Chapter II
Preparing for Defense

In the months that intervened between the invasion of Poland in September 1939, and the national election in November 1940, legislative foundations were laid for a more adequate system of national defense, but only after thorough debate which spread from the Senate and House chambers to every crossroads. Though creation of administrative machinery for mobilization was necessarily subordinated to the task of obtaining legislation and of promoting public discussion of the issues underlying legislative proposals, by November 1940, the first steps had been taken in the erection of a governmental machine for defense and for war.

The outbreak of war between the great powers found us still torn by conflicting emotions. If the opinion polls are to be believed, we thought Germany had caused the war. We thought Hitler's claim to the Polish corridor unjustified. We did not want to see England, France, and Poland agree to Germany's claims regarding Danzig. Less than a tenth of us believed that we should declare war on Germany at once.1 A month after war broke out more than half the people believed we would not become involved. Our sympathies were overwhelmingly with the deomcracies, but our sympathies were not belligerent. Nor did we believe the chances of our becoming involved great enough to warrant strenuous efforts in preparation for our own defense.


On September 5, 1939, the President, in obedience to the Neutrality Act, prohibited the export of arms and munitions to France, Germany, Poland, the United Kingdom, India, Australia, and New Zealand.2 In his address to Congress, summoned to an extra session on September 21, the President recounted the rise of aggression and reported: "The Executive Branch of the Government did its utmost, within our tradiitional policy of noninvolvement, to aid in averting the present appalling war. Having thus striven and failed, this Government must lost no time or effort to keep our Nation from being drawn into the war." He called for a repeal of the arms embargo provision of the Neutrality Act and a return to our traditional neutrality policy under the usages of international law. He advocated that certain other provisions of the Neutrality Act be retained such as the restriction on the movement of American vessels in war zones and of travel by American citizens on belligerent vessels.

On November 4, the President signed a revised Neutrality Act. The new Act repealed the embargo on the shipment of arms and munitions to belligerents and introduced the rule that no exports to belligerents could be made until all right, title, and interest was transferred to the consignee. This provision, popularly known as "cash-and-carry," had applied to articles other than arms and ammunition from the passage of the 1937 Neutrality Act until May 1, 1939. Prohibition of the arming of American merchant ships, limitation of travel by American citizens on vessels of nations at war, and restriction on the movement of American vessels into combat areas were continued in effect.3

With the adoption of the "cash-and-carry" principle, the British and French took steps to enlarge and to coordinate their purchasing operations in this country, and on December 6, the President established an Interdepartmental Committee for Coordination of Foreign and Domestic Military Purchases--generally known as the President's Liaison Committee-which consisted of representatives of the War Department, Navy Department, and Treasury Department. It operated under the direction of the Secretary of the Treasury and located sources of supply and ironed out competition between foreign purchasing and our own procurement programs. British and French contracts resulted in the construction of facilities for the production of armament and thus strenghthened our own defense. To the maximum practicable degree the Committee took measures to assure that new factories erected with foreign funds would be equipped to produce goods to meet American military specifications.


On January 3, 1940, the President, in his annual message, said: "I am asking the Congress for Army and Navy increases which are based not on panic but on common sense. They are not as great as enthusiastic alarmists seek. They are not as small as unrealistic persons claiming superior private information would demand." In reporting the appropriation bill, the House Appropriations Committee recommended 57 new airplanes instead of 496.

Chart 2. Foreign Government Contracts for Armaments Placed in the United States.1

2Prior to 1940, foreign government contracts amounted to $118.1 million.
Source: Foreign Purchasing Missions and War Production Board.

It eliminated an item of some $12 million for the development of an air base in Alaska. In all, cuts totaling about 10 percent of the requests were made.4 The Committee's recommendations were accepted by the House without serious protest. By the time the appropriations measures were considered by the Senate, the Nazis had begun moving westward and then all could see that the level of military expenditures proposed in January was far too low.


The "phony" war came to an abrupt end in April and May 1940. Mechanized forces, employed on an unparalleled scale and with unprecedented skill, destroyed what had been thought to be the world's best armies, but the Maginot mentality in America, remote from the field of actual battle, was not crushed by falling bombs. It had to be worn down by the attrition of debate and by the realization that warfare had entered a new era. We had to revise our thinking about a great many things: about the security which the Atlantic assured us under these new conditions, about our position in world affairs, and about methods to finance and organize military production. We had to learn, in effect, to believe what we could see with our own eyes. That was not easy. For months following the opening of war in the west, we debated and disputed, making up our minds about what we should do at this juncture in world events.

The Nazis Move Westward

The German invasion of Denmark and Norway on April 9 appeared to us disturbing but not fatal, but the assault on the Low Countries on May 10 revealed unforeseen methods of making war. Within a week the Army of the Netherlands capitulated. The Belgians surrendered in less than 3 weeks. In little more than 30 days, France, considered to be one of the great land powers of the word, sued for an armistice. The British were driven from the continent. Italy entered the war. Disruption of the pattern of power in Europe had repercussions in the Far East. With the Netherlands and French conquered and with Britain occupied in her defense at home, their Far Eastern possessions became tempting objects of conquest. Even before the French-German armistice was signed in June 1940, the japanese militarists began to exert pressure on French Indochina. In July, the British were brought to close the Burma Road. A Germany dominant on the continent and free to develop and utilize its resources could threaten the United States through the economic ties that bound the Latin-American countries to Europe.

The United States was probably in the most precarious position in its history. Yet to many of us the peril seemed remote. Voices proclaimed loudly that all this could never touch us; we had the Atlantic and Pacific for moats. We continued with unabated zeal our political feuds even though these internal cleavages affected our ability to react quickly to changes in the international environment. The coincidence of the crisis with a presidential election further complicated matters. Everything that was done or left undone was open to charges of partisanship. On the other hand, the fact that the crisis occurred during the year of a presidential election insured the


most alert and demanding public scrutiny and criticism of governmental policy.

The fall of the Netherlands, Belgium, and France did, however, demolish most of the powerful centers of opposition to the development of industrial facilities for production fo defense equipment. By and large, the problem of rearmament, narrowly defined to exclude such questions as the draft, ceased to be one of mobilizing national consensus and became one of governmental and industrial organization for production. In this, some progress had been made already. Navy expenditures for the year ending June 30, 1940, were 46 percent greater than those for the fiscal year 1937-38. Over the same period, expenditures for the military functions of the War Department increased 54 percent. But this expansion, achieved against fairly strong opposition, was trifling in comparison with what had to be done.

The sweep of German armies over Western Europe also cleared the way for obtaining additional appropriations for national defense. When the President addressed Congress on may 16 to review military developments in Europe, he requested an immediate appropriation of $896,000,000 and additional authority to make contract obligations totaling $286,000,000. In response to this request, funds were made available by acts approved on June 11 and 13.5 Shortly after the British forces were driven from the continent of Europe, the President made an "urgent and new recommendation" for the appropriation of still more money both for the further expansion of production facilities and for the purchase of additional weapons. Again Congress acted quickly. Including contract authorizations, about 13/4 billion dollars were made available by legislation approved on June 26.6 On July 10, the President went ot Congress again for additional appropriations and authorizations of almost 5 billion dollars. Two months later Congress made the necessary authorizations in an act approved September 9, 1940.7 The delay between the request and the appropriation handicapped the defense program, particularly the construction of training facilities.

Advisory Commission to the Council of National Defense

As early as the fall of 1939, the President began to think about the administrative arrangements which might be necessary if we were forced to go to war. It was deemed inadvisable to seek from Congress positive legislation for industrial mobilizaton since, in a campaign year, such a request might set off a partisan debate and if anything resulted it might be restrictive legislation. Plans, therefore, had to be made within the existing statutory framework. The President


decided to revive the Advisory Commission to the Council of National Defense. From the first World War, statutory authority remained for a Council of National Defense consisting of the Secretaries of War, navy, Interior, Agriculture, Commerce and Labor. The statute authorized the President to appoint,upon nomination by the Council, and advisory commission "of not more than seven persons, each of whom shall have some special knowledge of some industry, public utility, or the development of some natural resource, or be otherwise specially qualified."8

As a first step, on May 25, 1940, he issued an administrative order formally establishing an Office for Emergency Management in the Executive Office of the President. The basis for this action had been laid by the Executive order defining the divisions of the Executive Office in connection with the general program of governmental reorganization in 1939. That order had provided, "in the event of a national emergency, or threat of national emergency," for "such office for emergency management as the President shall determine." The activation of the office served two important purposes. It provided the President with assistance in the coordination and direction of emergency agencies and provided authority for the establishment of such new agencies as had to be created. Most of the new administrative organizations necessary for defense and war originated as units of the Office for Emergency Management. At the time of the establishment of the OEM, the President designated William H. McReynolds, one of his administrative assistants, as Liaison Officer for Emergency Management with the function of directing the OEM the duties of which were to--

Assist the President in the clearance of information with respect to measures necessitated by the threatened emergency;

Maintain liaison between the President and the Council of National Defense and its Advisory Commission, and with such other agencies, public or private, as the President may direct, for the purpose of securing maximum utilization and coordination of agencies and facilities in meeting the threatened emergency;

Perform such additional duties as the President may direct.

On May 28, the President announced the reestablishment of the Advisory Commission to the Council of National Defense. It was to consist of the following "advisors": Industrial materials, Edward R. Stettinius, Jr.; industrial production, William S. Knudsen; employment, Sidney Hillman; farm products, Chester C. Davis; transportation, Ralph Budd; Price stabilization, Leon Henderson; and consumer protection, Harriett Elliott. The Liaison Officer for Emergency Management was designated as Commission secretary. Although the Commission in form was advisory to the Council of National


Defense, in fact it was advisory to the President, for the Council remained dormant.

In creating the Commission, the President made an administrative determination which drew no little criticism from both his friends and enemies. Fundamentally, his decision was dictated by judgments of what was feasible in the general political circumstances--and in political matters the opinion of the President had always been accorded respect. Reliance on existing legislation made it possible to avoid seeking action from Congress, acton which might, and probably would, have resulted in administrative inflexibility at a time when the utmost flexibility was required. moreover, other and more important issues, such as selective service, needed to be given priority by Congress without the distraction of additional urgent Presidential requests.

At the time of the creation of the Commission, the domestic political situation was delicate. The national conventions were in the offing. Even preparation for defense was a matter of questionable popularity with a people that hated war. The Administration was being accused of leading the Nation to war in an underhand manner without disclosing its intentions. In describing his action, the President said:

This is not complete, immediate national mobilization. We are not talking at the present time about a draft system, either to draft money or men or women or all three. We are trying to expend about a billion and a quarter dollars more than the normal process. And in order to do that, it has seemed wise to put into effect what has been ready and planned for a long, long time,under na existing statute without having to go and propose something entirely new in the way of legislation that would take weeks and months and a great deal of pro and con discussion, partisan and otherwise, and would probably end up in practically the same thing that we have on the statute books now.

Decision to revive the Advisory Commission meant a rejection of the Army-Navy Industrial Mobilization Plan. The plan, however, scarcely merited the build-up it had ben given; it was a document dealing only in generalities with the problem of governmental organization for war and it was formulated for conditions unlike those which actually arose. It presumed the existence of a state of war under which almost any power could be had from Congress for the asking and under which a full-fledged war organization would have to be created. Neither of these conditions prevailed, and until war came, progress could be made only as public opinion crystallized into decision. Another crucial factor in the rejection of the "M-day" plan was its provision for a single administrator with vast powers over governmental organization and policy, far greater powers than those exercised by the Chairman of the War Industries Board in World War I. Delegation of such enormous powers would have made it difficult for the President to control the broad strategy of defense preparation and foreign economic policy during a most critical period. Such action


would have constituted virtual abdication by the President and would have made him less able to meet his constitutional responsibilities. Moreover, the plan carried with it potentialities of far greater military influence in the management of governmental affairs than appeared either desirable or politic at the time. For these reasons, the plan seemed unattractive to the President. For the same reasons, his political opponents held the plan in high esteem.

The individual advisors set to work in their respective fields. In most instances, each advisor's job was twofold. He had to aid in getting a current job done. Perhaps more important,m he had to make detailed studies and plans about what would have to be done if the country got into war. Only the advisors on industrial materials and industrial production faced questions demanding immediate answers. Labor supply was adequate. Price inflation was not an immediate danger. Farm products were not scarce. The transportation system was not under a strain. In these fields, the problem was one of preparation of plans for whatever might come. Each of the advisors built up small staffs which later became the foundation on which more elaborate war organizations were built.

In addition to the small organizations which grew u around each advisor, the Commission provided for the establishment of other organization units which were destined to become important parts of the administrative machinery for defense and war. The Council of National Defense had statutory authority to "organize subordinate bodies for its assistance in special investigations" and this power served as a legal basis for the creation of some emergency administrative agencies. The Council of National Defense on June 27, 1940, designated Donald M. Nelson as Coordinator of National Defense Purchases. He functioned in fact as a member of the Advisory Commission. Later he also became Director fo the Small Business Activities Office, authorized by the Commission on October 23, 1940. At the outset, the Commission authorized the establishment of the Bureau of Research and Statistics, under the direction of Stacy May, Director of Information for the NDAC. Late in July, Frank Bane, Executive Director of the Council of State Governments, became Director of the Division of State and Local Cooperation in the Office of the NDAC Secretary. The functions of this division included the maintenance of liaison with State and local defense councils and the absorption of some of the pressure from State and local groups for defense contracts. Other "subordinate bodies," to be mentioned subsequently in this chapter, were also established to aid the Advisory Commission or to carry on functions quite independently of the Commission.


Although the "advisors" were collectively called the Advisory Commission to the Council on National Defense, they were not intended to constitute a collegial body or to function as a group. In practice, the theory was not maintained that each advisor was to function independently within his own sphere. All the advisors were interested in all phases of defense policy and the Commission soon assumed collegial characteristics and functions. The advisors considered themselves to be a Commission, not just Presidential assistants created under a convenient statute, and so did Congress and the country. In the personnel of the Commission, and in its deliberations were reflected most of the significant political viewpoints of the time. And the deliberations of the Commission were certainly not without value in the process of developing reconciliations of some sharp differences in order that the defense effort might move along. Yet the efforts of the advisors to function as a Commission, a type of operation to which their mandate did not extend, contributed to their administrative difficulties.

Any judgment about the work of the Commission must necessarily be tentative. Administratively, it was by no means a perfect machine for the conduct of mobilization, but it was not designed to be. On the positive side, the advisors expedited the execution of the production and procurement program authorized at the time, brought new and needed personnel into the Government, initiated studies and 'surveys, defined the kinds of problems which might arise, and served as a practical administrative stop-gap. The Commission must be evaluated in the light of what was politically practicable at a time when the Nation, beset by considerable internal political turmoil, was making up its mind about what it would do in international affairs. During the summer of 1940 and even after Pearl Harbor, endless fears and ideological blinders restrained action. It required both debate and the further development of events to dissipate these restraints. Business was fearful; labor was anxious.

Issues in Getting Production Under Way

It was necessary to induce manufacturers to accept defense contracts. Only recently, businessmen who had manufactured munitions in the first World War had been subjected to investigations, and they were not anxious again to go through that kind of agony. Mr. Knundsen, the advisor on industrial production, Mr. Nelson, Coordinator of Purchases for the Commission, and other businessmen drawn into the Commission's work were able by pressure and persuasion to induce reluctant businessmen to take contracts for the construction of new defense plants and the production of military goods.


The War and Navy Departments, accustomed to small-scale, meticulous, and slow purchasing procedures, had to be shocked into altering their practices to meet the necessities of larger-scale operation. The advice, assistance, and urging of business experts, while not always welcomed by the service departments, brought modifications in their practices. Legislation was required to remove legal limitations on contracting officers to permit the negotiation of contracts. Congress granted the necessary authority in several acts, but it was not easy for contracting officers, mindful of a reckoning to come for inevitable errors of judgment, to shake off their habitual methods of slow and careful action. The passage in June 1940 of a statute authorizing the President to order priority for deliveries under Army and Navy contracts gave them further support and strenghthened our legislation for defense.9

One of the most important blocks to rapid action was the fear that productive facilities, especially for raw materials, would be expanded so much that the Nation would be left with excess capacity. This anxiety colored action within both industry and the Defense Commission. We were not, and we hoped not to be, in the war, but war or no war, the estimates of materials and facilities the crisis would demand to support military production and to maintain the essential civilian economy, sere subjects of dispute. Quite apart from the technical problem of estimating quantities of materials and products required to maintain a given military effort over a given period of time, the determination of the new productive facilities we needed had to rest on a correct forecast of the trend of international events. What the trend was became the subject of heated controversy until Pearl Harbor. All sides accepted the proposition that some expansion in capacity was essential to produce commodities which had both civilian and military uses, but they differed about the particular industries to be expanded and about the degree of expansion. Emerging from a period in which our thinking was dominated by the problem of what to do about surpluses, we were cautious in our estimates of the future demands on our industries.

Private enterprise naturally was reluctant to invest its money in plants to produce weapons for a war that might not come, but we were not a nation traditionally disposed to invest public funds in manufacturing establishments. Government ownership of plants and machinery was anathema to many business and financial men, although some plane manufacturers were indifferent about how new factories were financed. After considerable discussion, Congress empowered the Reconstruction Finance Corporation--


(1) To make loans to, or, when requested by the Federal Loan Administrator with the approval of the President, purchase the capital stock of, any corporation (a) for the purpose of producing, acquiring, and carrying strategic and critical materials as defined by the President, and 9b) for plant construction, expansion and equipment, and, working capital, to be used by the corporation in the manufacture of equipment and supplies necessary to the national defense, on such terms and conditions and with such maturities and the Corporation may determine; and

(2) When requested by the Federal Loan Administrator, with the approval of the President, to create or to organize a corporation or corporations, with power (a) to produce, acquire, and carry strategic and critical materials as defined by the President; (b) to purchase and lease land, to purchase, lease, build, and expand plants, and to purchase and produce equipment, supplies, and machinery, for the manufacture of arms, ammunition, and implements of war, (c) to lease such plants to private corporations to engage in such manufacture, and (d) if the President finds that it is necessary for a Government agency to engage in such manufacture, to engage in such manufacture itself. . . .10

Under this legislation, the Rubber Reserve Company and the Metals Reserve Company were established on June 28, 1940, as subsidiaries of the Reconstruction Finance Corporation. Creating of the Defense Plant Corporation and the Defense Supplies Corporation followed on August 22 and 29, respectively. By no the Reconstruction Finance Corporation had become, as large organizations tend to do, fixed in its ways, and it was proud of its record of making "sound" loans. With the encouragement of persons in the Defense Commission who disliked the idea of Government ownership of plants, the RFC wavered for some time before it decided that the Government might own outright a plant essential for national defense but not likely to be built by private investors.

At the same time that steps were being taken to get production of defense articles under way, measures were initiated quietly to mobilize the scientific brains of the country to develop new implements of war. On June 27, through an order of the Council of National Defense, the president established the National Defense Research Committee. The Committee was instructed to "correlate and support scientific research on the mechanisms and devices of warfare, except those relating to problems of flight included in the field of activities of the National Advisory Committee for Aeronautics."11 The Committee rapidly entered in to contracts with universities, industrial laboratories, and other scientific institutions to focus the scientific resources of the Nation on problems relating to the mechanisms and devices of warfare.

The process of getting the country squared away for rearmament was accompanied by prolonged and vitriolic debate over the terms on which various interests would participate in the defense program.


Labor leaders thought that industry considered the emergency as a golden opportunity to liquidate labor unions and labor rights; and some industrialists undoubtedly were judged correctly. Industrialists (or some of them) thought that labor leaders saw in the emergency a golden opportunity to enlarge their domains and to hold up the Government until it met their terms; and some labor leaders undoubtedly were correctly gaged. Business was accused by labor, by politicians, and by others of conducting a "strike of capital" until they were able to get contracts on their terms. Everybody was clamoring for the Government to knock heads together; i.e., other people's heads.

The controversy crystallized around such specific issues as profit limitation, excess profits taxation, accelerated amortization for the purposes of private investment in defense production facilities, and labor conditions to be attached to Government contracts. In the summer of 1940, these subjects were being discussed in the press, in Congress, and within the Administration. Their solution did not seem to be expedited materially by reflections on the Battle of Britain. Industrial groups were anxious to modify limitations on profits and to be assured that their investments would be amortized rapidly under the tax laws; they were somewhat less enthusiastic about settling the question of excess profits taxation. At the insistence of the President, consideration of excess profits taxation was coupled with legislation for accelerated tax amortization. Business might be permitted to write off costs of expansions necessary for defense purposes more rapidly than usual but the Government would have some protection through excess-profits taxes.

Final action on tax amortization did not come until the approval of legislation on October 8. The dispute over this subject turned out to be less important than it seemed for it developed that most war plant expansion was financed from public funds rather than by private investment. The administration of tax amortization legislation became a question largely of determining whether proposed expansion would be useful only for defense. Relatively liberal administration by the War and Navy Department, anxious to get along with production, resulted in permission to some concerns to write off rapidly against high war profits the cost of facilities which would be usable in time of peace.

On Government policy toward labor, long and heated discussions occurred within the Advisory Commission, in the press, and on the hustings, for, it is to be remembered, this was a Presidential campaign year. Labor desired that hours of work should not be lengthened in order that idle workers might be absorbed in defense plants. It was more convenient for contractor to increase the hours of work than to put on double shifts; the War and Navy Departments sympathized


with this point of view and also were impatient with the labor conditions attached to Government contracts under the Walsh-Healy Act. The National Labor Relations Act still was unpopular among employers, many of whom would have welcomed an opportunity to use the defense program as a way around the legislation.

On August 31, the Advisory Commission to the Council on National Defense adopted a statement of principles on labor questions which was later transmitted to Congress by the President.12 The Commission urged that the defense program be used to "reduce unemployment and otherwise strenghthen the human fiber of our nation". It suggested that hours of work should be generally limited to 40 per week in order that the unemployed might be put to work. When more than 40 hours was necessary, overtime should be paid "in accordance with the local recognized practices." The Commission also concluded that defense work should comply with applicable Federal statutes such as the Walsh-Healy Act, the Fair Labor Standards Act, and the National Labor Relations Act as well as with State and local laws governing hours of work, wages, and related matters. The Commission declared against discrimination among workers because of age, sex, race, or color and suggested that adequate housing facilities be made available for employees. It reaffirmed a statement issued by the Chief of Ordnance of the United States Army on November 15, 1917, in which it was asserted that safeguards designed to protect labor should be retained in an emergency because they contributed to efficiency.

Progress in defense production form the fall of France to the end of 1940 was not impressive in terms of defense articles actually manufactured. Instead the period was one in which money was appropriation, contracts were awarded, war plant construction was put in motion, and other preliminaries to actual production were carried out. From June 1 to the end of December, almost $10.5 billion in contracts were awarded. Deliveries under these contracts were very small, of course, and the Government was ridiculed because, for example, it cited the number of planes "on order" as an indication of progress. An impression of the magnitude of total contract awards in the latter half of 1940 may be gained form the fact that these awards were over nine times the total amount spent for military purposes by the War and navy Departments in the fiscal year ending June 30, 19i38. Cash expenditures for all defense purposes in the month of December 1940 slightly exceeded the amount spent for naval purposes during the entire fiscal year ending June 30, 1938. Expansion was under way.

While the issues connected with getting production under way were being settled, other questions concerning the maintenance of


the health and welfare of the civilian population were arising. Modern war had made obscure the line between the home front and the battle front and to mobilize the civilian population for defense necessitated special government actions in a variety of fields.

Housing was one of the first problems to emerge. The construction of new industrial plants, the erection of shipyards, and the expansion of employment in established industrial centers, stimulated movements of population which created heavy demands for shelter in centers of defense activity. In June 1940 the Central Housing Committee reported to the President that the provision of housing for workers should be undertaken "in order to avoid the enormous labor turnover and the hampering of production which was experienced in the last war."

At the time, a number of Government agencies were concerned with housing in one way or another. The Public Buildings Administration had a large construction organization which designed Government buildings and contracted for their construction. The United States Housing Authority had responsibility for low-cost family housing and the Farm Security Administration specialized in rural housing. The financing of housing was handled by the Federal Housing Administration, the Federal Home Loan Bank Board, and certain subsidiaries of the Reconstruction Finance Corporation.

The administrative problem was to focus the work and influence of all these housing agencies in the areas where developing defense activities were creating requirements for housing.The Central Housing Committee recommended that a Defense Housing Coordinator be named for the duration of the emergency. He would be connected with the Defense advisory Commission and would be responsible for the planning and prosecution of a housing program through the existing governmental agencies. On July 21, the Defense Advisory Commission announced the appointment of Charles F. Palmer as housing coordinator to expedite housing construction and to coordinate the work of governmental housing agencies in defense centers. The coordinator within a few weeks had determined which local areas had the most urgent need for housing and should receive priority of attention by housing agencies. Steps were also soon taken to obtain appropriations for housing to be constructed directly by public agencies.

It was clear that intensification of defense activity would strain governmental health, welfare, recreational and related services and that they would have to be adapted to meet new kinds of problems. On November 28, 1940, the Federal Security Administrator was designated by order of the Council of National Defense as Coordinator of Health, Welfare, and Related Defense Activities. He was directed


to "formulate and execute plans, policies, and programs designed to assure the provision of adequate services of this character to the Nation during the national-defense emergency; and to that end he shall coordinate the facilities of existing Federal agencies with respect to these several fields of action, and shall establish and maintain liaison with such other agencies, public or private, as he may deem necessary or desirable".13

Emergency Organization for External Affairs

Following the fall of France, and during the siege of Britain, two broad objectives animated our actions in external matters. The first was to keep Britain and her fleet in being as fighting entities. The second was to protect our Latin-American flank by economic and political action. After Dunkirk, "the British Isles were in effect defenseless so far as organized and equipped ground forces were concerned," the Chief of Staff later reported. "Practically all their field army equipment had been lost and an immediate invasion was threatened . . . For the uNited States the military issue immediately at stake was the security of the British Fleet to dominate the Atlantic." The only sources from which immediate British needs for military equipment could be met even partially were the stocks of our Army and Navy. Steps were taken hastily to move rifles, field guns, machine guns, ammunition and other munitions to ports of embarkation, leaving the United States with enough World War stocks to equip 1,800,000 men.

The transfer of munitions enabled the British to meet their immediate crisis better equipped, but for the long pull greatly increased production in the United States was necessary to furnish a steady flow of war goods. Throughout the summer of 1940, British supply officers negotiated with the President's Liaison Committee and with officials of the Defense Commission to arrange for new facilities to produce tanks, planes, and other munitions. So far as practicable, the Government insisted that British orders should be in accord with specifications acceptable to both governments. Thus, as factories and machines came into production, we had the assurance that they would be capable of turning out war material which would be usable by American forces as well as by the British. Apart from this contribution to our national defense, the policy in the long run increased the efficiency of our productive capacity, for it reduced the variety of models of defense articles and equipment to be manufactured.

Even before Dunkirk, the British and French explored with the United States Government the possibility of acquiring a number of


the 200-odd destroyers which we had constructed for convoy duty in the FIrst World War. The suggested transfer raised an issue painful to decide. The benefit to use of strengthening the British Navy had to be weighed against the probability that we might need the destroyers in the Pacific. Also, the proposal quickly became a subject of public discussion and strong blocs of opinion arrayed themselves on both sides.

The transfer proposal was coupled with the acquisition of naval and air bases on British possessions in the western hemisphere. Thus was suggested a way to handle the issue in a manner consonant with the domestic division of opinion. Isolationist leaders long had advocated acquisition of naval bases on nearby British possessions; interventionists were equally anxious that the pressing necessities of the British be met. The deal was made on September 2, by an exchange of note between the British Ambassador and the Secretary of State. The right to bases in Newfoundland and Bermuda was granted freely to the United States. The right to bases in the Bahamas, Jamaica, St. Lucia, Trinidad, Antigua, and British Guiana was granted in exchange for 50 of our over-age destroyers.

Our program for external economic affairs had a negative aspect as well as the positive one of promoting production for export to friendly countries. The Government possessed a limited power to control exports, but it was necessary to broaden this authority to limit the exportation of materials which were required for our own production and to prevent the shipment of critical materials to aggressor countries. On July 2, the President approved an act which permitted him to prohibit or curtail the export of "any military equipment or munitions, or component parts thereof, or machinery, tools, or material, or supplies necessary for the manufacture, servicing, or operation thereof. . . ."14 On the day the act became effective, the president issued a military order designating Lt. Col. Russell L. Maxwell, United States Army, as Administrator of Export Control. The President also issued a proclamation listing materials, chemicals, products, and machine tools which were to be exported only under license. Subsequent proclamations enlarged this list. Licenses were issued by the Department of State in accordance with directives from the Administrator of Export Control.

The organization of the defense of the American republics was a matter of prime importance in the summer of 1940 because the Latin-American route offered the Germans their easiest approach to this hemisphere. It was necessary to combat Nazi economic and idealogical infiltration into the American republics as well as to take preventive military measures. In both objectives, the Good Neighbor Policy,


which the Government had pursued consistently, stood us in good stead.

The Nazi advance in Western Europe brought final action on a gill to authorize the War and Navy Departments to manufacture and sell certain types of arms and munitions to the government of any American republic.15 The legislation had been under consideration for a long time. It had been passed by the House on July 24, 1939, but did not become law until June 16, 1940. Its purpose was to make available to the American republics products manufactured in the United States by Government arsenals and factories, and thus to make the American republics less dependent on European sources of supply This legislation was important chiefly as a gesture, since the course of events led to assistance to the Latin-American republics under the Lend-Lease Act, rather than under this act.

French,Dutch, and British possessions in Latin-America were potential bases for Axis operations. Two days after France requested an armistice, the Secretary of State transmitted to the German and italian foreign offices a note indicating that the United States "would not recognize any transfer, and would not acquiesce in any attempt to transfer, any geographic region of the Western Hemisphere from one non-American power to another non-American power." On July 21, foreign ministers of the 21 American republics convened at Havana to consult about the difficulties and problems confronting them. The Declaration of Reciprocal Assistance and Cooperation for the Defense of the Nations of the Americas, as it emerged from the deliberations of the meeting, averred that any attempt by a non-American state against the territory or political independence of any American state would be "considered as an act of aggression against the States" signing the declaration. The signatory powers agreed to confer among themselves to agree upon measures in case such act of aggression were committed.

WHile the Havana conference was in session, the President requested Congress to increase the lending power of the Export-Import Bank. He pointed out that blockades and counterblockades with the consequent disorganization of trade were causing distress in the countries of the Western Hemisphere which were unable to dispose of their commodities through their normal channels of trade. legislation approved on September 26, increased the lending authority of the Bank from $200,000,000 to $700,000,000 and authorized it to lend up to $500,000,000 "to assist in the development of the resources, the stabilization of the economies, and orderly marketing of the products of the countries of the Western Hemisphere. . . ."16


Promotion of hemisphere solidarity demanded more effective coordination of governmental agencies concerned with various aspects of our relations with the American republics. Although the State Department had great accomplishments to its credit in the promotion of the Good Neighbor Policy, the traditional methods and limitations of diplomacy made it necessary to supplement the Department's work. The customs of diplomacy as well as its lack of legal authority restrained the State Department from participation in commercial, cultural, and educational activities which might embarrass it in the conduct of its normal business. Mr. Nelson Rockefeller and certain associates proposed that there should be created an organization which would not be hampered by the limitations of traditional diplomacy in the promotion of good will among the Latin American republics. Their arguments were persuasive and the Office for Coordination of Commercial and Cultural Relations between the American Republics was established by order of the Council of National Defense on August 16, 1940, with Mr. Rockefeller as Coordinator. The Office was directed to serve as a central point for coordination of the activities of Government departments and agencies which affected inter-American relations. it was also made responsible for carrying on directly programs in "such fields as the arts and sciences, education and travel, the radio, the press, and the cinema" which would "further national defense and strengthen the bonds between the nations of the Western Hemisphere".

By the order establishing his Office, the Coordinator was instructed to--

(1) establish and maintain liaison between the Advisory Commission, the several departments and establishments of the Government and with such other agencies, public or private, as the Coordinator may deem necessary to desirable to insure proper coordination of, and economy and efficiency in, the activities of the Government with respect to Hemisphere defense, with particular reference to the commercial and cultural aspects of the problem, and also shall be available to assist in the coordination and carrying out of the purposes of Public Resolution No. 83, Seventy-sixth Congress (H.J. Res. 367);

(2) be a member and chairman of the Interdepartment Committee on Inter-American Affairs, which shall include the president of the Export-Import Bank, one designated from each of the following departments: State, Agriculture, Treasury, and Commerce, and such representatives form other agencies and departments as may be needed from time to time, the Committee to consider and correlate proposals of the Government with respect to Hemisphere defense, commercial and cultural relations and to make recommendations to the appropriate Government departments and agencies;

(3) be responsible directly to the President, to whom he shall submit reports and recommendations with respect to the activities of his office;

(4) review existing laws, coordinate research by the several Federal agencies, and recommend to the Interdepartmental Committee such new legislation as


may be deemed essential to the effective realization of the basic objectives of the Government's program;

(5) be charged with the formulation and the execution of a program in cooperation with the State Department which, by effective use of governmental and private facilities in such fields as the arts and sciences, education and travel, radio, the press, and cinema, will further national defense and strengthen the bonds between the nations of the Western Hemisphere.17

Peacetime Selective Service

In an age of mechanized warfare a nation cannot "spring to arms." Men must be instructed thoroughly in the care and use of weapons and equipment often requiring great skill. But knowledge of the use of weapons and the operation of complex equipment is not enough; to become an effective team, officers and men must train together in large units under filed conditions approximating those of actual military operations. In the spring of 1940, our land forces consisted of a small professional army, the National Guard, and some Reserves. Training of the regular army had been limited severely by the maintenance of the regular army in small groups at scattered posts which made it impossible to conduct field exercises with large bodies of troops. In fact, the first genuine corps and army maneuvers in the history of the Nation became possible in the late spring of 1940. The National Guard required intensive training to be brought to the proper condition, but it represented the most readily available source of additional military personnel.

In his message of May 31, asking for additional armament appropriations, the President recommended that COngress give him authority to call into active service such portions of the National Guard and Reserve as might be necessary. The request was made so that, if Congress adjourned, the President would have authority to meet contingencies which might arise during its absence from Washington. No action was taken immediately to meet the recommendation. Shortly after it was made, Italy entered the war and France surrendered. On July 29, the President reported to Congress that the "increasing seriousness of the international situation" demanded that the national defense structure should be "brought as rapidly as possible to the highest state of efficiency, in training as well as in equipment and materials." He requested Congress to authorize him to order Reserve officers to active duty and to call the National Guard to "active service for such period of intensive training as may be necessary to raise its efficiency to a point comparable with that of our small regular establishment." By legislation approved on August 27, 1940,18 the President was granted power to call up the National


Guard and Reserve officers for 12 months of duty. By order of August 31, effective September 16, the President called into active military service certain elements of the National Guard, and subsequent orders brought other units into service.

Congress did not appropriate until September funds requested by the President early in July for construction of training facilities. The existing shortage of military camps made doubtful the wisdom of calling the National Guard into Federal service in September. Selective Service was, however, under consideration by Congress at the time and it was feared that to delay active duty for the Guard might result in further postponement of defeat of draft legislation.

Induction of the National Guard furnished a large block of personnel which could be trained, conditioned, and disciplined into an important addition to the defensive system. But even with this addition we had insufficient troops for defense. In the summer of 1940, the Administration felt that large numbers of men should be trained for military service. The issue was whether to rely on recruitment of volunteers or to adopt conscription. The introduction of compulsory military training in time of peace presented a grave issue which aroused prolonged debate in Congress and the country at large. The wisdom and necessity of the action were doubted by men of unquestioned sincerity. Thus a distinguished Senator declared--

. . . Mr. President, were I to be a party to riveting shackles of militarism upon the American people, and superimposing upon the American people in time of peace, the damnable system of conscription which has devastated and ruined Europe, I could not hope for any peace with myself hereafter.

. . .

Mr. President, this bill is supported by some of the ablest men in the Senate and in the country. When they come to reflect within a few months after their fever has abated and realize that they were hurried beyond necessity and hurried beyond the requirements of the our, I venture the assertion that many if not most of those who vote for this bill will regret it, because they are men of conscience; and when the last hour comes and the last scene comes or them and they review their careers, they will say, "That is one vote I cast that I would recall if I could."19

Our traditional fear of militarism was a major basis of opposition to the proposal. Another objection, which applied also to other issues then under consideration, was the belief that military training was a step toward war:

More than a year ago--I think it was a year and a half or 2 years ago--I said that I would stand at this desk until the end against war; and I repeat that statement, Mr. President . . . I do not know whether the President wants all the power we are giving him here or not, but I know that we cannot give it to him and convince the American people that we are not ready and resigned and reconciled to the final, inevitable, short step of actually entering the war.20


The proposal to draft manpower inevitably suggested the conscription of property. Delays in the execution of defense contracts because of uncertainty about profits added fuel to the flames and brought demands by some members of Congress for the conscription of industry as well as men. With equal vigor others opposed the conscription of factories. For example:

This is a most extraordinary provision for the confiscation, or at least the appropriation, of property. It modifies every concept of American law we have ever had, as does the draft law. If it were absolutely necessary in time of war, I should be in favor of it; but I do not believe the emergency is one which justifies the drafting of men. I shall refuse to vote for any measure to draft men, and I do not propose to vote for any measure to draft property.21

Chart 3. Public Opinion on Military Service.
The question asked was: "Do you think every able-bodied young man 20 years old should be made to serve in the Army or Navy for one year?"
Source: American Institute of Public Opinion.

Debate on the issue was by no means restricted to the halls of Congress. Discussion flared throughout the country, but public opinion gradually crystallized in favor of the draft. The trend in opinion, as measured by the opinion polls, is shown by the chart on this page. Opinion became much more favorable after the fall of France, and the upward trend continued during the summer months of 1940. After thorough consideration of every phase of the problem, Congress enacted selected service legislation which was approved on September 16; it included provisions permitting obligatory orders upon industry and empowering the Government, if necessary, to seize plants and operate them.


Passage of the Selective Service Act made a hug administrative mechanism necessary for the selection and induction of personnel for military training. Preparatory work by the General Staff of the War Department under way since 1926 included the preliminary training of Reserve officers and National Guard officers for the administration of selective service. As the passage of the bill approached, the President appointed a civilian committee to cooperate with the Joint Army and Navy Selective Service Committee with the consequence that plans which had been developed by the Joint Committee were further revised in the light of the viewpoint of the President's Committee. Once the plans were completed, the rapid creation of machinery for the administration of the legislation was made possible by the collaboration of STate and local governments. On October 16, 30 days after the law became effective, more than 16 million men were registered at more than 125,000 registration points in the United States. In the creation of local boards to function in the administration of selective service after the initial listing of registrants, State Governors prepared lists of persons for nomination to the President in whom the power of appointment was vested. In each State a headquarters was established to supervise the work of local boards. Federal-State cooperation and the willingness of thousands of citizens to volunteer their services enabled the rapid erection of a far-flung administrative apparatus which was to function remarkably well in view of the magnitude of its job.

The Cumulation of Events

In the months following the President's message of May 16, 1940, the Nation slowly moved toward great decisions. This process of making up our national mind about what to do in the world crisis was reflected in a series of basic laws. Before the end of 1940 legislation had been enacted to alter the peacetime rules for letting production contracts, to fix new rules to prevent excessive profits on contracts, to permit the Government to undertake the procurement of raw materials and the construction of facilities, to appropriate hug sums of money for defense, to establish the selective service principle, and to deal with a variety of related subjects. When war came in December 1941 further legislative action was necessary, but the legislation essential to authorize preparation for defense had already been enacted. The situation which confronted the Nation had not been foreseen by those responsible for planning for mobilization. They had thought that industrial mobilization would not really get under way until after a declaration of war, a condition under which expression of the national will through legislation would present a different problem.


Chart 4. Development of War Organization.

Source: Bureau of the Budget


On the administrative side, the Government's defense actions in 1940 were limited to the establishment of partial administrative machinery for partial industrial mobilization. The general political divisions were reflected in the form and rate of development of the administrative machinery and in the designations of the principal personnel. Moreover, the inchoate nature of the administrative machinery was not unaffected by the uncertainty which remained in national purpose. Had there been more general expectation that we would be attacked and that a more rapid industrial mobilization should be undertaken, the governmental mechanisms would have been different. Nevertheless, the Defense Advisory Commission and its subsidiary organizations contained in embryonic form many of the agencies which were developed more fully later. In the small and fairly simple administrative mechanisms created in the summer of 1940 were to be found the seeds of the Office of Production Management, the Office of Price Administration and Civilian Supply, and the Office of Defense Transportation. Some of the functions later to be performed by the War Manpower Commission, particularly in the field of labor training, were got under way on a small scale. The Administrator of Export Control eventually furnished part of the Economic Defense Board organization. The Defense Housing Coordinator, established as an agency of the Defense COmmission, later served as the core of the National Housing Agency. The Coordinator of Commercial and Cultural Relations between the American Republics, also created as a subsidiary of the Council of National Defense, was to have a continuous existence throughout the war. The Division of State and Local Cooperation later became the basis for the Office of Civilian Defense. The Reconstruction Finance Corporation set up various subsidiaries for defense purposes and began to work out policies and procedures. Building up the Selective Service System, in collaboration with the State government, was a remarkable administrative performance involving the participation of more than 100,000 volunteer and unpaid workers throughout the Nation.

In the steps taken and not taken in 1940, there were many grievous miscalculations as well as actions which subsequent events proved to be wise. in the accumulation of stockpiles and in the development of additional facilities for the production of raw materials, the goals were fixed far too low. Notable cases were rubber, aluminum, and steel. In general, miscalculations of this sort were premised on erroneous estimates of the probable course of international events and on unimaginative forecasts of the magnitude of the effort we would have to make. The trend of action was not uncolored by fears of surpluses and overcapacity. On the other hand, a vast program for the construction of plants to manufacture weapons of war was got


under way, although by the end of 1940 only a trickle of arms was coming off the production line. The explanation and the lesson is that it takes time to build factories and to get them into operation. These variations in the rate of progress in the defense program pointed to the lack of sufficient coordination within the administration to assure common action on all fronts.

After the election of 1940 and the conclusion of Congressional debates on major issues of the mobilization policy, the time was ripe for further steps in development of the Government's machinery for industrial mobilization. The campaign, although conducted with great fervor and not a little asperity on both sides, strengthened the position of the Government. The campaign was remarkable, not for the divisions it revealed but for the range of agreement among both major parties which it demonstrated. On the general direction which the country should follow, there was substantial agreement, but there was warm dispute about which party could take us in that direction most effectively. Criticisms made in the campaign, experiences in operation, and the growth in the defense program itself all made it clear that further developments in the machinery of Government were in order.


Table of Contents ** Previous Chapter (1) * Next Chapter (3)


1. In September 1939, 81 percent of the respondents in a poll by the American Institute of Public Opinion placed responsibility for causing the war n Germany. In the preceding month the Institute had asked: "Do you think Hitler's claims to the Polish Corridor are justified?" The replies were: Yes, 10 percent; no, 61 percent; no opinion, 20 percent. In the same month, the Institute asked whether Germany's claims to Danzig should be accepted and the replies were: Yes, 9 percent; no, 68 percent; no opinion, 23 percent. In September, the Institute asked whether we should declare war on Germany at once and the replies were: Yes, 9 percent; no, 88 percent; no opinion, 3 percent.

2. 4 Federal Register 3800-12.

3. 54 Stat. 4.

4. House Report No. 1912, 765h Cong., 3d sess., Apr. 3, 1940.

5. 54 Stat. 265, 350.

6. 54 Stat. 599.

7. 54 Stat. 872.

8. 39 Stat. 872.

9. 54 Stat. 676.

10. 54 Stat. 573.

11. 5 Federal Register 2446.

12. Congressional Record, vol. 86, pt. 11, p. 12114.

13. 5 Federal Register 4848.

14. 54 Stat 714.

15. 54 Stat 365.

16. 54 Stat. 961.

17. 5 Federal Register 2938-39.

18. 54 Stat. 858.

19. Senator Ashurst, Congressional Record, Vol. 86, pt. 10, pp. 11110-11.

20. Senator George, Congressional Record, Vol. 86, pt. 10, pp. 11097-98.

21. Senator Taft, Congressional Record, Vol. 86, pt. 10, p. 11101.

Transcribed and formatted for HTML by Patrick Clancey, HyperWar Foundation