WAR-TIME CONTROL OF TRADE AND INDUSTRY
The entire commercial and industrial life of the country was
established on a war basis very soon after war was declared. Trade
had to be thus mobilized in order to defeat the efforts of the enemy
to supply himself by roundabout and underground means with American
products and in order to use efficiently the organization of commerce
for the prosecution of the war. Industry had to be mobilized in order
to make sure that it would produce all the enormous amounts of every
sort that would be needed for war purposes. A people accustomed
throughout their history as a nation to a minimum of governmental
control of or interference in their business affairs and believing in
and practicing the principle of individualism in business suddenly
found themselves called upon to surrender that principle and submit to
pervasive governmental regulation. It was a sharp and searching test
of patriotism and of loyalty to national ideals and it put to thorough
trial the mental elasticity, alertness and resourcefulness of the
business life of the country.
These new conditions, limitations and controls were administered by War
Boards of Trade and Industry. That for trade was instituted six months
after the declaration of war as a more comprehensive and efficient
successor of an Export Administrative Board. The purpose of the War
Trade Board was primarily to carry out the provisions of the Act
forbidding Trade with the Enemy and certain portions of the Espionage
Act. It had under its control the whole of the foreign commerce of the
United States, which it managed by means of a system of licenses for
exports and imports. Not a pound of goods of any sort could be shipped
out of or into the country without a license granted by the War Trade
Board, and no license was granted by it without full knowledge of
the character of the shipment, its destination if an export and its
source if it were inward bound. It had its branch offices in a score of
cities, its representatives in foreign countries, its trade advisers
and distributors who were men of intimate and extensive knowledge of
trade conditions in all commodities at home and abroad, its members
who supplied information concerning war trade matters all over the
earth, from Iceland to Cape Horn and from Siam round the world to
Japan, its bureaus which studied the problems constantly arising and
collected data for their solution and for the guidance of the Board.
The applications made to the War Trade Board for export licenses,
nearly all of which were granted, averaged over 8,000 per day. The
transactions which passed daily through its hands represented values of
from $40,000,000 to $50,000,000. It had 3,000 employees, most of whom
were located in its Washington offices, although its representatives
were to be found in every important trading post in the world outside
of enemy countries.
The War Trade Board, by limiting exports, conserved the products of the
country for the use of our own people and the people of the nations
associated with us in the great conflict so that these products might
be used in whatever way would best aid the prosecution of the war;
it so controlled and supervised the shipping of goods to associated
and neutral nations as to conserve shipping space for military uses;
it regulated with the closest surveillance the shipping of goods
to neutral countries in order to make sure that they would not be
re-shipped in covert ways to enemy destinations; it hunted out enemy
and enemy-controlled firms in our own and neutral lands, closed up the
former and prevented trade with the latter, although it also in neutral
countries made every effort to find and list for American merchants,
in the place of these forbidden firms, others in the same lines not
friendly with the enemy with whom trade could be carried on; and it so
arranged trade with neutral nations as to supply them with necessities,
under guarantees that these should not be reëxported, in return for
their export to the United States and her associates of certain needed
products and permission for this country to use their shipping.
This mobilization of the commercial arm of the United States soon
proved its value and the government’s control of trade through the War
Trade Board was a highly important factor in hastening the winning
of the war. The firm hand which was laid on commerce with certain
neutral nations of Europe, through which Germany had been getting large
amounts of food and supplies, finally made effective the blockade of
the enemy. The trade of those nations with the United States during
the two and a half years before our entrance into the war had jumped
to enormous figures, many times its previous volume. When the War
Trade Board assumed control of American commerce it fell, in the case
of one nation, to one-twentieth of what it had been in the first year
of the war, while the total exports of food stuffs of the neutrals
of northern Europe to the Central Powers declined in a few months by
from sixty-five to eighty-five per cent of what they had been in the
previous year.
The Board procured, by trade arrangements with European neutrals, the
use of shipping for the United States and Great Britain amounting
to over two million tons, for which there was the greatest need for
transportation of troops, munitions, foods and supplies to Europe.
For this same purpose the Board conserved much tonnage by practically
suspending, for several months, trade in many commodities with South
America and the Orient. Working in harmony with the War Industries
Board, it prevented the shipment out of the United States of all
materials needed by this country and the associated nations for the
swift and efficient prosecution of the war.
Both the War Trade Board and the War Industries Board coöperated
constantly with the other civilian organizations through which
the nation carried on its support of the war, such as the Food
Administration, the Fuel Administration, the Council of National
Defense, the U. S. Shipping Board Emergency Fleet Corporation and
the Railroad Administration, and by this union of organization kept
up a harmonious, smoothly articulated and swiftly moving team-work
through which the full resources and powers of the entire nation were
mobilized and put to the service of the two direct war agencies of the
Government, the War and the Navy Departments.
The function of the War Industries Board in this nation-wide scheme
of organization was so to organize and regulate the industries of the
country as to insure the materials necessary for the war prosecuting
agencies of the Government and at the same time protect the country’s
civilian needs. It was charged with providing the nations associated
with us in the war with such military supplies as they desired and
America could spare and neutral nations with such commodities as they
needed and would exchange for materials essential to this country. Thus
these two administrative war agencies, the War Trade Board and the War
Industries Board, together had practically complete control of all the
vast affairs of the whole nation’s industry and commerce. As a sculptor
works a piece of clay into any desired form, these two boards took the
country’s business life into their hands and moulded and shaped it into
a war-making machine.
By a system of priorities that governed both production and
distribution the War Industries Board regulated the supply of raw
materials to manufacturers and the delivery of finished products.
It stimulated production and speeded distribution of whatever was
urgently needed for the fighting forces, for exchange with neutrals or
for our own people, but limited the supply of raw materials, or coal,
or electricity, or labor, and temporarily withheld the facilities of
distribution when need was not immediate, or when there would otherwise
have been interference with some war-making effort. Every important
class of industry in the country, and some that were not of large
consequence in so far as the size of their business was concerned, came
within the scope of the Board’s operations. The expert leaders of these
industries were represented among the advisers of the Board, to which
they brought their comprehensive and profound knowledge of resources,
conditions, methods of operation, and quantity, quality and ordinary
destination of output. Industries were listed, classified and studied
to determine the degree of preference to which each was entitled, and
in many cases the same method was applied to individual plants within
an industry. To those entitled to preferential treatment because
they could best subserve some phase of war need was given priority
of service in all their requirements, while the needs of others were
deferred until the preferred industries or plants were satisfied.
It is not possible to describe all the multiple achievements of
the War Industries Board, but a glance at them shows many of vital
importance. By establishing maximum prices upon a number of staple
raw materials necessary in the war-making program, an executive
order of the President putting into legal operation its agreements
and decisions, the Price Fixing Committee of the Board stabilized
prices and prevented or lessened profiteering in many industries. The
Conservation Section reduced wastage in industry in various ways, but
especially by curtailing the number of patterns, or varieties, in each
of many lines of production, scrutinizing for this purpose nearly two
hundred different industries. Thus, the thousand and more different
patterns for a buggy step were reduced to two, with resulting economy
of both labor and material. A Committee on Emergency Construction
took charge, under the Construction Division of the Government, of
the vast building program upon which the nation had at once to enter.
Cantonments, flying fields, camps, hospitals, embarkation depots,
docks, wharves, storehouses, ordnance, powder, explosives and nitrate
plants and other structures had to be built with the greatest possible
rapidity. The War Industries Board first developed a method for getting
the necessary information concerning contractors who could take charge
of this enormous building program and devised a scheme of organization
and then, by means of its priorities system, made sure that each
operation should have at the moment of need the necessary materials,
transportation facilities and labor. These structures, finished and in
construction, totaled a cost at the end of the war of approximately two
billion dollars. The Chemical Division did highly important work in the
way of instituting, aiding and speeding scientific investigations and
stimulating new chemical industries, such as the potash supply and the
dye industry. The Steel Division received the enthusiastic coöperation
of the steel manufacturers, who speeded up their plants for the
production of the immensely increased quantities needed of this vital
product. More and more steel, and ever more steel, was necessary for
the making of munitions, guns, cannon, rails, locomotives, shipyards,
ships. In the last six months of 1918 the steel products that went
into direct and indirect war necessities amounted to 22,000,000 tons,
a production of about twenty-five per cent more than would have been
the reasonable expectation for the period. The Steel Division handled
approximately 40,000,000 tons of steel per year. The Board’s program
of speeding work greatly increased the output in many vital industries.
For instance, the locomotive industry doubled its production in three
months without increasing its facilities or expanding its works. It
has been estimated that the industrial capacity of the country was
increased by at least twenty per cent.
All over the country business men coöperated with the War Industries
Board with patriotic zeal, willingly curtailing their output and
reducing their incomes in order to release material, capital, labor,
fuel, transportation facilities, for the expediting of work necessary
for the winning of the war. Dozens of them left their affairs in the
hands of subordinates or gave up high-salaried positions and entered
the service of the War Industries Board in order that the nation
might have the advantage of their training and their wide and expert
knowledge. These men, who were generally known as “the Government’s
dollar-a-year men,” because legally the Government can accept no
gratuitous service, freely gave to the country, as their contribution
to the winning of the war, what it could not have bought for millions
of dollars and worked with as much energy and ardor as ever they had
done for the making and furthering of their own fortunes.