.; Joseph R. Grundy, Bristol, Pa.; F. J. Hagenbarth,
President, National Association of Wool Growers, Salt Lake
City, Utah.
NICKEL.--Ambrose Monell, President, International Nickel Co.,
New York.
OIL.--I have asked Mr. A. C. Bedford, president of the Standard
Oil Co., to serve on the committee, but I shall probably add
another from the Middle West, whose name I have not yet
determined upon, and Mr. Ed. L. Doheny, of Los Angeles, Calif.
ZINC.--I have in the process of formation a committee
representing the zinc trade. There are certain difficulties in
the way of trade jealousies which we have to smooth away. The
same thing is occurring in other lines, but it will be
adjusted, and I shall report on them from time to time.
COAL.--I have been in consultation with the producers of coal,
both bituminous and anthracite, and am now studying that
situation as to the best method of covering coal.
SPRUCE WOOD.--I have also under consideration, but have come to
no conclusion, the employment through a committee of those best
fitted for obtaining the manufacture of aeroplanes for the
Government the proper amount of spruce wood which seems to be
needed.
LABOR PLEDGES SUPPORT
It will be long before the writer forgets the dramatic meeting of the
Advisory Commission as early as March 3, 1917, when Commissioner Gompers
reported that he had called an executive council meeting of the American
Federation of Labor for March 9, 1917, for the purpose of considering
the attitude of labor toward the preparedness plans of the government.
The labor leader spoke with great emotion. He referred to England's
difficulty in the first year of the war in enlisting the services of the
working people. He went on to say that in England unity was then lacking
between government and labor and that the same situation, if not
properly handled before hand, could arise in this country in even more
acute form, largely because of the racial diversity of our working
classes. He concluded by stating that he was now bending his efforts to
mobilizing good will in this direction, saying: [24] "I want the
workingmen to do their part if war comes to America." He forecasted the
meeting in Washington on March 12, 1917, of the officers of the National
and International Trade Unions of America, and said: "I am expecting a
definite response of support from every trade union in America." There
is no doubt in the writer's mind that Samuel Gompers kept the faith
throughout.
[24] I took Mr. Gompers' words verbatim.
On April 6, 1917, the Council and Advisory Commission approved a
declaration of the attitude of American labor toward the war presented
by Mr. Gompers' Committee on Labor of the Advisory Commission. This
action was directed toward the maintenance of existing standards of
employment, and provided, among other things, that the Council should
issue a statement to employers and employees in industrial plants and
transportation systems advising that neither employers nor employees
should endeavor to take advantage of the country's necessities to change
existing standards; and providing further that when economic or other
emergencies might arise requiring changes of standards, the same should
be made only after such proposed changes were investigated and approved
by the Council. It likewise provided that the Council urge upon the
legislatures of the States, as well as upon all administrative agencies
charged with the enforcement of labor and health laws, the great duty of
rigorously maintaining the existing safeguards as to the health and
welfare of workers, and that no departure from such standards in State
laws and State rulings affecting labor should be taken without a
declaration of the Council that such departure was essential for the
effective pursuit of the national defense.
MERGING THE RAILROADS
On April 7, 1917, the Council directed Chairman Willard of the Advisory
Commission to call upon the railroads so to organize their business as
to lead to the greatest expedition in the movement of freight and
troops. The response of the railroads was literally splendid. Their
executives came to Washington, conferred with Mr. Willard, and passed
the following resolution:
RESOLVED, That the railroads of the United States, acting
through their chief executive officers here and now assembled
and stirred by a high sense of their opportunity to be of the
greatest service to their country in the present national
crisis, do hereby pledge themselves, with the Government of the
United States, with the governments of the several States, and
one with another, that during the present war they will
coördinate their operations in a continental railway system,
merging during such period all their merely individual and
competitive activities in the effort to produce a maximum of
national transportation efficiency. To this end they hereby
agree to create an organization which shall have general
authority to formulate in detail and from time to time a policy
of operation of all or any of the railways, which policy, when
and as announced by such temporary organization, shall be
accepted and earnestly made effective by the several
managements of the individual railroad companies here
represented.
COÖPERATING COMMITTEES
The first of July, 1917, found the Council and Advisory Commission
directing the operation of the following boards and committees:
Aircraft Production Board.
Committee on Coal Production.
Commercial Economy Board.
Woman's Committee.
General Munitions Board with its sub-committees on Army
Vehicles, Armored Cars, Emergency Construction and Contracts,
Optical Glass, Storage Facilities, Machine Guns, Priority, and
Accounting.
Munitions Standards Board with its sub-committees on Gauges and
Dies, Army and Navy Artillery, Fuses and Detonators, Small Arms
and Munitions, Optical Instruments, and Army and Navy
Projectiles.
Section on Coöperation with States.
Committee on Inland Waterways.
Committee on Telegraphs and Telephones.
Committee on Railroad Transportation, with which acted an
executive committee made up of leading railroad presidents and
six departmental committees composed likewise of railroad
executives and paralleling the military departments over the
country, and sub-committees on Express, Car Service, Military
Equipment Standards, Military Transportation Accounting,
Military Passenger Tariffs, Military Freight Tariffs, and
Materials and Supplies.
Committees on Cars and Locomotives, with their personnel made
up of the high executives of such concerns as the Baldwin
Locomotive Works, the Pullman Company, and the American
Locomotive Company.
Committee on Electric Railroad Transportation, composed of
electric railway presidents.
Committee on Gas and Electric Service.
Committee on Automotive Transport.
Committee on Supplies, with its sub-committees on Cotton Goods,
Woolen Manufacturers, Shoe and Leather Industries, Knit Goods,
Leather Equipment, Mattresses and Pillows, and Canned Goods.
Committee on Raw Materials, with its sub-committees, popularly
known at the time as the "A to Z" committees, on Alcohol,
Aluminum, Asbestos, Magnesia and Roofing, Brass, Cement,
Chemicals, Acids, Alkalis, Electrochemicals, Fertilizers,
Miscellaneous Chemicals, Coal-Tar Products, Pyrites, Sulphur.
Sub-Committees on Copper, Lead, Lumber, Mica, Nickel, Steel
Products, with sub-committees on Alloys, Sheet Steel, Pig Tin,
Steel Distribution, Scrap Iron, Pig Iron, Iron Ore, and Lake
Transportation, Tubular Products, Tin Plate, Wire Rope, Wire
Products, and Cold Rolled and Cold Drawn Steel.
Sub-Committee on Oil, Rubber, Wool, and Zinc.
Committee on Engineering and Education, with its sub-committees
on General Engineering, Production Engineering, Universities
and Colleges, Secondary and Normal Schools, and Construction
Engineering.
Committee on Labor, with its sub-committees on Mediation and
Conciliation, Wages and Hours, Women in Industry, Welfare Work,
Sanitation with twelve subdivisions, Vocational Education with
nine subdivisions, Information and Statistics, Cost of Living
and Domestic Economy.
General Medical Board, with a long and active list of
sub-committees.
[Illustration: Copyright by Underwood & Underwood
Daniel Willard
President of the Baltimore and Ohio Railroad.
He was chairman of transportation and communication in the Council of
National Defense.]
SERVICE OF EXPERTS
On these boards and committees sat, almost without exception, the
American leaders of industry, science, and labor. Scattered through the
list one finds such names as:
Rear Admiral David W. Taylor, one of the world's leading naval
constructors.
F. S. Peabody, the great coal operator.
James J. Storrow, of Lee, Higginson & Co., of Boston.
A. W. Shaw, publisher of the _System_ magazine, who, as
Chairman of the Commercial Economy Board, preached with
remarkable success the gospel of conservation in business.
Dr. Anna Howard Shaw, who for her labors as Chairman of the
Woman's Committee received the Distinguished Service Medal.
Frank A. Scott, on whom was bestowed the same distinction for
his leadership of the General Munitions Board.
W. A. Starrett, constructing architect of New York, to whom in
great measure is due the credit for the building of the
cantonments in an incredibly short space of time.
Samuel Vauclain, President of the Baldwin Locomotive Works,
whose contribution in the matter of Army and Navy artillery was
monumental.
Theodore Vail, President of the American Telephone & Telegraph
Company, who brought the wire communication men of the country
to a common center in the national interest.
Charles Clifton, President of the National Automobile Chamber
of Commerce.
Gen. George H. Harries, the famous electric railway operator.
Samuel Insull, President of the Commonwealth Edison Co., of
Chicago.
Charles Eisenman, who, as active head of the Council's
Committee on Supplies, procured for the Government $800,000,000
of supplies in 200 days at an overhead cost of but $20,000,
involving the handling of 45,000 contracts, and who justly
received the Distinguished Service Medal.
A. F. Bemis, President of the National Association of Cotton
Manufacturers.
John P. Woods, the eminent woolen manufacturer.
J. F. McElwain, of the McElwain Shoe Company.
Lincoln Cromwell, of Wm. Iselin & Co., New York.
Arthur V. Davis, President of the Aluminum Co. of America.
Thomas F. Manville, President of H. W. Johns-Manville Co.
Charles F. Brooker, President of the American Brass Company.
John E. Morron, President of the Atlas Portland Cement Company.
John D. Ryan, President of the Anaconda Copper Company.
R. L. Agassiz, President of the Calumet & Hecla Mining
Company.
W. A. Clark, President of the United Verde Copper Company.
Murry M. Guggenheim.
R. H. Downman, President of the National Lumber Manufacturers'
Association.
Ambrose Monell, President of the International Nickel Company.
Gary, Farrell, Burden, Dinkey, King, Grace, Schwab, Topping,
Dalton, and Clarke, the great steel executives.
Bedford, Davison, Doheney, Lufkin, Markham, Sinclair, Van Dyke,
Muir, James, and Guffy, in whose hands lay almost the entire
oil output of America.
Stuart Hotchkiss, President of the General Rubber Company.
F. J. Hagenbarth, President of the National Association of Wool
Growers.
The Presidents of the leading zinc companies.
Then when we come to Engineering and Education:
Dr. Henry E. Crampton, of Columbia University.
Charles A. Stone, of Stone and Webster.
The heads of the great engineering societies.
The presidents of Harvard, Johns Hopkins, and other famous
universities and colleges.
Among labor leaders such persons as:
Warren S. Stone, Grand Chief of the Brotherhood of Locomotive
Engineers.
James W. Sullivan, Matthew Woll and Frank Morrison, all high in
the American Federation of Labor.
Such well-known men as:
V. Everit Macy, Benjamin Ide Wheeler, John H. Finley, August
Belmont, E. T. Stotesbury and Charles G. Dawes, afterwards a
brilliant figure as a General in France.
Such nationally and internationally known physicians as:
General Gorgas; Dr. William H. Welch, of Johns Hopkins; the
Mayos; Dr., afterwards Brigadier-General, Finney; Dr. George E.
Brewer; Dr. George W. Crile; Dr. Simon Flexner; and Dr.
Theodore Janeway.
Dr. George E. Hale, Chairman of the National Research Council,
which was and is the Council's Department of Science and
Research.
Thomas A. Edison, President of the Naval Consulting Board,
which was and is the Council's Board of Inventions.
The activities of these men and their hundreds of colleagues, nearly all
dollar-a-year workers and men whose time could not be bought, as a rule,
in days of peace, reached out and touched almost every town and village
in almost every part of the United States. They were moved and
stimulated by the philosophy of voluntary coöperation, which was first
and in a very daring way thrust into the consciousness of the nation by
the Council of National Defense. It was the policy that won the war. One
distinct benefit which the Government received from calling the
industrial intelligence of the country to its aid was the breadth of
view which industrial leaders possess. Their habit of mind to survey the
field as a whole, to take a bird's-eye view of the problem to be solved,
enabled the Government agencies to obtain a proper comprehension of the
task of building the war machine. The country will probably never know
the debt that it owes to these men and their like who came to Washington
and bent their backs throughout the hot Southern summer during a series
of endeavors in which absolutely no paths were charted.
NON-PARTISAN REPRESENTATION
It has been asked why a coalition government was not formed to wage the
war. That very thing was in effect done by the Council, though we were
all too busy to point it out at the time. A majority of the Advisory
Commission was made up of Republicans. Certainly Republicans were in the
huge preponderance in the Committee and Boards of the Council and
Advisory Commission. Speaking as one who was not affiliated with the
politics of the Administration of Woodrow Wilson, the writer never
perceived a trace of political flavor in the organization and operation
of the Council from first to last. Never did the six Democratic cabinet
officers forming the Council itself so much as inquire into the politics
of the hundreds of business men and experts nominated to them for
appointment. It was an amazing demonstration of non-partisanship in a
national crisis. The Council was an organization of specialists from
beginning to end, and the work was everywhere carried forward on the
most impersonal basis. The writer attributes this state of affairs to
the breadth of view, and the very genuine passion for national service,
of Secretary of War Baker, Chairman of the Council.
It should be plainly stated that, utilizing in the main dollar-a-year
experts, the Council made the preliminary mobilization of industry to
July 1, 1917, at the grotesquely small sum of $127,000. To May 1, 1919,
its total expenditures, including the operation of the war industries
for nearly a year, amounted to but $1,500,000, and this comprehended the
expenditure of $225,000 for the erection of a building. I doubt if there
is anything in governmental or commercial history to match those
figures, squared with results. The savings of the Council and Advisory
Commission to the Government and the people mounted literally into the
billions, as careful analysis of pre-war and war-time prices on certain
commodities will demonstrate. It was made possible by the Council's
course in commandeering to its side the business men of the United
States.
SOME RESULTS OF COÖPERATION
One of the practical results of voluntary coöperation was the agreement
made by Mr. Baruch and Mr. Ryan with the largest copper producers of the
country to furnish the Navy 20,000,000 pounds of copper and the Army
25,510,000 pounds at 16-2/3¢ a pound when the market price was 35¢ a
pound. This meant saving to the Government close to $10,000,000. The
copper men made this offer notwithstanding their increased cost for
labor, materials, etc., because, as they said: "We believe it to be our
duty to furnish the requirements of the Government in preparing the
nation for war with no more profit than we receive from our regular
production in normal times."
In the same way the steel makers of the country, represented in the
Steel Institute, agreed to furnish steel to the Government at the basic
price of 2.9¢ per pound as compared with the then market price of from
5¢ to 7¢ a pound. This represented an approximate saving to the
Government of $18,000,000.
THE FIELD DIVISION
The tremendous effort of the Council to mobilize and coalesce into a
fluid and powerful whole the industrial, economic and scientific forces,
was supplemented and to a great extent made possible by the Council's
Section on Coöperation with States, later known as the Field Division.
Through this subordinate body was created, guided and coördinated the
185,000 units of the state, county, community and municipal councils of
defense, which literally unified the citizenship of America for war. If
production was to win the war, it was elementary that the civilian
morale must be brought to the highest pitch of coöperation and
efficiency--and it was accomplished. In this vital task a noble part was
played by the Woman's Committee of the Council, which in the most
thorough-going and swift manner brought the services of the women of the
country to the Government. The director of this committee, Miss Hannah
J. Patterson, received the Distinguished Service Medal.
WAR INDUSTRIES BOARD
On August 1, 1917, the Council, with its fortunate power to create
subordinate bodies, brought into being the War Industries Board, of
which the first Chairman was Frank A. Scott, and of which some of the
other members up to the end of the war were:
Robert S. Brookings.
Brigadier-General Hugh S. Johnson.
Rear Admiral F. F. Fletcher.
Hugh Frayne, of the American Federation of Labor.
George N. Peek, a prominent Middle Western manufacturer.
J. L. Replogle, who became the very efficient Director of Steel
Supply.
L. L. Summers, an expert on explosives.
Alexander Legge, General Manager of the International Harvester
Company.
And Judge Edwin B. Parker.
Mr. Brookings was later placed in charge of price fixing and Judge
Parker in charge of priorities. The War Industries Board undoubtedly
accomplished a much better centralization of effort than was possible in
the hurried organization of the early days, when the imperative need was
to increase the sources of supply and get production going until the
executive departments of the Government could get into their full
stride. Mr. Scott was succeeded as Chairman of the War Industries by
Daniel Willard, who in turn was succeeded by B. M. Baruch, who, in his
leadership of this vital and powerful agency, duplicated the success
that Mr. Willard had made as Chairman of the pioneer Advisory
Commission.
CANTONMENT CONSTRUCTION
In indicating even an outline statement of the American industrial and
economic effort in the war, the writer feels helpless to paint the
picture within the space of a few thousand words. It simply cannot be
done. But to visualize what the measure of the task was, let one thing
be cited:
[Illustration: Copyright Underwood & Underwood
=John D. Ryan=
President of the Anaconda Copper Company. He was made chairman of the
Aircraft Production Board after we entered the war.]
At our entrance into the war there were one colonel and four men to
build the cantonments. The job involved the expenditure of $150,000,000
in about three months. The largest year's work on the Panama Canal
amounted to but some $50,000,000. The situation was heart-breaking. On
hearing of it Frank Scott, then Chairman of the General Munitions Board,
called up the Secretary of War and said that something had to be done,
with which the Secretary instantly agreed. The result was that the
Colonel, afterwards Brigadier-General Littell, had a civilian
organization built around him by the Council of National Defense,
notably by W. A. Starrett, later himself a colonel in the Army, which
functioned until the Army was in shape to carry on the job alone. The
building of the cantonments was the greatest job of the ages.
Incidentally it should be stated that the average profit to the
contractors was less than three per cent.
MEN LITTLE KNOWN
The writer likewise feels great reluctance in mentioning, as he has
mentioned, only a few of the men who waged the industrial side of the
war. Many business men little known to the country gave up their
businesses and came to Washington and did superhuman things--did them in
an impersonal, selfless way that was nothing less than stirring. Many of
them remain unknown to this day, and their chief reward must lie in the
satisfaction that they drew to their own souls by what they did, which
is, of course, the greatest satisfaction of all in such situations as
war-time Washington exemplified.
It has not even been possible to touch on the work of business men in
such great war agencies as the Food and Fuel Administration, the War
Trade Board, the Shipping Board, the Aircraft Production Board, the
Office of the Alien Property Custodian, the War Finance Corporation, and
those divisions of the War Department which called highly qualified
civilians to their aid. It would seem better to emphasize the initial
effort, when the Council, through force of circumstances, became the
great administrative laboratory for the examination, organization, and,
at the proper time, allocation of totally new and untried phases of
Federal action related to the prosecution of the war. It was in effect a
fecund mother, which, it is not the slightest exaggeration to say, gave
birth to and propelled the war machine which in the closing days of the
conflict overseas was reaching to the peak of its load, and which in
fact dealt the death blow to the Imperial German Government. It made, in
truth, its fair share of mistakes, but some day its part in sending out
the trumpet call to the business and labor and scientific leaders of
America to join in the national defense will be fully told. Then there
will be perceived in clear and true light the extent to which
peace-loving American civilians offered all they had and all they were
to the Government of the United States so that decency might again be
paramount upon the face of the earth.
VII--THE LIBERTY LOAN ARMY
Mobilizing Americans at Home to Pay for the War--A National Effort
Which Yielded $24,065,810,350
By GUY EMERSON
Vice-President of the National Bank of Commerce, formerly Director of
Publicity, Government Loan Organization
Our Army was our first line in the war against Germany. Our second line
of offense and defense was the Navy, and behind both stood another line
without which neither the Army nor the Navy could have "carried on."
This third force was the greatest unit ever marshalled in the history of
this or any other country--the Liberty Loan Army. Before a man in the
United States uniform entered a trench, before the first depth bomb had
been dropped on a U-boat, this Army, which finally carried a roster of
22,777,680 names, had entered the war.
Think of it! One person in every five in the immense population was in
the war!
True, their contribution to the eventual triumph of our arms was
measured in dollars while that of the men at the front or on the seas
was in lives or limbs. Yet it is a fact that dollars were as powerful
relatively as men in bringing the Boche to bay.
Various causes have been given to account for the startlingly sudden
collapse of the Kaiser's army. Some say that the Allies' superior
military strategy brought it to its knees. Others contend that success
against the U-boats broke it down. Both are partly right, for each
helped to undermine the German morale. But however great the
contribution of both was, it is safe to say that the front presented by
the Liberty Loan Army was a vital factor. The belated German
consciousness that the United States as a whole was in the war, as
tangibly represented in the strength of the Liberty Loan Army, helped to
shatter the Germans' will to victory. As much as the men in khaki or in
blue, this gigantic unit bore in upon his mind as an unyielding
opponent. He understood the futility of trying to defeat a people that
enlisted against him to the number of 22,777,680 at home, 4,000,000 in
the field and 300,000 on the water.
THE SPIRIT BEHIND THE DOLLAR
There is another angle to this important element of morale. In inverse
ratio to the weakening of the spirit of the Germans against this
resistless body there came a daily strengthening of the morale of our
own men and those of the Allies through this manifestation at home.
Where there are two opposing wills to victory in the field, the one that
has the greater backing at home is certain to overwhelm the other.
It was not the dollar that won the war, it was the spirit behind the
dollar. Before Prince Max asked for the armistice he had learned that
$9,978,835,800 had been subscribed in this country toward his defeat. It
is natural to assume that this fact did not impress him so much as the
related fact that millions of persons had participated in the
subscription.