During the preparatory period, Wilson created a National Defense Council composed of key cabinet secretaries to plan production needs in the event of war. A civil advisory council, including representatives from labor, industry, banking, medicine and other areas, consulted the council. But as long as the US remained neutral, the men who ran these bodies felt no urgency to act, and the advice proved less effective. When the country finally joined the war in April 1917, Wilson scrapped the council for a new list of agencies, including food management, fuel management, rail administration, and critically the War Industries Board.
The War Industries Board’s job was to monitor and coordinate production and procurement not only for the US war effort, but also for the Allied Forces. Its creation was a historic step forward, a courageous attempt to bring modern thinking about planning and organization into a Herculean task. Due to the size of the challenge, the new board initially had problems: Some poorly thought-out regulations hindered the smooth functioning, and top employees quickly changed over. Then, in early 1918, Wilson asked Bernard Baruch, a financier who became a statesman, to head the board and described the position as “the general eye of all utility departments in the field of industry”.
Baruch had a kind of can-do spirit. As the son of Jewish immigrants, a graduate of City College and a man he made himself, he had made a fortune with shares. Wilson called him “Dr. Facts ”for his technocratic, data-driven approach to problem solving. (It was Baruch who probably shaped the aphorism that is usually attributed to Daniel Patrick Moynihan in a modified form: “Every man has the right to his own opinion, but no man has the right to be wrong in his facts.”) Cutting a Debonair With his pretty profile, thick hair, and elegant suits and ties, Baruch became known to the Americans through his appearances in newspapers and newsreels, as Anthony Fauci did today.
Baruch was a perfect product of the “progressive” ideology of the era – a term that did not mean today’s Whole Foods linkism, but a striving for order, efficiency, pragmatism and professionalism. He believed that it was necessary to impose rationality on the market economy production system, which, regardless of its peacetime virtues, was not up to the task of coordinating a war economy. Business and government cooperation – which Americans typically view as bad because they stifle competition – becomes beneficial or even necessary in a national emergency to ensure that the needs of individual companies do not take precedence over the collective good. Baruch was not hostile to business, but he picked up the gospel of competitive markets in favor of an organized, rationalized, nationalized approach to the manufacture and distribution of war material and goods.
Crucially, the advanced early 20th century ideology that Baruch advocated also emphasized the idea of a public good or national interest that is different from the compromises that competing interest groups have made. He believed in the idea of progressive statecraft and believed that learned, disinterested administrators might be above party political concerns to act in the interests of collective welfare. If the War Industries Board were to succeed, it would need such selfless, statesmanlike leadership.
When Baruch took over, the order was messy and slapdash. Some production areas were overloaded while others were underutilized. Government orders were also unevenly executed, with one agency overcrowded while others lacking their basic rates.
Under Baruch, the War Industries Board coordinated the functioning of the various companies that operate in the various economic sectors. It established simplified, standardized specifications for the goods needed, which should be quickly manufactured using new mass production techniques. The board set production levels and made decisions about which manufacturers should get which raw materials in which order – and where the end products should be delivered. Wilson biographer A. Scott Berg explained the decisions Baruch employees had to make. “Should a locomotive, for example, be sent overseas to transport soldiers to the front, or to South America to transport nitrates for bullets? Removing the supports from women’s corsets provided enough metal for two warships. “Overall, the work of the War Industries Board has been recognized Industrial production increased by around 20 percent.
Another problem was the control of prices. At the beginning of the war, purchases of American goods by the Allied powers had driven up prices. But when the United States itself intended to join the struggle, it offered against the Allies and drove up the prices of fuel, materials and goods even higher. If prices become too high, demand will theoretically lag and decrease again – but in times of war, such scruples disappear when demand becomes bottomless. It was up to the War Industries Board to keep this inflationary pressure under control. Baruch has not set prices, but has kept them low by reducing or eliminating competition for resources by centralizing the purchase of goods and resources. This meant that different agencies or actors would not offer the prices up. As governor of New York Andrew Cuomo explainedby pleading with the Trump administration to take command of the purchase and distribution of the necessary supplies: “This is not the right way, this is ad hoc, I compete with other countries, I offer prices to other countries. ” Unlike the Trump administration officials who are overly concerned about big business, Baruch rejected the arguments that private sector profits would suffer. The increase in production during the war, even at reduced prices, would enrich the company’s coffers, he rightly emphasized.
Americans who romanticized the old ideal of rugged individualism complained about the government’s intrusion into private sector decisions. Mark Sullivan, a crazy journalist who became a conservative columnist, wrote hyperbolically: “Every businessman was deprived of control of his factory or business, every housewife gave up control of his table, every farmer was only allowed to use his wheat to that of the Government sell fixed price. ”However, this complaint turned out to be hollow. As the leading historian of the home front of World War I, David M. Kennedy, found, the main problem of the War Industries Board was on the contrary: the thinness of its real power. It persuaded companies to act, but had little ability to command them. It was based on the voluntary business spirit, which did not always arise. As a result, the board was less efficient than it could have been, and much of the material it manufactured reached the troops too late to make a difference in the war that ended in late 1918. “The war thus showed the disgusting truth. This voluntary service has its dangers. ” Kennedy closed in his classic work, Over here.
However, if the War Industries Board failed to mobilize companies as effectively as possible, it clearly showed that only the government, not the private sector, has both the authority and the size to control and coordinate industrial mobilization at the national level . In the late 1930s, when the geopolitical situation in Europe deteriorated again, far-sighted officials from the Franklin D. Roosevelt government made it a priority to examine the state of the country’s national resources and production capacity in the event of another war. By 1939, more than two years before Pearl Harbor, a new War Resources Board was in operation – a successful descendant of Baruch’s. With the Korean War, this lesson became more permanent with the transition of the Defense Production Act of 1950.
The United States has long had the natural resources and labor to create wealth. What it discovered in World War I was the ability to coordinate its industry to address not only national but also global emergencies. The expectation that the federal government will take command of the industry and guide it in the production and distribution of urgently needed goods does not mean a radical usurpation of the functions of the private sector. Rather, it is a centuries-old American practice that, as Bernard Baruch knew, boils down to heads of government acting in the public interest as they should at terrible times.