America Converts to a War Economy


By SIR CLIVE BAILLIEU, British Representative on the Combined Raw Materials Board and Head, British Raw Materials Mission, Washington, D. C.

Delivered before the Institute of Public Affairs, University of Virginia, Charlottesville, Va., July 6, 1942

Vital Speeches of the Day, Vol. VIII, pp. 696-700.

MARSHAL FOCH, the great French warrior-statesman, who led the Allies to final Victory in 1918, insisted: "That War is the supreme conflict in the domain of moral force". This was the core of his military philosophy. It was the foundation of his teaching. He claimed only one merit—that of never despairing.

I recall this fundamental truth and this merit, for they have a bearing upon the situation of the United Nations today, as well as upon the subject upon which I have been invited to address you.

Before I attempt to give you a brief summary of what has happened in Britain during the war, let us stop for a moment and enquire—Why has it happened?

Why have Britishers willingly and without argument permitted their traditional liberties to be jettisoned and their family life to be broken up? Why have they suffered without anything more than a good natured grumble, to be told what they may eat, what they may drink and what they may wear? Why has this stupendous transformation in the economic and social structure of the British Isles been effected without acute internal disorder and social strife?

The answer to my mind, is stark and clear. It is because in Britain, as in each of the United Nations, this is a People's War. It is because in Britain, as in each of the United Nations, there is an underlying moral unity which transcends all divisions of class and creed and color. It is because in Britain, as in each of the United Nations, the ultimate test of Government is not the power of the ruler but the happiness of the ruled. It is because in Britain, as in the United Nations, the people believe in the simple virtues, in the simple ways of life, in honesty, in fair dealing and friendliness, in the right to live their own lives and to permit other people to live theirs, in that feeling of security which springs from charters of liberty broad based upon the people's will. It is because the peoples of Britain realize all this is at stake in this war, that we have witnessed a spiritual resurgence not seen since Elizabethan times. It is because this is so that, when Poland was attacked by Germany, all doubts and hesitations were dissolved, and Britain stood, by the people's will, four-square to the challenge to human freedom. To us the challenge and implications of the onslaught on Poland were as clear and inescapable as they were to you following the treacherous Japanese attack on Pearl Harbor. Overnight in Britain,as in this country, the spiritual and moral foundations of belief were raised to a different and to a higher plane. It is this, which explains why, in the little Island of Britain so much has been accomplished in such a short space of time.

The spiritual conversion of the people of Britain preceded, and then inspired and sustained the great conversion of its man-power, machinery, and material to the single purpose of winning the war.

The results of this tremendous conversion show themselves at one end in the size of the Armed Forces and in the ever-growing stream of munitions. What are the results on the other side—what is the price that we have paid? Materially, it is shown in a great reduction in the standard of living: spiritually, it is shown in the tremendous disturbance in our traditional ways of doing business, the almost complete sacrifice of economic freedom both by industrial leaders and by workers.

I can only touch briefly on the main facts about the reduced standard of living. Almost all the major foods are strictly rationed—about 20 cents' worth of meat a week, during last winter only 1 egg a month, and so forth. Gasoline is now confined only to essential journeys—there is no basic ration. Clothes are rationed by a point system which gives a man only one suit, two or three shirts and two sets of underwear a year.

I shall say a little more later about the limitation of supplies which controls the available amounts of almost everything else on which money can be spent.

These are things anyone can see. But of almost more importance are the changes in our attitudes towards our businesses and our jobs, changes which, I submit, could only have been possible with the most complete cooperation of the people as a whole. Business leaders have agreed to the entire elimination of certain types of business, such as importing and merchandising: to the large scale conversion of their plants to war work: and to the concentration of the production of their ordinary lines in a small number of plants. All this means submitting to a degree of regimentation and Government control which would have been abhorrent in peace.

The workers for their part have agreed to a system which they would certainly have described as industrial slavery in normal times. They cannot leave their jobs, and indeedhave to work wherever they are directed even if this means the breaking up of their home life: women as well as men are called up, assigned to war work, and work long hours prescribed for them. Workers are moved from light to heavy jobs, from better to worse paid jobs, and it has all been done with their full agreement and with virtually no industrial disputes.

Perhaps the best gauge of what has been achieved is the fact that in peace time the people of Britain spent four-fifths of their income on themselves and one-fifth on their Government. Today we spend two-fifths on ourselves and three-fifths to fight the war.

This involved working out scientifically how much food and clothing and shelter and services would hold the home front together, and then cutting ourselves to that basic standard. The resources thus set free are immediately turned to the production of munitions.

The story of our all-out conversion to a war economy began in 1939, when we skimmed the cream off our civilian structure. We went first after the industries which obviously could be most quickly converted to war production. The automotive industry is a good example, just at it is in the United States. After the war began all export trade production of automobiles for civilian use was stopped and plants were generally adapted to the manufacture of aircraft and a wide variety of parts. By the summer of 1940 the conversion of the automobile plants had been largely completed. We had found that something like 85 per cent of the tools that made autos could be adapted to making aeroplanes. A good many people in Britain did not believe it could be done. I recall that you had the same dispute here. There is no such word as "CAN'T" in a wartime vocabulary.

At the other end consider for a moment what we in Britain call, "The Battle of the Biscuit". What can the lowly biscuit do to win a war? There were 360 types of biscuits made in Britain. Manufacturers in South Wales competed for the markets in Scotland, and Scottish brands competed in South Wales. You can see that the biscuit business founded by King Alfred had come a long way. And then the Ministry of Food staged a biscuit blitzkrieg. When the battle was over there were, instead of 360 types, only 20 types. These were the ones that required the least sugar and flour and labor, and they were being made in the most efficient plants. Then the Ministry of War Transport moved in on the biscuit business. Long, wasteful, crosshauls and counter-crosshauls were forbidden. Each maker had to stick to his own territory. The result of this drive was a saving in transport alone amounting to 12 million ton miles a year. Twelve million tons of war materials can now be transported one mile simply because common sense was applied to the biscuit business.

This little story illustrates how deeply you must delve into your way of life in order to throw your full weight into the war.

These are only two examples. All of our heavy industries and our metal-working industries were converted to war manufacture and out of them has come a mounting flood of munitions.

Meanwhile, shortages of raw materials had automatically reduced production of most civilian goods. But the reduction was not large enough. And so in June 1940, we began serious attack on civilian consumption. We estimated the essential requirements for a long list of products such as clothing, carpets, cutlery and furniture. Then we issued Limitation of Supplies Orders which slashed production of these products down to percentages ranging between zero and 50 per cent. If it was a useless luxury, it waseliminated. If it was an essential product it was cut to 10 per cent, or 15 per cent, or whatever volume we thought the nation must have in order to continue to work and fight. We reduced the production of clothing by 50 per cent.

We completely prohibited the manufacture of a long list of products such as furnishing fabrics, vacuum cleaners, refrigerators, lawn-mowers, washing machines, radios, wallpaper, and paper handkerchiefs. We limited the production of such essential things as sheets, carpets, linoleums, and wooden furniture, cutlery, glassware, and towels to percentages ranging between 10 to 20 per cent.

This policy resulted in large savings in raw materials and labor, but we discovered that it was not efficient. All of the blanket makers, for example, were running at 30/35 per cent of capacity. This was wasteful for large areas of floor space, thousands of machines and tens of thousands of workers were idle many hours a week. And so, in March 1941, Captain Oliver Lyttelton, who is now Minister of Production and then was President of the Board of Trade, devised a scheme known as Concentration of Industry. The Government called together the manufacturers and said:

"You are working far below capacity now. We cannot permit that to go on; we hope that you yourselves will get together on a concentration programme, but if you don't we'll step in and do it for you. You must follow these general rules. The largest and most efficient plants should be released for conversion to war production. You should close those plants which are situated in critical industrial areas where there are shortages of labor, housing, transport and electrical power. You should concentrate production in plants located in areas where such shortages are not so serious. The plants left in operation should have a capacity of only enough to produce the quota for your industry, plus a small margin of capacity to take care of emergency requirements."

We did not stop there. We were determined that the concentration scheme would not be used to stimulate the rise of monopolies at the expense of the companies which converted to war production. The companies remaining in business were required to pay a percentage of their profits to the companies which closed down, sufficient to cover carrying charges. The companies remaining in business were required either to manufacture a Victory model which would be anonymous or manufacture the brand product of their closed competition as well as their own brand product. In this way we have seen to it that the reconversion of our economic front after the war will be accomplished with as little suffering as possible.

What have been the results of these two schemes, Limitation of Supplies followed by Concentration of Industry? In a group of 30 typical industries there were 1,000,000 workers employed. Today there are approximately 250,000. The other 750,000 are working in war plants. The saving in factory space has been just as important, for a total of 52,000,000 square feet have been released for war work.

I think that the way in which we use that space may be of special interest. Before the war we had planned a network of large special purpose war plants, or shadow factories as they were called. We began building them. Then came Dunkirk. We lost just about all the first-class weapons we had. There was not time to go on building new plants, nor could we afford the materials and the labor. And so we made an inventory of all factory and storage space in the United Kingdom and began allocating it to war production. We had just about run out of factory space when Concentration came along, and I can tell you that those 52,000,000 square feet have been a Godsend.

No one, not even the Army or Navy, can build a newplant, storage hall, or even an addition to a plant unless the Controller of Factory and Storage Space issues a certificate saying that he cannot supply some sort of space that will serve the purpose. Recently the Navy wanted to build 5,000,000 square feet of storage depot space. The controller said, "No." Today the Naval stores are lodged in abandoned sheds, barns, mines and quarries. Not only have labor and materials been saved but the stores actually are safer because they have been dispersed in areas less subject to the risks of air attack.

The Controller aims at holding 3,000,000 square feet of factory space in reserve, scattered strategically in industrial areas. When a factory is badly blitzed the equipment and plant which can be salvaged are moved into a building by the Controller, and they get on with the job.

It is interesting to contrast the methods we have had to employ in the development of tank production with those in use here. The organization of our tank industry is not nearly so efficient as is your system of great tank arsenals, but you must remember that a great arsenal such as the Chrysler Tank Arsenal would not be very efficient in Britain after the Germans had located it. Chrysler has concentrated his main production and assembly lines in one huge factory. It is a masterpiece of industrial efficiency. It is the supreme application of American mass production technique to the manufacture of one of the most vital instruments of modern war.

Now in Britain you have a very different picture. Our arsenal is made up of 6,000 shops and garages. There are two parallel production lines, although one cannot see them, For example, there are two little shops making all the washers, two others making the bolts, and so on. The little parts flow to the sub-assembly plants which may have been shoe factories, and the sub-assemblies flow to final assembly sheds. If one of the little shops back along the line is knocked out by a bomb, the other one making the same part goes all out for a few days or weeks until its partner can be re-established. Does this system work?

I cannot give you our tank production in detail. But let us say that in August 1940, we were producing one particular type of tank at an annual rate of X. Then in February 1941, we were producing X every four months, and in December 1941, we were producing X every two months. Today we are doing even better than that. So fast has production mounted that in 1941 we were able to send 3,000 British tanks to the fighting fronts, in addition to equipping the home tank divisions. During that year we imported only 200.

There are many dramatic examples of conversion of plants to making war goods. I will cite only a few typical examples:

The aluminum hollow-ware industry is now making bombs, aircraft shrouds and cowlings, aircraft tanks and parts, machine tools, hurricane lamps, and many other war products.

Insect powder manufacturers are making jigs and tools. Biscuit manufacturers are doing general machining work. Brewery equipment manufacturers are machining parts for aircraft and bombs. Gas stove manufacturers are building aircraft assemblies such as wings and rear fuselages. Even baby-carriage makers are in the war. They do tubular work, pressing and general machining. Spectacle makers are making heater ducts, cable ducts and cabin windows. Ticket-issuing machinery makers are building flying controls, rudder bar controls and small assemblies. The piano maker builds navigators' tables, small accurate wooden parts, wooden press tools and wooden jigs. Hair-waving equipment makers are now machining aircraft parts. Tobacco plants build jigs, tools and fixtures. Bacon slicing machine makers now build the parts for aeroplanes.

But perhaps one of the most interesting facts is that the makers of children's toys no longer build toy soldiers and toy guns—they make Vickers machine guns.

We are working long hours. Men work 55 to 70 hours a week, and women, 5 1/2 millions of them, work 48 to 55 hours. The time lost through strikes since the outbreak of war has averaged less than one hour per worker per year. There are 33 millions of us between the ages of 14 and 65 that includes the lame, the halt and the blind, and the millions of housewives who have many children. Of those 33 millions, 22 millions are working full time in the war effort. We have had to dig so deep for man-power that 77 1/2 per cent of the boys and 67 1/2 per cent of the girls between the ages of 14 and 17 are working in the factories and the fields. After the last war, Kipling wrote this bitter epitaph for a battery which ran out of ammunition:

"If any mourn us in the workshop, say

We died because the shift kept holiday".

There are no holidays in our hearts because we, the people, have demanded all of these things. We, the people, are on the march.

The conversion of a Nation to all-out war requires controls, but we have tried to limit these to the basic fundamentals of production. These can be conveniently summarized as follows:

First, Control of Raw Materials. Upon the outbreak of war the Government froze all stocks of raw materials. It bought up all supplies of those materials which were in short supply, believing that there would be leakage and; waste unless the Government were the sole owner and distributor of them. Regulations regarding the less scarce materials are less strict, but we stay ahead of the game to the best of our ability, and tighten the controls before serious trouble arises.

Second, Control of Machine Tools. The Government directs the production and distribution of all new machine tools, the redistribution of all used machine tools, and the rebuilding and redistribution of worn-out tools. It has the power—and uses it—to seize any tool not being used efficiently in essential production and place it in a plant where it is needed.

Third, Control of Plant Facilities. I have touched on this earlier in my story. Briefly, all existing plant space and all new construction is controlled by the Government.

Fourth, Control of Man-power. Every man and woman is subject to the draft to work or fight. In essential industries they are frozen in their jobs. They cannot be fired, nor can they quit.

Fifth, Control of Transport. We view transport as one continuous operation, including ships, harbours, canals, railroads and highways. The Ministry of War Transport controls them all, the Ministry of Snipping and the Ministry of Transport having been united under one head.

A nation at war must actively operate these five controls if it is to mobilize fully its resources for war. These controls are the instruments by which the living, pulsing lifeblood of the national economy is geared to the supreme need of total war. With them, we have achieved a rate of production equal to that of Germany and which has only recently been passed by your own. The time will come when your rate will be three times what ours is today. That will be truly magnificent and, as we all know, it calls for heavy sacrifices today and will call for many more. Because with you, as with us, this is a people's war, we cannot doubt that they will be made.

I mention these facts of production because I believe that only if we both know the whole story about each other can we build that mutual understanding and respect which is the foundation of Victory.

And this leads me to consider for a moment the important development during the last six months in the integration of our common effort over the whole field of Production and Supply. There have, as you know, been set to work a series of Combined Boards charged with the responsibility of dealing with and using to the best advantage of the United Nations, the combined resources of the U. S. and the British Commonwealth, acting in consultation with others of the United Nations.

In the field of Supply, there is the Combined Production and Resources Board: the Combined Food Board; the Combined Raw Materials Board.

In the field of Transportation there is the Combined Shipping Board.

In the Military field there is the Combined Chiefs of Staff and the Combined Munitions and Adjustment Board.

Through these Boards the National effort of the U. S. and British Commonwealth will be gradually fused into one mighty pattern covering the whole field of War production and supply, allocation and transportation, designed to meet the strategical plans agreed upon by their respective governments.

From this comradeship of war, therefore, we are deriving an unique experience and elaborate machinery which may well prove of inestimable value to the world in the immediate post-war phase.

This machinery is in itself an expression of our current need and itself derives from the clear resolves of our two peoples that we shall wage total war without stint or without limit.

But if this or other machinery adapted to our needs is to operate effectively in the post-war world, then the American and British peoples must avoid in war-making the same kind of mistake which we did in peace. We stayed aloof from each other on problems affecting the chances of war. We lived in a world of illusion. We failed to see that what we called peace was an uneasy armistice. We failed to take steps together or in time to guard ourselves against the coming storm.

Now, united in purpose and in action as never before, dedicated to a supreme effort to achieve final victory over the forces of evil and hatred, let us not overlook our duty, during the struggle, to think how we are to plan a better and more stable world. This cannot be done on the morrow of Victory. We shall run grave risks if we fail to learn by the past. In this, our respective Governments have shown wisdom and courage in the Land-Lease Agreement made in February.

This provides that the final settlement of Lend-Lease shall not be allowed to disrupt international commerce but shall be such as to improve world-wide economic relations. It then goes on to state the intermediate steps that must be taken if this ultimate objective is to be achieved. They are far reaching, consisting as they do of domestic and international measures by agreement between Governments to expand production, employment, exchange, and consumption, the elimination of discrimination and the reduction of tariffs and other trade barriers. To agree on general aims of this kind during a war is enough to justify calling the Agreement an historic document. But the final paragraph goes further and provides for discussions to start on an early date on the specific means of attaining the ends. The carrying on of such discussions during the war will be even more epoch-making than the signing of the Agreement itself.

It should be noted that this Agreement is carefully drafted to avoid creating the impression that the United Kingdom and the United States are creating a bloc exclusive of the rest of the world. At every possible stage other like-minded Nations are to be invited to participate in the concerted measures for achieving the ultimate end.

Our Governments have here given us a lead in thinking about post-war problems. Two points arise—

(1) Unless we do so clearly, we may have to resort to opportunism in dealing with these problems.

(2) We must know our post-war objectives in order to understand fully the significance of what we do during the war.

Thinking of post-war problems does not mean making blue prints. We can merely state the broad objectives of policy.

Take, for example, the many controls over commerce and industry of which I have given some examples. The removal of them constitutes a problem in many cases as great as, if not greater than, the problem of establishing them. This alone makes a difficult transitional period after the war inevitable, which will only be orderly if the dropping of "controls" is itself controlled, i.e., consciously directed. We may not have to set up controls to eliminate the controls but we must think intelligently about:

(1) Adapting machinery of control set up for war purposes for dealing with the problems of the transition to peace purposes;

(2) The speed at which the war-time controls are to be relaxed. The same spirit of cooperation between the Nations shown during the war must continue after the war if chaos is to be avoided.

We have seen the price which we paid for not acting together nor in time. We have seen that with a common purpose we can endure, we can welcome, those sacrifices in our way of thinking and of living which are the price of victory. Let us ensure that our thinking and our planning in the post-war world is conceived in positive terms of human progress, and that we firmly reject the defeatist, defensive philosophies which have plagued and stricken the world in the twentieth century.

Let us recall, in this centre of learning, that is such an unique memorial to his wisdom and beneficence, Jefferson's profound trust in the people. "The people", he said, "are the only sure reliance for the preservation of our liberty."

From the people—from their staunchness and their faith—derives the preponderant moral force from which a resounding and overwhelming military triumph will be won for the United Nations.

If, as Foch taught, war is the supreme conflict in the domain of moral force, then a peace, which safeguards the elementary rights of the people, represents the supreme achievement of mankind. But such a peace will call for a courage, and constancy, and a faith even transcending that which unites and inspires us in these days of trial.

It will call for the vision, the understanding, the selflessness which inspired the recent address of Vice-President Wallace.

If we are to emerge from this slough of despond we must, as Emerson taught, hitch our wagon to a star. We must give a chance to Carl Sandberg's "Moonshooters"—

"And who plucked marvels
of industry and science
out of unexpected corners
unless it was the moon shooters
taking their chances
out in the great sky of the unknown?
who but they have held to a hope
poverty and the poor shall go
and the struggle of man for possessions
of music and craft and personal worth
lifted above the hog-trough level
above the animal dictate:
"Do this or go hungry?"

The practical men told us Russia would collapse in six weeks—they forgot that Russia is a Nation of moon shooters. The practical men said China would fall in 1937—they forgot that China is a Nation of moon shooters. The practical men said Hitler would march down Piccadilly in September 1940—and our youth took to the airand shot the moon. The practical men called it fantastic when your President, with quiet confidence, told the world ] you would build 60,000 planes in 1942—they forgot that 130 millions of you are moon shooters born and bred.

I see the overwhelming machine and material resources of this country being harnessed as a mighty instrument of retributive justice and power to carry this People's war to final Victory.

And so, whilst we strive and sweat and toil, let us not forget that for which we fight—let us remember the lessons of the past—let us cleave to our dreams and highly! resolve that we will go forward together to the end— A PEOPLE'S PEACE.