Chapter VI
Transporting the Goods

Regarding the transportation problems of a many-front war, President Roosevelt said in his radio address of February 23, 1942:

The broad oceans which have bene heralded in the past as our protection from attack have become endless battlefields on which we are constantly being challenged by our enemies.

We must all understand and face the hard fact that our job now is to fight at distances which extend all the way around the globe.

We fight at these vast distances because that is where our enemies are. Until our flow of supplies gives us clear superiority we must keep on striking our enemies wherever and whenever we can meet them,, even if, for a while, we have to yield ground . . .

We must fight at these vast distances to protect our supply lines and our lines of communication with our Allies--protect these lines from the enemies who are bending every ounce of their strength, striving against time, to cut them.

Our entrance into the war intensified the race between the United Nations' merchant shipbuilding program and the Axis submarines, surface raiders, and long-range bombers; it magnified the problems involved in allocating shipping space; and it brought many new domestic transportation problems. Our transportation resources had to be mobilized for all-out war. Close coordination had to be established between shipping needs, ship construction, ship utilization, and movement of men and materials to war factories, training camps, and ports. The defense period had failed to produce these coordinating mechanisms.


Allied sinkings were particularly heavy in Atlantic waters. Because of a deficiency of escort vessels, the United States Navy was not


prepared to perform an adequate job of convoying. For some months the fate of the war hung in the balance. The total Allied ship tonnage sunk was larger than that built. At the time of Pearl Harbor, the United Nations had 45,000,000 deadweight tons of shipping of which 12,000,000 tons were under United States control. During 1941 the Axis powers sank 3,100,000 tons of United Nations' shipping and in 142 three times as much. Further losses would imperil Allied life lines. The American Navy had to increase the number of antisubmarine vessels and put into operation new techniques for reducing sinkings, and the Maritime Commission had to stimulate the shipbuilding industry to perform miracles of ship construction.

The war needs of the United Nations for merchant shipping were beyond anything the world had previously known. Military supply to combat theaters around the world required water transportation over vast distances for men and material. In addition, there were the needs of our Allies for food, materials, and munitions. As Admiral Land, Chairman of the United States Maritime Commission, put it: "There is not limit to the need for ships in a total, global war."1

Under arrangements made by President Roosevelt with Prime Minister Churchill shortly after Pearl Harbor, the task of building merchant vessels fell largely to the united States, while the British yards constructed British naval vessels.2

Since mass construction of oceangoing ships requires many months of careful preparation, the United States benefited from the foresight in having started before Pearl Harbor both long-range and emergency ship=-construction programs. no other types of defense construction takes so long to get under way. The year following the passage of the Merchant Marine Act of 1935, the United States Maritime Commission inaugurated a long-range shipbuilding program calling for construction of 50 high-speed standard merchant ships a year for 10 years. These ships were to have up-to-date turbines and gears and to be equipped with the most modern loading devices. Their construction was subsidized and fixed-sum contracts were used in letting the bids. Following the fall of France in July 1940, this program was stepped up to 200 ships a year. Events moved swiftly and these plans soon proved inadequate for the assumed needs of national defense. Great Britain was in danger of falling if aid were not forthcoming. The standard ships took too long to construct and their main propulsive engines were of the type needed also by the Navy.

The National Defense Advisory Commission recognized the need for an emergency shipbuilding program and on July 2, 1940, persuaded


Rear Admiral Land, Chairman of the Maritime Commission, to assume, in addition to his regular duties, the directorship of a newly created Shipbuilding Section of its Production Division. Admiral Land and William S. Knudsen of the Advisory Commission recommended to the President the mass production of a simple-design emergency steel cargo vessel called the Liberty ship and unofficially named the "Ugly Duckling." The plans for this ship were adapted from a British tramp-steamer type and called for the older triple-expansion reciprocating engine, steam-driven winches, and other auxiliary equipment no longer used on standard ships or naval vessels. Its speed was slow, 11 knots, and its cargo capacity about 10,000 dead-weight tons. Elimination of refinements found on standard vessels made it possible to use prefabrication and subassembly methods. After some experimentation, full use was also made of welding instead of riveting. To build a welded ship would require less steel, fewer trained shipyard workers, and less time.

On December 28, 1940, the President allocated $500,000 in cash and $36,000,000 in contract authorization from his emergency fund to

Chart 15. U.S. Merchant Ship Construction and Sinkings.


enable the Maritime Commission to start work on the new program. Congressional approval for construction of 200 Liberty ships followed in an act passed on February 6, 1941, which included authority to negotiate construction contracts without competitive bidding and to adjust outstanding construction contracts.3 The authority to negotiate contracts meant that the Commission could use a cost-plus-a-fee contract in place of a fixed-sum contract. At the hearing on this legislation, several Congressmen raised objections to the cost-plus system which had led to abuses in World War I. Admiral Land explained that in view of rising and uncertain costs for labor and materials, it was not possible to get shipbuilding companies to make fixed-sum bids for emergency ship construction. He contended that the negotiated contract was the only type of procedure that could be utilized to procure emergency ships quickly under existing conditions of pressing need and congestion of facilities.

In order to transport the increasing volume of strategic materials and lend-lease aid, later appropriation acts passed in March, August, October, and December increased the program to 1,200 vessels of approximately 13,000,000 dead-weight tons.

To carry out its emergency ship construction program, the Maritime Commission had to create almost a complete new shipbuilding industry because existing yards had prior commitments either to the Commission itself or to the Navy. Admiral Land recommended that the number of new shipyards be kept to a minimum so as to reduce the requirements for overhead management. In line with this recommendation, the Advisory Commission proposed to the President on December 27, 1940, the expansion of shipbuilding facilities in four localities. Within four months, the number of new shipyards proposed for the emergency program was increased from four to nine. They were financed by the Maritime Commission. By October 15, contracts had been let in 19 different yards for 131 new shipways, of which 107 were for the emergency program and 24 for the long-range program.

While at first the Maritime Commission left procurement of materials for constructing shipyards and ships to a single private company, it found itself drawn into procurement through the need to furnish expediting assistance. Enlarged shipbuilding programs of both the Navy and the Maritime Commission encountered shortages of machine tools, steel, propulsion machinery, and valves. The reluctance of the steel industry to expand, the slowness of the Office of Production Management in pushing this expansion, failure of the armed services and the Maritime Commission to anticipate clearly


their needs for steel and components, and the rivalry between programs contributed to these shortages.

The Maritime Commission had to face keen competition from the armed services in procuring materials for shipbuilding. It was not until the spring of 1941 that the Commission was given representation on the Priorities Committee of the Army and Navy Munitions Board. Shortly after this, the Director of Priorities of the Office of Production Management gave merchant shipbuilding priority parity with the Army and Navy. In spite of this parity, the Commission was at a disadvantage as compared with the Navy which had started its program earlier and which enjoyed greater prestige among manufacturers. The Commission did not obtain mandatory priorities until August 1941.

From July 1, 1940, to December 31, 1941, some 136 merchant ships aggregating 1,551,000 deadweight tons were delivered. While this was an impressive achievement, it was less than had been scheduled and was far short of war needs. The War Production Board Planning Committee reported in June 1942 that failure of ship completions to meet schedules was due to inadequate steel deliveries, slow development of production in new yards, failure of older yards to accept new standards of speed, inadequate production of propulsion machinery, and conversion of merchant ships to naval categories. It recommended coordination of production planning, procurement, and allocations of all agencies securing ships materials; placing of Government representatives in plants of major suppliers to deal with distribution of steel plates, and a larger staff for the Maritime Commission.4

Of the ambitious Liberty ship program only seven ships were completed during 1941 and five of those were for the British. But the necessary groundwork had been laid for vast increases in shipbuilding which was to reach its peak in a year and a half.

After Pearl Harbor, the shipbuilding program was progressively advanced to meet growing needs arising out of greater demands for aid and increasing sinkings by German submarines. In his address to Congress of January 6, 1942, the President said that he had ordered immediate steps to be taken "to increase our production rate of merchant ships so rapidly that in this year, 1942, we shall build 8,000,000 deadweight tons as compared with a 1941 production of 1,100,000. We shall continue that increase so that next year, 1943, we shall build 10,000,000 tons." A month later, another 6,000,000 deadweight tons were added to the program and by June 30, 1942, a further directive had been given the Maritime Commission to add


another 3,000,000 deadweight tons. These additions brought the total program for the calendar year 1943 to 19,000,000 deadweight tons.

The achievement of this unprecedented merchant shipbuilding program was to involve the solution of difficult management, manpower, and materials problems.

The appropriations acts granting contract authority to the Maritime Commission were only the first step. It was up to the Commission to work out the terms of the shipbuilding contracts and find reliable companies to accept them. The contracts for the Liberty ships were of the cost-plus-base-fee type under which the contractor received a base fee subject, within maximum and minimum limits, to a bonus or penalty for delivery ahead of or behind contract delivery date, and with bonus or penalty for man-hour record below or above an agreed standard. Such contracts were made possible by emergency legislation which gave the Commission authority to negotiate construction contracts without competitive bidding. The Commission insisted that the cost-plus-base-fee contract which placed a high premium on speed and volume of construction was necessary to fulfill its obligations.

Analyses of comparative performance by individual yards awarded contracts showed marked variations in efficiency. The best yards building Liberty vessels showed a production record for all deliveries during their operating history, of from two to three times that of the poorest yards.5 Further detailed analysis of yard showings on liberty ships in production time, man-hours, and cost per ship, for equivalent construction experience, indicated similar wide variations. In general, good management meant good performance records. Low performance records and management shortcomings were in part the result of cost-plus-base-fee contract terms which permitted the yard operator an assured net return regardless of total production cost, which was borne by the Federal Government. Profits were earned almost entirely for management, with relatively small contractor investment, and, in addition, allowed costs included very high executive salaries in many yards. In a few cases the Truman Committee discovered what it thought was "rapacity, greed, fraud, and negligence" and it referred these findings to the Department of Justice for appropriate action.6 IN addition, the Truman Committee recommended renegotiation of fee contracts with several companies which had poor production records.

In shipbuilding such manpower problems as recruitment, training,


Chart 16. Ship Deliveries under U.S. Maritime Commission Program.


wage stabilization, and turn-over were similar to those in other fields of war production which are discussed elsewhere.

Of peculiar importance in shipbuilding was the training function. Before the defense period more than one-half of the shipyard workers were skilled and the length of apprenticeship was from 3 to 4 years. More than 90 percent of the workers recruited in 1942 had to be trained for the jobs they were to perform.

During 1942 the merchant shipbuilding program was delayed at times by shortages of steel and of such components as gears, turbines, engines, and valves. After December 17, 1941, the Army and navy Munitions Board no longer granted merchant vessels an equal priority with naval construction. Since the total supply of steel at the time was below the total requirements, the Maritime Commission as a claimant for the shipyards was in an unfavorable position. Appeals were made by the Commission to the Army and Navy Munitions Board for equal status, but no change was made despite the judgment of Admiral King that there was little use in producing all the materials of war unless we could transport them abroad. The launching and completion of merchant ships were repeatedly delayed by inadequate and tardy deliveries of steel plates and propulsion machinery.7 The contract with the Higgins Company for the construction of Liberty ships was canceled because of a lack of steel.

The weak priority position of the Maritime Commission was partly the result of inadequate representation on the Army and Navy Munitions Board. Representatives of the Commission were outvoted by representatives of the Army and Navy. Within the War Production Board, the Planning Committee protested against the inferior priorities of the Maritime Commission and urged the Shipbuilding Division to adopt more energetic measures in aiding the Commission. The unequal priority treatment meant that aircraft escort carriers being constructed by the Maritime Commission carried a lower priority than similar Navy construction and that the Navy could set back the delivery of needed components for merchant ships by placing orders in plants booked solidly with Maritime orders. So serious did the situation become in the summer of 1942 when Congress authorized naval construction in excess of the President's program, that the President looked into the matter personally and directed Donald Nelson, Secretary Knox, and Admiral Land to confer and "settle the matter." At the conference, it was decided to prosecute both the Maritime Commission and Navy programs as scheduled. The deficit in steel plate would be borne by other programs which would be reviewed by the Joint Chiefs of Staff.

During the first 9 months after Pearl Harbor, the deliveries of new


ships were behind schedule and they failed to offset Allied losses. The United Nations Merchant fleet fell to a low point of 43,000,000 tons in August. Lack of shipping was a major limiting factor in the prosecution of the war.

Shipbuilding problems, however, were being solved. The curve of ship deliveries was rising rapidly. In September a turning point was reached. During the calendar year 1942 the President's goal of 8,000,000 tons, set in January, was met (chart 16). American shipyards shattered all established shipbuilding records. Whereas in 1941, the average time taken to deliver a Liberty ship had been 355 days, by the end of 1942 the average was reduced to 56 days and the Oregon Shipbuilding Corporation, one of the Henry J. Kaiser companies, had completed a ship in the record time of 14 days.

Allocating Shipping Space

As the United Nations' supply of vessel tonnage diminished and the demand for cargo space rose, efficient use of available shipping facilities became a matter of major importance. Within a month after Pearl Harbor, shipping demands outweighed the available supply by better than 2 to 1. The issues involved in the use of ships were of a top policy character; i.e., the fulfillment of the Russian protocol, the support of the British campaign, the reinforcement of the Philippine area and Australia, and the movement of troops to various bases, as well as to England. Normal commercial practices were entirely inadequate to meet these demands. It would have been the height of folly for Government agencies to bid against each other for shipping space and thus skyrocket shipping costs. Furthermore, the shipping companies could not afford to take war risks and they might refuse to handle the most urgent cargoes. Proper allocation of shipping tonnage required Government coordination by a system of priority ratings for cargoes. The Government had to determine the cargoes to be moved both in the import and export trades, to coordinate the two, to determine the ports to be used, and to route the traffic.

Import and export control, shipping control, cargo control, and port control were the chief tools available to insure the best use of shipping to bring strategic materials to this country and to carry munitions and supplies to our Allies where they were needed most. Cargo control meant determining the type of commodity which would move in the available shipping space and the order of priority in which such commodities would move. Shipping control or operations control called for the scheduling, routing, and loading of merchant vessels so as to guarantee their maximum utilization. Port control called for the close coordination between shipping, storage,


and domestic transportation facilities. The right cargoes had to be available for outgoing vessels, and proper arrangements had to be made to handle incoming cargoes. Steps had to be taken to avoid port congestion. At the same time, there had to be enough surplus goods in storage at the ports so that the ships could be promptly and correctly loaded.

Cargo, operations, and port control had to be closely related, but at the time of Pearl Harbor these controls were scattered among a number of old-line and emergency agencies. Definite answers had not been given to a number of administrative questions. Should transportation and war production be controlled by the same agency? What should be the relationship between shipping priorities and materials priorities administration? SHould the armed forces have their own ships? Should the armed forces have the final word as to the use of shipping? Should ocean shipping and domestic transportation be controlled by the same agency? What should be the relationship between the American shipping pool and the Allied shipping pool? Within 3 months answers were given to most of these questions. The answers had their roots in events which preceded the actual outbreak of war.

When the emergency shipbuilding program was started, a number of leading Government officials discussed ship-operation problems with the President. On January 15, 1941, Secretary Hull urged the President to make some provision for establishing priorities on shipping in order to expedite acquisition of critical materials. Shortly after this, Admiral Land, supported by Secretary Jones and others, recommended to the President that the Chairman of the Maritime Commission be named by Executive order as Director of Ocean Shipping with instructions to utilize the Maritime Commission and its staff in dealing with all problems of ocean transportation. At the same time, Admiral Land pointed out that there were "no existing statutory provisions adequate to devise and implement control of shipping facilities in foreign commerce; i.e., Priorities of space and shipments, routes, discharging facilities, and storage tonnage," and he indicated a willingness to submit a draft of such legislation.

The Attorney General and the Bureau of the Budget investigated the proposal to establish a Division of Ocean Shipping Management in the Office of Production Management and reported to the President that it was not "legally or administratively feasible." It was pointed out that under existing laws the powers vested in the Maritime Commission could not be transferred by Executive order, that there was not statutory authority in existence for directing the movement of ships, except as the Commission operated its own ships or exercised certain indirect controls, that control over ship movements should


not be vested in OPM while that office was concerned with the import of defense materials, that there were other important elements in shipping policy, that the proposed Executive order illustrated the immediate need for a Division of Defense Economics which would consider shipping policy as one device for controlling trade, and that an administrative order might designate the Chairman of the Maritime Commission as an aide of the President on shipping matters.

Instead of an Executive order, the President, on February 10, 1941, requested Admiral Land, with the assistance of other Government departments involved, to take proper steps to secure the maximum utilization of our merchant tonnage. he said: "I particularly request you to give all assistance and cooperation to the Office of Production Management in expediting the shipping of materials which are essential to our production program."8 The President thus specifically mentioned that the Maritime Commission should cooperate with OPM in working out shipping priorities.

To carry out the President's directive, the Maritime Commission established a Division of Emergency Shipping on February 28, 1941. This Division was charged with supervising all emergency shipping problems and maintaining liaison with the War, Navy, and State Departments, the Office of Production Management, the Rubber and Metals Reserve Corporations of the Reconstruction Finance Corporation, and other governmental departments and agencies with respect to emergency activities of ship transportation. It also supervised negotiation of sales, charters, transfers, reallocations, reassignment, and acquisition fo vessel tonnage. A small staff was recruited form the shipping industry. In the beginning the Division had no field staff and conducted business on an informal basis with no systematic record keeping and non analysis of performance. It asked the various shipping companies to cooperate in the defense effort on a voluntary basis. Some companies refused to substitute defense cargoes for more profitable nondefense cargoes.

IN handling export cargoes, the Maritime Commission was guided by demands of the Army, Navy, lend-lease authorities, Coordinator of Inter-American Affairs, British Purchasing Commission, and private shippers. Especially important were the lend-lease requests following the President's directive in April that at least 2 million tons of shipping be obtained to aid the British. Much of this shipping was secured on the basis of informal negotiations with interested shipping companies and was put into service on the Red Sea route to aid the British in their Mediterranean campaign. The British signed the contracts but payments came out of lend-lease funds. Subsequent


investigations showed that the companies found the contracts highly profitable. One operator, for instance, obtained a net return for a voyage which was nearly six times the return for operation of the same vessel in the intercoastal trade in 1940 for a similar period of time.9

On the import side, the President directed the Maritime Commission to cooperate with the Office of Production Management on cargo priorities. OPM was concerned with shipping, since it allocated critical materials upon their delivery into this country. Beginning in April, it sent to the Commission brief lists of priorities for materials which it was trying to stock pile. In June it established a Shipping Liaison Section to present systematic priorities to the Commission for essential imports. At the request of the Commission, the priority lists were cleared with other agencies by the Shipping Priorities Advisory Committee, which included representatives of the Commission, the State Department, the Federal Loan Agency, the Office of Price Administration and Civilian Supply, the Department of Agriculture, the Office of the Coordinator of Inter-American Affairs, and OPM. W.Y. Elliott, the Chief of the Shipping Liaison Section and the Secretary of the Committee, became the driving force behind the import priorities work.

As the Shipping Priorities Advisory Committee broadened its experience, it saw the need for coordinating its activities with the stockpiling work of the Reconstruction Finance Corporation. A second informal committee, called the Cargo Clearance Committee, was created to deal with stock-piling problems., This committee, also known as the Clayton Committee, form its chairman, William Clayton, included representatives of the Maritime Commission, the reconstruction Finance Corporation, the Department of State, and from time to time other agencies.

The relative responsibilities of the Office of Production management and the Maritime Commission for import priorities were the subject of prolonged negotiations. OPM contended that priority powers were indivisible, but Congress in the Ship Warrants Act, approved July 14, 1941, gave the Commission authority to provide for priorities in transportation by merchant vessels in the interests of national defense. The law was similar to a British law which had been found effective in controlling neutral shipping. Warrants issued


by the Commission entitled ships to priorities in the use of facilities of loading, discharging or storage of cargoes, fueling, drydocking, and repairing in American ports. To secure a warrant, the ship company had to agree to the Commission's conditions regarding voyages, cargoes and rates.10 OPM was not mentioned in the law but the president in a letter of August 26 asked Admiral Land to use OPM as a channel for schedules of shipping priorities. The Executive order establishing the Supply Priorities and Allocations Board, issued 2 days later, further strengthened the position of OPM in dealing with the Commission regarding shipping priorities.11

Differences arose between the Maritime Commission and the Office of Production Management regarding the administration of the legislation and Presidential directives on shipping priorities. Mr. Elliott and his group in OPM kept pressing the Commission for greater performance in picking up foreign cargoes on the import priorities list. The Commission took the position that the Priorities Advisory Committee could advise but not direct the Commission regarding what should be imported. The Committee, which was guided by Mr. Elliott, found it difficult to obtain the information it needed to operate. It found unsatisfactory the figures collected by the Commission and other agencies regarding goods available abroad and actual imports. it also took exception to the Commission's reluctance to interfere with the shipment of profitable nonessential cargoes. It urged the Commission to use its powers to increase the importation of low-rate high-priority cargoes.

The declaration of war found the United States unprepared to meet the greatly increased demands placed upon its ocean shipping. The War and Navy Departments began to press their claims for shipping as against those of the Lend-Lease Administration. With plans being discussed for expeditionary forces to Africa, Britain, and Australia, it was evident that military developments would put a tremendous strain on shipping facilities which were already inadequate for our rearmament needs and for delivery of lend-lease aid.

The situation was rendered more difficult by uncertainties about who was to be responsible for shipping and how such responsibilities were to be administered. In addition to the questions regarding the role of the Office of Production Management, the Maritime Commission, and the Economic Defense Board in cargo control, there was the question regarding the divided direction of shipping. Both the Army and the Navy had expanded their own merchant fleet operations by purchase and by charter.

The bulk of the American foreign fleet still operated under private


control, subject only to mild restraints exercised by the Division of Emergency Shipping of the Maritime Commission. Scarcely any use had been made as yet of the powers under the Ship Warrants Act and the requisitioning sections of the Merchant Marine Act. During the defense period many American vessels had been sold or transferred to foreign registry in order to get around provisions of the Neutrality Act. Repeal of the restrictive provisions on shipping in this act in November, and the declaration of war in December brought the entire American Merchant Marine into United Nations war service without the necessity of change of registry.

At the outbreak of war, imperfect coordination existed between the American and British shipping authorities. Informal working relationships had been established between the two countries but there was no machinery for settlement of disagreements. While there was a mutual exchange of information as to records and cargoes, each country maintained responsibility for the operation of its own facilities.

Proposals to establish an agency to handle both import and export problems were rejected because of interagency disagreements. On December 17, 1941, the President asked William L. Batt, Director of the Materials Division of oPM, to organize an interdepartmental conference on raw materials. Mr. Batt assumed that his control of raw materials necessarily involved responsibility for control of shipping. Henry Wallace and Milo Perkins of the Board of Economic Warfare, were ot willing to accept this assumption. On the other hand, the agencies dealing with stockpiling and shipping problems were opposed to granting the Board of Economic Warfare exclusive control over cargo. Another important development was the foreseeable demand by the Army and Navy for increased diversion of shipping. The execution of the plans for sending and convoying expeditionary forces to Africa, Great Britain, and Australia would place a tremendous strain on shipping facilities.

Recognizing the need for action, President Roosevelt established on December 8, 1941, the Strategic Shipping Board by the following letter:

This Board will be composed of the Chairman of the Maritime Commission, the Chief of Staff, the Chief of Naval Operations, and Mr. Harry Hopkins. It should establish policies for and plan the allocation of merchant shipping to meet military and civilian requirements, and coordinate these activities of the War and Navy Departments and the Maritime Commission. Operations should remain in the hands of existing organizations.

The Board should consult with representatives of the OLLA and other agencies of the Government responsible for processing or planning the procurement, production, import and export of defense articles and materials. Representatives of the governments receiving assistance under the Lend-Lease Act should likewise be consulted.


The Strategic Shipping Board soon encountered difficulties which made it clear that a more systematic organization was necessary. Secretaries Stimson and Knox in a joint letter to the President on January 13, 1942, pointed out some limitations of the Board. In the first place, the power of decision lay with the Board rather than a single person. Since no Executive organization could be established under the directive of the Board, the members of the Board delegated acton to subordinates who were members of existing organizations having conflicting interests. Actual control of private shipping was not vested in the Board and control of shipping in the hands of the armed services remained in those organizations. Control in the field was divided and existing private shipping agencies were uncoordinated. For these reasons, Secretaries Stimson and Knox urged the President to establish a Central Shipping Administration with Admiral Land as Administrator.

With their letter, the Secretaries submitted draft of an Executive order which provided for control by a new agency of all oceangoing vessels of the United States with certain exceptions, for the transfer of functions concerned with maritime affairs from other Government departments to the new agency under the provisions of the War Powers Act, and for allocation of vessels in compliance with the joint decisions of the Secretary of War and the Secretary of the Navy. Admiral Land objected to the provision in the proposed order placing him under the control of the military authorities, since it allowed him no discretion in carrying out Presidential and other high nonmilitary directives for allocating ships. Harry Hopkins opposed the same clause since he thought it would not result in sufficient consideration to lend-lease. The Maritime Commission prepared a draft of an order to meet this and other objections.

President Roosevelt submitted both drafts of the proposed order to the Director of the Bureau of the Budget for further consideration. After long and difficult negotiations, the Bureau of the Budget worked out a new draft which embodied the essential features of the maritime Commission proposal. This draft failed to receive the approval of the War Department. In a memorandum of February 5, 1942, to the President the Director of the Bureau of the Budget said:

The attached executive order establishes a War Shipping Administration in the Office for Emergency management. This order has been prepared in the Bureau of the Budget and represents a reworking of drafts which were submitted: (a) Jointly by the Army and Navy and (b) by the Chairman of the Maritime Commission.

The functions, duties, and powers now vested in the Maritime Commission, with respect to ship allocation and operation are transferred to the War Shipping Administration under authority of the First War Powers Act. The Administrator is authorized to allocate and control the operation and use of all ocean vessels


under the flag or control of the United States, except combatant vessels of the Army and Navy, fleet auxiliaries of the Navy and transports owned by the Army and Navy.

The order has been cleared with and approved by Secretary Knox and Admiral Land. I also understand that Harry Hopkins is strongly in favor of this draft as now presented. However, Secretary Stimson has requested that the Army and Navy be given greater control over the decisions of the Administrator in allocating vessels by inserting language which would require that the allocations of the Administrator comply with "strategic military requirements as determined by the joint decision of the War and Navy Departments." Both Admiral Land and Harry Hopkins feel that this sentence so weakens the position of the Administrator that an order including such a provision would be ineffective. We concur in the view of Land and Hopkins and thus recommend that you sign the order as submitted.

The President took the view that the war being wages was global in character and that the closest cooperation with our Allies was needed. This he thought could be better achieved by establishing a civilian agency in charge of all shipping which would give proper weight to lend-lease. American military control of shipping would tend to slight the imperative demands of Russia, Great Britain, and China. The President signed the proposed order creating the War Shipping Administration on February 7, 1942.12 Two days later Admiral Land, still retaining his chairmanship of the Maritime Commission, was appointed Administrator of the new agency.

The responsibility of the War Shipping Administration under the Executive order extended to all phases of shipping including purchase or requisition of vessels for its own use or use of the Army, Navy, or other Government agencies; the repairing, arming, and degaussing of vessels controlled by War Shipping Administration and Allied vessels under Lend-Lease provision; conversion of vessels to troop transports, hospital ships, and to other special purposes; providing ship personnel; operating, loading, discharging and general control of the movement of these ships; administering or marine and war risk insurance laws and funds; and control of terminal and port facilities, forwarding and related matters.

Creation of a new war agency to exercise these functions had a number of advantages. Emergency shipping powers which had been vested in the Maritime Commission were now concentrated in a single individual. The new agency would be free from the restraints in the Merchant Marine Act regarding the recruitment of personnel from the shipping industry. This act prohibited the hiring of people from the shipping industry on a dollar-a-year basis. WSA was not bound by these provisions and made a general practice of hiring men from the industry.


The executive order authorized the Administrator to allocate shipping within the limits of "strategic military requirements," as he interpreted them. In arranging for imports, he was to be guided by schedules transmitted from the War Production Board. The exact relations between ocean and coastwise shipping were left to negotiations between the Administrator and the Director of the Office of Defense Transportation.

The order designated the Administrator to represent the United States Government in dealing with the British Ministry of War Transport in matters relating to the use of shipping. on January 26, 1942, while negotiations regarding the Executive order were still in process, the President announced prospective formation of the Combined Shipping Adjustment Board. Actually, two boards were established, one in Washington and the other in London. While in principle the shipping resources of the two countries were pooled, in practice each country directed its own shipping. The British representative in Washington did not have power to commit the British shipping pool. Such decisions could only be made by the British Ministry of War Transport in London. Similarly, the American member on the London Board could not commit the United States pool. The allocation of American shipping was in the hands of the War Shipping Administration in Washington. In 1942 the British pool was two and a half times larger than the American pool, but as the American shipbuilding program got under way this ratio changed in favor of the American pool.

The elaborate plans made by the British representative in Washington, Sir Arthur Salter, for the staffing of the Combined Shipping Adjustment Board did not materialize. In practice, the Board made a general review of the utilization of vessels in an effort to discover ways of saving tonnage through the elimination of duplication and the prevention of cross-hauling. Its findings were purely advisory. In addition to holding formal meetings, British and American representatives carried on many confidential and informal negotiations. To the American representatives, the Board was a disappointment because it did not provide a joint shipping pool. Efforts within the War Department to enlarge and strengthen the Board came to naught.

One of the main problems facing the War Shipping Administration was the lack of an accurate record of where United Nations ships were, what they were doing, and to what extent they could be assigned to other purposes. To remedy inadequacies of shipping data, Admiral Land appointed as his adviser Lewis W. Douglas, insurance executive and former Director of the Bureau of the Budget, who had been brought to Washington by Harry Hopkins to assist in lend-lease


activities. Mr. Douglas found lend-lease and shipping problems inseparable. His job with the War Shipping Administration was to prepare a picture of the American shipping situation and to establish the basic statistical and reporting procedures which would make possible current appraisals of the shipping operations. This work was slow in getting under way because Mr. Douglas at first had no control over the operating divisions of War Shipping Administration. In a report of April 25, 1942, to the President on wartime transportation, the Liaison Officer for Emergency Management said:

The general administration of WSA is thus marked by an almost complete lack of planning and effective management. Problems directly affecting the Nation's survival are being met on a day-to-day basis without adequate information for proper decisions. This has resulted in needless waste in the past and the waste will continue until effective management methods are instituted. * * * At the moment, some of the information essential to proper allocation and efficient management of our shipping is beginning to be assembled. This has come about since the appointment of Mr. Lewis Douglas as Chief Adviser of WSA.
In May Mr. Douglas was appointed Deputy Administrator for vessel utilization and planning and this gave him the needed control over operations. By fall marked improvement had been made in the statistical picture and advance planning was under way. Lack of cooperation on the part of the Navy, however, was still a handicap in compiling information about ships.

In allocating shipping tonnage, Mr. Douglas stated that Presidential directives were given first priority. For instance, the President made shipping to meet the Russian protocol a first priority and this was carried out at the expense of the Red Sea operations. After the President's instructions, requests from the military authorities came next, then lend-lease orders, and finally civilian requirements. In practice, Mr. Douglas, after consultation with the agencies concerned, made the day-to-day decisions on allocations. In performing this function WSA was subjected to continual pressure from agencies interested in securing greater allocations. Dissatisfaction with Mr. Douglas' decisions led in some cases to attempts to have them set aside by higher authority. In an effort to alleviate this pressure, he sought directives from top military and civilian officials in making the most vital decisions.

In early 1942 the Army attempted to gain control of all inland and off-shore transportation. After a series of conferences, a compromise was reached under which representatives of the War Department, War Shipping Administration, Office of Defense Transportation, and the British Ministry of War Transport were to sit as a Daily Operations Committee controlling the movement of both inland and off-shore transportation. On June 13, 1942, an agreement was signed by the Army Transport Service and War Shipping Administration covering


the interdepartmental relationship between the Army and WSA so as to form a basis for full and complete cooperation in connection with the purchase, charter, use, and operation of vessels and terminal facilities. On imports the War Production Board continued to furnish priority lists and the Board of Economic Warfare was the key agency on exports not under the control of military authorities or lend-lease.

Active participation by the United States in the war necessitated total Government control of all oceangoing tonnage. On April 18, 1942, the WSA issued na order making all American owned or controlled ships subject to requisition. It proceeded at once to take over either actual title or the unlimited right of use of all privately owned oceangoing vessels within our jurisdiction. Private ship companies became operating agents for the Government. Elaborate legal and accounting arrangements were necessary to take care of acquisition costs, charter rates, operating costs, stevedoring contracts, repairs contracts, and insurance rates. Regarding problems encountered by the Administration in getting under way, the Truman Committee reported:

The War Shipping Administration candidly admits that many difficulties have been encountered in the loading and handling of ships and that many blunders were made, especially in the earlier months. This was to be expected because of the transition that had to be made from peacetime cargoes handled by private merchants to war cargoes of different types handled by Government agencies. The frankness of the War Shipping Administration in admitting and hastening to correct its mistakes presents a refreshing contrast to the attitude of some war agencies.13

One of the most serious problems in connection with effective operation of American ocean ships was that of providing the necessary seamen and officers. During the early months of our war effort, sailing of many ships were delayed because of inadequate crews. An interdepartmental committee composed of representatives of the State and Justice Departments and the War Shipping Administration analyzed these problems. Recruiting and training of merchant seamen had been a function of the Maritime Commission, which had delegated the actual operation of schools to the Coast Guard. On the recommendation of the Bureau of the Budget, which had made a study of maritime training and related problems, the president issued on February 22, 1942, and Executive order transferring training to the United States Coast Guard.14 Recruitment functions left with the Commission were transferred to the War Shipping Administration, which established a Recruitment and Manning Organization to


create and operate pools of American seamen in a few principal ports. There was no question about the responsibility of the War Shipping Administration for manning vessels in the sense of hiring a specific man for a specific voyage.

Admiral Land and his associates were never reconciled to the transfer of the training function to the Coast Guard. They continued to agitate for the return of this program to their jurisdiction. Maritime unions, fearing militarization of the merchant fleet, supported the position of the War Shipping Administration. As a result, the President signed on july 11, 1942, and Executive order transferring the training functions from the Coast Guard to War Shipping Administration.15 Cooperative arrangements were developed between the United States Employment Service and the Recruitment and Manning Organization for the registration of seamen. In the actual hiring of seamen, union hiring halls were used in accordance with collective bargaining agreements. Individual discipline cases continued to be handled by the Coast Guard.

During the first 9 months of the war, many improvements were made in the ocean shipping situation. Establishment of the War Shipping Administration hastened the leasing and acquisition of ships by the Government so that they could be employed more effectively for war transport. The Maritime Commission was left free to concentrate on shipbuilding. Shipping was converted from a "business as usual" to an all-out war basis. American shipping was not monopolized by the Armed Services but was devoted to the needs of all the Allies. Close relations were established with the British shipping pool. Vast improvements were made in the procedures for maintaining current information on the location of ships and cargoes. Sailing delays due to manpower shortages were practically eliminated.

Maximum utilization of shipping in the American pool, however, was not achieved during this period. This was especially true of the ships under the control of the Army and the Navy. The War Shipping Administration order did not unify control over all American-controlled ships and it contained no ready-made formula for solving shipping space allocation problems. Friction still existed between War Shipping Administration, War Production Board, Lend-Lease Administration, Foreign Economic Administration, and the armed services over requirements, exchanges of information, loading methods and the general problems of shipping and cargo control. As the War Shipping Administration gained experience and the size of the American shipping pool increased, these frictions interfered less and less with the job of delivering the greatest quantity of war goods ever moved in history.


Domestic Transportation

Ocean transportation shortages were felt by our Allies first. Domestic transportation shortages soon affected the lives of every man, woman and child in the United States. The swift advance of the Japanese on the rubber-producing areas, sinking of coastal vessels--especially tankers, growing shortage of gasoline on the eastern seaboard, orders stopping the manufacture of motor vehicles for civilian use, manpower shortages in the transportation field, curtailment of civilian air traffic, growing obsolescence of railway equipment, and rationing of tires, automobiles, and gasoline brought home to all the transport dislocations of a many-front war.

Chart 17. Petroleum Shipments to Eastern States.

Domestic transportation requirements at the time of Pearl Harbor were much heavier than at the time of the declaration of war in 1917. The armed forces were larger, ports on all our seacoasts were used for the shipping of men and materials, war industries involved more displacement of population and greater freight tonnages, coastal shipping was more successfully attacked by the enemy, and the railroads had less equipment with which to meet the emergency. Since coastwise and intercoastal shipping was subject to attack by the enemy and to requisition by the Armed Forces and War Shipping Administration, it practically disappeared during 1942. This meant a greatly increased burden upon the railroads.

Particularly threatening to inland transportation was the enemy action against petroleum tankers. Normally the eastern States consumed approximately 1,500,000 barrels of petroleum or petroleum products daily and of this supply about 95 percent moved by tankers from the southwestern oil fields and refineries (chart 17). By May this supply had been more than cut in half. The long tanker haul from the Gulf of Mexico had to be given up because escort vessels could not be spared from convoy duty in the Atlantic and Pacific. Steel, manufacturing


facilities, and labor could not be immediately diverted to the manufacture of railroad tank cars, barges, and pipe lines without disrupting the flow of supplies to the Pacific and to our Allies fighting the Nazis. If we were to prosecute the war successfully and conserve our limited supply of rubber, it was not possible to consume oil and gasoline at home in the quantities to which we had become accustomed.

Another major question which faced the country in these fateful days was whether our transportation resources were adequate for total warfare. There were differences of opinion among the experts regarding the capacity of our transport. Some contended that we had a surplus of transportation capacity, while others held that there were serious shortages and a danger of a general break-down of the war machinery on that account.

Prior to the war there existed no machinery capable of dealing with the domestic transportation system as a whole. The Association of American Railroads had certain voluntary controls over car supply and movements. The Interstate Commerce Commission had broad emergency powers which might have been used to promote a more economical flow of railway traffic and a more efficient distribution of cars. But the Commission was not in a position to require advance preparation to meet defense needs. Besides, as an 11-member quasi-judicial regulatory body, the Commission was not fitted for fast action; neither was its staff geared to a defense program. It did not have full regulatory powers over intrastate and local carriers. This was especially important in the local transportation field. While these powers could have been given to the Commission, it was thought better to give them to a temporary war agency which would be abolished after the emergency and raise no question about the Federal Government continuing in this field. The motor carrier groups were not so well organized as the railroads and limited themselves to voluntary organization to meet emergencies.

The Division of Transportation of the Advisory Commission to the Council of National Defense, established on May 29, 1940, was the last of the staff units of the Advisory Commission to be absorbed into other administrative agencies. Ralph Budd, railroad executive, served as Commissioner until after Pearl Harbor when the Office of Defense Transportation was established. The Division never had a large staff and it relied heavily upon consultants, advisory committees, and the cooperation of other agencies and the transportation industry.

Mr. Budd and his associates believed that the Division of Transportation could be most useful by acting in an advisory and coordinating capacity. They assumed that existing transportation facilities were adequate for national defense since there was a surplus of transportation


capacity and that a large staff would duplicate the work of the Interstate Commerce Commission and other agencies and get in the way of private management. The Division relied upon the Association of American Railroads for advice, information, and active support of its policies. Much of its comparatively conservative advice on car supply was based on statistical data furnished by the AAR Car Service Division. The Division established a Central Motor Transportation Committee which headed up a Nation-wide organization composed of 16 district committees. Within the Central Committee and also in each district committee were included representatives of the public, of for-hire trucking, private trucking, and bus operations. The Division also set up a Tank Car Service Committee in anticipation of the diversion of tankers from the Gulf East Coast oil service. Activities of the Division included making of recommendations regarding needed railroad equipment, assisting transportation companies to secure priorities for equipment, and furnishing advice on such matters as port congestion, grain shipments, increasing the movement of ore, stock piling of coal, collection of iron and steel scrap, and prevention of sabotage.16

As the defense program got under way, the Division of Transportation became a less suitable instrument for coordinating domestic transportation. Provision of information and advice was not sufficient to meet the growing needs. The staff of the Division thought largely in terms of railroad problems and looked upon other forms of transportation as secondary--as in normal times they perhaps are. Other agencies began to move into the transportation field on a piece-meal basis.

In the spring of 1941 the staffs of the Bureau of the Budget and the National Resources Planning Board made a study of transportation and concluded that certain critical problems were developing. They contended that allowance should be made for diversion of coastwise and intercoastal ship tonnage, for possible shortages of tonnage on the Great Lakes, for increasing demands on port facilities, and for other contingencies of an emergency period. They foresaw the need for insuring an adequate supply of petroleum and its products to Atlantic coast points following withdrawal of tankers. Among possible programs and actions, they mentioned the short-routing of traffic, placing restrictions on the use of equipment for storage, pooling and reallocating car supplies, shifting locomotives to hard-pressed roads, diverting tonnage around congested terminals, and coordinating all inland transport with movements at the ports.

Plans for the reorganization of the defense transportation field were pushed by the National Resources Planning Board, the Bureau


of the Budget, and other agencies in the spring of 1941. The staff of the Planning Board recommended the establishment of a new agency within the Office for Emergency Management to carry on both emergency planning and action functions under the direction of a man with broad experience who was not a top executive in a transportation industry. When officials of the Office of Production Management sought to absorb the Transportation Division of the Advisory Commission, the staff of the Bureau opposed this move on the ground that the transportation function was of broad importance to the entire defense program and they proposed an Executive order establishing a separate transportation agency whose functions would extend to ocean shipping as well as land transport facilities and would include the exercise of certain authorities of the President over transportation priorities.

The question was threshed out by the President's advisers during the summer and fall and the plan subsequently proposed was modified in the light of their discussions. It was decided that the powers of the new office be confined to domestic transportation because of the difficulty of getting someone who could supervise both inland and ocean transportation, that priorities in movements would be directed by the Office of Produciton Management and the Supply Priorities and Allocations Board and carried out by the new office, and that the new office would be responsible for negotiating rate adjustments.

The Bureau of the Budget draft of an order incorporating these changes was ready on December 5, 1941, and was signed by the President the 18th of the month.

Executive Order No. 8989 established the Office of Defense Transportation and authorized it to coordinate the transportation policies and activities of the railroad, motor, inland waterway, pipe line, air transport, and coastwise and intercoastal shipping industries; to keep close watch on domestic transportation in connection with the war effort; to protect the interests of such transportation becore other agencies of the Government, particularly the Office of Production Management; to do everything possible to promote the maximum utilization of transportation facilities; and to this end to require action by orders, where necessary.

From the beginning of the negotiations concerning the Executive order, Mr. Joseph Eastman, Chairman of the Interstate Commerce Commission, was regarded by the President's advisers as the logical man to head the new agency. He was not connected with any transportation group but he was thoroughly familiar with the problems in the field and had the confidence of the industry. Mr. Budd was among those who urged Mr. Eastman's appointment. The President


announced Mr. Eastman's acceptance of the responsibility on January 2, 1942.

As Director of the Office of Defense Transportation, Mr. Eastman exercised his wide powers with marked caution. He and his associates, many of whom came with him form ICC, believed that actual management should remain in private hands and that existing operating practices should be left undisturbed wherever possible. He also held that transportation priorities were administratively impractical and should be avoided.

After Pearl Harbor, freight traffic reached new highs but there was comparatively little congestion and no general system of priority orders was invoked by the office of Defense Transportation. As in World War I, it was essential that congestion at the ports be prevented. The Association of American Railroads worked out elaborate procedures for keeping in touch with possible danger points and cooperated closely with ODT, ICC, WSA, the Armed Forces, and shippers to prevent serious accumulations of cars under load. ODT organized on march 187, 1942, a Transportation Control Committee, representing interested Government agencies, to control the movement of freight to the ports in such a manner as to meet the established shipping schedules. The Committee met daily and issued permits to the various procurement agencies and shippers in accordance with the shipping space which had been allocated to them. ODT sent members of its own staff to keep a constant watch over traffic in all major ports and by General Order NO. 16A established a unit permit system on export cargo and named as its agents for the issuance of such unit permits Transportation Division, Bureau of Supplies and Accounts, Navy Department; Division of Cargo Clearance, War Shipping Administration; Transport Controller, Canada; and Traffic Control Division, Transportation Corps, War Department. The Army transport Chief stated that the Army was in actual control of its traffic and that the Committee was relatively powerless to interfere. While the War Department domination of this rail traffic was criticized in some quarters, the results in preventing congestion at and near the ports were of the greatest importance.

In contrast to the situation in 1917, no great demand developed for large and rapid increases in railroad rates. Although railroad rates were increased only moderately in 1942, railroad earnings were high. Mr. Eastman ascribed this to the greater success the Government had in 1942 in resisting inflation and to the fact that dense traffic combined with close approach to maximum utilization of facilities was productive of highly economical operation.17 In accordance


with the provisions of Executive Order No. 8989, ODT represented the Government interest in negotiating rates with domestic transportation carriers. In the performance of this function it established a joint force of rate clerks with OPA and sponsored the creation of the Traffic Executive Chairmen's Committee by the traffic associations.

Because of the enormous amount of freight that had to be transported during the war, coupled with the limited amount of equipment to handle this extraordinary load, ODT had to issue regulations that would result in fuller use of railroad equipment than was common in peacetime. Among the orders issued was one requiring heavier loading of less-than-carload of freight.18 This order, which restricted the forwarding of such cars unless loaded with minimum weights was instrumental in preventing a shortage of box cars.19 A similar shortage in refrigerator cars was avoided by an arrangement set up by ODT in cooperation with the car owners, ICC, and the Association of American Railroads, which provided practical pooling of all refrigerator cars, regardless of ownership. ICC issued a service order to carry out this plan.20

Another responsibility imposed on ODT wsa to survey and ascertain present and anticipated storage and warehousing requirements and encourage the provision of increased storage facilities where necessary. After Pearl Harbor, the capacity to produce was greater than the capacity to transport and well-ordered storage arrangements had to be provided. ODT had no authority to compel the storage industry to provide for amply storage space, nor could it legally build and operate this space itself, but it persuaded the industry to create Federal warehouse associations which pooled existing resources of warehouses, it induced such procurement agencies as the Army, Navy, and Lend-Lease Administration to construct new warehouses, and it cooperated with ICC and the Department of Agriculture in solving grain storage shortages.

The war disrupted the normal pattern of railway movement. New industries and military establishments were created on sites which had not been railroad centers and there were increasing movements of freight to ports for shipment abroad. These conditions modified and sometimes reversed the direction of loaded and empty car movement. Obstructions could be averted most effectively by a centralized supervisory authority continuously informed of conditions likely to affect the free flow of traffic, and using such information to remove them.


To provide this supervision, ODT established the Traffic Channels Plan which was essentially a daily reporting system based on a purely voluntary arrangement between the carriers and ODT. No order was promulgated by ODT to enforce it. In the western territory, however, war activities were unusually disruptive of normal railroad traffic and it was felt that to improve utilization of equipment and to prevent congestion and delay, traffic had to be diverted or rerouted over rail lines with excess capacity. The Association of American Railroads proposed the extension of the functions of its Car Service Division to include rerouting and diversion. It was decided, however, that such an activity would violate the antitrust laws. While both

Chart 18. Passenger Traffic on Railroads.


ODT and ICC had some jurisdiction in the field, they decided to act jointly through a common agent.21

One of the most difficult problems faced by ODT shortly after Pearl Harbor was the transportation of petroleum products from the southwestern oil-producing districts to the eastern seaboard territory following the withdrawal of intercoastal tankers form this trade. The Liquid Transport Department of ODT, originally called the Division of Petroleum and Other Liquids, was the only Division organized along commodity lines. Early in the war, it concentrated on the substitution of railroad tank cars for oceangoing tankers. The amazing increase in the shipment of oil by tank car was facilitated by close supervision of the car supply by ODT; by substitution of tank trucks for tank cars on short hauls; and by scheduling of trainload movements, all with the cooperation of the railroads, the shippers, and the Office of Petroleum Coordinator. The tank car rail movement increased from 70,000 barrels a day before Pearl Harbor to more than 850,000 barrels per day 8 months later. But the railroad equipment was old and the use of tank cars costly. In 1941 the Supply Priorities and Allocations Board twice refused to approve the construction of pipe lines from the Texas oil fields to the East Coast. Differences of opinion were expressed regarding location and use of such lines. On June 10, 1942, however, WPB, on the recommendation of the Petroleum Administrator for War and ODT, authorized the allocation of materials for pipe-line construction. A little more than a year later the 24-inch line was in operation and the pressure on the railroads was lightened.

While railway passenger-miles were 83 percent higher in 1942 than in 1941 the railroads had to operate with virtually the same passenger-carrying equipment. ODT had to see that essential military and civilian passengers were accommodated and that a disproportionate share of railway facilities was not diverted to pleasure travel. It sought to achieve these objectives without resort to a compulsory priority system or any scheme requiring the rationing of passenger travel. It rejected such rigid controls on the ground that they would create serious administrative problems, particularly with the increasing shortage of manpower, and would involve many hardships. ODT issued one order prohibiting replacing of train service by bus service without its approval and another freezing all railway passenger schedules and prohibiting railroads, with certain exceptions, from running any special passenger trains or giving other special services. In addition, ODT urged the railroads to adopt voluntary measures of


their own to conserve passenger equipment.22 Through the cooperation of businesses and professional organizations, about two-thirds of the normal conventions and group meetings were eliminated or greatly reduced. ODT prohibited use of special passenger facilities for athletic and other recreational events. It also conducted educational campaigns to induce the general public to refrain from unnecessary travel and it urged the Government and industries to spread vacations throughout the year.

Local Transport

Within a few months after his appointment, Mr. Eastman recognized the responsibility of his office for regularly established local transportation even though this subject was not expressly mentioned in Executive Order No. 8989. He saw that something had to be done to improve the local transit facilities in areas where new war plants or training centers were established. As prospects for securing additional equipment were poor, ODT had to secure the maximum utilization of existing rapid transit systems, street railways, interurban railways, trolley buses, local, suburban and school buses, taxicabs, for-hire cars, ferries and local water carriers, and other local passenger services.

In order to conserve local transport equipment and to direct it into channels of essential use, ODT issued a series of orders regulating the substitution of buses for streetcars and the chartering of buses by groups for their exclusive use, banning sightseeing buses, eliminating duplications of service, curtailing schedules and service for elimination of wasteful operation, requiring proper maintenance of equipment and maximum loading, and requiring carriers in competitive service over parallel, or closely parallel routes, to formulate joint action plans for the maximum utilization of equipment. The joint action plans were submitted to the Department of Justice for clearance as to the enforcement of the antitrust law.23 Other orders banned automobile racing, restricting the number of taxicabs and the number of taxicab services, and regulated the use of rental cars. In addition, public and operator cooperation was sought for securing the adoption of staggered hours, restoration of abandoned streetcar services, diversion of rubber-borne traffic to street railway routes, turn-back service, fewer stops on bus and streetcar routes, street traffic control, and other conservation measures.

While the increased burdens placed upon local mass transit systems in many places were staggering, ODT took the position that it would


not attempt to obtain priorities for the construction of new streetcars, trolley coaches, and motor buses until all possible means of making fuller use of existing equipment had been exhausted. WPB authorized the completion in 1942 of only 350 streetcars, 400 trolley coaches, and 9,000 buses, in each case considerably less than the number recommended by ODT.

Private Passenger Cars

The attack at Pearl Harbor called for immediate action to conserve existing rubber stockpiles since it cut off substantially all of the Nation's sources of crude rubber. Some 27 million passenger automobiles, comprising an essential part of our transportation system, had to be kept on the road. Failure to provide tires for these vehicles would keep war workers from their factories and ultimately would mean a break-down in the whole transport system.

At first Mr. Eastman was unable to take comprehensive action on rubber-borne traffic problems. Subsequently and in cooperation with the Chairman of the Highway Traffic Advisory Committee of the War Department, he sponsored conservation of rubber-borne car equipment by promoting group riding, slower speeds, changes in traffic signals, and staggered hours for industry.

On December 11, 1941, the Office of Production Management stopped the sale, transfer, and delivery of new tires, and, on December 27, authorized the Office of Price Administration to ration automobile tires.

The rationing of tires involved administrative problems of vast proportions, chief among which was the creation of an organization capable of rationing commodities in communities throughout the country. The first step was taken on December 16 when State Governors were notified that it would be necessary to begin rationing on January 2 and that the rationing organization would be built around State defense councils. By December 19 outlines of the plan had been drawn: the Office of Price Administration would develop "policies, regulations, and necessary informational data" and distribute this information among the defense councils; the job of setting up community organizations would be handled by State defense councils; and local boards established by local defense councils would be responsible for seeing that tires were made available to persons entitled to them under regulations issued by the national office of OPA. By January 5, 1942, less than a month after the declaration of war, the organization had been developed sufficiently to permit sale of automobile tires under the rationing system. Monthly quotas were established for each State and county and eligibility lists issued to guide the tire rationing boards in distributing tires and


Chart 19. Transportation Activity.


tubes to the most essential users. Similar mechanisms were worked out for rationing of automobiles.

Before the tire and automobile rationing program had become well established, a second threat to inland transportation developed; enemy action against petroleum tankers created a gasoline shortage on the eastern seaboard. On May 15, 1942, an emergency gasoline rationing plan was put into effect on the eastern seaboard. Applications were filed and ration cards distributed through public schools. The system was admittedly crude and was designed as a stop-gap measure to reduce gasoline consumption pending the development of a coupon rationing system. It was not sufficiently flexible to permit "tailoring" of rations to individual needs. Educational campaigns did not completely eliminate evasion of the rationing regulations by the public and they were less successful in curtailing pleasure driving.

The relation between ODT and OPA became an important issue after the signing of an Executive order giving ODT authority over "all rubber-borne transportation facilities, including passenger cars, buses, taxicabs, and trucks."24 As OPA began to ration cars, tires, and gasoline, it was apparent that it was making decisions which affected "rubber-borne transportation facilities" but which also came within the jurisdiction of the ODT. The amount of gasoline allowed an owner of a truck fleet by OPA might not be sufficient to transport essential war freight. Similarly, there was no mechanism in the rationing system "to bring about rationalization of rubber-borne traffic." At the outset, therefore, gasoline, tires, and automobiles were rationed as commodities rather than as factors of transportation.

By action of WPB, May 2, 1942, OPA was directed to implement insofar as administratively practicable any policies or programs formulated by ODT. OPA, however, continued to develop its rationing plans; ODT moved slowly in formulating any transportation policy for passenger cars; and, as a result, transportation policy for which ODT was legally responsible was being fixed by OPA.

A survey made in the summer of 1942 of the Federal agencies concerned with the supply of local transportation facilities revealed the general impression that the Office of Defense Transportation had shown a lack of understanding of the full implications of the rubber shortage, had an inadequate staff to cope with its responsibilities, and had demonstrated a lack of imagination and energy in attacking the local transportation problem.

By June, however, mandatory gasoline rationing extending throughout the Nation was demanded by many in order to reduce consumption of rubber tires and maintain essential transportation facilities. A report of the Petroleum Industry War Council, made on May 27,


estimated that without additional rubber for automobile tires and without reduction of speed and mileage, the number of cars in use would decline to 9 million by the end of 1943 and to slightly over 1 million by the end of 1944. After thorough discussion of this situation, and of ways in which it might be solved, members of the War Production Board were of the opinion that Nation-wide compulsory rationing was the only solution. Pending further discussion of this measure, the Office of Price Administration was directed to move ahead as rapidly as possible with a more fully developed rationing system for the Eastern area.25

At meetings held in June and July, the President would not approve Nation-wide rationing of gasoline but suggested instead that a major conservation program covering tires and gasoline be instituted by means of an intensive public information campaign.

This campaign did not have the desired results, however, and by August the rubber supply situation had become so crucial that the President appointed a special committee to study the supply problem and to recommend action. On September 10, 1942, the Baruch Committee reported that the situation was so grave that "unless corrective measures are taken immediately this country will face both a military and civilian collapse". The Committee concluded that "gas rationing is the only way to save rubber." It recommended that a new Nation-wide rationing system of gasoline be devised so that the average annual mileage could be held to a maximum of 5,000 miles.

The importance of immediate action, stressed by the Baruch Committee, tended to resolve the question of OPA-ODT responsibility in favor of OPA. OPA local boards, established at first to ration automobile tires, comprised a field organization which could undertake the administration of a rationing system designed to limit individual car owners to essential mileage. OPA had acquired considerable experience in rationing and the "permanent" eastern area plan could be extended without difficulty. ODT, on the other hand, had no rationing experience and was just beginning to build up its field organization. Under these circumstances the job of administering the Nation-wide rationing plan was delegated to OPA. The problem of the relation between the ODT's rationalization policies and the OPA rationing program had yet to be solved.

Motor Transport

In the field of motor transport, the Office of Defense Transportation was given additional responsibilities by an Executive order of May 2, 1942, which directed it to "formulate measures to conserve


and assure maximum utilization of the existing supply of civilian transportation services dependent upon rubber, including the limitation of the use of rubber-borne transportation facilities in non-essential civilian activities, and regulation of the use or distribution of such transportation facilities among essential activities."26 This order, supplementing but not supplanting the rationing authority delegated to the Office of Price Administration by the War Production Board, was aimed to help a sick industry. Trucks were wearing out rapidly and new equipment was not being made. The operation of trucks under war rules was not always profitable.

The dispersed organization of the motor transport industry made unworkable the administration of a general and simplified policy of control uniformly applicable to all carriers. Many thousands of private and contract carriers were involved and they were comparatively unfamiliar with the operation of controls. At first it was hoped that limited supplies of vehicles, parts, tires, and gasoline could be conserved by issuance of general orders regulating mileage operated and loads carried. Reliance was placed upon voluntary cooperation of the industry and only a relatively small field staff was contemplated. It soon became evident, however, that an industry with over 4,000,000 private owners and 600,000 public carriers engaged in such varied activities could not be controlled successfully by any such blanket system of regulation.

The Office of Defense Transportation decided that necessary savings in tire mileage and in equipment use could be achieved only by a more flexible technique administered on a decentralized basis. It developed a plan for issuing to all commercial truck operators a Certificate of War Necessity which would be required in order to obtain gasoline, tires, parts, and other essential materials. The basic principle of the program was the elimination of waste through full loading of equipment and curtailment of unessential mileage. In reviewing the operations of these vehicles, ODT sought to eliminate such wasteful practices as daily delivery and "call-backsē. Observance of the 35-mile-an-hour speed limit was also made a condition for receiving a Certificate of Necessity. This ODT order was difficult to enforce since the local authorities failed to report violations except in rare cases. A survey of highway speeds showed widespread nonobservance of the order. Local war price and rationing boards were directed to issue gasoline coupons in accordance with mileage granted by ODT. The plan was applied first to the eastern gas rationing area, but later it was extended to the entire country. ODT had to increase greatly its field force to administer the certificates. In spite of this, the plan was inconvenient to small operators, and in 1944


ODT turned the work over to the OPA local boards. In applying the plan to farm vehicle operators, ODT relied upon the county war boards of the Department of Agriculture.

Water Transportation

The use of water transportation to supplement overloaded rail and highway facilities was an obvious way in which the transportation crisis could be alleviated. Iron ore traffic on the Great Lakes was given priority over grain and coal shipments with the result that during the 1942 season a record-breaking total of 92,000,000 tons of iron ore was moved from the Minnesota iron ranges to the steel mills on the southern shores of the lakes. While many barges on the country's rivers and canals were ideal at the time of Pearl Harbor, they were being used close to capacity 6 months later. The greatest exception was south-bound movement down the Ohio and Mississippi Rivers. Attempts to induce the Maritime Commission to use barges to transport steel southward were unsuccessful. The Commission refused to cooperate on the grounds that the barges were slow and their use would hold up the shipbuilding program.

ODT issued orders designed to increase shipment of ore at the expense of grain and steel shipments but WPB pressed for a general priority system. As in other fields, ODT shied away from using general priority powers for water transportation.

Our waterways carried only a small fraction of the freight that was moved during the first 9 months of the war. In addition to iron ore, oil, coal, sulphur, scrap iron, and heavy general merchandise were carried by water. At certain crucial centers, however, water transport constituted an important part of our surplus carrying capacity which enabled the Government ot meet war requirements.

Transportation Manpower

As far as manpower problems were concerned, the Office of Defense Transportation acted as a coordinating agency, bringing to bear whatever technical knowledge and economic data it possessed and enlisting the aid and cooperation of those Federal agencies responsible for the operating phases of the Government's manpower program. The Office with certain exceptions,27 did not operate transportation systems, nor did it regard itself as a labor recruiting agency, a training agency, or a mediator of labor disputes. It worked with the Federal agencies concerned with such matters, aiming not to duplicate the work of any of them. Thus, it kept the War Manpower Commission


informed regarding current over-all manpower requirements of transportation industries, it cooperated with Selective Service System to determine occupational deferment policies for essential occupations in the transportation industries, it tried to induce the transportation companies to take full advantage of the United States Employment Service and the Railroad Employment Service, and it facilitated the settlement of labor disputes by urging use of the Conciliation Service and by furnishing information and technical advice to the War Labor Board.

ODT encouraged transportation industries to adopt on a voluntary basis such personnel policies as would insure the maintenance of an adequate staff of employees. At the end of 1942 there were 2,700,000 Americans working in for-hire transportation jobs within the country--an increase of 200,000 over December 31, 1941--and turn-over was considerable, particularly among the poorly paid maintenance-of-way laborers. Both the railroad and the trucking industries formed joint labor management committees to consider, with representatives of the Office of Defense Transportation, not only manpower problems, but also problems of maximum utilization of materials and equipment. ODT helped influence the transportation industries and unions to open up jobs for women and Negroes. Women "motorettes" and "conductorettes" invaded the local transportation field. It encouraged the establishment of adequate training and upgrading programs. The lack of any direct labor representation in the Office was criticized in labor quarters while the lack of vigorous action against labor rules and practices which were wasteful of manpower was criticized in management circles. In this as in other fields, the Office of Defense Transportation did not disturb existing practices.

General Considerations

Any final estimate of the Office of Defense Transportation must take into account the limited nature of its jurisdiction of which Mr. Eastman was fully aware. He indicated that his No. 1 problem was to assure the carriers supplies for repairs and maintenance and "whatever new equipment and facilities may be necessary to meet the demands of an increasing traffic." He had to appear before the Requirements Committee of the War Production Board to plead for the critical materials needed by the transportation industries and later in 1942 his office became the claimant agency of domestic transportation for such materials. He made it clear that WPB would be responsible for a transportation break-down in case that the needs of the transportation industry for equipment and repairs were not met. In the spring of 1942 the War Production Board turned down the request for additional railway passenger cars and greatly curtailed the request for


freight cars and locomotives on the assumption that there would be a surplus of transportation capacity.

Other important transportation questions were outside the jurisdiction of the Office of Defense Transportation. Authority over rates and charges rested with either the Interstate Commerce Commission, the Civil Aeronautics Board, State, or municipal regulatory authorities, or the Office of Price Administration. The Interstate Commerce Commission also had broad emergency powers over both railroad-car service and motor-transport service. Mention has already been made of the responsibilities in the domestic transportation field of the armed services, the labor agencies, the Maritime Commission, the War Shipping Administration, the Petroleum Administrator for War, the Defense Housing Coordinator, the Department of Agriculture, and the Rubber Director. In describing the position of his agency, Mr. Eastman said:

It is, for example, the claimant agency of domestic transportation for critical materials before the War Production Board, for rubber before the Rubber Director, for gasoline before the Petroleum Administrator for War, and for coal before the Solid fuels Administrator. It has representatives on both the War Production Board and the War Manpower Commission. It can negotiate voluntary rate adjustments with the carriers and make representations as to rates before the regulatory authorities. On wages alone it has no chips in the game whatsoever. The whole set-up is, of course, far from perfect, but I do not criticise it on the ground that authority over transportation is somewhat divided. Matters such as critical materials, wages, prices, and manpower are of such general importance over the whole range of the war effort that they cannot wisely be left to individual treatment by commodities or services.28

The Government agencies charged with primary responsibility for transporting goods during the war were set up before or within 2 months after Pearl Harbor. This prompt action would not have been possible without the careful planning and consideration of the issues during the defense period. In fact, the shipbuilding program might have been delayed a whole year if it had started from scratch after December 7, 1941. Before Pearl Harbor, the President had decided not to establish an office of transport after the British model that combined control over domestic transportation and ocean shipping. He had about decided upon an emergency domestic transportation agency apart from the emergency production agency and apart from the established transportation regulatory agency. While considerable thought had been given to shipping priorities and shipping control, prewar plans were less definite in this field than in the domestic transportation field.

The War Powers Act enabled the President to transfer the necessary powers to establish the Office of Defense Transportation and the


War Shipping Administration. Both of these emergency agencies placed great emphasis upon cooperation with other Government agencies and with the transportation industries. Apparently, the theory was held that American private enterprise under suitable contract terms and with the necessary Government aid in securing critical materials could build all the ships needed to win the war, that private shipping companies under suitable charters and naval protection could operate these ships on any routes required by the grand war strategy, and that the private domestic carriers were fully capable of so pooling and utilizing their existing facilities with certain needed replacements that they would be able to handle the movement of men and goods needed to win the war. While these theories were challenged and more drastic measures were demanded, serious transportation break-downs were averted, even though narrowly. With certain curtailments of nonessential travel, the existing transportation equipment plus the newly built emergency ships met the requirements of a global war.


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1. U.S. Congress, House. Committee on Appropriations, Independent Offices Appropriation Bill for 1944. Hearings, . . . 78th Cong., 1st sess., p. 681.

2. Ibid., p. 699.

3. 55 Stat. 5-6.

4. WPB Digest of Minutes, June 30, 1942, p. 42. In January Admiral Land reported to Mr. Knudsen that delays were caused by (1) lack of steel, (2) strikes, (3) late delivery of cranes in new shipyards, (4) failure of valve manufacturers to produce valves and fittings, (5) late delivery of turbines and gears for standard ships, and (6) failure in main ship machinery delivery.

5. As measured by average lightweight tons per way-month, that is, the actual weight of the ship without cargo, fuel, or stores.

6. Senate Report No. 10, pt. 16, 78th Cong., 2d sess., p. 271.

7. WPB, Minutes, Feb. 17, 1942, and Feb. 23, 1942.

8. National Defense Advisory Commission, Defense, Feb. 18, 1941, vol. 2, p. 9.

9. The Red Sea charters were made between the shipping companies and the British Ministry of War Transport in April 1941, on the basis of rates approved by the Maritime Commission. As later events showed, the risks were not as great as anticipated. The Commission requested the companies to agree to a voluntary downward revision of rates. U.S. Congress. House. Committee on Merchant Marine and Fisheries. Red Sea Space Charters Rates. Hearings . . . 78th Cong., 1st sess., on H. Res, 52, p. 243. The Commission was criticized for not requisitioning the ships in 1941 after it was given the power of requisition. U.S. Congress. House. Committee on Appropriations. Independent Offices Appropriation Bill for 1944. Hearings . . . 78th Cong., 2d sess., pp. 754-757.

10. 55 Stat. 591.

11. Executive Order No. 8875, Aug. 28, 1941, 6 Federal Register 4181.

12. Executive Order No. 9054, Feb. 7, 1942, 7 Federal Register 837.

13. Senate Report No. 10, pt. 16, 78th Cong., 2d sess., p. 281.

14. Executive Order No. 9083, Feb. 28, 1942, 7 Federal Register 1609.

15. Executive Order No. 9198, July 11, 1942, 7 Federal Register 5383.

16. Activities of the NDAC Transportation Division, Sept. 11, 1941 (mimeo.).

17. Eastman, Joseph B., "Public Administration of Transportation under War Conditions," American Economic Review, March 1944, pt. 2, vol. 34, p. 91.

18. ODT General Order No. 1, Mar. 23, 1942.

19. ODT estimated that for periods May-December 1942, and for the calendar years 1943, 1944, and 1945, the average loading (tons) was over 9, where in 1941 it was 5.5.

20. ICC Service Order No. 95, Nov. 9, 1942, 7 Federal Register 9257.

21. ICC Service Order No. 99, Feb. 3, 1943, 8 Federal Register 1652. The Army requested exemption from some of the provisions of this act for its freight. This was granted by ODT Certificate of Preference and Priority in Transportation No. 2, dated Jan. 19, 1944. It marked a departure from ODT's policy of not using priorities.

22. In 1945, ODT felt obliged to issue a number of orders clamping down on facilities for unnecessary travel and uneconomic operation of railroad passenger equipment.

23. After July 20, 1943, joint action plans were put into effect under WPB Blanket Certificate No. 99.

24. Executive Order No. 9156, May 2, 1942, 7 Federal Register 3349.

25. WPB, Minutes, June 2, 1942.

26. Executive Order No. 9156, May 2, 1942, 7 Federal Register 3349.

27. Certain transportation properties were taken over and managed because of strike situations. They were: Toledo, Peoria & Western R.R.; American Railroad of Puerto Rico; Illinois Central R.R.

28. Eastman, Joseph B., op. cit., p. 89.

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