War Production Board Minutes

[Minutes of the Planning Committee of the War Production Board] [From the U.S. Government Publishing Office, www.gpo.gov]

CIVILIAN PRODUCTION ADMINISTRATION BUREAU OF DEMOBILIZATION MINUTES of the Planning Committee of the War Production Board Historical Reports on War Administration Documentary Publication No. 5 War Production Board CIVILIAN PRODUCTION ADMINISTRATION • John D. Small, Administrator BUREAU OF DEMOBILIZATION G. Lyle Belsley, Director James W. Fesler, War Production Board Historian MINUTES of the Planning Committee of the War Production Board February 20, 1942, to April 1, 1943 Historical Reports on War Administration : War Production Board Documentary Publication No. 5 UNITED STATES GOVERNMENT PRINTING OFFICE • WASHINGTON : 1946 HISTORICAL REPORTS ON WAR ADMINISTRATION: WAR PRODUCTION BOARD Documentary Publication Series No. 1. Minutes of the Advisory Commission to the Council of National Defense No. 2. Minutes of the Council of the Office of Production Management No. 3. Minutes of the Supply Priorities and Allocations Board No. 4. Minutes of the War Production Board No. 5. Minutes of the Planning Committee of the War Production Board FOREWORD When the War Production Board succeeded the Office of Production Management in January 1942, one of the major organizational changes effected by Chairman Donald M. Nelson was the establishment of a Planning Committee. The Committee, free of operating responsibilities, was charged with submitting to the Chairman of the Board plans, procedures, and information helpful to the planned development and realization of the war production program; recommendations of plans and policies for maintaining proper balance among elements of the war production program and for attaining the fullest and most effective use of war production resources; and reports and recommendations regarding policies for overcoming potential obstacles to full realization of the war production program. This assignment of functions was formalized on March 3, 1942 by General Administrative Order No. 22 (which is reproduced in the appendix to this volume). As a result of a reorganization of the War Production Board, the Planning Committee, among other units, was transferred on February 16, 1943, to the direction and supervision of Executive Vice Chairman Charles E. Wilson, and on March 19, 1943, to the direction and supervision of Vice Chairman Ralph J. Cordiner. On April 1, the Committee held its final meeting, and shortly thereafter the members submitted their resignations individually to the War Production Board Chairman. Early in May action was initiated to consolidate the work of the Planning Committee with that of the Statistics Division and the Office of Progress Reports. This consolidation was formally effected on June 29, 1943, when the Executive Vice Chairman abolished the Planning Committee and established the Bureau of Planning and Statistics. The Planning Committee initially had three members: Robert R. Nathan as Chairman, Thomas C. Blaisdell, Jr., and Fred Searls, Jr. On December 30, 1942, Marion H. Hedges was appointed an additional member. Associated with the Committee were Edward T. Dickinson, Jr., Executive Director from March 15, 1942, and James W. Fesler, Acting Secretary and, after September 15, 1942, Executive Secretary. The Committee’s staff, under the Executive Director, consisted of the Program Analysis and Research Section, the Planning Coordination Section, and the Current Planning Problems Section, respectively headed by Simon Kuznets, Thomas W. Wilson, Jr., and Matthew Fox. The minutes of the Planning Committee are reproduced here in the form in which they were prepared by the Executive Secretary and approved by the Chairman of the Committee. The shift from Roman to Arabic numbering of meetings, conformably to a policy of the Executive Secretary of the War Production Board (who directed the central secretariat for the Board’s major policy committees, including the Planning Committee), has been retained in this publication in order to avoid disturbance of cross-references in the body of the minutes. The formal recommendations adopted by the Committee are reproduced in full or in part in the appendix to this volume. Minor typographical errors in the recommendations have been corrected by the editors, who have also supplied appropriate notes to indicate the necessary omission of portions of the more lengthy and less significant recommendations. The’minutes were prepared for publication under the supervision of James W. Fesler, War Production Board Historian, by Henry E. Edmunds, Chief, and Samuel B. Marley, Jr., and Marie C. Stark, Archivists, Historical Records Section, Civilian Production Administration. ui TABLE OF CONTENTS Page Foreword ………………………………………………. ii Minutes of Meetings Number Date I……………………… February 20, 1942 ………………………… 1 II…………………….. February 23, 1942 ………………………… 3 III……………………. February 26, 1942 ………………………… 6 IV ……………………. March 2, 1942 ………………………… 8 V …………………….. March 3, 1942 ……………………….. 11 VI ……………………. March 6, 1942 ……………………….. 12 VII …………………… March 10, 1942 ……………………….. 15 VIII ………………….. March 11, 1942 ……………………….. 17 IX ……………………. March 13, 1942 ……………………….. 17 X …………………….. March 16, 1942 ……………………….. 18 XI ……………………. March 19, 1942 ……………………….. 21 XII …………………… March 20, 1942 ……………………….. 22 XIII ………………….. March 23, 1942 ……………………….. 25 XIV …………………… March 25, 1942 ……………………….. 28 XV ……………………. March 27, 1942 ……………………….. 29 XVI …………………… March 31, 1942 ……………………….. 31 XVII ………………….. April 1, 1942 ……………………….. 32 XVIII …………………. April 2, 1942 ……………………….. 33 XIX …………………… April 3, 1942 ……………………….. 34 XX ……………………. April 6, 1942 ……………………….. 36 XXI …………………… April 7, 1942 ……………………….. 38 XXII ………………….. April 8, 1942 ……………………….. 40 XXIII …………………. April 13, 1942 ……………………….. 42 XXIV ………………….. April 14, 1942 ……………………….. 45 XXV …………………… April 18, 1942 ……………………….. 46 XXVI ………………….. April 20, 1942 ……………………….. 47 XXVII …………………. April 22, 1942 ……………………….. 48 XXVIII ………………… April 23, 1942 ……………………….. 50 XXIX ………………….. May 2, 1942 ……………………….. 52 XXX …………………… May 5, 1942 ……………………….. 53 XXXI ………………….. May 6, 1942 ……………………….. 54 XXXII …………………. May 12, 1942 ……………………….. 55 XXXIII ………………… May 13, 1942 ……………………….. 56 XXXIV………………….. May 14, 1942 ……………………….. 57 XXXV…………………… May 15, 1942 ……………………….. 57 XXXVI………………….. May 27, 1942 ……………………….. 58 XXXVII…………………. May 28, 1942 ……………………….. 60 XXXVIII ……………….. June 8, 1942 ……………………….. 61 XXXIX………………….. June 9, 1942 ……………………….. 62 XL ……………………. June 10, 1942 ……………………….. 63 XLI …………………… June 26, 1942 ……………………….. 66 XLII ………………….. June 30, 1942 ……………………….. 68 XLIII………………….. July 1, 1942 ……………………….. 70 XLIV…………………… July 7, 1942 ……………………….. 72 XLV……………………. July 9, 1942 ……………………….. 75 XLVI…………………… July 14, 1942 ……………………….. 77 XLVII …………………. July 23, 1942 ……………………….. 79 XLVIII ………………… July 29, 1942 ……………………….. 80 XLIX ………………….. July 30, 1942 ……………………….. 81 50…………………….. August 7, 1942 ……………………….. 82 51 ……………………. August 13, 1942 ……………………….. 84 52 ……………………. August 20, 1942 ……………………….. 85 53 ……………………. August 27, 1942 ……………………….. 86 54 ……………………. September 3, 1942 ……………………….. 88 55 ……………………. September 17, 1942 ……………………….. 90 56 ……………………. September 24, 1942 ……………………….. 91 57 ……………………. October 8, 1942 ……………………….. 92 58 ……………………. October 15, 1942 ……………………….. 93 59 ……………………. October 22, 1942 ……………………….. 95 60 ……………………. October 29, 1942 ……………………….. 96 61 ……………………. November 5, 1942 ……………………….. 98 62 ……………………. November 12, 1942 ……………………….. 99 63 ……………………. November 19, 1942 ………………………. 101 64 ……………………. December 3, 1942 ………………………. 101 65 ……………………. December 10, 1942 ………………………. 104 66 ……………………. December 17, 1942 ………………………. 105 67 ……………………. December 31, 1942 ………………………. 107 68 ……………………. January 7, 1943 ………………………. 109 69 ……………………. January 22, 1943 ………………………. 111 70 ……………………. January 28, 1943 ………………………. 113 71 ……………………. February 10, 1943 ………………………. 115 72 ……………………. February 18, 1943 ………………………. 117 73 ……………………. February 22, 1943 ………………………. 118 74 ……………………. February 25, 1943 ………………………. 118 75 ……………………. March 4, 1943 ………………………. 120 76 ……………………. March 11, 1943 ………………………. 121 77 ……………………. March 18, 1943 ………………………. 122 78 ……………………. March 25, 1943 ………………………. 123 79 ……………………. April 1, 1943 ………………………. 124 Appendix General Administrative Order No. 22 …………………………. 125 Recommendations …………………………………………………… 125 Index ……………………………………………………………. 173 VJ FEBRUARY 20, 1942 MEETING I Present: Committee Members: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr. Mr. Frederick Searls, Jr. Staff: Mr. James W. Fesler, Acting Secretary

Organization of the Planning Committee The Chairman introduced as documents an organization chart of the War Production Board (Document 1), and the press release announcing the establishment of the Planning Committee (Document 2). He stated that originally it had been suggested that the Committee be composed of five or seven members, who would devote only part of their time to the Committee. As the situation developed, however, it was decided to have a committee of three members, who would act full time and carry on only such other responsibilities as are related to the production program. However, some latitude in this matter is essential because of special circumstances. The Chairman pointed out that Mr. Blaisdell will continue his work with the National Resources Planning Board, particularly as it relates to the national income ; that Mr. Searls will remain on the staff of the Ordnance Department of the War Department ; and that the Chairman is to serve as Assistant Director of Progress Reports of the War Production Board. The members were of the view that, particularly in the early period of the Planning Committee, they should devote almost full time to the planning work. The Chairman proposed that the preparation of the minutes and related work of the Committee be performed by the Office of the Executive Secretary of the War Production Board, and he stated that the Executive Secretary has agreed to undertake this responsibility if the Committee should so desire. Upon motion duly made, it was agreed without objection that: The Office of the Executive Secretary of the War Production Board will prepare the minutes of the Committee, and perform such related work as the Committee may assign to it. As a result of the reduction of the size of the Committee from that originally contemplated, the suggestion has been made that the Committee should establish an advisory council to assist it in its work. Mr. Searls suggested that as it is impossible to anticipate fully how the work of the Committee will develop, and as there is some danger of giving the public a false impression as to the extent to which the advisory groups will be active, it would be unwise to establish a full-fledged advisory council at this time. Mr. Blaisdell suggested that it might be well to have a panel of consultants, who would be selected as needed. Upon motion duly made it was agreed without objection that: The Committee will not at this time designate an advisory group of consultants, but will appoint consultants from time to time as the need arises. In view of the fact that the work of the Planning Committee will often involve an attempt to assemble information from a number of sources, there was general agreement that a staff would be essential. The Chairman expressed the view that the staff should be kept as small as possible. There was general agreement that duplication of the work of other statistical and research units of the War Production Board should be avoided and that the task of preparing detailed analyses of problems should be assigned to the Division of Statistics, Office of Progress Reports, National Resources Planning Board, Bureau of Mines, and similar agencies already well equipped to furnish basic data. The Chairman stated that, although the staff will remain small, the Committee should not be hesitant about drawing from statistical units, operating officials, and other organizations and persons, full information required for the work of the Planning Committee. Thé Chairman undertook to investigate the persons suggested for possible inclusion on the staff, and also agreed to designate one member of the staff to maintain contact with outside officials and citizens who desire tb submit proposals to the Planning Committee.
Functions of the Committee The Chairman discussed the general scope of the Committee’s work. The Chairman of the War Production Board in announcing the establishment of the Committee said that the job of the Committee “is to look ahead and spot problems that we will be running into six months from now, and develop proposals to solve those problems; it will also work on matters of more immediate, day-to-day concern and 1 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE formulate plans for action. I expect the Board to be alert, tough-minded and realistic.” The Chairman of the Committee emphasized the fact that by reason of its broad assignment of functions and its direct attachment to the Executive Office of the Chairman of the Board, the Committee bears a heavy responsibility for anticipating difficulties in the munitions program, and for advising the Chairman of the Board with respect to policies that will aid in the avoidance of break-downs. The Chairman of the War Production Board has asked that the Committee, at an early date, give particular attention to three problems: (1) The review of the total munitions program in terms of the balance among its constituent parts and the relation of direct military requirements to indirect military needs, essential civilian demands, and the total national economy; (2) the relation of the shipping situation to the presently planned munitions program ; and (3) the airplane program in terms of the feasibility of its total goal of 60,000 planes in 1942, the adequacy of the flow of raw materials, and the extent of utilization of aircraft industry facilities The Chairman explained that the first assignment, review of the total munitions program, is an extremely difficult task and one that requires continuing study. He reviewed the historical development of present estimates for the munitions program. The objectives of the President’s War Munitions Program were originally developed on the basis of a consolidated balance sheet of American, British, and Canadian inventories and production. He stated that the goal thus developed was for an expenditure of between 140 and 150 billion dollars by September 1943. The Chairman introduced an analysis of the “Feasibility of the Victory Program” (Document 3), translating the program into dollars, raw materials, labor supply, and relation to the total national income. On the basis of the analysis, the conclusion was reached that in 1942 out of a total national income of 105 to 110 billion dollars, the United States could produce 40 billion dollars worth of munitions and war construction and that in 1943, out of a total national income of about 125 billion dollars, the nation could produce 60 billion dollars worth of munitions and war construction. The munitions figures are exclusive of pay and subsistence items, which will probably total 7 billion dollars for 1942, and 10 billion dollars for 1943. . In December 1941, it was estimated that 27 billion dollars worth of munitions production was scheduled for 1942. An additional 8 billion dollars would be required for completing the needs of a 3.6 million man army. This total of 35 billion dollars planned expenditure for 1942 came well within the 40 billion dollar estimate of munitions productive capacity, but since December sharp increases in the Lend-Lease, merchant ship, naval construction, and plant facilities programs have raised 1942 schedules to a total of 47 billion dollars Although the 1942 goal is thus higher than the estimates of probable munitions production, the Chairman of the War Production Board has determined that every effort should be exerted to meet this higher goal. The Chairman stated that the Planning Committee has been asked to review the itemized objectives of the War Munitions Program and analyze their significance in terms of production. Mr. Blaisdell emphasized the importance of analyzing the munitions program not merely in terms of its direct implications, but also in terms of its implications for indirect defense and essential civilian needs, and particularly in terms of its place in the total national economy. The second problem to which the Committee was asked to give its attention in the near future is that of shipping, particularly as it relates to the objectives of the munitions program. The question has been raised, the Chairman pointed out, as to the feasibility of setting high production goals of tanks and equipment for a very large ground Army, if shipping facilities are not going to be adequate to transport the equipment and troops to overseas battle fronts. It was suggested that a number of officials of this Government and Allied Governments are giving attention to the shipping problem, and that it would be wise for the Planning Committee to consult with them in order to avoid duplication. The Chairman agreed to ask Mr. David E. Scoll, Assistant to the War Shipping Administrator, to appear in person at the next meeting of the Planning Committee to report on current studies with respect to the shipping situation. The Chairman stated that in dealing with the third immediate assignment of the Committee, that of the aircraft program, a considerable amount of preliminary investigation would have to be conducted by the staff of the Committee, and that the Committee would necessarily have to delve into somewhat detailed problems of the flow of materials, employment of man power, and similar phases of the program.
Specific Problems Deserving Committee Consideration The. Committee discussed a number of specific problems as illustrative of the type of subject to which the Planning Committee might give attention in the future. Defects in basic approaches to the munitions production program were outlined. Mr. Blaisdell stressed the importance of defining production goals as rates of production, rather than simply as grand totals. Mr. Searls observed that some determinations of military requirements are based on exaggerated estimates unrelated to productive capacity or to other segments of the requirements picture. He also suggested that the planning 2 FEBRUARY 20 AND 23, 1942 function of the Committee will be rendered difficult by the instability of estimates of requirements. The Chairman suggested that the Planning Committee review the scrap steel situation with a view to presenting a plan to the Chairman of the War Production Board for drastic improvement of the situation. Mr. Blaisdell suggested that the planning approach should characterize the work of the industrial branches of the War Production Board. The branch chiefs should be required to develop programs for their respective sectors of the war production effort, and should coordinate these programs with the total picture. Mr. Blaisdell further urged that for effective implementation of planning it is necessary to insist that policy decisions by higher operating officials must be promptly executed by their subordinates, even though the subordinates may disappprove of the decisions or plan to submit the issues involved for reconsideration at a later time. He expressed the view that the Committee might recommend to the Chairman of the War Production Board the issuance of an order to branch chiefs emphasizing the importance of program development and of prompt execution of policy decisions. Mr. Blaisdell suggested that the Committee inquire into the critical housing situation in shipbuilding centers and agreed to prepare a report to the Committee on this subject. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING II FEBRUARY 23, 1942 Present: Members: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr. Mr. Fred Searls, Jr. Staff: Mr. James W. Fesler, Acting Secretary By Invitation: Mr. David E. Scoll, Executive Officer, Combined Shipping Adjustment Board Mr. Lewis Douglas, Advisor to the Administrator, War Shipping Administration Mr. Carl W. Flesher, Acting Director, Construction Division, United States Maritime Commission Approval of Previous Minutes The minutes of the meeting held on February 20, 1942, were approved.
Merchant Shipping Requirements Messrs. Douglas, Scoll, and Flesher appeared in person to discuss merchant shipping requirements and the ship contruction program. The Chairman explained that the Planning Committee is reviewing the merchant shipping situation in order to determine the extent to which shortage of cargo space is a critical limitation upon the whole munitions program. He pointed out that there is a close relation between available cargo-shipping facilities and the possible size of American Expeditionary Forces. In the last war for every soldier transported abroad, 7.9 tons of cargo space were required to transport equipment and supplies. Major General Brehon B. Somervell, Assistant Chief of Staff, War Department, assumes that in the present war the corresponding figure is at least 10 tons of cargo space for each soldier. Mr. Flesher expressed the view that General Somervell’s assumption substantially underestimates the need for vast quantities of cargo shipments to support expeditionary forces, particularly because of the present war’s emphasis on tanks, planes, and ammunition, as well as on other items of military equipment. Mr. Scoll presented a chart (Document 4) showing for each month in 1942 the merchant shipping required to transport all exports and imports now planned by the United States. He called attention to the fact that the estimates refer to the space required for cargo only, not to that for men, and that only ships of over 5,000 tons dead weight capacity are included in the calculations. The chart takes into account the number of ships available, the capacity of the ships, and the length of the voyages to which they would be assigned. In the month of February, the merchant ships required are: Army, 126; Navy, 59; Archangel Route, 96; Red Sea Service, 109; India and Burma Service, 56; Persian Gulf Service, 32; Western Hemisphere, 100; and South Africa, west coast of Africa, and east coast of South America, 165. These estimated requirements have been correlated with the expected availability of American-owned ships and foreign flag ships now under the quasicontrol of the United States. For the months of March, April, May, and June, it is clear that the shipping needs exceed the available shipping space. Revision of the stated requirements for these months has, therefore, become essential. The Army 3 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE and Navy are currently preparing a recommendation as to possible adjustments of their shipping requirements. The Maritime Commission, in consultation with other interested agencies, plans , to reduce from 176 to 85 the number of ships assigned to the routes between the United States and South Africa, the west coast of Africa^ and the east coast of South America. The following assumptions underlie this reduction: (1) British ships will be available to meet South African shipping needs; (2) American exports of coal to, and imports of manganese from, South Africa will’be reduced; (3) American imports, of bauxite from South America will be reduced; (4) the United States will cease exporting to the west coast of South America, but will continue to import Chilean nitrate and copper by having ships returning from Australia put in at west coast ports for cargoes there available; and (5) partial compensation for the reduction in ships available for the South American trade is in sight if the South American countries will press into use their approximately 35 ships confiscated from the Axis countries. Mr. Searls emphasized the importance of coordinating American and British shipping operations, citing as an example of lack of coordination the shipping of copper from Africa to Great Britain via the United States. Mr. Scoll summarized the 1942 shipping situation as one that reveals a tremendous shortage of shipping space for exports and a tremendous excess of shipping space for imports. This excess of space for imports means that the problem of obtaining adequate shipping space for the importation of strategic materials is no longer critical. The heavy demand for space in out-bound vessels arises because the United States is the primary supplier of finished military items required in. the theaters of war by the forces of the United Nations. Mr. Scoll explained that the British are, in contrast to the United States, hard-pressed for shipping space to carry their imports, but in a satisfactory situation with respect to space for exports. Some apprehension has been felt by the British that this situation, coupled with our shipping position, might induce us to emphasize shipments of raw materials to Great Britain to the practical exclusion of shipments of finished military items. Mr. Flesher suggested that a policy of concentrating on raw materials in shipments to Great Britain would ensure full utilization of British productive facilities, and would correspondingly reduce the pressure on our own facilities. Mr. Searls suggested that, while no wholesale transplanting of British machine tools would be feasible, the possibility of our importing some of those idle tools should not be ignored. Mr. Douglas emphasized the fact that the American merchant shipping situation cannot be regarded as satisfactory. He stated that the United States has available only about 21 million tons of merchant shipping as contrasted with the approximately 26 million tons available in the last war. Even these figures inadequately present the relatively more difficult situation of American shipping in the present war, as the voyages to the theaters of war are now materially longer than they were in World War I, and the proportion of supplies and equipment required for a given number of soldiers has greatly increased. Mr. Douglas and Mr. Scoll emphasized the difficulty of developing accurate estimates of shipping requirements and shipping availability. A large number of assumptions have been necessary relating to such questions as: The losses of shipping to be anticipated; the speed of voyages, particularly under a convoy system; the proportional amount of supply and equipment required per soldier in a foreign theater of war; the continued availability of foreign flag ships; the adaptability of ships built for ordinary commercial cargoes to the heavier and larger items of military equipment; and the probable time required for unloading and reloading at foreign ports, many of which are at present poorly equipped. Mr. Douglas added that until very recently information as to the location and the cargoes of ships has not been available in a form satisfactory for use in the preparation of over-all estimates of shipping supply and requirements. It was further pointed out that the estimates give only a partial picture, as they are based on the current flow of exports and imports, and do not take into account the backlog of goods awaiting shipment. Mr. Scoll stated that considerable attention is being given to the problem of more effective utilization of available ships, and that particular emphasis is being placed on substitution of barges and small vessels for large vessels now in use on short routes, thus releasing the large vessels for use on the longer voyages. The Chairman suggested that a chart projecting shipping requirements and probable supply be prepared for the year 1943. The Chairman emphasized that this is particularly important at present as the 1943 objectives of the whole munitions program are currently being reviewed. Mr. Douglas and Mr. Scoll agreed that a chart, covering both British and American supply and requirements, should be prepared by the Combined Shipping Adjustment Board. Upon motion duly made, it was agreed without objection that: The Combined Shipping Adjustment Board is requested to prepare a statement showing shipping requirements and available shipping facilities of the United States and Great Britain for the year 1943.
Merchant Shipbuilding Program Mr. Flesher stated that the present ship construe- 4 FEBRUARY 23, 1942 tion program calls for completion in 1942 of 7,410,-000 tons of merchant shipping of all types. Of the total scheduled production, 2,030,000 tons are being privately built, and 5,380,000 tons are being built by the Maritime Commission. It is particularly important to keep this in mind in developing objectives for 1943 construction, as the task of the Maritime Commission will be increased far out of proportion to the net increase of the total program. Mr. Flesher stated that the 1942 objective cannot be achieved unless drastic steps are taken to make materials available for the merchant-ship construction program. He reported that the Maritime Commission program is being substantially impeded by the naval shipbuilding program, which has the advantage of higher priority rating. He introduced a memorandum of the Navy Department dated December 17, 1941 (Document 5), assigning an A-l-a preference rating for materials required in 1942 for naval shipbuilding and an AA rating for battleships and aircraft carriers in certain cases. He also presented a letter (Document 6) from Rear Admiral H. L. Vickery, Member, United States Maritime Commission, dated January 2, 1942, requesting that the shipbuilding program of the Maritime Commission be placed on a parity with that of the Navy Department. Mr. Flesher pointed out that prior to December 17, the two shipbuilding programs were on a parity. He also reported that the Maritime Commission has not even been able to obtain an AA preference rating for the conversion to Navy use of 28 C-3 ships, even though the Bureau of Ships, Navy Department, concurred in this proposal. A two-month delay may well be the result of this inability to expedite conversion of these ships so as to move them off the ways as rapidly as possible. Mr. Flesher pointed out that these 28 vessels, since they are being converted for naval use, are not included in the Maritime Commission figures as accomplishments that can be counted toward the 1942 goal of merchant shipping tonnage. Mr. Blaisdell stated that favorable priority rating alone would not solve the merchant-ship construction program, as ratings do not ensure deliveries of needed materials. Even allocations are often inadequate, because the War Production Board allocates capacity rather than actual production. Mr. Flesher reported, that deliveries of steel plates are 165,000 tons behind the request of the Maritime Commission during the past year. For March 1942, the Commission has requested 270,000 tons of steel plate but the Iron and Steel Branch of the War Production Board has informed it that only 200,000 tons will be made available. The Chairman stated that the Requirements Committee is making a complete study of the steel-plate problem and that this study will be available to the Planning Committee. Mr. Flesher declared that the priority and allocation situation is going to be particularly important when the Maritime Commission undertakes to build additional ways and obtain the cranes, machine tools, and other equipment necessary to provide facilities for the production of 10 to 15 million tons of merchant shipping in 1943. It was emphasized that the whole program of naval and merchant shipbuilding must be fully scheduled, with the deliveries of required materials, tools, and other equipment guaranteed. The view was expressed that the Army and Navy are building an unusual number of small ships, and that even with full recognition of the desperate need for escort vessels, one may question the present large program in this field. The Chairman urged that a resurvey of shipping requirements be undertaken, and Mr. Scoll stated that a preliminary report could be furnished within a few days. Accordingly, upon motion duly made, it was agreed without objection that: The United States Maritime Commission and the War Shipping Administration are requested to prepare a report to the Planning Committee reviewing shipping requirements. At this point Messrs. Douglas, Scoll, and Flesher left the meeting. The Acting Secretary presented for the information of the Committee an excerpt from the minutes of the meeting of the War Production Board held February 17, 1942 (Document 7).
Staff There was discussion of the need for prompt recruitment of a small staff to give attention to the problems currently of concern to the Committee. Upon motion duly made, it was agreed without objection that: The Chairman is authorized to select a staff representative of the Committee for the analysis of the merchant-shipping program. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman 5 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE MEETING III FEBRUARY 26, 1942 Present: Members: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr. Mr. Fred Searls, Jr. Staff: Mr. James W. Fesler, Acting Secretary Approval of Previous Minutes The minutes of the meeting held on February 23, 1942, were approved.
Merchant Shipping The Chairman referred to the previous discussion of the shipping situation (See Minutes, February 23, 1942, Sections 1 and 2), and requested that the Committee determine upon an appropriate procedure for future study of this problem. He reported that, at the request of the Chairman of the War Production Board, the Director of Progress Reports has already initiated an inquiry into shipping problems and has arranged to have the Bureau of Foreign and Domestic Commerce undertake on his behalf an independent appraisal of the shipping situation. The Director of Progress Reports has expressed willingness to have the collaboration of the Planning Committee in the direction and use of this study. Accordingly, the Chairman and Mr. Blaisdell held a preliminary conference with representatives of the Bureau of Foreign and Domestic Commerce, and obtained an outline of the proposed study (Document 11). After further discussion, it was agreed without objection that: The Planning Committee requests that the Bureau of Foreign and Domestic Commerce, Department of Commerce, survey and report on the supply of and demand for merchant shipping and the efficiency of utilization of available shipping facilities. The Chairman stated that the shipbuilding program will be analyzed by the Office of Progress Reports and that the results of this study will be available to the Planning Committee. Mr. Searls urged the importance of careful review of the efficiency with which available cargo space is being utilized, and suggested that Mr. Edward Riley, General Manager, General Motors Overseas Transportation, is well equipped to make such an analysis. It was suggested that the study might be most effective if Mr. Riley were a member of the staff of the War Shipping Administration rather than a member of the staff of the Planning Committee. The Chairman reported that Mr. Lewis Douglas, Advisor to the War Shipping Administrator, has indicated that such an arrangement would be satisfactory. Upon motion duly made, it was agreed without objection that: The Planning Committee recommends that Mr. Edward Riley, General Manager, General Motors Overseas Transportation, be invited to join the staff of the War Shipping Administration for the purpose of surveying and preparing recommendations regarding space utilization on merchant ships. The Committee requests that such reports and recommendations as Mr. Riley may prepare be made available to the Committee. Mr. Blaisdell inquired as to the possibility of duplication between the studies of the Bureau of Foreign and Domestic Commerce and the studies of Mr. Riley. The Chairman expressed the opinion that the approaches of the two studies will probably be quite different, Mr. Riley being concerned primarily with the specialized problem of determining the most effective form in which war supplies can be shipped, and the Bureau of Foreign and Domestic Commerce being concerned principally with the routing of cargo vessels and the wastage of merchant shipping through shipment of cargoes of non-essential goods.
Integration of the War Munitions Program The Chairman called attention to the memorandum of Mr. Searls commenting on the feasibility of the War Munitions Program (Document 8). Mr. Searls pointed out that the study, “Feasibility of the Victory Program” (Document 3) concludes that the Victory Program can be three-fourths achieved by September 30 1943 and can be completed by the Spring of 1944. However, the principal ground for this conclusion appears to be that the munitions program will consume a not unreasonable proportion of the national income expected for the years of 1942 and 1943. Mr. Searls expressed the opinion that availability of finances has only a permissive effect on the time of completion of the war munitions program and that the actual results of such a program are definable only in terms of actual appropriations, contracts let, availability of specific materials, plant facilities, tools, and production efficiency. Mr. Nathan agreed that the dollar basis of measurement is not wholly satisfactory, but pointed out that there is no other common denominator for the whole program. He suggested that there are advantages in taking an over-all view in terms of the relation of munitions production in a particular period to the total goods and services capable of production by the national economy in the same period. “National income,” he explained, being the equivalent of 6 FEBRUARY 26, 1942 total production, defines the outside limits of production for both military and civilian purposes. Thus, the national income is not used in a financial sense but rather as a production concept. The 1942 program calls for a 52 billion dollar expenditure on munitions and construction, as contrasted with the 40 billion dollars deemed practicable in the memorandum on “Feasibility of the Victory Program.” The estimates for 1943 recently submitted call for an expenditure of 102 billion dollars on war production and construction alone, which will obviously be impossible in an economy producing a total of perhaps 120 billion dollars worth of goods and services. There was general agreement that the war munitions program must be analyzed item by item, as well as in terms of its over-all relation to the total production of the country. The Chairman noted, as an example of the interrelations of the two approaches, that the building of additional plants may be criticized on either of two grounds: (1) That they would raise the schedule of munitions production to an impossible percentage of the total national production, or (2) that the building of particular plants would be a waste of construction materials, as the specific raw materials or tools that would be required for operation of those plants would not be available. Mr. Searls suggested that the Planning Committee can make its most significant contribution by analyzing individual items in the program and using the results of each such analysis to assist in reappraising the objectives in other sectors of the program. He pointed out as an example that only 65 percent of the ammunition objective can be realized. The immediate implication of this fact is that additional ammunition facilities should not be built since machine tools and other factors present insuperable problems. From this direct implication, the Committee should move ahead to the fact that materials hitherto hypothetically ear-marked for the ammunition objective would thus be released for use in other parts of the war munitions program. The Chairman announced that he has asked the Statistics Division to translate 1942 and 1943 military objectives into terms of raw materials so that this analysis may be available to the Committee. He stated that an important defect in analyses of earlier programs has been the failure to translate objectives into terms of additional facilities that are needed, which, he observed, presents much more difficult problems than the translation of finished-goods figures into estimates of raw materials. The Acting Secretary introduced excerpts from the minutes of the meeting of the War Production Board held January 27, 1942, and February 10, 1942 (Documents 9 and 10), relating to the war munitions program.
Utilization of Existing Productive Facilities Mr. Searls observed that the plant facilities of the country have not been fully utilized for war munitions and essential civilian production. He suggested that the solution lies along the line of either persuading larger companies to subcontract, or having the armed services farm out orders through their district offices and make necessary provision for increased tolerances, higher prices, and larger inspec-tional forces. Mr. Searls stated that the principal cause for not using idle machine tools in plants is the unwillingness of the Government to pay the necessary price to make production with these less economical tools reasonably compensatory. The Chairman inquired as to whether telescoping delivery dates and multiplying orders on the books of larger plants would have the effect of forcing these plants to subcontract and thus bring idle machine tools capacity into operation. Mr. Searls observed that often these policies, instead of forcing subcontracting, stimulate the large plants to order more new machine tools, even though the deliveries of such tools are certain to be long delayed. Mr. Nathan suggested that there should be a critical scrutiny of every request for new machine tools and that every possibility of utilizing old tools should first be exhausted. Mr. Blaisdell said that the problem must be approached from an engineering standpoint and that the goal must be maximum utilization of tools that will do the job. He expressed the opinion that cost must be a secondary consideration. Mr. Searls suggested that the tax program will contribute materially to the correction of such overpayments as may result from positive attempts to encourage the bringing of less economical tools into war production. Mr. Searls pointed out that decentralization of authority to place contracts is essential if the smaller plants, less well-known to Washington officials, are to be fully utilized. It was suggested that although a secondary check already exists in the careful control of the distribution of new machine tools, an incentive system may be necessary to ensure that field officials actually place munitions contracts in the plants with idle machine tools. Upon motion duly made, it was agreed without objection that: Mr. Searls will prepare a report to the Committee on methods of contract negotiation, criteria governing the award of contracts, and controls over the distribution of new machine tools. Mr. Blaisdell suggested that if negotiation of contracts is to be more widely practiced, the number of finance and tax field officials will need to be increased in order that the public may be adequately protected against profiteering. It was pointed out that, because of substantial time lags, regular tax audits would not provide adequate controls. Mr. Searls presented for the information of the Committee a report “Subcontracting in Canada’s Munitions Industries” (Document 12) issued by the Industry and Subcontract Coordination Branch of the Canadian Department of Munitions and Supply. 7 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE
Aircraft Program The Chairman stated that the President’s 1942 objective of 60,000 airplanes is divided as follows: 11,300 long-range heavy and medium bombers; 11,-000 light dive, torpedo, and scout bombers; 16,000 pursuit planes ; 6,700 observation and transport planes; and 15,000 trainers. The Chairman felt that the Aircraft Branch is skeptical of the possibility of achieving the President’s objective unless -10,212 spares can be counted with 51,061 combat planes in gauging fulfillment of the objective. It was noted that the War Production Board at its meeting on February 17, 1942, agreed that in the President’s objective “the term 60,000 planes refers to 60,000 complete units and does not include necessary spares as the equivalent of complete units.” It is, therefore, necessary for the Chairman of the War Production Board to determine whether or not the quota defined by the President can be achieved. There was general agreement that an integrated report should be prepared before the Committee requests officials to appear personally for discussion of the problem. It was suggested that the advice of persons not directly connected with the aircraft program should be obtained, and Mr. Searls recommended that the Chairman and Mr. Blaisdell consult with Mr. C. R. Fairey, Director General of the British Air Commission. The Chairman undertook to arrange for such a conference.
Proposed Agenda Items Mr. Blaisdell raised the question of the availability of materials for railroad maintenance and equipment pursuant to decisions of the Supply Priorities and Allocations Board, and he also noted that requests have been filed for a program for 1943. The Acting Secretary undertook to furnish the Committee with information regarding the history and present status of consideration of railroad requirements. Mr. Searls suggested that the Committee should not dissipate its energies through review of a number of specific subjects that are already being considered elsewhere. The Chairman observed that the railroad-equipment problem may be regarded simply as an illustration of the lack of sound planning of the whole curtailment and conversion problem. He felt that each industry branch has a different concept of the proper policy to be followed. Mr. Blaisdell referred to the proposed location of new aluminum plants and observed that, because of its inadequate staff and lack of control over the location of privately financed plants, the Plant Site Board is not able to exercise as full a supervision over plant sites as appears necessary for proper planning of power supply, labor supply, and protection against enemy attack. The Chairman suggested that the Committee may at a future meeting wish to consider the problem of utilizing workers’ intimate acquaintance with the production process as a source of suggestions for solution of production problems. He pointed out that stimulation of such suggestions would result in both practical ideas and improved worker morale. Mr. Searls stated that the problem of eliciting suggestions from workers is principally one of intra-plant scope, and that labor relations vary so much from plant to plant and are often in such delicate equilibrium, that the Planning Committee could probably not make a very effective contribution on the subject. The Chairman suggested that there is an inter-plant problem of effective cross-fertilization of ideas developed in individual plants through worker-suggestion systems. Mr. Blaisdell proposed that the Committee consider the subject of the work-day and the workweek. He pointed out that studies are available indicating, on the basis of current experience, the optimum working periods. The Chairman observed that, although superficially it would appear that the Committee should complete a thorough analysis of the war munitions program before turning to more specific questions, the pressure of particular dislocations in current effectuation of the program is so great that the Committee must give consideration both to the over-all analysis and to specific problems as they arise. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman Present: Members: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr. Mr. Fred Searls, Jr. Staff: Mr. James W. Fesler, Acting Secretary 8* MEETING IV MARCH 2, 1942 By Invitation: Mr. Simon Kuznets, Research Advisor, Industry Branch, Statistics Division, War Production Board (for discussion of item 3) Mr. Matthew Fox, Office of Progress Reports, War Production Board (for discussion of item 1) FEBRUARY 26 AND MARCH 2, 1942
Salvage Program Mr. Fox appeared in person to discuss his report (Document 15) on the proposed program for salvaging materials needed for war production. The Chairman explained that the interest of the Planning Committee m the salvage problem stems from the fact that a shortage of iron and steel scrap would prevent achievement of capacity production by the steel industry; Mr. Fox outlined the functions and organization of the Bureau of Industrial Conservation. The Bureau is responsible for directing dormant scrap into normal trade channels. The emphasis has been placed upon the Stimulation of voluntary, cooperative collection of scrap by such groups as the American Legion, Boy Scouts of America, junior chambers of commerce, and industry committees. The Bureau of Industrial Conservation has a very small staff, consisting of less than a dozen executives at Washington and 35 field officers. The Bureau intends to have a field headquarters in each state, which will be staffed by one official and one or two clerical employees. The principal defect in the salvage program has been the failure to organize effectively the actual collection of such scrap as is available. It is now proposed that the Bureau of Industrial Conservation, in collaboration with the Work Projects Administration, inaugurate an aggressive scrap collection program involving the collection of scrap on farms and in automobile graveyards, and the demolition of structures no longer in use. Employees of the Work Projects Administration are to visit every farm to collect such scrap as is made available on either a contributory or a sale basis. The Government, when buying such scrap, will pay 10 percent less than a scrap collector would pay, thus avoiding competition with the established commercial methods of collection. County agents will be asked to explain the program to farmers unwilling to release their scrap, and, if necessary in particular cases, the requisitioning power will be invoked. The Work Projects Administration will assemble the scrap at concentration points, from which sales will be made to scrap dealers on the condition that the scrap be processed and shipped to industrial plants within thirty days after the sale. The program is designed to draw from farms not only scrap iron and steel, but also all other metals and rubber. Paper, burlap, and rags are not included in this program. Demolition of abandoned bridges, mines, and similar structures will be the responsibility of the Work Projects Administration in all cases where sale of the scrap involved would not make the demolition a commercially profitable venture. The Bureau of Industrial Conservation will supervise this work, and assist in resolving related legal problems. A list of projects is being developed with the assistance of other governmental agencies familiar with the location of abandoned mines, oil wells, railroad and streetcar ways, and similar sources of scrap. As the farm and automobile-graveyard programs cannot produce enough scrap to maintain the steel industry at capacity operation, the importance of the demolition projects can hardly be over-emphasized. Mr. Searls inquired whether substantially higher price ceilings for scrap might not stimulate commercial collection of scrap sufficiently to result in scrap deliveries as great as those under the program of the Work Projects Administration and at a lower total cost to the Government. Mr. Blaisdell Suggested that a legitimate comparison of commercial collection and governmental collection of scrap would Necessitate translation of the relief wages into going wages. The Chairman expressed the opinion that the Government-sponsored system would probably be less expensive than would a commercial system stimulated by substantially higher ceiling prices, and emphasized particularly the difficulties in placing demolition projects on a commercial basis. Upon motion duly made, it was agreed without objection that: The Committee requests Mr. Matthew Fox, Office of Progress Reports, to prepare an analysis of the flow of scrap metal correlated with changes in scrap prices. Mr. Blaisdell urged the importance of an integrated, comprehensive scrap-collection program, and observed that preparation of such a program is the responsibility of the Bureau of Industrial Conservation. Mr. Blaisdell emphasized again his view that each industry branch and other organization unit with specific subject-matter assignments should be requested by the Chairman of the War Production Board to present a program for its industry or its cluster of functions. He suggested that the Planning Committee should stimulate such programming by operating branches and bureaus, arid should examine the individual programs in terms of consistency with other segments of the total program and in terms of adherence to fundamental principles of the War Production Board. The Chairman undertook to discuss with the Chairman of the War Production Board the proposal that industry branches and other organization units be directed to prepare programs for their industries and functions, such programs to be reviewed by the Planning Committee in its advisory capacity to the Chairman of the Board.
Merchant Shipping The Chairman reported that, pursuant to the decisions of the Committee (See Minutes, February 26, 1942, Item 1 ) he has designated the Bureau of Foreign and Domestic Commerce to prepare a report on the shipping situation and has suggested the appointment of Mr. Edward Riley to the staff of the’ War Shipping Administration. The Chairman also re 9 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE ported that the members of the Committee are to confer with representatives of the War Shipping Administration, the Bureau of Foreign and Domestic Commerce, and the Office of Progress Reports of the War Production Board to define more precisely the procedure to be followed in the collaborative study of the shipping situation within the next few days.
Integration of the War Munitions Program Mr. Kuznets appeared in person to make a preliminary report on the analysis of estimated military and naval requirements. The Chairman reviewed the history of the program, pointing out that early estimates of finished-goods requirements were based on the Industrial Mobilization Plan. The Plan gave inadequate recognition to requirements of airplanes, tanks, and motorized units, and posited an M-Day, which never materialized. In the procurement field relatively small-scale appropriations and foreign orders did not stimulate the development of broad, comprehensive plans for war production. It was only in March 1941, with the passage of the Lend-Lease Act and the Defense Aid Supplemental Appropriation Act, 1941, that the magnitude of the program was stepped up to sizeable portions. By the end of June, the program totaled 50 billion dollars. During the summer of 1941, the United States and Great Britain developed an international balance sheet focusing attention on the magnitude of the objectives. It was not until the fall of 1941 that the large-scale war munitions objectives assumed sufficient precision to permit appraisal in terms of a balanced program. The program has, therefore, been under consideration for approximately five months, and now comes before the Planning Committee with reference to the feasibility of the 1942 and 1943 objectives defined by the armed services. Mr. Kuznets suggested that there are two possible approaches to an appraisal of the military objectives. One is to arrive at a feasible military production estimate by determining the total production of finished articles of which the national economy is capable, and subtracting from this total the irreducible minimum of production required for civilian requirements. The second approach is to analyze qualitatively the specific military requirements as compared to the specific resources for production. Mr. Kuznets explained that the over-all quantitative approach should precede the categorical, qualitative analysis in order that the outer limits of total military requirements can be fixed. If the total military estimates are clearly not feasible in the framework of national productive capacity, the estimates should be returned to the armed services for downward revision prior to an attempt at qualitative analysis. The Chairman cautioned that downward revisions should be on a selective basis, and not on a uniform percentile basis. Mr. Kuznets indicated that a significant advantage of the quantitative approach is 10 that it makes possible a broad comparison of our war effort with that of nations having longer experience with war production problems. However, the measurement of the war effort by total percentage of one year’s national income can be misleading if allowances are not made for the extent to which in any one year a nation is drawing on its accumulated stocks as distinguished from its current output. Mr. Kuznets expressed the view that if proper account were taken of German draughts on her own and conquered nations’ stocks of goods, the percentage of German current output devoted to war production would be about forty percent as contrasted to the seventy percent of German national income often attributed to war production. Mr. Searls urged the importance of placing estimates of requirements on the realistic grounds of strategic needs and production possibilities. He suggested that at present merchant shipping appears to be the critical limitation on feasibility of the war munitions program, and that the stated objectives of the President and the armed services should be reappraised in terms of this particular bottleneck. Mr. Kuznets observed that there is no single bottleneck in a well-developed economic system, and expressed the fear that an appraisal of objectives based on any single limiting factor would, therefore, be misleading. Mr. Blaisdell emphasized the importance of starting with some definable factor in appraising the feasibility of the estimated program. The Chairman undertook to prepare an analysis of the military objectives stated in the President’s message to Congress on January 6, 1942. In preparing the qualitative analysis, Mr. Kuznets plans to translate, estimated military requirements into raw materials and industrial facilities. Although it is difficult to anticipate needs for new industrial facilities, particularly because of the impossibility of precisely estimating conversion possibilities, it is hoped that the translation of the military requirements in such terms will be possible. Upon motion duly made, it was agreed without objection that: Mr. Simon Kuznets, Research Advisor, Industry Branch, Statistics- Division, is requested to prepare a report for submission to the Planning Committee by March 12, 1942, on the feasibility of the war munitions program.
Aircraft Program Mr. Blaisdell reported the substance of a conference of the Chairman and himself with Mr. C. R. Fairey, Director General, British Air Commission, and Mr. F. W. Musson, Director of Programs and General, British Air Commission. The most pressing problems in the American aircraft production program were reported to be propellers and engines. The propeller problem is largely explained by the fact that estimates of spare propeller blades required had been increased very substantially. The suggestion MARCH 2 AND 3, 1942 was made by Mr. Fairey that the most important need is integration of the aircraft industry to ensure full use of facilities. More specifically it was proposed that cutting-tool pools be established in particular areas, that aggressive steps be taken to place poorly managed companies under good management, and that the power to place contracts and the power to supervise performance of the contract should be in the same hands. The Chairman stated that Messrs. Fairey and Musson expressed the opinion that the 1942 objective of 60,000 airplanes is not beyond the possibility of achievement, but emphasized the importance of concentrating responsibility for the elimination of obstacles to this program. It was suggested that the respective responsibilities of the War Production Board and the armed services need clarification with respect to responsibility for the avoidance or solution of difficulties in the production process. Mr. Searls said that delays in the translation of military programs into actual contracts have an even greater retarding effect than the particular production difficulties that are encountered after contracts are let. The Chairman observed that the program could be expedited if time limits were prescribed for the obligating of appropriated funds and if, at the contract placement stage, emphasis were placed upon maximum use of existing facilities through conversion and subcontracting. The Chairman undertook to prepare for consideration by the Committee, a draft memorandum on principles of procurement.
Labor Supply The Chairman observed that shortages of skilled labor may well prove to be the limiting factor on achievement of the war munitions program, and suggested that the Committee give consideration to this problem at an early meeting. The Chairman ¿mdertook to prepare, for consideration by the Committee, a memorandum on the labor supply problem. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING V MARCH Present: Members: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr. Mr. Fred Searls, Jr. Staff: Mr. James W. Fesler, Acting Secretary
Procurement The Chairman called attention to the fact that with the passage of the Fifth Supplemental National Defense Appropriation Act, 1942, the war munitions program will aggregate over 140 billion dollars. This means appropriations covering practically all requirements through 1942 and many beyond 1943. The commitment of the large amount of funds currently available must be done with care. He proposed that the Committee submit a memorandum to the Chairman of the War Production Board urging that certain principles to be followed in the placement of contracts obligating the funds newly available be emphasized. Mr. Searls expressed the view that most of the principles outlined by the Chairman are already well understood. The Chairman and Mr. Blaisdell felt that reemphasis of the principles would 686312—46—2 3, 1942 be a valuable stimulus to their more general observance in actual procurement. The Chairman proposed the principle that contracts calling for the construction of new plants should be accompanied by a justification that fully satisfies the representatives of the War Production Board as to the absolute need for these new plants and the impossibility of using existing plants for the purposes at hand. Mr. Searls inquired as to the location of responsibility for approval of plantconstruction projects. It was pointed out that at present each industrial branch is responsible for plant expansion within the industries assigned to it, and that branch officials are charged with the duty of ascertaining the views of other concerned divisions of the War Production Board. Mr. Searls observed that it is natural for the individual branch to .encourage expanded facilities for production of the materials or articles which it is expected to provide in ample quantities for the war munitions program. There was general agreement that a central review of all plant-construction projects is necessary, and that neither the Plant Site Board nor the Clearance Committee of the Bureau of Priorities is at present equipped to exercise such a review. The Chairman undertook to prepare a report for the Committee on present assignments of func 11 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE tions with respect to the authorization of new • plants. Mr. Searls suggested that the subject, control of new plant construction, is sufficiently important to deserve treatment in a special memorandum to the Chairman of the War Production Board, rather than as one of several items in a general memorandum on principles of procurement. The Chairman suggested as a second principle of procurement that supply contracts accompanied by requests for machine tools should only be approved if the request for new tools is thoroughly justified by evidence that existing tools and facilities are not available to produce the articles required under the contract. Mr. Searls pointed out that the Army and Navy Munitions Board is now allocating machine tools among the various supply arms and services, and that, under existing clearance procedures, the War Production Board has an opportunity to review critically demands for new tools in connection with all contracts of the armed services of a value of $1,000,000 or more and all contracts of the armed services of a lesser value that call for new machine tools of a value of as much as 20 percent of the total contract. He recommended that any memoran-dum to the Chairman of the War Production Board relating to the importance of justifying claims for new machine tools should indicate the already established control methods. The Chairman proposed as a third principle of procurement that no supply contract should be let for production beyond December 1943, unless this date would allow less than fifteen months of produc tion on the contract. He explained that there is a danger that the emphasis upon early obligation of the funds provided by the Fifth Supplemental National Defense Appropriation Act, 1942, will induce procurement officers to award contracts to facilities already engaged in war munitions production even though these facilities may be unable to promise delivery on the new contracts before 1944. He feels that it is important to stimulate procurement officers to. broaden the base of munitions production by bringing the less efficient plants and the older tools into the program and by converting plants at present engaged in production of civilian goods. Mr. Blaisdell, while acknowledging the importance of broadening the base of war munitions production, called attention to the importance of a balanced use of facilities so as to maintain the production of articles required to meet indirect defense and essential civilian requirements.
Railroad Equipment Program The Acting Secretary presented for the information of the Committee a memorandum (Document 13) describing recent directives relating to railroad equipment and maintenance, and a memorandum (Document 14) outlining the railroad equipment program proposed by the Office of Defense Transportation for the remaining months of 1942. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING VI MARCH 6, 1942 Mr. Mr. Mr. Mr. Present: Members: Robert R. Nathan, Chairman Thomas C. Blaisdell, Jr. Fred Searls, Jr. Staff: James W. Fesler, Acting Secretary Approval of Minutes The minutes of the meeting held on February 26 1942, were approved.
Toluol . referred to the discussion of toluol by the War Production Board (Document 16) and to the report on toluol submitted to the Board (Docu-ment 17). He pointed out that there is an assured available capacity for annual production of 135 million gallons of toluol and that this, plus capacity that avaiIabIe’ will bring capacity in sight to 165 million gallons. To meet 1943 fequire- ments, production of 300 million gallons will be necessary. The great bulk of the requirements are attributed to the TNT program. Mr. Searls explained that the production of toluol is closely linked to the refining of gasoline, with toluol largely dependent on the demand for gasoline, and expressed concern over the possibility that the reduced accessibility of the eastern market area may cause a reduction in gasoline production. Such an eventuality would reduce toluol production, and this reduction in turn would force a serious drop in TNT production. r . Mr. Searls stated that a tremendous reorientation of the refining industry will be required to meet this problem. He felt that because of the intricate price, transportation, and production problems involved, the detailed planning of this reorientation will necessarily fall very largely to the industry itself.. The: anti-trust laws, as presently interpreted were cited as possible deterrents to the intercompany collaboration required. Mr. Searls .raised 12 MARCH 3 AND 6. 1942 a question as to the appropriate Federal agencies to negotiate with refining companies with respect to toluol production, and introduced a description of the functions and organization of the Office of the Petroleum Coordinator for National Defense (Document 23). The Chairman pointed out that a number of gasoline refineries are not equipped to produce toluol, and noted that, in view of the reduced market for gasoline, the fundamental policy must be either to require such refineries to equip themselves for toluol extraction, or to confine gasoline production to the refineries that are now capable of extracting toluol. The Chairman undertook to arrange for further Committee consideration of the toluol problem, with the assistance of representatives of interested agencies.
Merchant Shipping The Chairman reported the substance of a conference on March 5, 1942, attended by: The Chairman and Messrs. Blaisdell and Searls; Mr. Stacy May, Director of Progress Reports, War Production Board; Mr. Thomas M. Woodward, Commissioner, United States Maritime Commission; Mr. David E. Scoll, Executive Officer, Combined Shipping Adjustment Board; Mr. Lewis Douglas, Advisor to the War Shipping Administrator; Mr. Joseph Meehan, Chief, Research and Statistics Division, Bureau of Foreign and Domestic Commerce; Mr. Charles A. R. Wardwell, Chief, Current Business Analysis Unit, Research and Statistics Division, Bureau of Foreign and Domestic Commerce; and Mr. James A. McCullough, Assistant Chief, National Economics Unit, Research and Statistics Division, Bureau of Foreign and Domestic Commerce. Mr. May recognized that the problem of merchant shipping is of primary concern to the Planning Committee, but reported that the Office of Progress Reports desires to continue its interest in the sudy and will do so through Mr. Nathan as Assistant Director of the Office of Progress Reports. Mr. Douglas emphasized the scarcity of data essential to a determination of requirements for, and supply and utilization of, merchant shipping. Upon the suggestion of Mr. Douglas it was agreed that: (1) The Bureau of Foreign and Domestic Commerce, on behalf of both the War Shipping Administration and the War Production Board, will analyze requirements for merchant shipping; (2) the War Shipping Administration will analyze the supply of merchant ships, and (3) the Bureau of Foreign and Domestic Commerce and the War Shipping Administrator will collaborate on preparation of a summary report. The Chairman reported that the members of the Planning Committee have designated Mr. Meehan as the representative of the Committee in preparation of the collaborative report on the shipping situation. The conference agreed that a preliminary report will be submitted to the Planning Committee about March 27, 1942. Following this report by the Chairman Mr. Searls pointed out the importance of an early determination of the probable assignment of munitions to the various theaters of war during thé next several months, in order that merchant ship requirements can be effectively planned.
Procurement The Committee resumed consideration of principles of procurement proposed for incorporation in a memorandum to the Chairman of the War Production Board (See Minutes, March 3, 1942, Item 1). The Chairman called attention to Directive No. 2 (Document 24) issued by the Chairman of the War Production Board on March 3, 1942, which orders that all military supply contracts are to be placed by negotiation instead of by competitive bidding unless the Director of Purchases specifically authorizes the use of competitive bids. In placing contracts, primary emphasis is to be put upon speed of delivery. Contracts for standard and semistandard articles relatively simple to make are to be placed with smaller concerns so that the facilities of the larger, more fully equipped concerns may remain available for production of more difficult and complicated items. Contracts are to be placed with the concerns which need the smallest quantities of new machinery and equipment for performance of the contracts, and procurement officials are directed to obtain from prospective contractors lists of all additional machinery and equipment required to ensure contract performance. Mr. Searls observed that the quotas set under the recently evolved system of allocation and rationing of new machine tools will constitute a very real limitation on the supply of new tools available for meeting the contracts let by each procurement agency. He felt that, therefore, every preference must be shown to suppliers able to proceed with equipment already available to them, and thàt increased prices in keeping with higher labor requirements must be tolerated where engine and turret lathes and other simple machine tools already in the plants of a contractor or sub-contractor can be utilized to avoid installation of government-owned multi-spindled screw machines and other elaborate types of automatic tools. He observed that Directive No. 2, by its emphasis on negotiation of contracts and careful scrutiny of requests for new machine tools,. in effect constitutes a recognition of this principle. The Chairman undertook to investigate the adequacy of present controls over the authorization of new machine tools. Mr. Searls emphasized the importance of letting contracts for the present program on schedules that will require delivery of a very substantial quantity of items in 1942, and urged that in no case should deliveries be accepted later than 1943. Mr. Searls^ while emphasizing the importance of rapid obligation 13 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE of available funds agreed that there must be increasing insistence upon certain fundamental principles in the placing of contracts. There was general agreement with the proposal of the Chairman that further expansion of capacity must be promoted by the placement of contracts with industries and firms not now engaged in munitions production. There was also general agreement that allocation of contracts must give primary consideration to the availability of labor supply. In connection with the discussion of labor supply, the Chairman introduced an excerpt (Document 18) from the minutes of the meeting of the War Production Board held March 3, 1942, a report (Document 19) of Brigadier General Frank J. McSherry, Deputy Director, Labor Division, War Production Board, and a memorandum (Document 20) and a letter (Document 21) from Mr. John J. Corson, Director, United States Employment Service. Although the importance of subcontracting was fully recognized, several alternative types of recommendations were advanced. The Chairman pointed out that British contracts include provisions that a specified percentage of the work must be subcontracted. He observed that it is not certain that this system of encouraging subcontracting would be appropriate for use in the United States, and emphasized the importance of varying the specified percentage for different industries. Mr. Searls suggested that in view of the variety of circumstances that characterize contract negotiations the Committee could not well do more than state as general principles that contracting officers must exhaust the possibilities of requiring subcontracts to existing shops as a mean of avoiding allocation of machine tools to prime contractors, and that contract prices must be adapted to allow for the more costly subcontracted type of manufacture. The Chairman proposed that the Committee should recommend that the Production and Purchases Divisions be directed to submit to the Chairman of the War Production Board a specific set of recommendations for effecting a greater degree of subcontracting. There was agreement that firms practicing, or willing to include provisions for, in-plant training of workers should receive preferential treatment in the award of contracts. The Chairman undertook to prepare a final draft of a report on principles of procurement, incorporating therein the views of Messrs. Blaisdell and Searls. Mr. Blaisdell expressed the fear that emphasis on quantity obligations, total capacity, and rapid award of contracts may cause an early expansion of capacity beyond that required for maintenance of a steady production rate for each item correlated with the production rates of related items in the War Munitions Program. The Chairman confirmed this fear, pointing out that some of the 1942 quantity objectives are so high and the productive rates during the first quarter so low that an enormous expansion of capacity would be required to meet the 1942 objectives. This in turn, would in many instances cause a surplus of capacity for meeting of the 1943 objectives, or at least attainable objectives, and would during 1942 cause a drain upon construction materials, machine tools, and labor that are currently needed for production of finished military and essential civilian goods. The Chairman suggested that the Committee urge greater emphasis upon the attainment of necessary rates of production, rather than upon the meeting of quantitative objectives. Mr. Blaisdell called attention to the multiplicity of procurement agencies with field officials and inquired whether such officials should not be coordinated through some common regional supervisory organization. The Chairman agreed upon the need for integration of procurement and production agencies, and suggested that the question posed by Mr. Blaisdell was relevant to Washington as well as to the field service. Mr. Searls, while agreeing that coordination is important, pointed out that consideration of far-reaching changes in field organization should take into account the disruption of existing operations and relationships that would be necessary to make such changes effective.
Salvage Program The Chairman referred to the report of Mr. Matthew Fox on the salvage program (Document 15). He noted that the study was undertaken prior to establishment of the Planning Committee, and inquired whether the report should be submitted to the Chairman of the War Production Board as a report of the Planning Committee. Upon motion duly made, it was agreed without objection that: The study of the salvage program (Document 15) is not a report of the Planning Committee.
Railroad Equipment Program Mr. Blaisdell referred to the railroad equipment program proposed by the Office of Defense Transportation (Document 14). He stressed the need for an integrated approach to the requirements of the national transportation system, as contrasted with the simple assemblage of the requirements of each individual railroad. Particular attention was called to the importance of a national pool of all railroad cars and to the possibilities of more efficient control of car utilization to ensure observance of such basic principles as conversion to war use of cars being used for non-essential civilian transportation and maximum utilization of cars as rolling stock rather than as stationary storage cars. Mr. Blaisdell agreed to make available to the Committee the information of the National Resources Planning Board bearing on the national transportation system in wartime.
Organization The Chairman suggested that the work of the 14 MARCH 6 AND 10, 1942 Committee might’be expedited if there were alternates designated to act for the members of the Committee in the event of their inability to attend meetings. Upon motion duly made, it was agreed without objection that: 1« Each member of the Planning Committee shall designate an alternate ;
In the absence of a member from a meeting of the Committee, the alternate designated by that member shall act for him ;
Each alternate is authorized to attend meetings of the Committee, but shall have no voice nor vote at meetings at which the member who designated him is present. The Chairman also suggested that designation of several members of the group of advisors should occur at an early date, as a large number of the problems coming before the Committee should be reviewed by outstanding experts prior to their consideration by the Committee itself. The Chairman undertook to prepare a general agenda of subjects proposed for consideration by the Committee during the next several weeks. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING VII MARCH 10, 1942 Present: Members and Alternates: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. H. deWitt Smith, Alternate for Mr. Searls Staff: Mr. James W. Fesler, Acting Secretary By Invitation: Colonel J. P. Harris, Chief, Powder, Explosives and Pyrotechnics Branch, Ammunition Division, Industrial Service, Ordnance Department, War Department. Captain J. H. Matkin, Powder, Explosives and Pyrotechnics Branch, Ammunition Division, Industrial Service, Ordnance Department, War Department Mr. Walter G. Whitman, Consultant on Toluene Chemicals Branch, Materials Division, War Production Board Approval of Previous Minutes The minutes of the meetings held on March 2, 1942, and March 3, 1942, were approved.
Organization Pursuant to the decision of the Committee that alternates would be designated (See Minutes, March 6, 1942, Item 6), Mr. Searls announced the designation of Mr. H. deWitt Smith of the Metals Reserve Company, Department of Commerce, as his alternate.
Toluene Colonel Harris reported that as recently as last September the goal for TNT production was fixed at 2.8 million pounds per day, but that today esti mates of desirable production are as high as 10 million pounds per day. In order to meet this higher goal for TNT, approximately 250 million gallons of toluene per year would be required, and if other needs than those of the TNT program were also to be met, a total of 300 million gallons per year should be produced, a figure which is in sharp contrast to the 21 million gallons produced in 1937, and even to the present annual production rate of 60 million gallons. Colonel Harris stated that there is no possibility of meeting the above total requirements for toluene before mid-1943, as production is expected to be only about 175 million gallons per year by the early part of 1943. Colonel Harris pointed out the dependence of toluene production upon the production of gasoline. Of the present annual toluene capacity of 60 million gallons, approximately 27 million gallons are derived as a by-product of coal-coking, but the balance is derived in the petroleum-refining process—30 million gallons by the Baytown Ordnance Works, and 3 million gallons by the Shell Oil Company plant at Houston, Texas. Further expansion of toluene production is almost entirely dependent upon equipping additional petroleum refineries so that they can produce toluene. Colonel Harris presented a list of existing commitments for 168 million gallons of additional toluene capacity (Document 29), and pointed out that 98 million gallons of this new capacity are to be obtained from petroleum refinery plants that have hitherto produced no toluene. Colonel Harris stated that toluene production is now threatened by the reduction of facilities for transporting gasoline to eastern markets. He urged that in order to ensure continued production of toluene: (1) The movement of gasoline to eastern markets by ship should be protected as fully as possible; (2) railway tank cars should be made avail 15 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE able in adequate numbers to move to eastern markets the gasoline refined at plants equipped to produce toluene; and (3) the output of gasoline at refineries not producing toluene should be curtailed as much as is necessary to permit continued full production of toluene-producing refineries, and equitable arrangements should be effected to permit curtailed companies to obtain sufficient gasoline from toluene-producing plants to maintain their markets. Mr. Searls expressed the opinion that within a month the critical character of the toluene problem will become apparent and that in June or July there will be a serious decline in the rate of increase of TNT production. He stated that the oil industry should be encouraged to arrange for the concentration of gasoline refining at toluene-producing plants, and called attention to the importance of obtaining legislative exemption of the oil industry from the provisions of anti-trust laws for this purpose. Colonel Harris observed that in the cases of the sulphuric acid industry and the wood pulp industry, the Department of Justice sanctioned industry-wide conferences held under the direction of the War Department. However, he agreed that legislative action extending protection against prosecution under anti-trust laws would have a valuable psychological effect upon the oil industry. Mr. Whitman reviewed the interrelations of motor gasoline, high-octane gasoline, butadiene, and toluene. He stated that high-octane gasoline and butadiene are in competition for the same petroleum stocks, but that toluene encounters less aggressive competition. All three by-products of the petroleumrefining industry could be adequately produced if the refineries were assured of opportunity to process crude oil and to dispose of the gasoline thereby produced. In view of the apparent difficulties in disposing of motor gasoline, Mr. Whitman agreed with Colonel Harris that gasoline production should be concentrated at refineries equipped to produce toluene. He suggested that construction of a petroleumproducts pipeline to the eastern market area be reconsidered, pointing out that earlier rejection by the Supply Priorities and Allocations Board and the War Production Board of a petroleum pipeline proposal occurred prior to emergence of the need for disposing of motor gasoline in order to maintain refinery production of critical war materials. Mr. Whitman also, proposed that all possibilities of using inland refineries for production of high-octane gasoline, toluene, and butadiene should be exhausted, as the. Gulf Coast refineries are in a strategically inferior location and are distant from even the midwestern markets. Colonel Harris agreed with this view, but explained that, as the geographical pattern of the refining industry is already determined, it is inevitable that a large proportion of the war contracts for petroleum by-products should be placed in the Gulf Coast area. . Mr. Searls suggested that consideration might be given to shutting down the petroleum refineries at Aruba and Curacao, since they are not equipped to produce toluene- This would permit diversion to the Gulf Coast of tankers now assigned to the shipment of gasoline from Aruba and Curacao. Mr. Whitman pointed out that much of the oil and aviation gasoline required for European operations of the United Nations is shipped directly from Aruba and Curacao, and that similar shipments from the Gulf Coast would take a longer time. Mr. Searls felt that about five days would be added to the round-trip to England if the tankers loaded at the Gulf Coast. The Chairman raised the question of the appropriate governmental organization for initiating and supervising reorientation of the oil industry to ensure continued production of war materials despite the shrinkage of the market for motor fuel. Mr. Whitman explained that he regards the Ordnance Department of the War Department as responsible for toluene production, the Petroleum Coordinator for National Defense as responsible for high-octane gasoline production, and the Reconstruction Finance Corporation, the Petroleum Coordinator for National Defense, and the Chemicals Branch of the Materials Division, War Production Board, as jointly responsible for synthetic rubber production. He explained, however, that the Chemicals Branch gives full assistance as requested, in connection with the toluene and high-octane gasoline programs. Mr. Whitman emphasized the advantages of enlisting the aid of the industry committees already operating under the Petroleum Coordinator for National Defense, and stressed the importance of a coordinated consideration of toluene, high-octane gasoline, and butadiene problems. Mr. Blaisdell emphasized the desirability of an integrated approach to the problems of the oil industry, and urged that this approach be more concerned with technical than with price considerations. Mr. Whitman suggested that, if the Petroleum Coordinator is directed to initiate oil industry conferences on assuring the production of these specific war materials, representatives of the Chemicals Branch of the Materials Division, War Production Board, and the Ordnance Department, of the War Department should actively participate in these conferences in order that they may contribute to formulation of an industry program. Mr. Whitman proposed that the War Production Board issue a directive to the Petroleum Coordinator for National Defense ordering that appropriate steps be taken to assure an adequate supply of crude petroleum to refineries producing toluene. Mr. Searls suggested that an assured flow of crude petroleum to refineries would not be an adequate solution to the problem, as provision will have to be made for disposition of motor gasoline. Mr. Whitman stated that if transportation measures and drastic curtailment of production of gasoline at refineries not equipped to produce war products fail to solve the problem, surplus motor gasoline produced could be pumped into the ground. 16 MARCH 10, 11, AND 13, 1942 At this point Colonel Harris, Captain Matkin, and Mr. Whitman left the meeting- Upon motion duly made, it was agreed without objection that: Mr. Searls will prepare a draft recommendation on the toluene problem. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING VIII MARCH Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr- James W. Fesler, Acting Secretary
Toluol Mr. Searls presented a draft memorandum on the toluol problem, as requested by the Committee (See Minutes, March 10, 1942, Item 2). The memorandum was discussed and revised. Upon motion duly made, it was agreed without objection that: The draft memorandum on toluol supply, as revised (Document 27), is approved for transmission to the Chairman of the War Production Board, as Planning Committee Recommendation No. 1. 11, 1942
Procurement The Chairman presented a draft memorandum on policies of procurement, as requested by the Committee (See Minutes, March 6, 1943, Item 3). The memorandum was discussed and revised. Upon .motion duly made, it was agreed without objection that : The draft memorandum on policies of procurement, as revised (Document 28), is approved for transmission to the Chairman of the War Production Board as Planning Committee Recommendation No. 2. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING IX MARCH Present: Members: Mr. Robert R- Nathan, Chairman Mr. Thomas C. Blaisdell, Jr. Mr. Fred Searls, Jr. Staff: Mr. James W. Fesler, Acting Secretary
War Munitions Program Mr. Searls referred to the report (Document 25) on finished and unfinished business of the Planning Committee, and presented a memorandum (Document 30) relating to the field of operation of the Committee. He expressed the opinion that the Committee is disposed to consider too wide a range of subjects immediately, and urged that the Committee concentrate upon appraisal of the war munitions program with a view to arriving at reasonably accurate estimates of military requirements and pro- 13, 1942 duction possibilities, and developing a feasible program in which the several objectives will be mutually consistent. The Chairman agreed that the Committee should primarily devote its present efforts to development of a balanced, feasible war munitions program. The Chairman pointed out that in order to meet the presently stated objectives of 75 billion dollars of war production and expenditures for 1942, monthly expenditures for the year would have to average 6.25 billion dollars, and that, as the monthly expenditure at the beginning of the year was only 2.5 billion dollars, the rate of expenditure would have to rise to a level of about 10 billion dollars a month at the end of the year in order to meet the objectives. He observed that monthly war expenditures of 10 billion dollars are wholly out of the realm of feasibility. It was suggested that in 1942 only perhaps 45 per cent of the total productive effort of the nation can be readily assigned to war production, and that curtailment of presently stated 17 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE 1942 objectives by about 25 per cent of the dollar value of the total 1942 program will therefore be necessary. The Chairman reviewed the growth of the objectives since October 1941, and explained that the growth was attributable not only to a healthy reaction to military events, but also to the fact that traditional autonomy of responsibility for each segment of the program has prevented effective auditing of the program from the standpoint of the total economy and the balance among related objectives. He felt that in order to effect the necessary curtailment of the 1942 objectives some organization appreciative of both strategic and production considerations must analyze the program and determine upon appropriate revisions. The Chairman tentatively proposed that the Committee: (1) Inform the Chairman of the War Production Board that the presently stated 1942 and 1943 objectives of the war munitions program are not feasible according to the criteria of the proportion of national productive effort available for war production, the availability of raw materials, and the prospective labor supply; (2) propose that the Chairman of the War Production Board establish a board familiar with both strategic and production factors, and authorize it to determine initially the reductions in specific objectives of the war munitions program that are necessary to impart feasibility and balance to the program. Messrs. Searls and Blaisdell suggested that any necessary reductions should be made by the Chairman of the War Production Board in pursuance of his responsibility for war production and procurement. Mr. Searls proposed that the Planning Committee should review the war munitions program, report to the Chairman of the War Production Board the over-all percentage reduction believed necessary, and submit to him preliminary indications of possible specific changes in objectives. The Chairman of the Board, with the assistance of the report of the Planning Committee and after consultation with officials concerned with strategy, should make final determinations of devised objectives. Upon motion duly made, it was agreed without objection that: The Committee will devote full attention to review of the objectives of the war munitions program, and will postpone consideration of problems currently arising in specific phases of the work of the War Production Board.
Defense Housing In accordance with a previous request of the Committee (See Minutes, February 20, 1942, item 3), Mr. Blaisdell presented a draft report to the Chairman of the War Production Board on the critical housing situation in shipbuilding centers. He proposed that appropriate action be taken to effect coordination at the community level of planning and development of defense housing projects. Upon motion duly made, it was agreed without objection that: In view of the intention of the Committee to concentrate upon a review of the war munitions program, and its consequent inability at this time to give the housing problem the study that would be required, the Committee refers the draft report on defense housing to Mr. Blaisdell, for appropriate use by himself as an individual. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING X MARCH Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Mr. Stacy May, Director, Statistics Division, War Production Board Mr. Simon Kuznets, Research Advisor, Industry Branch, Statistics Division, War Production Board 16, 1942
Organization The Chairman announced the appointment of Mr. Edward T. Dickinson, Jr., as Executive Director of the Planning Committee.
War Munitions Program The Chairman referred to a report by Mr. Kuznets on the feasibility of the war munitions program (Document 31), a financial analysis of the program (Document 32), and a report by Mr. Bertrand Fox, analyzing the raw material requirements of the program (Document 33). It was pointed out that the presently estimated objectives, exclusive of pay and subsistence, call for 18 MARCH 13 AND 16, 1942 expenditures of about 62 billion dollars in 1942 and 110 billion dollars in 1943. The Chairman emphasized that the figures are rough approximations, and called particular attention to the facts that (1) the 1942 estimates for new facilities construction are expressed in terms of existing contract commitments which are not fully reliable indices of probable expenditures nor of facility requirements in 1942, (2) the 1943 estimates for construction of new plants and of other construction arbitrarily assume the same expenditures as in 1942, and (3) the estimates for the aircraft program are based on the 8-1 ultimate schedule rather than the higher objective announced by the President. Mr. Kuznets observed that the accuracy of the estimates is necessarily conditioned by as yet unpredictable price changes, and that the estimates also multiply any errors in the unit costs provided for in current war production contracts. Mr. May noted that there is lack of balance among the estimates, and that such disequilibria should be speedily eliminated. The Chairman proposed that the Committee consider the feasibility of the 1942 and 1943 total programs, and arrive at approximations of such over-all curtailments as will be necessary. Mr. May suggested that the country should be able to produce, in terms of 1941 prices, between 40 and 45 billion dollars’ worth of war munitions and construction in 1942, and about 60 billion dollars’ worth of such munitions and construction in 1943. He estimated that pay, subsistence, travel and other non-production categories would call for additional expenditures of about 9 billion dollars in 1942 and 11-12 billion dollars in 1943. Mr. May said that there is no doubt of the ability to meet the 40 billion-dollar figure, but that a number of difficulties prevent confident prognostication of our ability to exceed that figure during 1942. Mr. May cited the fact that the Government is generally paying a higher price for the output per man at a plant manufacturing munitions than was ever paid for the output per man at the same plant when it manufactured civilian goods. He noted that this consideration may mean that the forecasts of total national income have been too low, as they assumed an approximate equivalence per employee between production of civilian goods at a plant and military production at the same plant after its conversion. Mr. Kuznets observed that less manhours per unit may be required in producing many military articles because production of some such articles has been shifted to a mass production basis as a result of large orders and improvements in production management, but that for military articles not capable of mass production, the opposite would be true. Mr. May reported that munitions production, military construction, pay, and subsistence have been at a rate of 2.5 billion dollars per month for the first two months of 1942, which, if maintained, would give a total for 1942 of 30 billion dollars. Mr. May anticipates that the rate for March will be about 3 billion dollars, and that by June the monthly rate should have advanced to 4 billion dollars. Mr. Kuznets concurred in these estimates and further pointed out that if the 1942 and 1943 goals declared feasible by Mr. May are actually to be attained, the average monthly war expenditure rate for all of 1942 must average 4 billion dollars, and at the end of 1942, total expenditure must be at a monthly rate of roughly 6 billion dollars. Mr. Kuznets expressed the view that if the monthly production rate is to more than double between the first and last of the year, new facilities must be built this year. Mr. May expressed qualifications to this view, observing that while many of the new facilities already being built will be needed, new facilities will not be completed in time to contribute significantly to achievement of the 6 billion-dollar rate of monthly production accepted as feasible for the end of 1942 by Mr. Kuznets. Hence serious doubts arise to whether these additional new facilities will be needed to meet the 1943 objectives. Mr. May noted that if these doubts should prove to be sound, materials that would have been used in construction of new facilities will be available for manufacture of implements of war. The Chairman suggested that construction of many new facilities, specially designed for war production, will set back the process of converting plants now producing less essential civilian goods. Mr. Blaisdell emphasized the necessity of providing for construction of synthetic rubber and high-octane gasoline facilities, blast furnaces, and rolling mills. There was general agreement that the present estimates of the 1942 war munitions program must be cut by about 35 percent in order that the total expenditure on war munitions and war construction may total approximately 40 billion dollars. Mr. May tentatively suggested that the curtailment be so applied that the following revision of stated 1942 objectives can be effected: 1942 Stated Objectives Proposed 1942 Objectives (Billions of Dollars) Total Munitions 62.6 42.6 Planes 9.2 92 Naval Ships 4.8 3.2 Merchant Ships 1.8 1 8 Defense Aid, Machine Tools .4 .2 Defense Aid, Miscellaneous 2.7 1 8 Foreign Orders, Miscellaneous 2 2 Ordnance, Army 15.6 92 Ordnance, Navy 3.7 2.4 Ordnance, Foreign 6 .4 Miscellaneous Munitions, Navy 1 2 10 Miscellaneous Munitions, Army 7.5 5.0 Industrial Facilities 6.5 4.2 Other Construction 8.4 4.0 Mr. May emphasized the very general nature of these suggested curtailments, and urged that they be critically scrutinized. Mr. May proposed that analysis of the 1943 ob 19 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE jectives should be based on the peak production rates attainable by the end of 1942. He felt that if an approximately 6 billion-dollar monthly rate for all military expenditure, including pay and subsistence, can be achieved by December, an objective of 72 billion dollars for 1943 should be quite feasible. The Executive Director observed that this approach may underestimate the achievable goals for 1943, as it fails to allow for any acceleration of the production rate between the beginning and end of 1943. Mr. Searls suggested that 1943 objectives be fixed at a level that is reasonably certain of being attained, instead of at a higher level. He pointed out that overly optimistic announcements of production potentials stimulate an unhealthy inflation of estimates of requirements, and occasion lack of balance in the program. Mr. Searls and the Executive Director urged that specific curtailments of presently estimated requirements should be based upon an analysis of the availability of raw materials. Mr. Searls felt that increasingly during 1942 the scarcity of materials will prove to be the most significant cause of actual delays in munitions production. The imperfections of the priorities system were declared responsible for the present failure of raw materials to flow evenly into war production. Mr. May observed that, although the priorities system will not work perfectly, it is feasible to administer it so that military production is really given first claim to available materials and in amounts sufficient to allow military production to go forward without the delays that have been experienced to date because of insufficient allotments. The Chairman observed that the present difficulties stem not from a lack of raw materials, but from the failure of the Government to curtail the production of civilian goods as drastically as now appears necessary. Mr. May undertook to prepare a report for the Planning Committee, translating recent civilian-goods production into terms of the raw materials consumed by such production. Mr. Searls emphasized the importance of immediately halting the letting of contracts designed to carry into effect the present inflated objectives. He pointed out that procurement officers are under pressure to obligate available funds at the earliest possible moment, and expressed concern lest the production thus initiated cause an impossible pressure upon present facilities, materials, and labor supply. Upon motion duly made it was agreed without objection that: The Chairman of the War Production Board shall be advised by a joint memorandum from the Planning Committee and the Statistics Division that:
The total objectives of the War Munitions Program for 1942 should be reduced to approximately 40 billion dollars of munitions and construction-
At the present time it appears that approximately 60 billion dollars’ worth of munitions and construction is the feasible goal for 1943.
Pending more detailed analysis, an immediate moratorium should be declared on the letting of contracts for new facilities and contracts calling for new tools (exceptions being subject to the approval of the Chairman of the War Production Board).
In curtailing the presently stated objectives for 1942 both strategic and production factors should be used as criteria,—the production factors including such problems as availability of raw materials, labor supply and facilities, and the possibility of conversion.
The availability of merchant ships, which is currently being studied by the Planning Committee, is a further criterion to be considered in curtailing presently stated objectives. There was general agreement that it is the policy of the Committee to favor an all-out war production program. It was explained that the suggested curtailment of 1942 and 1943 objectives is designed to fix objectives at the maximum levels of which the economy is capable, and thus to ensure a balanced achievable program rather than a program of distorted objectives that, when executed, would certainly break down. The Committee discussed implementation of the recommendation that total objectives be curtailed. The Chairman read a draft of a letter proposed for transmission by the Chairman of the War Production Board to the heads of agencies responsible for preparation of estimates of requirements. Upon motion duly made, it was agreed without objection that: The Chairman is authorized to submit to the Chairman of the War Production Board, on behalf of the Planning Committee and the Statistics Division, a draft letter intended for the heads of agencies responsible for the preparation of estimates of requirements, suggesting that each addressee name a person to consult with the Chairman of the War Production Board on the revision of the presently stated objectives of the War Munitions Program for 1942, and suggesting, further, an immediate moratorium on the letting of contracts for new facilities and all contracts requiring new tools (exceptions being subject to the approval of the Chairman of the War Production Board). James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman 20 MARCH 16 AND 19, 1942 MEETING XI MARCH 19, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary
War Munitions Program The Chairman referred to the importance of curtailing the presently stated objectives of the war munitions program, and introduced as a document Planning Committee Recommendation No. 3 (Document 35), transmitted pursuant to the action at the preceding meeting (See Minutes, March 16, 1942, Item 2) as a joint memorandum from the Committee and the Director of Statistics of the War Production Board. The Chairman suggested that the Committee determine the main outlines of the immediate studies to be undertaken by the staff with a view to appraising the extent to which specific factors limit the feasibility of the war munitions program. The Chairman felt that materials, labor, and facilities constitute the major potential limiting factors. With reference to materials, the Chairman felt that the Committee should confine its present analysis to the most critical materials, but should very thoroughly investigate the supply of and demand for these materials. Upon motion duly made, it was agreed without objection that: With a view to determining the extent to which the war munitions program must be curtailed because of scarcity of raw materials, the staff of the Committee shall prepare detailed studies of the supply of and demand for the following materials : aluminum; antimony; copper; chromite; ethyl alcohol; lead; nickel; steel ingots, 41-50 alloys, plates, forgings, and castings; tungsten; molybdenum; rubber; vanadium; wool; and zinc. It was observed that effective analyses of the program are handicapped by doubts regarding the firmness of military formulae governing proportional requirements of such items as guns and ammunition. The Chairman suggested that American, British, and Russian experience in theaters of war should provide a sound basis for reappraisal of the tables of allowances for ammunition. Mr. Searls agreed upon the importance of such reappraisal and reported that the matter is already under study by the War Department. Mr. Searls undertook to report to the Committee on such steps as the Committee might appropriately take to expedite revision of formulae relating ammunition requirements to gun require-ments. The Chairman regarded labor supply as a possible restriction upon the scope of the war munitions program. Mr. Blaisdell observed that a theoretical analysis on the basis of man-hours had suggested that total labor supply would not be a limiting factor unless production rose two-and-a-half or three times as fast as the present rate of expansion. He felt that such problems as adequate supplies of specialized skills, and geographical location of labor pools in relation to location of war production plants, should cause more immediate concern than the problem of total labor supply. Mr. Searls stated that preparation of a thorough analysis of facilities as a limiting factor on the war munitions program, although highly desirable, would not be feasible. He pointed out that a multitude of varying factors, including changes of specifications, producers’ ingenuity, and price considerations, make it practically impossible to define the amount of war production that depends on machine tools of a particular type, age, and location. The Executive Director pointed out that even in connection with specific contracts, manufacturers are unwilling to provide detailed justifications for the amounts of new machine tools that they claim are necessary for fulfillment of their contracts. He observed that insistence by the Bureau of Aeronautics, Navy Department, upon careful review of their contracts has resulted in extensive reductions in authorizations of new machine tools. It was the consensus of opinion that, although an over-all analysis of machine tools as a potential limitation on the war munitions program is not possible, the Committee continues to be concerned over the need for adequate control of specific allocations of machine tools. The Chairman announced that the staff is preparing a study of existing controls over authorization of new plants in accordance with a previous request of the Committee (See Minutes, March 3, 1942, Item 1). Mr- Searls urged that current materials, labor, and management, resources should be used for production of finished military articles rather than for construction of facilities that cannot be completed until 1944 or 1945. He cited a number of examples of diversion of current resources to such long-range projects. He expressed concern over the apparent lack of a central organization for appraising projects for new facilities in such a, way that their relative merits can be compared and a check be placed on the tendency of officials in the War Production Board and the armed services to overexpand facilities. Mr. Searls noted that in its supply of several so-called scarce materials, the United States has a vast superiority over thé Axis. 21 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE At this point Mr. Nathan left the meeting, Mr. Blaisdell took the chair, and Mr. Dickinson acted as alternate for Mr. Nathan.
Organization Mr. Dickinson proposed that the Committee, in order to make regular provision for the disposition of miscellaneous items of business, schedule at least one meeting a week with a formal agenda. Upon motion duly made, it was agreed without objection that: At least one meeting a week will be scheduled with a formal agenda. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING XII MARCH 20, 1942 Present: Members: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr. Mr. Fred Searls, Jr. Staff: Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary
Organization The Acting Secretary introduced General Administrative Order No. 22 (Document 34) establishing the Planning Committee and defining its functions. The Order directs the Planning Committee to : ( 1 ) make available to the Chairman of the War Production Board such plans, procedures, and information as may be helpful to the planned development and realization of the war production program ; (2) recommend to the Chairman of the War Production Board plans and policies for maintaining proper balance and relationships among elements of the war production program for attaining the fullest and most effective use of materials, facilities, and services in connection with the program; and (3) anticipate future trends of war production, inform the Chairman of the War Production Board of potential obstacles to full realization of the program, and recommend to the Chairman of the War Production Board policies for overcoming such obstacles. The Committee is authorized to have access to necessary information, and the Chairman of the Committee is authorized to appoint necessary personnel. Mr. Blaisdell announced the designation of Mr. Ralph Watkins, Assistant Director of the National Resources Planning Board, as his alternate on the Committee.
War Munitions Program The Chairman reported that pursuant to the previous decision of the Committee (See Minutes, March 19, 1942, Item 1), Mr. Simon Kuznets has been requested to prepare detailed analyses of the relation of a number of critical materials to the feasibility of the war munitions program. The Chairman reported that Planning Committee Recommendation No. 3 (Document 35) is under study by the Chairman of the War Production Board. Mr. Searls emphasized the urgency of curtailing the award of contracts for construction of new plants and machine tools. He felt that this is an even more pressing need than the general moratorium on contract awards for ordinary munitions production.
Construction of industrial and Community Facilities The Executive Director reported that the War Production Board, at its meeting of March 17, 1942, determined that, effective immediately: (1) no new construction, except military construction projects, shall be undertaken unless approved by the War Production Board as essential to the war effort or to public health or safety; (2) the War Production Board may defer work on any particular construction already in progress, if conditions seem to warrant such action; and (3) the use of essential materials and equipment shall be reduced to an absolute minimum. It was noted that the Director of Industry Operations is directed to issue an appropriate order to make this policy effective. The Chairman proposed that the Committee study construction projects already authorized, including industrial facilities, housing, and related community facilities. The Chairman was requested to prepare a report for the Committee on projects for the construction of industrial facilities, housing, and related community facilities.
Aircraft Program The Chairman referred to a memorandum (Document 36) on the aircraft program, from Mr. T. P. Wright, Deputy Chief of the Aircraft Branch, Production Division, War Production Board, and a memorandum (Document 37) on the feasibility of the airplane program from Mr. Mordecai Ezekiel, Consultant to the Planning Committee, Mr. Searls 22 MARCH 19 AND 20, 1942 observed that the importance of airplanes in modern warfare makes it imperative that their production take precedence over that of most other sections of the war munitions program. He suggested that the possibilities of substitution of relatively less critical materials for the scarce materials now required in airplane specifications should be fully explored. It was observed that there is some doubt of the feasibility of the President’s 1942 objective of 60,000 planes, including 45,000 combat planes. The Chairman announced that the next meeting of the Committee will be devoted to an analysis of the feasibility of the aircraft objectives established by the President.
Merchant Shipping The Chairman referred to the progress report on the study of merchant shipping requirements (Document 38) prepared by Mr. Joseph Meehan, Chief, Research and Statistics Division, Bureau of Foreign and Domestic Commerce, Department of Commerce, and to the memorandum (Document 39) of Mr. Warren Wilhelm on loading and unloading of merchant ships in the New York Harbor area. The Chairman reported that, with the apparent concurrence of Mr. Lewis Douglas, Advisor to the War Shipping Administrator, the War Department has suggested that the data with respect to shipping requirements should be gathered from all shipping agencies other than the War Department, and that the results of such a survey should then be submitted to the War Department, at which time it would undertake to prepare estimates of its own requirements. Upon motion duly made, it was agreed without objection that: The Chairman is authorized to inform Brigadier General Brehon B. Somervell, Commanding General, Service of Supply, United States Army, and Mr. Lewis W. Douglas, Advisor to the War Shipping Administrator, that it is essential that Army shipping requirements be furnished to the representatives of the Planning Committee at the same time that the requirements of other agencies are submitted, and that, therefore, the procedure suggested by the War Department is not satisfactory. The Chairman is authorized to take such further measures on behalf of the Committee as may be necessary to ensure successful gathering of the data required for the study of merchant shipping requirements.
Community Facilities The Chairman referred to the memorandum (Document 22) from Mr. J. Douglas Brown, Professor of Industrial Relations, Princeton University, proposing the establishment of a Community Clearance Unit in the War Production Board. The Chairman explained that Mr. Brown was formerly Chief of the Priorities Branch, Labor Division, War Produc tion Board. The proposed Community Clearance Unit would have the following functions: (1) to obtain information concerning employment, unemployment, housing, war contracts, facilities, power, transportation, and other phases of the current and prospective economic situation in particular communities and areas throughout the country; (2) to service the agencies that determine the location of new plants, the procurement agencies in their allocation of war contracts, and the industrial branches in their formulation of curtailment programs and allocation of materials for civilian production; (3) to certify communities for special treatment in the placement of war contracts where those communities face potential distress due to unemployment; and (4) in general to act as a clearing house for all information and requests related to the situation of particular communities or areas. Mr. Blaisdell noted the relation of Mr. Brown’s proposal to the problems of plant sites and coordinated provision of the housing, transportation, sewers, heat, light, and other community facilities essential to the availability of a local labor supply. Mr- Blaisdell cited, as an example, the failure to make plans and take appropriate actions to accommodate the approximately 30,000 workers who, with their families, will be added to the population of Ypsilanti, Michigan, as soon as the Willow Run plant of the Ford Motor Company is in operation. Mr. Blaisdell stated that two important reforms are necessary. The first is to provide that no new plants may be constructed without prior approval by a single government agency, and to make certain that full knowledge of all implications of locating a plant in a particular community or area is made available to this plant site agency. Mr. Blaisdell said that, at present, locations of proposed plants are not thoroughly reviewed by any central agency unless the plant is to be owned by the Government or to be built with Government funds. The Chairman observed that the location of new military camps is also relevant to the plant site problem, as both new plants and military encampments are likely to inincrease the population burden on existing community facilities. It was also pointed out that strategic factors must be considered in determining the location of war production plants. Mr. Blaisdell emphasized the fact that mere centralization of clearance of proposed plant sites would not meet the problem, as means must be devised to furnish this plant site agency with adequate information to enable it to anticipate the probable strains on community resources that particular plant sites would occasion, and to take necessary actions to initiate construction of additional community facilities, where required. The Executive Director suggested that the National Resources Planning Board is the appropriate agency to gather information on community facilities for use of a plant-site agency. Mr. Blaisdell observed that the National Resources 23 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE Planning Board, the Plant Site Board of the Purchases Division of the War Production Board, and the Labor Division of the War Production Board have all been concerned with the problem of location of new plants. Mr. Blaisdell stated that a second reform should be the coordinated execution of projects for the construction of community facilities auxiliary to a new plant site. He noted that at least six Federal agencies, and a varying number of state and local agencies, have segmentary responsibilities for the actual work of meeting the local situation resulting from location of a new plant. He reported that in Mobile, Alabama, the National Resources Planning Board had taken the initiative in coordinating the participating agencies with a view to reducing extravagant demands for facilities, ensuring agreement of all agencies upon the new areas to be developed and the types of facilities to be built, and laying a basis for day-to-day cooperation in the actual work of construction. He stated that local agreement among the participating agencies had proved possible, but that Washington officials of the several agencies disapproved of the agreement because of its departure from the agencies’ official positions .on policies and methods. Mr. Blaisdell suggested that the National Resources Planning Board should be designated to make surveys of localities where war production is, or is likely to be, located, and that the War Production Board should designate for each comm-munity found deficient in community facilities an official charged with expediting the actual construction of the necessary facilities. Mr. Blaisdell pointed out that the work of. expediting construction is an engineering task, and felt that extensive coordination of all persons , and agencies contributing to the local project is necessary- The Chairman concurred in the view that the War Production Board should designate the National Resources Planning Board as the agency to assemble data bearing on the adequacy of community facilities in war production areas, and proposed further that the National Resources Planning Board be asked to recommend methods for channeling these data to procurement agencies and the War Production Board in such a manner as to maximize the practical application of the data. He suggested that inquiry be made as to the possible relation of the Bureau of Government Requirements, Division, of Industry Operations, War Production 7Bpafd,’to the community facilities situation. . The Chairman expressed the view that the responsibility for ensuring adequate, but not excessive, utilization of existing facilities and construction of additional facilities found necessary should be vested in the field service of the War Production Board. The Executive Director emphasized the importance of correcting the problem of undue pressure on community facilities by careful control of the location of new plants. This control can only be effective if exercised while the new plant is still in the proposal stage. He felt that the location of new plants is fundamentally an engineering type of problem, and should be determined on the basis of full cognizance of the availability or non-availability of community facilities, labor supply, industrial power, raw materials, and protection against enemy activity. The Executive Director was requested to prepare a report to the Committee, outlining the functions of the Plant Site Board of the Division of Purchases, the Labor Division, and the National Resources Planning Board with respect to control over the location of new plants.
Raw Materials The Chairman observed that estimates of the levels at which the war munitions program is feasible have been based on the assumption that the flow of raw materials will be effectively controlled. He felt that effective control does not exist at present, and that, unless this situation is speedily corrected, production achievements will fall substantially short of the goals previously deemed feasible. He stated that the staff of the Committee is preparing a report on conservation of materials, and proposed that the Committee at an early date devote attention to the allocation system and compliance problems. The Executive Director observed that the questions raised by the Chairman are fundamental, but require considerable study preliminary to formulation of recommendations designed to improve control over the flow of materials. Mr. Searls agreed that effective controls are essential, but urged that in the immediate future the Committee continue to devote its primary attention to the definition of feasible war production objectives. ■ : James W. FeSler Y Acting Secretary Approved: Robert R. Nathan r Chairman 24 MARCH 20 AND 23, 1942 MEETING XIII MARCH 23, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. Edward T. Dickinson, Jr. Executive Director Mr. James W. Fesler, Acting Secretary Mr. Mordecai Ezekiel, Consultant By Invitation: Mr. A. H. Bunker, Chief, Aluminum and Magne-sium Branch, Materials Division, War Production Board Mr. Merrill C. Meigs, Chief, Aircraft Branch, Pro-“ duction Division, War Production Board Mr. T. P. Wright, Assistant Chief, Aircraft Branch, War Production Board Mr. Albert Butler, Research Advisor, Aluminum and Magnesium Branch, Materials Division, War Production Board Mr. F. J. Lamb, Chief, Fabrication Unit, Aluminum Section, Aluminum and Magnesium Branch, Ma-terials Division, War Production Board 1* Aircraft Program The Chairman explained that the interest of the Committee in the aircraft program resülts from the fact that the Chairman of the War Production Board has asked the Committee to determine the feasibility of the total war munitions program and; specifically, to advise him as to feasible aircraft objectives for 1942 and 1943J Réference was màdè to reports on the aircraft program by Mr. T. P. Wright (Document 36)/ Mr. Mordecai Ezekiel (Docuriïént 37), and Mr. K. T. Keller (Document ai), and to an excerpt (Document 40) from the minutes of the meeting of the War Production Board held February 17, 1942. The 1942 objectives under the several suggested programs are as follows : 1942 Tactical :…… Trainers Total Flancs 8-1 Initial 8-1 Ultimate President’s Objectives Balanced President’s Objective . Ezekiel Recommendation 33,774 17,287 39,523 17,287 45,000 15,000 (Aircraft Branch) 45,000 23,000 39,000 21,000 51,061 56,810 60,000 68,000 60,000 Mr. Ezekiel reported that the three major îimitâtions on the aircraft program are raw fnaterials,: fabricated materials, and machine tools. He stated that aluminum s has not so far been a bottleneck, pointing out fhàt deliveries of planes hâve been lagging ten .tp twenty percent behind corresponding alùmihüm deliveries to aircraft companies. In 1943, however, the prospective supply of aluminum will be only sufficient for the manufacture of about 115,000 planes in 1943. There is a slight possibility of greater plane production if current experiments in the partial substitution of plywood and steel for aluminum prove successful. Fabricated aluminum is a greater problem than aluminum ingot. If the 8-1 ultimate program is accepted as the objective, shortages of high-strength sheet, tubing, forgings, and extruded shapes will occur at various times from the fall of 1942 to the summer of 1943. Machine tools are needed in both the aluminum-fabricating and airplane factories. Mr. Ezekiel felt that if machine tools continue to be produced and allocated as in the past, only about two thirds of the tools needed in 1942 for aircraft and aluminum are likely to be available. He believed that prospective supplies of aircraft engines, propellers, and guns seem reasonably adequate to keep pace with the program, and that supplies of miscellaneous equipment can be expanded as rapidly as needed if steps continue to be taken to plan ahead and correct bottlenecks in advance. Mr. Wright emphasized the importance of concentrating on 1942 production, rather than upon undue multiplication of new facilities whose construction consumes materials and whose productive capacity cannot be in use in time to contribute significantly to the realization of 1942 and even 1943 objectives. He pointed out that overemphasis upon the expansion of facilities may actually lower output of planes in 1942. He fully agreed that objectives should be stated at high enough levels to furnish genuine Incentives to the industry, and that every eflfort should be exerted by labor and management to achieve the highest possible rate of production. Mr. Wright noted that, under the 8-1 ultimate program, the monthly production rate by June 1944, will be 8,730 airplanes. At this rate the annual value of production of airframes alone will be about 25 billion dollars, which, assuming a national income of 135 billion dollars, represents 18% percent of the national income. Addition of the necessary guns, bombs, and ammunition brings the figure to 23 percent and addition of operating costs of half of the airplanes (assuming arbitrarily that the other half are transferred to other members of the United Nations) results in thé estirnate that 33 percent of the national income must go into, our air-war effort. Mr. Wright pointed out that if present contracts and appropriations for defense services other (han air wär are taken into account, it .appears that 68 percent of the national incorpe will be devote^ to the total war effort. As, judging from British and German experience, this appears to be about the largest proportion that can be put into direct wär effort, 25 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE it seems clear that the peak rate fixed by the 8-1 program is the maximum possible rate. However,; Mr. Wright emphasized the importance of achieving the peak rate earlier than the 8-1 program’s assumption of June, 1944. Mr. Searls inquired as to the allowance for spare parts in the various aircraft programs. Mr. Meigs reported that the over-all allowance for spares in relation to finished planes is 20 percent as measured by dollar value. He noted that this allowance translates itself into varying requirements for spares beyond initial equipment, pointing out that spare propellers are 101% percent of propellers incorporated in finished planes, spare aluminum pistons are 60 percent of such pistons in completed planes, and spare crankcases are 42 percent of the crankcases in completed planes. Mr. Bunker observed that, although the objectives of aircraft programs are usually defined in terms of finished planes, all calculations of materials requirements for the program are based upon the combined needs for finished planes and spare parts. Mr. Wright noted that the 1943 allowance for spares will be about 11 percent greater than the 1942 allowance, and that this increase will raise the spare allowance in dollar value to 31 percent of finished planes. Mr. Searls pointed out that determination of the proper relationship of spares to finished planes may be the crucial factor in appraising the feasibility of the aircraft program. He inquired as to the availability of data bearing on experience with the spare parts problem in Great Britain. Mr. Meigs agreed to furnish the Planning Committee with a report on British experience with the spare parts problem, prepared by the Spare Parts Committee of the Aircraft Branch. Mr. Wright stated that early in the program the production of spares lagged because of tihe emphasis upon the delivery of completed planes. Mr. Searls observed that achievement of the 8-1 objectives, with a proper proportion of spares, may be of more practical utility than attainment of the higher objectives fixed by the President at the expense of inadequate provision of spares. The strategic plans of the President might be more readily accomplished by providing the servicing of planes necessary to provide maximum life to the planes, than by concentrating on a total quantity of completed planes. The Chairman noted that the Committee has earlier been informed that propellers and engines are the most pressing problems in aircraft production (See Minutes, March 2, 1942, item 4), and asked for confirmation or correction of this information. Mr. Wright reported that deliveries of engines are in arrears, partly because of the diversion of engines to accelerate the production of four-engine bombers, and that, as a result, some airplane factories are operating only five days per week. He believed that it would be impossible to build enough engine-fabricating facilities to meet the 8-1 ultimate objective for 1942. Mr. Ezekiel noted that engines can be produced well in excess of the requirements of the 8-1 initial program, and stated that to date the total supply of engines has exceeded the production of finished planes. Mr. Wright suggested that total supply is misleading, as acute shortages of engines of particular types have been real obstacles to the completion of planes. Mr. Ezekiel expressed the hope that reduction of the tank program or change-over from airplane engines in tanks might relieve the aircraft-engine problem. Mr. Wright believed that the propeller situation will get much worse, not only because of production problems, but also because of the need for an increased proportion of spare propellers to finished planes. Mr. Ezekiel noted that the forging capacity for propellers is inadequate and Messrs. Bunker and Butler added that an even greater inadequacy exists in propeller-finishing capacity. Mr. Bunker felt that the propeller supply problem would be most acute between May and November 1942. Messrs. Meigs and Wright referred to specific difficulties with the production of turbo supercharges, turrets, automatic pilots, bombsights, and other instruments. They reported that airframes are not expected to be a problem, and that the machine-tool situation is somewhat improved. They noted that the Scheduling Unit at Dayton, Ohio, is well-equipped to keep informed of specific obstacles to full production at each plant participating in the aircraft program, and to initiate action to obviate the difficulties. Mr. Ezekiel stressed the need for anticipating the difficulties that are likely to arise six months from now, as well as for taking care of current emergency situations. Mr. Meigs emphasized the problem of supplying sufficient, skilled management and labor to man the aircraft industry. He pointed out that the industry has expanded tremendously as a result of the war, and that this fact has put a great strain on the ability of the management to adapt its abilities to a large-scale mass-production industry. At the same time, new workers have had to be introduced to highly skilled operations at a rate that taxes the recruiting and training facilities of the industry. Even in the converted automobile industry a similar pressure is occurring. Mr. Meigs cited as an example the demands for engines from the Ford Motor Company: An early schedule called for the company to deliver 800 engines per month; under the 8-1 schedule the company is expected to deliver 1800 a month; and scheduling of the President’s objectives would require 3000 engines a month from the company. With reference to the demands for skilled labor in the production of airplanes, Mr. Meigs pointed out that the automatic pilot and bombsight has 500 watchmakers’ parts and 3000 other parts. Mr. Wright stated that the greatest obstacle to advance planning of all components of the aircraft program is the lack of stability in the objectives. He 26 MARCH 23,1942 urged that a definite 1942 program be agreed upon at the earliest possible moment, and that, as soon thereafter as proves feasible, the 1943 objectives be finally determined. The executive Director inquired as to the extent to which designs can be frozen so as to provide absolute stability to the specific objectives. Mr. Wright replied that changes in the objectives must be made only for major reasons, but that designs must be altered whenever combat experience reveals that alteration is necessary. Mr. Blaisdell suggested that advance planning of a program is made difficult if there is a need for changes in design from time to time. Mr. Wright stated that a planned program must include proper allowance for probable changes in design. With respect to the relation of aluminum supply to the aircraft program, Mr. Ezekiel observed that, on the basis of the estimate that six months must elapse between delivery of fabricated aluminum and completion of planes from that aluminum, the aircraft companies have already received enough aluminum in aggregate poundage, to deliver in the first seven months of 1942, 27,500 planes instead of the 24,664 planes scheduled under the 8-1 initial program. Mr. Wright suggested that the numbers comparison is misleading, as the weight of planes and the increased proportion of heavy-bomber types is steadily mounting. Actually between January 1942 and June 1944, the weight of the average plane doubles. It was explained that other factors than the supply of aluminum are, of course, influential in determining the maximum production levels. Mr. Bunker felt that the pressure of requirements upon the aluminum supply will be much greater in 1942 than in 1943. Mr. Wright concurred in this view, explaining that the next six months will be the most difficult period for the aircraft program in terms of adequacy of aluminum supply. Mr. Ezekiel pointed out that to date, the aircraft industry has been receiving not over 60 to 65 percent of all shipments of fabricated aluminum, and urged that allocations of fabricated aluminum to the aircraft industry be increased to the equivalent of 75 to 80 percent of the primary aluminum produced two months earlier. Mr. Bunker observed that in Great Britain 91% percent of the primary aluminum ingot, and 80 percent of both primary and secondary aluminum ingot, is used in the production of aircraft. He noted that the British figures express a proportion of domestically consumed aluminum, and that the parallel figure for the American use of aluminum in aircraft is 67 percent. He stated that in Great Britain 1 percent of all aluminum goes into civilian goods as compared to about 8 percent in this country, and noted that the aluminum included in this figure is largely secondary metal, unfit for aircraft. He also pointed out that in peace time the British used aluminum in faf fewer civilian goods, and so have an inherently simpler problem in effecting the channeling of aluminum to military production. Mr. Bunker felt that only about 70 percent of the American aluminum supply can be assigned to the aircraft industry. He reported that the Aluminum and Magnesium Branch is progressively curtailing.aluminum available for naval items. Mr. Searls stated that the specifications for ordnance items have been revised to use less aluminum, but he suggested that the reduction in use of aluminum for such items may have gone too far. Mr. Wright said that substitution of other metals for aluminum in military weapons is a shortsighted policy if thereby the effectiveness of the weapons is seriously reduced. He also referred to the tendency for a supposedly plentiful materials to become scarce when widespread use of it as a substitute for critical materials develops, and cited wood as an example. He wished to urge emphasis on increasing the supply rather than changing to substitutes. Mr. Meigs Stated that every effort is being made to investigate all possible substitutes for aluminum in aircraft construction. Mr. Blaisdell suggested that the expression of the aircraft objectives in terms of total production of planes per year can be misleading, and urged that emphasis be placed upon monthly rate of production for each type of plane. With respect to 1943 objectives, Mr. Wright stated that the 8-1 initial goal of 88,000 planes is feasible if some new facilities are built, but that the 8-1 ultimate goal of 105,000 planes during 1943 is not feasible. The subsequent peak objective can be between 115,000 and 120,000 planes per year. This, of course, is beyond the present 8-1 goals, but plans for the 300,000 engines per year required for, this peak objective are being pressed. Messrs. Meigs and Wright reported that at present primary responsibility for the production of aircraft rests with the Air Corps, War Department, and with the Bureau of Aeronautics, Navy Department. The War Production BoardJntervenes at the request of either of these services. Mr. Wright also pointed out that responsibility for aircraft specifications rests with the armed services, and urged that, as strategic considerations should weigh heavily in the determination of designs, the War Production Board should not go further than to make suggestions in this field. James W. FeSler Acting Secretary Approved: Robert R. Nathan Chairman 686312—46—3 27 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE MEETING XIV MARCH 25, 1942 Present: Members: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr. Mr. Fred Searls, Jr. Staff: Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary Mr. Mordecai Ezekiel, Consultant
War Munitions Program The Chairman announced that on March 24, 1942, he and Mr. Blaisdell participated in a conference with Mr. Donald M. Nelson, Chairman of the War Production Board; Mr. Sidney Hillman, Director of the Labor Division; Mr. William H. Harrison, Director of Production; Mr. James S. Knowlson, Director of Industry Operations; Mr. Stacy May, Director of Statistics; and Mr. Ferdinand Eberstadt, Executive Director, Army and Navy Munitions Board. The conference considered the problem of revising the 1942 objectives of the war munitions program in order to bring them within the range of feasibility. As a result of the conference, a letter has been sent by the Chairman of the War Production Board to the Secretary of War and the Secretary of the Navy requesting that they designate representatives to collaborate with the Chairman of the War Production Board in reviewing the war munitions program and arriving at specific objectives. The letter further proposed that contracts for new facilities and contracts calling for large supplies of new tools be negotiated only for those items specifically designated by the President on January 6, and for the expansion of such critical materials as aluminum, magnesium, steel, synthetic rubber, high-octane gasoline, and toluene.
Aircraft Program The Chairman proposed that the Committee advise the Chairman of the War Production Board that revision of the 1942 and 1943 aircraft-production objectives defined by the. President is essential. He observed that: (1) the proportion of 45,000 tactical planes to 15,000 trainer planes is unrealistic, (2); production of 45,000 tactical planes during 1942 is riot feasible; (3) the Aircraft Branch feels that production of 51,000 planes of all types is possible, but the Aluminum Branch feels that the available aluminum supply will permit a greater production of aircraft; (4) few steps can now be taken to affect 1942 deliveries of aircraft very greatly; and (5) 60,000 planes may be regarded as the goal toward which the industry should strive, but the 8-1 ulti mate objective of 57,000 planes, if distributed by types in proper proportion, should be the specific, working goal. Mr. Searls felt that the 8-1 ultimate objective is not likely to be achieved in finished planes, but noted that in fact actual production can exceed 60,000 planes, if counting of unassembled frames, engines, propellers, and parts, as equivalents of finished planes is legitimate. The War Production Board ruled such counting as not legitimate. (See Document 40). Mr. Ezekiel pointed out that the achievement of either the 8-1 initial or the 8-1 ultimate goal is contingent upon early action to ensure an adequate allocation of machine tools, fabricated aluminum, and other factors essential to aircraft produc-tiori. Mr. Blaisdell urged that the Committee indicate clearly whether the President’s 1942 objective of 60,000 planes is beyond the range of feasibility, and state definitely the maximum assured production. He emphasized the danger of over-optimistic forecasts of probable production, particularly from the standpoint of public relations, The Chairman expressed the view that actual 1942 deliveries of airplanes will be between 10 and 20 percent less than the President’s objectives, and suggested that, sirice the President’s objectives can be thus closely approached, public announcement of a revision of objectives downward is undesirable. He believed that, pending the over-all review of the objectives of the war fnunitions program, the Aircraft Branch should be directed to make every effort to achieve the 8-1 ultimate goal of 57,000 planes. The 1943 objectives under the several suggested programs are: 8-1 Initial 8-1 Ultimate President’s Objective Ezekiel Recommendation Tactical 63,821 24,545 80,588 24,545 100,000 25,000 80,000 30,000 Trainer Total 88.366 105.133 125.000 110.000 Mr. Ezekiel stated that enough engines will be produced in 1943 to enable the completion of 110,000 to 115,000 planes, provided the riecessary complement of spares, and permit necessary exports of engines. He felt that propellers will be available for only 104,000 planes unless high priorities are made available to expedite propeller production. Sufficient primary and secondary high grade aluminum should be available for production of 110,000 planes. Mr. Searls observed that the conclusion that the 1943 aluminum supply will be adequate is based on the assumption that success will attend the production of aluminum at as yet unbuilt and untested plants. Mr. Ezekiel urged that action be taken to ensure the conditions upon which a satisfactory rate of plane MARCH 25 AND 27, 1942 production in 1943 will depend. He called attention to the fact that 1943 plane designs are currently being determined, and that immediate action is necessary to ensure that these designs provide for the maximum practicable substitution of plentiful materials for materials that are scarce. With respect to the proportion of tactical to trainer planes, Mr. Ezekiel stated that the President’s 1943 objective of 100,000 tactical planes cannot be achieved, and he furthermore felt that the relationship between tactical and trainer planes should be in the approximate ratio of 2^:1 rather than, as in the President’s objective, 4:1. The Chairman proposed that the Committee recommend that the proportion of total aluminum allocated for aircraft production be increased as much as is possible without serious interference with the combat efficiency or continuity of production of other military items. Mr. Ezekiel reported that deliveries of fabricated aluminum to the aircraft industry will have to be equivalent to 75 percent of the primary aluminum produced two months earlier if the 8-1 ultimate program is to be achieved. He stated that so far aluminum deliveries have been at a rate sufficient to meet the 8-1 ultimate program. Mr. Blaisdell suggested that it is not possible to determine the proportion of a scarce material that should be allocated to a single industry without appraising the legitimacy of competing demands for the same material. The Executive Director pointed out that strategic considerations must play a part in the weighing of competing demands, and that, accordingly, the armed services would need to participate in the development of a final determination. It was the view of the Chairman that, pending the thorough analysis suggested by Mr. Blaisdell, the Committee can legitimately advise the Chairman of the War Production Board that achievement of a particular rate of plane production is dependent upon the availability to the aircraft industry of a specific proportion of the total aluminum supply. The Committee reviewed the recommendations submitted by Mr. Ezekiel (See Document 37). The Chairman observed that action to ensure maximum utilization of existing plants and to convert plants now engaged in less essential production to aircraft production should precede authorization of the construction of new plants. Mr. Ezekiel was requested to prepare a summary of his report on aircraft production and to include : ( 1 ) detailed analysis of the engine problem; (2) further analysis of the proportion of the primary aluminum supply that should be allocated to the aircraft program; (3) statement of the proper ratio of tactical to trainer planes, on the basis of consultation with the Air Corps, War Department, and Bureau of Aeronautics, Navy Department. The Chairman undertook to prepare a draft memorandum expressing proposed recommendations of the Committee with respect to feasible aircraft-production objectives. Further discussion developed the importance of machine tools for the aircraft program. The Executive Director was requested to prepare a report on the problem of machine tools. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING XV MARCH 27, 1942 Present: Members and Alternates and Staff: Mr. Robert R. Nathan, Chairman Mr. Fred Searls, Jr. Member Mr. Ralph J. Watkins, acting for Mr. Thomas C. Blaisdell, Jr. Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Mr. Simon Kuznets, Research Advisor, Industry Branch, Statistics Division, War Production Board (for discussion of item 1)
War Cycles Mr. Kuznets presented a memorandum (Document 45) outlining a tentative proposal that the Na tional Bureau of Economic Research undertake a study of war cycles for the Planning Committee. Mr. Searls expressed the view that the proposed study, although undoubtedly of value, might tend to divert the attention of the Committee from war problems of greater urgency. The Executive Director suggested that the study might be of significance in connection with the Committee’s continuing analysis of the feasibility and balance of the war munitions program. Mr. Watkins concurred in this view, and felt that the study should be definitely oriented with reference to this analysis. However, Mr. Watkins also called attention to the fact that the National Bureau of Economic Research intended to avoid the use of confidential and secret materials in making the proposed study, and he questioned whether a study thus restricted as to its sources of data would be of practical value to the War Production Board.

MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE Upon Mr. Watkin’s suggestion, it was agreed that further consideration of the proposed study should be deferred until the next meeting, in order that Mr. Blaisdell might participate in the decision. The Chairman adverted to the fact that the Chairman of the War Production Board, in announcing the proposed organization of the War Production Board (See Document 47), had indicated that the Planning Committee should give attention to the problems of post-war adjustment of the national economy. Mr. Searls suggested that studies of these problems might well be postponed until the Committee has completed its consideration of more pressing problems directly related to effective prosecution of the war. Mr. Watkins explained that the National Resources Planning Board, although engaged on several special studies of such problems as the post-war effects of war-time expansion of productive capacity, is primarily interested in stimulating and coordinating post-war planning by other agencies. It would, therefore, welcome consideration of post-war problems by the Planning Committee. At this point Mr. Kuznets left the meeting.

War Munitions Program The Chairman reported that in response to the request of the Chairman of the War Production Board that the Secretary of War designate a representative to collaborate in the revision of the presently stated objectives of the war munitions program, the Secretary of War has appointed Brigadier General Lucius D. Clay, Deputy Chief of Staff for Requirements and Resources, Services of Supply, War Department. The Chairman further reported that General Clay proposes as a first step toward revision that the President be requested to reduce the tank objectives announced in his message to Congress on January 6, 1942, and that armored cars and other self-propelled vehicles be substituted for tanks thus removed from the President’s objectives. It was noted that reduction of the tanl$ objective would also permit curtailment in the program for certain other ordnance items and that the overall reduction in the total progfam thus effected would amount to perhaps 5 billion dollars and bring the total 1942 program to about 57 billion dollars. The Chairman also reported that he believes Mr. William H. Harrison, Director of Production of the War Production Board, is inclined to favor retention of the existing 1942 objectives, but to extend the period for their realization into the first quarter of 1943. At least Mr. Harrison does not seem to be greatly concerned over striving for a much higher goal than is feasible. The Chairman expressed the view that such a policy would cause lack of balance in the program and result in an undesirably high pressure on facilities, materials, and manpower, as there would be a natural tendency for all procurement agencies to attempt to press for achievement of the so-called 1942 objectives before the end of the calendar year. He felt that the total stated goals 30 must be feasible for the period to which they are understood to apply. The Chairman and Mr. Searls undertook to confer with Brigadier General Lucius D. Clay, and Mr. William H. Harrison for the purpose of discussing general approaches to revision of the 1942 war munitions program. The Chairman expressed the opinion that revision of the objectives of the war munitions program should be expedited as much as possible. The Chairman undertook to propose to the Chairman of the War Production Board that representatives of the Planning Committee, Statistics Division, Production Division, and Materials Division, be authorized to meet officially with representatives of the War and Navy Department for the purpose of expediting revision of the war munitions program.
Aircraft Program The Chairman presented a draft recommendation proposing revision of the 1942 and 1943 aircraft production objectives. Mr. Searls expressed himself as skeptical of the possibility of achieving the 8-1 initial objective of 51,000 planes during 1942. He also felt that he could not endorse several of the specific remedial measures proposed by Mr. Mordecai Ezekiel in his report to the Committee (Document 37). After detailed consideration of the draft recommendation, it was agreed without objection that: The draft recommendation on airplane objectives, as revised (Document 46), is approved for transmission to the Chairman of the War Production Board as Planning Committee Recommendation No. 4.
Merchant Shipping The Chairman announced that the Committee will consider the problem of merchant shipping as soon as the War Shipping Administration submits its report of the probable supply of merchant ships. Mr. Searls expressed the opinion that the greatest threat to the success of the United Nations lies in the dearth of shipping. He observed that this in itself constitutes a paramount reason for immediate revision of presently stated objectives of the war munitions program. Such revision should both release materials needed for ship construction and prevent the building of implements of war in quantities far in excess of the shipping space available for their transportation to the theaters of war. Mr. Searls suggested that, while it is important to have manufacturing facilities capable of producing munitions at a high rate, there is no justification for consuming scarce materials in the excessive production of munitions that cannot be delivered to fighting units. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MARCH 27 AND 31, 1942 MEETING XVI MARCH 31, 1942 Present: Members: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr. Mr. Fred Searls, Jr. Staff: Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary Approval of Minutes The minutes of the meetings held on March 6, 10, 11, 13, 16, and 20, 1942, were approved.
Status of Assigned Studies The Executive Director reported upon the present status of studies requested at previous meetings of the Committee. He stated that the staff is actively engaged on preparation of a report covering review of the authorization of new plants (See Minutes V, item 1, and XI, item 1), and new machine tools (See Minutes VI, item 3 and Minutes XIV, item 2), and will consolidate with this study its survey of projects for the construction of industrial facilities, housing, and related community facilities (See Minutes XII, item 3). He also reported that in order to stimulate planning within the operating units of the War Production Board (See Minutes IV, item 1), the staff of the Planning Committee will include a Planning Coordinator. The Chairman stated that Mr. Paul Webbink, Research Advisor, Labor Division, has agreed to prepare a report to the Committee, reviewing the labor supply situation, with particular attention to recent developments (See Minutes IV, item 5). Mr. Blaisdell stated that the report on the national transportation system in war time will be submitted in the near future (See Minutes VI, item 5). The Acting Secretary undertook to obtain for the Committee the report of the Aircraft Committee on the spare parts problem (See Minutes XIII, item 1). The Executive Director stated that Mr. Simon Kuznets has in progress a report on the supply of and demand for critical materials (See Minutes XI, item 1) and a report translating recent civilian-goods production into terms of the raw materials consumed by such production (See Minutes X, item 2). Mr. Searls suggested and it was agreed that, consideration of the relationship between gun requirements and ammunition requirements (See Minutes XI, item 1) should be deferred until the procedure for reciprocal adjustment of all munitions objectives has been determined. The Chairman announced that a general agenda of subjects to come before the Committee during the next several weeks (See Minutes VI, item 6) will be submitted in the near future.
War Munitions Program The Chairman reported that the Chairman of the War Production Board has taken the position that (1) the President must be informed of the relation of his announced 1942 and 1943 objectives to the feasibility and balance of the whole war munitions program, and (2) the armed services must determine their own requirements, and must be responsible for choosing the specific objectives to be reduced in order to render the whole program feasible. Accordingly, the Chairman of the War Production Board has written the President that 40 billion dollars represents the total value of war munitions, war facilities, and military construction that is feasible in 1942, and that 60 billion dollars is the corresponding limit for 1943. He noted that the present programs of the Army, Navy, and Maritime Commission call for outlays for munitions and construction of 62 billion dollars in 1942 and 110 billion dollars in 1943. The necessary over-all revision of these presently stated programs can be accomplished either (1) by adhering to the President’s announced objectives for airplanes, tanks, anti-aircraft and anti-tank guns, and merchant shipping, while sacrificing other equipment deemed by the War Department to be vital to a balanced complement of field equipment, or (2) by authorizing the armed services to revise all objectives, whether initiated by the President or by the services, in order that the munitions produced during 1942 and 1943 may be in conformity with the standards of a balanced supply of goods essential to the prosecution of the war, such revision to be submitted to the President for his consideration. The Chairman of the War Production Board requested the President to indicate which of these approaches to revision of objectives meets with his approval. The Chairman of the Committee expressed the view that the implications of retention of objectives beyond the range of feasibility are not thoroughly appreciated. Mr. Searls observed that experience both of this country during the first World War and of England during the present war has revealed clearly that overly ambitious goals result in bogged-down production lines and construction activities because of the excessive pressure on the limited supplies of materials, workers, and facilities. The Chairman suggested that the Committee should prepare a report emphasizing the practical importance of reducing objectives to the limits of feasibility, and that Mr. W. H. Harrison, Director of Production, should be invited to discuss with the Committee the relation of feasible objectives to the work of actual production. 31 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE Mr. Searls agreed to draft a memorandum on the practical implications of munitions-program objectives beyond the range of feasibility. It was reported that contracts for the construction of new plants are still being awarded by procurement officers of the War Department although it was understood that the recommendation of the Committee that a moratorium be declared on such awards had been accepted by both the Chairman of the War Production Board and the Commanding General, Services of Supply, United States Army.
War Cycles Study The Chairman recommended that the Committee authorize the study of war cycles by the National .Bureau of Economic Research, as proposed by Mr. Simon Kuznets (Document 45). He called attention to the competence of the National Bureau of Economic Research, the modest cost of the project, and the limitation of the arrangement to a six-month experimental period. He stated that the study would compare the trends of our economy during the present war with trends in this country during the first World War and with trends in foreign countries during war periods. He emphasized the fact that the study would be oriented with reference to the practical interests of the Committee, and would be generally supervised by Mr. Kuznets. Mr. Blaisdell felt that the Committee should give great weight to the view of Mr. Kuznets that the proposed study would assist him materially in his work on the range of subjects already assigned to him by the Executive Director. Mr. Searls expressed the view that the proposed study is not directly relevant to the immediate interests of the Committee. Upon motion duly made, it was agreed, Mr. Searls dissenting, that: The Executive Director is authorized to complete arrangements for a study of war cycles by the National Bureau of Economic Research, in general conformity with the memorandum (Document 45) submitted by Mr. Simon Kuznets.
Field Service Organization Mr. Blaisdell referred to a current survey of field relationships among the several war procurement agencies and between such agencies and the War Production Board. He reported that the survey was initiated by the War Department, and is under the direction of Mr. Luther Gulick, Consultant, National Resources Planning Board. The Chairman noted that one of the principal problems of concern to the Planning Committee is the result that extensive decentralization may have upon the problem of effectively implementing broad policies determined upon at Washington. He suggested that a report of the results of the the current survey would be of value to the Committee. . Mr. Blaisdell undertook to request Mr. Luther Gulick, Consultant, National Resources Planning Board to make his report on field relationships among procurement agencies and between such agencies and the War Production Board, available to the Planning Committee. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING XVII APRIL 1, 1942 Present: Members: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr. Mr. Fred Searls, Jr. Staff: Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary
Merchant Shipping The Chairman announced that the War Shipping Administration has submitted its forecast of available cargo shipping facilities, and that the report will be circulated to the members of the Committee. Mr. Blaisdell pointed out that the evidence submitted clearly reveals that the shipping situation is so crit ical that only the most essential goods should be carried in ships controlled by the United States.
War Munitions Program Mr. Searls read a preliminary draft regarding the practical implications of munitions-program objectives beyond the range of feasibility (See Minutes XVI, item 2). The views expressed in the draft were endorsed by the Chairman and Mr. Blaisdell. Mr. Searls agreed to revise his draft memorandum on the practical implications of munitions-program objectives beyond the range of feasibility, for further consideration by the Committee.
Toluene The Executive Director reported that Planning Committee Recommendation No. 1, relating to toluene, was referred to Mr. W. L. Batt, Director of 32 MARCH 31, APRIL 1 AND 2, 1942 Materials, by the Chairman of the War Production Board. It was suggested, and the Committee agreed, that Mr. R. O. McClintock, Coordinator for Oil, War Production Board, should be invited to discuss the toluene problem with the Committee. MEETING APRIL 2, Present: Members: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr. Mr. Fred Searls, Jr. Staff: Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Mr. R. Otis McClintock, Coordinator for Oil, War Production Board
Toluene The Chairman informed the Committee that Planning Committee Recommendation No. 1 (Documents 27), relating to the toluene supply problem, has been referred to Mr. McClintock for consideration, and the Chairman requested Mr. McClintock to comment on the recommendation. It was Mr. McClintock’s view that there are so many technical and detailed readjustments that would be required to effectuate the Committee recommendation that the problem must be regarded as one for solution by the petroleum industry itself, acting with the support and collaboration of the Office of the Petroleum Coordinator for National Defense. Mr. Searls pointed out that the Ordnance Department of the War Department awards contracts for toluene production, and so should also participate in the development and execution of policies concerning toluene. Mr. McClintock expressed the opinion that among governmental agencies, the Office of the Petroleum Coordinator has the primary responsibility for ensuring that the petroleum industry has adequate capacity for production of critical war materials. He felt that the principal contributions to be made by the War Production Board are confined to the determination of production objectives. Mr. Searls observed that the critical problem is that of providing for concentration of gasoline production at those refineries that are equipped to produce toluene, high-octane gasoline, butadiene, and fuel oil. He emphasized the need for speed and coordination in developing a policy favoring those refineries that produce war materials. The Chairman suggested, and Mr. McClintock concurred, that so James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman XVIII 1942 far the refineries producing war materials have not been accorded preferential treatment in the disposal of their motor gasoline. Mr. Searls stated that, although the immediate problem is that of ensuring against an early reduction in toluene production, the longer-range problem should not be neglected. The longer-range problem arises from the fact that contracts will be let over the next several months for production of toluene, high-octane gasoline, butadiene, and fuel oil. Mr. Searls pointed out that the disposition of motor gasoline will be far more difficult if there is such a lack of coordination in the placing of these contracts that an unnecessarily large number of plants are engaged in production of critical war materials. He observed that the same plant can produce several different materials of this type, and with a lower output of motor gasoline than would result from a wide dispersion of war contracts. Mr. McClintock observed that the Office of the Petroleum Coordinator is responsible for stimulating the industry to meet these and similar problems. Mr. Blaisdell pointed out that the problems have been under study by the Office of the Petroleum Coordinator for some time, and that the recommendation of the Committee is intended to emphasize the imperative need for drastic action to protect a vital sector of the munitions program. Mr. McClintock acceded to the suggestion of the Chairman that he consult with Colonel J. P. Harris of the Ordnance Department, War Department, with respect to relations between the Ordnance Department and the Office of the Petroleum Coordinator. Mr. Blaisdell emphasized the importance of a broad approach to the problem of arranging the major structural changes within the petroleum industry that are essential to the effective conversion of the industry to war production. At this point Mr. McClintock left the meeting. The Executive Director undertook to report to the Committee within one week as to further implementation of Planning Committee Recommendation No. 1, relating to toluene.
War Munitions Program Mr. Searls presented a revised draft (Document 52) of his memorandum on the practical implications of over-procurement (See Minutes XVII, item 2). 33 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE After discussion, it was agreed without objection that : The Chairman will bring the memorandum by Mr. Searls on over-procurement (Document 52) to the attention of Mr. W. H. Harrison, Director of Production, War Production Board. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING XIX APRIL Present: Members: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr. Mr. Fred Searls, Jr. Staff: Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Mr. Joseph Meehan, Chief, Research and Statistics Division, Bureau of Foreign and Domestic Commerce, Department of Commerce. Mr. Charles A. R. Wardwell, Chief, Current Business Analysis Unit, Research and Statistics Division, Bureau of Foreign and Domestic Commerce, Department of Commerce Mr. James A. McCullough, Assistant Chief, National Economics Unit, Research and Statistics Division, Bureau of Foreign and Domestic Commerce, Department of Commerce; on loan to the War Shipping Administration
Merchant Shipping Mr. Meehan referred to the report on merchant shipping requirements (Document 44). He stated that the data are necessarily imperfect, but that the very fact that agencies have had to forecast their shipping requirements for as much as a year ahead constitutes notable progress toward a planned shipping program. Mr. Meehan suggested that the most important next step is the thorough consideration of the relative merits of alternative uses for our limited shipping facilities. He noted that decisions are daily being made with regard to the rerouting of particular ships and the relative preference shown various cargoes awaiting shipment. He reported that, among agencies having important claims on shipping space, the Shipping and Import Branch, Materials Division, War Production Board, had presented the most thorough analysis of its future shipping requirements. Mr. Meehan referred to the War Shipping Administration report (Document 58), estimating the probable supply of shipping and comparing the estimated requirements with the estimated supply. He 3, 1942 observed that, because of various differences in approach, the figures for requirements and the figures for supply are not exactly comparable. He noted, particularly, that in the War Shipping Administration report, it is assumed as settled that the Army will be allotted its present ships, 18 merchant ships a month, and a definite number of C-3 type ships. Mr. Meehan also felt that some of the requirements listed, particularly those of Russia, are understatements. Mr. Wardwell observed that there are two alternative methods of matching available ships and cargoes. One is to regard the ships and the cargoes as if they were on a constantly moving chain, and make the analysis by counting all ships and cargoes where-ever they are in the world on the base date. The second method is to take one point on the chain, such as the continental United States, and compare cargoes on the dock awaiting shipment with the ships in port available to lift the cargoes. Mr. Wardwell stated that the War Shipping Administration started its analysis with ships entering port in April, but by August the figures include the whole merchant marine ; in other words, the basis of the analysis shifts from the port-clearance principle to the merchantshipping-chain principle. As a result, the report gives the impression that during the next few months, there is a very sharp rise in the inadequacy of shipping space to accommodate required cargoes. Mr. Wardwell reported that, in fact, the deficit increases at a much more moderate rate. Mr. Meehan noted that the report projects requirements on the basis of actual anticipations for the first quarter of 1943. He observed that actual requirements were rising toward the end of the year rather than remaining on a plane, and would probably continue upward. It was Mr. Meehan’s view that the whole question of foreign supply of ships should be thoroughly studied. He noted that the War Shipping Administration assumes simply that the foreign supply to be expected in the future is the foreign ships that have recently been in our trade, instead of analyzing the total picture, including the possibility that other foreign ships might be available to us. Mr. Meehan also believed that the ships touching at Canadian ports should be included in the supply of available 34 APRIL 2 AND 3, 1942 shipping, and that it is questionable whether the 300,000 tons of shipping now statutorily assigned to the New England coal trade should be regarded as inconvertible to more essential routes. It was noted that the War Shipping Administration report assumes a sinking loss rate of 2 percent of dry cargo shipping tonnage. Mr. Searls observed that if the present rate of total sinkings, including both dry cargo and tanker sinkings, is maintained, it is probable that 6 percent will be an appropriate allowance for such losses. Mr. Meehan pointed out that an underestimation in the calculation of the rate of sinkings may introduce substantial errors into the whole analysis. Mr. Wardwell analyzed the cargo requirements of the Army and the estimated tonnage available to the Army. He stated that 1.8 million tons of cargo shipping were available to the armed forces on March 31, 1.6 million tons of such shipping will be added during the balance of 1942 through the 18 ships to be delivered to the Army each month, and about 300,000 tons will be added to Navy cargo vessels under the C-3 program. Thus, a total of 3.7 million tons of shipping will be available to the Army and Navy by December, 1942, which is slightly in excess of estimated Army Requirements by December of 3.6 million tons. Mr. Wardwell thought that the Army requirements probably represented cargo shipments to support about 600,000 more troops than were in theaters of war at the end of March. Mr. Wardwell explained that this analysis must be regarded as very tentative, as a number of assumptions were made by him during its development. He particularly called attention to the fact that the requirements stated by the Army indicated points of departure, but did not include information as to probable destinations. In order to arrive at this analysis, Mr. Wardwell assumed certain destinations on the basis of the indicated points of departure. He further noted that no allowance had been made in his calculations for probable sinkings. Mr. McCullough suggested that the sinkings might exceed the total tonnage added to the supply under the C-3 program. In a discussion of the ratio of cargo tonnage required to lift the equipment for one soldier, it was revealed that estimates vary from 5 to 18 ship tons of 40 cubic feet per man. Mr. Meehan suggested that it is essential to arrive at a firm, well-substantiated estimate of this load factor, and that there has already been sufficient experience with the movement of troops to permit development of such an estimate. Mr. Wardwell felt that the load factor of about 5 ship tons per man, used by the Army, has been developed from detailed analyses of the complementary equipment and initial supplies an expeditionary force requires. He also emphasized the widely varying conditions in theaters of war, and suggested that load factors must vary with the task assigned to the particular expeditionary force, the climate at its destination, and similar considerations. Mr. Meehan called attention to the alternative as-: sumptions that can be made with respect to the relation between outbound and inbound shipping. He pointed out that in his report (Document 44) on shipping requirements the position was taken that the excess of outbound over inbound shipping is so great that in the main efficient routing of inbound ships will ensure the transportation of cargoes destined for this country. Consequently, it was assumed that requirements for inbound shipping could be ignored for purposes of determining the deficit in shipping supply. The War Shipping Administration makes the contrary assumption that, for areas of the world where shipments to the United States are expected to exceed shipments received from the United States, the United States-bound shipping needs are the controlling factor in determining requirements. Mr. Meehan pointed out that this condition exists in the cases of West Africa, the Caribbean area, and the west and north coasts of South America. He suggested that these assumptions may result in overstatement of shipping requirements. Mr. McCullough observed that the correct answer may well require recognition that neither all inbound cargoes can be picked up by boats returning from outbound trips planned in accordance, with outbound requirements, nor all outbound ships can be allowed to return in ballast in preference to making detours to load inbound cargoes. On the basis of the studies submitted to the Committee, Mr. Meehan concluded that about 40 percent of the presently stated requirements cannot be met by available shipping facilities in the absence of more effective utilization. He suggested that the agencies concerned should, therefore, begin to determine the types of requirements that can be most readily dispensed with. Mr. McCullough urged that study be devoted to the scheduling of the cargoes to be. loaded in particular months, and the number of ships suitable and available for loading those specific cargoes. Mr. Blaisdell emphasized the importance, of relating the rate of sinkings to the number of new vessels delivered by shipbuilders in each month, and in turn, the relation of merchant shipping to the naval shipping situation. Mr. Meehan pointed out that lend-lease goods account for a very sizeable portion of the total shipping requirements. Mr. Blaisdell observed that lend-lease is merely a fiscal concept, and that the important consideration is whether the needed materials are being shipped to the most important theaters of war. Mr. McCullough noted that an official estimate in the latter part of 1941 stated that United Kingdom requirements for cargoes from the United States and’ Canada would be about 1% million tons per month. Actual shipments have been about 1 million tons per month. Mr. Searls pointed out that most of the merchant ships plying between this continent and the British Isles are owned or controlled 35 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE by the British Government. Mr. McCullough suggested that in view of the shipping shortage every effort should be made to substitute munitions for the wood pulp, cereals, and other less essential cargoes now being shipped to the United Kingdom. Mr. Searls emphasized the interdependence of the shipbuilding program, war munitions production objectives, new facilities, and the availability of shipping facilities. He pointed out that the production objectives for a number of types of munitions will have to be substantially curtailed if, as the evidence appears to indicate, there will be too few ships to move large quantities of these munitions to the theaters of war. This curtailment in munitions objectives and the resultant reduction in the construction of new industrial plants should release large quantities of materials needed in the shipbuilding program. Mr. Searls suggested that it is important for the Committee to learn what munitions will not be shipped if shipping space is to be as limited as the present studies forecast. Mr. Meehan noted that there is some danger in assuming that large quantities of troops and munitions cannot be shipped to theaters of war. He pointed out that much shipping space is at present not being utilized most effectively, and that many less essential cargoes are occupying space that with fuller realization of the emergency would be assigned to munitions under a rigid system of controls and penalties. The Chairman inquired as to the appropriate procedure for obtaining more adequate estimates of shipping supply and requirements. He pointed out that the Committee could either actively develop the estimates, in cooperation with the War Shipping Administration, or could simply request the War Shipping Administration to undertake such analyses as it feels would meet the needs of the Committee. The Chairman pointed out that the interest of the Committee is largely confined to the relation of available shipping to the objectives of the munitions-production program and emphasized the importance of recognizing fully the responsibility of the> War Shipping Administration for making the plans and decisions in the shipping sector of the war program. Mr. McCullough observed that at present the War Shipping Administration is projecting specific shipping requirements for only two months in advance. Mr. Searls undertook to discuss with Mr. Lewis W. Douglas, Advisor to the War Shipping Administrator, the appropriate procedures for further development of estimates of shipping supply and requirements. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING XX APRIL 6, 1942 Present: Members and Alternates: Mr. Robert R. Nathan, Chairman (for discussion of items 1 and 2, and part of item 3) Mr. Thomas C. Blaisdell, Jr. (for discussion of part of item 3) Mr. Fred Searls, Jr. Mr. Ralph J. Watkins (acting for Mr. Blaisdell during discussion of items 1 and 2, and part of item 3) Mr. Edward T. Dickinson, Jr. (acting for Mr. Nathan during part of discussion of item 3) Staff: Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Mr. Simon Kuznets, Research Advisor, Industry Branch, Statistics Division, War Production Board 1, War Munitions Program The Chairman reported that the Chairman of the War Production Board has received the President’s approval of a revised war munitions program objective for 1942 of 45 billion dollars. The Chairman of the Board has instructed the Planning Committee to sit with representatives to be designated by the War and Navy Departments for the purpose of reducing the presently stated objectives in conformity with this new over-all goal. The Chairman emphasized the fact that the Committee will not determine specific objectives for each individual item in the program, but will simply bring considerations of production feasibility to bear upon the thinking of the Army and Navy representatives responsible for revision of the program. The Chairman noted that the Committee will need rela-> tively thorough analyses of the factors of production in order that it may determine feasible levels of production.
Merchant Shipping Mr. Searls recommended that, in view of the prospects for a fully developed statistical organization in the War Shipping Administration, and in view of the desirability of reducing duplicatory 36 APRIL 3 AND 6, 1942 research activities, the Committee should not press further its own gathering of detailed data on shipping supply and requirements. He also suggested that the Committee express its appreciation to the Bureau of Foreign and Domestic Commerce for the studies it has submitted to the Committee (See Documents 38, 39, 42, and 43) and urge the Bureau to assist the War Shipping Administration in the development of accurate data on the shipping situation. There was general concurrence with these views. Mr. Searls observed that the available evidence indicates that the 1942 relationship between the supply of and demand for shipping cannot be materially remedied by an augmented- shipbuilding program. He concluded that, since this is true, the greatest steps toward increasing cargo-carrying capacity will have to be in the direction of more efficient operation and utilization of available ships.
Industrial Facilities and Military Construction Program Mr. Kuznets referred to his reports on new industrial facilities (Document 48) and direct military construction (Document 50). He summarized the total program for Federally and privately financed construction of industrial facilities as follows: (In Billions of Dollars) Total Program Value In Place 12/31/41 To do After 12/31/41 Value In Place 2/28/42 To do After 2/28/42 Federal 15.7 2.8 12.9 3.7 12.0 Private … 2.9 1.0 1.9 1.4 1.5 Total 18.6 3.8 14.8 5.1 13.5 Mr. Kuznets pointed out that if the approximately 13 billion dollars of Federal funds remaining to be expended after 1941 were to be spent in conformity with present completion schedules, there would be built roughly 8 billion dollars’ worth of value in place of Federally financed facilities in 1942, and roughly 5 billion dollars’ worth of such construction in 1943 or later. Mr. Kuznets called particular attention to (1) the dramatic acceleration of the rate at which contracts for Federally financed industrial facilities have been awarded during January and February; (2) the large volume of funds still unobligated at the end of February, but earmarked by Congress for the financing of new facilities; (3) the large number of facilities already contracted for that will not be completed until sometime during 1943; (4) the rate of approximately one billion dollars a month that will have to be attained by the end of 1942 in order to provide the 700 million dollar monthly average for the whole year that is necessary to meet the estimated 8 billion dollars’ worth of Federally financed facilities construction; and (5) the concentration of commitments and funds in explosives, ammunition, and guns. Mr. Blaisdell entered the meeting at this point. The Chairman observed that machine tools are an important limiting factor upon the feasibility of a large industrial facilities program. Mr. Kuznets estimated that about 1.3 billion dollars’ worth of machine tools would be required for proper tooling of the 8 billion dollars’ worth of new facilities in 1942. It was noted that this figure does not represent total machine-tool requirements for the year, as it Omits requirements for exports, replacements, additions to old plants, and installation of tools in new plants whose construction is privately financed. The Chairman observed that there are two criteria by which an industrial facilities program may be tested: (1) the need for the facilities in order to produce goods required by the war munitions program ; and (2) the ability to build the new facilities in view of the limited supply of materials and labor. Mr. Kuznets suggested that the first criterion should be given preponderant weight as there is no question of the nation’s ability to build large numbers of facilities if it is willing to sacrifice other claims upon the required materials and labor. Mr. Searls felt that sound decisions will necessarily be based both on the need for the plants and on the merits of the alternative uses to which the same material and human resources might be put. The Chairman felt that existing 1942 programs of 8 billion dollars’ worth of Federally financed construction of new industrial facilities and 8.4 billion dollars’ worth of direct military construction and Federally financed defense housing (See Document 50) are beyond the bounds of feasibility, quite apart from any doubts as to the needs for such a large volume of construction. He pointed out that the figure, 16.4 billion dollars, accounts for only certain categories of construction and that other types of construction necessary during 1942 would probably add another 6 billion dollars. As 16 billion dollars is the previous peak of annual construction, the presently stated 1942 construction programs seem clearly beyond the range of feasibility. At this point Mr. Nathan left the meeting, Mr. Searls took the chair, and Mr. Dickinson acted as alternate for Mr. Nathan. Mr. Kuznets pointed out that the significance of the high construction objectives can be readily appreciated when translated into terms of raw materials. He estimated that the 1942 industrial facility and military construction program would require between 13 and 14 million tons of steel. Mr. Watkins noted that non-military construction would probably consume an additional 4 million tons of steel. Thus, about one-fifth of the total steel production of the country would be needed for construction projects. Mr. Searls observed that the situation is even more serious than these figures indicate, for a large-scale construction program results in large orders for construction machinery and industrial equipment, whose manufacture, in turn, requires substantial quantities of steel. 37 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE Mr. Kuznets emphasized the importance of keeping 1943 in mind when determining goals for 1942. He pointed out that to meet the 1942 program for construction the monthly rate must be over 2 billion dollars by December 1942. He pointed out that, as 1943 facilities-program objectives do not require maintenance of this 24 billion dollar annual rate, a severe curtailment of construction activities will be necessary. He observed that the direction of enormous quantities of men and equipment into the construction industry during 1942 and the rapid demobilization of the industry in early 1943 would result in great dislocation and waste. Mr. Searls reported that the Ordnance Department, War Department, has substantialy curtailed its facilities-construction program. He stated that certain existing plants have found it possible to double their scheduled output. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING XXI APRIL 7, 1942 Present: Members and Alternates: Mr. Robert R. Nathan, Chairman (present for the latter part of the meeting) Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Seards, Jr., Member (acting chairman for the first part of the meeting) Mr. Edward T. Dickinson, Jr., acting for Mr. Nathan during the first part of the meeting Mr. Ralph J. Watkins, alternate for Mr. Blaisdell Staff: Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Mr. Simon Kuznets, Research Advisor, Industry Branch, Statistics Division, War Production Board
Raw Materials Mr. Kuznets presented a report (Document 56) on the evaluation of objectives in terms of raw materials. Mr. Searls emphasized the difficulty of accurately appraising civilian requirements for raw materials. He pointed out that an increase in the military production program often stimulates an increase, rather than the commonly expected decrease, in civilian requirements for materials such as steel. It was suggested that a thorough study of the relations between military objectives and the construction of additional industrial facilities might furnish a basis for effecting a curtailment of the facilities program. Mr. Searls pointed out that the evidence submitted to the Committee reveals that reduction of civilian requirements for steel is essential. Mr. Kuznets reported that the amount of steel to be made available to railroads has been reduced, and that a conservation order is being prepared to prohibit several hundred uses of steel in finished products. Mr. Searls stated that on the basis of contracts already placed, and facilities already existing or contracted for, 670,000 tons of Army ammunition are to be produced per month at the beginning of 1943. He pointed out that even if British boats should carry 20 per cent instead of their present 5 per cent of the ammunition produced under Army contracts, there would still be six times as much ammunition as the United States can transport in ships. It was estimated that 2.5 million deadweight tons of shipping would be required for ammunition alone. Mr. Searls observed that this would account for about 50 per cent of the total shipping tonnage available in March, 1943. He concluded that these comparisons indicate the need for reducing ammunition objectives and for increasing shipping and storage facilities. The Executive Director inquired as to the possibility of British production of ammunition being sufficient to provide for the needs of American expeditionary forces in the British Isles and the continent of Europe. Mr. Searls responded that the British feel that their production of ammunition is not adequate for their own needs, and, therefore, are not in a position to make ammunition available to their allies. Mr. Nathan entered the meeting at this point and took the chair. Mr. Kuznets noted the difficulties in arriving at estimates of minimum civilian requirements. He pointed out that there is a natural tendency for all estimates of requirements to include a margin of possibly dispensable needs, which can be used as a cushion against overly drastic curtailment by allocation agencies. He also stated that the time element is very important in the gauging of minimum civilian requirements, as the civilian economy might live on its existing capital for a short period and so do without supplies and equipment that over a longer period it would need to have. The Executive Director pointed out that, on the same basis, planning for drastic cuts in civilian supplies for one year should be consciously influenced by recognition of the need for compensating in the succeeding year for those 38 APRIL 6 AND 7, 1942 cuts. Finally, Mr. Kuznets observed that, because of the great importance of indirect defense needs, the civilian requirements cannot be accurately estimated until the military requirements have been determined. The Chairman suggested that in view of the extensive civilian consumption of materials during the first quarter of 1942, the estimates of civilian requirements for 1942 as stated in Mr. Kuznet’s report (Document 56) should be regarded as minima. Mr. Kuznets endorsed this suggestion, with the reservation that the estimates of civilian requirements for cattle hides are probably too high. The Chairman suggested that there are three possible approaches to the task of relating materials shortages to revision of the objectives of the war munitions program: (1) to make a broad analysis, based on only the more critical materials, particularly steel, copper, zinc, and the alloys; (2) to analyze the implications of all of the critical materials; or (3) to make very specific studies of not only the raw materials, but also such related items as aluminum forgings, steel plates and castings, brass rolling mills, and nickel steel. The Chairman recommended that the broad analysis of selected materials should receive the first attention of the Committee. This study may then be supplemented and refined by use of the other two suggested approaches. The Executive Director suggested that the Committee should at some stage of this inquiry give attention to special bottlenecks holding up thé delivery of munitions. There was general acknowledgment of the merit of this suggestion. In an attempt to gauge the extent and type of curtailments in the war munitions program that may be impaired by materials shortages, the Committee roughly analyzed the implications of the supply of and requirements for copper, as presented in Mr. Kuznets’ report (Document 56). With respect to the 1942 supply of copper, it was noted that domestic production was estimated at 1,411,000 tons and imports at 703,000 tons. It was stated that of the anticipated domestic production, 1,165,000 tons will be primary copper, and that 1942 domestic production of primary copper is expected to increase from a monthly rate of 90,000 tons in January to 104,000 tons by December. Mr. Searls expressed the opinion that the estimates of domestic production are excessive. The 703,000 tons of expected imports of copper may be compared with actual 1941 imports of 724,000 tons. Of the expected imports, 40,000 tons will probably be Rhodesian ore shipped to the United States for refining and export to Great Britain., With respect to 1942 requirements for the 2,114,-000 tons of copper that are estimated to be available for allocation, it was suggested that the foreign, merchant shipbuilding, and aircraft requirements, totaling 375,000 tons, should be treated as irreducible. Mr. Kuznets urged that the stated civilian re quirements of 616,000 tons should be treated similarly, and stated that the bulk of these requirements are for such indirect defense purposes as electrical generators, telephone and telegraph equipment, industrial and office machinery, and wire and cable. Deductions of these requirements for foreign nations, civilians, merchant shipbuilding, and aircraft from the total expected supply leaves only 1,120,000 tons of copper available for the Army, the Navy, and war construction, as compared with estimated requirements for these purposes of 1,828,000 tons. Consequently, it was tentatively suggested that the stated copper requirements for the Army, Navy, and war construction must be cut roughly 40 per cent. The Chairman reported that the Army and Navy have already been urged to adopt emergency specifications designed to conserve such scarce materials as copper. Mr. Kuznets observed that European armies have apparently equipped themselves with far less copper than is available to the United States Army. Mr. Searls reported that in 1940 Germany possessed only 13.8 per cent of the world supply of copper. Upon motion duly made, it was agreed without objection that: The staff will prepare estimates of the percentile cuts in Army, Navy, and war construction requirements that would be necessary in view of available supplies of critical raw materials, and upon each of the following asumptions: (1) that curtailment of aircraft, merchant shipbuilding, and civilian requirements is not feasible; (2) that curtailment of aircraft, merchant shipbuilding, civilian, and foreign requirements is not feasible; and (3) that although aircraft and merchant shipping requirements cannot be reduced, foreign requirements other than those of Canada can be halved, and’ civilian requirements can be reduced to the average annual requirements for the period 1931-1935. Messrs. Blaisell and Watkins suggested that the stated civilian requirements should be reviewed as critically as the other requirements. -The Chairmans felt that it would be impossible to reduce civilian consumption of many critical materials to the 1932 level, and also reiterated his view that the stated civilian requirements for 1942 may prove to be too low, since the year is too far advanced for drastic measures to effect extensive reductions in 1942 civilian consumption of materials. Mr. Kuznets advocated that the materials problem be approached through analysis of the materials requirements for the most vital finished products, the order of their importance to the successfùl prosecution of the war, and that, after the materials needs for these products have been determined, the residual supply of the materials may be distributed among other claimants,. with due appraisal of the merits of competing claims in the light of such factors as limited shipping and storage facilities. Mr. 39 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE Searls emphasized the importance of an early decision by the Committee as to the curtailments of munitions objectives necessitated by materials shortages, and expressed the view that the degree of refinement implicit in the approach proposed by Mr. Kuznets cannot be achieved within the short period before the Committee must take action. Mr. Searls explained, however, that the course outlined by Mr. Kuznets might well be worth following after the Committee has completed its basic policy decisions. The Chairman concurred with the view that the Committee must very promptly prepare a recommendation with respect to the materials situation. The Executive Director suggested, and the Chairman agreed, that shipping, industrial facilities and military construction, and raw materials should be treated together in a single recommendation on major factors limiting the feasibility of war munitions program objectives. Mr. Kuznets suggested that in the conferences with the representatives of the War and Navy Departments the Committee should emphasize that non-essential civilian uses are being drastically curtailed but that even with such curtailment there will still not be enough of certain materials to meet stated requirements of the War and Navy Departments. The attempt to bring these stated requirements within the limits of available supplies of materials could then be based upon (1) substitution of more plentiful for scarce materials in Army and Navy specifications, (2) curtailment of military objectives in recognition of such other limiting factors as shipping and (3) curtailment of 1942 objectives in the light of the 1943 program and the consequent desirability of establishing 1942 peak rates that can feasibly be maintained throughout 1943. Messrs. Blaisdell and Kuznets stressed the importance of immediately establishing controls adequate to prevent the flow of critical materials into non-essential uses. Mr. Searls inquired whether it would not be desirable to propose that highest authorities prescribe specific objectives that will bring the total program within the range of feasibility. He felt that such a procedure is probably the only one that can achieve results as quickly as the emergency requires. The Chairman suggested that before the Committee adopts such a procedure, it should be certain that the already established procedure for consultation between the Committee and military and naval representatives will not ensure satisfactory adjustment of the war munitions program objectives.
Report of Planning Committee to the War Production Board The Chairman referred to the report (Document 54) of the work of the Planning Committee between February 2 and April 4, 1942, and requested approval of its submission to the War Production Board at its meeting on April 7, 1942. Upon motion duly made, it was agreed without objection that: The report (Document 54) of the work of the Planning Committee between February 2 and April 4, 1942, is approved for submission to the War Production Board. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING XXII APRIL 8, 1942 Present: Members: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Staff: Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Mr. Stacy May, Director of Statistics and Director of Progress Reports, War Production Board Mr. Simon Kuznets, Research Advisor, Industry Branch, Statistics Division, War Production Board
War Munitions Program Mr. Searls expressed the fear that negotiations for the revision of specific objectives of the war munitions program may extend over a number of months. He, therefore, proposed that the highest authorities be requested to prescribe promptly a maximum objective for each major segment of the war munitions program. Mr. Searls also urged that rigid controls be placed on the obligation of funds for new industrial facilities. He felt that a reviewing agency should be directed not only to scrutinize critically every new proposal for construction of facilities but also to reconsider a number of the commitments already made in the first quarter of 1942. The Chairman pointed out that the President has 40 APRIL 7 AND 8, 1942 recently directed that the over-all 1942 objective for munitions production and war construction should be 45 billion dollars, and that the War Department has already determined on reductions amounting to about 8 billion dollars. Mr. May expressed the opinion that a vigorous attitude on the part of the War Production Board should be sufficient to ensure rapid progress in the negotiations with the armed services. Mr. Blaisdell urged that in analysis of the war munitions program attention be given to the productive capacities being established on particular items and the peak rates of production made possible thereby. Mr. May agreed that such an approach is desirable, pointing out that the 1943 program depends upon the capacities and production rates established during 1942. He added, however, that a number of facilities will have been brought into production by 1943, and that much productive energy currently being devoted to construction of industrial facilities will be released during 1943 for direct participation in munitions production. He proposed that the program be analyzed by projecting 1942 peak production rates through 1943, and testing the ability of the nation to sustain these rates by reference to the national income, raw materials, industrial facilities, and similar factors. Mr. May pointed out the danger of aiming for 1942 production rates that it will be impossible to sustain during 1943 because of materials shortages. Mr. Blaisdell observed that this consideration should not weigh heavily if high 1942 production rates of particular items are essential to giving the United Nations striking power at an early date. He also suggested that surplus capacity is preferable to the risk of inadequate capacity, particularly in view of the possibility that production at some war plants and in some areas may be interfered with by enemy activity. The Chairman suggested that in order to pursue its work on revision of the war munitions program, the Committee will need to know the stated requirements for each category under the 62 billion dollar 1942 program, the possible reductions in these requirements, the monthly rates of expenditures already scheduled, and the annual and monthly requirements for each of the critical raw materials. Mr. Kuznets felt that the annual expenditure rates and annual rates of raw materials consumption can be computed, but that analysis on a monthly basis will not be feasible until production schedules under the revised program have been determined. Mr. May suggested that monthly schedules might be worked out for a few materials on a sample basis.
Raw Materials ‘ Pursuant to the previous action of the Committee (Minutes XXI, item 1) Mr. Kuznets presented supplementary tables oni the supply of raw materials in 1942 and 1943 -(Document 57). ■ Mr. Searls expressed doubts as to the reliability of existing estimates of materials requirements. He pointed out that the reported 1942 requirements for copper in small arms and gun ammunition would necessitate an average monthly production of ammunition far in excess of actual monthly production during the first part of 1942. Mr, Searls also reported that the substitution of steel for brass in cartridge cases should reduce ammunition requirements for copper by roughly 50,000 tons in 1942, and 357,000 tons in 1943. He stated that, on the basis of such independent information as is available to him, the estimate that the supply of copper will be 2,114,000 tons in 1942, and 1,942,000 tons in 1943, is generally accurate, and does not rest on misconceptions regarding the use of copper scrap. However, he pointed out that the estimates are optimistic since they make no allowance for such factors as strikes and shipping difficulties. Mr. Kuznets pointed out that the estimate that 835,000 tons of chromite will be available in 1942, assumes that the 1941 import level of about 650,000 tons can be maintained. He observed that the bulk of these imports must come from South Africa, Rhodesia, and Cuba, and expressed the view that the estimates of imports may be very optimistic. The Chairman and Mr. May felt that the continued importation of African chromite at 1941 levels is not unlikely. Mr. Searls stated that the estimates of domestic production of chromite are low, and also questioned the indiscriminate combination of low-grade and high-grade ores in the estimates. The Chairman suggested that the estimates of supply should take into consideration the materials that through requisitioning may be made available for war production. In this connection Mr. Kuznets referred to a report (Document 59) submitted to the War Production Board by Mr. L. J. Martin, Assistant Chief, Bureau of Priorities, War Production Board.
Merchant Shipping Mr. May advised the Committee against use of estimated shipping capacity as a major factor limiting the whole war munitions program. He observed that, in the first place, current estimates of available shipping facilities understate the number and capacity of ships that could be mobilized in a time of desperate emergency. Second, the current estimates of essential demands for shipping space assume that a substantial quantity of raw materials should be shipped to our allies. It was Mr. May’s view that shipments of finished munitions should be greatly preferred over shipments of raw materials because the finished munitions can be used immediately while the raw materials ’ cap. not be processed into finished munitions for periods of from three to nine months after their delivery r He also pointed opt that emphasis on the-shipffi^Vo^ fi^ tions would stimulate maximum use of bur war 41 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE production facilities. Third, the reduction of objectives because of unfavorable shipping prospects would delay the early equipping of our Army and Navy, and this in turn might postpone and reduce shipments of munitions to our allies. Mr. May emphasized the fact that it is more dangerous to have too few implements of war for our allies than it is to have a large supply that cannot be immediately shipped. He observed that Germany and Russia appear to have solved the problem of munitions storage, as they have been accumulating war supplies over a period of many years. He also pointed out that our possession of a large number of such vital implements of war as airplanes and tanks would probably result in a general feeling that the United States is sufficiently armed to be able to spare vast amounts of -equipment to other members of the United Nations. Mr. May emphasized his thorough agreement with the policy of building the maximum number of merchant ships, even if this entails some diversion of economic resources from production of munitions. He would nôt, however, favor the reduction of munitions-production objectives on the assumption that ships will not be available to transport the supplies produced in conformity with the objectives. The Chairman pointed out that a choice must be made between two alternative policies: (1) production of a great quantity of munitions of war, without regard to limitations of shipping facilities, or (2) production of only the amount of munitions that can either be shipped abroad or be effectively used within the United States, and devotion of the residual economic resources to the service of the civilian economy. The Chairman felt that availability of shipping facilities should be taken into account in the determination of the number of troops that can be transported abroad with a full complement of equipment and supplies. Mr. May proposed that instead of either curtailing munitions production or producing extravagant quantities of complementary equipment and supplies for American troops, the residual productive effort of the nation, after due allowance for necessary troop equipment and supplies and essential civilian needs, should be devoted to production of types of armament most needed by our allies. He urged, continued adherence to the President’s concept of the United States as the arsenal of democracy. Such a concept, he pointed out, does not require that planes and tanks produced in this country must bear any particular relation to the number of American troops that can serve in foreign theaters of war. Mr. May observed that a number of our allies have adequate manpower, and that, therefore, it is conceivable that the United Nations may determine that during particular periods of the war the shipment of large quantities of critical munitions should be given precedence over the transportation of millions of troops with their complementary equipment and supplies. Mr. Searls pointed out that the ammunition objectives are beyond the range of feasibility whether judged by the requirements of our expeditionary forces or by the availability of shipping space. He also emphasized the peculiar difficulties in storing large quantities of surplus ammunition; Mr. May agreed that ammunition objectives are a special case, and that they should be fixed at a level that is feasible in view of the shipping and storage factors. Mr. Searls suggested that production of great quantities of tanks and planes would necessarily call for production of large quantities of guns and ammunition, which, if shipping space were not available, would encounter the storage problems he had already outlined. Mr. May suggested that, before plane and tank objectives are reduced to accommodate ammunition and gun production and storage factors, there should be consideration of the possibility that some of our allies may be able to provide the guns and ammunition to match the American tanks and planes. Mr. May undertook to prepare a memorandum to the Committee, elaborating his remarks on the relation of shipping to the feasibility of the war munitions program. James W. Fesler • Acting Secretary Approved:. Robert R. Nathan Chairman MEETING APRIL 13, ■ -J Present: ■ Members: Mr. Robert R. Nathan, Chairman ME Thomas C. Blaisdell* Jr. Mr. Fred Searls, Jr. XXIII 1942 Staff: Mr. Edward T. Dickinson, Jr., Exectttive Director Mr. James W. Fesler,; Acting Secretary By Invitation: Mr. A. I. Henderson, Deputy Director of Materials, 42 APRIL 8 AND 13, 1942 War Production Board (for discussion of item 1) Mr. Federrick M. Eaton, Assistant General Coun- sel, Materials Branch, Legal Division, War Production Board (for discussion of item 1) Commander H. G. Siçkel, Navy Chief, Priorities Division, Army and Navy Munitions Board (for discussion of item 2) Colonel C. T. Kerr, Army Executive, Priorities Division, Army and Navy Munitions Board (for discussion of item 2) Mr. Simon Kuznets, Research Advisor, Industry Branch, Statistics Division, War Production Board Mr. Matthew Rose, Chief of Facilities Section, Statistics Division, War Production Board (for discussion of item 2) Mr. Robinson Newcomb, Coordinator of Industry Section, Statistics Division, War Production Board (for discussion of item 2)
Raw Materials The Chairman stated that there are two fundamental interests in the field of raw materials. One interest relates to the adequacy of supplies in view of the requirements for particular materials. The other interest relates to the controls over the flow of raw materials into particular uses, and involves such measures as conservation, inventory control, and priority and allocation mechanisms. The Chairman explained that the Committee is immediately interested in the impact upon the war effort of the program for expansion pf materials supplies through construction of additional facilities. Mr. Henderson suggested that balancing of supplies and requirements should begin with a determination of the absolute minimum of indirect defense and essential civilian needs for each material. The residual supply of the material should then be applied to the satisfaction of military requirements. Mr. Henderson acknowledged the difficulty of developing sound criteria to govern the determination of essential civilian needs. Mr. Henderson stated that some of the present shortages of materials are caused by inadequacy of supplies to meet genuine needs, while other apparent shortages reflect a lax control over the flow of materials. He noted that aluminum, nickel, and steel plate flow almost exclusively into military or quasimilitary use, but that such materials as copper flow into a large variety of civilian as well as military uses and inevitably create difficult problems of control. The Chairman inquired as to what proportion of new facilities for expanding the production of materials are of sufficient importance to be given priority over finished munitions. Mr. Eaton observed that determination of the number and capacity of new facilities needed is almost impossible in the absence of relatively stable estimates of military requirements. It was pointed out that lack of certainty regarding military requirements for incendiary «86312—46—♦ bombs prevents accurate appraisal of the necessity for the present magnesium expansion program. Similarly, a large copper-expansion program may not be necessary if there is an extensive substitution of steel for brass in cartridge cases. Mr. Searls observed that further considerations in the justification of construction of particular facilities should be the date of completion and the degree to which such construction will interfere with current production of finished munitions. He questioned particularly the wisdom of further development of copper mines in South America. Mr. Henderson advocated that the war munitions program be divided into layers, of which the top layer in terms of precedence would be a balanced, attainable program, to which the highest priority rating would be granted. The second layer would consist of materials-production plants absolutely essential for the future expansion of the munitions program. The third layer would be made up of a second war munitions program. Further layers would represent decreasing possibilities of achievement and correspondingly lower priority ratings. The principal objective of such an approach is to ensure recognition of the fact that, while the first several thousand tanks are absolutely essential, and must take precedence over most alternative uses of our economic resources, the last thousand tanks in the President’s 1942 objective of 45,OCX) tanks may be less important to the war effort than the building of some of the planned ammonia and synthetic rubber facilities. Mr. Henderson pointed out that present priority arrangements give uniform rating to tanks as a category, without reference to the decreasing degree of essentiality of each succeeding group of tanks produced. In this connection, Mr. Kuznets submitted a memorandum (Document 61) on the problem of estimating feasible levels of military production. The Chairman pointed out that in the past it has appeared that only the threat of great shortages has been adequate to stimulate the use of ingenuity in the conservation of scarce materials; and he observed that if Mr. Henderson’s suggestion that objectives be stated at a low enough level to be clearly achievable were adopted, some new stimulus to conservation would be essential. Mr. Searls expressed the opinion that the War Production Board should require conservation, and that no area of the program should be exempt from its jurisdiction in this regard. Mr. Henderson pointed blit that there is a considerable resistance on the part of the armed services . to conservation measures imposed from without. He also noted that, as the War Production Board has not in the past required full conservation in civilian use of critical materials, it has not been in a very good position to act more strictly with respect to military use of the same materials. In a number of instances the need for speed in the completion of Army and Navy projects has pre 43 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE vented time-consuming efforts to obtain satisfactory substitutes for critical materials. Mr. Henderson urged that the allocation system be confined to a very small number of critical materials, and that the actual making of allocations be decentralized so that it can be based on detailed knowledge of the problems of particular plants and involve the minimum amount of formalized paperwork. Mr. Blaisdell pointed out that although it is desirable to concentrate intensive efforts on the currently most critical points in production, there is a tendency for such points to multiply as the program progresses. Mr. Dickinson commented that the decentralization of allocations would create a problem of competition among the allocating units. Mr. Henderson agreed that this would be a difficulty, but pointed out that coordination efforts will be required under any scheme. Mr. Eaton observed that the priority system has worked with reasonable success in the past because there have been no real shortages of materials. Therefore, the priority system has been used primarily as a device to route materials into military production in preference to civilian production. It is increasingly clear, however, that, as the use of scarce materials by civilians is being reduced to a minimum, the task of priorities and allocations henceforward Will be to discriminate among competing military uses for the limited supplies of critical materials. Mr. Eaton suggested that particularly high priorities should be granted to goods planned for shipment of equipment and of a balanced task force to theaters of war during the next quarter or half-year. The Chairman observed that there is no question of the adequacy of production of military items in relation to the shipping space that will be available during 1942. Mr. Henderson reported that construction of approved projects needed for production of raw materials is being delayed by shortages of steel plate. He concurred in the Chairman’s suggestion that a reappraisal of the facilities program would be desirable in the light of the revised war munitions program, but emphasized the importance of stabilizing military production objectives if such a reappraisal is to be authoritative. At this point Messrs. Henderson and Eaton left the meeting.
Industrial Facilities and Military Construction Commander Sickle, Colonel Kerr, and Messrs. Rose and Newcomb entered the meeting at this point. The Chairman explained that as a result of a conference of representatives of the War and Navy Departments and the War Production Board on April 10, a special committee has been designated to submit a report within two weeks on revision of the objectives of the industrial facilities and military construction program. The special committee is composed of Commander H. G. Sickle, Colonel J. L. Phillips (Colonel C. T. Kerf, alternate), and 44 Mr. Robert R. Nathan as chairman. In view of the interest of the Planning Committee in the facilities and construction program, a joint session of this special committee and the Planning Committee was determined upon for the purpose of considering the scope and method to be observed in preparation of the special report. In the course of the discussion, the following approaches were suggested: (1) The special committee could recommend specific reductions in the facilities and military construction program, based upon its own consideration of the actual need for such construction; (2) the special committee could request the supply arms and services of the War and Navy Departments and the industrial branches of the War Production Board to submit justification statements for projects not yet contracted for or, if contracted for, not yet started; (3) the special committee could recommend establishment of a board to hear appeals against the broad cuts initiated by the special committee and to review all new proposals of projects; (4) the special committee could arrive at recommendations regarding a reduced program by analyzing the most critical components needed in the construction of industrial facilities and military projects; (5) the special committee could group projects in terms of the degree of their essentiality, and recommend that full priority assistance should be available only for projects in the most essential category. There was consideration of the availability of various types of information needed for the work of the special committee, and Messrs. Rose and Newcomb agreed to undertake preparation of reports analyzing insofar as data can be readily obtained: (a) the quantity of funds authorized for facilities and military construction, but as yet uncommitted, (b) where available the value, scheduled completion dates, and capacities of all projects for which funds have been committed, but not fully expended, and (c) the types and quantities of raw and fabricated materials required for the facilities and military construction projects. Mr. Nathan left the meeting at this point, Mr. Searls took the chair, and Mr. Dickinson acted as alternate for Mr. Nathan. Mr. Newcomb discussed the Army and Navy construction program, and emphasized the value of concentrating on current construction. He pointed out that more man-hours are available now for war construction work than will be available later in 1942 and early in 1943, as the demands of munitions industries for workers will by then have risen materially. There was general agreement that conservation of scarce materials should be emphasized in construction activities of the Army and Navy. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman APRIL 13 AND 14, 1942 MEETING XXIV APRIL Present: Members: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Staff: Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Commander H. G. Sickel, Navy Chief, Priorities Division, Army and Navy Munitions Board Lieutenant Colonel C. T. Kerr, Army Executive, Priorities Division, Army and Navy Munitions Board Mr. Simon Kuznets, Research Advisor, Industry Branch, Statistics Division, War Production Board Mr. Matthew Rose, Chief of New Facilities Section, Contracts Branch, Statistics Division, War Production Board Mr. Robinson Newcomb, Coordinator of Industry Section, Industry Branch, Statistics Division, War Production Board
Industrial Facilities and Military Construction The Chairman presented an analysis (Document 62) of Federally financed commitments for war industrial facilities. He pointed out that a total of 10 billion dollars of Federal funds are committed for war industrial facilities and that more than half of this amount has been committed during the first quarter of 1942. He also observed that the value of Federally financed projects not started exceeds the value of the projects under way. The Chairman announced that the special committee on industrial facilities and military construction was meeting with the Planning Committee to continue the discussion of the scope and methods of the report, of the special committee (See Minutes XXIII, item 2). After discussion it was the consensus of opinion that the report should cover: (1) the volume of funds accounted for by the indus- 14, 1942 trial facilities and war construction program, as compared to the size of the total war munitions program; (2) the industrial facilities for which commitments of funds exist, classified by purpose, present status, and completion dates; (3) the use of materials and equipment in the new revised facilities and construction program; (4) the purpose, present status, completion dates, materials consumption, etc., of direct military construction projects, and the possibilities of conservation of critical materials therein; (5) the agencies and procedures hitherto concerned with the planning and authorization of new facilities; (6) the desirability of declaring a moratorium on some or all projects not yet completed, with, however, provision for individual exceptions on appeal. Mr. Kuznets agreed to prepare for the special committee an outline of the topics that he believes the report should discuss. The individual members of the special committee agreed to prepare (1) proposed criteria to govern curtailments of the facilities and military construction program, and (2) recommendations regarding the organizational and procedural arrangements for effecting such curtailments as the special committee endorses. Messrs. Newcomb and Rose agreed to furnish the special committee with lists of the most critical components of industrial facilities and military construction projects. At this point Commander Sickel, Lieutenant Colonel Kerr, and Messrs. Rose and Newcomb left the meeting.
War Munitions Program The Chairman announced that following a discussion at a staff meeting of the War Production Board on April 13, the Chairman of the Board appointed a committee under the chairmanship of Mr. Nathan and representing the principal operating divisions of the Board to consider downward revision of the war munitions program. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman 45 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE MEETING XXV APRIL 18, 1942 Present: Members, Alternates and Staff: Mr. Robert R. Nathan, Chairman (for the latter part of the meeting) Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. Edward T. Dickinson, Jr. (who acted for Mr. Nathan and served as Chairman for the first part of the meeting) Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Mr. R. Otis McClintock, Coordinator for Oil, War Production Board Mr. Reavis Cox, Chief, Services Program Branch, Division of Civilian Supply, War Production Board
Petroleum and Petroleum Products Messrs. McClintock and Cox reported upon the possibility of a shortage of petroleum and petroleum products upon the Eastern Seaboard. According to figures, furnished by the Office of the Petroleum Coordinator and the Division of Civilian Supply, daily consumption in the eastern states during the second and third quarters of 1941 averaged 1.4 million barrels. Of this total, approximately 643,000 barrels were gasoline, ànd 402,000 barrels fuel oil— the balance being kerosene, gas oil, and other miscellaneous products. Because of the dangerously high rate of sinkings by Axis submarines, it has been decided that tankers should remain in port until an adequate protection system can be developed and placed in effect. As a result of the stoppage of tanker transportation, deliveries are now averaging 750,000 to 800,000 barrels a day to thé East Coast area which is only about one-half of thé quantity required to maintain last year’s rate of consumption. Stocks of petroleum and.petroleum products in the eastern area are only 46 million barrels, but this is being reduced rapidly by present rates of consumption, and may soon fall below the level of a reasonable working inventory, which is estimated to be 30 million barrels. Mr. McClintock stated that, in view of these critical developments, it will be necessary to increase the deliveries of the most essential types of petroleum products or reduce consumption to a minimum. It is hoped that arrangements can be made to increase daily tank car shipments from the present 600,000 barrels to 700,000 barrels. The Petroleum Coordinator is working on plans to increase total deliveries by all methods of transportation to one million barrels a day. Messrs. McClintock and Cox outlined various suggestions made by officials of the Office of Petroleum Coordinator and the Division of Civilian Supply for reducing existing consumption levels. The suggestions included: limitation of the amount of fuel oil available for domestic heating and non-residential space heating; curtailment of deliveries of gasoline for use of trucks, buses, and governmental vehicles other than those of a military character ; rationing of gasoline for passenger cars; and prohibition of non-essential driving. It was pointed out that deliveries of fuel oil needed in essential industries should take precedence over deliveries of petroleum and petroleum products for most other uses. Mr. McClintock pointed out that statistics on present patterns of consumption and on supplies are not sufficiently accurate to furnish a firm basis for the specific decisions on allócatión and rationing that must be made. At this point Mr. Nathan entered the meeting and took the chair. The Chairman stated that the possibility of a shortage of petroleum and petroleum products on the eastern seaboard has been under consideration by higher authorities, and that it has been determined that strategic considerations render undesirable immediate adoption of the suggestions for reducing existing consumption levels. Upon motion duly made, it was agreed without objection that: The Planning Committee will consult with the Chairman of the War Production Board with respect to measures to meet the threatened shortage , of petroleum and petroleum products on the eastern seaboard. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman 46 APRIL 18 AND 20. 1942 MEETING XXVI APRIL 20, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Colonel J. L. Phillips, Army Priorities Committee, Army and Navy Munitions Board Commander H. G. Sickel, Navy Chief, Priorities Division, Army and Navy Munitions Board Lieutenant Colonel C. T. Kerr, Army Executive, Priorities Division, Army and Navy Munitions Board Mr. John H. Martin, Assistant Chief, Bureau of Priorities, War Production Board (for the latter part of the meeting)
Industrial Facilities and Military Construction Program The Executive Director presented a memorandum (Document 64) by Mr. W. O. Heinze, on the subject of planning for war facilities expansion. The Executive Director pointed out that the principal organizational change recommended by Mr. Heinze is the establishment of a single board composed of production experts and charged with the responsibility for all aspects of new facilities planning including the development of new sources, the determination of location, substitution of subcontracting for new tools, the prevention of conflicts and overloading, insurance of maximum utilization, and an active follow-through to completion of approved projects. The Facilities Clearance Committee of the Army and Navy Munitions Board would be abolished, and the Plant Site Board of the War Production Board would be reconstituted as a subcommittee of the proposed board. The Chairman reported that since Meeting XXIV of the Planning Committee, the special committee on ,the industrial facilities and military construction program has held several meetings. General agreement has been reached that the need for a particular project should be the primary criterion governing such review board as may be established and that the feasibility of the project in terms of the availability of materials and equipment required for construction and operation of the project should be a secondary, though important, consideration. There was also agreement that the special committee should submit an outline of the contents of justification statements to be required from agencies sponsoring new projects. Colonel Kerr reported that a small group of representatives of the Army, the Navy, and the Production Division of the War Production Board is preparing such an outline. In response to an inquiry by Mr. Blaisdell, the Chairman stated that the review of proposed projects must be closely articulated with the work of a high policy committee weighing competing demands for critical materials and equipment. Mr. Kuznets suggested, and there was general agreement, that the proposed facilities review board should have the status of a subcommittee of the committee that determines objectives for the whole war munitions program. Mr. Blaisdell expressed the view that the facilities review board must be continuously considering the whole facilities and military construction program in order to ensure that it is internally consistent and consistent with other sectors of the total war munitions program. He emphasized the importance of careful scheduling of construction in order that peak demands on national economic resources can be anticipated and appropriate action taken. He noted that proper scheduling may enable completion of a volume of construction that would be impossible on an unplanned and uncoordinated basis. Mr. Blaisdell also urged that attention be devoted to the problem of providing the staff and procedures necessary for effective analysis of project proposals prior to their consideration by the review board. He pointed out that such an analysis, by clarifying the merits and demerits of proposals, will enable prompt rejection of a large number of proposals lacking appropriate justification. Mr. Blaisdell further observed that sponsoring agencies are at present ill-equipped to prepare the complete justification reports that the review board should require. Colonel Phillips called attention to the fact that several agencies at high levels in the war organization are committing United States materials and equipment to development of foreign mines and other facilities. It was observed that coordination between such commitments and the decisions of the facilities review board will be essential. Mr. Martin entered the meeting at this point. Mr. Martin expressed the view that multiplication of agencies concerned with construction activities is undesirable, and urged that a broad policy committee be established to consider all construction programs in order to establish a single, consistent pattern of policy. The detailed work of passing on specific proposals for projects should be assigned to an administrative unit, which would be guided by criteria prescribed by the policy committee. The suggestion was advanced that the Bureau of Construction of the War Production Board might, with appropriate expansion of its power, serve as the 47 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE administrative unit. However, there was general agreement that the special committee will not specifically recommend this arrangement. With respect to military construction, as distinguished from construction of industrial facilities, Colonel Phillips and Commander Sickel observed that few projects can be eliminated. However, Colonel Phillips felt that the estimated cost of such projects is often excessive, and that their construction will consume economic resources at a lower rate than the dollar figures would indicate. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING XXVII APRIL 22, 1942 Present: Members, Alternates and Staff: Mr. Robert R. Nathan, Chairman (for the first part of the meeting) Mr. Thomas C. Blaisdell, Jr., Member Mr. Edward T. Dickinson, Jr. (acting for Mr. Nathan, and as Chairman, for the latter part of the meeting) Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Mr. Bernard Baruch (for the first part of the meeting) Colonel J. L. Phillips, Army Priorities Committee, Army and Navy Munitions Board Commander H. G. Sickel, Navy Chief, Priorities Division, Army and Navy Munitions Board Lieutenant Colonel C. T. Kerr, Army Executive, Priorities Division, Army and Navy Munitions Board Mr. Simon Kuznets, Research Advisor, Industry Branch, Statistics Division, War Production Board Mr. Matthew Rose, Chief of New Facilities Section, Contracts Branch, Statistics Division, War Production Board Mr. Robinson Newcomb, Coordinator of Industry Section, Industry Branch, Statistics Division, War Production Board
Industrial Facilities and Military Construction Program. Mr. Rose submitted tables (Document 68) relating to war industrial facilities financed with Federal funds. It was noted that as of April 1, 1942 the value of Federally financed facilities amounted to 10.7 billion dollars. The scheduled completion dates and degree of progress on projects were reported as of April 1 to be as follows: . Progress on Projects (In Millions of Dollars) Total Some Progress by April 1, 1942 No Progress by April 1, 1942 No Report of Progress Available Completed by April 1, 1942 .t 577.3 472.7 104.6 To be Completed During 2nd Quarter, 1942 …. 1,074.3 942.7 7.1 124.5 To be Completed During 3rd Quarter, 1942 …. 1,167.2 881.8 56.7 228.7 To be Completed During 4th Quarter, 1942 …. 999.3 797.7 76.8 124.8 To be Completed During 1st Half, 1943 1,122.9 629.5 201.0 292.4 To be Completed During 2nd Half, 1943 289.8 217.5 38.2 34.1 To be Completed During 1944 126.1 000.2 125.9 Subtotal 5,356.9 3,942.1 379.8 1,035.0 Completion dates unknown 5,320.0 1,312.4 1,829.8 2,177.8 Total 10,676.9 5,254.5 2,209.6 3,212.8 It was noted that 10.7 billion dollars represents only the industrial facilities for which Federal funds are already committed. As 5 billion dollars of Federal appropriations for industrial facilities remain yet to be committed, privately financed construction of facilities under certificates of necessity is estimated at 3 billion dollars, and other privately financed facilities construction is approximately 2 billion dollars, the total industrial facilities program aggregates 20.7 billion dollars. The Chairman observed that it is not yet too late to effect a substantial reduction in the program without undue disturbance of projects already under way. He noted that of the 15.7 billion dollar Federally financed program, 5 billion dollars has not yet been committed, projects valued at 2.2 billion dollars although contracted for have not yet been initiated, and initiation of construction on probably 2 billion dollars’ worth of the projects for which no progress reports are available remains to be undertaken. Thus, projects totalling over 9 billion dollars remain uninitiated and can readily be stopped. 48 APRIL 20 AND 22, 1942 Mr. Blaisdell pointed out that of the projects remaining to be completed, for which completion dates are known, about two-thirds, measured by value, are scheduled for completion during the next nine months. He observed that if to this amount should be added a substantial portion of work on projects for which no completion dates are available, the facilities program during the rest of 1942 would seriously divert resources from the production of actual munitions. The Chairman stated that most of the projects scheduled for completion in 1942 are already under way, and are therefore not as readily halted as projects not to be completed until 1943 or 1944. He noted that roughly 45 percent of the value of projects not yet started is represented by plants for explosives, ammunition assembling and loading, and nonferrous metals, particularly aluminum and magnesium. Mr. Blaisdell questioned the size of the projected expansion of facilities for aircraft manufacture, urging that maximum feasible utilization of existing facilities should precede extensive expansion of those facilities, Messrs. Rose and Newcomb suggested that the proposed expansion of ship-construction facilities be examined critically on the basis of the availability of components needed in ship construction and the extent of utilization of present facilities. Mr. Kuznets observed that most of the projects for which no report of progress is available and no completion date is indicated are probably not started yet. He pointed out that the largest expansion programs in this category appear to be in connection with the production of (a) ammunition, shells, bombs, and related items, (b) iron and steel products, and (c) chemicals. Mr. Rose referred to the table (in Document 68) relating to the estimated cost of projects rated under Priority Order P—19, which governs materials entering into defense projects. He noted that a number of projects are constructed without either Federal funds or a Federal certificate of necessity, and that priority ratings are, therefore, the only readily available index to the volume and distribution of such projects. It was pointed out that the summary of priority data is valuable primarily in connection with construction of public utilities facilities and nonindustrial facilities. Public utilities and other nonmanufacturing industrial facilities total 1.5 billion dollars in value reported, and, if all data were available, would probably amount to about 2 billion dollars. Mr. Rose stated that construction of such projects extends into 1945 in some cases. Mr. Baruch called attention to the fact that, according to the table submitted, almost one billion dollars’ worth of priority-rated construction is for non-industrial facilities, such as roads, housing, schools, and hospitals. He emphasized the importance of establishing effective controls over the construction of projects sponsored by state and local governments. The Chairman observed that until recently the only means of halting such projects was the denial of priority ratings, and that this was not fully effective. Conservation Order No. L—41 now prohibits governmental construction of a value of 5,000 dollars or more, unless the construction has been specifically authorized by the War Production Board. Mr. Baruch suggested that one of the most effective steps toward restricting construction projects would be the establishment of a capital issues committee, which would prevent unnecessary access to the money market by either public or private agencies. Commander Sickel supported this suggestion, pointing out that the cumulative total of construction represented by projects valued at less than 5,000 dollars, and so exempt from the Conservation Order, would be a significant drain upon economic resources. Mr. Kuznets agreed to prepare memoranda summarizing the industrial facilities program, on the basis of the tables (Document 68) prepared by Mr. Rose. Mr. Newcomb referred to his memorandum (Document 65) on possibilities for reducing material requirements in the construction program. He pointed out that the proposed volume of 1942 construction (not including equipment) is over 16 billion dollars, and suggested that savings might be effected not only through critical re-examination of the needs, but also through examination of designs and specifications for particular types of projects. The savings were estimated as follows: Original Program Proposed Program Possible Savings Through Simplified Designs and Specifications Proposed Revised Program (In Millions of Dollars) Army Construction (other than factories) 6,100 5,800 625 5,175 Navy Construction (other than factories) 1,700 1,700 250 1,450 Factories (structures without equipment) 3,540 ♦2,600 2,600 War Housing 2,300 *1,800 1,800 Essential Civilian Construction 1,950 1,950 250 1,700 Non-essential Civilian 850 850 200 650 Total 16,440 14,700 1,325 13,375 *A savings of 1 billion in factories and SOO million in war housing has already been included in the 14.7 billion estimate. Mr. Newcomb called particular attention to the possibility of savings in: Army construction work on aeronautics facilities, Air Corps troop housing, rivers and harbors, and overseas warehouses; Navy construction of housing, hospitals and Government-owned shipyards; Maritime Commission construction of shipbuilding facilities; construction of defense plants, and essential and non-essential civilian 49 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE construction. Colonel Phillips observed that Mr. Newcomb’s estimates of possible savings are conservative. Mr. Newcomb called attention to the significance of the suggested savings in terms of raw materials. If additional savings amounting to one billion dollars are effected in the total factory construction program, approximately 4 million tons of steel, 40,000 tons of copper, and smaller amounts of other materials will be released during 1942 for more essential uses. Colonel Kerr reported that it is proposed that agencies submitting justifications for proposed projects to the facilities review board will be required to furnish data with respect to: (1) identification of the project; (2) need for the capacity that the project makes possible; (3) engineering soundness, including such factors as the availability of labor and the location; (4) feasibility, particularly with respect to the availability of scarce materials and equipment; and (5) availability of materials and facilities needed for operation of the project when completed. The Chairman emphasized the fact that the availability of materials and other components needed in construction and operation of the project must be analyzed in relation to competing demands for the same types of materials and components. The individual sponsoring agency can submit data useful to the review board in gauging the feasibility of the project, but cannot itself be sufficiently familiar with competing demands to submit a formal justification of the project in this regard. Mr. Baruch pointed out that the timing of projects is an important consideration in establishing their feasibility. Mr. Kuznets noted that provision must be made to correct the present tendency for the cost of a project as estimated at the time of its approval to rise materially after the approval has been obtained. Mr. Dickinson called attention to the recent tendency for Army and Navy supply contracts to include provision for new facilities, and urged that either this practice be stopped or supply contracts providing for facilities be subject to approval by the facilities review board. Commander Sickel observed that the cost of a project is not known until contract negotiations are well under way or completed. The Executive Direc tor pointed out that letters of intent are now adequate bases for the initiation of construction, and emphasized the importance of establishing appropriate controls over the issuance of such letters. Mr. Rose expressed the view that projects must be reviewed before negotiations begin. Mr. Kuznets agreed with this view, and further pointed out that review at such an early stage would necessarily be guided primarily by the need for the project, review on grounds of feasibility having to be deferred until negotiations are further advanced. Mr. Nathan left the meeting at this point. Mr. Dickinson took the chair, and acted for Mr. Nathan. Mr. Baruch advocated the establishment of a board, comparable to President Wilson’s War Cabinet, to determine priorities of effort on a broad policy basis. He also proposed the creation of a subordinate board to establish priorities of operations conformably to the general decisions of the superior board. Mr. Blaisdell called attention to the tendency during the present war to regard “priority power” as merely an operational tool, rather than as a major instrument of policy. Mr. Baruch left the meeting at this point. The constitution of the facilities review board was discussed. Proposals were made that: (1) unanimous approval by the board should be necessary to initiation of construction; (2) the Chairman should have sole determining powers, the other members serving in an advisory capacity to him ; and (3) some existing board or committee in the War Production Board or the Army and Navy Munitions Board should be converted into a facilities review board. Mr. Rose stated that it is important that the facilities review board arrange for a system of reporting on the progress of construction on authorized projects, and take appropriate steps to ensure completion of the projects within the time limits agreed upon. He pointed out that there is at present no adequate provision for such reporting and expediting. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING XXVIII APRIL 23. 1942 Present: Members and Alternates: Mr. Robert R. Nathan, Chairman (for the first part of the meeting) Mr. Thomas C. Blaisdell, Jr., Member Mr. Edward T. Dickinson, Jr. (acting for Mr. Nathan, and as Chairman for the latter part of the meeting) Staff: Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary 50 APRIL 22 AND 23, 1942 By Invitation: Colonel J. L. Phillips, Army Chief, Priorities Division, Army and Navy Munitions Board Commander H. G. Sickel, Navy Chief, Priorities Division, Army and Navy Munitions Board Lieutenant Colonel C. T. Kerr, Army Executive, Priorities Division, Army and Navy Munitions Board Mr. Robinson Newcomb, Coordinator of Industry Section, Industry Branch, Statistics Division, War Production Board
Industrial Facilities and Military Construction Program Proposed appendices (Document 69) for the report of the special committee on industrial facilities and construction were submitted. The Chairman agreed to revise the proposed appendices (Document 69). Colonel Phillips and Mr. Blaisdell proposed that the special committee recommend curtailments of specific programs for facilities expansion and military construction. Mr. Blaisdell felt that, despite the present inadequacy of data and the lack of time for extensive consultation with interested agencies, the special committee can appropriately suggest curtailments and that, if its curtailments are effected, the programs to which they apply should be immediately restudied. The Chairman reported that the Plant Site Board has deferred action on all proposals for new facilities, pending completion of the work of the special committee. He pointed out that this deferment of action, if continued in force until the new facilities review board is ready to operate, would be more drastic than a recommendation by the special committee that only certain projects should be postponed, pending further study. The Chairman suggested that approval should be denied projects that are scheduled for completion in 1944. He expressed the view that the production rates attained by the Spring of 1943 will be determinative of our success on the production front, and that it is therefore wasteful to apply current materials and labor to the construction of facilities that will not be in production before the latter part of 1943. Mr. Blaisdell pointed out that statistical reports to the effect that current supplies of particular materials are adequate to meet requirements are often misleading, as the supply may actually be so inadequate that the specifications of military articles have had to be altered in order to enable substitution of less scarce and less satisfactory materials for those of which we are currently short. He suggested that expansion of facilities to enable production of additional quantities of materials that add to the effectiveness of military weapons should not be arbitrarily disapproved on the ground that substitute materials are already available. Colonel Kerr presented draft charts on the external relationships and internal organization of the proposed facilities review board. Mr. Blaisdell urged that the report of the special committee place emphasis upon the need for a board of high policy to determine program priorities on the basis of both strategic and production considerations. He expressed the fear that the flow of work to the facilities review board might call exclusively for action on specific project proposals. The facilities review board should also have the responsibility of developing a program closely synchronized with the over-all munitions program and the relative priorities of the various objectives in that program. There was discussion of the number and method of selection of members of the proposed facilities review board. After discussion, the special committee agreed that: The special committee will recommend that the facilities review board be composed of five members: three, including the Chairman, to be designated by the Chairman of the War Production Board; and two, preferably from the Army and Navy Munitions Board, to be designated by the War and Navy Departments. The question was raised as to whether the proposed review board should have jurisdiction over all types of construction or merely over those types directly connected with the war program. The Executive Director pointed out that the obscurity of dividing lines among military, indirect war, and essential civilian types of projects, and expressed the fear that duplication and conflict might result if two or more coordinate agencies were given final control over separate phases of construction activity. The special committee agreed that: The special committee will recommend that the review board be given full jurisdiction over all types of construction projects including those covered by Limitation Order No. L-41, and that the board be authorized to delegate such portions of this authority as it sees fit to the Bureau of Construction or other appropriate agency or agencies of the War Production Board. James W. Fesler Approved’ Acting Secretary Robert R. Nathan Chairman 51 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE MEETING XXIX MAY Present: Members: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member . Mr. Fred Searls, Jr., Member Staff: Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary Mr. R. W. Goldsmith
Cost Control and Contract Negotiation Mr. Goldsmith presented a draft report, on cost control and contract negotiation in armament production. The Chairman pointed out that two distinct issues are treated: (1) the availability of the latest reliable estimates of unit costs; and (2) the control of costs under contracts for war munitions and construction. Mr. Goldsmith stated that reliable information on the estimated or actual prices of armaments are essential as a basis for: estimating the total outlay under a given armament program; measuring the economic impact of the armament program, especially with respect to inflation; measuring the progress of the munitions program and its several constituent programs; determining contractors’ profits; and establishing an adequate system of cost analysis and control. Mr. Goldsmith explained that for these purposes it is necessary that there be available the latest information on unit costs, whether this be simply the best judgment of procurement officers, the contract prices, or the actual payments to contractors. The Thompson submachine gun was cited as an example of inadequate unit cost data. Mr. Goldsmith reported that for numerous other items the actual prices have been 20 to 30 per cent below the estimates of the procurement officers. Mr. Searls stated that changes in specifications account for over ninety per cent of the cases in which contract prices have exceeded actual costs. He agreed that the figures furnished to the War Production Board should reflect the latest information available to the procurement agencies, and suggested that there should be no difficulty in arranging an appropriate procedure. It was agreed without objection that: Mr. R. W. Goldsmith is requested to draft a memorandum from the Planning Committee to the Director of Statistics proposing arrangements for obtaining accurate information on unit costs of war munitions. Mr. Goldsmith explained the importance of controlling, as well as analyzing, costs. He pointed out that control over costs is essential to the most economic use of resources. Any reduction of real costs 2, 1942 releases men, materials, and facilities for work where they are needed more, and so eases the pressure upon our limited resources. Analysis and control of costs enables identification and rejection of the hopelessly inefficient producers and furnishes valuable indices as to which producers will by their performance provide the greatest returns for differential prices, financial assistance, and preferential allocation of material and labor. Careful control of costs should ward off the inflationary effect of padded costs, which simultaneously increase the Government’s deficit and consumer’s income. In this connection, Mr. Goldsmith pointed out that heavy taxation of profits is not an adequate substitute for direct control of prices and profits on armament contracts, as tax-evasion devices are bound to develop and, even where such devices are ineffective, there is an inflationary lag of about a year in the sopping up of excess profits by taxes. Furthermore, reliance on the excess profits tax to recapture profits that exceed a reasonable allowance removes the incentive to keep costs at a minimum, and so encourages waste of resources and inefficient operations. With respect to existing machinery for the control of costs, Mr. Goldsmith referred to Executive Order No. 9127, dated April 8, 1942, Section 403 of the Sixth Supplemental National Defense Appropriation Act, 1942, dated April 28, 1942, and a memorandum, dated April 25, 1942, proposing establishment of price adjustment boards in the War Department, Navy Department, and Maritime Commission. The Executive Order authorizes the Chairman of the War Production Board to issue rules and regulations and establish policies to coordinate and govern procurement agencies in the inspection of plants and auditing of books of war-supplies contractors. The memorandum of April 25, concurred in by the War and Navy Departments and Maritime Commission, and approved by the Chairman of the War Production Board, calls for the creation of a price adjustment board in each of the procurement agencies, to advise and assist the official in charge of purchasing in securing adjustment or refunds in instances where it is determined that costs or profits of contractors are, or may be, excessive for any reason. Section 403 of the Sixth Supplemental National Defense Appropriation Act authorizes and directs the Secretaries of War and Navy and the Chairman of the Maritime Commission to renegotiate contract prices and to withhold or recover any parts of the contract price found as a result of such renegotiation to represent excessive profits. It also authorizes the grantees of this power to delegate the power to individuals or agencies within their respective departments or commission. Mr. Goldsmith urged the importance of coordi 52 MAY 2 AND 5, 1942 nated control of renegotiation of armament contracts. He questioned the possibility of such coordination without establishment of a single board of contract review superior to the departmental price adjustment boards, and expressed the view that the War Production Board should take the leadership in establishment of such a review board. The Chairman agreed that there should be some central determination of basic principles to guide the renegotiation of contracts. Mr. Goldsmith felt that the Board determining basic policies should also review the more important actions of the price adjustment boards in order to ensure uniform application of the policies determined upon. Mr. Blaisdell pointed out that a central board could also serve a useful function by pooling information as to successful methods of cost control and contract renegotiation, and by calling attention to duplications and conflicts arising in the course of this work. Mr. Searls referred to the fact that by the Sixth Supplemental National Defense Appropriation Act, 1942, the heads of the principal procurement agencies are given direct Congressional authorization to renegotiate contracts, and he questioned the possibility of super-imposing on such agencies a central review board, without formal amendment of the Act. Mr. Goldsmith suggested that the legal difficulty might be solved by vesting merely advisory powers in the central board. Mr. Searls felt that contract renegotiation directed toward the elimination of excess profits is in some regards unnecessary, as heavy excess profits taxes are adequate to accomplish the same objective without as severe a disturbance of the production process. He expressed the view that, although cost control is often urged as a method of discovering inefficiencies in production, real efficiency in plants is much more effectively achieved by procurement officers and production advisers fully familiar with the individual plants. It was his view that the War Production Board should, at the most, direct the attention of the procurement agencies to the importance of appointing highly competent persons to membership on the price adjustment boards. Mr. Goldsmith agreed to prepare a revised memorandum to the Planning Committee, dealing with the importance of a central policy and review board in connection with cost control and contract renegotiation. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING XXX MAY Present: Members: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Staff: Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary
Control of the Flow and Accumulation of Raw Materials The Committee considered the importance of an adequate system of controls over the flow and inventory accumulation of raw materials. There was general agreement that effective controls must be based on direct scheduling of all production programs and projects. The Executive Director pointed out that assemblage of the data needed for scheduled programs should not be overly burdensome, as most plants have already prepared detailed production schedules. It was suggested that each industry and commodity branch should be responsible for scheduling the programs falling within its jurisdiction. Mr. Blaisdell pointed out that enforcement of any materials control system must primarily emphasize education of manufacturers and dealers in the direc- 5, 1942 tion of voluntary compliance, rather than stress punitive action against violators. The Chairman proposed that the problem of excessive and uneven accumulation of inventories should be attacked through an early appeal to manufacturers and distributors to refrain from unnecessary advance buying of materials, and through establishment of a system of monthly inventory reports.
Cost Control and Renegotiation of Contracts The Executive Director reported that, at the request of officials of the War. Department, the staff of the Planning Committee is preparing a memorandum that will outline the problem of adjusting contract prices downward without destruction of the profit incentive, and describe several basic criteria that might be observed in the renegotiation of War Department contracts. Mr. Blaisdell pointed out the difference between corporate profits and reward for efficient management. In a period such as the present, when prices and wages are stabilized and high incomes are heavily taxed, it is essential to production efficiency that individual managers be offered adequate incentive for doing effective jobs. Large corporate profits, however, are not especially effective in stimulating 53 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE increased efficiency of production in wartime. The principal function served by substantial corporate profits in peacetime is the attraction of investment capital to particular industries. As new private investment capital is not necessary in wartime, there is no reason for corporate earnings to be at a higher level than that necessary to preserve the existing investment values. The Executive Director suggested that a four percent return should be adequate, but pointed out that some specialized companies would be likely to claim that fairly high rates of profit in wartime are necessary in order to bring their long-run profits to the level of a fair return. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING XXXI MAY 6, 1942 Present; Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Mr. Mordecai Ezekiel, Consultant, Planning Committee (present for discussion of item 1)
Merchant Shipbuilding Mr. Ezekiel presented his report (Document 75) on the maritime shipbuilding program. He described stated goals, schedules, and possibilities of production of merchant ships as follows : President’s Objectives January 6, 1942 Maritime Commission Program April 9, 1942 WPB Shipbuilding Branch Expectations April 20, 1942 Proposed Objectives (Mr. Ezekiel) 1942 8.0 7.6 72 9.0 1943 10.0 15.8 20.0 Mr. Ezekiel stated that unless presently adverse situations are corrected it is possible that the total tonnage of cargo vessels completed in 1942 may be only 5.5 to 6 million tons. He reported that the principal obstacles to achievement of high objectives are shortages of propulsion equipment, inadequacy of steel deliveries, shortages of individual components, and delays, in the shipbuilding yards themselves. The two types of ships being built call for different types of propulsion machinery. The standard high-speed vessels require turbines and gears, the shortage of which is likely to force postponement until 1943 of the completion dates for about 30 standard vessels, originally scheduled for completion in 1942. However, by late 1943 this situation will be corrected, and the total 1943 production of propulsion equipment for standard vessels will exceed the requirements of the standard vessels projected for completion in that year. Mr. Ezekiel stated that approximately two-thirds of the tonnage of vessels included in the 1942 and 1943 program of the Maritime Commission are emergency 54 cargo vessels, which require reciprocating steam engines instead of turbines and gears. Throughout the balance of 1942 the monthly production of steam engines is expected to exceed the corresponding monthly requirements for installations in emergency cargo vessels. Furthermore, additional steam-engine capacity is likely to be brought into production in late 1942. It was suggested that the deficiency of turbines and gears and the excess of reciprocating steam engines indicates that it might be desirable to increase the proportion of emergency cargo vessels to the total shipbuilding program. Mr. Ezekiel observed that on such a basis, engines would probably be available for completion of 9 million tons of shipping in 1942 and 19 million tons in 1943. He felt that expansion of the production goals for emergency cargo vessels might be desirable, but that additional shipbuilding facilities for such vessels should be made available in order to avoid substantial interference with the construction of standard vessels. As propulsion equipment will be available in late 1943, it may actually be desirable to increase 1943 objectives of the standard-vessel program to the limit of propulsion-production capacity. Mr. Ezekiel also called attention to the superiority of standard over emergency vessels. Standard vessels are faster than emergency cargo vessels, can travel without convoy, are able to make more trips per year than emergency vessels, and have so far experienced a lower rate of sinkings than have emergency vessels. The greatest problem in connection with steel deliveries has arisen in connection with steel plates. From September through March allocations were less than scheduled requirements, and actual shipments and deliveries were even less than the allocated amounts. Steel-plate deliveries to shipyards expanded sharply in March, and are now about one-third of total deliveries of steel plates. Scheduled deliveries of plates for the Maritime Commission program were 283,000 net tons in April, and the Iron and Steel Branch has recommended that 300,000 tons of plates be scheduled for May deliveries. Mr. Ezekiel observed that in order to meet the presently scheduled program of the Maritime Commission, monthly plate deliveries will have to increase to MAY 5, 6, AND 12, 1942 360,000 tons by July, and to 390,000 tons by December. He estimated that if present plans for expansion of production capacity for steel plates are executed, and if in addition 100,000 tons of monthly capacity are added by conversion of existing equipment from strip to plate steel production and 60,000 tons of monthly capacity are added by bringing obsolete plate mills into production, it should be possible to supply the Maritime Commission with sufficient steel for a 10 million ton program in 1942 and an 18 or 20 million ton program in 1943. Mr. Ezekiel felt that, although there has been some difficulty in obtaining components for the shipbuilding program, it should be possible to cure this situation so effectively that 9 and 19 million ton programs for 1942 and 1943 respectively would not be impractical in terms of components. He pointed out, however, that forgings for line shafting and engines, thrust bearings, welding equipment, cranes, and other yard equipment are current bottlenecks of varying degrees of stringency. Delays in the shipyards themselves are primarily due to individual errors of management. Labor has not been a bottleneck at any stage of the shipbuilding program. Delays due to strikes have been relatively minor, and the supply of general skilled labor appears to be adequate for the building of 9 million tons of shipping in 1942. However, Mr. Ezekiel noted shortages in supervising and technical labor, and urged increased emphasis upon training of supervisory labor and diversion of technical men and supervisors from the steel construction industry to shipbuilding. Mr. Ezekiel recommended that management practices be improved by the stationing of efficiency engineers of the Maritime Commission at each yard, by full use of labor-management committees, and by other methods. It was pointed out that a severe strain has been put upon long established management practices by the need for placing shipbuilding on a mass-production basis. Mr. Ezekiel urged that much more effective cem trai scheduling of production be effected for ships, ship components, components of engines and gears, steel plates, and structural steel shapes. There was discussion of the organizational arrangements within the Government for scheduling and general supervision of the shipbuilding program. Mr. Ezekiel agreed to prepare a revised stater ment of his major conclusions and recommendations with respect to the shipbuilding program.
Control of Inventories With reference to the earlier discussion (Minutes XXX, item 1 ) of controlling the flow and inventory accumulation of raw materials, the Executive Director suggested that a monthly control of inventories might be established by the monthly collection of data on the inventory-position of each company, expressed in terms of dollars. The monthly dollar figures, when checked against quarterly dollar and poundage figures, should readily reveal the points at which inventories were mounting at an unreasonable rate. Upon motion duly made, it was agreed without objection that: The staff of the Planning Committee shall investigate and submit to the Committee recommendations regarding methods of inventory control. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING XXXII MAY 12, 1942 Present: Members: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Staff: Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary Mr. Mordecai Ezekiel, Consultant Approval of Minutes The minutes of meeting XI, and of meetings XIII to XXXI, inclusive, were approved.
Merchant Shipbuilding In accordance with his agreement at the previous meeting (See Minutes XXXI, item 1) Mr. Ezekiel presented a revision of his memorandum on the shipbuilding program. Mr. Searls expressed doubt that 8 million tons of merchant ships will be constructed in 1942, and cited the shortage of steel plates as the principal obstacle to achievement of the construction program. The allocations of steel plates have laid stress upon past requirements rather than upon the rapid acceleration of the rate of use. The allocations have also failed to give adequate weight to the importance of allowing the shipyards to maintain working inventories of plates. On the other hand, the War Production Board has been handicapped by the failure of the Maritime Commission to furnish detailed statements of the quantities, sizes, and types of plates required for each shipbuilding yard. Mr. Searls urged that the Maritime Commission plan its 55 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE requirements in more detailed fashion, and that the War Production Board, in allocating steel plates, recognize the critical importance of the shipbuilding program. Mr. Searls emphasized the fact that the objective should be to have the maximum amount of shipping capacity available for use, and that shipbuilding is only one of several methods of contributing to attainment of this objective. Vigorous measures should be taken to prevent the sinking of existing cargo vessels, and to salvage vessels already sunk. Mr. Searls urged that the production of riaval patrol vessels and subchasers be expedited, and that air patrol of coastal waters be increased. He referred to the desirability of establishing a special anti-submarine unit within the Navy Department. Mr. Ezekiel stated that Great Britain has been very successful in protecting shipping within 100 miles of the British coast. There was general agreement that, if steel plates are available for the construction of more ships than existing shipbuilding facilities permit, additional facilities should be provided. Mr. Searls referred to the possibility of increased utilization of shipbuilding facilities in the Great Lakes.
Industrial Facilities and Military Construction Program The Chairman referred to the report (Document 78) of the special committee on industrial facilities and military construction, and stated that a committee headed by Mr. W. H. Harrison, Director of Production, War Production Board, and composed of representatives of the War Production Board and the War and Navy Departments has been established in lieu of the Facilities and Construction Board recommended by the special committee. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING XXXIII MAY 13, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Mr. Simon Kuznets, Chief, Program Analysis and Research Section, Planning Committee Mr. R. W. Goldsmith, Member of Staff, Program Analysis and Research Section, Planning Committee
Cost Control and Renegotiation of Contracts Mr. Goldsmith presented a revised draft of his report on cost control and contract negotiation in armament production (See Minutes XXIX, item 1). The Executive Director presented notes on contract prices and contract negotiations submitted to the War Department by the Planning Committee (Document 95). Mr. Kuznets pointed out that the War Production Board could either (a) propose or prescribe criteria to govern the renegotiation of contracts, or (b) establish a formal board to exercise continuous supervision over the departmental price adjustment boards. He believed that a board should not be estab lished unless its functions were to be more than advisory. Mr. Searls expressed the view that, as most of the initial placement of contracts has been completed, the procurement agencies should remain responsible for the terms in those contracts. He suggested that it might be appropriate for the Chairman of the War Production Board to issue a directive prescribing the principles to be followed by the procurement agencies in renegotiating contracts. He regarded establishment of a supervisory board as undesirable. The Chairman believed that coordination of the departmental price adjustment boards is necessary, and that under Executive Order 9024 the War Production Board is the appropriate agency to provide such coordination. He agreed that procurement operations should be decentralized functionally and territorially, but emphasized the importance of centralized establishment of principles and centralized review of results and procedures. Mr. Goldsmith was requested to consult with the Office of Price Administration and procurement agencies with regard to cost control and renegotiation of contracts, and to report his findings to the Planning Committee. James W. Fesler . .. j Acting Secretary Approved: Robert R. Nathan Chairman 56 MAY 12, 13, 14, AND 15, 1942 MEETING XXXIV MAY 14, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Mr. Mordecai Ezekiel, Consultant, Planning Committee (for discussion of item 1) Lieutenant Colonel Willard F. Rockwell, Director, Production Division, United States Maritime Commission (for discussion of item 1)
Merchant Shipbuilding The Committee considered further the revised memorandum on the shipbuilding program prepared by Mr. Ezekiel (See Document 75 and Minutes XXXI, item 1, and XXXII, item 1). Colonel Rockwell and Mr. Ezekiel agreed that 1942 construction of merchant ships can total 8 to 9 million tons if the necessary steel, parts, and machine tools are made available. Colonel Rockwell reported that about 270,000 tons of steel plates were delivered to shipyards in April, and about 320,000 tons were allocated for May deliveries. June requirements will amount to about 400,000 tons. By the end of 1942 shipyards will require 500,000 tons of steel plates per month. Colonel Rockwell stated that steel deliveries as late as October will affect total 1942 completions of ships. Colonel Rockwell and Mr. Searls reported that prior to February 1942, requirements for steel plate were submitted directly to the War Production Board by private yards and Gibbs and Cox, Inc. Each shipbuilder placed his own orders with steel mills, with the result that the steel companies were free to favor established customers over newcomers to the shipbuilding industry. The Maritime Commission has now established a scheduling unit, which will enable much closer control over the estimating of requirements and over the actual distribution of plates allocated for merchant shipbuilding. Much of the control will be exercised through regional offices familiar with the problems of individual shipyards. The Chairman expressed the hope that the increased control over scheduling will enable the Maritime Commission to approximate more closely than in the past its estimates of probable production. .There appeared to be general agreement that improvement of the statistical and economic analysis work of the Maritime Commission is desirable. Mr. Ezekiel referred to the importance of controlling excessive inventories of steel plates in shipyards. Colonel Rockwell expressed the view that inventories are at present unbalanced but in the aggregate not excessive. Mr. Searls and Colonel Rockwell believed that further increase in the number of shipyards is undesirable until existing yards are fully utilized. At this point Colonel Rockwell and Mr. Ezekiel left the meeting.
Mobilization of Scientific Research Resources Mr. Blaisdell referred to his memorandum (Document 79) on the use of scientific knowledge in the war. He proposed the establishment of a War Research Development Corporation to carry on research, test new industrial processes, build pilot plants, and construct full-scale plants for approved processes. He expressed the opinion that such a corporation would be preferable to the Office of Technical Development proposed by a committee under the chairmanship of Mr. Maury Maverick, as the corporate form of organization lends itself more readily to action. Approved: James W. Fesler Robert R. Nathan Acting Secretary Chairman MEETING XXXV MAY 15. 1942 Present: t. Mobilization of Scientific Research Resources Members and Staff: The Committee resumed consideration of the prob- Mr. Robert R. Nathan, Chairman lem of mobilizing the scientific research resources of Mr. Thomas C. Blaisdell, Jr., Member the nation (See Document 79 and Minutes XXXIV, Mr. Fred Searls, Jr., Member item 2). Mr. Blaisdell emphasized the importance of Mr. Edward T. Dickinson, Jr., Executive Director converting scientific research to war purposes, and Mr. James W. Fesler, Acting Secretary pointed out that no agency at present is vigorously 57 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE undertaking this function. The Office of Scientific Research and Development, although charged by Executive Order No. 8807 with a wide range of duties, has in practice acted primarily as an agent for arranging for research requested by the War and Navy Departments. The Chairman referred to the proposal that an Office of Technical Development be established within the War Production Board (See Document 81), Mr. Blaisdell stated that the War Research Development Corporation proposed by him could either supplement or replace the proposed Office of Technical Development. Upon motion duly made, it was agreed without objection that : A memorandum shall be sent to the Chairman of the War Production Board, transmitting the proposal of Mr. Blaisdell that a War Research Development Corporation be established. The memorandum shall also: (1) express the concurrence of the Planning Committee with the general principle that the scientific research resources of the nation should be mobilized effectively for the war program; (2) state that the corporate form of organization lends itself more readily to action than would an Office of Technical Development, and (3) emphasize the importance of the quality of persons charged with developing research resources. Mr. Blaisdell and the Acting Secretary were directed to execute this decision (See Document 83).
Industrial Facilities The Chairman referred to a proposal to establish a facilities staff in the Division of Industry Operations. Such a staff would (a) advise other agencies as to the necessity for the construction of new industrial facilities, with particular reference to the possibility of greater use of existing facilities; and (b) develop criteria for the guidance of procurement officers in reviewing proposals for new plants, tools, and other equipment. Mr. Blaisdell expressed the view that the industry branches are responsible for maximum utilization of existing facilities; The Chairman believed that the branches have not fulfilled their responsibility in this regard. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING XXXVI MAY 27, 1942 Present: Members and Staff : Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls; Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Mr. Simon Kuznets, Chief, Program Analysis and • Research Section, Planning Committee
Fuel Supplies for the Eastern States, in Winter, 1942-1943 Mr. Blaisdell reviewed his memorandum (Document 87) on fuel supplies for the eastern states during the winter of 1942-43. Correction of the prospective shortage of fuel supplies involves a number of industries and administrative agencies. There must be coordinated consideration and action with regard to (a) the production of oil, anthracite and bituminous coal, and natural and manufactured gas, (b) the transportation of the fuels by railway cars, pipelines, barges, tankers, tank trucks, and similar media, and (c) the efficiency in use of these fuels. Mr. Blaisdell proposed that the Chairman of the War Production Board designate an official of either the Bituminous Coal Division of the Interior Department, the Office of the Petroleum Coordinator for War, or the Office of Defense Transportation to develop a unified program for dealing with this series of problems. Mr. Searls reported that arrangements have been made to assure New England a supply of coal adequate to meet minimum requirements next winter. He advocated rationing of coal for that. area. He also pointed out that oil will be required for the heating of many houses, as the shortage of steel prohibits widespread conversion of oil furnaces to coal furnaces. It was agreed that officials familiar with the oil and coal situation should be invited to appear before the Planning Committee for discussion of the New England fuel situation.
Revised Preference Ratings Proposed by the Army and Navy Munitions Board Mr. Kuznets referred to a letter (Document 90) from the Army and Navy Munitions Board, dated May 20, 1942, proposing revised priorities in the production of munitions. He reviewed a memorandum (Document 88) from Mr. Adolph J. Golden- 58 MAY 15 AND 27, 1942 thal commenting on the proposed revision, and a memorandum (Document 89) by Mr. Kuznets on the same subject. The proposed priorities system establishes four regular classifications ranging from AA-1 to AA-4 and an emergency classification of AAA assignable only for individual items of extreme urgency. The ratings apply to items constituting an essential part of the 1942 military program, which includes items needed in 1942 for munitions and ships to be co.m pleted in later years. Ratings AA-1 and AA-2 include the total Airplane Program, the Army Supply Program, about one-half of the Merchant Marine Program, the Navy Program (exclusive of vessels that cannot be launched by the end of 1943), and military and naval construction essential for overseas operation. These two ratings alone will account for a production volume of some 40 billion dollars in 1942. Ratings AA-3 and AA-4 are assigned to the rest of the military production and construction program, including all new facilities. It is proposed that the new ratings should take precedence over all other ratings, and that no additional items should be added to the AA categories without the concurrence of the Army and Navy Munitions Board. Mr. Kuznets stated that no allowance for essential civilian and indirect military uses is made within the AA categories, although the AA categories will consume the total supplies of most scarce materials and components. It appears that only one-half, of the merchant shipbuilding program is to be given an AA-1 rating, although the whole ammunition program carries that rating. Mr. Kuznets proposed that the Army and Navy Munitions Board be requested to revise the proposed system of ratings on the basis of the following criteria: (1) that any system of top ratings be confined to items that, in total, represent a definitely feasible productive accomplishment and account for only a limited part of probable total output; (2) that top-rated items be so scheduled as to avoid concentration of output in the early segment of any scheduling period; (3) that the definition of categories be spelled out so that no loose interpre-. tation can lead to inflation of top ratings; and (4) that the relationship between the new top ratings suggested and the existing preference ratings be clearly indicated if possible, with direct translation of some of the already existing ratings into the new top ratings that may replace them. Mr. Searls expressed the view that, although the suggested criteria are sound, the Committee should express itself more strongly as to the defects of the proposed ratings. The Chairman suggested that the AA ratings might be as follows: AA-1 representing the AA-1 program proposed by the Army and Navy Munitions Board, except that the ammunition portion of this program should be reduced by half, and the total merchant shipbuilding program should be included in this top program; AA—2 representing minimum essential civilian and indirect military requirements; and AA—3 covering requirements for the balancing of Presidential items. Mr. Blaisdell suggested that if a feasible program is determined upon, only one rating category will be needed, and the principal emphasis should be upon scheduling of production objectives by months or quarters. The Chairman stated that a series of ratings will be needed to guide each fabricator in scheduling his production within very short time periods. Mr. Kuznets pointed out that.in view of the imperfections certain to characterize either a scheduling or a rating system, it is necessary to use both systems in complementary relation to each other. The Chairman and Mr. Searls agreed to draft a memorandum outlining the views of the Committee on the revised ratings proposed by the Army and Navy Munitions Board.
Labor in War Production The Executive Director presented memoranda (Documents 84 and 85) by Mr. Rufus Burr Smith, outlining proposed functions of the Labor Production Division of the War Production Board, and discussing the need for an industrial health program.
Air Cargo The Executive Director submitted a report (Document 86) prepared by Mr. F. H. Hoge, Jr., proposing establishment of an Air Cargo Board within the War Production Board. Mr. Searls expressed doubt that critical metals, fabricating facilities, and engineering and management personnel could.be applied to the construction of cargo airplanes without substantial interference with the present combat-plane program. Mr. Blaisdell agreed to draft a memorandum proposing investigation of the feasibility of an extensive cargo-airplane production program, with particular emphasis upon the availability of satisfactory materials, the engineering soundness. of such airplanes, and the likelihood of producing such airplanes in time for them to contribute significantly to the winning of the war. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman 686312—46—5 59 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE MEETING XXXVII MAY 28, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Mr. Simon Kuznets, Chief, Program Analysis and Research Section, Planning Committee (for discussion of item 1) Mr. Mordecai Ezekiel, Consultant, Planning Committee (for discussion of item 3)
Revised Preference Ratings Proposed by the Army and Navy Munitions Board Pursuant to the earlier action of the Committee (Minutes XXXVI, item 2), Mr. Searls submitted a draft recommendation regarding the revised preference ratings proposed by the Army and Navy Munitions Board. The Chairman suggested that attention be drawn to (1) the earlier recommendation (Document 35) that a production-strategy board be established for purposes of program determination, (2) the importance of scheduling objectives within shorter time periods than a year, and (3) the necessity of making favorable provision for the merchant shipping program. Upon motion duly made, it was agreed without objection that: The draft memorandum on the preference ratings proposed by the Army and Navy Munitions Board (Document 92) is approved for transmission to the Chairman of the War Production Board as Planning Committee Recommendation No. 7. At this point Mr. Kuznets left the meeting.
Utilization of Used Equipment The Executive Director presented a draft recommendation on the use of used equipment within the Federal Government, prepared at the request of the Chairman of the War Production Board, dated May 16, 1942. At present no organized machinery exists whereby a uniform policy or program can be undertaken for the transfer, exchange, or sale of used equipment either between the Federal departments or from outside sources for use by the Federal Government. Such a uniform policy would free raw materials for direct production of armament and would ensure that presently idle equipment is fully utilized. It was proposed that a Bureau of Used Equipment and Supplies be established within the Division of Industry Operations of the War Production Board, and be charged with responsibility for (1) formulating policies and procedures for the full utilization of used equipment and supplies (other than items of a technical, military character) by the Armed Services and other departments of the Federal Government, and (2) coordinating and directing the efforts to obtain such used equipment from governmental, industrial, or public sources. The Bureau would not itself be an operating body, but would use existing agencies for the establishment of requirements and the execution of procurement, requisitioning, and similar programs. Mr. Blaisdell expressed concern over the general tendency to establish a new agency for each new function in preference to assigning the function to an existing agency with related duties. He suggested the possibility of directing the Procurement Division of the Treasury Department, or the Bureau of Industrial Conservation of the War Production Board to supervise the use of used equipment by Federal agencies. The Chairman and Mr. Searls felt that a small but distinct organizational unit, such as the proposed Bureau of Used Equipment and Supplies would serve to emphasize the importance of the objectives involved. The Chairman proposed that the new Bureau of Used Equipment and Supplies should be at the policy level, promoting the use of used equipment, but not itself acting as a procurement agency. He also urged that the Bureau should foster the use, exchange, and transfer of used equipment within industry as well as within the Federal Government. Mr. Blaisdell suggested that the possibility of saving productive resources by insistence upon maximum utilization of used equipment should be brought to the attention of industry and commodity branches of the War Production Board. Upon motion duly made, it was agreed without objection that: The draft memorandum on utilization of used equipment as revised (Document 91), is approved for transmission to the Chairman of the War Production Board as Planning Committee Recommendation No. 6. At this point Mr. Ezekiel entered the meeting.
Merchant Shipbuilding Mr. Ezekiel gave a preliminary report on his survey of shipbuilding yards on the Gulf Coast. Noting that the observations require further verification, he cited complaints by Mr. Andrew J. Higgins, who builds shore landing boats, tank barges, and submarine destroyers, that (1) contracts are on his 60 MAY 28 AND JUNE 8, 1942 books for only two more weeks, (2) the Navy Department has not placed in service a large number of boats already completed by his yards, and (3) engines needed in the completed hulls of Higgins boats are routed to yards without completed hulls. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING XXXVIII JUNE 8, 1942 Present: Members, Alternates, and Staff: Mr. Robert R. Nathan, Chairman (for a portion of the meeting) Mr. Thomas C. Blaisdell, Jr., Member, who acted as chairman during the last portion of the meeting , , Mr. Ralph J. Watkins, Alternate for Mr. Blaisdell (present for discussion of item 2) Mr. Edward T. Dickinson, Jr., Executive Director, who acted for Mr. Nathan during the last portion of the meeting Mr. James W. Fesler, Acting Secretary By Invitation: Mr. R. W. Goldsmith, Member of Staff, Program Analysis and Research Section, Planning Committee (for discussion of item 1) Mr. Wilbert G. Fritz, Principal Economist, Industrial Location Section, National Resources Planning Board Mr. Glenn E. McLaughlin, Chief, Industrial Location Section, National Resources Planning Board
Price Control and Renegotiation of Contracts Mr. Goldsmith presented a revised memorandum (Document 94) proposing the establishment of a War Contracts Policy Board. The Executive Director called attention to the fact that the proposal was made following conferences with representatives of the Price Adjustment Boards of the War, Navy, and Treasury Departments, the Purchases Division of the War Production Board, and the Office of Price Administration. The organizational features of the proposal were discussed with the Director of the Office of Organizational Planning, War Production Board. The Executive Director and Mr. Goldsmith stated that the functions of the War Contracts Policy Board would not conflict with the functions of the Purchases Policy Committee, and that it might be desirable for a single person to serve as chairman of both the Board and the Committee. Most of the members of the Purchases Policy Committee are commodity specialists, and would not, therefore, be particularly experienced in the problems connected with the renegotiation of contracts. Mr. Blaisdell pointed out that a large amount of funds remains to be obligated. He urged, therefore, that the emphasis upon criteria to govern the renegotiation of contracts not divert attention from the importance of establishing sound principles to govern the original awarding of contracts. The Executive director announced that Mr. Searls had given his proxy for action on the proposal of a War Contracts Policy Board to the Chairman and Mr. Blaisdell jointly. Upon motion duly made, it was agreed without objection that: The memorandum on a War Contracts Policy Board, as revised (Document 94), is approved for transmission to the Chairman of the War Production Board as Planning Committee Recommendation No. 10. At this point Mr. Goldsmith left the meeting, and Messrs. Watkins, Fritz, and McLaughlin entered the meeting.
Supply of Petroleum and Petroleum Products to the Eastern States, Winter, 1942-1943 Mr. Watkins stated that the Chairman of the War Production Board has appointed a committee to consider the recommendation of Mr. Harold L. Ickes, Petroleum Coordinator for War, that a petroleum pipeline be built between the Southwestern oil-producing area and the East Coast. The committee is headed by Mr. Wayne Johnson, Coordinator for Oil, War Production Board, and includes representatives of the Departments of War, Navy, and Commerce, the Board of Economic Warfare, the Office of Price Administration, the War Shipping Administration, the Office of Defense Transportation, and a representative of the Special Assistant to the President supervising the Defense Aid Program. The Committee will probably recommend that a crude petroleum pipeline be constructed between Longview, Texas, and Salem, Illinois. Messrs. Fritz and McLaughlin expressed the view that the Longview-Salem pipeline is not desirable. They presented a report (Document 96) on alternative methods of meeting the shortage of petroleum products on the Eastern Seaboard. They favored ( 1 ) rationing of gasoline in all states east of the Mississippi River, and Minnesota, Wisconsin, Iowa, and Missouri, which would release tank cars and barges for movement of petroleum products eastward; (2) construction of a petroleum products 61 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE pipeline from Chicago to Toledo, in preference to the construction of any other pipeline as this short line would enable greater concentration of lake tankers in Lake Erie; and (3) construction of a petroleum products pipeline from New Orleans to Memphis, in preference to the Longview-Salem crude petroleum pipeline, as such a line would deliver more oil products per ton of steel used in construction than could the Salem line, and would deliver such products to a point nearer the East Coast. At this point Mr. Nathan left the meeting, Mr. Blaisdell took the chair, and Mr. Dickinson was designated to act for Mr. Nathan. Mr. Watkins emphasized the fact that the most critical shortage of petroleum products on the East Coast will occur next winter. He doubted that the Longview-Salem pipeline could be completed in time to enable increased deliveries of petroleum products to the East Coast by the fourth quarter of 1942. As the Longview-Salem line would njove only the crude petroleum northward, allowance would have to be made for refining the crude petroleum and for the delays incident to multiple handling prior to arrival of needed products in the East. Mr. Watkins proposed that the Planning Committee call attention to the need for (1) transfer of tank cars from the Middle West to the East, (2) naval convoying of tankers, and (3) severe rationing of petroleum products in the East. Messrs. Blaisdell and Fritz expressed the fear that severe rationing in the East might adversely affect rates of war production. Upon motion duly made, it was agreed without objection that: Messrs. Fritz and McLaughlin are requested to submit to the Planning Committee a brief statement of their views on the supply of petroleum products to the Eastern Seaboard. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING JUNE Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary
Revised Preference Ratings Proposed by the Army and Navy Munitions Board The Chairman reported that the President has approved the revised preference ratings proposed by the Army and Navy Munitions Board (Document 90), provided that essential civilian needs are included among the higher ratings. Officials of the War Production Board and the Army and Navy Munitions Board are conferring as to implementation of the President’s decision. The Chairman expressed the fear that the orderly flow of materials may be disturbed by the introduction of the new AA ratings, because (1) the AA-rated programs, instead of being restricted to a small portion of total productive resources, will exhaust available supplies of many such resources; (2) the AA-1 ratings, if assigned to the full capacities of a few selected plants, may force the making of supplementary allocations of materials during the third quarter of 1942, and so depart from the pattern of distribution of ratings relied upon in original third-quarter allocations under the Production Require- XXXIX 9, 1942 ments Plan; and (3) the AA-1 ratings, if spread among a number of manufacturers of the same products, may induce such manufacturers to attempt to meet their six-month AA-1 production objectives within the third quarter, and so may result in excessive top-rated demands for the limited supplies of materials.
Small Business Establishments The Chairman presented’ for the consideration of the Committee a memorandum (Document 99) from the Chairman of the War Production Board, together with memoranda prepared by Messrs. Philip D. Reed and Vergil D. Reed, on the problems of small business establishments forced by the war to curtail or cease their operations. The Chairman also called attention to the passage by Congress of the Smaller War Plants Act (Document 102), which directs the Chairman of the War Production Board and the Smaller War Plants Corporation to promote the conversion of small plants to war production. There was general agreement that small businesses not capable of conversion to war or essential civilian production should not be allotted materials nor be permitted to continue employing workers. Aid to non-essential small plants should provide only for necessary maintenance of the plant, and should not interpose obstacles to the transfer of useful equipment to war plants. 62 JUNE 8, 9, AND 10, 1942
Supply of Petroleum and Petroleum Products to the Eastern States, Winter, 1942-1943 Pursuant to the previous request (Meeting XXXVIII, item 2), a memorandum (Document 98), dated June 9, 1942, was introduced, containing a summary of the views of Messrs. Wilbert G. Fritz and Glenn E. McLaughlin on the problem of supplying the Eastern States with petroleum products for next winter. The Executive Director pointed out that a pipeline cannot be constructed in time to relieve the critical shortage expected to develop by next winter. He, therefore, advocated immediate gasoline rationing in the Middle West, as such a step would release tank cars and barges for increased shipments of petroleum products to the Eastern area. Mr. Searls felt that provision by the Nay of adequate protection of tanker movements, and the salvage of sunk tankers would provide a much more effective remedy for the shortage of petroleum prod-ucts in the East than would construction of the Longview-Salem pipeline. Tanker movement from the Gulf Coast refinery area would, also promote the production of toluene by providing an outlet for the gasoline produced in toluene manufacture. He expressed doubt that the steel requirements of the pipeline project could be met without interference with the production of bombs. Upon motion duly made, it was agreed without objection that: The Chairman is authorized to transmit to the Chairman of the War Production Board, Planning Committee Recommendation No. 9 (Document 101), proposing that the Longview-Salem pipeline project be disapproved, on the grounds that (1) it is unlikely that the pipeline could be completed in time to relieve the shortage of petroleum products in the Eastern states during the winter of 1942-1943, (2) adequate patroling of the coastal waters of the United States would enable resumption of tanker transportation, which is preferable to construction of the Longview-Salem pipeline, and (3) gasoline rationing in the Middle West would release tank cars and barges for transportation of petroleum products to the Eastern states.
Anthracite and Bituminous Coal Supply Mr. Searls called attention to the fact that anthracite and bituminous coal mines are not operating at capacity and reported that terms in existing unionmanagement contracts prevent relief of this situation. He pointed out that, in view of the prospective fuel-oil shortage on the East Coast, provision of an adequate supply of coal is essential. The Executive Director agreed to discuss with the Labor Production Division of the War Production Board the importance of removing obstacles to capacity operation of anthracite and bituminous coal mines.
Mobilization of Scientific Research Resources Mr. Blaisdell referred to a report (Document 100) by a committee headed by Mr. Maury Maverick, proposing establishment within the War Production Board of an Office for Technical Development. He also referred to the memorandum (Document 8o) submitted by the Planning Committee to the¿Chairman of the War Production Board on May lo, proposing creation of a War Research Development Corporation. In view of the importance of reducing differences over organizational details in order to ensure early action in mobilizing scientific researcn resources, Mr. Blaisdell proposed that the Planning Committee endorse the report of the committee under Mr. Maverick. Upon motion duly made, it was agreed without objection that: The Chairman is authorized to transmit to the Chairman of the War Production Board, Planning Committee Recommendation No. 8 (Document 97) urging early action upon the proposal of a committee, headed by Mr. Maury Maverick, that an Office for Technical Development be established within the War Production Board. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING XL JUNE 10, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Mr. James W. Fesler, Acting Secretary By Invitation: Sir Walter Layton, Chief Advisor to the British Minister of Production on Programs and nan- F. A. Roberts, Office of the Minister of Production, Great Britain . Director Mr. R. W. B. Clarke, Office of the Minister of Production, Great Britain 63 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE Mr. Thomas W. Wilson, Jr., Chief, Planning Coordination Section, Planning Committee Mr. Matthew Fox, Chief, Current Planning Problems Section, Planning Committee
Production Planning in Great Britain Sir Walter Layton and Messrs. Roberts and Clarke, members of the British mission headed by Captain Oliver Lyttleton, Minister of Production of Great Britain, were invited to join with the Planning Committee in a discussion of United States and British methods of broad program planning. The Chairman reviewed Recommendation No. 3 (Document 35), dated March 17, 1942, relating to revision of the War Munitions Program. The Committee recommended that the then stated munitions-production and war-construction objectives of 62 billion dollars for 1942 and 110 billion dollars for 1943 be reduced to about 40 billion and 60 billion dollars, respectively. The Chairman pointed out that the Committee strongly favors a program large enough to induce an all-out production effort, but is concerned lest impossible goals induce a confusion that might actually reduce production. He also reported that reduction of the industrial-facilities and military-construction program would provide the greatest savings of materials and manpower with the least disturbance of production. Mr. Searls stated that the total munitions and construction program is still not feasible, and is not in balance with the facilities that will be available for overseas shipment of munitions. He pointed out that if the ratio of ammunition to other shipments is the same as in the last war, shipping space will be available for only 10 percent of the ammunition now scheduled for production. The transportation of goods required for the essential civilian economy has already been curtailed. The Chairman expressed the view that the ship construction program has never been thoroughly integrated with strategic objectives. Mr. Searls explained that such integration is difficult because of the rapid changes in strategic considerations. Sir Walter Layton observed that the problem of shipping is twofold: (1) Whether enough cargo ships and transports will be available to carry large quantities of munitions and troops to theaters of war; and (2) whether naval forces are sufficient to provide adequate protection for ocean shipping. He suggested that some adjustment between naval and merchant shipbuilding may be necessary. The Chairman agreed with the suggestion of Sir Walter Layton that the enlargement of the military program beyond the limits of feasibility is partially attributable to attempts to balance the high Presidential objectives. Mr. Blaisdell observed that such attempts have rested on a misconception. The Presidential objectives for selected categories of munitions are based upon the view that the United States should serve as the arsenal of the United Nations. A large amount of such munitions, therefore, is intended for use by allied forces, rather than by United States forces. The Chairman agreed with this view, and pointed out that except for arms and components directly related to Presidential items, the total military program need not provide goals for non-Presidential items to match those in the Presidential categories. Sir Walter Layton outlined British organization for strategic and production planning. The Minister of Defense, Mr. Winston Churchill, and the Minister of Production, Captain Oliver Lyttelton, are coordinating officers, without formal ministries. A Cabinet Committee of Defense, of which the Minister of Defense is Chairman, is divided into two substantially distinct parts: the Committee of Defense (Operations) and the Committee of Defense (Supply), the Minister of Production being the Deputy Chairman of the latter. Under the Committee of Defense (Operations) is a committee composed of the three chiefs of staff of the Armed Services, under the chairmanship of the Minister of Defense. This committee confines its attention to purely military problems. Below this committee is a group of Joint Planners, consisting of the Directors of Plans of the three Armed Services. The Joint Planners are concerned with the planning of strategic operations. The organization for production planning closely parallels that for strategic planning. Under the Committee of Defense (Supply) is a Joint War Production Staff, which includes the Minister of Production as Chairman, and, on the one hand, the Assistant Chiefs of Staff concerned with supply for the Army, Admiralty, and Air Force, and, on the other hand, the Comptroller of the Admiralty, the technical heads of the Ministries of Supply, Aircraft Production, and a representative of the Ministry of Labour. Below this Joint War Production Staff is a Planning Group, composed of the heads of the programming departments of the appropriate supply ministries, as well as the officials in charge of requirements for the military services. The Minister of Production has general coordinating responsibility over the allocation of materials, labor, machine tools, and other supplies essential to war production. Regional representatives of the Minister of Production coordinate the field operations of such agencies as the Ministry of Supply and Ministry of Aircraft Production. Sir Walter Layton stated that in Great Britain the consideration of feasibility of total program has been based primarily on manpower, secondarily on materials, and thirdly on shipping facilities. At present the imports problem is a more serious limitation than manpower. Machine tools have not been and are not likely to be limiting factors on the production program, although some difficulty will be experienced with the supply of particular types of special-purpose tools. It is now anticipated that production rates, as compared with the first quarter of 64 JUNE 10, 1942 1942, will at their peak represent a 20 percent increase in naval construction, a 50 to 60 Percent increase in the production of Army items, and a 100 percent increase in production for the Air rorce. These high degrees of expansion will call for only about a 15 percent increase in requirements for labor. . , Construction activity has been subjected to progressively more rigid controls. Mr. Clarke reported that the total 1942 building program, including maintenance, will have a value of about 2 billion dollars, which is substantially less than the volume of construction in normal times and less than 1U percent of the total war program for 1942. An important factor in controlling the size o^jje construction program has been the shortage of building labor which is drafted both into the armed forces and into war industry. The Prime Minister issued a directive requiring a 40 percent reduction in the number of workers employed in the construction industry. Construction needs have been great, as every new factory requires auxiliary housing, hospitals, and other new facilities. Storage requirements have been much greater than in the last war, as ammunition and bombs are used at an uneven rate. Sir Walter Layton stated that allocations of materials were at first very unsatisfactory, as estimates of requirements by the various agencies proved inaccurate. It was found that requirements were estimated far in excess of needs, and that deliveries were less than allocations. At present, deliveries correspond closely to allocations, and the acaimwa-tion of information on deliveries has enabled the Government agencies to make much more accurate estimates of their requirements. Much the same development has occurred in labor requirements and allocations, although the controls must necessarily be somewhat less refined than those applied to materials. . - « The Executive Director pointed out that the United Kingdom experienced first a manpower shortage, and only recently has been troubled by a shortage of materials. In the United States, on t e other hand, shortages of materials have already been felt, but the manpower shortage will not be critical for some six to nine months. Sir Walter Layton expressed the view that the occasional idleness of factories in the United States is attributable less to a general shortage of materials than to an unsatisfactory control of the distribution of pliable materials. He also stated that some British plants have been idle because of delays in deliveries of materials. Mr. Clarke stated that representation of civilian interests is not a major concern in the organization for production planning in Great Britain, as virtually no strictly civilian production exists. 1 ne statements of minimum civilian requirements are submitted by the Board of Trade through the Ministry of Supply. The Board- of Trade and other agencies concerned with the civilian economy are represented on the committees allocating materials. Mr. Clarke stated that only 9 percent of raw materials imports are now for direct or indirect civilian use. Consequently, only insignificant quantities ot materials would be made available for war production by further curtailment of civilian production. Sir Walter Layton stated that the Lord President s Cabinet Committee, which includes the Minister of Production, controls policies with regard to home affairs. This Committee approved the scheme tor concentration of industry, rationing, and other methods of reducing civilian consumption, i he coal mines problem is at present before the Committee. . Sir Walter Layton and the Chairman agreed that the Combined Production and Resources Board will not be effective unless there is in the United States an organization for integrating strategic and produc-tion policies. Sir Walter Layton recognized the fact that the heads of the military and production agencies of the Government must devote the bulk ot their time to their respective agencies, but expressed the view that a board composed of such officials has the substantial advantage that it enables important questions to be settled by concurrence of the principal agencies. The Chairman pointed out that the Cabinet in Great Britain, together with its committees, brings about an integration of effort that in this country can be provided only, by dent. He also observed that the British method of coordinating agencies concerned with production emphasizes the importance of integration at several levels, whereas, in the United States formal joint consideration of major policies occurs only at the weekly meetings of the War Production Board, suggested that it might be desirable for the staffs as well as the heads of agencies concerned with production and strategy to be integrated. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman 65 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE MEETING XLI JUNE 26, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Mr. Thomas W. Wilson, Jr., Chief, Planning Coordination Section, Planning Committee Mr. R. W. Goldsmith, Member of Staff, Program Analysis and Research Section, Planning Committee Mr. Rufus Burr Smith, Sr. Economic Analyst, Planning Committee Approval of Previous Minutes The minutes of Meetings XXXII to XL, inclusive, were approved.
Relief to Manufacturers Forced to Cease Operations Because of the War The Chairman referred to the memorandum (Document 99) dated May 26, 1942 by Mr. Philip D. Reed, relating to the problems of manufacturers forced to cease operations as a result of Limitation and Conservation Orders. On the basis of a survey conducted by Mr. Vergil D. Reed, it is concluded that 24,000 out of a total of 184,000 manufacturing establishments will be compelled to shut down their plants before October 1, 1942. The net sales of the 24,000 companies in 1939 were about 4 billion dollars out of total sales by all manufacturers of 54 billion dollars. On a percentile basis, this means that 13 percent of all manufacturers, responsible for approximately 8 percent of total net sales, will be forced to cease operations by the Fall of 1942. Mr. Philip Reed noted that many of the smaller companies will not be needed to meet the production schedule of the war munitions program, and are not, in general, adapted to war production. Conversion of such companies to war production would be costly in terms of materials consumed in converting the plants, materials extravagantly used in production, and dollar cost of the products to the Government. Mr. Reed suggests that small manufacturers be tided over the war period by (1) shutting down their plants, (2) releasing their labor for employment in larger war plants, (3) pooling their critical tools for the purpose of rental to any war production plant requiring them, and (4) providing for governmental payment of the manufacturer’s fixed charges, such as rent, interest on mortgage or other debt, insur ance, property and franchise taxes, and maintenance. Mr. Reed estimates that the cost to the Government of payment of fixed charges for the 24,000 plants expected to close by Fall, would be about 200 million dollars a year. The Executive Director submitted a draft memorandum (Document 105), prepared by Messrs. Wilson and Goldsmith, relating to the proposal of Mr. Reed. A minimum program of relief should (a) be limited to manufacturing establishments, (b) be intended to preserve the fixed assets and corporate identity of only those manufacturing establishments that were basically sound at the time they were threatened by war-time restrictions, (c) grant relief only to firms that cannot maintain their corporate identity through participation in the war program, such as by actual manufacturing of war products, lease of equipment to war plants, or use of their property as storage space for war products, and (d) grant relief only as a method of preserving a segment of industry that is important to the maintenance of a healthy economic system in the post-war era. Specific suggestions were made for the granting of loans at a low interest rate to preserve fixed assets in working condition, disposition of inventories at a fair price, adjustment or governmental assumption of long-term debts, orderly liquidation of weak firms, postponement of the collection of Federal back taxes, support of plants closed by plans for concentration of essential civilian production, and provision of working capital to firms resuming production in the early post-war period. The Chairman pointed out that at a previous meeting (Minutes XXXIX, item 2) there was general agreement that small businesses not capable of conversion to war or essential civilian production should not be allotted materials nor be permitted to continue employing workers, and that aid to non-essential small plants should provide only for necessary maintenance of the plant, and should not interpose obstacles to the transfer of useful equipment to war plants. It was pointed out that among plants going out of business will be some that would have shut down in the normal course of business, some whose mortality is directly or indirectly caused by Limitation, Conservation, and Allocation Orders of the War Production Board or by agreements or directives to concentrate the total production of an industry in one or a few plants, some that can be converted to war production, some that can be maintained by the owners independently of governmental assistance, some that will be needed in the post-war period, and some whose usefulness will by the end of the war have ended because of changes in markets, processes, and equipment. The Chairman stated 66 JUNE 26, 1942 that the Government should be actively concerned only about those plants that would under normal conditions have remained in business and that are likely to be needed in the post-war period. The Chairman suggested that if the Committee favors provision of relief to businesses shut down because of the war, it should advocate that this relief take the form of (a) conversion to war production wherever possible, (b) governmental assistance in the orderly liquidation of businesses, particularly through rapid disposition of inventories and equipment and appropriate adjustments of leases and other commercial obligations, and (c) limited financial assistance by the Government for the maintenance of plants likely to be needed in the post-war period. Mr. Blaisdell believed that the principal emphasis should be placed upon the ready re-entry of manufacturers into business in the early post-war period. To this end he advocated that manufacturers be offered three alternatives: (a) conversion of plants to war production, (b) voluntary liquidation of businesses for cash on the open market, or (c) opportunity for manufacturers to elect liquidation of their plants to the Government in return for government securities negotiable only after the war ends, and of a value higher than the distress market value. ‘ Mr. Searls expressed the view that the Government should not extend relief to plants unable to convert to war production or essential civilian production. He emphasized (a) the difficulty of determining which manufacturers deserve relief, (b) the likelihood that government relief will counteract the process of natural selection in the business world by introducing differential relief to the less efficient and adaptable manufacturers, (c) the probability that, if, as is likely, the duration of the war is long, the plants maintained with governmental assistance will be outmoded by changes in consumer demands, improvements in equipment and processes, altered cost relationships, and similar developments, and (d) the cumulative burden upon Government finances of maintaining plants over a number of years. The Executive Director and Mr. Wilson pointed out that widespread shutdowns of plants will stimulate a number of unsound proposals for relief, and they suggested that adoption of such proposals would be less likely if the War Production Board at an early date advocated a conservative program of relief. e . Messrs. Searls and Blaisdell expressed disapproval of governmental financial assistance to manufacturers forced to shut down their plants because of the war. Upon motion duly made, it was agreed that : The Executive Director shall prepare a draft recommendation expressing disapproval of governmental financial assistance to manufacturers “ forced to shut down their plants because of the war, on the grounds of: the uncertainty of the duration of the war; the probability that present industrial products, equipment, and processes .will be obsolescent by the end of the war; the administrative difficulties of a relief scheme; the problem of ensuring equitable treatment of all manufacturers; the impossibility of socializing the impact of the war in every case; the likelihood that even maintenance of plants useless to the war effort will consume or freeze materials, labor, and other resources that otherwise could be directed into war production; and the cost to the Government of financing relief schemes. The recommendation shall also point out that provision of capital to manufacturers on easy terms in the early postwar period may be desirable. Mr. Goldsmith cited two problems in connection with the liquidation of businesses that he believed deserved consideration by the Committee, apart from its disapproval of general relief schemes. One problem is the price to be paid for equipment and materials that must be disposed of by liquidating manufacturers. He pointed out that semi-fabricated materials if sold on the open market are often priced as scrap rather than at a figure approaching the recent market value of the materials. There was general agreement that when the Government purchases semi-fabricated materials from liquidating businesses, it should pay a price approaching the recent market price for such materials, rather than the distress market price. It was noted that the Inventory and Requisitioning Branch of the Bureau of Priorities has followed this policy. The second problem described by Mr. Goldsmith concerns the fate of plants forced to cease operations because of a Government order or an industry agreement that the limited production of the industry should be concentrated in one or a few plants. This problem was readily solved in the case of the stove industry, as stove production was concentrated in the small plants, and the large plants were able to convert to war production. Not all industries can adjust themselves to wartime as readily as the stove industry. The Chairman noted that in Great Britain the manufacture of certain civilian products is concentrated in a few plants, but the products are labelled with customary trade marks and distributed through the respective trade channels of the several companies. Financial arrangements are worked out among the companies making up the industry. Mr. Searls expressed approval of concentration plans where the companies discontinuing the manufacture of the industry’s product are able to convert to war production, or where the industry,. acting with a minimum of governmental supervision,, is able to reach agreement as to ¡appropriate financial arrangements. Messrs. Blaisdell and Goldsmith noted that the British experience indicates that concentration plans will lag or will be on an unsound basis unless 67 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE the Government participates actively in the arrangements. At this point Messrs. Wilson and Goldsmith left meeting and Mr. Smith entered.
Industrial Health, Hygiene, and Safety Mr. Smith reviewed a report (Document 103) of a conference of representatives of several Government agencies, and referred to his memorandum of May 22, 1942, (Document 85),. on the need for an industrial health program. The rate of industrial fatalities has risen 29 percent since 1940. It is anticipated that by the winter of 1942 the cumulative effect of long hours, poor nutrition, and inadequate health protection will be a direct reduction in the effective labor supply of over 2 million workers, reduced efficiency, high turnover rates, increased costs of training workers, and serious threats of epidemics. Representatives of the United States Public Health Service, the Nutrition Division of the Office of Defense Health and Welfare Services, the Surgeon General’s Office of the U. S. Army, the Department of Labor, the Office of Civilian Defense, the National Youth Administration, the Labor Production Division of the War Production Board, and the Planning Committee adopted proposals for transmission to the Chairman of the War Production Board through the Planning Committee. In order to protect and maintain the productivity and health of war workers and to provide for the fullest coordination and utilization of Federal, state, and local facilities to that end, it was recommended that: (1) The Chairman of the War Production Board invite each of the several agencies and divisions concerned to appoint a member of a committee that shall determine broad questions of policy and whose members shall be available for consultation on specific problems; (2) a Section on Industrial Health, Hygiene, and Safety be established in the Labor Production Division of the War Production Board, to be responsible for acting as a clearing house and referral agency in the work of the several agencies concerned; and (3) this Section be responsible for recommending additional staff and finances for the several professional agencies, as necessitated by the additional responsibilities resulting from the protection of war workers. It was noted that, while the objective of providing more adequately against hazards to the health of war workers is a desirable one, there are jurisdictional questions among the several Federal agencies interested in the field of industrial health, and between the Federal Government on the one hand and state labor and health agencies on the other. Mr. Blaisdell undertook to arrange for examination by the Bureau of the Budget of the jurisdictional questions involved in the proposal for establishment of a Section of Industrial Health, Hygiene, and Safety in the Labor Production Division of the War Production Board. At this point Mr. Smith left the meeting.
Yukon Pipeline Mr. Searls submitted a draft memorandum on the proposed construction of a 400-mile pipeline from McKenzie River at Norman Wells to White Horse, Yukon Territory, Alaska, and the proposed construction of a 1,600-mile road from Edmonton to Fairbanks. The feasibility of these two projects was seriously questioned. The alternative to the proposed pipeline is continuance of the shipment of petroleum products to Alaska by tankers up the West Coast of the continent. Mr. Searls stated that only two or three tankers a year would be required for the supplies required. The Executive Director was requested to investigate further the proposed Yukon pipeline and road, and to report his findings to the Committee.
Merchant Shipping Mr. Searls reported that the loss of merchant ships through sinking continues to be the most serious threat to the successful prosecution of the war. He noted that it has been determined that trawlers shall be mobilized for assistance in the protection of American coastal waters. It was his view that the heavy rate of sinkings of merchant ships should not be permitted to divert emphasis from the need for allocation of sufficient steel plates to enable fulfillment of the merchant shipbuilding objectives. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING XLII JUNE 30, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Felser, Acting Secretary By Invitation: Mr. Thomas W. Wilson, Jr., Chief, Planning Coordination Section, Planning Committee (for discussions of items 2 and 4) 68 JUNE 26 AND 30, 1942 Mr. R. W. Goldsmith, Member of Staff, Program Analysis and Research Section, Planning Committee (for discussion of item 2)
Merchant Shipbuilding The Chairman presented a report on the merchant shipbuilding program (Document 112), which he had submitted to the War Production Board at its meeting of June 30, 1942.
Relief to Manufacturers Forced to Cease Operations Because of the War Pursuant to the previous request of the Committee (Minutes XLI, item 1), the Executive Director presented a memorandum in preliminary form on the relief of manufacturers forced out of business as a result of the war effort. The memorandum was discussed and revised. The Executive Director noted that Mr. Searls has read and approved the memorandum. Upon motion duly made, it was agreed without objection that: The memorandum on relief for manufacturers forced out of business as a result of the war effort, as revised (Document 116), is approved for transmission to the Chairman of the War Production Board as Planning Committee Recommendation No. 11.
Industrial Health, Hygiene, and Safety In accordance with his previous agreement (Minutes XLI, item 2), Mr. Blaisdell presented a report on a conference with Mr. Byron Mitchell of the Bureau of the Budget, with reference to jurisdictional questions involved in the proposal for establishing a Section of Industrial Health, Hygiene, and Safety in the Labor Production Division of the War Production Board (Document 111). He reported that formal clearance of the proposal appears unnecessary in view of the informal discussions (See Document 103) among representatives of affected agencies. The Chairman noted the close relationship of the proposed Bureau to the functions assigned to the Office of Defense Health and Welfare Services and suggested that this relationship be further explored. Mr. Blaisdell agreed to confer with appropriate officials of the Office of Defense Health and Welfare Services with respect to the proposed establishment of a Section of Industrial Health, Hygiene, and Safety in the Labor Production Division of the War Production Board.
Utilization of Used Equipment The Executive Director referred to Planning Committee Recommendation No. 6 (Document 91), adopted on May 28, 1942, (Minutes XXXVII, item 2), and submitted a draft memorandum proposed as a supplement to the earlier Recommendation. The drafts of an Executive Order and of a General Administrative Order of the War Production Board have been revised in conformity with conferences between the Executive Director and representatives of the Bureau of the Budget. Upon motion duly made, it was agreed without objection that: The draft memorandum (Document 113), outlining the results of a conference between the Executive Director of the Planning Committee and representatives of the Bureau of Budget, concerning the utilization of used equipment, is approved for transmission to the Chairman of the War Production Board as a Supplement to Planning Committee Recommendation No. 6.
Smaller War Plants Corporation Mr. Wilson presented a draft memorandum (Document 109) on effective mobilization of productive facilities by the Smaller War Plants Corporation established by Public Law 603, 77th Congress, 2d Session (Document 102). The memorandum submits a number of recommendations designed to bring small facilities into war production on a large scale. A great many potential producing units are believed to exist which are now either substantially idle, are threatened with closure by Limitation or Conservation Orders, or are engaged in non-essential civilian production. Although the supply of critical materials apparently limits the extent to which fabricating facilities can be employed, efforts must not be confined solely to stimulating additional supplies of raw materials. Additional reservoirs of fabricating capacity must be mobilized for present use and for a reserve so that the war production program has available to it the maximum capacity and productive effort the economy can provide. The Chairman expressed the view that with the existing supply of raw materials the nation is likely to approach full utilization of its manpower. Mr. Blaisdell observed that raw materials production is practically at peak rates and pointed out that the emphasis on construction of new facilities has fallen largely on the fabricating type of facilities rather than on expansion of ore mining facilities. It was proposed that (1) new contracts will not be let to present suppliers until a strong effort has been made to develop new sources of supply; (2) the Smaller War Plants Corporation should seek out additional facilities for production of bottleneck components which slow down the aggregate production effort; (3) existing contracts should be redistributed to (a) shorten the time of completion; (b) remove simple work from facilities capable of more difficult work; (c) remove present contracts from specific areas because of labor shortages, overcrowded community facilities, etc.; and (d) divert production from a facility working three shifts to a plant which is standing virtually idle; and (4) sources should be developed for many small items required by Lend-Lease and the Office of Strategic 69 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE Services, and unorthodox methods should be devised, such as alternate specifications and materials, for increasing the production of the most critical war items. The Chairman and Mr. Blaisdell agreed that it is advisable to have some excess capacity available to provide flexibility to the program and that this stand-by capacity should be in large plants rather than in completely idle small plants losing their labor supply and managerial staffs. They favored, therefore, that some third shift, and week-end work be diverted to small plants, where possible, from the large, fully occupied facilities. It was felt that sub-contracting offers the greatest possibilities of drawing small plants into the war program. It was recommended that the Stanley Plan, which has proved so successful in Chicago, and the “mother hen” system of distributing a contract through a number of small firms should be extended. To ensure the effectiveness of the Smaller War Plants Corporation, it was proposed that close contact be maintained with the procurement agencies, with the Office of Technical Development, with regional and local offices of the War Production Board, and with the Substitution Branch of the Bureau of Industrial Conservation. Upon motion duly made, it was agreed without objection that: The Draft memorandum on the Smaller War Plants Corporation, as revised (Document 115), is approved for transmission to the Chairman of the War Production Board as Planning Committee Recommendation No. 10. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING XLIII JULY Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Mr. M. Goldsmith, Vice President and Chief Engineer, Atlantic Refining Company, and Chief Engineer, War Emergency Pipelines (for discussion of item 1) Mr. C. W. Chambers, Staff, Planning Committee 1. Texas-Illinois Pipeline The Chairman referred to the Planning Committee Recommendation No. 9 (Document 101) proposing that the Texas-Illinois pipeline project be disapproved, and to the action of the War Production Board (Document 107) authorizing construction of the pipeline. Mr. Goldsmith outlined the history or proposals initiated in the summer of 1941 for the construction of a pipeline to provide approximately 250,000 barrels a day of petroleum to the East Coast. On September 9, 1941, Mr. Ralph K. Davies, Acting Petroleum Coordinator for National Defense requested authorization of an A-la project rating for the construction of a pipeline from the Texas oil fields to Bayonne, New Jersey. It was estimated at that time that 454,000 tons of steel, iron, and machinery would be required for the construction of the line which would have an initial capacity of 250,000 barrels a day, with a potential capacity of 350,000 1, 1942 barrels a day. On September 15, 1941, the Supply Priorities and Allocations Board denied the application for an A-l project rating to avoid diverting steel plate from the Navy and Maritime Commission. In actions of October 29 and November 5, 1941, the Supply Priorities and Allocations Board again denied high priority ratings for the pipeline project. On June 8, 1942, a conference of the eleven oil companies associated with the 1941 pipeline proposal favored construction of a pipeline from Texas to the Eastern area, but advocated that, if only half of the line could be built, that half should start in the Eastern area. At that meeting the view was expressed by a representative of the Office of the Petroleum Coordinator for War that a decision to oppose construction of a pipeline from Texas to Illinois might well result in failure to secure approval of any pipeline, whereas if steel were obtained for the Texas-Illinois line, it was likely that further allotments of steel could be obtained for extension of the line to the East Coast. Mr. Goldsmith expressed the view that the steel and equipment made available for the Texas-Illinois line would be better used in construction of a pipeline from Phoenixville, Pennsylvania, to Columbus, Ohio. He emphasized, particularly, the importance of concentrating during the summer upon construction of the portion of line that must cross the Alleghany Mountains to avoid interruption of construction during the winter months. The claim has been made that industry in the Chicago area needs the Texas-Illinois pipeline to supplement the declining flow of petroleum and petroleum products from the Illinois oil fields. It is believed that the only con 70 JUNE 30 AND JULY 1, 1942 tribution of the Texas-Illinois project toward relieving the shortage of petroleum products on the East Coast would be to permit more rapid turnaround of barges and tank cars. A number of pipelines already furnish oil to the Midwestern area, and it would appear that Midwestern needs could be met and the surplus shipped East readily, if the Columbus-to-Phoenixville line were constructed. Mr. Goldsmith stated that the suggestion that a pipeline be constructed across the southern part of Michigan to permit concentration of lake tankers in Lake Erie has never been given serious consideration, as the line would not make a very substantial contribution. Mr. Searls suggested that construction of a 120-mile products pipeline across northern Florida, as proposed in the Mansfield Bill, and construction of storage tanks at its termini, would require less steel than the Texas-to-Illinois crude pipeline and would have the further advantage of relieving the Gulf Coast refining area of the surplus gasoline resulting from the production of toluene and butylene. He noted that the Maritime Commission is building concrete barges for shipment of petroleum products from Texas to northwestern Florida and from northeastern Florida to the more northerly points on the Atlantic Coast. Mr. Goldsmith stated that the feasibility of the Florida pipeline, which could be laid very rapidly because of the level terrain, depends largely upon the ability of the Navy to protect the movement of barges and tankers off the Atlantic Coast. He noted that the Plantation Pipeline from Louisiana to North Carolina is being improved and extended to increase its capacity to 60,000 barrels of petroleum products a day. Mr. Blaisdell noted that even a pipeline from Texas to the East Coast with a capacity of 250,000 barrels a day, plus tank car shipments at the current rate of 750,000 barrels a day, would not meet Eastern requirements, which are now estimated at 1.2 million barrels a day. Mr. Goldsmith stated that tank car deliveries are likely to decline, as it will become increasingly impossible to rely upon rubber-borne vehicles for short hauls of petroleum and petroleum products. Mr. Blaisdell suggested that extension of gasoline rationing to the Mid-West, emphasis upon shipments of fuel oil to the Eastern area, and effective control of tank car and barge movements appear important possibilities for meeting the fuel crisis in the East. Mr. Goldsmith stated that the Texas-Illinois pipeline can be built in six months if the equipment is made available. The Chairman pointed out that there is some danger of unfavorable public reaction if there is a further change in Government plans for construction of pipelines. Mr. Goldsmith suggested that the public reaction would be favorable if the change consisted of construction of a line obviously better designed to meet the eastern problem than the recently approved line for assisting the Chicago area. He pointed out that the same quantities of steel could be used as have already been approved, as it is not essential that in this emergency the pipeline have particular termini, but only that the line bring the western supply of oil closer to the East. Mr. Goldsmith recommended that the War Production Board give a hearing to representatives of the petroleum industry before proceeding with plans for the construction of the pipeline. At this point Mr. Goldsmith left the meeting. Upon motion duly made, it was agreed without objection that: The members of the Planning Committee will consult with the Chairman of the War Production Board upon the projected pipeline from Texas to Illinois. At this point Mr. C. W. Chambers entered the meeting.
Yukon Pipeline Pursuant to the previous request of the Committee (Minutes XLI, item 3), Mr. Chambers reported upon the Yukon Pipeline Project to extend approximately 550 miles from Fort Norman, Mackenzie, Canada, to Whitehorse, Yukon, Canada. The line will be owned by the United States Army and operated by Imperial Oil, Ltd., of Canada. The greatest uncertainty is the productivity of the oil fields at Fort Norman, said to have a potential production of 400 barrels per day, which may be increased to 2,000 barrels per day if more wells are drilled. Mr. Searls expressed doubt that the capacity of the field is large enough to warrant the expenditure of critical materials in the construction of the pipeline and refinery. The proposed pipeline is designed to serve such important and critical centers as Fairbanks, Anchorage, Seward and Dawson, as well as the many settlements and towns in interior Alaska that lie along the Yukon River. Oil and products from the projected refinery at Whitehorse would be barged down the Yukon which is navigable, including tributaries, for 3500 miles, and over the railroad to Skagway, where ships could be refueled. Delivery of 2,000 barrels per day, if it can be achieved, would be equivalent to the supply from 10 tankers of average size. The pipeline project would also tie in with the new road being built from interior Canada to Alaska and help to meet fuel requirements of the upper reaches of the road. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman n MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE MEETING XLIV JULY 7, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Mr. Maury Maverick, Chief, Bureau of Governmental Requirements, Division of Industry Operations, War Production Board (for discussion of item 4) Mr. Frederick Lawton, Administrative Assistant to the Director, Bureau of the Budget, Executive Office of the President (for discussion of item 4) Mr. Thomas W. Wilson, Jr., Chief, Planning Coordination Section, Planning Committee (for discussion of item 3) Mr. Charles J. Hitch, Head Program Planner, Planning Committee (for discussion of item 3) Mr. R. W. Goldsmith, Member of Staff, Program Analysis and Research Section, Planning Committee (for discussion of item 3) Mr. Peter R. Nehemkis, Special Assistant to the Director, Office of Progress Reports, War Production Board (for discussion of item 4) Mr. Byron Scott, Special Assistant to the Chief, Bureau of Governmental Requirements, Division of Industry Operations, War Production Board (for discussion of item 4) Mr. Malcolm G. Bardwell, Executive Officer, Bureau of Governmental Requirements, Division of Industry Operations, War Production Board (for discussion of item 4)
Texas-Illinois Pipeline The Executive Director reported that, pursuant to the previous decision of the Committee (Minutes XLIII, item 1), the Chairman, Mr. Blaisdell, and the Executive Director conferred with the Chairman of the War Production Board, Mr. Ferdinand Eber-stadt, Chairman of the Army and Navy Munitions Board, and Brigadier General Walter B. Pyron, Liaison Officer for Petroleum, War Department, with reference to the Texas to Illinois pipeline. During the conference General Pyron expressed the view that the major purpose of the pipeline project was to relieve the possible shortage of petroleum and petroleum products in the Chicago area. In this connection the Executive Director referred to a report (Document 119) by Messrs. Glen E. McLaughlin and Wilbert G. Fritz on supplying crude oil to the Chicago area and the East Coast area. According to the report, the Chicago area now has a surplus of 72 crude oil of such proportions that Illinois has been shipping approximately one-fourth of the total crude oil sent by tank car to the East Coast. The trend of oil discovery in Illinois has been favorable, over one-third of the volume of new reserves (not including pool extensions) having been discovered in the Illinois fields. The Executive Director reported that the Chairman of the War Production Board has asked the Committee to confer with Mr. Wayne Johnson, Coordinator for Oil, War Production Board, with reference to the proposed Texas to Illinois pipeline.
Yukon Pipeline The Executive Director expressed the view that, as plans for construction of the Yukon pipeline (See Minutes XLIII, item 2) have already been completed, and substantial quantities of steel delivered, it appears to be too late to recommend disapproval of this project. Mr. Searls pointed out that the procedure by which materials were made available for construction of the pipeline was apparently irregular, and suggested that it would be appropriate for the Committee to investigate further the nature of this procedure, and to submit an appropriate memorandum to the Chairman of the War Production Board. Upon motion duly made it was agreed without objection that: The Executive Director shall further investigate the procedure by which the Yukon pipeline was initiated and approved, and report his findings to the Committee.
Concentration of Civilian Production Messrs. Wilson, Hitch, and Goldsmith presented a draft memorandum (Document 118) on the concentration of civilian production. War Production Board orders limiting the output of civilian industries have with a few exceptions imposed uniform percentage reductions on all firms. Continuation of this practice would not be conducive to maximum conversion, would waste resources, would intensify regional and local bottlenecks in resources, and would imperil price ceilings by fostering low volume production with consequent higher costs. It would appear that concentration of production of civilian goods is probably desirable in an industry whenever (1) some or all firms in the industry are required for and are convertible to war production, (2) permitted civilian production is so restricted as to prevent the economic operation of all firms in the industry, and (3) a significant part of the production is continuing in regions or localities suffering from bottlenecks in labor, transport, power, or ware JULY 7, 1942 house accommodation. The selection of nucleus plants to be allowed to continue operation at or near capacity should be guided largely by such criteria as suitability of the plants for conversion to war production, condition of local labor markets, economy of transport, power supply, requirements for warehouse accommodation, and efficiency of plant operations. It is believed that concentration plans should not foster post-war domination of an industry by one or a few companies, should, wherever possible, be accompanied by standardization and simplification of the product, should be flexible and be drafted for limited periods, should be closely coordinated with plans of the Office of Price Administration for concentration of distributive channels, and, where compensation is provided for firms closed down by concentration plans, should require that the financial burden fall upon the nucleus firms continuing operations and be limited to the duration of the concentration program. It was noted that the most suitable method of compensating firms closed down would be provided by either (a) an agency scheme under which the nucleus firms produce at cost for closed down firms, the latter retaining their sales organization and depending for compensation on the difference between purchase and sales prices, or (b) a pooling scheme that concentrates both production and distribution in the nucleus firms and provides for direct compensation payments by nucleus firms to the closed down firms. It was proposed that a small Concentration Committee, including representatives of the Bureau of Industry Branches, the Civilian Supply Division and the War Manpower Commission, be established with authority to direct the concentration of civilian production in the shortest possible time, review and approve concentration proposals, and make regular progress reports to the appropriate deputy of the Chairman of the War Production Board. It was felt that this Concentration Committee should develop lists of industries deserving of consideration in connection with concentration plans, appoint special groups to develop concentration plans for specific industries on the basis of full consultation with all interested agencies, review concentration programs submitted by such groups, and secure authorization from the Department of Justice to permit institution of the plans. Mr. Searls referred to the superiority of voluntary agreements among firms in an industry as compared to governmentally imposed concentration plans. Mr. Hitch observed that in Great Britain the Government took the initiative in the case of those industries where rapid concentration of production was ■essential. In the case of industries permitted to develop concentration plans by voluntary agreement, many months were required for development of satisfactory plans. The Chairman agreed with Mr. Searls that industries should play a very active part in the develop ment of concentration schemes, but believed that in areas where concentration needs to be speeded because of shortages of labor and similar conditions, the Government would have to take much of the initiative. It was noted that an individual company has the option of either participating in a concentration scheme or ceasing operations during the duration of the scheme. The Chairman observed that firms should be permitted to continue operating at a relatively small percentage of their normal rate if such continued operation is not detrimental to the war program. It. was noted that there should be a concentration of petroleum refining operations in order to ensure maximum production of toluene, high octane gasoline, and butylene. However, such concentration is a problem distinct from that of concentrating the manufacture of purely civilian end products. Upon motion duly made it was agreed without objection that: The memorandum on concentration of civilian production (Document 118), as revised, is approved for transmission to the Chairman of the War Production Board as Planning Committee Recommendation No. 12 (Document 121).
Utilization of Used Equipment The Executive Director referred to Planning Committee Recommendation No. 6 (Document 91), and the supplement thereto (Document No. 113), relating to the utilization of used equipent. He pointed out that the Planning Committee is interested in establishing appropriate channels for the stimulation of the use of used equipment in order that materials and other resources needed for the war program can be conserved. It is the desire of the Committee to use existing agencies in preference to the creation of new organizations. The Committee has discovered that the Bureau of the Budget is interested in the same problem, from the standpoint of discouraging purchase of new equipment by Federal agencies when satisfactory surplus equipment exists elsewhere in the Federal Government. Mr. Maverick expressed the view that the proposed Executive Order authorizing the Bureau of the Budget to develop and promulgate standards to govern the utilization by Government agencies of supplies and equipment, to require the transfer of supplies and equipment from one Government agency to another, and to review before submission to the War Production Board all applications by Federal agencies for priority or preference rating assistance under the Governmental Requirements Plan of the Board contradicts fundamental concepts of the operation of the American Constitutional system, and represents a drastic incursion into the power delegated to the War Production Board by the President. Mr. Maverick believed that, while the Bureau of 73 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE the Budget may legitimately review budget estimates prior to their submission to Congress, it should not have controlling authority over the expenditure of funds appropriated by Congress to particular Federal agencies. He noted that the proposed Executive Order contradicts this concept, as it is an expression of the philosophy that the Bureau of the Budget should assume over-all managerial functions of the Executive Branch of the Government. Mr. Maverick also pointed out that Form 408 of the War Production Board, which is an application by Government agencies for priority assistance, should not be submitted for preliminary review to any agency other than the War Production Board. He believed that the proposed Executive Order, which provides for such preliminary review by the Bureau of the Budget, would constitute Presidential withdrawal of an important part of the priority powers originally delegated to the Chairman of the War Production Board. Mr. Maverick summarized his views as follows: (1) powers vested in the Chairman of the War Production Board should be delegated only by the Chairman, in order that he may continue to have authority commensurate with his responsibility for war production and procurement; (2) all applications to the War Production Board for priority assistatnce should be submitted directly to the War Production Board; (3) even if coordination of the use of used equipment by Federal agencies is desirable, it is probable that the Procurement Division of the Treasury Department, rather than the Bureau of the Budget, should be designated to perform this function; (4) no agency outside the War Production Board should be authorized to make a final determination* as to the need for supplies and equipment containing critical materials. Mr. Lawton pointed out that the Procurement Division of the Treasury Department has no authority to determine the needs of agencies for equipment, but merely acts as a central purchasing agent. The Procurement Division also lacks authority over the disposition of surplus property until a Federal agency has voluntarily declared certain property to be of a surplus character. It is the purpose of the proposed Executive Order to authorize the Bureau of the Budget to press vigorously for the declaration of surplus equipment as surplus in order that it can transferred to agencies able to use it. Earlier this year the Bureau of the Budget was authorized by statute to dispose of surplus equipment of the Civilian Conservation Corps. The proposed order merely extends this type of function to other agencies. Mr. Lawton stated that the Procurement Division of the Treasury Department will be primarily responsible for the actual execution of the proposed Executive Order, and noted that the Secretary of the Treasury and the Procurement Division of the Treasury Department have endorsed the proposed order. The Executive Director observed that, in correspondence with the Bureau of the Budget, he has emphasized the importance of obtaining general agreement by interested agencies upon the proposed order. Mr. Blaisdell called attention to the fact that there is a general tendency for Federal agencies to seek autonomy in such matters as control of equipment and supplies. He believed that, in view of this strong tendency, only the Executive Office of the President, of which the Bureau of the Budget is a major unit, has sufficient prestige to ensure the maximum utilization of used equipment through genuine pooling of the surplus equipment and supplies of all Federal agencies. Attention was called to the fact that supplies and equipment excepted by the proposed Executive Order from the control of the Bureau of the Budget are of the type that go beyond the normal institutional operations of the average Federal agency. Thus, applications for new supplies and equipment for construction of housing, electric power works or facilities, roads, reservoirs, and other physical improvements will be submitted directly to the War Production Board without prior review by the Bureau of the Budget. * Mr. Lawton stated that the Bureau of the Budget does not intend to establish a staff of commodity and production expert?, as it will be concerned only with equipment that is already owned by Federal agencies. The Chairman pointed out that the basic concept of the proposed Executive Order is that the United States Government is a single corporation which files its request for new supplies and equipment through a single channel to the War Production Board. Mr. Maverick stated that hitherto the Bureau of Governmental Requirements has been dealing directly with each Federal agency.
Industrial Health, Hygiene, and Safety The Chairman referred to the proposal (Documents 103 and 111) for establishing a Section of Industrial Health, Hygiene, and Safety in the Labor Production Division of the War Production Board. He reported that the Director of the Labor Production Division has already instructed his staff to arrange for the establishment of such a Bureau. Upon motion duly made, it was agreed without objection that : In view of the impending establishment of a Section of Industrial Health, Hygiene, and Safety in the Labor Production Division, the Planning Committee will not submit a formal recommendation upon the subject to the Chairman of the War Production Board. James W. Fesler ‘Acting Secretary Approved: Robert R. Nathan Chairman 74 JULY 7 AND 9, 1942 MEETING XLV JULY 9, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Mr. Wayne Johnson, Special Advisor to the Chairman of the War Production Board on Petroleum Matters (for discussion of item 2) . Brigadier General Walter B. Pyron, Liaison Officer for Petroleum, War Department (for discussion of item 2) . Colonel Joseph S. Gorlinski, Acting Chief, Operation and Training Branch, Troops Division, Office of Chief of Engineers, War Department (for discussion of item 2)
Texas-Illinois Pipeline Mr. Johnson reported upon the factors that impelled the Committee, of which he was Chairman, to recommend that the War Production Board approve construction of the proposed pipeline from Texas to Illinois. He stated that he entered upon the inquiry without preconceived ideas, and that the recommendation of his Committee was arrived at with the concurrence of the eleven Government agencies most vitally concerned with the problem. The decision that the Texas-Illinois line should be built, rather than a line from Illinois to the East was heavily,influenced by the fact that 240,000 tons of steel would have been required for the Illinois-to-the-East line as compared with the 125,000 tons required for the Texas-Illinois line. It was believed that the Texas-Illinois line would reduce the turnaround time of tank cars serving the East from 18 days to 10 days, and would also expedite the movement of oil by barges to the East Mr. Blaisdell noted that the War Production Board in approving the Texas-Illinois pipeline (Document 107) directed that arrangements for obtaining the necessary steel should be so devised as to involve a minimum of interference with the war production program. It was observed that the Army and Navy Munitions Board at one time questioned the desirability of the pipeline; more recently it has endorsed the proposal, and has arranged for the necessary steel to be made available out of steel subsequently proposed for shipment under Lend-Lease arrangements. Mr. Searls expressed the view that the steel for the pipeline is being obtained at the expense of merchant ships and naval convoy and patrol vessels. Mr. Johnson stated that the shortage 686312—46—6 of steel plates, rather than that of steel itself, is limiting the production of vessels, and pointed out that construction of the pipeline will not directly affect the availability of steel plates. The Chairman pointed out that the Iron and Steel Branch of the War Proruction Board recommended that steelplate production be held below capacity levels, in order that important competing requirements for steel billets can be met. Mr. Johnson reported that Mr. M. L. Goldsmith, Chief Engineer of the Texas-Illinois pipeline had reported that there was no question but that the necessary motor and other equipment could be obtained without interference with the war program. Mr. Johnson expressed the view that, although construction of the pipeline may divert critical materials from other uses, the project is a desirable insurance against critical shortages of petroleum and petroleum products. The Executive Director stated that eleven large eastern suppliers of oil have expressed unanimous disapproval of the Texas-Illinois pipeline. Mr. Johnson expressed lack of familiarity with the resolution of the oil companies, but stated that he.was aware of their preference for 550 miles of pipeline starting in the Eastern area. He informed the companies that sufficient steel is not available for this more ambitious line. He also pointed out that the Management Pipeline Committee of the Petroleum War Council unanimously endorsed the proposed Texas-Illinois pipeline. Mr. Johnson stated that the threatened shortage of oil in the Chicago area was called to the attention of his Committee as a further argument for construction of the Texas-Illinois line. Mr.. Searls expressed the opinion that it is possible to increase the current rate of petroleum production of the Illinois oil fields. Mr. Johnson agreed that expert judgment conforms to Mr. Searls’ view, but stated that, although drilling of more wells would cause, a temporary rise of production, a high production rate could not be long maintained. He also stated that with the exercise of ingenuity it would be possible to deliver to the Eastern area all pf the 250,000 barrels arriving daily at the Illinois terminus of the pipeline. Mr. Johnson expressed the view that the proposed products pipeline across northern Florida should not be regarded as an alternative to the Texas-Illinois line, as the Florida pipeline will probably carry not more than 35,000 to 40,000 barrels a day. Mr. Johnson emphasized the threatening shortage of fuel oil in the East and observed that refineries dislike to convert their plants to the production of fuel oil because this is less profitable than the production of gasoline. Mr. Blaisdell suggested that fuel 75 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE oil shipments to the East Coast might be stimulated by providing for a higher price for fuel oil and a lower price for gasoline. Mr. Blaisdell emphasized the general principle that civilian consumption should be restricted whenever it is substantially interfering with direct military and war production needs. He urged that civilian consumption of gasoline in the Mid-West be curtailed through a rationing program in order that tank cars may be released for movement of petroleum products to the East. At this point Mr. Johnson left the meeting. Mr. Searls called attention to the fact that oil could be transported on small tankers, now being built on the Great Lakes for the Standard Oil Company (New Jersey), from the Chicago area to Buffalo, New York, and thence by barge through the Erie Canal System to New York City. At this point General Pyron and Colonel Gorlinski entered the meeting.
Yukon Pipeline Reference was made to the earlier discussion (Minutes XLIII, item 2) of the Yukon pipeline. General Pyron and Colonel Gorlinski reported that they were not fully familiar with the circumstances responsible for approval of the construction project. General Pyron noted that provision of a local supply of oil to our armed forces in the Alaskan region would be an invaluable asset. Geologists have estimated that the Norman Wells Field might produce as much as 5,000 to 6,000 barrels of oil a day, but officials of Imperial Oil, Ltd., feel that this may be an overly optimistic estimate. Colonel Gorlinski stated that the pipeline could be constructed without great difficulty, as it would be laid on the surface and would not reach an altitude higher than 5,000 feet. About 200 to 300 miles of pipeline have already been delivered to the area. It is possible that the line could be completed by the end of 1942, but the schedule for construction has recently been extended to two years. No plans have yet been developed for construction of the necessary refining facilities. If the refinery were built at Whitehorse, refinery products could be distributed by rail or highway to Skagway, and thence by sea, or by barges down the Yukon. Mr. Searls pointed out that the transportation of products from Whitehorse would in itself consume large amounts of gasoline. Upon motion duly made, it was agreed without objection that: The Executive Director shall further investigate the procedure by which the Yukon pipeline project was initiated and authorized.
Reorganization of the War Production Board The Chairman referred to the reorganization of the War Production Board, and presented an organization chart (Document 128) and a copy of General Administrative Order No. 2-45 (Document 129), effecting the principal changes. He pointed out that the Planning Committee becomes a part of the Executive Office of the Chairman of the War Production Board, and will be expected to advise the Chairman upon a large number of policy questions. It will also assist the Vice Chairman on Program Determination in developing a balanced and feasible war production program. The Chairman directed attention to the fact that procurement agencies, such as the War and Navy Departments, are regarded as exercising their functions by delegation from the Chairman of the War Production Board. Mr. Blaisdell pointed out that in the past it has been difficult to distinguish purely strategic questions from questions affecting the war production program. It was his view that no clear line of distinction can be drawn because the War Production Board cannot effectively formulate a production program and control the flow of materials if so-called strategic decisions can be made exclusively by the armed forces. Such decisions often call for diversion of substantial amounts of critical materials and other productive resources. He further pointed out that the armed forces should actively recognize that maintenance of the civilian economy is basic to the provision of armament items needed for military operations. The Yukon pipeline and the military construction and industrial facilities programs were cited as examples of problems requiring joint consideration by officials concerned with strategy and production.
Transportation The Executive Director presented a proposed recommendation (Document 117) on the subject of transportation. Upon motion duly made it was agreed without objection that: The Executive Director shall submit the proposed recommendation (Document 117) on transportation to the Office of Defense Transportation and the Transportation Committee of the War Production Board for comment. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman 76 JULY 9 AND 14, 1942 MEETING XLVI JULY 14, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. James W. Fesler, Acting Secretary By Invitation: Mr. Edgar B. Stern, Chairman, Transportation Committee, War Production Board (for discussion of item 1) Mr. S. S. Bruce, Assistant Director, Division of Railway Transport, Office of Defense Transportation (for discussion of item 1) Mr. W. J. Bailey, Special Advisor to the Chairman, Transportation Committee, War Production Board (for discussion of item 1) Mr. Arthur C. Schier, Special Advisor to the Chairman, Transportation Committee, War Production Board (for discussion of item 1) Mr. Ernest W. Williams, Economist, Industrial Section, National Resources Planning Board (for discussion of item 1) Mr. C. W. Chambers, Member of Staff, Planning Committee, War Production Board (for discussion of item 1) Mr. Wayne Johnson, Special Advisor to the Chairman of the War Production Board on Petroleum Matters (for discussion of item 2) Major J. R. Parten, Director of Transportation, Office of the Petroleum Coordinator for War (for discussion of item 2)
Transportation Mr. Chambers reviewed the draft memorandum (Document 117) on transportation. The transportation system of the country is currently handling the largest physical volume of business in history, and there is no reason to anticipate a decline of traffic requirements. At the same time total transportation facilities are shrinking, because of the sinking and diversion of ocean-going vessels and the steady wearing out of currently irreplaceable rubber tires and motor trucks. As a result of these developments railroads will be called upon to handle an unprecedented load of freight and passengers. The effectiveness with which railroads can handle this burden will necessarily be conditioned by (1) war-time changes in the usual pattern of flow of railroad traffic, (2) reduction of railroad efficiency because of such developments as increased short hauling and passenger business, (3) limitation of materials for repair, maintenance, and new production of capital equipment, and (4) difficulties in retaining and augmenting the necessary railroad labor force. The railroads enter the critical period with the advantages of an excellent operating management, high morale, a relatively high degree of inter-carrier cooperation and integration, and fairly stout ways and structures. On the other hand railroads have considerably less equipment than they had even in 1929, and the freight cars are disproportionately distributed with reference to the types that will be required during the current emergency. A large amount of information on railroad problems is available in the industry and the Federal Government, and this should facilitate effective organization of the industry for handling the war-time load. Mr. Chambers believed that the transportation system could not continue to meet the expanded war needs without positive assistance and vigorous direction by war agencies. An adequate approach to war-time transportation problems requires: (1) Limitation of transportation to essential traffic, (2) maximum use of physical assets, (3) adequate and efficient use of manpower, and (4) allocation and prompt delivery of sufficient materials to sustain essential transportation. A number of specific suggestions were advanced for effecting these objectives. Mr. Blaisdell stressed the importance of intimate cooperation between the War Production Board and the Office of Defense Transportation. Mr. Bruce pointed out that the War Production Board must assume the responsibility for determining relative priority of movements of various commodities and products. He believed that a substantial part of the present burden on railroads is non-essential in character. Mr. Stern stated that a thorough investigation of all implications must precede any decisions to rationalize distribution practices by • requiring each manufacturer to sell his total product within relatively short distances of his plant. Such a requirement would disturb established distribution channels and competitive relationships, and would impose particular burdens on companies now selling their products nationally on the basis of years of national advertising. Mr. Bruce stated that such matters fall within the jurisdiction of the War Production Board. At this point Messrs. Bailey and Schier entered the meeting. Mr. Stem reported that the Transportation Committee is developing detailed estimates of transportation requirements, and is collaborating closely with the Office of Defense Transportation in order to ensure that the data will be readily usable. He also stated that the committee is attempting to reduce cross-hauling by encouraging the War Department, and particularly the Quartermaster Department, to place contracts with due attention to transportation difficulties. 77 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE Mr. Bruce stated that the Office of Defense Transportation is undertaking to coordinate truck and railroad operations. It is contemplated that a large number of trucks will be converted from long-haul to short-haul operations. In view of the tremendously increased demands upon railroad transportation, Mr. Bailey emphasized the importance of materials being made available for repair and maintenance of railroad equipment, and for construction of locomotives and freight cars, particularly of the hopper-car type. At this point Messrs. Stern, Bailey, Schier, Bruce, Williams, and Chambers left the meeting and Mr. Johnson and Major Parten entered.
Texas-Illinois Pipeline Major Parten reported that shortly after he joined the Office of the Petroleum Coordinator in March, 1942, he asked that an engineering committee be established to develop plans for supplying the East Coast with petroleum and petroleum products. Such a committee was established, and at a meeting in Tulsa it recommended that two lines be constructed, one a 20-inch products line from Longview, Texas, to Salem, Illinois, and then to the East Coast, and the other a 24-inch crude pipeline following the same route. The Office of the Petroleum Coordinator decided to recommend the construction of only the crude oil line, recognizing, however, that this line could also be used for movement of oil products. It was believed that it was necessary to complete construction of the pipeline from Texas to Illinois by the winter of 1942 in order to compensate for the decline in petroleum supplies of the Illinois area. After the War Production Board had been advised of the views of the Office of the Petroleum Coordinator a group of eastern petroleum suppliers advanced the view that if the whole pipeline from Texas to the East were not to be built, a line from the East to Illinois would be preferable to a line between Texas and Illinois. Major Parten believed that this proposal was ill-advised as facilities for moving petroleum by rail between Illinois and the East are superior to rail facilities that would have been available for moving oil from Texas to the western terminus of a pipeline built to the Midwest from the East. The group of oil companies adopted the resolution to which reference has been made earlier (Minutes XLIII, item 1) and appointed a committee to investigate and report upon the relative merits of the two proposed lines. Major Parten stated that this committee has never submitted a report. Major Parten pointed out that if a pipeline had been built from the East to Columbus, Ohio, for example, a heavy demand would have been placed upon tank cars for shipment of oil from Texas to Columbus, and large quantities of materials would have been consumed in the construction of unloading racks, storage tanks and related terminal facilities. Mr. Johnson confirmed the fact that representatives of the eleven oil companies adopted a resolution in favor of construction of the eastern part of the pipeline in preference to construction of the Texas-Illinois portion of the line. He stated that the proposal of the oil companies would have required 240,000 tons of steel, as compared to only 125,000 tons of steel required for construction of the Texas-Illinois pipeline. This factor was very influential in the development of his own preference for the Texas-Illinois line. Major Parten stated that there has been a sharply decreasing supply of petroleum in the Illinois area. The Illinois fields are producing 290,000 barrels a day at present, as compared to some 500,000 barrels a day when the fields were at the height of their productivity. Mr. Searls expressed the view that this decline in production is partially attributable to restrictions on production and on well-drilling. Major Parten stated that increased drilling of wells would arrest the decline of production, but would require large amounts of steel. In his view the production of the Illinois fields has long passed its peak. He pointed out that in the month of June it was very evident that tank cars were having to obtain petroleum from the Texas areas in greater quantities and from the Illinois area in decreasing quantities. Mr. Searls stated that production of at least three Illinois fields is restricted to twenty percent of capacity. Major Parten observed that these restrictions are relatively recent. Mr. Searls explained that his criticism of the Texas-Illinois line is not based upon any preference for the proposal of the oil companies that a line be built starting in the East. He would prefer that no pipeline be constructed in order that steel needed for naval escort vessels and merchant ships might not be diverted. He cited the reduction in the merchant ship-building program by 3,000,000 tons as a reflection of the diversion of steel billets to tubing for the Texas-Illinois pipeline from mills rolling plate for the shipbuilding program. If any pipeline were to be constructed it should be a product line so planned as to move products out of the Gulf coast refining area. By use of the 6,000 ton concrete sea-going barges now being produced, together with a products pipeline across northern Florida, as much as 150,000 barrels of petroleum products could be delivered to New York daily. A tug towing two concrete barges will deliver the equivalent amount of oil as a tanker and with no greater consumption of power. Major Parten stated that the main factor considered by him in weighing alternative routes for pipelines was the volume of oil to be delivered daily for each ton of steel used in construction of pipeline. He stated that the Texas-Illinois line will deliver .86 barrels of oil per day per ton of steel used in construction. Mr. Johnson stated that he favors rationing of gasoline in the Middle West at the earliest possible 78 JULY 14 AND 23, 1942 moment, and Major Parten expressed the view that some restriction of consumption in that area is inevitable. Mr. Blaisdell inquired whether the possibility of Middle West rationing, which would make tank cars available for moving petroleum to the East, had been considered as an alternative to construction of the pipeline. Major Parten stated that freeing of tank cars by rationing in the Middle West would not appreciably increase the supply of petroleum products to the East Coast. The extra tank cars already pressed into the service of the Eastern area were largely drawn from the Midwest, which is now relying heavily on truck transportation for its own supply of petroleum products. Mr. Johnson pointed out that the irreplaceability of tires on trucks now carrying petroleum products in the Midwest will result in a decline in truck transportation and will, therefore, necessitate increasing use of tank cars in the Midwest. Consequently, there are few tank cars that could be diverted further to the Eastern routes. Major Parten believed that rationing might increase shipments of gasoline and heating oil to the East, but that it would not assist in meeting the fuel oil crisis. Mr. Blaisdell reported that it was his belief that rationing in the Midwest would free enough tank cars to meet the requirements of the Eastern area. Mr. Blaisdell pointed out that diversion of tank cars, in contrast to construction of the pipeline, would consume no steel and would permit delivery to the East of at least as much petroleum as would be added to the Eastern supply by construction of the Texas- Illinois pipeline. Major Parten disagreed with this view. Mr. Johnson stated that the inability of the Navy to assure his Committee that tanker transportation could be resumed was the most important factor, in his own mind, in favor of construction of the pipeline. He pointed out that even when the pipeline is constructed there will be a deficiency of 100,000 to 300,000 barrels a day in the supply of petroleum products required by the Eastern area. Major Parten explained that the proposed Texas-Memphis line is undesirable because railroad facilities at Memphis are inferior to those available in the Illinois and Indiana area, and products lines are already serving Memphis and adjacent areas. Major Parten reported that tanker transportation on the Great Lakes will be increased, but noted that subsidization by the Reconstruction Finance Corporation will be required to meet the higher cost of such transportation. It is expected that 70,000 to 80,000 barrels a day can be moved by lake tankers during periods when the lakes are not frozen. Major Parten agreed to report to the Committee upon the extent to which production at Illinois oil fields is being restricted, and the reasons therefor. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING XLV1I JULY 23, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Mr. C. W. Chambers, Member of Staff, Planning Committee, War Production Board
Transportation The draft recommendation on transportation (Document 117) was reviewed in the light of comments by Mr. Edgar B. Stem, Chairman, Transportation Committee of the War Production Board, and Messrs. V. V. Boatner and S. S. Bruce of the Office of Defense Transportation (Document 132). Upon motion duly made, it was agreed without objection that: The memorandum on transportation (Document 117) as revised, is approved for transmission to the Chairman of the War Production Board as Planning Committee Recommendation No. 13.
Industrial Facilities and Military Construction Mr. Blaisdell referred to his memorandum (Document 127) on construction and facilities commitments. He noted that the Committee has already recommended review of all construction and facilities commitments in order to conserve materials and correlate finished munitions objectives with prospective supplies of raw materials, manpower, and fabricating capacity. Pointing out that the volume of munitions currently being produced exceeds current shipping capacity, Mr. Blaisdell suggested that materials be diverted from production of finished munitions to the construction of raw material and fabricating facilities that will be needed to meet Army and Navy schedules, and also to the increasing of shipping, electric power, and domestic transporta 79 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE tion facilities. In order to ensure maximum utilization of manpower, consumption of raw materials should be concentrated in the most efficient factories. Mr. Blaisdell stated that in view of the disproportionately high capacity of fabricating facilities as compared to raw material facilities, facilities for the production of raw materials should be increased. The Chairman expressed doubt that materials should be diverted at present from the production of munitions to the expansion of facilities. He stressed the critical importance of providing munitions for an early offensive action—and the probability that construction of materials facilities would not raise munitions output until 1944. Mr. Blaisdell felt that such facilities would directly contribute to munitions production within eight months. The Chairman expressed the view that reduced operations of plants have been due more frequently to ineffective production scheduling than to a general shortage of materials. Available supplies of materials are sufficient to support an output of war munitions worth approximately 75 billion dollars a year. Materials are at present being consumed at a rate that should produce 5% billion dollars’ worth of war goods per month. Mr. Blaisdell said that the present high rate of munitions production is being made possible by the depletion of inventories. Obviously this cannot go on indefinitely. He believed, however, that sufficient materials should be available through conservation, conversion, and other methods to enable construction of additional facilities to expand the output of materials. It was agreed that : Further consideration of the construction and facilities program will be deferred pending completion of staff studies of the general feasibility of present objectives of the war production program.
Yukon Pipeline The Executive Director reported that the War Production Board has been requested to make additional quantities of steel available for construction of the Yukon Pipeline, but that action on this request is being deferred until further information is available. He noted the possibility that pipe delivered to the Yukon could be used for delivery of gasoline from Skagway to Whitehorse. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING XLVIII JULY 29. 1942 Present: Members, Alternates and Staff: Mr. Robert R. Nathan, Chairman Mr. Fred Searls, Jr., Member Mr. Ralph J. Watkins, acting for Mr. Thomas C. Blaisdell, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Mr. Ferdinand Eberstadt, Chairman, Army and Navy Munitions Board (for the latter part of the meeting) Lieutenant Colonel Willard F. Rockwell, Director, Production Division, U. S. Maritime Commission Mr. George C. Brainard, Chief, Tools Division, War Production Board Captain J. O. Gawne, Chief, Shipbuilding Division, War Production Board Mr. T. N. Berlage, Chief, Priority Section, Production Division, U. S. Maritime Commission
Machine Tools for Merchant Shipbuilding Mr. Searls reported that reduced availability of steel plates for the merchant shipbuilding program has forced a reduction in the production goals for emergency cargo vessels. The lagging construction schedule of standard cargo vessels, therefore, must be expedited. Shortage of turbines has delayed standard cargo vessel construction. In order to alleviate this situation additional machine tools must be allotted to turbine manufacturers. The Maritime Commission proposes that immediate steps be taken to provide the necessary tools. Colonel Rockwell and Mr. Berlage indicated the quantities of particular types of tools that will be urgently needed during the next several months. Mr. Brainard observed that the types of tools requested are in great demand for other programs. There was general agreement that adequate quantities of tools have not been made available to the merchant shipbuilding program. Colonel Rockwell stated that the Maritime Commission has not been awarded sufficiently high priority rating to meet its requirements. Further difficulty has resulted from the procedure of submitting Maritime Commission requirements through the Navy Department, which is anomalous, since the naval shipbuilding program is competitive with the merchant shipbuilding program. Colonel Rockwell also observed that naval tool orders are often filled before the tools can be put to use even though the merchant shipbuilding program could use them immediately. 80 JULY 23, 29, AND 30, 1942 At this point Mr. Eberstadt entered the meeting. Mr. Eberstadt reported that the complete revision of the tools allocation system, which is under way, will be completed in two or three months. He agreed that, in the interim, emergency steps should be taken to provide tools for the merchant ship program. In addition, he urged that, in view of the great demands of other programs for tools, every effort be made to locate and to requisition idle second-hand tools, and to extend subcontracting of tools manufacture. Colonel Rockwell pointed out that the Maritime Commission has been constantly utilizing the Critical Tools Service to find idle tools. He urged the Armed Services to review recent and prospective shipments of tools to ascertain whether the tools are to be put into immediate use. In support, Mr. Brainard said that tools have been delivered to a number of Armed Service plants that will not be used for several months. Mr. Brainard proposed that idle tools capac ity in Navy plants and yards be more fully utilized to satisfy the requirements of other branches of the Armed Services and of the Maritime Commission as well. Upon the suggestion of Mr. Eberstadt it was agreed by Mr. Searls, Colonel Rockwell, and Mr. Berlage that: The Maritime Commission will assign a representative to collaborate with the Chairman of the Army and Navy Munitions Board in arranging for an increase in the allocation of machine tools for the manufacture of turbines for standard cargo vessels. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING XLIX JULY 30. 1942 Present: Members, Alternates and Staff : Mr. Robert R. Nathan, Chairman Mr. Fred Searls, Jr., Member Mr. Ralph J. Watkins, Acting for Mr. Thomas C. Blaisdell, Jr. Mr. James W. Fesler, Acting Secretary By Invitation: Lieutenant Colonel Willard F. Rockwell, Director, Production Division, U. S. Maritime Commission Mr. J. T. Gallagher, Chief, Production Engineering Section, Production Division, U. S. Maritime Commission Mr. Mordecai Ezekiel, Consultant, Planning Committee
Merchant Shipbuilding Mr. Ezekiel presented his reports (Documents Nos. 133 and 136) dated July 20, and July 22, 1942, on the maritime shipbuilding program. The Chairman called attention to the view of the Iron and Steel Branch, War Production Board, that production of steel plate should be held to a maximum of one million tons per month, because of the important competitive demands for steel ingots. (See Document 141.) It was reported that the working committee of the Combined Chiefs of Staff advises the allocation to the merchant shipping program of 390,000 tons of plate per month in September and October, and 375,000 tons per month in November and December. Mr. Ezekiel stated that this proposed allocation should be adequate to enable completion of the entire 28-million-ton shipbuilding program for 1942-1943. Mr. Gallagher expressed disagreement with this view. Colonel Rockwell reported that scheduling of merchant ship construction by the Martime Commission was not initiated until February, 1942, and called attention to the fact that the Commission has been handicapped in scheduling activities by the unsatisfactory character of production scheduling in many shipbuilding yards. There has recently been a substantial lack of balance of shipments of the various sizes of plates and shapes to yards. Mr. Gallagher pointed out also that the steel mills have had considerable freedom of discretion in rolling and shipping plates and shapes, and have not fully observed the requirement of the War Production Board that delinquencies in meeting allocations in one month should be promptly compensated for by the rolling and shipping schedule at the beginning of the succeeding month. Colonel Rockwell and Mr. Gallagher stated that the Maritime Commission has now established sufficient control of inventories in merchant shipbuilding yards to prevent the receipt of shapes and sizes of which there is already a sufficient supply on hand. Colonel Rockwell pointed out, however, that the several yards have dissimilar requirements for inventories, particularly because of varying location and lay-out arrangements. Mr. Gallagher observed that it has been difficult to force alteration in the peacetime habit of accumulating materials well in advance of the laying of keels for ships in which those materials will be utilized. It has been particularly difficult to force abandonment of a business-as-usual attitude in the shipyards constructing standard cargo vessels. 81 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE Colonel Rockwell noted that there has been an inadequate appreciation of the importance of the maritime shipbuilding program on the part of the Armed Services. (See Minutes XLVIII) Materials and components have been diverted from this program through the use of priority ratings controlled by the Army and Navy Munitions Board. The Chairman and Mr. Searls pointed out that the success of the War Shipping Administration in diverting vessels from trade channels to the meeting of the shipping needs of the Army has been partially responsible for the complacent feeling of the Armed Services that there is no lack of ships. Mr. Ezekiel expressed the view that naval shipyards have excessive inventories of plates and other materials, and urged that proper controls be established to force these yards to reduce their excessive inventories before receiving new shipments of the materials concerned. He pointed out that this would automatically increase the availability of new steel plates for the Maritime Commission program.
Combined Production and Resources Board The Chairman stated that.the Planning Committee and its staff would actively participate in the work of the Combined Production and Resources Board. The Board will particularly be concerned with (1) preparation, in consultation with the Combined Chiefs of Staff, of a balanced, feasible war munitions program; (2) scheduling of requirements so that, for example, components of end products are not manufactured at a rate far in excess of the possibilities of their incorporation in end products; and (3) review of the general principles governing the flow of materials essential to achievement of the war munitions program. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING 50 AUGUST 7, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. . Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. James W. Fesler, Acting Secretary By Invitation: Mr. Reese Taylor, Chief, Iron and Steel Branch, War Production Board (for discussion of item 3) Mr. Simon Kuznets, Chief, Program Analysis and Research Section, Planning Committee, War Production Board Mr. Thomas W. Wilson, Jr., Chief, Planning Coordination Section, Planning Committee, War Production Board
Inventory Control The Chairman emphasized the importance of production scheduling to prevent accumulation of excessive inventories of fabricated and semi-fabricated products. He pointed out that critical materials are immobilized just as much by creating excessive inventories of end products and components as by over-stocking the raw materials. As the Production Requirements Plan controls inventories of raw materials only, it must be supplemented by production scheduling if all types of industrial inventories are to be effectively controlled.
Expansion of the Supply of Materials , Reference was made to the memorandum (Docu 82 ment 127) submitted by Mr. Blaisdell on construction and facilities commitments, which was discussed at an earlier meeting of the Committee (Minutes XLVII, item 2). The Chairman expressed regret that^action upon the Committee’s earlier recom-mendation that all construction and facilities commitments be reviewed has taken the form of curtailment of programs for expanding the supply of raw materials. As a result, the fabricating capacity of the country now appears to be in excess of available supplies of raw materials. The Chairman reported that Mr. Luther Gulick, Director of the Office of Organizational Planning, has requested the Committee to investigate the problem of expansion and maintenance of production of raw materials including particularly metal ores, petroleum, and other fuels.
Expansion and Maintenance of Steel Production %Mr. Taylor presented a report (Document 142) on the steel expansion program, and called attention to the fact that the expansion program has been limited to 9,710,000 tons, which would raise the total capacity of the industry to 98,280,000 tons by June 30, 1943. This estimate, however, assumes, somewhat questionably, the availability of 16 million tons of scrap in 1943 and the retention of most of the recirculating scrap. The steel expansion program is up-to-date, but Mr. Taylor anticipates that it will steadily fall behind schedule as a result of assignment to the program of only AA-3 and AA-4 rat JULY 30 AND AUGUST 7, 1942 ings. Higher urgency ratings are already being assigned by the armed services for the construction of additional fabricating facilities, in spite of the fact that such action interferes very seriously with the programs for construction of additional. steel, toluene, aviation gasoline, and butadiene facilities. Mr. Taylor emphasized the fact that fabricating facilities are at present not being fully used, and he therefore questioned the wisdom of constructing additional fabricating facilities. Mr. Taylor called attention to the fact that difficulty is also being experienced with obtaining sufficient materials to maintain even the present production capacity of the steel industry. In his opinion, in which Mr. Blaisdell concurred, maintenance and repair of raw material facilities should receive priorities superior to those assigned to finished munitions inasmuch as the small investment of materials is essential to the continued output of materials basic to the whole war program. In view of the low priority ratings assigned, to the expansion program, the difficulty in obtaining materials needed for repair and maintenance of existing facilities, and the possibility that ore supplies will decrease, Mr. Taylor expressed doubt that 1943 steel production would exceed that of 1942. Mr. Searls pointed out that such a development would parallel the experience of the steel industry in the first World War. Emphasis was placed on the probable reduction in the rate of ore production in the Great Lakes region as a result of the diminishing possibilities of open-pit mining. Mr. Searls expressed the view that the ore production rate of this region could be maintained for about five years, with appropriate beneficiating measures. He also called attention to the fact that the War Production Board, at its meeting on August 4, 1942, authorized construction of docks and improvements of railroads to permit by-passing of the Soo Locks in order to assure continued movement of iron ore to the Eastern steel mills. ‘ ; Mr. Blaisdell called attention to the possibility of increasing the efficiency of pig-iron furnaces by use of compressors and blowers now used in non-essential air-conditioning equipment. Mr. Taylor expressed the view that effective direction of the flow of steel industry products could only be achieved by the use of a detailed reporting system through which the steel mills indicate in detail the uses to which steel is to be put by orderers. He pointed out that the new Priorities Regulation No. 10 will be unsatisfactory for this purpose as it uses unduly broad categories of end use, such as tanks and airplanes.
Expansion and Maintenance of Metal Mining Capacity The Chairman referred to a proposal by Mr. Wilbur A. Nelson that the functions of the Mining Branch of the War Production Board be expanded to include broad responsibility for increasing and maintaining the capacity of mines producing war materials. Mr. Blaisdell undertook to study the proposal for increasing and maintaining mining capacity, and to report his findings to the Committee at an early date.
Combined Production and Resources Board Reference was made to the difficulty of determining the appropriate roles of war production, and strategy agencies of the Government in determining the objectives of the war munitions program. Mr. Kuznets expressed the view that the Combined Production and Resources Board should determine essential civilian and indirect military requirements, and that distribution of the balance of materials among alternative military uses , should be the re-sponsibily of the Combined Chiefs of Staff. Mr. Searls pointed out that merchant ships are needed for military, indirect military, and civilian needs. If strategy officials are given final authority over merchant-shipbuilding objectives they tend to ignore the fact that allocation of steel to the building of ships that will bring critical materials, such as bauxite, to the United States is as essential to airplane production as is the allocation of steel to airframe assembly plants. Mr. Blaisdell stated that decisions as to program objectives must be arrived at by a joint consideration of strategic and production factors. The division of program determination into separate strategic and “civilian” compartments stimulates . bureaucratic competition for power. Advice preliminary to program determination, and action carrying out programs determined on must, of course, flow, along varied administrative channels. The determination itself, however, must be the responsibility of a single official or agency. At present there is no single organizational point at which joint consideration of production and strategic factors can occur. The Army and Navy Munitions Board is distinct from the strategic departments of the Armed Services, and arrives at its production decisions with no greater awareness of strategic plans than has the War Production Board. Furthermore, the Army and Navy Munitions Board confines its direct interest to the desires of the Army and Navy, and gives little attention to the production of military items for our Allies, the production of essential industrial and civilian supplies for. the United States, and the demands of Latin American and other friendly nations for a large variety of materials and finished products. Mr. Blaisdell stated that it is illusory to assume that the Combined Chiefs of Staff, or any other purely strategic organization, can arrive at sound production objectives for even strictly military items. Not only the total quantities of . a particular raw material assailable, but also processing facilities, mass 83 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE production possibilities, availability of matching components, possibilities of substitution of materials and simplification of specifications must be considered in the determination of production objectives. If officers concerned purely with strategy are to make these decisions, they must have at their command information regarding production factors. In view of the current absence of a joint strategyproduction group, and the obvious inability of purely strategic agencies to determine program objectives, Mr. Blaisdell believed_ that such determinations should be made by the Chairman of the War Production Board, in accordance with his authority un der Executive Order No. 9024 to determine policies and plans with respect to war procurement and production. In performing this function the Chairman should be furnished with full information as to all relevant strategic and production factors. But, while drawing on all appropriate sources for information and guidance, he should ensure that program determinations are made by himself or his deputy. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING 51 AUGUST 13, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary Approval of Previous Minutes The minutes of meetings XLI to XLIX, inclusive, were approved.
Conversion of Petroleum Refineries Mr. Blaisdell referred to the Refinery Conversion Program (Document 145) proposed by the Office of the Petroleum Coordinator for War on August 4, 1942, and to memoranda (Document 146) by Mr. Wayne Johnson, Special Advisor to the Chairman of the War Production Board on Petroleum Matters, proposing that a directive be issued requiring initiation of the Refinery Conversion Program. The Office of the Petroleum Coordinator for War has pointed out that the general downward trend in the consumption of motor gasoline has created a situation in which refining equipment, once deemed essential to support our automotive transportation system, is now available for alleviating shortages of essential war products such as butadiene, toluene, and aviation-gasoline components. The conversion program should in itself enable the annual production of 200,000 tons of butadiene alone. Conversion of refineries requires less than 15 percent of the quantity of critical materials that would be required for comparable new installations. Furthermore, the conversion program will assure far earlier deliveries of butadiene and other important war products than will the new construction of specialized plants. A considerable amount of interchange of equipment among refineries will be necessary, as few refineries have available all equipment required for their conversion. Only an inconsequential quantity of such non-war products as distress gasoline will be produced as by-products of the program. The Refinery Conversion Program has been developed through the work of the Petroleum Industry War Council and industry and technical committees associated with the Office of the Petroleum Coordinator for War. Each refiner has been asked to submit a definite proposal for conversion to war products if his situation and equipment indicate a reasonable possibility of participation. The Office of the Petroleum Coordinator for War recommends that contracts for purchase of war products from converted refineries should be on a cost-plus basis, in view of the fact that there is at present no satisfactory basis for predicting operating and maintenance costs and the exact yields of the various war products to be obtained from converted refineries. ■ In view of the importance of coordinating the several agencies concerned with the petroleum industry and its war products, Mr. Wayne Johnson has proposed that the principal responsibility for developing and executing plans for conversion of petroleum refineries be vested in the Office of the Petroleum Coordinator for War. Mr. Blaisdell recommended that (1) the Refinery Conversion Program be made more specific, (2) relations among the butadiene, high-octane gasoline, and toluene programs be explored more fully in connection with the conversion program, and (3) if the War Production Board delegates to the Office of the Petroleum Coordinator for War the principal responsibility for the conversion of refineries, regular progress reports to the War Production Board should be required. Mr. Blaisdell also emphasized the fact that the War Production Board must retain ultimate responsibility for the rubber, toluene, and aviation-gasoline programs. The Chairman and Mr. Searls expressed the view that the Office of the 84 AUGUST 7, 13, AND 20, 1942 Petroleum Coordinator for War is the logical ag^y to supervise the Refinery Conversion Program, r. Searls urged that adequate precautions be taken to protect the toluene program against any reduction as an incident of the conversion program. Mr. Blaisdell was requested to prepare a draft memorandum outlining an appropriate policy ot the War Production Board toward the conversion of petroleum refineries to the manufacture of war products.
Proposed Mining Division In accordance with his agreement at the previous meeting (Minutes 50, item 4), Mr. Blaisdell presented a preliminary report (Document 147) upon the proposal of Mr. Wilbur A. Nelson (Document 149) that the functions of the Mining Branch be expanded, and the name of the branch be changed to Mining Division. Mr. Blaisdell emphasized the probability that the functions of the proposed Mining Division, as outlined by Mr. Nelson, would duplicate functions now being performed in materials branches and other organization units ot the War Production Board. Mr. Blaisdell was requested to continue his study of the proposal for a Mining Division, by exploring further the history of the Mining Branch and the views of the Deputy Director General for Industry Operations and chiefs ot materials branches. The Chairman pointed out that it will be necessary to relate this organizational analysis to the substantive problem of increasing the production of raw materials through emphasis upon labor supply, price differentials, adequacy of priority ratings for maintenance and expansion programs, and similar factors. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING 52 AUGUST 20, 1942 Present: Members and Staff: Mr. Thomas C. Blaisdell, Jr., Acting Chairman Mr. Fred Searls, Jr., Member Mr. Edward T. Dickinson, Jr., acting for Mr. Robert R. Nathan, and Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Mr.’ Frank R. Isenhart, Assistant to the Executive Secretary, War Production Board
Merchant Shipbuilding The Executive Director reported on an analysis of the relation of monthly shipments of steel plate to the possibility of attaining the merchant-shipbuilding objectives. The Maritime Commission is of the opinion that the decision by the War Production Board to limit the allocation of steel plates for the merchant-shipbuilding program to 368,800 tons m September will have the effect of making impossible the attainment of the 1943 objective of 16,000,000 tons of merchant ships. The Executive Director has concluded that shipments of 400,000 tons of steel plate per month should be adequate on the following basis: (1) That the 16 million tons be scheduled more evenly through the entire year of 1943 instead of the present schedule which provides for a con-struction rate in the early months of 1943 that would produce 18 million tons per annum if continued at the peak level; (2) that inventories be reduced m standard and minor craft yards where inventories of steel plate and semi-fabricated plate have been accumulating over the past several months; and (3) that the 75 tons wastage and spoilage factor for each EC-2 ship be eliminated or drastically modified in line with actual experience which shows this allowance to be excessive. The Executive Director also pointed out that the schedule submitted by the Maritime Commission allows as much as a fifteen-month lead factor and recommended that adequate steps be taken to speed up production, particularly in the slower yards which are operating under conditions that are tantamount to peace-time practices. Reference was made to reports. (Documents 133 and 136) on the merchant-shipbuilding program by Mr. Mordecai Ezekiel, and to a letter (Document 148) from Colonel Willard F. Rockwell, Director, Production Division, Maritime Commission, commenting upon Mr. Ezekiel’s report. It was observed that the principal value of these documents would be as reference sources for officials associated with the shipbuilding program. The Acting Secretary was directed to make copies of Documents 133, 136, and 138, available to officials of the War Production Board associated with the merchant-shipbuilding program.
Conversion of Petroleum Refineries Mr. Blaisdell referred to his memorandum (Document 150) concerning the program for conversion of petroleum refineries to the production of war 85 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE products. He reported that he has participated in the preparation of directives indicating that the Chairman of the War Production Board endorses the general outlines of the refinery conversion program (Document 145) prepared by the Office of the Petroleum Coordinator for War. However, the program, when formulated in detail, will be subject to further review by the War Production Board. Mr. Blaisdell emphasized the importance of examining particular conversion projects from the standpoint of engineering feasibility, physical location, transportation arrangements, and similar factors. He also urged that the selection of refineries for conversion be based upon the contribution each refinery can make to the war program rather than upon the particular difficulties of a refinery in marketing its commercial products. Mr. Blaisdell reported that, as a result of the initiation of the conversion program, the Rubber Reserve Corporation might cancel some contracts for the construction of plants capable of producing butadiene. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman MEETING 53 AUGUST 27, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. Frank R. Isenhart, Acting Secretary By Invitation: Mr. Simon Kuznets, Chief, Program Analysis and Research Section, Planning Committee, War Production Board Mr. Thomas W. Wilson, Jr., Chief, Planning Coordination Section, Planning Committee, War Production Board Mr. Charles J. Hitch, Administrator of the Contract Production Control Section, Planning Committee, War Production Board
Flow of Materials The Chairman referred to a memorandum dated August 9, 1942, from Mr. Eberstadt to Mr. Knowl-son on the subject of priorities in distribution of raw materials (Document 153), and also to the Steel Quota Plan which has been prepared by the Iron and Steel Branch (Document 152). He pointed out that the Planning Committee has not as yet given adequate consideration to the flow of materials, and stated that he desired the Committee to do so more fully at this time. It was stated that the Committee on the Control of the Flow of Materials reported to the Chairman of the War Producion Board that time limitations did not permit any method other than the Production Requirements Plan for handling the flow of materials during the third quarter of the current year. Further meetings of the Committee on the Control of the Flow of Materials would not be held and any action would be taken by the Planning Committee itself. The Chairman requested Mr. Hitch to report to the Committee at the next meeting on the current status of materials claims and material supplies. The Chairman agreed that the Production Requirements Plan was not fully operative in the third quarter and reported that Mr. Krug, Deputy Director for Priorities Control, is developing improvements in procedure with respect to tabulation and review of data, and that the Production Requirements Plan will be more effective as a control over the flow of materials in the fourth quarter. He added that the Production Requirements Plan has serious limitations, however, because of the time required to process the large number of applications, and because the plan cannot avoid unbalanced production and inventories of components and end products. In addition, inventories of materials reported on forms PD-25A are untimely for processing purposes, and he therefore suggests that forms PD-25F filed during the fourth quarter should state inventories as of September 30. In order for the Production Requirements Plan to be more effective, the Chairman stated that sound schedules must be installed for the use of materials, as well as end products, to keep raw materials programs within the bounds of supplies. Such scheduling may require new procedures in each Service for correlating supplies with requirements, and some change in the form of priorities issued to effect a monthly claim on materials. The Chairman expressed the belief that in order to secure a balance between material supplies and production demands, priorities should be limited to a definite quantity of raw materials for the production, within a specified period, of a definite quantity of end products. Mr. Wilson remarked that many details of scheduling otherwise required to achieve such a balance can be eliminated by forcing prime 86 AUGUST 20 AND 27, 1942 contractors to schedule carefully their requirements for component parts necessary to the completion of the end item. Consequently, the Committee must decide whether the Production Requirements Plan can be improved sufficiently to correct its apparent weakness, or whether it should be abandoned for some more effective plan for controlling the flow of €1*^ ell S • Mr. Blaisdell stated that detailed scheduling required to control adequately the flow of materials would not be very different under the Production Requirements Plan or the proposed Steel Quota Plan. The Chairman pointed out that under the Production Requirements Plan there was no knowledge of whether a manufacturer has produced in excess of requirements or not, and readjustment of production schedules will be difficult unless supplies of materials can be withheld from manufacturers producing in excess and in advance of delivery requirements. This problem is intensified in the case of sub-contractors, since the finished product schedule is ordinarily available only to the prime contractor. The Chairman pointed out that present unbalance in the over-all production program resulting from inadequate scheduling is readily apparent in inventory figures, and may be corrected by installation of a warrant plan which would require manufacturers to return their unused warrants periodically to offset inventories. Mr. Blaisdell pointed out that an unbalanced program would still be possible under a warrant system applicable to raw materials since warrant holders could distribute materials to unnecessary end products. However, this would work against the interest of the distributors of warrants at all levels and self-interest could be counted on to obviate poor distribution of the warrants. While modification of the Production Requirements Plan to require manufacturers to schedule production within the limits of available materials might provide the necessary control of materials flow, it would not reduce the time required to process Production Requirements Plan forms. Mr. Wilson suggested that in order for the Committee to formulate a recommendation regarding methods to improve the control over the flow of raw materials, the Committee should consider: (1) Whether the objectives can be accomplished through retention of the Production Requirements Plan with simultaneous development of more accurate bills of material, elimination of unnecessary end uses, and scheduling of production to bring demands for material into balance with available supplies. (2) Whether the objectives can be better and more effectively accomplished by vertical allocation of materials through prime contractors, and if so, whether the change over to such a vertical allocation system should be accomplished on the basis of end products or individual materials. These matters will be discussed in a memorandum to be submitted by Mr. Wilson and Mr. Hitch before the next meeting.
Analysis of the Production Program The Chairman referred to an analysis of the production program which has been prepared by Mr. Simon Kuznets (Document 151). It was agreed that this analysis be brought to the attention of the Chairman of the War Production Board, and the members of such Board. Mr. Kuznets suggested that in the presentation thereof attention be called to the following facts : (1) That attention has been previously called to the fact that the production program is too large. (2) That analysis shows no single organization with the responsibility of determining the program. (3) That objectives are largely determined by procurement agencies, each working independently, without joint consideration of limitations of resources. (4) That feasibility of the over-all program should be decided jointly by civilian and military representatives. (5) That the Combined Production and Resources Board may be the proper mechanism for correlating the entire program, but if so, considerable preliminary work on formulation of our domestic production program must be accomplished by joint efforts of our own civilian and military groups. Mr. Blaisdell added the further suggestion that the Committee call attention to the fundamental issue involved in decisions regarding the type and kind of armament being produced, and the necessity of bringing military men and production men together in such decisions. Mr. Kuznets was assigned the task of incorporating these suggestions in the letter of transmittal to Mr. Nelson. James W. Fesler Acting Secretary Approved:
- Robert R. Nathan Chairman 87 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE MEETING 54 SEPTEMBER 3, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Acting Secretary By Invitation: Mr. Simon Kuznets, Chief, Program Analysis and Research Section, Planning Committee, War Production Board (for discussion of items 1-4) Mr. Charles J. Hitch, Member of Staff, Planning Coordination Section, Planning Committee, War Production Board
War Munitions Program The Chairman referred to the analysis of the production program (Document 151) and the memorandum (Document 157) on principles of program formulation, both of which were prepared by Mr. Kuznets. Upon motion duly made, it was agreed without objection that: The Acting Secretary is authorized to draft Planning Committee Recommendation No. 15, transmitting Documents 151 and 157, requesting the Chairman of the War Production Board to authorize distribution of these documents to officials concerned with program determination, and recommending that the feasibility of the production program and the desirability of a more effective organizational arrangement for production programming should be formally considered at early meetings of the War Production Board and of the small cabinet of key officials of the Board. The Chairman is authorized to approve Recommendation No. 15 on behalf of the Committee. Mr. Kuznets suggested that there should be a study of the extent to which the objectives of the war munitions program have been considered by officials and groups at authoritative levels. Such a study might concentrate attention upon the Combined Production and Resources Board, the War Production Board, and the Requirements Committee. The analysis should indicate the extent to which these bodies include as regular attendants authoritative representatives of governmental agencies whose participation is essential to sound program determination. It should also reveal the extent to which the size of the program has been discussed and the types of decisions that have been made. A further step in the study should be an analysis of correspondence among key officials likely to be participating in the determination of the program. Upon motion duly made, it was agreed without objection that: The Chief of the Program Analysis and Research Section, with the collaboration of the Acting Secretary of the Committee, will review the minutes of the Combined Production and Resources Board, the War Production Board, and the Requirements Committee, and the correspondence among principal officials concerned with program determination, and report upon the extent of consideration given in the past to the importance of defining a feasible war munitions program.
Obsolescent Military and Naval Equipment It was pointed out that materials, tools, and manpower are wasted when devoted to the production of types of military and naval items that recent combat experience has proved obsolescent. Concern was expressed over the lag involved in discontinuing contracts, production schedules, material allocations, and facilities-construction programs for the production of military equipment of inferior value in the theaters of war. Although this delay in shifting to newer designs of military equipment is partly attributable to the internal operations of the Armed Services, the War Production Board cannot escape the responsibility for production programming, conservation of critical materials, and rapid conversion of war plants to the production of newly designed weapons. Mr. Blaisdell, therefore, suggested that the War Production Board critically review stated requirements for military items in order to determine the extent to which economic resources are being wasted through continuance of production of obsolescent military and naval items. Mr. Kuznets called attention to the fact that the continued demand by the Armed Services for materials that will be consumed in the production of obsolescent items is merely one of the many significant indications that the requirements submitted to the War Production Board by the Armed Services are not carefully reviewed for accuracy, timeliness, balance, and consistency with over-all strategic objectives. Upon motion duly made, it was agreed without objection that: The Chairman is authorized to transmit as Planning Committee Recommendation No. 16, a proposal that the Chairman of the War Production Board direct the Vice Chairman on Program Determination to review the end-product requirements of the Armed Services, as submitted to the War Production Board, in order to determine the extent to which materials are being consumed in the production of military and naval items that combat experience has revealed to be obsolescent. 88 SEPTEMBER 3, 1942
Price Control and Renegotiation of Contracts The Chairman referred to the previous action of the Committee (Minutes 38, item 1) authorizing transmission of a Planning Committee Recommendation proposing establishment of a War. Contracts Policy Board. He stated that transmission of the Recommendation had been delayed pending further study of the operating experience of the Price Adjustment Boards established by the War and Navy Departments and the Maritime Commission. Analysis of this experience has largely confirmed the earlier views of the Committee, and accordingly on August 31, the Chairman transmitted to the Chairman of the War Production Board a slightly revised memorandum on the establishment of a War Contracts Policy Board as Planning Committee Recommendation No. 14.
Transportation The Acting Secretary reported that Planning Committee Recommendation No. 13, which had been submitted on August 12, 1942 to the Vice Chairman of the War Production Board was referred by him to the Transportation Committee for comment. On August 28, the Acting Chairman of the Transportation Committee reported (Document 160) to the Vice Chairman that his Committee agrees with the broad conclusions of the Planning Committee, and that the Office of Defense Transportation, the Transportation Committee, and the Industry Branches of the War Production Board are already acting upon many of the operating suggestions included in the Recommendation. The Transportation Committee advised against formal adoption of Recommendation No. 13 as the policy of the War Production Board, in view of the inclusion in the Recommendation of many suggestions regarding strictly operating rather than policy problems. However, the Transportation Committee recommends that many of the operating suggestions be put into effect through close cooperation, implemented by directives where necessary, among the various agencies that might assist in effectuating the broad conclusions of the Planning Committee. The Acting Secretary stated that Recommendation No. 13, together with the Transportation Committee’s comments thereon, is being distributed to members of the War Production Board for their information (See WPB Document No. 137).
Row of Materials In accordance with the previous request (Minutes 53, item 1), Mr. Hitch presented a memorandum (Document 159) upon the problems of controlling the flow of materials, together with various other reports (Documents 154, 155, 156 and 158) relating to these problems. He stated that the principal findings of the studies were that: (1) Tight control oyer the flow of materials is essential if program objectives are to be met, even if the objectives have been adjusted to feasible limits; (2) there are two principal methods of controlling materials ; by horizontal allocation to individual plants using the materials (PRP) and by the vertical method through end product producers; (3) if the PRP method is retained, main reliance will have to be placed on independent programming, scheduling, and conservation measures, but there are serious difficulties connected with independent action in each of these areas; and (4) the vertical method is preferable, as it would integrate allocation with programming and scheduling and encourage conservation. Mr. Blaisdell expressed the fear that under a system of vertical allocation of materials, (a) the War Production Board would not have adequate control to prevent the Armed Services from overdrawing their allotments of materials, and (b) the requirements of the Armed Services and the allocations to meet them might be stated in such broad terms that the War Production Board would have relatively little control over the specific objectives for which materials could be used. The Chairman obseyved that both of these problems might be satisfactorily solved by appropriate provision in the formal plan of vertical allocation. Upon motion duly made it was agreed that: (1) The War Production Board should adopt the vertical method of allocating critical materials to important programs, retaining the Production Requirements Plan for certain special purpQses; (2) An authoritative group should be appointed to work out the details and institute the vertical system of materials allocation to certain programs by January 1, 1943 ; (3) The memorandum (Document 159) on control of the flow of materials, together with the recommendations herein stated, shall be transmitted to the Chairman of the War Production Board as Planning Committee Recommendation No. 17. Mr. Blaisdell stated that, while joining in approval of the Recommendation, he wished to. submit a concurring opinion indicating the implications surrounding the adoption of the Recommendation. He emphasized the fact that regardless of whether vertical or horizontal allocation is adopted, vigorous administration will need to be accompanied by more adequate production scheduling, programming of new facilities, bills of materials, inventory controls and programs of substitution and conservation, if the materials problem is truly to be brought under control. James W. Fesler Acting Secretary Approved: Robert R. Nathan Chairman 89 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE MEETING 55 SEPTEMBER 17, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Fred Searls, Jr., Member Mr. James -W. Fesler, Executive Secretary
War Munitions Program The Chairman referred to comments (Document 166) by Lieutenant General Brehon B. Somervell, Commanding General, Services of Supply, War Department, with reference to Planning Committee Recommendation No. 15 and its attachments (Documents 151 and 157). The Chairman expressed the view that General Somervell’s comments failed to recognize the great importance of bringing the war munitions program within feasible limits and establishing a high-ranking body with authority to establish a balanced set of feasible objectives on the basis of strategic, production and social considerations. The Chairman’s reply (Document 169) to General Somervell was submitted for the information of the other members of the Committee. The Chairman and Mr. Searls agreed that unnecessary construction at present constitutes the most significant waste of economic resources. Mr. Searls pointed out that earlier recommendations of the Committee (Recommendation No. 3) and of the Special Committee on Industrial Facilities and Military Construction (Document 78) had particularly emhasized the cost of excessive construction in terms of materials. He noted that a current analysis would reveal that unnecessary construction projects are a severe drain upon the supply of workers in critical war industry areas.
Responsibility for Program Determination The Chairman submitted a draft statement reaffirming the Committee’s view that production and strategy are not separable spheres, but overlap to such an extent that program determination must necessarily be based on simultaneous consideration of both production and strategic factors. Upon motion duly made, it was agreed without objection that: The draft statement on production and strategy, as revised, is approved for transmission to the Chairman of the War Production Board as Planning Committee Recommendation No. 18.
Steel Ingot Supply and Requirements, July 1942 through December 1943 The Chairman presented for the information of the Committee a report (Document 168) on steel ingot supply and requirements for the second half of 1942 and the year 1943, which has been prepared by the Steel Working Committee of the Planning Staff of the Combined Production and Resources Board. He pointed out that even on the basis of optimistic estimates of materials supply, the shortages of steel in relation to requirements will be 11 percent in the fourth quarter of 1942 and will average 3 percent for the 18-month period.
Copper Supply and Requirements, July 1942 through December 1943 The Chairman presented for the information of the Committee a report (Document 167) on copper supply and requirements for the period July 1942 through December 1943, which had been prepared by the Staff of the Combined Production and Resources Board. He noted that presently stated copper requirements are approximately 20 percent above supplies for the period.
Staff Studies in Progress The Chairman announced that the staff of the Planning Committee has in preparation studies of the aircraft program, the salvage program, and inventory control methods. He also reported that the staff is assisting in the implementation of Planning Committee Recommendation No. 17, relating to the use of a system of vertical allocation of materials.
Organization The Chairman announced that Mr. James W. Fesler, who has been serving as Acting Secretary, has been appointed Executive Secretary of the Committee. James W. Fesler Executive Secretary Approved: Robert R. Nathan Chairman 90 SEPTEMBER 17 AND 24, 1942 MEETING 56 SEPTEMBER 24, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. James W. Fesler, Executive Secretary By Invitation: Mr. Mordecai Ezekiel, Consultant, Planning Committee (for discussion of item 2) Mr. C. W. Chambers, Planning Coordination Section, Planning Committee (for discussion of item 1) .. . Mr. H. Graham Morison, Legal Division (for discussion of item 1)
Inventory Control Mr. Chambers reviewed the principal findings and conclusions of his study of excess, idle, and frozen inventories. He noted that since 1939 inventories have increased at a rate not warranted by the increase in sales. Pointing out that these over-all trends do not adequately reflect the unbalanced inventory situation, he presented comparisons of inventories of particular materials by groups of industries and specific companies. Mr. Chambers believed that the unbalanced inventory situation can be largely attributed to (a) the initial assumption that a. sufficient quantity of materials would be available for the meeting of all needs, (b) the resultant reliance upon qualitative priority ratings as the chief guides for the flow of materials, (c) the misuse of priority powers by the Armed Services, and (d) the lending of money by the Armed Services to their contractors, without realization of the stimulation that such loans give to inventory accumulation. Mr. Chambers doubted that existing practices of the government would be adequate to correct the inventory situation. He pointed out that although Priorities Regulation Number 1 required all manufacturers to keep their inventories at minimum practicable working levels, the meaning of this limitation has never been specifically defined, industry by industry. Use of requisitioning powers has been handicapped by the extensive negotiations over price that precede the actual movement of the materials into channels of current use. The requirement of reports of excessive inventories, as on Form PD-25A, has not been fully satisfactory. Such reports are seldom on a current basis, and, in the case of the PD-25A forms, provide data on inventories of raw materials only, and so provide inadequate bases for control of inventories of goods in process. Mr. Blaisdell pointed out that in addition to Control of excessive accumulations of raw materials and goods in process^ it is desirable to provide means whereby idle machine tools may either be moved to plants where they call be used as tools or be converted to scrap so that their metal content can be moved into channels of war production. Mr. Chambers recommended that steps should be taken to ensure that the War Production Board is effectively armed with legal powers and inaugurates a vigorous and realistic program to flush out frozen, idle, and excess inventories. He suggested that priorities regulations be amended to require manufacturers with frozen inventories to accept and fill orders filed with them, and to enable the War Production Board to force war and essential civilian manufacturers to place their orders with companies having excess and idle inventories. Mr. Chambers felt that the requisitioning procedure should be such that materials can be taken prior to completion of negotiations over price, with, of course, reasonable provision for appeals by owners of the materials. Mr. Chambers believed that the principal responsibility for the management of inventories should rest with field officials of the War Production Board and accordingly he proposed establishment of a Materials Redistribution Division under the Deputy Director General for Field Operations. He believed that criteria of reasonable working inventories should be established for each industry with the assistance of the industry branches and industry advisory committees of the War Production Board. These national industrial criteria would be adjusted to regional conditions by field officials. Mr. Chambers concluded by stressing the dependence of inventory control upon actions taken with regard to establishment of feasible objectives, production scheduling, lending policies, concentration of production; price control, and transportation.
Aircraft Objectives for 1943 Mr. Ezekiel reviewed the relationship between prospective aluminum supplies and the aircraft objectives for 1943. James W. Fesler Executive Secretary Approved: Robert R. Nathan Chairman 686312—46—7 w MINUTES OF WAR PRODUCTION BOARD PLANNING COMMUTEE MEETING 57 OCTOBER 8, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman (present for the latter part of the meeting) Mr. Thomas C. Blaisdell, Jr., Member (who presided for a porton of the meeting) Mr. Fred Searls, Jr., Member Mr. James W. Fesler, Executive Secretary By Invitation: Mr. Stacy May, Director of Statistics, War Production Board Mr. Simon Kuznets, Chief, Program Analysis and Research Section, Planning Committee, War Production Board Mr. Thomas W. Wilson, Jr., Chief Planning Coordination Section, Planning Committee, War Production Board Approval of Previous Minutes: The minutes of Meetings 50 through 56 (August 7 through September 24, 1942) were approved.
Organization It was noted that Mr. Searls has resigned as Assistant to the Deputy War Shipping Administrator to accept appointment as Chief of the Facilities and Construction Program Branch of the War Production Board.
War Munitions Program The October 6th meeting of the War Production Board was devoted to a review of Planning Committee Recommendation 15 and Document 151, relating to feasibility of the objectives of the war production program for 1942 and 1943 (See Document 183). In view of the trend of that discussion, the Committee undertook to formulate a proposed resolution for consideration by the Board at its meeting on October 13. Messrs. Blaisdell and Kuznets submitted memoranda (Documents 181 and 184) in this connection. Mr. Blaisdell called attention to the necessity of relating strategic decisions to such limiting production factors as the availability of particular materials. He felt that review of the airplane and ammunition objectives by the War Production Board would mark an advance toward joint consideration of strategy and production. He also observed that scheduling of production- on. the basis of General Somervell’s admission that there would probably be a three-month lag in achievement of 1942 objectives would itself be a recognition that objectives are too high. Mr. Blaisdell concluded by expressing doubt that revision of objectives should be abandoned simply because, as General Somervell had % pointed out, the Army Supply Program would need to be recalculated., Mr. Kuznets proposed that the War Production Board state that the over-all program is substantially in excess of feasible levels, and that 1943 objectives should be fixed at 75 billion dollars, which is approximately 20 percent less than the present 1943 objective (including carryover of the 1942 deficit) of 97 billion dollars. In view of the relatively satisfactory adjustment of the British production program to feasibility considerations and in view of the difficulty of obtaining specific guides as to combined strategy, Mr. Kuznets believed that efforts in the immediate future should be concentrated on adjustment of the United States program rather than on achievement of a combined British-United States program. The adjustment of the program must be on a selective, rather than a horizontal basis. If aircraft, merchant shipping, and defense aid objectives are to be regarded as constants, they alone will account for approximately 49 billion dollars of the suggested 1943 total of 75 billion dollars. Objectives for other categories, now totaling about 48 billion dollars will, therefore, have to be cut by 50 percent to 26 billion dollars. The selective adjustment in the program cannot be made by the War Production Board alone. Therefore, the collaboration of the President or the Joint Chiefs of Staff will be essential. Mr. Kuznets pointed out that adjustment can take either of two forms: (1) Actual reduction in the stated objectives for the year, or (2) production scheduling geared to the concept of a three-month lag in attainment of the year’s objec-tives. The latter, since it avoids formal reduction of objectives, may encounter less opposition, and is not inferior in its results. Mr. Kuznets emphasized the dynamic character of strategic objectives and pro–duction possibilities, and urged that objectives of the program be reviewed at least once every quarter. Mr. May called attention to the fact that the 26 percent shortage of copper, the 14 percent shortage of aluminum, and the failure of supply and requirements of certain other materials to balance until the latter half of 1943, confirm the feasibility analysis based on dollar valuation. Mr. Searls pointed out that specific shortages in particular areas are even greater than can be revealed in an over-all analysis, which necessarily is based on an averaging of favorable and unfavorable situations. He observed more particularly that specific shapes and forms of materials are in even more satisfactory supply-demand relationships than are raw materials. Mr. Blaisdell called attention to the overly favorable appearance of annual supply figures for materials and components. Such figures fail to reflect sufficiently the dates at which new supplies become available during the OCTOBER 8 AND 15, 1942 year, and so give the illusion that production schedules can assume an even flow of materials throughout the year. Revision of objectives should, therefore, be based on monthly schedules and specific bottlenecks. Mr. May referred to the proposed increase of the 1943 aircraft objective from 125,000 to 131,000 planes. Doubt was expressed as to the possibility of producing more than 112,000 planes during the year, in view of shortages of machine tools and aluminum shapes and forms. Drastic diversions of tools and components from other programs might enable achievement of the aircraft objective, but would be an unwarranted interference with such essential programs as that for synthetic rubber. Messrs. Blaisdell and May questioned the wisdom of expressing aircraft objectives in numbers of planes, rather than in weight of planes, particularly in view of the great importance of bombers. At this point Mr. Nathan entered the meeting and took the chair. Mr. May suggested that the Committee emphasize the importance of effective collaboration among existing military and production bodies rather than reiterate its desire for a formally constituted board composed of persons qualified to consider jointly production, strategic, and social factors bearing on the program. However, emphasis should be placed on the fact that production authorities, in addition to indicating the required over-all reduction of objectives, must actively participate in the selection of areas for selective cuts. Mr. Searls pointed out that the War Production Board is responsible for determination of the production program, and should indicate the over-all percentage cut of present objectives; the probably irreducible objectives (such as those for aircraft, merchant ships, and synthetic rubber), and the reducible objectives (such as those for the ground Army and for facilities and construction). Upon motion duly made, it was agreed without objection that : The Planning Committee recommends that: (1) The War Production Board resolve that the objectives and schedules for 1943 war production must be substantially adjusted; (2) The War Production Board take the responsibility for indicating the feasible limits of 1943 war production ; (3) On the basis of joint and intimate collaboration wjth the Joint Chiefs of Staff, or other strategy representatives, and representatives of the Combined Production and Resources Board and the War Manpower Commission, the War Production Board undertake to translate these over-all limits into goals for particular segments of the program; and (4) The War Production Board emphasizes the necessity for reducing the proposed size of the ground Army if (a) aircraft, merchant ships, and other essential program objectives are to be undisturbed, and (b) merchant shipping continues to limit severely the feasibility of transporting and maintaining several million troops abroad. James W. Fesler Executive Secretary Approved: Robert R. Nathan Chairman MEETING 58 OCTOBER Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. James W. Fesler, Executive Secretary Ry Invitation: Mr. Charles H. Chambers, Planning Coordination Section, Planning Committee, War Production Board (present for discussion of item 3) Mr. Matthew Fox, Chief, Current Planning Problems Section, Planning Committee, War Production Board (present for discussion of item 1) 15, 1942 Mr. James Newman, Planning Coordination Section, Planning Committee, War Production Board (present for discussion of item 1) Mr. Thomas W. Wilson, Jr., Chief, Planning Coordination Section, Planning Committee, War Production Board
Salvage The Chairman called attention to the early interest the Committee had evinced in the problem of salvaging materials needed for war production (See Minutes 4, item 1; 6, item 4; and Document 15). He also pointed out that Mr. Fox spent several weeks in England studying the British conservation methods, including salvage, 93 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE Mr. Fox presented a draft recommendation (Doc- । ument 179) on salvage, in which he emphasized the importance of (a) establishing a Salvage Division apart from the present Conservation Division and (b) planning effectively for the collection, sorting, transportation, and use of salvaged materials. The national Salvage Division should include operating branches to deal respectively with auto-graveyards, rural and farm salvage, industrial salvage, special projects involving unusual problems of price or law, and general salvage. It should also provide staff agencies for enlisting the cooperation of women, schools, labor, industry, and the Armed Services. Associated with the Director of the Division should be a Planning Staff to prepare basic data on materials to be included in salvage operations, the supply of scrap, the availability of processing and transportation facilities, the desirability of stockpiling particular secondary materials, and similar problems. To implement these responsibilities the Planning Staff should establish effective progress reporting methods. . Mr. Fox reported, that the present work of the Conservation Division with automobile graveyards is successfully administered, and that the industrial salvage program, though needing more aggressive prosecution, is soundly conceived. The least successful phase of the salvage program is that concerned with salvage of materials in households, business establishments, and farms. The failure in this area is attributable to the excessive reliance on local initiative, the inadequate preparation for collection, disposal, and use of waste materials, and the lack of coordination among the various salvage objectives and campaigns. Overcoming these deficiencies requires a much more effective organization of salvage operations. Mr. Fox outlined in detail the organizational changes that are required. Mr. Blaisdell suggested that the draft recommendation submitted by Mr. Fox should comment on the extent to which adjustment of the price structure for scrap might affect salvage activities. Mr. Fox stated that industrial salvage activities would not be substantially affected by a change in the price structure, general salvage is largely on a voluntary basis, and demolition projects present such a variety of special problems that they must be treated on an ad hoc basis. Mr. Blaisdell also suggested that the draft recommendation should be revised to include an explanation of the character of the scrap industry and the distinctive scrap problems associated with the several materials. Mr. Wilson reported that the draft recommendation was prepared on the basis of extensive consultation with officials of die Salvage Branch of the Conservation Division. Messrs. Wilson and Fok believed that the top officials of the Conservation Division would agree with most of the recommendations made, except that relating to establishment of a separate Salvage Division. 94 Upon motion duly made, it was agreed without objection that: The draft recommendation (Document 179) on salvage, as revised, is approved “for transmission to the Chairman of the War Production Board aS Planning Committee Recommendation No. 19.
War Munitions Program The Chairman reported that the War Production Board on October 13 discussed further the feasibility of 1943 production objectives (See Document 186), considered Planning Committee Recommendations No. 15 and No. 18, and adopted the following resolution: The Chairman of the War Production Board will inform the Joint Chiefs of Staff that the production objectives resulting from a combination of the “must” program and that proposed by the Joint Chiefs of Staff constitute a total program that cannot be achieved ; it greatly exceeds in dollar value the productive capacity of the country; definite limitations are imposed by shortages of copper, alloy steel, aluminum, and other critical raw materials and of certain manufacturing equip-meht, such as that required for aluminum forgings and extrusions; and facilities necessary for thè production of power plant and other types of equipment essential to the support of so large a program cannot be provided in time to meet «the ‘ program. Accordingly, the Chairman of the War Production Board will request the Joint Chiefs of Staff to review the military production program, giving due consideration to Presidential directives and consulting with appropriate officials of the War Production Board in reference to available materials, facilities, equipment, manpower, and other controlling factors. The Chairman suggested that the most practicable procedure to implement this decision might be to (a) direct the Production Executive Committee of the War Production Board to schedule for 1943 the “must” program controlled by Presidential directives, (b) schedule the balance of the presently stated production program through 1943 and such part of 1944 as is required to keep schedules within the range of. production feasibility, and (c) invite the Joint Chiefs of Staff to propose such revisions in the non-Presidential part of the schedules as they deem desirable.
Inventory Control The Committee considered the report (Document 175) by Mr. Chambers on inventory control, and the alternative draft recommendations submitted by Mr. Chambers (Document 182) and Mr. Wilson (Document 185). The differences of the two drafts were noted: Upon motion duly made, it was agreed without objection that: The Committee approves the general character OCTOBER 15 AND 22, 1942 of the proposals in Documents 175, 182, and 185, and authorizes Mr. Blaisdell to reconcile the divergent views of these documents and prepare a draft Recommendation for consideration by the Committee. James W. Fesler Executive Secretary Approved: Robert R. Nathan Chairman MEETING 59 OCTOBER 22, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Executive Secretary By Invitation: Mr. W. Y. Elliott, Director, Division of Stockpiling and Transportation, War Production Board (present for discussion of item 1) Mr. Charles H. Chambers, Planning Coordination Section, Planning Committee, War Production Board (present for discussion of item 1)
Transportation The Chairman explained that in view of the Committee’s earlier interest in problems of transportation (See Recommendation Number 13) and the recent establishment within the War Production Board of a Division of Stockpiling and Transportation, it is desirable to explore the ways in which the Committee and the Division can be of assistance to each other. Mr. Elliott expressed the hope that the Planning Committee will continue its interest in the field of transportation and will give him the benefit of its views. He described as his principal concerns at present: (a) The inadequacy of existing allocations and preference ratings applicable to the railroad requirements for equipment and maintenance materials; (b) the confused organizational arrangements for the programming of railroad requirements ; (c) the need for zoning of marketing areas in order to save transportation; (d) the desirability of fixing warehousing rates in such a fashion as to avoid present wasteful transportation occasioned by the search for cheap storage space ; (e) the need for allocation of tank storage space among such liquids as industrial alcohol, vegetable oils, and gasoline; (f) the possibility of relieving the tank car situation by greater use of barges and construction of pipelines; (g) the threatened shortage of open-top cars; and (h) the importance of fixing storage and railroad rates in a more expeditious manner than that provided by the Interstate Commerce Commission. The Chairman noted that the Combined Produc- tion and Resources Board is making a comparative study of the material requirements for maintaining the operating efficiency of the domestic war economies of Great Britain and the United States. Through this study the more extensive British experience may be used as a rough guide in resolving such disputed issues as the requirements of railroads for equipment and maintenance materials. With respect to the organizational confusion regarding responsibility for programming of railroad requirements, Mr. Searls noted that a Services Program Branch has been established in the Office of Program Determination and that it is important that questions of railroad requirements channel through this Branch. Mr. Elliott pointed out that the establishment of marketing zones, although it would run counter to the peace-time pattern of nation-wide distribution based upon national advertising, would parallel steps already taken in Germany and Great Britain. He felt that the report of Mr. Ernest Williams (Document 172) underestimated the possibilities of saving transportation by zoning. Although agreeing that special-type coals could not be readily subjected to a zoning system, Mr. Elliott felt that the quantities of genuinely special-type coals are considerably less than Mr. Williams thought. Mr. Searls believed that the pressure on warehousing space will steadily increase, and that the greatest prospective relief of this pressure is the possibility of a readjustment of war production objectives designed to emphasize production of such war materiel as can be moved to theaters of war within a reasonable time. Mr. Elliott undertook to indicate to the Executive Director those problems upon which the Division of Stockpiling and Transportation wishes advice from the Planning Committee.
Adjustment of War Production Objectives The Chairman reported that pursuant to the resolution of the War Production Board, adopted on October 13, 1942 (See Minutes 58, item 2, and Document 186), the Chairman of the War Production Board addressed a memorandum (Document 191) to the Joint Chiefs of Staff. This memorandum pointed out that the capacity of production of muni- 95 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE tions, facilities, and war construction in the United States during 1943 can be set at roughly 75 billion dollars. This contrasts with the presently stated 1943 military requirements of about 92 billion dollars, and with the 97 billion dollar 1943 total objective, comprising both the stated military requirements for 1943 and the estimated deficit of the 1942 program (excluding aircraft). It was pointed out that failure to relate objectives to production capacity will result in confusion and chaos, imbalance, and excessive construction of fabricating facilities. The War Production Board was of the opinion that the best way effectively to adjust requirements is to extend the date of delivery of some segments of the program until such time in 1944 as will make their attainment possible. This extension of delivery dates should, of course, give due weight to the “must” programs set by the President (aircraft, merchant vessels, escort vessels, and Russian requirements) and the synthetic rubber, aluminum, and certain other facility expansion programs. The Joint Chiefs of Staff were informed that the Chairman of the Production Executive Committee, in cooperation with his Committee, has been instructed to secure from the procuring services for review and final determination the realistic scheduling of month-by-month production for (a) meeting the Presidential “must” programs for 1943 and (b) accomplishing the balance of the military production program during 1943 and such part of 1944 as is necessary in consequence of production limitations and in accordance with guidance from the Joint Chiefs of Staff. Accordingly, the Joint Chiefs of Staff were invited to furnish guidance to the War Production Board in deciding which part of the program can be extended to 1944 with least damage to the war effort. The Chairman expressed the belief that the steps already taken by the Joint Chiefs of Staff pursuant to the memorandum of October 19 have furnished grounds for the hope that the adjustment of war production objectives to production capacities and strategic considerations, which the Planning Committee has consistently advocated since March 17, 1942 (See Recommendation Number 3), will be accomplished in the near future.
Aircraft Production Objectives The Chairman called attention to the report (Document 190) of the Joint Aircraft Planning Committee on aircraft production in 1943 and the memorandum (Document 189) from the Chairman of the War Production Board to the Joint Chiefs of Staff on aircraft objectives. It was pointed out in these documents that facilities now being built will provide capacity to build about 107,000 planes in 1943, including 80,000 tactical planes. An additional 5,000 planes might be produced in new facilities to be completed by the middle of 1943. The major limiting factors for aircraft production were identified as (a) fabricating capacity for aircraft engines, propellers, and other components, and for aluminum products, and (b) allocations of machine tools, alloy steel, and copper. The Joint Aircraft Planning Committee recommended, however, that the 1943 aircraft objective be 125,000 planes.
Program Planning in Great Britain The Executive Director made a brief preliminary report of his work for the Committee in England during the past several weeks. He called particular attention to the British concept that the planning group of the principal war production agency must necessarily take a broad viewpoint of its responsibilities, and therefore, must devote attention to the programs and activities of all government agencies participating in the war production program. James W. Fesler Executive Secretary Approved: Robert R. Nathan Chairman MEETING 60 OCTOBER Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas G. Blaisdell, Jr., Member Mr. Ralph J. Watkins (alternate for Mr. Blaisdell) Mr, Edward T. Dickinson, Jr., Executive Director (who presided for the early portion of the meet-; ing) Mr. James W. Fesler, Executive Secretary By Invitation: Mr. Simon Kuznets, Chief, Program Analysis and 29, 1942 Research Section, Planning Committee, War Production Board Mr. Charles H. Chambers, Planning Coordination Section, Planning Committee, War Production Board (present for discussion of item 1)
Inventory Control Pursuant to the previous request of the Committee (Minutes 58, item 3), Mr. Blaisdell presented a draft recommendation (Document 197) on inventory control, which was proposed as a substitute for the previously considered reports and draft recommen- 96 OCTOBER 22 AND 29, 1942 dations (Documents 175, 182 and 185). The Executive Director suggested that, as the several draft recommendations are largely confined to substantiating the generally recognized existence of an inventory problem, and to proposing remedial steps, a number of which have already been taken as a result of circulation of Mr. Chambers’ report, it would not be appropriate to submit a formal recommendation on the subject. Mr. Kuznets concurred in this view and further pointed out that inventory control should not be considered in isolation, but should be regarded as a phase of the larger problem of designing an effective production control system. Mr. Blaisdell reported that experience with the Production Requirements Plan has indicated that control of inventories must be administered separately from materials allocations. He agreed, however, that the two should be related through common policies. At this point Mr. Nathan entered the meeting and assumed the chair. The Chairman and Mr. Kuznets pointed out various technical difficulties in gauging the relationship between growth of inventories and growth of sales, and in proving that particular inventories are excessive or unbalanced in relation to prospective production rates. Upon motion duly made, it was agreed without objection that: Pending completion of its analysis of the problems of production control, the Committee will not submit a formal recommendation upon the subject of inventory control. The Executive Secretary is directed to make Mr. Chambers’ report (Document 175) available to officials of the War Production Board responsible for various phases of inventory control.
Production Control Mr. Kuznets emphasized the importance of effective production scheduling, and the need for clarification of the responsibilities of the Vice Chairman of the War Production Board in charge of the work of the Production Executive Committee. He expressed the view that it is unsound to develop a system for allocation of materials to claimant agencies without an effective method of checking materials requests against production schedules. Production schedules in turn must be realistically related to program objectives, labor, supply, transportation, and availability of plants and tools, as well as materials. The Chairman pointed out that, in view of the time lag between allocations of materials and their incorporation in finished munitions, the proposed Controlled Materials Plan will not have a substantial influence upon the achievement of 1943 objectives. It is not to be the basis for materials allocations qptil the second quarter of 1943 and will, no doubt, be less than fully effective during this initial quarter. The Chairman believed that this delay in effective ness of the Controlled Materials Plan makes imperative thé prompt introduction of production scheduling. He also observed that analyses of the feasibility of production objectives on an annual basis inadequately reveal the need for scheduling of production. Limitations on production are fewer and less critical on an annual basis than during particular quarters and particular months, for the short-range shortages of specific resources are frequently compensated for by excesses during later periods. Similarly, yearly objectives are not sufficiently refined to disclose the need for balancing the flow of complementary components through effective scheduling. The Chairman stated that (1) the Chairman of the Production Executive Committee should have full power to assemble detailed evidence bearing upon the scheduling function, (2) the field officials of the procurement services should provide schedules for every plant participating in the war program, (3) the Chairman of the Production Executive Committee should be authorized to use the Office of Progress Reports as an independent check upon the progress of production, the balance among component items, and similar aspects of scheduling, and (4) requests for materials should specify the items for which the materials are to be used so that these requests can be checked against production objectives and schedules. Mr. Kuznets pointed out that it is necessary to control the scheduling of civilian as well as military items. He further felt that production scheduling should not be regarded as a stopgap until an effective materials control plan is instituted, but should be regarded instead as the necessary core for any satisfactory system for controlling the flow of materials. Mr. Kuznets reemphasized the importance of clarifying the relationship of the Chairman of the Production Executive Committee to the operating divisions of the War Production Board in order that he can be assured of the effective implementation of his decisions.
Illinois-East Coast Pipeline Mr.. Blaisdell noted that the War Production Board at its meeting on October 27 had approved extension to the East Coast of the petroleum pipeline being constructed between Texas and Illinois. He pointed out that the Planning Committee had earlier disapproved the Texas to Illinois pipeline (Recommendation 9). He also expressed doubt as to the wisdom of expending steel and other materials for extension of the pipeline instead of for repairing tank cars, barges, and other already existing means of moving petroleum products.
Used Equipment Branch It was noted that in general conformity with Planning Committee Recommendation 6 and its supple- 97 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE ment, the Office of Operations has established a Used Equipment Branch (Document 198). The Branch is authorized to coordinate activities withinthe War Production Board with regard to locating and redistributing critical used equipment and machinery. James W. Fesler Executive Secretary Approved; . .. . Robert R. Nathan Chairman MEETING 61 NOVEMBER 5, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Executive Secretary By Invitation: Mr. Simon Kuznets, Chief, Program Analysis and y Research Section, Planning Committee, War Production Board Mr. Thomas W. Wilson, Jr., Chief, Planning Coordination Section, Planning Committee, War Production Board
Program Scheduling and Production Control The Chairman referred to the earlier discussion (Minutes 60, item 2) of the problems of program scheduling and production control, and submitted a draft recommendation for consideration by the Committee. Particular emphasis was placed on the importance of balanced scheduling of objectives on a monthly basis both as an essential to the success of the Controlled Materials Plan and as an independent means of guiding the flow of materials pending the full application of the Plan. Although the production schedules must necessarily be prepared by the varjops procurement agencies, centralized supervision and approval of such schedules are essential to maintenance of a balanced flow of end products and components. Central determination of annual production objectives does not suffice, for such objectives provide no security against excèssive and unbalanced production in particular months. Central analysis and approval of production schedules must be complemented by central checking of actual deliveries against scheduled deliveries. Otherwise, the schedules for the future may become increasingly unrealistic. The Chairman cited examples of schedules for November and succeeding months that- are grossly inconsistent with actual deliveries during September and October. The responsibility for scheduling production objectives, and for production control to ensure prompt, adjustment of schedules as the needs arise, falls naturally to the War Production Board. It is somewhat difficult to segregate fhese functions so that they can be assigned among co-ordinate Vice Chairmen of the Board. The determination of production schedules realistically related to such factors of feasibility as materials, manpower, fabricating capacity, and bottleneck components is hardly separable from the estimating and allocation of the available supplies of raw materials. Materials allocations must be consistent with production schedules. Consequently the allocation function, instead of continuing as the policy lever by which the War Production Board controls production, becomes largely a mechanism for implementing production schedules. Production control being a reporting of actual deliveries as a basis for adjustment of schedules, cannot well be directed by anyone except a subordinate of the productionscheduling body. Even production expediting, responsibility for which has largely been transferred to the procurement agencies, appears to be so important a method of closing the gap between schedules arid deliveries that some question arises as to the wisdom of complete abdication of the Board’s powers to perform this function. In view of the interlocking character of these functions, the Chairman expressed the view that an early determination of organizatonal responsibilities is essential. Upon motion duly made, it was agreed without objection that: The draft recommendation on program scheduling and production control is approved for transmission to the Chairman of the War Production Board as Planning Committee Recommendation Number 20.
Manpower The Chairman reported that the Chairman of the War Production Board has requested the Committee to submit an analysis of the manpower problem and possible steps for its solution. He pointed but that if 7.5 million men are under arms by the end of 1943, achievement of scheduled production levels would require that 4 million workers be added to the nation’s normal labor force. If the Army should increase beyond 7.5 million men, the industrial manpower shortage would be even more acute. The Chairman pointed out that these prospects make it imperative that not only new workers be brought into industry but that present workers be utilized more effectively. 98 OCTOBER 29, NOVEMBER 5 AND 12. 1942 Messrs. Searls and Blaisdell expressed doubt that the War Production Board should acquiesce to increasing the Army above 7.5 million men. The problem of replacing as many as 8 million industrial and agricultural workers is almost insoluble. By contrast, there is a marked flexibility in the needs of the armed forces. In view of shipping limitations, a relatively small proportion of the total Army can be transported to theaters of war. Furthermore, it is entirely reasonable to suppose that the United States could contribute more toward a successful termination of the war by producing and shipping to our Allies the great quantities of munitions needed, than by shipping and supplying large numbers of American troops, which would interfere with our munitions production. Mr. Searls pointed out that broad military and production strategy requires recognition of the fact that, although foreign labor cannot be brought in to relieve our industral manpower shortage, foreign soldiers can be substituted for American soldiers in many of the theaters of war. A true combined strategy of the United Nations would free shipping and rationalize the use of manpower. Mr. Searls questioned the wisdom of extending the work-week beyond 48 hours to maximize the productiveness of our limited manpower resources. Efficiency on the job would actually decrease and absenteeism would rise. He also expressed the view that the cost-plus-fixed-fee type of contract has been responsible for much inefficiency in the use of labor. Mr. Wilson submitted for the information of the Committee a draft study on the manpower problem. Upon motion duly made, it was agreed without objection that: In view of the many debatable elements in the manpower problem, and the limited time available for completion of recommendations, on the subject, the Committee requests the Chairman to submit his personal views to the Chairman of the War Production Board. The Committee will not at this time submit any formal recommendations.
Munitions Production of the United Nations, the Axis, and Neutral Countries _ The Chairman referred to the reports (Documents 195 and 196) by Mr. Raymond W. Goldsmith comparing the past and prospective production of munitions by the United Nations, the Axis, and neutral countries. It is expected that by the end of 1943 the United States will produce as large a quantity of combat armaments as all the rest of the world together, despite the fact that this country accounts for not much over one-fourth of the total income of the world. The accumulated combat armament production of the United Nations will, by the end of 1943, be nearly one-third in excess of that of the Axis, and this lead will increase in 1944. Upon motion duly made, it was agreed without objection that: The staff reports (Documents 195 and 196) on world munitions production shall be made available to key officials concerned with strategy and production. James W. Fesler Executive Secretary Approved: Robert R. Nathan Chairman MEETING 62 NOVEMBER 12, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Executive Secretary By Invitation: Mr. Thomas W. Wilson, Jr., Chief, Planning Coordination Section, Planning Committee, War Production Board Mr. Charles H..Chase, Planning Coordination Section, Planning Committee,. War Production Board 1* Waterways Transportation Messrs. Wilson and Chase presented a draft réc- ommendation (Document 199) outlining methods by which the War Production Board could promote utilization of waterways for transportation; Particular attention was drawn to the heavy overloading of railroads, the under-utilization of inland waterways, and the relatively low requirements for repair and maintenance of waterways facilities. Although barge shipment is slower than rail shipment, barges could be used more intensively if the needs, for bulk commodities and metals of the less critical shapes and forms were planned ahead sufficiently. It was pointed out that the “emergency basing point system”, adopted by the Office of Price Administration, authorizes adding to the price of a commodity the railroad freight charges from the point of origin. The resulting ease with which manufacturers call pass on the higher cost of rail transportation destroys the natural competitive advantage of the 99 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE waterways. Although the Office of Defense Transportation has direct responsibility for coordinating the transportation policies and activités of Federal agencies and private transportation groups, the War Production Board must also bear a major share of the responsibility for the waste of available waterways transportation capacities. In executing its general responsibility for the war procurement and production program the War Production Board affects the customer-supplier relationships, allocates materials and equipment for maintenance of the transportation system, and provides for an even flow of materials and commodities. The Board directly influences the extent to which waterways are used for freight transportation. Mr. Wilson reported that the draft recommendation resulted from conferences with officials of the Office of Defense Transportation and the Division of Stockpiling and Transportation of the War Production Board. Mr. Searls stressed the importance of close collaboration between the War Production Board and the Office of Defense Transportation. He urged that decisions by the War Production Board that rail shipments of certain materials be embargoed to promote diversion of such materials to the waterways, should be arrived at only after agreement with the Office of Defense Transportation. Messrs. Wilson and Chase pointed out that the Division of Stockpiling and Transportation agrees with this suggested mode of operation, and issues no directives to the Office of Defense Transportation that have been informally disapproved by that agency. Mr. Searls expressed the view that barge transportation is most appropriate for such staple commodities as coal, oil, and sugar, but that it would not be feasible to embargo rail shipments of the more critical materials and commodities. The Executive Director and Mr. Chase felt that if the flow of materials were planned on a sufficiently long-range basis, even such controlled materials as steel plate might be moved by barge. Upon motion duly made, it was agreed without objection that: The draft recommendation (Document 199), as revised, is approved for transmission to the Chairman of the War Production Board as Planning Committee Recommendation No. 21.
East Coast Petroleum Situation Mr. Blaisdell presented a memorandum (Document 203), expressing concern over the tendency of officials to approve pipeline projects without giving due attention to alternate methods of moving petroleum and petroleum products. He urged particularly that the possibilities of greater use of tank cars and barges should be thoroughly examined. Curtailment of consumption of petroleum products in the midwest areas would shorten the tank-car haul to the East Coast, and thus would increase the quantities of petroleum products moved eastward. The operation and management of tank cars has not been fully unified, partly because few tank cars are owned by railroads. Besides relieving the situation through further rationing and through integrated control of all tank cars, the Government might improve the flow of petroleum products to the East by directing that large quantities of these products be barged up the Ohio River from Mount Vernon, Indiana, to Pittsburgh. This would provide a net addition to the quantity of petroleum products moved eastward by other means of transportation. Mr. Blaisdell pointed out that the extension to the East of the Texas-Illinois pipeline is only now being initiated, and therefore cannot contribute to a solution of the critical shortage of petroleum products on the East Coast during the winter of 1942-43. Mr. Searls reaffirmed the view that initiation of the Texas-Illinois pipeline last summer was unsound, but expressed doubt, in which the Chairman concurred, that the pipeline extension project should be disapproved at this stage. To Mr. Blaisdell’s suggestion that the steel required for the project should be devoted instead to the building, repairing, and maintenance of tank cars, Mr. Searls pointed out that construction of large numbers of new tank cars would be difficult in view of the competing demands for the manufacturing facilities. Mr. Searls expressed the view that the most effective relief for the eastern petroleum crisis would be full utilization of tankers. Mr. Blaisdell noted that the Office of the Petroleum Coordinator for War regards the utilization of tankers as the least practicable method for meeting the situation. Upon motion duly made, it was agreed without objection that: Copies of Mr. Blaisdell’s memorandum (Document 203) on methods of meeting the petroleum situation shall be transmitted to the Price Administrator and the Petroleum Coordinator for War, with the request that these officials comment upon the feasibility of the remedial steps suggested.
Wastage in Aircraft Engine Production The Chairman referred to the report (Document 192) by Major R. B. Lawrence on waste of critical materials in the production of aircraft engines. It was noted that in manufacturing 22 types of aircraft engines 73 percent of the total amount of various forms of steel used is waste, and the loss per model runs from a low of 66 percent to a high of 83 percent. The percentages appeared unusually high when contrasted with normal manufacturing lossesl Some doubt was expressed as to the validity of contrasting normal manufacturing losses with losses in the aircraft-engine industry, and attention was directed to the relatively slight variation among different engine companies with respect to identical models. Upon motion duly made, it was agreed without objection that : : 100 NOVEMBER 12 AND 19 AND DECEMBER 3, 1942 The Chairman will bring the report (Document 192) on waste in aircraft engine production to the attention of the Vice Chairman of the War Production Board in charge of production, in order that such remedial steps as are required may be initiated.
Program Scheduling The Chairman referred to Planning Committee Recommendation No. 20 on program scheduling and production control, and pointed out that the Chairman of the War Production Board has announced that the scheduling of production is the responsibility of the Vice Chairman of the Board in charge of production. The Chairman called attention to the importance of establishing common principles and procedures for production scheduling. The Chairman and the Executive Director undertook to formulate statements of principles and procedures of production scheduling, to be sub mitted to the Committee at a subsequent meeting. The Chairman called attention to the current lag in munitions production, and pointed out that materials shortage is not the cause of this lag. Effective production scheduling, expediting of production as required to meet schedules, and establishment of controls to prevent production far ahead of schedules appear to be needed most urgently to further advance munitions output. Mr. Searls expressed the view that the central tasks of the Planning Committee must be the constant analysis of the feasibility of program objectives and the examination of program scheduling, production control, and similar methods for achieving these objectives. James W. Fesler Executive Secretary Approved: Robert R. Nathan Chairman MEETING 63 NOVEMBER 19, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C,. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. James W. Fesler, Executive Secretary By Invitation: Mr. Thomas W. Wilson, Jr., Chief, Planning Coordination Section, Planning Committee, War Production Board
Program Scheduling The Chairman expressed the view that because of the general interest in scheduling, an outline of the significance, principles, and procedures for production scheduling would be helpful to officials in the War Production Board and the procurement agencies. In this connection he submitted, as preliminary explorations of these areas, his memorandum (Document 204) on principles of scheduling military production, and the notes (Document 202) on scheduling procedures prepared by the Executive Director. He proposed that they should be carefully revised and combined with a statement of the basic implications and objectives of scheduling, in terms of (a) usefulness of schedules to strategists as a reliable forecast of production of military items needed for strategic operations,, (b) protection against immobilization of materials in idle inventories of components as a result of failure to balance production/ and (c) control of the flow of materials under the Controlled Materials Plan so as to assure correspondence between allocations of materials and desired production of end products. . Upon motion duly made, it was agreed without objection that: The Chairman and the Executive Director are requested to prepare for the Committee’s consideration a handbook reviewing the significance, principles, and procedures of production scheduling. James W% Fesler Executive Secretary Approved: Robert R. Nathan Chairman MEETING 64 DECEMBER 3, 1942 Present: Mr. Thomas C. Blaisdell, Jr., Member Members and Staff: Mr. Fred Searls, Jr., Member (present for discus- Mr. Robert R. Nathan, Chairman (present for dis- sion of items 1 and 2 and the latter portion of cussion of items 1 and 3) - item 3) 101 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Executive Secretary By Invitation: Mr. Mordecai Ezekiel, Consultant, Planning Committee, War Production Board (present for discussion of a portion of item 1) Mr. Raymond W. Goldsmith, Program Analysis and Research Section, Planning Committee, War Production Board (present for discussion of item 3) Mr. Simon Kuznets, Chief, Program Analysis and Research Section, Planning Committee, War Production Board Mr. James Newman, Planning Coordination Section, Planning Committee, War Production Board (present for discussion of item 3) Mr. Thomas W. Wilson, Jr., Chief, Planning Coordination Section, Planning Committee, War Production Board (present for discussion of a portion of item 3)
Aluminum Requirements for the Aircraft Program The Chairman reported that, pursuant to the request of the War Production Board, the Joint Chiefs of Staff submitted a revised munitions and construction program on November 26, 1942, and invited the War Production Board to advise them as to whether the most important sections of the program are feasible. Members of the Committee expressed some doubt that 107,000 planes can be produced in 1943 in view of the shortage of aluminum rods, bars, forgings, and extrusions. It was also pointed out that the supply of aluminum ingot may be inadequate to support the plane program contemplated. Mr. Searls reported that the shortage of heavy machines is holding up the completion of aluminum facilities. He emphasized the shortage of castings and stated that the Director General for Operations has reserved 26 percent of castings for distribution outside of the regular priorities system. Mr. Searls also pointed out that capacity for making aluminum rods, bars, forgings, and extrusions has, at least since midSeptember, been 20 percent less than aluminum ingot capacity. Mr. Ezekiel recalled that the conclusion of the Joint Aircraft Planning Committee (Document 190) that between 107,000 and 112,000 planes would be produced in 1943 was accompanied by a number of conditions. Since September 28, when the Committee filed its report, experience has been such as to make doubtful the fulfillment of these conditions. Aluminum production has not expanded as rapidly as was required, and monthly production of aircraft itself would have to increase with unusual rapidity to meet the 1943 goals. It was noted that the aircraft industry is now operating on a lead factor of four , to five months instead of the six months previously assumed. This shortening of the manufacturing cycle, however, naturally increases the pressure on the aluminum industry for large deliveries. Mr. Ezekiel observed that modifications of specifications, particularly the lower allowances for spares, are likely to ease the requirements somewhat. Mr. Searls expressed the view that the design changes necessary to reduce the use of critical materials cannot be effected in time to make production of 107,-000 planes feasible in 1943. He urged the importance of establishing realistic objectives in order to prevent the over-expansion of facilities for building fuselages and assembling finished planes.
Revision of 1943 Production Objectives Mr. Kuznets pointed out that the revised program submitted by the Joint Chiefs of Staff calls for munitions and construction during 1943 of a value of 80.1 billion dollars as contrasted with the 92.9 billion-dollar value of the unrevised program. He reviewed the principal reductions as follows: Program Reduction (In Billions) 137 ‘ 6.9 $3.9 1.0 2.0 3.0
- .8 12.8_______ Mr. Kuznets expressed gratification at the fact that the over-all program has been reduced, and that the specific reductions presumably reflect qualitative and quantitative adjustments of strategical requirements. He called attention to the fact, however, that the principal reduction has occurred in requirements for the Army Supply Program and particularly in the Ground Army part oi that Program. As a result, the portions of the total program reduced relatively slightly or not at all are those portions that are the most difficult to achieve with the productive resources available to the country. The revised airplane program, for example, will require our tripling the number of planes and almost quadrupling the total weight of planes during 1943 as compared with 1942. There has apparently been no significant reduction in the program for minor naval craft, although past performance has always lagged behind schedules for this category. Finally, the merchant shipbuilding program has actually been increased, although it would appear that in order to produce 19 million deadweight tons of ships in 1943 it will be necessary to reach by December 1943, an annual rate of 24 million deadweight tons. It was pointed out, however, that the Maritime Commission believes it feasible to plan for a rise from an annual rate of 13 to 14 million tons at the beginning of 1943 to 24 million tons at the end of the year without expansion of existing facilities. Mr. Kuznets expressed the view that it will be difficult to gauge the feasibility of the 1943 program submitted by the Joint Chiefs of Staff until the Services have scheduled out the revised program so 102 Program Reduction (In Billions) Aircraft $3.7 Army Supply Program 6.9 Ground Army …. $3.9 Direct Military Construction ’ i.o Lend-Lease …. 2.0 Navy 3.0 Miscellaneous (increase) + .8 12.8 DECEMBER 3, 1942 that a careful appraisal can be made in terms of the month-by-month availability of resources. Upon motion duly made, it was agreed without objection that: In view of the fact that the Production Vice Chairman of the War Production Board is undertaking an analysis of the feasibility of the revised program and is responsible for the scheduling out of objectives, the Planning Committee will not take any action at this time.
Size of the Army Messrs. Goldsmith and Newman reviewed their analysis (Document 207) of considerations affecting the size of the Army. They pointed out that the essential limiting factor upon the size of the Army is the shipping available to transport troops abroad with necessary initial equipment and to keep them supplied while abroad. The principal variables in estimating the number of soldiers who can be shipped abroad are (a) the number of ship-tons required to provide the initial organizational equipment on a per man basis, (b) the number of shiptons required per month for maintaining each soldier abroad, and (c) the number of round trips each ship can make per year. They also observed, however, that estimates of the total available shipping to meet Army requirements are conditioned by assumptions regarding new construction of ships, the sinking rate of ships, the requirements of shipping space for movement of essential raw materials, food, and munitions to the United States and to other United Nations, and the Navy requirements for ships to supply its fleet and bases and to transport and supply the Marine Corps. It was estimated that, depending upon the weight given these various factors, the dry cargo shipping space available to the United States Army during 1943 will average between 3.5 and 6.2 million deadweight tons. It is believed that the most likely amount of tonnage available is 5 million, which would permit the transportation and maintenance during 1943 of 1.5 million men, bringing our total expeditionary forces abroad by the end of 1943 to almost 2.5 million men. Requirements for troops within the continental United States, both for the defense of North America and for training, bring the total requirements to 5.1 million men at the end of 1943. This contrasts with the 7.8 million men at present scheduled to be in the Army by the end of 1943. There will thus be an excess of 2.7 million men, which, Messrs. Goldsmith and Newman pointed out, would constitute a stagnant pool of manpower, contributing neither to the defense of the country in a military sense nor to its productive output. Mr. Blaisdell suggested that the estimates would be somewhat altered by inclusion of a casualty rate for troops stationed abroad, as additional troops might be transported and supplied to replace those killed or returned to the United States for hospitalization. Mr. Goldsmith responded that as long as losses of this character are less than 25 percent, the general conclusions of the memorandum would not be substantially affected. He observed that between June 1941, and June 1942, German losses of all types on the Russian front have been estimated at roughly one million, which is 20 to 25 percent of the 4 to 5 million men probably assigned to that front. He emphasized that the fighting on the Russian front has been particularly intense and that some doubt may be expressed as to whether on an over-all basis our contacts with the enemy would be as costly. He agreed that the need for replacing casualties might mean that eventually we should have to induct as many as 7.5 million men into the Army, but he felt that nonetheless the induction rate for 1943 might safely be decelerated. Messrs. Kuznets and Wilson noted that there may be military reasons for recruiting a total Army three times as large as the number of troops that can be abroad by the end of 1943. Mr. Newman explained that the principal purpose of the memorandum was to assemble the essential data establishing the relationship between shipping and the size of the Army, and to pose the question of the reasonableness of immobilizing for both war production and combat some 2.7 million men, Mr. Blaisdell expressed the view that it would be difficult to achieve a revision of Army induction rates until the shortage of manpower for war production becomes so acute that return of some soldiers to productive employment is imperative. It was agreed without objection that: Messrs. Goldsmith and Newman will revise the memorandum (Document 207) on considerations affecting the size of the Army, giving particular attention to (1) casualty rates, (2) the contemplated distribution of the total Army among combat forces, Services of Supply, and other special groups, (3) revised data of the War Shipping Administration relating to shipping requirements and supplies, and (4) historical experience throwing light on the relationship between active combat forces, men in training, home defense forces, and reserve forces. James W. Fesler . , Executive Secretary Approved: Robert R. Nathan Chairman 103 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE MEETING 65 DECEMBER 10. 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member (present for discussion of items 2 and 3) Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Executive Secretary Approval of Minutes: The minutes of Meetings 57 through 64, inclusive, were approved. L Production Scheduling Reference was made to General Administrative Orders 2-71, 2-72, 2-73, and 2-74 of the War Production Board, which state that : (a) the Production Vice Chairman of the Board is responsible for and shall direct the scheduling of the various production programs of the Army, Navy, Maritime Commission, and other agencies; (b) the Production Vice Chairman is responsible for the central direction of aircraft production; (c) the Production Vice Chairman shall ensure that claims for materials submitted to the Program Vice Chairman are in harmony with plans, programs, and schedules of the Production Vice Chairman, and (d) the Production Vice Chairman shall follow the progress of the war production program, and analyze and report upon causes of and possible remedies for such deficiencies as his investigations reveal. Mr. Blaisdell submitted a memorandum (Document 211), proposing that the Planning Committee prepare a formal recommendation on scheduling procedures. He believed that such a recommendation should emphasize that (a) schedules for each end product must be integrated with a schedule of requirements for each critical material and critical component, (b) adequate machinery for reporting of production performance against each schedule is essential, (c) a production schedule engineer should be stationed at each major war production plant to report progress and keep the plant on schedule, and (d) field control centers should be established to readjust plant schedules when necessary. The Chairman noted that under General Administrative Order 2-74 the Production Vice Chairman will be responsible for progress reporting. This should facilitate the taking of such remedial measures as the progress reports indicate to be necessary. Mr. Blaisdell expressed the view that in the office of the Production Vice Chairman the controls over the progress of production should be administered separately from the scheduling operations. 104
Criteria Governing Requirements for Maintenance) Repair, and Operating Supplies The Executive Director called attention to the importance of developing basic criteria for determining requirements for maintenance, repair, and operating supplies. He referred to his outline (Document 208) of the problem, and reported that the staff of the Planning Committee is already engaged upon an analysis of the criteria developed by the Office of Civilian Supply, industry divisions, claimant agencies, and the Treasury Department. The Charman particularly emphasized the importance of establishing criteria that would distinguish between essential and non-essential repair and maintenance needs. He felt that, while genuine military requirements of this character must be met, all claims of need for materials and parts must be carefully reviewed. He suggested also that requirements of certain industries, such as railroads and electric utilities, should be ranked equally, in this respect, with the military. The Chairman pointed out that an unduly harsh denial of maintenance and repair requirements of less essential industries might force the closing of those plants that first wear out their equipment. This would result in the fortuitous concentration of less essential industries, which would be inequitable and inferior as compared with concentration plans based on careful analysis of each industry. The Chairman regarded the development of satisfactory criteria governing maintenance and repair as extremely important in view of the fact that a properly screened maintenance and repair program for American industry would deserve the highest preference ratings. He felt that at present there is a tendency for the critical review of maintenance and repair claims to be confined to those single industries, such as railroads, whose requirements are relatively large. This necessarily leads to an unfair discrimination in favor of small industries. The Executive Director and Mr. Blaisdell confirmed this observation, pointing out that industry divisions appear to rely almost entirely upon each company’s own judgment of its repair and maintenance requirements.
Curtailment of Civilian Production The Chairman reported that the Combined Production and Resources Board is undertaking a comparative analysis of the impact of the war upon the civilian economies of the United Kingdom and the United States. The study of the United Kingdom has been completed and the Planning Committee staff, with the cooperation of the Office of Civilian Supply and the industry divisions, is currently DECEMBER 10 AND 17. 1942 preparing the complementary study of the United States. The Chairman called attention to the fact that 1943 munitions production will have to be almost double that of 1942 if presently stated goals are to be achieved. This necessarily raises the question of what part of the civilian economy can be curtailed to release resources for 1943 munitions production. The Chairman pointed out that in the past curtailment measures have been directed largely toward the release of raw materials and machinery that were directly needed in munitions production. This accounts, for example, for the emphasis upon conversion of the automobile and refrigerator industries.
Size of the Army The Chairman pointed that the Joint Staff Planners of the Joint Chiefs of Staff, in preparing the revised 1943 war production program, had made certain rather broad assumptions regarding the availability of industrial manpower. The Chairman of the War Production Board has requested the Planning Committee to bring to the attention of the War Manpower Commission the implications for war production of the contemplated size of the Army.
Fabricating Facilities The Chairman called attention to the importance of curtailing the programs of the Armed Services for expansion of industrial facilities. Mr. Searls reported that most of these expansion projects are too far advanced to warrant their construction being stopped. However, he and the Chairman pointed out that newly completed facilities not now needed to fulfill their original purpose might well be diverted to production of goods for which there is a shortage of fabricating capacity. . The Chairman reported that, at the request of the Combined Raw Materials Board, the Combined Production and Resources Board is studying the problem of effective utilization of the combined fabricating capacity of the United Kingdom and the United States. A choice is necessary among three policies: (a) Maintaining United Kingdom production at peak levels through shipment by the United States of the necessary materials, (b) using the United States fabricating capacity at peak levels, and shipping finished munitions rather than raw materials to the United Kingdom, thus forcing under-utilization of United Kingdom facilities, and (c) developing some compromise between these two based upon shipping considerations, relative efficiencies in use of materials, and similar factors. James W. Fesler Executive Secretary Approved: Robert R. Nathan Chairman MEETING 66 DECEMBER 17, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director (for discussion of part of item 1 and items 2 and 3) Mr. Jesse Robison, Acting Executive Secretary By Invitation: Mr. Simon Kuznets, Chief, Program Analysis and Research Section, Planning Committee, War Production Board (for discussion of item 2)
Civilian Supply Organization The Chairman referred to recent changes in the organization and personnel of the War Production Board. He pointed out that the problem of controlling the impact of military production on the civilian economy presents a much harder task in 1943 than in the past. He deplored the lack of a concrete program for the civilian economy at this time when the pressure of the diversion of materials and productive facilities to the war program is intensifying. He pointed out that the elements of control over the civilian economy are dispersed through several agencies including the War Production Board, Office of Price Administration, Office of Economic Stabilization, Petroleum Administration for War, Department of Agriculture and others. He pointed out that the principal functions of the War Production Board are the expediting of war production and the judicious allocation of facilities and materials, and raised the question whether there could be incorporated into the War Production Board the prestige required to organize the civilian economy. Mr. Blaisdell expressed the belief that the degree to which the civilian economy is protected will depend upon the personnel to whom this responsibility is delegated within the War Production Board, and that a strong and aggressive leadership would ensure that the civilian economy is not so drained that it cannot make the necessary contribution to war production. He felt that inadequate representation of the civilian economy would be dangerous in view of the 105 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE tendency of military interests to absorb as much as possible of materials, facilities and manpower. The Chairman suggested that adequate representation for the civilian economy can be provided only in an independent agency whose claims upon total resources would rank equally with the military and export claims. Mr. Blaisdell felt that the removal of the civilian economy interests from the War Production Board would weaken the Board. The Executive Director expressed the opinion that sufficiently strong and aggressive leadership of the Office of Civilian Supply could achieve the desired objective. The Chairman pointed out that under the present arrangement no one has been delegated the authority to appraise the utilization of the resources devoted to the military program and, if necessary, to cut back the resources allocated to the military authorities if they cannot prove their efficient utilization of such resources. Mr. Blaisdell observed that this is properly a function of the War Production Board. The Executive Director added that it is doubtful that the necessary authority can be developed within the Board in time to prevent disastrous results.
Civilian Economy Mr. Kuznets stated that his studies of the current status of and prospects for the Civilian economy are approaching completion. Tentative conclusions drawn from the data thus far compiled include : (a) The reduction of civilian consumption in 1942 was less than expected, and in the aggregate was little less than in 1941. (b) The impact of the war program varied widely in types and character of products. (c) The civilian program for 1943 falls into three , categories’: ° .
Based, on the materials in scarce supply.
In terms of residual programs, such as food.
Unprogrammed areas* (d) There is reluctance to face the problem of what are the essential civilian requirements. Political considerations prevent a downright solution and the extent of the labor supply is still in question. Mr, Kuznets: stated that lack of a 1943 program for the civilian economy is the fault of the production authorities father than of the Office of Civilian Supply. He pointed out that unless the latter is informed what resources will be shifted from civilian to military production a definitive program cannot be established. Mr. Blaisdell pointed out that in establishing a war production program of 75 to 80 billion dollars, including munitions and construction, we have in effect set up a total civilian program. Mr. Kuznets stated that consumer outlays approximated 75 billion dollars in 1942 and possibly can be reduced in 1943 to about 65 billion dollars. The important question is to determine, how much of such outlays will be supplied from existing inventories and how much must be satisfied from new production. The Chairman emphasized that consideration should be given to the broad categories of the civilian economy and the areas in which curtailment will be severe. He pointed out that since the supply of critical metals to the civilian economy is now nominal there cannot be much further drain. However, an expanding military operation will draw heavily on manpower and to a fairly substantial degree on power and some other resources available to civilians. After further discussion of the necessity of calling attention to this important question with the least possible delay the Chairman said we would take under consideration the possibility of submitting a preliminary memorandum in anticipation of the larger study being prepared by Mr. Kuznets.
Size of the Army Mr. Nathan reported that meetings had been held with representatives of the War Manpower Commission in which were discussed the problem of the burden imposed on the economy and on the production program by the induction program of the Army. However, the discussidn did not consider the limitations which available shipping places on the amount of men who can be sent to foreign theaters, of war. The general conclusions reached by the Planning Committee were conveyed and discussed. The Chairman expressed the view that it was advisable to take the matter tip directly with Mr. Paul V. McNutt, Chairman of the War Manpower Commission, and he proposed to do so. Jesse Robison Acting Executive Secretary Approved: Robert R. Nathan Chairman 106 ► J DECEMBER 17 AND 31, 1942 MEETING 67 DECEMBER 31, 1942 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member (present for discussion of item 5) Mr. Fred Searls, Jr., Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Executive Secretary By Invitation: Mr. Charles J. Hitch, Planning Coordination Section, Planning Committee, War Production Board (present for discussion of items 2 to 5 inclusive) ft Report on 1942 and 1943 War Production The Chairman announced that during the past week the Chairman of the War Production Board has asked the Planning Committee and the Statistics Division to prepare a joint report on the accomplishments and deficiencies of 1942 war production and the prospective achievements and problems of 1943 production. Mr. Searls pointed out that the delay in arriving at many of the achievements of 1942 could appropriately be listed among the deficiencies. He cited the fact that the War Department has voluntarily agreed to abandon the completion of facilities projects to the value of 450 million dollars. As approximately 300 million dollars have already been invested in the building of these facilities, the belated recognition of their dispensability will save only one-third of the materials and manpower required for the projects. Mr. Searls pointed out that on May 6, 1942, a committee composed of the Chairman of the Planning Committee and representatives of the Army and Navy Munitions Board called attention to the importance of curtailing the facilities program of the Armed Services (See Document 78). The delay in carrying out this recommendation has resulted in a wastage of resources critically needed for the production of munitions. The. Chairman pointed out that Mr. Searls’ analysis underestimates the wastage that has occurred, since a number of the facilities that have been completed, such as shellloading plants, are now being used at a relatively small percentage of their capacity. Mr. Searls observed that the large facilities programs included in the Army Supply Program for 1943 are closely related to the contemplated size of the Army. Consequently, it will be difficult to effect drastic curtailment of the 1943 facility construction programs unless the Planning Committee’s view (Document 210) prevails that the 1943 induction objectives of the Army are excessive , by 1,5; to 2.0 million men.
Controlled Materials Plan Mr. Hitch reported upon the implementation of 686312—46—8 the Controlled Materials Plan. He stated that a definitive list of “B” items, for which bills of materials need not be submitted by manufacturers, has been completed and contains approximately 400 items, most of which are machinery and equipment although there are also a number of components such as bearings, internal combustion engines, and brake and wheel assemblies. Mr. Hitch also reported that there is now being distributed to all manufacturers under the Controlled Materials Plans the CMP-4A form which will be used by contractors in submitting requirements for the “A” items. Mr. Searls observed that because of the tardiness in distributing the necessary forms and instructions, the allocation of materials for the first quarter of the operation of the Controlled Materials Plan would be largely on the basis of rough bills of materials. Mr. Hitch observed that the information filed under the Production Requirements Plan will be of value in testing the accuracy of data submitted under the Controlled Materials Plan. It was believed, however, that there will be some difficulty in translating Production Requirements Plan returns into ¡terms that are meaningful for the Controlled Material^ Plan. Mr. Searls criticized the practice under the Production Requirements Plan of allocating only a portion of the stated requirements of manufacturers of critical components. He favored allocating to such manufacturers 100 percent of their requirements as stated on Form PD-25A, thus relieving them of- the necessity of filing supplementary PD-25F applications during the quarter. Mr. Hitch stated that, although the original Controlled Materials Plan provided for submission of requirements for “B” items to the Office of Civilian Supply, each claimant agency now presents its own claims for “B” items to the appropriate industry division of the War Production Board. The Divisional Requirements Committee reconciles requirements with prospective supplies of “B” items, and translates the approved requirements into their gross materials content. Each claimant agency then includes the appropriate portion of such materials requirements with its requirements for “A” items in its total statement of requirements for controlled materials, and submits these statements through the appropriate channels to the Requirements Committee. The Requirements Committee allocates to claimant agencies all materials that will be required for both class “A” and class “B” products within the limit of supplies. Each claimant agency notifies the appropriate industry divisions of the class “B” products for which it is making a part of its materials available. Inventory control is to be based upon a general regulation limiting to 60 days the permissible inven- 107 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE tory of any one itém and including the usual instruction to maintain inventories at minimum working levels. Policing of inventories will be done in the field. Mr. Searls felt that the strictness of the inventory policy should vary directly with the effect of inadequate inventories upon war production. He pointed out particularly that the manufacturers of bottleneck components should not be so severely restricted as to inventory that there is any danger of their production being interrupted with subsequent interference with many end-product programs. The Chairman agreed that a flexible policy is necessary. Mr. Hitch reported that there will be little central control of requirements for maintenance, repair, and operating supplies. Railroads and other industries operating under P orders with respect to maintenance, repair, and operating supplies are controlled, and there is also control over the amounts of materials that go into repair parts. Except for these two limited controls, the War Production Board will not restrict the acquisition of materials and parts of maintenance, repair, and operating purposes. Mr. Searls reported that the Facilities Bureau, of which he is Director, will act as the claimant agency for the expansion programs for high-octane gasoline, rubber, steel, alloy steel, and aluminum. Requirements for all other facilities programs will be presented by the appropriate claimant agencies. Mr. Hitch stated that the content of the list of “B” items is one of the major policy questions in the operation of the Controlled Materials Plan. He believed that, despite the great pressure for expansion of the “B” list, the list should be utilized for a period in order to furnish a firm base for the estimation of requirements. The Executive Director criticized the present length of the “B” list and expressed the fear that claimant agencies will divert so much energy to estimating requirements for the numerous “B” items that they will neglect to devote proper attention to the task of making the Controlled Materials Plan work for “A” items. He emphasized that the distinctive feature of the Controlled Materials Plan is its use of vertical allocation for ultimate end products. As most end products are in the “A” list, he felt that the emphasis should properly be placed upon sound estimates with regard to such items. Mr. Hitch reported that the industry divisions had been informed that they cannot demand information as of right from the Armed Services with regard to items on the “B-H” list (for which manufacturers do not need to report their requirements). He stated that in many cases the Armed Services have data already available with regard to end products included on the “B-II” list, but lack specific information with regard to components. The Chairman observed that it is not feasible to free the Armed Services of the obligation to submit requirements for “B” products, since the Controlled Materials Plan necessarily calls for integration of requirements for components with requirements for materials. Mr. Searls concurred, pointing out that exaggerations to any significant extent of requirements for “B” items will impair the whole plan for scheduling requirements on a more refined basis than has been possible under previous distribution systems. Mr. Hitch called attention to the problem of controlling the actual distribution of “B” products, and expressed the view that this problem has not yet been adequately faced. There is apparently no mechanism for preventing advance ordering of “B” products, although estimating of requirements and program scheduling are based on the assumption that there will be no advance ordering.
Production Scheduling The Chairman expressed the view that the Planning Committee’s over-all analysis of the feasibility of the war production program (Recommendation Number 15) discharged for the moment the Planning Committee’s responsibilities for a broad-gauged review of objectives. The revised 1943 program, amounting to 82 billion dollars, still requires analysis in terms of specific facilities, components, materials, and manpower, and needs to be studied from the standpoint of the month-by-month availability of required resources. This is largely the task of the Production Vice Chairman. The Chairman stressed the importance of the development of common criteria to govern the scheduling of programs by the Armed Services. He cited the fact that the Navy Department has never issued a directive to its field staff setting up standards of realistic scheduling. He also called attention to varying attitudes toward the view that an overly optimistic schedule provides a useful incentive to maximum production. Mr. Searls concurred in the Chairman’s observation and further observed that the Production Vice Chairman must deal directly with manufacturers in order to discharge effectively his responsibilities for production scheduling. Production scheduling cannot be performed simply at high-policy levels but requires intimate contact through the industry divisions with individual companies. In the case of such an intermediate product as valves, for instance, it would be necessary to review the order boards of the principal valve manufacturers, examine the types of valves for which they have contracts, determine their relative ability to produce these valves, and redistribute such orders as cannot be filled within a reasonable time by particular manufacturers. This redistribution process would emphasize the importance of maximum production of valves, with each company specializing on those types of valves for which its machinery and skilled labor are best adapted, thus correcting such maldistribution as has resulted from the sometimes haphazard placement of war contracts by procurement officers. The procedure suggested would result in effective production scheduling for all valves already on order. With respect 108 DECEMBER 31, 1942 AND JANUARY 7, 1943 to valve requirements not yet reflected in contracts with valve manufacturers, Mr. Searls proposed that procurement agencies indicate the end products in which valves will be incorporated and that the War Production Board then obtain information from the end-product manufacturers as to the quantity and types of valves needed each month for the end products and as to the proportion of valve requirements for which orders have not yet been placed. Mr. Searls felt that if the valve requirements of claimant agencies are in excess of scheduled supplies, the Divisional Requirements Committee or, on appeal, the Production Vice Chairman can determine which programs are to be curtailed. There appeared to be general agreement that claimant agencies can furnish statements of their end-product requirements, but are not fully equipped to state requirements for components. There was also general agreement that components presently appear to be a more important limiting factor upon the achievement of 1943 production objectives than do materials. Mr. Searls cited the fact that Mr. William K. Frank, Director of the Industrial Equipment Division, had found it essential to deal directly with compressor manufacturers in successfully scheduling the production and distribution of compressors. Mr. Searls emphasized that, as manufacturing plants are the choke-points in the production of components, it is essential to work directly with these plants in rationalizing component production. Mr. Hitch felt that the procedure suggested by Mr. Searls would be consistent with the Controlled Materials Plan, since the industry divisions are responsible for the distribution of “B” products.
Program of Essential Civilian Requirements The Chairman called attention to the need for an agency charged with developing on an integrated basis the minimum essential civilian requirements. He felt that this task might be assigned to the Economic Stabilization Director or to the Office of Civilian Supply, but that in any event steps must be taken to ensure integration of the different requirements of the recently established “czars” dealing with such civilian needs as food, rubber, and petroleum and petroleum products. The Chairman also felt that an agency concerned with the civilian economy and possessed of public prestige might be able to contrast the use of resources by the civilian economy with that by the Armed Services. He cited instances of wastage of resources that indicate a lack of appreciation by the Armed Services of the sacrifice of living standards that the civilian consumers will shortly be experiencing. A strong civilian agency might also develop analyses of the relative gain to the war eflfort of granting a marginal amount of materials to military production or to civilian requirements. Mr. Searls pointed out that reduction in the size of the Army would be the most significant step that could be taken toward recognizing the relative merits of increased war production through release of economic resources to the indirect military and civilian part of the economy.
Organization The Chairman announced the appointment to the Planning Committee of Mr. Marion H. Hedges (See Document 214). Mr. Hedges has been Research Director of the International Brotherhood of Electrical Workers (American Federation of Labor), member of the Board of Trustees of the National Planning Association, and consultant to the Social Security Board. James W. Fesler Executive Secretary Approved: Robert R. Nathan Chairman MEETING 68 JANUARY 7, 1943 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. Marion H. Hedges, Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Office of the Executive Secretary, War Production Board, Executive Secretary By Invitation: Mr. Charles W. Chambers, Planning Coordination Section, Planning Committee, War Production Board (present for discussion of item 1)
Curtailment of Less Essential Civilian Production The Chairman directed attention to the importance of refining the criteria governing curtailment of less essential civilian production. Such refinement becomes increasingly necessary as the conversion of facilities to war production is completed and the need is recognized for maintaining production of the absolutely essential quantities of civilian products. To illustrate the problem of developing specific orders to govern curtailment of less essential production, Mr. Chambers discussed the recent amendment to Conservation Order M-241, dealing with the paper and pulp industries. He reported that curtailment of paper production would significantly reduce the pressure upon manpower and transportation, and, 109 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE because of the latter, would save rubber and other critical materials. As long ago as June, 1942, Mr. Blaisdell recommended a 25 percent cut in the production of paper and paper board, and on August 8 the Chairman of the War Production Board directed the Chief of the Pulp and Paper Division to eliminate non-essential production of paper and paper board. On October 31, 1942, General Conservation Order M-241 was issued, freezing production at the levels that had prevailed during the preceding six months. The new amendment to Conservation Order M-241 fails to curtail paper production substantially below the all-time record levels of the six-month period from October 1941 through March 1942. First quarter production in 1943 may actually exceed the production during the third quarter of 1942. Because of the inadequacy of this curtailment, the Clearance Committee of the Distribution Bureau on December 31, 1942, disapproved the proposed amendment to Conservation Order M-241. . Mr. Chambers pointed out that the manpower used for lumber production cannot be segregated from the manpower used for pulpwood production, and that the Army has declined to release soldiers for use in lumbering operations as long as paper production continues relatively unabated. The Chairman observed that issuance of the amendment to Conservation Order M-241 determines War Production Board policy for at least the first quarter of 1943. He felt that it might be possible, however, for the Planning Committee to give some guidance as to the type of curtailment that would be appropriate for the second quarter of 1943. Mr. Chambers doubted that the Pulp and Paper Division has been unaware of War Production Board policy toward curtailment of less essential uses of such critical materials as pulpwood. He pointed out that last August the Chairman of the War Production Board had clarified this policy to the Pulp and Paper Division. Mr. Chambers felt that the principal difficulties in the regulation of the paper industry have been the rapid turnover of personnel in the Pulp and Paper Division, the general confusion as to the respective responsibilities of the several industry divisions, and a lack of discipline and failure to follow policies established by the higher officials of the Board. The Chairman suggested that the Planning Committee undertake to develop criteria that might guide the industry divisions in the development of programs for the curtailment of less essential civilian production. He felt that the relation of such curtailment to release of manpower needed careful analysis. Consideration should also be given to the extent to which the limitation orders should prevent manufacturers from emphasizing the production of the more profitable items at the expense of the less profitable but perhaps more necessary products. The Chairman announced that the Planning Committee has been invited to assign a representative to the Clearance Committee in order that the Planning Committee may become more fully aware of the problems involved in the preparation and clearance of limitation orders.
Synthetic Rubber The Chairman reported that the Planning Committee, though not ordinarily directly concerned with scientific experimentation with manufacturing processes, has for some time watched with interest the testing of Jean’s process for manufacturing synthetic rubber from garbage and other fermenting substances. Mr. Blaisdell stated that the Office of the Rubber Director has been studying the process. Mr. Searls reported that Colonel Bradley Dewey, Deputy Rubber Director, has concluded that Jean’s process does not appear promising enough to warrant any slackening of the present synthetic rubber programs. He called particular attention to the difficulty in stabilizing the quality of the output of the proposed process.
Merchant Shipping The Chairman announced that the staff of the Committee is collaborating with the War Shipping Administration in analyzing the availability of war materiel for shipment abroad.
Yukon Pipeline Mr. Searls referred to the earlier discussions of the Yukon pipeline (Minutes 41, item 3; 43, item 2 ; 44, item 2 ; 45, item 2 ; 47, item 3). He stated that he has recently brought to the attention of the War Department the question of the advisability of completing this project. James W. Fesler Executive Secretary Approved: Robert R. Nathan Chairman 110 JANUARY 7 AND 22, 1943 MEETING 69 JANUARY 22, 1943 Present: Members and Staff: Mr. Thomas C. Blaisdell, Jr., Member, who presided in the absence of Mr. Robert R. Nathan, Chairman (present for discussion of items 1 and 2) Mr. Marion H. Hedges, Member, who presided for the discussion of items 3 and 4 Mr. Edward T. Dickinson, Jr., Executive Director, alternate for Mr., Robert R. Nathan Mr. James W. Fesler, Office of the Executive Secretary, War Production Board, Executive Secretary By Invitation: Mr. Simon Kuznets, Chief, Program Analysis and Research Section, Planning Committee, War Production Board (present for discussion of items 2 and 3) Mr. Matthew Fox, Chief, Current Planning Problems Section, Planning Committee, War Production Board (present for discussion of item 4)
Petroleum Products Pipeline Mr. Blaisdell reported that the Petroleum Administrator for War has submitted a proposal for the construction of a 20-inch petroleum products pipeline from the Texas Gulf Coast to the East Coast. It is suggested that the War Production Board now authorize construction of the western half of this line, which would be in operation by September 1943. The line would follow the route of the War Emergency Pipeline already completed from Texas to Illinois and now being extended to the East. According to the Petroleum Administrator, completion of the western segment of the proposed pipeline would permit increasing deliveries of petroleum products to the East Coast by 110,000 barrels a day. The Petroleum Administrator estimates that, with all presently planned transportation facilities (not including the newly proposed pipeline), stocks of petroleum in District I will by March 30, 1943, fall to the minimum working level of 40 million barrels. Inventories would be increased during the spring and summer, but by January 1, 1944, stocks would again decline to the minimum working level and by April 1, 1944, would be reduced to 12 million barrels, or 28 million barrels less than the safe working minimum. During the spring and summer of 1944 stocks would not be replenished sufficiently to reach the minimum working level, and from October 1944 to April 1945 requirements would exceed both new supply and inventory by 10 million barrels. Mf. Blaisdell referred to his memorandum (Document 216) to the Chairman of the War Production Board, calling attention to significant discrepancies in the estimates now presented by the Petroleum Administrator and the estimates earlier presented by him in seeking approval for the extension of the War Emergency Pipeline to the East Coast. Mr. Blaisdell also reported that it would appear feasible to increase the capacity of the War Emergency Pipeline by at least 110,000 barrels. This, he pointed out, would require changed specifications for the pumps and other equipment being installed for the War Emergency Pipeline, but would require less critical materials than construction of the steel pipeline proposed by the Petroleum Administrator. It was noted that the War Production Board has referred the Petroleum Administrator’s proposals to the Requirements Committee for analysis.
Comparative Study of War-Time Trends Mr. Kuznets pointed out that on March 31, 1942, the Planning Committee authorized completion of arrangements for a study of war cycles by the National Bureau of Economic Research (Minutes 16, item 3, and Document 45). Since that time the National Bureau of Economic Research has submitted several memoranda, based on non-secret information, relating to developments in the United States, Germany, and England during World Wars I and II. It was originally planned that such data would be combined with the secret information available to the Planning Committee into a definitive analysis. In view of the other demands on the time of the Planning Committee Staff, this combined analysis has not been completed. Mr. Kuznets submitted a memorandum (Document 215) by Mr. Geoffrey H. Moore, comparing industrial production in the United States during World Wars I and II Mr. Kuznets pointed out that production trends in the two world wars show a remàricable parallel. The most striking similarities are in the production of raw and semi-fabricated materials. The output of industrial materials increased from 1939 to 1941 at about the same rate as in 1914—1916, and experienced a marked reduction in rates of increase in 1917 and 1942. Developments in the raw materials industries have been conditioned by the fact that in general the pre-war backlog of productive capacity was fairly limited. Some of the raw materials industries were on a 24-hour production basis even before the war. Additional production in many cases could be obtained only by more intensive use of existing equipment. Mr. Kuznets observed that the marked rise in steel output between 1938 and 1942 was paralleled in the first World War, and in both cases the trend leveled off rather sharply. It is expected that production of steel in 1943 will exceed 1942 output by not more than 6 percent. Output of fabricated products, in contrast to ma- 111 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE terials production, increased markedly during the two wars. The increased capacity of the machine-tool industry as compared with steel ingot expansion is an example. The greater expansibility of fabricating operations can be explained in part by the fact that before the wars fabricating plants were working eight hours or less a day. The major difference between production trends in the two wars has been in construction. The proportion of total materials devoted to new construction declined throughout World War I. In World War II, on the other hand, there has been no such decline. This is probably to be accounted for in major part by the greater emphasis upon new facilities in World War II. Agricultural production has increased at a rate second only to that of fabricating capacity. However, the limits to both fabricating and agricultural capacity may be reached in 1943 because of transportation difficulties. The transportation industry is a 24-hour industry even in peacetime, and the degree of expansion possible is therefore limited. Mr. Kuznets believed that, on the basis of the experience of the United States in World Wars I and II and the experience of foreign countries, the hypothesis could be advanced that the sequence of production bottlenecks in wartime is characteristically as follows: (1) Critical raw materials, (2) food products, (3) transportation, and (4) labor supply. Mr. Kuznets gave a preliminary report on the major findings of the studies by the National Bureau of Economic Research on British and German experience in the two World Wars. In both Great Britain and Germany at the time of the first World War, production started to fall practically at the time of the declaration of war. This appears to have been due to the overdraft upon the labor forces for the Armed Services. Studies of recent German experience indicate that the draft of women into the labor force has been almost negligible, there being almost no increase in employment of women over the pre-war period despite the pressure for an increased supply of labor. Mr. Kuznets felt that this could be attributed to the fact that the demand for women’s services in the home itself increased markedly when production of civilian goods and services declined. In Great Britain also, female employment has not appreciably increased during the war. Throughout this period, however, Great Britain has maintained a higher ratio of female employment to total labor force than has the United States. If the United States were to duplicate on a proportionate basis the distribution of the British labor force by age and sex, we would be able to count upon a total labor force of 66 or 67 million persons. However, if the British rate of increase in female employment since 1938 were to be applied to the United States, dur maximum labor force would be approximately 61 million persons. Mr. Kuznets undertook to direct the preparation of an over-all analysis of the extent to which a com mon pattern emerges from United States, British, and German experiences in World Wars I and II and, in this connection, to determine whether any evidence can be adduced regarding the point at which a ceiling on total output can be expected. Mr. Kuznets cautioned against any expectation that these studies will result in absolute parallels. He did feel, however, that the feasibility of currently anticipated programs could be tested by such patterns of developments as these studies reveal. He pointed out that present forecasts of production capacity, for example, may prove unduly optimistic since they are characteristically prepared separately for individual products and usually assume that particular products will have the right-of-way over all competitors. Mr. Hedges stressed the importance of weighing the comparative analyses of labor shortages in accordance with the variations in productivity of individual workers in the different countries and at different periods. Mr. Kuznets agreed, observing, however, that the development of shortages of other resources, such as raw materials, may have to be compensated for by increased labor. This would necessarily reduce the total production to be expected from a given labor force.
Report on 1942 and 1943 War Production Mr. Kuznets reported briefly upon progress on the analysis, being prepared jointly by the planning Committee and the Statistics Division, of the accomplishments and deficiencies of 1942 war production and the prospective achievements and problems of 1943 production. He expected that the report would be completed in about two weeks. Mr. Kuznets suggested the desirability of the Planning Committee and the Statistics Division preparing quarterly reports to the War Production Board, giving a broad picture of the past quarter’s developments in war production and the civilian economy, and outlining to the Board the developments and problems to be expected in the succeeding quarter. He observed that, as thé Office of Progress Reports has been transferred to the Office of the Production Vice Chairman, it is likely that the monthly reports to the Board prepared by this Office will be rather strictly confined to direct military production. 4i Smaller War Plants Corporation Mr. Fox reported that the Current Planning Problems Section of the Planning Committee staff has been assisting Mr. Lou Holland, Deputy Chairman of the War Production Board on Smaller War Plants, in implementing the Act of June 11, 1942, which directs the aggressive mobilization of the productive capacity of all small business concerns. By the end of October, the Smaller War Plants Division had placed only 6.5 million dollars’ worth of business with small firms. The difficulty in obtaining agreement by procurement agencies to the wider distribution of war orders was largely overcome through the conclusion of formal arrangements 112 JANUARY 22 AND 28, 1943 (Document 220 on November 7, 1942. These agreements committed the procurement agencies to maximum possible subcontracting and provided for adequate advance notice to the Smaller War Plants Division with regard to requirements that might be met by smaller war plants. With the elimination of obstacles to the cooperation of procurement agencies, it appeared that the Smaller War Plants Division was inadequately organized to handle a large volume of business. Accordingly, the Current Planning Problem Section assisted Mr. Holland in improving the organization of the Division in both Washington and in the field. Mr. Fox emphasized the importance of field organization, since small business facilities are widely dispersed. The Section has also prepared recommendations with regard to the more satisfactory organization of the Smaller War Plants Corporation. Through the efforts of the Planning Committee staff, a common understanding of the principles governing the placement of contracts with smaller war plants has been developed between the Services of Supply, War Department, and the War Production Board. It has also been possible to retain War Production Board control over the allocation of smaller war plants contracts among the various regions of the country, despite a natural inclination of the War Department to undertake such allocation itself. Since October 1942, 286 million dollars worth of business has been placed with smaller war plants, as contrasted with the 6.5 million dollars placed in the five months from June to October. James W. Fesler Executive Secretary Approved: Thomas C. Blaisdell, Jr. Acting Chairman MEETING 70 JANUARY 28, 1943 Present: Members and Staff: Mr. Thomas C. Blaisdell, Jr., Member, who presided in the absence of Mr. Robert R. Nathan, Chairman Mr. Marion H. Hedges, Member Mr. Edward T. Dickinson, Jr., Executive Director, alternate for Mr. Robert R. Nathan Mr. James W. Fesler, Office of the Executive Secretary, War Production Board, Executive Secretary By Invitation: Mr. Simon Kuznets, Chief, Program Analysis and Research Section, Planning Committee, War Production Board
Submarine Activities Mr. Kuznets referred to his report on merchant ship sinkings and submarine war (Document 219). He reported that merchant sinkings during 1942 totaled about 13 million deadweight tons, including 9.5 million tons of dry cargo vessels and 3 million tons of tankers. Losses exceeded new construction in both categories so that at the year end inventories of dry cargo vessels were reduced .5 million tons to 32.3 million tons, and inventories of tankers were reduced by 2 million tons to 11.5 million. The additional reduction in the effective fleet by virtue of damage and consequent lengthy repairs, is not taken into account in these figures, although it is believed that about 3 million tons of shipping is continuously in drydock for repair. Total losses during 1942 ran fairly steadily at about 1 million tons per month, declining in the latter half as a result of the reduction in tanker sinkings. Losses in dry cargo vessels persisted during the last 3 quarters of the year at a rate of about 2.6 percent per month of current inventory. This persistence, Mr. Kuznets observed, reflects the failure of whatever measures were, taken to offset the activity of enemy submarines, which, accounting for 90 percent of ship losses in the last quarter of the year, were the most important single cause of sinkings. He pointed out that increased military operations near territory occupied by the enemy may be expected to result in increased destruction from enemy land-based aircraft and enemy mines. Scarcely any portions of the Atlantic and the Mediterranean have been free of the menace of submarine attack. Losses are heaviest on the most strategically important routes, and especially heavy on the northern route to Russia. He reported that the total Allied fleet of escort vessels, including destroyers, destroyer escorts, auxiliary aircraft carriers, corvettes, and sloops, increased from 668 at the beginning of 1942 to 770 at the end. An undetermined but substantial portion of this fleet was engaged from time to time in combatant duties. As against this modest increase in protective facilities, German submarines are estimated to have increased about 100 percent during the year, from about 200 to 400. Including Italian and Japanese submarines, corresponding figures would be 300 and 550, approximately an equal increase. In considering the prospects for 1943, Mr. Kuznets mentioned several favorable factors: The in 113 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE crease in total inventory of Allied escort vessels, based on present schedules; the enormous volume of merchant ship construction; the increasing speed of the average merchant vessel in operation (partly the result of a higher percentage of josses among slower and older ships) ; the increased effectiveness of submarine destruction and ship protection devices; and thé possibility of destructive damage to German submarine bases and production centers. Offsetting unfavorable factors are: The expected increase in the German submarine fleet to about 600 units by the end of the year; the greater effectiveness of submarines; and possibly the greater effectiveness of Axis airplanes and mines as operations move closer to Axis occupied territories. With regard to the prospective increase in ‘ the escort vessel fleet, Mr. Kuznets pointed out that schedules call for nearly doubling the escort fleet, but adjustments must be made for increased diversions to combatant duty, for losses, and for the fact that the bulk of the increase in escort vessels will be completed too late in 1943 to deal effectively with the submarine menace in the early part of the year. Mr. Kuznets pointed out that it is possible only to suggest ranges of prospects for sinkings in 1943. Depending on whether average sinkings per submarine in 1942 are projected into 1943 or whether the relatively low loss ratios on the highly protected convoys are applied, shipping losses this year may range from 20 million deadweight tons, almost equal to the shipbuilding program for the year, down to 6 million deadweight tons, or less than half the sinkings in 1942. Mr. Kuznets emphasized the relatively low losses of vessels owned and chartered by the Army, and observed that extending to regular merchant vessels the kind of protection now accorded to Army vessels would materially reduce our shipping losses. Projecting the average ratio of sinkings to inventory experienced last year suggests shipping losses falling somewhere between 11 million and 15 million deadweight tons. On this basis the net addition to our merchant fleet from construction would be only about 10 to 20 percent. The British Admiralty estimates that 1943 sinkings will approximate 14.7 million tons, or an average of 1.2 million tons per month. This indicates, said Mr. Kuznets, the seriousness of the problem and the difficulties of ocean transport and supply, which far surpass those raised by submarine activities in the last World War. Mr. Hedges felt that defensive measures against submarines have improved since the first World War as, despite the fact that the United Nations have fewer merchant ships now than in the first World War and that Axis submarines are more numerous and better armed than in the previous war, - sinkings are not significantly greater. Mr. Kuznets observed that in the first World War the most effective anti-submarine measures were mines. In this war, however, the submarines have rela tively free access to the sea, and haVe a greater range of movement because of a large variety of conveniently located submarine bases. Mr. Kuznets noted that readjustment of the Navy construction program to emphasize escort vessels and similar craft was undertaken during the second half of 1942. He stated that the principal obstacle to meeting the escort vessel schedule has been thé shortage of large Diesel propulsion engines. He also emphasized the strategic choice in the use of destroyers that has to be made between convoy purposes and combatant duty. Mr. Kuznets stressed the fact that convoys traveling at an average speed of 13 to 17 knots have experienced only about one-third the rate of sinkings that convoys traveling between 7 and 8 knots have had. The maximum surface speed of submarines is 13 to 15 knots and maintenance of this speed over a period of time consumes a great amount of fuel. Consequently, it is not practical for submarines to follow behind a fast convoy for a long period of time. To take advantage of this factor, Mr. Kuznets suggested that the faster vessels be grouped together and travel with relatively little protection, since speed in itself is an important protective element. Then the slow vessels could be grouped together and could be allotted a relatively large number of protective escort vessels. Mr. Kuznets reported that the Under Secretary of the Navy has requested that the report on submarine activities be kept up to date, and has undertaken to make available Navy Department data on this subject. Mr. Kuznets pointed out that action to implement the findings of the report would have to take the form of better utilization of vessels through improved loading and routing practices, classification of vessels for convoying purposes, unified control of shipping by Great Britain and the United States, simplification of the design of escort vessels, and resolution of the dispute over the assignment of destroyers as between convoy and combatant duty.
Representation of the Planning Committee on Other Boards and Committees The Executive Director referred to Administrative Order Number 13 of the Office of the Program Vice Chairman which provides for representation of the Planning Committee on the Order Clearance Committee. He noted that participation in operating responsibilities would run contrary to the earlier philosophy governing Planning Committee activities, since it might reduce the objectivity with which the Planning Committee and its staff approach the work of other parts of the War Production Board. Upon motion duly made, it was agreed without objection that: Thè Executive Secretary shall prepare an analysis of the problem of participation of members of the Planning Committee ând its staff in the operations of other units of the War Production 114 JANUARY 28 AND FEBRUARY 10,1943 Board, for consideration at a future meeting of the Committee.
Program Determination Mr. Blaisdell reported that the proposal (See Minutes 69, item 1, and Document 216) for the construction of a 20-inch petroleum products pipeline from the Texas Gulf Coast to Norris City, Illinois, and Seymour, Indiana, has been approved by the War Production Board. He observed that this raises the whole question of the effect that consideration of individual projects has upon over-all programming, He pointed out that this project is like many others that are passed upon by the Facility Clearance Board without full consideration of the relationship of the particular projects to already established programs. Messrs. Blaisdell and Kuznets expressed the fear that true programming in terms of over-all consideration of military and civilian requirements, balanced against available resources on a month-by-month basis, is not at present being performed. It was pointed out that the Program Vice Chairman is primarily limiting his program determinations to the allocation of materials. The Production Vice Chairman is emphasizing the elimination of bottlenecks, and in performing this expediting task is tending to become a Claimant Agency for materials required for the production of the critical components, rather than weighing all segments of the total program against each other in order to guide the flow of resources. Mr. Blaisdell suggested that in order to draw attention to the deficiencies outlined, the Planning Committee should undertake to test the feasibility of combined military and civilian requirements on a month-by-month basis, and to make this analysis available to officials having authority to establish and implement the total program. Mr. Kuznets felt that the Planning Committee might well provide basic, criteria to guide individual officials in their decisions, and might further provide the specific framework setting the bounds of possible action with regard to various segments of the program. Mr. Blaisdell stressed that with the establishment of so-called “czars” over particular commodities and functions, the War Production Board must exercise the important responsibility of integrating the programs developed by these otherwise autonomous units. Mr. Blaisdell recurred to the pipeline project as an example of failures to abide by established criteria. In this case, the War Production Board has approved a project that is not to be completed until after mid-1943, although, it is an established policy of the Board that, in general, projects falling in this category should not be completed. Mr. Blaisdell indicated that the particular policy did not meet with his approval but that, since the policy does exist, it Should either be faithfully observed or formally abandoned. In any event, the consideration of each individual project without reference to any common criteria of judgment is bound to be haphazard and inconsistent in its results. Mr. Blaisdell noted that the Planning Committee cannot make quarterly reports to the War Production Board covering both military and civilian portions of the economy, as suggested by Mr. Kuznets (Minutes 69, item 3) until there is an established program against which quarterly accomplishments can be measured. Mr. Kuznets reviewed the areas in which relatively satisfactory data are available for the preparation of quarterly reports. He noted that past progress reports have related mostly to the production of military end products and direct military construction. Data are available on Federally financed fabricating facilities. He felt that the areas requiring analysis henceforth are: Components of essential products; raw materials used for both military and other purposes; the output of civiliantype products; and the construction of facilities not financed by the Federal government. Mr. Kuznets agreed that upon completion of the report on 1942 and 1943 war production, and the special study on the civilian economy, it would be appropriate for the staff of the Planning Committee to prepare an analysis of the over-all military and civilian production program. Mr. Hedges emphasized that such projects as this are at the very core of the responsibilities assigned to the Planning Committee. James W. Fesler Executive Secretary Approved: Thomas C. Blaisdell, Jr. Acting Chairman MEETING 71 FEBRUARY 10, 1943 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. Marion H. Hedges, Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Office of the Executive Secretary, War Production Board, Executive Secretary 115 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE By Invitation: Mr. Charles J. Hitch, Planning Coordination Section, Planning Committee, War Production Board
Size of the Army The Chairman pointed out that it would be desirable to obtain agreement among interested agencies with regard to the facts bearing upon the feasibility of the proposed size of the Army. He undertook to initiate steps for the holding of a meeting of representatives of the War Production Board, War Department, Navy Department, War Manpower Commission, and War Shipping Administration.
Organization of the War Production Board The Chairman pointed out that General Administrative Orders 2-76 and 2-77 transfer to the Office of the Production Vice Chairman the following Industry Divisions: Shipbuilding Division, General Industrial Equipment Division, Tools Division, Automotive Division, Safety and Technical Supplies Division, Facilities Bureau, and Aluminum and Magnesium Division. The Aircraft Division and Radio and Radar Division had previously been transferred to the jurisdiction of the Production Vice Chairman. It was observed that the War Production Board has two broad functions to perform : (a) Control of production, and (b) control of the distribution of materials and facilities. As both controls must operate through the Industry Divisions, it is not desirable to divide Industry Divisions into two groups, one reporting to the official in charge of production and the other to the official in charge of distribution. Continuance of the Industry Divisions is assumed to be desirable in order to provide each industry with a single point of contact with the War Production Board and to bring to light any inconsistencies among staff activities of the Board before they are translated into actions affecting industry. Mr. Searls felt that it might be appropriate for the Aircraft and Shipbuilding Divisions to report directly to the Production Vice Chairman, but that all other Industry Divisions should report directly to the Director General for Operations. The Director General should be responsible directly to the Chairman of the War Production Board, and be the channel through which the Program Vice Chairman and the Production Vice Chairman maintain contact with Industry Divisions. He believed that it should be the task of the Director General for Operations or, if necessary, the Chairman of the Board, to reconcile conflicting instructions stemming from the Program Vice Chairman and the Production Vice Chairman. He stressed the difficulties involved in requiring that conflicts be reconciled at the level of the Industry Division directors. Mr. Blaisdell pointed out that during the first three quarters of 1942, the Director General for Operations was not directly subordinate to the Chairman of the Requirements Committee and, as a result, there was some difficulty in achieving satisfactory implementation of Requirements Committee decisions. The Chairman noted that a number of factors bear upon the difficulty of implementing decisions, and pointed out that the Office of Civilian Supply and the Conservation Division have had varying success in their relations with Industry Divisions. Mr. Searls expressed the view that the scheduling of production of the several most critical items and the distribution of materials to all programs should be closely integrated in some such agency as the present Distribution Bureau. The production of only 38 critical items is at present on a scheduling basis, and in many of these cases the scheduling will last only for the few months when the item is in the most critical supply-demand situation. Mr. Searls felt that the important task of determining relative urgencies of products and programs must continue to be a responsibility of the Requirements Committee, whose determinations should be transmitted to the Distributing Bureau for implementation through a variety of instruments, including production schedules. The Chairman observed that many of the problems of war production would not have become so critical had there existed an agency with authority to determine over-all program objectives. Mr. Searls agreed, citing the aircraft program as one whose objectives have been unrealistically stated in terms of annual totals instead of in terms of peak monthly production rates. In the attempt to meet 1943 aircraft objectives, facilities are being constructed that by the beginning of 1944 will provide an excessive production capacity. It was agreed that a reappraisal of aircraft objectives should be undertaken by the staff of the Planning Committee. It was further agreed that the staff will undertake to develop tentative analyses of the functions of the War Production Board and their organizational implications. James W. Fesler Executive Secretary Approved: Robert R. Nathan Chairman 116 FEBRUARY 10 AND 18, 1943 MEETING 72 FEBRUARY 18, 1943 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell» Jr., Member Mr. Marion H. Hedges, Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Office of the Executive Secretary, War Production Board, Executive Secretary By Invitation: Mr. Simon Kuznets, Chief, Program Analysis and Research Section, Planning Committee, War Production Board
Conservation of Consumer Goods The Executive Director presented a draft recommendation (Document 221) urging a coordinated program to promote maximum conservation of goods now in consumers’ hands. It was proposed that a Civilian Conservation Branch be established in the Conservation Division for the purpose of coordinating present conservation efforts of the War Production Board and of other Federal agencies, particularly the Office of Price Administration and the Office of Civilian Defense. Where no other agency is able to undertake an important segment of the total program, the Civilian Conservation Branch would itself engage in such operations. Upon motion duly made, it was agreed without objection that: The draft recommendation (Document 221) is approved for transmission to the Chairman of the War Production Board as a Planning Committee Recommendation, provided that it be revised in accordance with the suggestions of members of the Committee and be reviewed with the Director of the Office of Civilian Supply and the Administrative Assistant to the Chairman of the War Production Board.
Report of 1942 and 1943 War Production Mr. Kuznets submitted a draft of Part III of the report on 1942 and 1943 war production being prepared jointly by the Planning Committee and the Statistics Division at the request of the Chairman of the War Production Board (See Minutes 67, item 1; 69, item 3). Mr. Blaisdell expressed the view that although it is highly desirable to emphasize the importance of a coordinated consideration of military strategy needs, economic and production feasibility, and domestic and international policy factors, it is not practicable to insist that some par ticular body be created for this purpose, as there are several alternative ways of achieving the desired unification of policy. Mr. Blaisdell also urged that a sharp distinction be made among the various types of scheduling. The Chairman noted that the two principal types are (a) program scheduling, which involves the relating of objectives to resources, and (b) operational scheduling, which involves the detailed direction of the flow of resources to meet agreed-upon objectives. It was Mr. Blaisdell’s view that wartime government regulation should be recognized as a necessary step to the freeing of enterprise for full participation in the war program. He pointed out that industrial management is faced with a conflict between two responsibilities: (a) its responsibility to the owners of the enterprises being managed and (b) its responsibility to the nation. Beset by this conflict, industrial managers are not free agents, and cannot exercise the vigor that would be released were their responsibilities better harmonized. Only government orders can free industrial managers to devote themselves wholeheartedly to war production without conflicting considerations of profits for owners. He pointed out that the issuance of Limitation Order L—2—g, which prohibited the production of passenger automobiles, constituted a landmark in the conversion from a peacetime to a war economy. The increasing difficulty of rapidly adjusting labor supply to war production requirements, Mr. Blaisdell suggested, should be recognized by the Committee’s report to be as important a limiting factor on war production as is the shortage of basic raw materials. He also proposed that the report examine the rationale behind the creation of numerous commodity and functional czars, as well as emphasize the responsibility of the War Production Board for integrating the work of these semi-autonomous administrative areas into a consistent program. Mr. Hedges expressed the view that to discern the pattern of the post-war period, attention must be currently devoted to the extremely rapid technological changes occurring in industry. He believed that the War Production Board should arrange for maintaining an up-to-date inventory of the technological changes having important implications for the post-war period. James W. Fesler Executive Secretary Approved: Robert R. Nathan Chairman 117 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE MEETING 73 FEBRUARY 22, 1943 Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Marion H.~ Hedges, Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Office of the Executive Secretary, War Production Board, Executive Secretary By Invitation: Mr. Simon Kuznets, Chief, Program Analysis and Research Section, Planning Committee, War Production Board
Report of 1942 and 1943 War Production The Committee continued its consideration of the draft of Part III of the report on 1942 and 1943 war production (See Minutes 72, item 2). Messrs. Blaisdell and Hedges, while agreeing that increased government controls will be necessary to ensure attainment of maximum war production in 1943, urged that such controls be kept to thè minimum required for achievement of production objectives and be constantly adapted to the democratic environment of public consent and approval. Mr. Blaisdell urged that the concept of resources requiring mobilization for the war program be broadened beyond the traditional triad of materials, facilities, and manpower, so as to include as well industrial management and technical knowledge. The Chairman agreed that mobilization of these two additional resources is essential, but pointed out that they do not lend themselves as readily as materials, facilities, and manpower to allocation and other instruments of quantitative control. Mr. Blaisdell observed that a number of agencies, such as the Office of Scientific Research and Development, the Office of Production Research and Development, and the National Inventors Council have already been established to facilitate the use of technical knowledge in the war program. The Executive Director urged recognition of the fact that the day-to-day decisions with regard to the war production program are willy-nilly setting the framework of post-war planning. Because of this interrelationship, he questioned the tendency to differentiate between the two areas of government action. He also called attention to the fact that industrial management is devoting attention to postwar planning even while supervising current war production. James W. Fesler Executive Secretary Approved: Robert R. Nathan Chairman MEETING 74 FEBRUARY 25, 1943 Present: Members and Staff: Mr. Thomas C. Blaisdell, Jr., Member, who presided in the absence of Mr. Robert R. Nathan, Chairman Mr. Fred Searls, Jr., Member Mr. Marion H. Hedges, Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Office of the Executive Secretary, War Production Board, Executive Secretary By Invitation: Mr. Matthew Fox, Chief, Current Planning Problems Section, Planning Committee, War Production Board Mr. Raymond W. Goldsmith, Program Analysis and Research Section, Planning Committee, War Production Board (present for discussion of Item 2) Mr. Charles J. Hitch, Planning Coordination Section, Planning Committee, War Production Board Mr. Simon Kuznets, Chief, Program Analysis and Research Section, Planning Committee, War Production Board
Planning Committee Agenda The Committee considered the areas in which the Planning Committee and its Staff should concentrate their energies. It was the consensus of opinion that the Committee should: (1) Continue to undertake broad analyses of the national economy, with particular attention to the feasibility of the war production program, (2) undertake, through joint committees or otherwise, analyses of specific commodities, products, and industries constituting critical bottlenecks in the war production program, (3) prepare recommendations on particular functional problems, such as coordination of scheduling with the allocation of materials, (4) assist the 118 FEBRUARY 22 AND 25, 1943 Chairman and the Executive Vice Chairman of the War Production Board on any matters referred by them to the Committee or its Staff, and (5) cooperate fully with division directors and other officials of the War Production Board on any problems upon which the Committee and its Staff have special competence. Mr. Searls proposed that particular emphasis be placed upon the achievement of a sound and feasible program of war production. He noted that the Committee cannot confidently perform its over-all programming task if it fails to analyze with some care the soundness of the more specific programs that together constitute the over-all program. He pointed out that programs based upon firm requirements are not available for even such critical commodities as steel and high-octane gasoline. Mr. Kuz-nets observed that an important reason for the absence of firm requirements for a number of commodities is the multiplicity of jurisdictional units whose decisions affect requirements. He suggested that the Planning Committee, being in a neutral position and having an unusually intimate acquaintance with the over-all production program, could effectively facilitate the development of relatively conclusive programs by bringing together representatives of the various concerned jurisdictions in joint committees. This procedure has been followed by the Combined Production and Resources Board and the Planning Committee in the analyses of programs for aircraft, trucks, steel plates, rubber, copper and other products and commodities. Mr. Fox stressed the desirability of directing Planning Committee energies toward activities of immediate usefulness to operating officials of the Board and at the latters’ request. This would ensure that each of its recommendations would receive consideration by someone qualified to act promptly if the recommendations met with his approval.
Current Use of Resources for Post-War -Readjustment ’ ■ The Executive Director observed that because of the urgency of current war problems-and the limited staff of the Committee, there has been little opportunity for the Committee to consider problems of post-war readjustment. However, questions regarding post-war planning are increasingly being referred to the Committee. He cited as an example the request of the Chairman of the War Production Board that the Committee recommend a policy concerning the current use of materials and other resources for development of models of civilian products for quantity production in the post-war period. Mr. Goldsmith explained that the policy problem was posed most sharply by the case of a Minneapolis manufacturer of power lawn mowers, whose production has been forbidden under Limitation Order L-67. The manufacturer appealed for permission to use one-half ton of steel in inventory to develop five models of lawn mowers, duplicates of which would be manufactured on a large scale in the postwar period. The manufacturer’s appeal was denied by the Appeals Board. The manufacturer now complains that this decision runs contrary to the public recognition by the Chairman of the War Production Board that post-war planning is desirable. Mr. Goldsmith reported that Mr. Arthur N. Holcombe, Chairman of the Appeals Board, has recognized that other appeals are likely to arise involving the use of materials for post-war planning, and that a War Production Board policy on this subject is desirable, but pending the development of such a policy, the Appeals Board must abide by the précèdent set in this lawn-mower case. It was noted that the over-all policy for cases of this type should (a) discriminate according to whether the products have current military or essential civilian usefulness, or are merely useful in the post-war economy, (b) take into account the possibility that alternative current uses of the materials would be more wasteful than their use in development of post-war models, and (c) recognize that, as relatively small amounts of materials are involved, the more important issue may be whether engineering and inventive talents should be diverted from current improvement of war products to post-war development. In this last connection it was noted that Germany has forbade such diversion of talents. Although the Committee recognized, of course, that thinking about post-war technological problems cannot be controlled by government edict, it was concerned over the report that large groups of engineers and draftsmen are working exclusively on designs for post-war products. Large corporations, which can easily divert small amounts of materials to development work by its engineers and draftsmen, thus obtain an unfair advantage over smaller manufacturers, who are forced to appeal to the War Production Board for even small quantities of materials for this type of work. The Executive Director stated that not only engineers and draftsmen, but also top-side management men in corporations, are devoting a substantial part of their time to post-war planning. Mr. Kuznets noted that the Federal Government is devoting part of its resources to post-war planning, and he questioned whether it is feasible to apply a simple rule of “all-out war” to every policy decision that has to be made by the War Production Board. ‘ Mr. Goldsmith was directéd to formulate a statement of the issues involved in the use of materials and manpower for the development of models for post-war civilian products. James W. Fesler Executive Secretary Approved: Thomas C. Blaisdell, Jr. Acting Chairman 119 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE MEETING 75 MARCH 4, 1943 Present: Members and Staff: Mr. Thomas C. Blaisdell, Jr., Member, who presided Mr. Marion H. Hedges, Member Mr. Edward T. Dickinson, Jr./ Executive Director, alternate for Mr. Robert R. Nathan __ Mr. James W. Fesler, Office of the Executive Secretary, War Production Board, Executive Secretary By Invitation : Mr. Matthew Fox, Chief, Current Planning Problems Section, Planning Committee, War Production Board (present for discussion of item 1) Mr. Raymond W. Goldsmith, Program Analysis and Research Section, Planning Committee, War Production Board (present for discussion of item 1 ) Mr. Charles J. Hitch, Planning Coordination Sec- tion, Planning Committee, War Production Board Mr. Simon Kuznets, Chief, Program Analysis and Research Section, Planning Committee, War Production Board
Current Use of Resources for Post-War Readjustment Reference was made to the previous discussion (Minutes 74, item 2) of War Production Board policy toward the use of manpower and materials for the development of models of civilian products for quantity production in the post-war period. It was recalled that the Chairman of the Board has called the Committee’s attention to the desire of a Minneapolis manufacturer to develop improved models of lawn mowers. Mr. Goldsmith advocated; that the policy should be a liberal one because (a) the quantities of materials involved are relatively insignificant, (b) such a policy would be consistent with the emphasis placed by the Chairman of the War Production Board upon post-war planning, (c) rigid enforcement of a restrictive policy would be necessary in order to prevent discrimination in favor of large corporations, and (d) the character of the problem makes effective enforcement difficult. Mr. Goldsmith stressed the fact that if such a liberal policy were adopted, it would be necessary to adopt appropriate safeguards, such as limiting the amounts of materials that can be devoted to development of post-war models, withholding materials from companies whose war work would be interfered with by diversion of energies into developmental work, and refusing materials to firms found guilty of violating War Production Board orders. Mr. Fox emphasized the ease with which large corporations can obtain materials for development work, as con 12^ trasted with the difficulty experienced by smaller enterprises. Mr. Blaisdell favored a policy of refusing to permit materials for developmental work designed primarily to advance the competitive position of the company. He recognized fully the need for experimental work likely to assist the prosecution of the war, and also granted that the time may come when materials and manpower can be made available for the development of strictly peacetime models. In view of the shortage of engineers, draftsmen, and workers with similar skills, he doubted that the War Production Board should at this time permit any diversion from the requirements of all-out war. He agreed with Mr. Fox that it would not be possible to enforce strict compliance with this policy by industry, but urged that nonetheless, as a war agency, the Board cannot collaborate in the diversion of resources to non-war purposes. Messrs. Blaisdell, Dickinson, and Goldsmith noted that adoption of the position suggested by Mr. Blaisdell implies that the War Production Board should not by public statements advocate post-war planning. Mr. Hedges, referring to the theory that discoveries and inventions frequently derive from accidents, doubted that it would be easy to distinguish between research ostensibly directed to war purposes and research directed toward advancement of post-war competitive status. Mr. Kuznets expressed general concurrence with Mr. Blaisdell’s suggestion, but observed that (a) the distinction should be between essential and non-essential development work in terms of the present emergency, (b) the question is whether small or large amounts of materials are involved in development work is irrelevant to the policy issue, although of significance at the administrative level, and (c) it is quite feasible to distinguish between post-war planning of a world-wide or economy-wide character on the one hand, and the type of post-war planning represented by the development of improved models of lawn mowers. Mr. Hedges summarized the consensus of the meeting as being that materials and manpower should be made available only for such research and experimentation as can legitimately be regarded as necessary to all-out production for war. Messrs. Kuznets and Dickinson believed that consideration of the possibility of research and experimentation on post-war models should be postponed until strategic developments and the prospects for peace have become better defined. It was also observed that even old-type models of civilian goods will have a profitable sale in the immediate post-war period because of the large demand for consumers goods that will have accumulated by that time. MARCH 4 AND 11, 1943
Report on Civilian Economy Mr. Kuznets reported that the staff has near completion a study of the civilian economy of the United States. He pointed out that the multiplication of relatively independent agencies dealing with various segments of the civilian economy poses an unusually challenging problem of coordination of the policies and implementation devices adopted by these agencies. Mr. Blaisdell felt that the War Pro duction Board must assume a major responsibility for such coordination, and that to discharge this responsibility it must develop a staff adequately equipped to appraise all civilian programs. James W. Fesler Executive Secretary Approved: Thomas C. Blaisdell, Jr. Acting Chairman MEETING 76 MARCH Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Marion H. Hedges, Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James Fesler, Office of the Executive Secretary, War Production Board, Executive Secretary By Invitation: Mr. Raymond W. Goldsmith, Program Analysis and Research Section, Planning Committee, War Production Board Mr. Simon Kuznets, Chief, Program Analysis and Research Section, Planning Committee, War Production Board Approval of Previous Minutes: The minutes of Meetings 65 through 74, held December 10, 1942, through February 25, 1943, were approved.
Current Use of Resources for Post-War Development Mr. Goldsmith presented a draft (Document 228) of a proposed policy regarding experimental and development work on civilian products. He pointed out that this draft was intended to reflect the views of the Committee expressed at the preceding meeting (Minutes 75, item 1). The Chairman observed that the policy toward use of resources for experimental and development work of a civilian character might well be a liberal one inasmuch as such work is unlikely to divert, a significant amount of inventive talent away from the war program. However, he was fearful that almost insurmountable administrative difficulties would result from such a policy since manufacturers might be inclined to pursue such work considerably beyond a developmental stage. Messrs. Dickinson and Kuznets observed that relaxa-tiop by the War Production Board of its restrictions on non-essential work would have an adverse , psychological effect. Mr. Goldsmith suggested that, 11, 1943 since a restrictive policy would be more significant in saving manpower than in saving materials, the principal policy decision with regard to developmental work might well be regarded as within the jurisdiction of the War Manpower Commission. The Chairman proposed, and there was general agreement, that the policy should be that, in view of the high objectives for 1943 war production, all-out mobilization of resources is essential. At this stage of the war, therefore, it is not feasible to permit the diversion of resources to work that does not contribute to achievement of these goals.
Report on Civilian Economy Mr. Kuznets presented the staff report (Document 227) on civilian consumption and output in the United States, and requested that the report be reviewed by the Committee at its next meeting preparatory to its more general circulation. The Chairman called attention to the fact that this study results from (a) the decision of the Combined Production and Resources Board that the United Kingdom, Canada, and the United States should prepare analyses of the impact of the war upon their respective economies and (b) the recognition by the Planning Committee of the increasing importance of development of a program on civilian requirements. He noted that the British Ministry of Production submitted its “Report on Non-Military Sector of British Economy” (Document 213) in October. He and Mr. Kuznets observed that the Planning Committee report on the civilian economy of the United States does not attempt to present comprehensive recommendations on policy with regard to our domestic economy. It is intended that such recommendations will be developed separately for presentation to the War Production Board. James W. Fesler Executive Secretary Approved:. Robert R. Nathan Chairman 121 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE MEETING 77 ‘ MARCH Present: Members and Staff : Mr. Robert R. Nathan, Chairman (present for discussion of items 1 and 2) Mr. Thomas C. Blaisdell, Jr., Member, who acted as chairman during the discussion of item 3 Mr. Marion H. Hedges, Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Office of the Executive Secretary, War Production Board, Executive Secretary By Invitation: Mr. Simon Kuznets, Chief, Program Analysis and Research Section, Planning Committee, War Production Board Mr. Thomas W. Wilson, Jr., Chief, Planning Coordination Section, Planning Committee, War Production Board
Report on Civilian Economy The report, “Civilian Consumption and Output in the United States” (Document 227), was reviewed by the Committee. It was noted that the facts presented in the report establish that civilians as a group will make relatively slight sacrifices in 1943. Consumption even in the second half of 1943 will in general be 25 percent above minimum requirements. Household fuels, transportation, arid medical care will be the principal areas of shortàge. Although consumers will be able to purchase only 90 percent as much in 1943 as in 1942, arid in the fourth quarter of 1943 will have their consumption cut to 80 percent of the corresponding quarter of 1942, such curtailments will still enable civilians to consurne as much as they did in 1939. It was observed that this indicates that the econorriy can readily support an army of 11 milliori men. Mr; Blaisdell pointed out that the Planning Committee had never contended that the economy could riot support a large army. It had emphasized instead that a greater impact on the enemy would be achieved by using manpower for war production than by inducting a large working force into the Army where it would remain idle because shipping limitatioris prevent its being sent overseas. The Chairman pointed out that the report, although establishing a generally favorable picture for civilian Consumption in 1943, does not fully reflect the geographic variation of the impact of the war on civilian life. Mr. Wilson observed that both manpower shortages and pressures toward lower living standards have been highly localized. Mr. Wilson also pointed out that the impact of the war has often been most adverse upon essential civilian needs. In his view, resources available for 18, 1943 civilian production should be channeled to the most essential civilian requirements rather than to cosmetics, household conveniences, and similarly less essential purposes. Mr. Kuznets pointed out that the severe cuts in civilian consumption in 1942 had been largely confined to areas in which critical shortages of particular resources, such as rubber and fuel, had developed. The reduction in transportation services cannot, therefore, be readily corrected by curtailments in other parts of the economy. Mr. Blaisdell observed that the statistical analyses presented in the report are confined to marketable commodities and services. They cannot, therefore, reflect such declines in services of housewives and production by farmers for home consumption as may have resulted from the war. Mr. Blaisdell also suggested that, since the national economies differ, it cannot be assumed that all nations should curtail their civilian economies to exactly the same point. Much must necessarily depend upon the feasibility of wholesale transfers of factories, managerial talents, labor, and other eco nomic resources iron! production of civilian goods and services to war production. The Chairman observed that inasmuch as civilian purchasers have beeh drawing down the nation’s inventories, statistics on consumption of civilian goods are likely to mislead one into believing that a similar production is being devoted to civilian goods. He also noted that the changed pattern of income distribution during the war naturally creates greater consumer demand for certain less essential goods than would be expected had the peacetime pattern of income distribution continued during the • war period. Mr. Hedges noted the need for assuring that workers displaced by the decline in construction activity transfer to the industries in which they can best contribute to the war program. He suggested that the Chairman of the War Production Board solicit the full cooperation of the building trades unions in guiding this transfer. Upon , motion duly made, it was agreed without objection that: The report, “Civilian Consumption and Output in the United States” (Document 227), is approved for transmission to the Chairman of the War Production Board, subject to the preparation of an introductory note emphasizing that (1) the present report is primarily factual in character, and will be followed by Planning Committee recommendations regarding policies affecting the civilian economy, and (2) discriminating use of the report requires that a number of qualifications be kept in mind in interpreting the findings. 122 MARCH 18 AND 25, 1943
Current Use of Resources for Post-War Development The Chairman announced that, in accordance with previous discussions (Minutes 74, item 2; 75, item 1 ; and 76, item 1 ) of the Committee, a recommendation on current use of resources for post-war development had been drafted and transmitted to the Chairman of the War Production Board. Upon motion duly made, it was agreed without objection that: The transmission to the Chairman of the War Production Board of Planning Committee Recommendation Number 22, “Policy Regarding Experimental and Development Work on Civilian Products”, is approved.
Concentration of Civilian Production Mr. Wilson submitted a memorandum (Document 230) on the War Production Board’s Concentration of Production Program. The memorandum proposed that: (1) The policy of concentration of civilian production be reaffirmed, (2) Full authority and responsibility for the concentration program be vested in the Committee on Concentration of Production which should focus its efforts on the completion of concentration programs for (a) civilian industries with large labor forces and (b) highly critical labor areas; it should also have power to effect concentration of an industry where jurisdictional disputes between industry divisions threaten to delay concentration, (3) Preparation of concentration programs be based upon authoritative determinations of requirements for civilian products prepared by the industry division requirements committees or higher authority, and upon authoritative determinations by the War Manpower Commission of labor sup ply and demand conditions in important industrial areas, (4) The Concentration Committee establish binding criteria for the selection of nucleus plants under each concentration program, (5) All very small firms automatically be given nucleus status in concentration programs, (6) Interim concentration programs be put into effect for industry even though the status of a few firms accounting for a small amount of the industry’s production has not been determined, (7) Simplification and standardization programs, when appropriate for industries being considered for concentration, be developed by a subcommittee of the Concentration Committee, (8) Concentration programs be put into effect even where compensation plans are not formulated by the industries affected, (9) The Concentration Committee have jurisdiction over all programs involving selective closure of units within an industry, but not concern itself with the rationalizing of the output of industries continuing to produce at capacity. Upon motion duly made, it was agreed without objection that: Further discussion of the report on concentration of production (Document 230) is deferred, f pending completion of staff studies of the amount of labor that would be released in critical labor areas by the closing of plants producing non-essential products that are furnished to non-local markets. James W. Fesler Executive Secretary Approved: Robert R. Nathan Chairman MEETING 78 MARCH Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Marion H. Hedges, Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Office of the Executive Secretary, War Production Board, Executive Secretary By Invitation: Mr. Thomas W. Wilson, Jr., Chief, Planning Coordination Section Planning Committee, War Production Board 25, 1943 Approval of Previous Minutes: The minutes of Meetings 75, 76, and 77, held March 4, 11, and 18, respectively, were approved.
Organization It was noted that on March 19, 1943, General Administrative Order 2-85 was issued redefining lines of administrative responsibility and authority within the War Production Board. Section 4 of the Order transferred the Planning Committee to the supervision of the Vice Chairman of the Board. The Chairman reported that the Vice Chairman of the Board is exploring the possibility of a closer admin 686312—46—9 123 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE istrative integration of the work of the Planning Committee, the Statistics Division, and the Office of Progress Reports.
Manpower Requirements and Supply Mr. Wilson submitted a draft memorandum (Document 232) summarizing the problem of manpower supply and demand in 1943. He noted that the additional labor requirements for 1943 will total 7.87 million workers. These increased requirements must be met largely by adding 3 million persons to the national labor force, and by transferring 3.77 million persons from non-agricultural industries, trades, and services. Mr. Wilson emphasized the fact that the net increase of the labor force depends largely upon the recruitment of women unskilled in industrial work. He observed that an analysis of the Selective Service registrants between 18 and 38 years of age, and the 1943 requirements of the Armed Services, reveals that practically every able-bodied man between 18 and 38 will be inducted into the Armed Forces. He stressed the fact that of the additional workers required in munitions and other essential production, three-fourths are needed in 126 communities in which labor is already critically short or will become so by mid-1943. This local concentration of labor shortages intensifies the manpower problem more than the national totals would indicate. Mr. Wilson also stressed the fact that the labor force will deteriorate qualitatively because of the loss of skilled men to the Armed Services and their replacement by untrained women. Furthermore, the national totals fail to reveal the disruptive effects to be expected as a result of extremely high turnover rates. The War Production Board, in Mr. Wilson’s opin ion, must take a vigorous interest in the manpower problem because it is in effect the claimant for the labor essential to munitions production, and is in a position to free labor from non-essential activities in critical labor areas through concentrating civilian industry and through shifting war contracts from shortage to surplus areas. The Chairman urged the importance of (a) the development of firm statements of essential civilian and indirect military requirements as a basis for determination of manpower needs, (b) the responsibility of the War Production Board for opposing the depletion of labor forces vitally needed for such civilian and indirect military production, (c) vigorous efforts to liquidate labor supplies that have been hoarded, and (d) action by the War Production Board to ensure that contracts are not placed in labor shortage areas.
Concentration of Civilian Industry In accordance with the previous decision of the Committee (Minutes 77, item 3), Mr. Wilson presented a revised statement (Document 233) of the need for concentration of civilian industry and the techniques through which this might be accomplished. The Chairman undertook to discuss the proposed recommendations with the Operations Vice Chairman of the War Production Board. James W. Fesler Executive Secretary Approved: Robert R. Nathan Chairman MEETING 79 APRIL 1, 1943 Present: Members and Staff: Mr. Robert R. Nathan, Chairman Mr. Thomas C. Blaisdell, Jr., Member Mr. Fred Searls, Jr., Member Mr. Marion H. Hedges, Member Mr. Edward T. Dickinson, Jr., Executive Director Mr. James W. Fesler, Office of the Executive Secretary, War Production Board, Executive Secretary
Organization The Chairman announced that his deferment from military service has been terminated at his request, and that accordingly he anticipates induction into the Army at an early date. Messrs. Blaisdell, Searls, and Hedges reported their intentions to submit individual resignations from the Planning Committee. Upon motion duly made, it was directed that : The minutes record the Committee’s appreciation for the services performed by the Executive f) Secretary, both for his recording of the actions of the Planning Committee and for his contributions to the substantive work of the Committee. Upon motion duly made, it was directed that: The minutes record the Committee’s appreciation for the effective work of the Executive Director and his staff, both in the recommendation of fundamental policies for consideration by the Planning Committee and in the promotion of an awareness of the public interest among officials throughout the war agencies. James W. Fesler Approved: Executive Secretary Robert R. Nathan * Chairman 124 APPENDIX ———-0————– WAR PRODUCTION BOARD March 3, 1942 Subject: Planning Committee GENERAL ADMINISTRATIVE ORDER NO. 22 Section 1. There shall be in the War Production Board a Planning Committee, which shall consist of a Chairman and two other members to be appointed by the Chairman of the War Production Board. Section 2. The Planning Committee, subject to the direction of the Chairman of the War Production Board, shall: .01 Make available to the Chairman of the War Production Board such plans, procedures, and information as may be helpful to the planned development and realization of the war production program; .02 Recommend to the Chairman of the War Production Board plans and policies for maintaining proper balance and relationships among elements of the war production program and for attaining the fullest and most effective use of materials, facilities, and services in connection with the program; and .03 Anticipate future trends of war production, inform the Chairman of the War Production Board of potential obstacles to full realization of the program, and recommend to the Chairman of the War Production Board policies for overcoming such obstacles. Section 3. The Committee shall have access to information needed in the performance of its functions available in or through any office of the War Production Board. Section 4. The Chairman of the Planning Committee is authorized to appoint such personnel as he deems necessary to carry out the duties assigned to the Planning Committee, and to designate a member of the Committee to serve as Chairman in his absence for any reason. D. M. Nelson Donald M. Nelson, Chairman March 12, 1942 PLANNING COMMITTEE RECOMMENDATION NO. 1 To: Mr. Donald M. Nelson, Chairman, War Production Board Subject : Toluol Supply
At a meeting of the War Production Board on January 27, 1942, a resolution was passed, approving action of the Under Secretary of War in requiring increase of Ordnance contract authorizations for production of toluol sufficiently to raise the annual productive capacity from 180,000,000 to 300,000,000 gallons.
Chief of Ordnance, through Powder and Explosives Section of the Ammunition Division, is engaged in building this additional capacity through contracts with existing oil refineries, and in step with expanding capacity for nitration, and requirements of Ordnance and Defense Aid for the T.N.T. No substantial increase in toluol production from by-product ovens is possible, and all increase must derive from oil refineries, in part from the gulf coast, which is the largest present source. Due largely to increased process efficiency in nitration plants, the consumption of toluol is now gaining on production, and if it is possible to hold toluol production to present plants, T.N.T. production will overtake it as of some date in May 1942, after which for several months toluol will be the limiting component.
Since the Board’s action on January 27th, enemy action has seriously interfered with the shipment of gasoline from the Baytown and Houston areas. The ratio of dollar value of the gasoline and toluol produced from these refineries is of the order of 90:5, and therefore the production of toluol requires disposition of the gasoline. The resulting situation is already serious with storage full and the gasoline invading other marketing areas.
Measurably, a similar situation can be expected to develop in other areas, where toluol production exists or is planned, as the national consumption of motor fuel drops off because of the tire situation. Not only is the authorized increase of toluol production seriously threatened, but also its present supply.
To a considerable extent, the same situation will develop within the next six months, in the production of high-octane aviation gasoline and butadiene for synthetic rubber.
It would appear that only a drastic revision of existing refining, marketing, and transportation schedules can bring about the necessary movement of crude and refinery products.
It is believed that the petroleum coordinator 125 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE will require the utmost good will and assistance of the oil industry to speedily effect the necessary drastic changes within the industry.
This problem is of immediate urgency and it is vital that steps be taken at once to correct the situation. Further, protection of the industry from prosecution under the anti-trust and Federal Trade Commission Acts for actions taken at the direction of appropriate national agencies in the national interest should be ensured through legislation, so that the cooperation we believe essential to carrying through this program will be promptly forthcoming. IT IS THEREFORE RECOMMENDED: (1) That the Chairman of the War Production Board request the Petroleum Coordinator immediately to undertake to assure the supply of crude oil to -those refineries now holding, or hereafter pos sessed of, contracts with U. S. Ordnance for the production of T.N.T. (2) That the War Production Board direct the production of high-octane gasoline and butadiene from those refineries producing or contracting to produce toluol, insofar as such productions are compatible with a reasonable degree of efficiency. (3) That a representative of the Materials Division of the War Production Board and of the U. S. Ordnance should be delegated to cooperate actively with the Petroleum Coordinator in the ensuing measures to be taken in cooperation with the petroleum industry. (4) That in view of the imminent shortage of toluol, prompt action be taken. For the Planning Committee Robert R. Nathan Robert R. Nathan, Chairman March 12, 1942 PLANNING COMMITTEE RECOMMENDATION NO. 2 To: Mr. Donald M. Nelson, Chairman, War Production Board Subject : Policies of Procurement The Fifth Supplemental Appropriation Act for the Fiscal Year 1942, plus the War Department appropriation request for 17 billion dollars now pending before the Bureau of the Budget, will bring the total program to nearly 165 billion dollars. Of this total, approximately 90 billion dollars remained at the end of February 1942, to be obligated, of which about 80 billion dollars represent funds available for munitions and war construction as distinguished from payrolls, subsistence, stockpiles, and miscellaneous war munitions items. In view of the magnitude of these unobligated funds, the Planning Committee believes that certain principles which you have already advocated, and which to a considerable but not uniform extent, are recognized by the procurement agencies, should be reemphasized. Therefore, the following principles are proposed:
Unnecessary construction of new plants should be avoided even though these may be already financed or programmed.
Every preference must be given to suppliers able to proceed with equipment already available to them. Where available, simple machine tools already in plants of prime contractors or subcontractors should be utilized to avoid installation of new automatic and elaborate types of tools, even though this involves higher costs. It is recognized that this principle implies further expansion in the proportion of negotiated contracts.
It is important to establish as early as possible the capacities required to meet the objectives, and contracts should be placed in accordance with broadening the base of production by bringing into war production plants now engaged in non-essential civilian production. Contracts should be placed which require delivery of a very substantial quantity of items in the calendar year 1942. Supply contracts should call for deliveries not later than calendar year 1943. Exceptions must be carefully scrutinized by division chiefs of the procurement agencies.
The objectives are now so large as to insure continuation of production at peak levels for items essential for the war effort. Accordingly, consideration should be given to the evolution of a contract calling only for quantities sufficient to attain peak rates and perhaps for short periods thereafter. Contractors producing critical items can be assured that their peak output will be accepted and this assurance should be as effective in attaining and continuing peak output as would be big backlogs of orders.
While funds should be obligated as rapidly as possible, action must not be so hurried as to omit serious consideration of the following criteria: a. Allocation of contracts and location of new facilities must give prime consideration to availability of labor supply. b. Preference must be given to prime contractors who are able and willing to sub-contract. Consideration should be given to establishing specific percentages of sub-contracting as a contractual requirement. Of course prices must be adjusted accordingly. Î26 APPENDIX c. Preference must be given to contractors who provide for in-plant training of workers. Here again, consideration should be given to the inclusion in the contracts of certain specifications for in-training programs. We realize that you have already expressed your self as favoring most of these provisions but we believe that constant emphasis on these principles is particularly essential at this time. For the Planning Committee Robert R. Nathan Robert R. Nathan, Chairman March 17, 1942 PLANNING COMMITTEE RECOMMENDATION NO. 3 Memorandum To: Donald M. Nelson From: Planning Committee and Statistics Division In developing the War Munitions Program, it was proposed that the production of munitions and construction could aggregate forty billion dollars in 1942 and sixty billion dollars in 1943 at 1941 prices. The objectives set by the President were generally in line with these goals. Realizing that an all-out effort was absolutely vital, the Armed Services and other procuring agencies have in recent months stepped up their requirements for 1942 and 1943 so substantially that total objectives are now completely out of line with the above goals. As indicated in the attached tabulation, the stated objectives for munitions and war construction now aggregate over sixty-two billion in 1942 and over one hundred and ten billion in 1943. These are not precise objectives since industrial facilities in 1942 are based on contracts rather than appropriations. The 1943 objectives for facilities and construction are arbitrarily held at the 1942 levels and may be too high. Also, the value of planes is based on the 8-1 ultimate rather than the President’s goals, as indicated in the footnote on Page 2. In some instances, prices actually paid for munitions have been lower than estimated unit costs, thus artificially inflating the dollar values in the objectives. Nevertheless, the figures are sufficiently accurate to permit the conclusions which follow. On the basis of a study of over-all production, labor, and raw materials, the stated objectives seem wholly impossible and steps must be taken immediately to bring the objectives in line with what is feasible. Any attempt to attain objectives which are far out of line with what is feasible will result in the construction of new plants without materials to keep them operating; vast quantities of semi-fabricated items which cannot be completed; production without adequate storage facilities; idle existing plants due to lack of materials; and similar disrupting situations. It is our belief that the production goals of forty billion dollars for 1942 and sixty billion dollars for 1943 at 1941 prices should be accepted as the official estimates of feasible levels of war production and war construction and that the stated objectives should be cut to those levels. It is possible that slightly more than these levels can be attained but we believe that it is desirable to permit some flexibility in the program. The goals should be large enough to encourage an all-out effort but not so large as to disrupt the entire program. Possibilities for curtailment appear to be particularly promising for war construction, new facilities, Army ground equipment and foreign demands for miscellaneous items. We have suggested an arbitrary reduction of the 1942 objectives as follows : 1942 Stated Objectives Proposed 1942 Objectives (Billions of Dollars) Total Munitions 62.6 42.6 Planes 9.2 9.2 Naval Ships 4.8 3.2 Merchant Ships 1.8 1.8 Defense Aid, Machine Tools .4 .2 Defense Aid, Miscellaneous 2.7 1.8 Foreign Orders, Miscellaneous … .2 .2 Ordnance, Army 15.6 9.2 Ordnance, Navy 3.7 2.4 Ordnance, Foreign .6 .4 Miscellaneous Munitions, Navy .. 1.2 1.0 Miscellaneous Munitions, Army .. 7.5 5.0 Industrial Facilities 6.5 4.2 Other Construction 8.4 4.0 We do not defend these cuts but we do believe that it will expedite the attainment of the goals to have such an arbitrary schedule for consideration. We believe that you have two methods of bringing about the necessary and prompt adjustment of the program. First, the entire matter can be referred to the attention of the President and he be requested to designate the proper military and production authorities to work together in establishing a practical set of objectives. As another alternative, we propose that you send letters to the heads of each of the agencies competing for the total output of the Nation asking that they designate someone with authority to sit with you or your representatives in the establishment of workable goals. Drafts of such a proposed letter are attached for your consideration. 127 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE We are impressed with the urgent need for immediate action because of the tremendous pressure now being placed on procurement officers to obligate the large funds that have recently been made available. If these funds are promptly obligated, especially for brand new plants or with contractors requiring large quantities of new machine tools, there will certainly be the need for widespread cancellation or renegotiation of contracts with disturbing results. We stand ready to serve you in any way you designate in this very important undertaking. The task of maintaining balance between strategic demands and production possibilities will be a difficult and continuing one. Stacy May Director, Statistics Division Robert R. Nathan For The Planning Committee Plans For Deliveries of Munitions and Government Financed War Construction (Millions of Dollart) 1942 1943 Total Munitions and Construction 62,555 110,140 Total Munitions 47,665 95,190 Planes 9,200 19,300 • Naval Ships 4800 6’500 Merchant Ships 1800 2,550 Defense Aid, Machine Tools 350 200 Defense Aid, Miscellaneous 2,725 3,000 Foreign Orders, Miscellaneous …. 200 Ordnance 19 900 44,200 Miscellaneous Munitions, Navy .. 1,200 1,200 Miscellaneous Munitions, Army .. 7,490 18,240 Total Construction 14,890 14,950 Industrial Facilities *6,450 6450 Other Construction ………….. 8,440 8,500 •Total under contract at the end of February 1942, less value put in place through 1941. Total Congressional provision through March 16, 1942, less value put in place through 1941 amounted to $11,386 million. Plans For Deliveries of Munitions and Government Financed War Construction 1942 1943 Quantity Value (Millions of Dollars) Quantity Value (Millions of Dollars) Total Munitions and Construction … i…. Total Munitions Planes Long Range, Heavy and Medium Bombers. Light, Dive, Torpedo and Scout Bombers. Pursuit Planes .. Observation and Transports Trainers .’ Spare Parts, Engines, Other Equipment and Engines for Export …………… Naval Ships ../ Merchant Ships Liberty Type …. Regular Cargo Tankers Passenger and Cargo Non-ocean Going Vessels Defense Aid, Machine Tools Defense Aid, Miscellaneous Foreign Orders, Miscellaneous • . • .. • 62,555 110,140 No. 763 527 83 78 10 65 9,501 9,165 13,333 7,669 17,387 Tons. 8.02 5.53 .86 1.25 .09 .29 47,665 •9,200 ”4,800 1,800 350 2,725 200 2,762 1,087 1,256 1,108 511 2,476 1,130 270 250 50 100 22,510 14,066 30,400 13,612 24,545 No. Tons. 1,016 11.17 711 7.47 137 1.39 111 1.82 20 24 37 .25 95,190 •19,300 ”6,500 2,550 200 3,000 7,285 1,425 2,800 2,090 735 4,965 1,570 520 300 70 50 .’.Bas. Ultimate, whereas current estimates for dollars involved in the President’s program are $9,800 million million in 1943. in 1942 and $23,178 b See attached table for physical deliveries in 1942. 128 APPENDIX Plans For Deliveries of Munitions and Government Financed War Construction Value 1942 (Millions of Dollars) vaiue (Millions of Dollars) ncp T nr at 19,900 44,200 NTaval 3,700 4,100 Pnrpicm Orders . - 600 100 Armv Ordnancp 15,600 40,000 T’ofal Cntnhat VphidpR 3,545 7,680 Tonics t - 2,493 5,786 Other Combat Vehicles . 1,052 1,894 Total Crims 3,845- 8,620 A C Guns … t 545 700 Antiaircraft Guns 1,278 2,527 Automatic Weapons, Small Arms, and 934 2,527

Light Field Artillery ……… Other Grins 866 221 Z,OZO 233 Tnta! Ammunition 7,580 17,800 A G Ammunition. Total 1,602 2,130 Bombs and Pyrotechnics Total 1,029 1,420 A C Small Arms Ammunition 461 621 A C Cannon Ammunition 112 88 Artillery and Seacoast Ammunition, Total 2,829 7,503 Infantry and Antiaircraft Ammunition, Total .. 3,159 8,162 Cartridge AP Cal SOAflGD 607 1,101 Cartridge A P Cal. 50M2GE - 598 .1,718 Other Infantry and Antiaircraft Ammunition 1,954 5,343 Snot Items. Miscellaneous Items and Spares 630 5,900 Plans For Deliveries of Munitions and Government Financed War Construction Value 1942 (Millions of Dollars) Value 1943 (Millions of Dollars) MlSCRf T ANROTTS MUNITIONS . 8,690 19,440

Naval .. 1,200 7,490 1,200 Army Total 18,240 Signa! Service 1,945 4,745 Related to President’s Program 1,275 4,325 Other Defense Aid 385 890 Other Army 285 530 Engineer Service 825 • 2,930 Defense Aid 591 1,986 Army 234 1,320 Chemical Warfare 485 1,570 250 Defense Aid ; 99 Army 384 1,320 Motor Transportation, Q.M 1,940 4,645 2,255 Defense Aid 1,145 795 Army * 4,225 2,390 Other Quartermaster 2,195 395 Defense Aid 655 Army 1,540 125 3,930 Medical and Hospital Dept 100 Plans For Deliveries of Munitions and Government Financed War Construction 1942 1943 Total Construction Industrial Facilities Aircraft Ships and Tanks Guns and Ammunitions Metals and Artificial Rubber Other Other Construction .. Military Housing Aeronautics Other Military Defense Housing , Quantity Value (Millions of Dollars) 14,890 6,450 1,550 2,075 1,975 850 8,440 2,100 2,950 2,490 900 Quantity Value (Millions of Dollars) 14,950 6,450 8,500 129 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE Naval Ship Deliveries Scheduled“ 1942 and 1943 Deliveries Launchings Keel Layings No. 44 000 Tons No. 000 Tons 1942 1943 1942 1943 Battleships …… 4 140.0 2 90.0 3 2 3 3 Large Cruisers’- 2 5 Heavy Cruisers 4 53.6 2 2 6 2 Light Cruisers 8 68.0 13 122.0 11 11 11 6 Aircraft Carriers . 2 38.4 9 212.3 8 6 7 2 Destroyers, Large *……. 25 51.2 85 273.8 67 66 81 19 Destroyer Escorts 3 4.7 52 86.4 20 51 40 8 Submarines 28 42.7 42 64.1 35 39 42 21 Scheduled Military Requirements 1942 1943 1942 1943 Patrol Craft, All Types 332 11 592 300 Large Sub-chaser 106 11 150 180 Small Sub-chaser 92 191 100 Motor Torpedo Boat 120 230 20 Others 14 21 Mine Craft, All Types 263 67 384 309 Large Mine Sweeper 60 65 62 97 Intermediate Mine Sweeper 164 204 210 Small Mine Sweeper 36 96 Mine Layers, Others 1 2 1 2 Others 2 0 21 0

Data from Munitions Record, February 20, 1942. These delivery figures are not coordinated with the dollar estimates on pages 1 and 2 [p. 128], March 27, 1942 Mr. Donald M. Nelson, Chairman, War Production Board The Airplane Program and Airplane Objectives PLANNING COMMITTEE RECOMMENDATION NO. 4 To: Subject: The Planning Committee requested Mr. Mordecai Ezekiel to serve as special consultant for the purpose of preparing a report on the feasibility of the President’s objectives of 60,000 airplanes in 1942 and 125,000 in 1943. The Committee requested Dr. Ezekiel to complete the report as quickly as possible and it was prepared within a period of two or three weeks. Also, the Committee had the benefit of information presented in person by Messrs. Meigs, Wright, Bunker, Butler and Lamb of the War Production Board at a Committee meeting. The Committee is not in a position to submit a comprehensive report with detailed analysis by types of planes. The Committee believes that a general observation can be given to you at this time. However, more detailed considerations must be developed as part of the over-all evaluation of the program that you are now initiating in cooperation with the armed services. It is our conclusion that the President’s objective of 45,000 tactical planes for 1942 is wholly impossible and that the figure of 15,000 trainers, set by the President, is too low in relation to the 45,000 tactical plane objective. Since this is die end of March and production for many months ahead is fairly well set by . the pattern of material and facility performances to date, your Committee does not believe that the 60,000 goal can be attained in 1942 even with the 8-1 distribution of types. However, the 60,000 goal was set by the President and since what can be attained is not so far below this objective, we believe that, at least for psychological reasons, the drive for that objective should be continued, with a redistribution of types as outlined in the 8-1 program. Mr. Meigs is pessimistic about the attainment of the 8-1 objective of 51,000, whereas Mr. Wright is somewhat optimistic about attaining this level. Your Committee feels that if all possible expediting steps are taken in relation to aluminum, machine tools, and simplification, it should be possible to attain or even slightly exceed the 8-1 objective. An all-out driving campaign toward fuller utilization of existing and contemplated facilities, more effective flow of materials, and the direction of as large a proportion of aluminum to aircraft purposes as is consistent with a balanced war effort, is essential. We propose a change in the 1943 objective from 125,000 planes to a total of perhaps 105,000 to 110,000. The Aircraft Branch of the War Produc 130 APPENDIX tion Board prefers to have the 8-1 objective of 88,000 planes adopted as the goal for 1943. We believe the 8-1 ultimate objective of 105,000 should serve as a minimum goal. According to present indications there should be sufficient aluminum with some margin to spare, for the achievement of the 105,000 program. Within this objective of 105,000 there should be a reasonable relationship between tactical and trainer planes based on strategic considerations. The attainment of the 8-1 ultimate objective for 1943 should be possible without any very great expansion in aircraft fabricating facilities. It should be noted that the Presidential items plus the complementary equipment in armament and ammunition call for an expenditure of 47 billion dollars in 1943 which compare with our estimated feasible objective of 60 billion dollars. We feel that the residue is certainly not adequate for naval vessels, naval ordnance and ammunition, quartermaster requirements, artillery, military construction, new facilities, and other war production that will be necessary in 1943. Therefore, it appears necessary that Presidential items be adjusted downward in 1943, and the proposed 105,000 plane-objective cannot be exempted from consideration in such an overall revision. We wish to emphasize the fact that spare parts in airplanes are substantial, and that the added engines, propellers, and other equipment make for a difficult production and material-consuming problem. The attainment of the 8-1 goal with adequate spares and service is to be preferred over the attainment of a 60,000 plane objective without necessary spares. Dr. Ezekiel’s report will be made available upon your request. For the Planning Committee Robert R. Nathan Robert R. Nathan, Chairman May 16, 1942 Mr. Donald M. Nelson, Chairman, War Production Board Maritime Shipbuilding Program PLANNING COMMITTEE RECOMMENDATION NO. 5 To: Subject: Herewith is transmitted a report made by Mr. Mordecai Ezekiel to the Planning Committee on the present status of the Maritime Shipbuilding Pro-i gram, with Mr. Ezekiel’s suggestions for improving, the future performance. The relatively recent appointment of Lt. Col. Rockwell as liaison officer of the Maritime Commission to work with the W.P.B. Iron and Steel Division in the allocation and distribution of plate, the creation of four regional offices, and regional inspection of shipyards by the Commission and the recognition by the Commissioners themselves of the maldistribution described by Mr. Ezekiel, is leading to improvement in shipyard performance, but it appears likely that the shortage of plate in the first half of the year will so affect completions in the second half that the rate of production required to compensate for the lag already experienced will be attained too late in the year to permit completion of eight million deadweight tons in 1942. This report does not include any comment on the utilization and the destruction of presently available shipping. It is important and desirable that the objectives for construction of new ships set by the President be attained, even though these objectives are, for 1942, twice as great as the maximum output ever attained by the nation before (in 1919) and for 1943 is thirty times the production in 1940, and even though they must be attained, if they are attained, in competition with the greatest naval ship expansion that any nation has undertaken. But the real necessity is not for the production of ships as an end in itself, but for the transport of cargo, particularly for the transport of munitions to the war areas. It should not be overlooked that this transport is even more dependent on the protection and efficient utilization of existing ships than on production of new ones. Much has been said of “Admiral Land’s Impossible Job.” Admiral Land’s really impossible job is to build merchant ships faster than an unmolested enemy can sink them. The plain truth is that we are not currently producing ships as fast as they are being sunk. Seventy per cent of ship losses are from U-boats and seventy percent of U-boat losses this year have been in U. S. Coastal waters. It is always a characteristic of submarine activity that its own vulnerability causes it to seek the least protected seas. We can gain in ability to transport cargo in three ways: one is to build more cargo ships; the second is to keep the ones we have afloat; the third is to operate ships more efficiently so as to shorten their turn around, increase their capacity and limit their time in port. The production of subchasers and escort boats is a function of the Navy, not the Maritime Commission, and the relative progress made by the Navy with this program is such as to make the performance on merchant shipping seem first class by contrast. The delivery of the P.C. 11 O’s are months behind schedule by reason of failure to produce the Pan- 131 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE cake Diesel engines designed by the Navy for these boats. Such boats as have been delivered have for this reason been motored with General Motors 8-268A 500 H.P. semi-heavy duty diesels, too heavy for these boats, and which give them an inadequate speed of 14 to 15 knots. Perhaps ten so far have obtained Pancake Diesels. It appears that a production of 20 Pancake motors per month will not be obtained for several months and as two motors are required for each boat there is no prospect of meeting the boat delivery schedule of 31 boats in May, 25 in June, 23 in July and 24 in August. It would be possible to motor the P.C. 110’s at least with Packard 1200 H.P. gasoline engines such as are used in the P.T.’s and B.P.T.’s used in England. A similar situation exists for the P.C. 173 boats. It would be interesting to know how many properly equipped planes are used by the armed forces in coastal patrol. In spite of relative proximity to submarine bases there have been no ships sunk by submarines within 100 miles of the British coast within a year. There appears to be a stubborn but not well founded objection of a section of the Naval ranking officers against employment of blimps, which’ would be a very effective anti-submarine weapon during the summer and autumn at least. There are thirty-six new wrecks charted by the Navy coastal survey as protruding from the water between Sandy Hook and Hatteras. Taking the British schedule of four escorts per convoy plus one additional escort per ten ships, as a standard, the Navy could, if the subchasers were up to schedule and a few corvettes were produced, have convoyed coastwise shipping for the last four months with the result that submarines rather than tankers would have gone to the bottom. The Navy should be required to convoy coastwise vessels until it demonstrates its ability to patrol. The allocation and efficient operation of ships is a difficult subject to discuss in a brief memorandum. However, the allocation of ships is a very difficult job from their operation and involves the highest strategical knowledge. Dean Gay, of Harvard University, who was instrumental in the organization of this service in the last war, has very recently investigated the present situation and reported it to the War Shipping Administration. His conclusions are known generally to the Committee and it is earnestly suggested that you request Mr. Gay to discuss this phase of the shipping situation with you. It is the opinion of the Committee that the prospective deficiency of a million tons of new ship construction in 1942 can more than be made good in the preservation and more efficient utilization of what we now have available, and that the measures suggested can make good the prospective construction shortage in 1943. For the Planning Committee Robert R. Nathan Robert Nathan, Chairman To: Robert Nathan, Chairman, Planning Committee From: Mordecai Ezekiel, Consultant Subject: Maritime Shipbuilding Program A preliminary report on the Maritime Shipbuilding program is submitted herewith. This embraces three sections :
1. Summary and recommendations……..pages A & B
2. Present shipbuilding situation…..pages 1-5
3. Recommendations ……………….pages 6-8 Mordecai Ezekiel Preliminary Report on Maritime Shipbuilding Program SUMMARY
4. We completed 1,167,000 tons of maritime shipping in the first four months of 1942. To produce 8 million tons in 1942, we must complete three-fourths as much each month for the rest of the year. As indicated by the attached progress charts, that sharp an increase in completions is not supported by the rate of fabrication and erection of ship steel to date, or by the rate of launchings.
5. If deliveries of steel, machine tools, and other essentials, to shipyards and maritime contractors continue to fall short of needs, future completed ship production will fall May 12, 1942. short of projected schedules just as it has in the past. We would then probably complete only 6 to 6j4 million tons of merchant shipping during 1942, as compared to 8 million requested by the President, and 7^4 million shown on the current shipbuilding schedule. (This estimate is based on engines and steel as well as yard progress reports.) In 1943, however, we can complete 15 million tons or more.
6. If we want to meet or exceed the President’s objective for 1942, we must move far more vigorously than heretofore. A powerful and determined drive to expand the speed of construction and the flow of materials and machines for that purpose could still bring 1942 completions up to 8 million tons or more.
7. To get maximum production in 1942, immediate changes are needed along the following lines: a. Deliver enough steel plate and other steel to the shipyards to build 8 million tons or more in 1942, and see that they get the steel in the proper sequence. (1) Deliver to shipyards at least 1,200,000 tons of steel plate during the second quarter of 1942, instead of the 900,000 tons they are now scheduled for. (2) Establish a competent and adequately staffed flat products scheduling unit, to consolidate, concentrate, and schedule production so that shipyards will get their steel in the proper sequence of each size, and mills will have large orders for each run. 132 APPENDIX (3) Expand steel plate production still further by additional diversion from other flat products to plate, by full utilization of existing equipment, and by bringing obsolete rolling capacity back into use. Rationalize the steel industry for maximum efficiency of production. Pool steel profits or pay supplementary prices on ship plate substituted for higher-profit items. b. Speed up shipyard operations. See that the shipbuilding yards use efficient and adequate management practices. Establish a force of efficiency engineers to check and improve the efficiency of yard operation and management. Complete promptly deliveries of cranes, automatic welders, and other yard equipment, and speed up arrangements for additional power where needed. Take effective steps to build up morale of shipyard workers—make them realize we are in a war and they are part of it. Stop all drafting of those skilled shipyard workers who have good attendance and production records. c. Set up an effective production scheduling unit (either in the W.P.B. or Maritime Commission) to schedule well in advance all essential components for ships, and the major sub-elements (forgings, castings, etc.) for engines and gears. Schedule requirements and production of each item monthly far in advance. Discover and correct all potential bottlenecks before they can delay the program. d. Provide engines and other components for 8 million tons this year. Increase steam engine production (Ford and Joshua Hendy expansions). Expedite final machine tools for turbine and gear plants, and speed up their operations. Expand propeller production facilities on the West Coast (now underway). e. Restrict ship type conversions to those starting production, and complete partly-finished ships without design or type changes. f. Investigate the feàsibility of temporarily diverting a few ways in standard-type yards to E.C. ship construction, using designs, molds, and templates from nearby E.C. yards. Until next spring, standard-type completions will run behind shipyard capacity because of shortages of propulsion equipment. Resume standard-type construction as rapidly as propulsion equipment can be gotten. The higher speed, greater freedom from submarine attack, and shorter turnaround makes each standard ship worth about two E.C. ships in freight handled. g. If more steel plate can be made available than existing yards can fabricate and erect in 1942, expand shipbuilding facilities further. The Hegeman-Harris proposal to fabricate and pre-assemble in existing structural steel shops, and to build ships on inexpensive cradles instead of shipways, seems to offer a way of increasing shipbuilding facilities promptly and with little drain on material resources. Present Shipbuilding Situation
8. The President’s objective (as stated in his January speech) called for 8,000,000 deadweight tons* of merchant shipping in 1942 and 10,000,000 in 1943.
9. The most recent Maritime Commission programs (April 30, 1942) provide for a maximum production of 7,500,000 tons in 1942 and 16,160,000 tons in 1943. These include some concrete barges, transports and troop ships, coastal tankers and cargo vessels, and ore-carrying vessels.
10. a. As of April 20th the Shipbuilding Division of the War Production Board expected that it would be possible to complete approximately 7,000,000 tons during 1942 out of the 7,500,000 tons now scheduled. b. The present informal working schedule of the Maritime Commission would complete about 7.2 million tons in
All vessel tons in this report are deadweight tons—the total load (including fuel) the vessel can carry. 1942, and 18 million tons in 1943 Jif the peak monthly rates are maintained after present contracts expire).
1. The 1942 program (from W.P.B.) is one-third in highspeed standard-type vessels equipped with turbine or Diesel engines and two-thirds in emergency cargo vessels of slower speeds and equipped with reciprocating steam engines. For 1943 the estimated proportions remain about the same—70% in E.C. vessels. The 18 million-ton program would increase still further the proportion of E.C.’s.
2. Thus far in 1942 final completion of both standard-type vessels and emergency cargo vessels has been running considerably below the schedules set last fall and winter. In terms of tonnage fabricated or erected, the lag has grown progressively less, .according to the Maritime Commission estimates. Completions have shown a somewhat similar though less marked improvement, especially in the emergency cargo vessels. E.C.-2 vessels completed in March and April approximate seven-eighths of the original schedules. It is hoped that by midsummer the E.C. program will be substantially on schedule. Unless present management, practices are improved, however, a considerable proportion of this year’s program of E.C.’s seems unlikely to be completed by January 1. The number of E.C. yards behind schedule materially exceeds those ahead of schedule.
3. Failure to keep up to schedule seems to have been due to four major causes: a. Failure to deliver to the shipyards the steel required, in some cases in total amounts, and particularly of the right balance or sequence of sizes and shapes;* b. Inability to expand deliveries of turbines and gears as rapidly as required by the programs, especially for the C-l type ships; c. Delays in the yards, both in fabricating the materials received and in some cases, in completing the ships after launching; d. Shortages of individual components or supplies, such as tackle, turnbuckles, valves, welding rods, etc.
4. Steel. a. From September through March, allocations to the yards ran materially below the quantities required according to the current Maritime Commission schedules, and shipments and deliveries in most months ran materially below allocations. Even so, the yards received up to October 1 an aggregate tonnage of steel for 55 more ships than were completed up to April 1. (In terms of steel for complete ships, however, the figure is considerably smaller—now being tabulated.) b. Steel plate deliveries to shipyards expanded sharply in March. They will have to be increased further to 360,000 monthly by July and 390,000 by December to provide the steel for the program as now scheduled by the Maritime Commission (7 and 18 million tons). c. 1. Steel plate production has expanded materially during 1942, owing to partial converting of strip mills to plate production and to some expansion in sheared plate capacity. Further expansion is expected during the balance of the year, and a good deal of new capacity is expected to come in about the first of next year.
5. Much additional steel plate capacity could be diverted from strip to plate at relatively little cost in new equipment. For example, Carnegie-Illinois 96” mill at South Chicago is producing only two-thirds as much plate as it could produce. Wheeling Steel Corporation’s 66” mill at Steubenville, Ohio, could produce ten times as much plate as in April. Youngstown Sheet and Tube’s Indiana Harbor • Deliveries to April 1 covered 86% of the particular steel scheduled, yard by yard, to that date. Some steel concerns (such as Carnegie) have delivered some yards hundreds and even thousands of tons of steel plate a month or more ahead of schedule, at the same time they were far behind schedule on total deliveries. To date, the standard yards, have received the lion’s share of the steel available, while the new E. C. yards have been under-supplied. 133 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE 64” mill is not producing plate at all, but could produce 25,000 tons a month. Bethlehem Steel’s 56” strip mill at Sparrows Point could produce 20,000 tons a month more than it is now rated. These four mills alone could increase their plate output by 95,000 tons a month.
6. Other capacity is not fully utilized. Ingot and slab capacity at Ford, capable of producing 5 to 10,000 tons a month, is now idle. Arrangements are being made with O.P.A. and the Iron and Steel Branch to get this idle capacity into use. Weirton has equipment for a 66” strip mill waiting to replace their present mill, but can’t shut down for the change over. The new mill could be installed elsewhere and put in shape for plate on short notice, where it could be supplied ingots or blooms. It could roll over 50,000 tons of plate a month. In addition, obsolete two-high mills could be utilized, if these other sources were still found insufficient, but they would have to be supplied blooms or slabs. d. If steel plate capacity is expanded as fast as now projected, and if Maritime requirements are met as indicated above, quantities of plate available for other uses will remain at about or slightly below the levels as in April (when Maritime was allotted 283,000 out of an expected total of 855,000). Bringing into use the additional capacity mentioned above from idle plant and strip mills, would make it possible to supply the Maritime Commission sufficient steel for a 10,000,000-ton program in 1942 and for an 18,000,000 or 20,000,000-ton program in 1943, and maintain or even increase the quantities of steel plate now going to other programs. e. Delays in shipping construction have been due in some cases to failure to receive plates of the proper sizes in the proper sequence, as well as to inadequate aggregate tonnage. There is a need for more precise and positive scheduling of the supply of particular sizes and shapes of plates going to particular concerns and more insistence on compliance with W.P.B. instructions by suppliers. Although supplies of structural shapes have been adequate to date, further expansion of steel plate for Maritime use might result in an insufficiency of structural shapes, and require expansion of structural shapes for this and other uses in addition to the plate expansions. On the West Coast, shortages of some structural shapes are currently reported.
7. Components. a. Completion of standard high-speed vessels recently advanced to 1942 is being prevented by shortages both of turbines and of gears. It is anticipated now that out of 183 standard vessels now scheduled for completion in 1942, approximately 30 vessels of about 320,000 deadweight tons will not be completed until 1943 for this reason. New turbine and gear plants have been under construction since the early summer of 1941, but their full operation may be retarded by delays in getting their final machine tools, especially boring mills and bars and gear hobbers. b: Reciprocating steam engines for the emergency cargo vessels, on the other hand, are now ahead of schedule. Throughout the balance of 1942 the monthly production of steam engines is expected to exceed the corresponding monthly requirements for installations in the E.C.-type vessels. Additional capacity now being arranged for in Ford and in the Josh Hendy concern is expected to expand steam engine capacity in late 1942 still further. Insofar as steam engines alone are concerned, it would be possible to supply sufficient engines to increase the deliveries of E.C.-type vessels by approximately 75 vessels, or 750,000 tons, in 1942, even without additional engine-building capacity. Including the additional capacity, steam engines could be supplied for at least an additional 80 in 1942 (155 extra in all) and 300 vessels in 1943. c. Taking into account the deficiencies in standard-type propulsion equipment and the possible expansions in engines for the E.C. types it would appear that engines could be made available to complete.9,000,000 tons of shipping in 1942, and 19 million tons in 1943. d. A hasty survey of other components indicates that there would not be insuperable difficulties in providing the parts for the program indicated above. Enough propellers are in sight for the entire program, so long as transportation lines to move completed propellers from the Atlantic Coast, to the Gulf and West Coasts can be kept open. In view of the possible danger of the blockading of the only feasible routes for the movement of such large units, however, efforts now being considered to expand propeller production on the Pacific Coast should promptly be followed through. e. A rough check on other components indicates that present or prospective supplies will be adequate in most cases; however, anticipated requirements and production month-by-month have not been laid out as yet in all cases. Forgings for line shafting and engines, however, constitute a current bottleneck which may continue to be a problem. Thrust bearings are also a tight spot at present. Welding equipment, cranes, and other yard equipment is now needed ahead of schedules in many cases. Expansions under way, however, are expected to cover needs.
8. Yard operation. a. Management. Fabrication of the steel and building the final vessels seems to be the bottleneck in expanding total tonnage. In two or three emergency shipyards production is already running above projected estimates. Completion after launching has Been a bottleneck in one yard, but cooperation between yards is helping to straighten this out. The yards vary widely in the experience of their management, in the extent of planning and scheduling used, and in the efficiency of their operations. This would be helped by a more even distribution of experienced shipbuilding personnel between the older companies and the less effective new ones. Companies like Newport News Shipbuilding & Dry Dock Company, Sun Shipbuilding Company, and Bethlehem Steel Company have a greater total of experienced personnel with relation to the total number of men they employ than the new ship building. Distribution of this personnel should be handled similar to the Army, which mixes the experienced and the green troops together rather than have all the experienced men in one regiment or division and all the inexperienced men in another. b. Labor. Experience and labor1 is also a problem. While large enough numbers are available, extensive and intensive training is needed. Time losses due to absentees and loafing have been heavy in many yards, as well as loss of men by the draft. Steps to build up workers’ morale and make them realize it’s their fight seem generally perfunctory and ineffective. c. Equipment. The shipyards are generally well-equipped, except for final deliveries of cranes, automatic welding machines, and in one case, for additional electric power.
9. A proposal is pending to construct emergency-type vessels with sub-contract prefabrication of the steel, and with the ship construction on cradles without the use of shipways the same as drydock locks are built. This seems promising enough to justify careful consideration. If the 1 Possibly should read: “Experienced labor . . . . *’ 134 APPENDIX Hegeman-Harris proposal to build 50 ships or more in 1942 by these methods were found feasible, that would go a long way toward providing the additional capacity to complete the vessels suggested above. RECOMMENDA TIONS The following are set down as tentative recommendations :
10. On schedules—to make the present goal 8,000,000 tons of cargo vessels completed in 1942, and 20,000,000 tons completed in 1943.
11. To bring into use all the obsolete steel plate and structural steel capacities existing in the country, even if that means working out arrangements to pay higher prices for the resulting steel.
12. a. To expand ship steel further by additional conversion of strip mills to plate production. To aid in this process, to concentrate the production of tin mill black plate in a few mills best suited for the purpose (either in small mills which cannot be diverted to plate production, or to have one or more strip mills specialize in producing all the tin mill black plate needed) and to devote as much as possible of the remaining strip capacity to plate production.* b. To check very closely into the present uses of all grades of sheet and strip steel and to cut down vigorously on those uses of strip steel and sheet not essential for the war effort.
13. a. To set up a production scheduling unit for all flat rolled steel products which will not only allocate the production at least a month in advance, but also will arrange for scheduling the particular sizes and types of plates to be made for each use during the month for the most effective utilization by each serviqe of the quantities available to it. This should be done by one central scheduling unit in the War Production Board, setting up the general allocation and use of plant facilities with separate scheduling units in the Maritime Commission, the Navy Department, the defense plant unit, etc., setting up shipping orders for deliveries to individual plants, within the general allocation. (This already is being done for thé Maritime E.C. vessels, and is to be extended to tankers and other standard vessels shortly. An adequate staff to do the job on time has not yet been built up, however.) In each case, the effort should be to insure that no projects were held up because of lack of balance between different sizes and types of plates supplied. Where ships, plants, or other projects had to -be held up because of insufficient supplies, complete units should be held up rather than to have several units each partially completed. b. Structural steel production on the Pacific Coast has been concentrated already with certain mills producing only certain shapes. Similar concentrations of production should be arranged in the East, so as to secure the most efficient production from the existing facilities. The scheduling unit recommended should arrange the production schedule for structural shapes as well as for steel plates, so as to provide for concentration and specialization in particular mills of shapes as well as plates. All structural steel facilities are not being used 100% ; a survey should be made immediately to find why not.
14. Prospective production of propulsion equipment for standard-type vessels in late 1943 now exceed the vessels projected for completion that year. If additional production facilities can be made available for E.C.-2’s, as recommended below, further standard-type vessels should be scheduled for 1943, up to the limit of propulsion production capacity.
15. The projected expansions in reciprocating engine capac- • This would involve some arrangement to recompense mills for the relatively lower profits from plate production, either by pooling profits or raising plate price. ¡ties should be carried through as promptly as possible, including both the Ford and Josh Hendy expansions.
16. Steps should be taken to speed up those shipyards producing emergency cargo vessels as promptly as possible to the full capacity. Where the management tends to prove incapable of planning the work effectively, the management should either be changed or supplemented. This might be done by affiliating them with other concerns or by borrowing management from other yards, or distributing experienced men more evenly between yards. a. The Maritime Commission should station efficiency engineers at each yard, to watch the efficiency of management, to check scheduling and planning methods, use of available materials, and full use of labor, and to recommend changes in methods of the management. The recommendations of these men should be promptly followed up by the Commission, where the management fails to follow them. These local .men might work under the leadership of the new Regional Industrial Advisers. b. The Maritime Commission should launch an immediate campaign to improve the morale of the men by competitions, shipyard buttons and decorations for good workers, etc. c. Steps should be pressed to defer all drafting of satisfactory shipyard workers for 6 months at least. d. Shipyards should be pressed to make full use of the new labor-management committees, both to improve the morale of the men and to put to immediate use all feasible suggestions for speeding up production.
17. Generally, skilled labor for the increased shipbuilding program appears to be adequate. Supervisory and technical labor seems short. Increased effort should be put behind the training of supervisory labor and special effort should be made to divert technical men and supervisors from the steel construction industry to shipbuilding, to aid the rapid expansion recommended herein.
18. Productive capacity for new yards to build E.C. vessels should be arranged for promptly. If the method of building vessels directly on the water without shipways is found practicable, this might be the most economical and productive way of providing increased productive capacity, especially for more ships in 1942.
19. The production scheduling work (either in the War Production Board or in the Maritime Commission) should be expanded to cover all essential components of ships, and also the major components that enter into engines and gears. Requirements and production of each item, monthly, should be scheduled far ahead, to insure that prospective bottlenecks are discovered and corrected far enough in advance so as not to delay the program. Deliveries of remaining critical machine tools, necessary to complete propulsion equipment plants, especially boring mills, boring bars, and gear hobbers, should be expedited to turbine and gear manufacturers. Propeller facilities on the West Coast should be expanded, to protect against interruptions to trans-continental rail shipment of propellers.
20. Every effort should be made to allocate or divert all available materials and parts to the place where they can be used most promptly, and instructions should be sent to all Maritime Commission personnel to this effect. . In addition, every effort should be made to prevent building up inventories of parts, materials, or components far in advance of the time they actually will be needed. This applies particularly to items such as bearings, which include a high proportion of critical metals.
21. An effective operating statistics unit should be established in the Maritime Commission. It should build up and keep current accurate data on (1) accomplishment to date, (2) present progress of work and other conditions in each yard, (3) forecasts of expected accomplishment and requirements, and (4) comparative data as a basis for com 135 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE petitions, inter-yard and intraryard. The data should be summarized in condensed form to give executives a ready over-all picture without wading through a volume of details. General subdivisions and details should also be kept available. Much of the necessary basic data is now reported, but is scattered through various offices of the Commission, without adequate attention to definition of terms, com parability of reports, or current summarization and presentation?
Three charts, titled “Progress of Maritime Shipbuilding Program (Inc. British and Private),” “Progress Emergency Cargo Shipbuilding (Inch British),” and “Progress of Standard Vessel Shipbuilding (Inch Private),” respectively, which were attached to the Ezekiel report, have been omitted from publication. May 27, 1942 PLANNING COMMITTEE RECOMMENDATION NO. 6 To: Mr. Donald M. Nelson, Chairman ¿2; War Production Board Subject: Program for the Utilization of Used Equipment This memorandum is in response to your request under date of May 16, 1942, that the Planning Committee “undertake to examine into the whole ques-iton of the utilization of supply items within the Federal Government including such related questions as procurement, conservation, reconditioning, transfer, requirements estimating, criteria as to such matters as the number of hours per day used, etc.” A detailed study of all the related problems and issues suggested for examination has not been attempted herein. It is believed that a complete inquiry would unduly delay submission of essential recommendations. Accordingly, in this report we have dealt only with the problem of used equipment. I. STATEMENT OF THE PROBLEM A, No uniform policy now prevails with respect to the utilization of existing used equipment by the departments and agencies of the Government. At the present time,’ used administrative and other types of equipment in the hands of the departments and agencies of the Government is disposed of when (a) it is deemed to be in excess of current needs or (b) it is no longer usable. Although it is customary for a governmental department to explore the possibilities of utilizing within its own organization any excess stocks of used equipment, no uniform policy prevails whereby an exchange or transfer of used equipment from one agency to another can be effected. Under peace-time conditions, there was no compelling reason for one agency to utilize the secondhand equipment of another. Today, the situation is different. A shortage in raw materials makes imperative a drastic conservation of metals. Today, it is tantamount to sabotage to utilize steel for the manufacture of new steel lockers where wood lockers will suffice. It is, moreover, the very essence of poor procurement planning to place orders for the manufacture of steel filing cabinets, for example, when such cabinets now being used by the governmental (civilian) departments in Washington alone are more than ample to supply the entire requirements of the Army, the Navy and the Maritime Commission, particularly in view of the fact that wood filing cabinets can be substituted. Again, it is scarcely good planning practice to place orders for new (administrative) equipment when there exists surplus equipment in some departments which could be used elsewhere. Furthermore, the underlying problem goes beyond an exchange or transfer of used equipment between the agencies and departments of the Federal Government alone. There is also the problem of the transfer, sale or requisitioning of used equipment in the hands of state and local governmental units: for example, the transfer of idle power shovels from a state highway department to the Corps of Engineers. Again, it may be necessary to purchase or requisition used equipment from industry, educational and other institutions, as well as from the general public. In the current program for the utilization of reconditioned and used typewriters by the Army and Navy, it will be necessary to tap all such sources of supply through voluntary purchase and by the requisitioning power. At the present time, no organized machinery exists whereby a uniform policy can be established for, and programs undertaken with respect to, the transfer, exchange or sale of used equipment either between the Federal departments or from outside sources for use by the Federal Government. B. The widespread utilization, wherever feasible, of existing used equipment would conserve our rapidly diminishing stocks of ra/w materials. All branches of the Federal Government purchase light sedan passenger cars for personnel transportation. The Quartermaster Corps alone will purchase during 1942-1943 approximately 14,000 passenger cars. Such requirements can and should be met out of the “frozen” stocks in the hands of dealers. By substituting available motorized equipment of this character it would be possible to save on these 14,000 cars alone not less than 600,000 pounds of copper and 14,000 tons of steel—materials which are desperately needed in other areas of production. In like manner the Army has need for a considerable quantity of dump and “pick up” trucks.- Here/ 136 APPENDIX again, a potential source of used equipment can be substituted for new equipment as a result of the curtailment of civilian activities and gasoline rationing.* C. A uniform program for the utilization of used equipment would make available urgently needed facilities not being fully employed for the production of war goods. Estimates prepared by the Construction Equipment Branch indicate that more than 6,000 power shovels alone will be required by the Military for use in continental United States and in the various overseas theaters of operation. Preliminary studies by the Planning Committee, on the other hand, suggest that a considerable portion of the requirements for construction equipment can be met from the reservoir of used equipment now in the hands of contractors, used equipment dealers, state and county highway departments, municipalities, city, state and national parks, special governmental bodies, drainage and irrigation districts, the W.P.A. and C.C.C. Much of this equipment is now lying idle. The retrenchment in state and local highway construction, as well as other types of public works, will increasingly cause this type of equipment to become available. Were the facilities of the construction equipment industry released in part from the manufacture of power shovels, the industry could by virtue of its complement of machine tools, foundries, large floor space, skilled manpower and management enter into immediate production of military items ranging from gun carriages, gun mounts, mobile machine shops to the fabrication of ship sub-assemblies, marine engines, pumps and deck machinery—all urgently required for the fulfillment of the President’s objectives. II. RECOMMENDATIONS Plainly, the direction of any broad program such as has been suggested by the preceding discussion must be centralized in a single, responsible authority. The Bureau of the Budget has proposed that it should have responsibility for the administration of a program such as has been discussed. We do not believe that this proposal is sound. The administration of such a program extends beyond the prevailing procurement channels of the Government. It impinges upon both military and civilian require • At a single C.C.C. Camp, for example, in Pennsylvania, there is now lying idle on blocks the following numbers and kinds of motorized equipment: 2 Ford coaches 1 Ford coupe 31 Rio dump trucks 35 Chevrolet dump trucks 2 Rio stake body trucks 84 Chevrolet stake body trucks 3 Chevrolet pick up trucks 1 Dodge pick up truck (It is to be noted that steps have been initiated by the War Department to transfer C.C.C. equipment.) ments. It involves the acquisition of used equipment from private industry, local governmental units and the general public. To operate such a program the Bureau of the Budget would of necessity be required to work through or take over existing units of the War Production Board. Accordingly, responsibility for such an undertaking must be vested in the War Production Board. Therefore, it is recommended that:
1. A Bureau of Used Equipment and Supplies be established within the War Production Board. Functionally, the Bureau should be attached to the Division of Industry Operations.
2. The Bureau should be charged with responsibility for: (a) Formulating policies and procedures for the full utilization (wherever possible and feasible) of used equipment and supplies by the Armed Services and the other departments of the Federal Government. Jurisdiction of the Bureau would not extend to items of a technical, military character. (b) Coordinating and directing the efforts to obtain such used equipment from governmental, industrial or public sources.
3. The Bureau would not itself serve as an operating body. (a) For operating purposes it would utilize: (i) the Treasury Procurement Division for the execution of specific procurement programs, or programs for the transfer and exchange of equipment from one governmental department to another; (ii) the Industry Branches for conducting negotiations with private industry, dealers and other sources of supply; and (iii) the Inventory and Requisitioning Branch to obtain items by use of the requisitioning power after voluntary procurement had proved insufficient. (b) The Bureau would work in close conjunction with the Office of Price Administration in regard to price and rationing factors; the Bureau of Industrial Conservation in regard to available substitutes; the Purchases Division in regard to procurement methods and policies (c) In establishing governmental and military requirements for new administrative and other types of equipment, the Bureau would use the facilities of the End-Products Requirements Commit 137 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE tee, the Bureau of Governmental Requirements, the Statistics Division, the Civilian Supply Division or any other department or branch of the Government. (A diagram is attached hereto setting forth the relationship between the Bureau and the several divisions of the War Production Board and other departments of the Government.) For purposes of the instant problem, it is less a question of determining requirements than of establishing a central funnel through which such data can flow and be marshalled effectively. By employing existing operating and servicing organizations within the War Production Board and other branches of the Government, the Bureau will require only a minimum of staff personnel.
4. In carrying out its duties, the Bureau should undertake to: (a) Designate those items of equipment on order or authorized for purchase with respect to which used equipment could be substituted. (b) Survey (through the Bureau of the Budget or other appropriate governmental agencies) the stocks of equipment now in the possession of the departments of the Government; the extent to which such equipment is being used; its availability for transfer or exchange. (c) Recommend to the Inventory and Requisitioning Branch of the War Production Board specific programs for requisitioning. (d) Devise, with the assistance of the Industry Branches, the Purchases Division, the Treasury Procurement Division, the Bureau of Governmental Requirements, and other interested branches of the Government, specific programs for the acquisition of used equipment either from governmental sources, industry or the general public. A proposed draft of a directive to effectuate these recommendations is attached hereto.3 For the Planning Committee Robert R. Nathan Robert R. Nathan, Chairman
In addition to the proposed draft of a General Administrative Order of the War Production Board establishing a Bureau of Used Equipment and Supplies to implement the Recommendation, other attachments omitted include: (1) An organization chart showing the relationship of the pro* posed Bureau of Used Equipment and Supplies to existing operating and servicing units of the War Production Board and other branches of the Government; (2) A memorandum, Donald M. Nelson to Robert Nathan, May 16, 1942, requesting the Planning Committee to study and make recommendations relative to the proposed Executive Order providing for the determination of requirements, control of distribution, and utilization of “shortage” supplies and equipment within Government agencies and enclosing a memorandum from Maury Maverick; and (3) A memorandum, Maury Maverick to Donald M. Nelson, May 8, 1942, opposing the proposed Executive Order. The “Supplement to Planning Committee Recommendation No. 6,” dated July 1, 1942, which has also been omitted, was a report on a conference between the staff of the Bureau of the Budget and a representative of the Planning Committee as a result of which the proposed Executive Order and War Production Board General Administrative Order were re-drafted. Attached to the supplementary Recommendation were drafts of the proposed Orders. The proposed Executive Order provided that the Bureau of the Budget,, in consultation with designated representatives of the War Production Board, require and supervise the transfer among the Goverment agencies of designated used equipment and supplies and review and’ supervise all applications of Government agencies for priority assistance in acquiring new supplies and equipment. The proposed General Administrative Order provided for the establishment of a Bureau of Used Equipment and Supplies which would assemble information relative to, and control the distribution, sale, and transfer of, used equipment and supplies in the hands of Federal, State, and local government agencies, industry, and the public. PLANNING COMMITTEE RECOMMENDATION NO. To: Mr. Donald M. Nelson, Chairman War Production Board Subject: Proposed Rerating System of the ANMB We have studied carefully the priority ratings proposed by the ANMB and submitted to you under date of May 20. The letter of transmittal accompanying the ANMB report refers in such specific terms to the President’s letter of May 1, 1942, addressed to you, that upon your agreement to the terms of the ANMB proposal, it becomes a document of great authority. We have reason to believe, and undoubtedly you have reached the same conclu sion, that your unqualified approval of the ANMB proposals, as submitted, is not expected by the ANMB. If you concur in the proposals, it will be most difficult hereafter to introduce any changes in suggested priority ratings or to implement any decisions concerning a better control of the flow of materials. Further, you are in effect requested to agree that the ANMB report properly complies with the President’s directive to the Joint Chiefs of Staff. 138 APPENDIX Specifically, we raise the following questions concerning the ANMB report:
1. The memorandum entirely neglects essential civilian uses. It is apparent that absolutely minimum essential needs must certainly have preference ratings within the newly created categories. Without essential civilian production, there can be no adequate war production.
2. Any document of such authority should be clear in its meaning, and if possible, precise in its terms. The proposals submitted need clarification and revision. Some of the categories are so vague as to absolutely invite inflation of these high ratings. For example, AA-3 ratings and AA—4 ratings are to be extended to facilities for production of end items and munitions to be completed in 1942 and 1943, respectively, and facilities for production of essential raw materials that “can be completed” and that “can produce a substantial amount of such materials”, in 1942 and 1943, respectively. A document as important as this one should not sacrifice clarity to brevity and it is believed that the facilities to be given these top priorities should be carefully considered and listed.
3. The ANMB report is not clear on the matter of merchant ships. As between AA-1 and AA-3 ratings, there seems to be no provision for one-half of the ocean-going merchant vessels to be constructed in 1942, unless this is covered in the general statement introducing the discussion of AA-2 ratings. Similarly, there is no proposed rating whatever for the large item of materials and repair parts for the conversion, modification, and repair of scores of idle ships which the Commission is converting or repairing, on both coasts and in the Great Lakes. Such operations are not performed by the Navy and are not “routine” and would be excluded from category d-5 of the AA-2 rating, and as not being otherwise mentioned, have no rating. It is respectfully urged that the entire merchant shipping program should be included in the AA-1 top priority category, or handled as suggested below. In your original directive to the Planning Committee and in the oral instructions that preceded it, you yourself pointed out the grave danger of unbalance in the general program and cited especially your apprehension that there may not be ships to carry the munitions of the Army SPRM program and perform simultaneously the other services absolutely essential to the life of England and of this nation. This Committee has been mindful of your instructions and has maintained contact with the Maritime Commission’s Construction Program. Such attention has not lessened the Committee’s apprehensions. Realization of dangerous shortage is daily increasing in the public mind and is attested by the press here and in Great Britain. There can be no doubt 686312—46—10 that a large part of the SPRM program, 4—9-42, must remain in the United States, long after its completion, whatever priority is given it. One of the errors of the Maritime Commission has been its own lack of vigor in expressing its needs in vigorous terms and although Admiral Vickery wrote Mr. Eberstadt on May 20 a guarded memorandum mildly protesting that the Maritime Commission might find the proposed priorities insufficient, he apparently failed to grasp what the subject document fails to do for the E. C. ships and the repair yards. It is presently left to you to see that irreparable damage is not done to this program. We respectfully suggest that this can be readily done by your stating that the simplicity of the Maritime Commission program permits it to be set forth in detail by the Commission and made the subject for the highest ratings and for definite allocations of materials and tools.
4. It does not appear that either the President’s letter or any strategic considerations call for top priority rating of 100% of the ammunition in the SPRM 4-9-42, as is proposed by placing it all under AA-1 rating. On the contrary there is every reason to believe that the ammunition program is especially adapted to a differentiated priorities based on time schedule for its need.
5. In addition to establishing ratings for certain proportions of the objectives within each year, it is necessary that some principles be developed for applying these ratings to the schedules within each year. If the very top rating applies to one-half of the military program, it is necessary that this rating should not be used for attempting to complete that program within the first few months of the year. There must be not only quantities but also time schedules to which the higher ratings may be attached. The determination of priority ratings is an integral part of program-planning. The ANMB memorandum includes within AA ratings practically all of the military program now contemplated and is of such magnitude as to involve the planning of production for the entire economy. Your Planning Committee reemphasizes the need of your establishing an authoritative production strategy group, as indicated in our Recommendation No. 3, dated March 17, 1942, and in the Report of May 6, 1942, of the Committee on Industrial Facilities and Construction. This top strategy group should concern itself with determining the size, timing, and composition of the entire productive effort of our economy. Such a top production strategy body will be completely frustrated in its effort if the priority ratings proposed by the ANMB are adopted. Therefore, we recommend your refusing to approve the proposed priorities and your taking immediate steps for the setting up of a top production strategy body. 139 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE Such a group may well consider a review of the AN MB proposals as the first item on the agenda of its work. For the Planning Committee Robert R. Nathan Chairman « June 9, 1942 PLANNING COMMITTEE RECOMMENDATION NO. 8 To: Mr. Donald M. Nelson, Chairman War Production Board Subject: Mobilization of Scientific Research Resources The Scientific Committee of which Mr. Maverick is chairman has reported to you and made specific recommendations for the implementing of the report. We submitted to you a brief memorandum on a similar subject, which we entitled “War Research Development Corporation.” We urge that action be taken promptly on the recommendations of Mr. Maverick’s Committee, since we believe that the achievement of the objectives is far more important than the specific way in which it is done. For the Planning Committee Robert R. Nathan Robert R. Nathan Chairman. June 10, 1942 PLANNING COMMITTEE RECOMMENDATION NO. 9 To: Mr. Donald M. Nelson, Chairman War Production Board Subject: Impending Petroleum Crisis on the East Coast The problem of petroleum supply will be dangerously critical this Winter on the East Coast. Deliveries must be stepped up materially from present levels to avoid a crisis. The critical period will pass by the end of the first quarter of 1943 when certain secondary transportation projects (concrete barges, etc.) will come into full operation. The proposed crude oil pipe line from East Texas to the East Coast will be of no assistance during the critical period. Only minor help can come from a crude oil pipe line to Salem, Illinois. These pipe lines will provide relief after the critical period has passed and there is, therefore, no justification for constructing them at this time. (10,000 tons of steel to repair raised torpedoed tankers can be better spared than 125,000 tons of finished steel required for the latter pipe line.) Under these conditions, and with practical solutions at hand, temporizing for political or other reasons would be tragic. Necessary transportation facilities, such as tank cars, can be made available to the East Coast by the immediate extension of gasoline rationing to the Mississippi Valley area. This would be far preferable to the construction of a pipe line and is a clear-cut issue separate and distinct from tire conservation. If the people of the Middle West cannot be called upon to make this small sacrifice, tanker movement must be reestablished on the Atlantic Coast. In the event that the Navy cannot convoy, a coastal patrol in the British manner, using the thousands of small craft available for the purpose, would provide adequate tanker protection. This alternative definitely is preferable to a pipe line. We cannot too strongly recommend immediate consideration of this problem. For the Planning Committee Robert R. Nathan Robert R. Nathan, Chairman 140 APPENDIX July 1, 1942 PLANNING COMMITTEE RECOMMENDATION NO. 10 To: Mr. Donald M. Nelson, Chairman War Production Board Subject: Smaller War Plants Corporation It is our considered opinion that the Smaller War Plants Corporation presents a real opportunity for the War Production Board to mobilize productive facilities more effectively in support of the war effort. To the extent that the new organization can direct war and essential civilian contracts into the hands of small business enterprises it will prevent mortalities which might otherwise have occurred. But this discussion is directed exclusively at the goal of increased, balanced production for the war effort or in direct support of the war effort. It is not concerned with relief for enterprises which cannot be used in war work or essential civilian production, and we believe that a positive effort to mobilize small and medium-sized facilities is far more important than the negative approach of arranging for a dole to concerns, many of which need not be casualties at all under more aggresive procurement. The plain truth of the matter is that no real, comprehensive effort has yet been made to bring small facilities into war production on a large scale. There is ample evidence, both in this country and others, of the tremendous potential impetus to war production that lies in this area. General Characteristics of the Facilities Problem 1. We have gone through a period in which there was great pressure for extensive procurement, in which the main objective was get out the contracts, load up industry, get started on the job of tooling up for production in huge quantities. As a result, war production contracts were let out in great chunks to the obviously qualified and easily located facilities. Now we are faced with a period in which procurement should be intensive—meaning an aggressive search for additional facilities and implying a necessary redistribution of outstanding contracts.
6. We now face what appears on the surface to be a fairly general shortage of critical materials. (This is one reason—though not the only one—why this committee has consistently urged a sharp reduction in the construction of new fabricating facilities.) While procurement policy must be formulated within limitations of actual shortages in supply of materials, we must not fall into the easy attitude that the mobilization of additional productive facilities would be pointless in view of the materials situation. There are many possibilities for increasing the supply of materials available for war work before we reach the point at which we can cease looking for additional productive equipment. Furthermore, an excess of fabricating facilities over supplies of raw materials provides a highly desirable range of flexibility within our productive system. We can foresee a time when, if ship sinkings decline, it may be decided that ship construction should be decreased so that materials can be diverted to the production of weapons. We should have reserve fabricating capacity to draw upon in such a contingency. This stand-by capacity can be effectively provided by only those plants that are already in production and possess a margin of unutilized productive capacity in the form of third-shift and weekend operations. An idle plant is not a stand-by plant, unless it is in a position to produce promptly. Therefore, all manufacturing facilities capable of being used in war work should be provided with contracts, even though shifting work from large and specialpurpose plants to smaller plants may result in some small loss of efficiency. If large plants are already pressed to the limits of their productive capacity and small plants have lost • their labor supply, management, and other resources when closed down because of lack of war contracts, the nation lacks a stand-by capacity that can be rapidly mobilized in time of need.
7. There are numerous reservoirs of productive facilities which are of positive benefit to war production. Many—but by no means all—of them fall within the classification of “smaller plants.” As far as the very small establishments go, it is not generally true that they are inefficient producers. Many of them are run by universal mechanics, men accustomed to diversified work and capable of working to close tolerances. They exist in large numbers, particularly in certain areas, but they must be sought out, for not many of them have the money, contacts, or knowledge to come to us and fight their way through the 141 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE obstacles that have heretofore confronted them in dealing with the procurement agencies. Some of these facilities are still engaged in non-essential civilian production; others are facing severe reductions in operations or actual closure as a result of L and M orders; and still others fall into special categories, such as well-equipped captive machine shops which now operate only a fraction of the week. A further interesting development that has come to our attention is that of subcontractors who have had war contracts and who are now faced with lack of work because their prime contractors have just received or will soon receive new government-furnished machinery, which will enable them to take more work into their own plants.
8. Facilities that will produce the bulk of the program are tooled or tooling. We must count on them for the great hard core of the war effort. But in many cases the limits set on various programs represent the opinion of the procurement agencies as to what it was feasible to produce. The opportunity before us is to mobilize a wide fringe of productive facilities which, cumulatively, are great and from which we can obtain the “plus” production—that extra that spells the difference between a good effort and an outstanding effort. It implies an approach to the mobilization of productive facilities not from the standpoint of what anybody else is doing, not from the standpoint of what has ever been done before, not from the standpoint of what the program calls for, but from the standpoint of what is the maximum that we can get out of the economy. Sources of Work for Facilities Not Now Engaged in War Production The sources of work for facilities not now engaged in war production are:
9. Appropriated moneys for which contracts have not been let. At the present time appropriations of over 100 billion dollars have yet to be translated into contracts. Whenever it will not slow down production, every effort should be made to find new sources of supply before additional contracts are added to the backlog of present producers; and the Smaller War Plants Corporation should start immediately to direct the letting of contracts for presently admitted procurement requirements to presently unused productive facilities. It cannot be stressed too strenuously that the key to our effort to broaden the base of muni- tions production is to obtain from the Armed Services full information on procurement re-. quirements at the planning stage. Past experience has shown beyond any doubt that this information will not be forthcoming unless heavy pressure is placed on the procurement agencies. The reluctance of the latter to deal with small facilities is readily understandable, but it is the clear responsibility of the War Production Board to force the use of additional production capacity.
10. Bottleneck components. Even when production has been carefully scheduled, there are cases where output of certain components has outstripped expectation and, rather than slow down the faster components, new facilities should be sought for increased production of the slower components. The Smaller War Plants Corporation should obtain from the Armed Services a list of bottleneck components and then seek new sources of supply.
11. Redistribution of existing contracts. This is a major and frequently very complicated undertaking, but one which gives considerable promise of better use of facilities. The possibilities lie generally in four directions: (a) Contracts on which deliveries will not be completed until well into the future. While the time period chosen will vary with the item involved, that part of a contract for which deliveries run beyond the desired date of completion should be taken away from the present contractors and awarded to new sources of supply whenever they can be found. (b) Removing simple work from facilities that are capable of more difficult work. There are many facilities that could be producing bottleneck items but that are now working on relatively simple production tasks, which could easily be performed by now-idle facilities. Considerable rearrangement in this area seems feasible. (c) Removing present contracts from specific areas because of labor shortages, overcrowded community facilities, etc. Such contracts should be placed with facilities not now engaged on essential work. (d) Removing part of the work from a facility working three shifts and putting it in another plant that is now idle. There is a good case for such a procedure if the idle plant is the principal support of its community.
12. Lend-Lease Military items. There are indications that at least in respect to certain items, 142 APPENDIX actual requirements of our Allies for fighting equipment have not been put forward because they believed or were told that sufficient productive facilities were non-existent. The Smaller War Plants Corporation should explore with the Armed Services and representatives of the Allies the possibility that there are some relatively simple munitions items for which the demand, in a global sense, is greater than indicated in present programs.
13. Office of Strategic Services. This office (formerly the Office of the Coordinator of Information) is engaged in certain procurement activities outside the regular procurement channels and is particularly anxious to locate small metal working shops.
14. Highly critical items, the present production of which is limited by alleged shortages of facilities or raw materials. There are items in the program—merchant ships, escort vessels, etc.—for which immediate demand is far beyond present production. In some cases strategic considerations may dictate against diverting more materials to these items. This will raise the problem of alternative specifications and materials. In other cases, if .highly critical machinery is involved, it will raise.the possibility of alternative machine processing, or use of second-hand equipment. There is a whole range of emergency and unorthodox steps that the Smaller War Plants Corporation should explore with respect to those military items for which the need is great and the apparent productive facilities limited. T echnique Subcontracting still offers the greatest possibilities of spreading the base of military production by drawing plants engaged in non-essential work into the war program. Convincing proof of this statement is the result of the trial given the so-called Stanley Plan in Chicago. Some 1,600-odd items-— most of them bottleneck items for which facilities had been sought over a considerable period—were listed in the Directory of Contract Opportunities and circulated to several thousand firms in the area. Subcontractors were located promptly for approximately 40% of the work. An exhibit is attached showing letters from prime and subcontractors who have used this service. It is our opinion that the Stanley Plan or a variation thereof should be adopted by the War Production Board as a nation-wide device for “marrying” prime contractors and subcontractors, and that it should be administered under the Smaller War Plants Corporation. Attempts to establish manufacturing pools have been largly unsuccessful because they failed to provide centralized responsibility. However, the “mother hen” technique has proven to be a prac tical and successful operation. The Smaller War Plants Corporation should proceed immediately to locate “mother hen” contractors who will: (a) Negotiate and accept full responsibility for performance of the contract, (b) Provide all drawings to subcontractors, (c) Purchase all materials for subcontractors, (d) Perform all inspection, (e) Be responsible for follow-up and production expediting. If going concerns cannot be located, the Smaller War Plants Corporation itself should provide engineering personnel for “mother hen” firms. It is suggested that the Corporation explore the possibilities of mobilizing the personnel of engineering management and construction firms to provide leadership for such organizations. Contracts should be sought from existing prime contractors or, through the certification procedure, the Corporation should take the contract and farm it out to a “mother hen” firm. Organizational Relationships The Smaller War Plants Corporation must be able to influence and stimulate the actions of several other organizations if its operations are to be fully effective :
15. The procurement agencies. Information may be gathered from the procurement agencies by the present personnel of the Facilities Staff of the Bureau of Industry Branches, but existing relationships with these agencies must be strengthened and the information made available to the staff of the Smaller War Plants Corporation. This implies an opportunity for the Corporation to find existing facilities to meet procurement requirements before contracts providing for new facilities are approved, a procedure that would be especially effective if a strong agency were established to clear new facility contracts.
16. With the proposed Office of Technical Development. It seems likely that the Smaller War Plants Corporation may frequently meet with the objection that shortages of materials dictate against placement of contracts with additional firms. Therefore, the Smaller War Plants Corporation should have representation in the proposed Office of Technical Development, and should perhaps make funds available for developmental work that promises to increase the supply of materials or the development of substitutes. For the same reason, the Smaller War Plants Corporation should stimulate development of marginal or otherwise unused sources of materials in this hemisphere and the exploration of additional deposits. This will involve contact with the Materials Division, the Depart- 143 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE ment of the Interior, and various subsidiaries of the Reconstruction Finance Corporation.
17. With the regional and local offices of the War Production Board. Because of the decentralization of procurement authority, the success of the Smaller War Plants Corporation may be measured in large degree by its effectiveness in the field. It cannot be effective under existing relationships between the field offices of the War Production Board and the field offices of the procurement agencies. It becomes increasingly apparent that field offices must be staffed and provided with the requisite authority and information to run an operation similar to that of the Capacity Exchange Centres in England. Field representatives of the Smaller War Plants Corporation must have an opportunity to find existing capacity before a contracting officer in the field is permitted to assign preference ratings for new machine tools or equipment. The failure of field offices of the War Production Board to obtain information on procurement requirements at a stage at which they can be of assistance, is in large measure responsible for the mediocre performance and standing of these field offices. Their performance and standing is not likely to improve unless they do obtain the needed information and in time to do something about it.
18. With the Substitution Branch of the Bureau of Industrial Conservation. We recommend that the Smaller War Plants Corporation, in cooperation with the industry branches, make a positive effort to assist firms that cannot get into war work and do not consume needed resources to turn to the pro-? duction of essential civilian items by using wood, ceramics, and other available substitutes. This will require close cooperation with the Substitution Branch of the Bureau of Industrial Conservation. For the Planning Committee Robert R. Nathan Robert R. Nathan Chairman July 1, 1942 PLANNING COMMITTEE RECOMMENDATION NO. 11 To: Mr. Donald M. Nelson Chairman, War Production Board Subject : Relief for Manufacturers Forced Out of Business as a Result of the War Effort This is a report on relief to manufacturers forced out of business by limitation and conservation orders. You requested us to study this matter as a result of Mr. Reed’s memorandum on the subject to Mr. Knowlson. We have approached it solely from the viewpoint of efficient utilization of economic resources for the prosecution of the war, and suggest the following:
19. The positive and most important method of minimizing mortalities in the manufacturing field is by providing plants with war work. No sufficiently comprehensive and vigorous effort to utilize fully the existing industrial facilities has yet been made. Perhaps the greatest single step that can be taken to prevent widespread mortalities in the manufacturing field is to implement forcefully the War Production Board’s policy of stopping construction of new facilities wherever existing facilities can be found by diligent search.
20. At the same time, no concern should be allowed to continue non-essential production if in so doing it consumes any resources— materials, manpower, electric power, or transportation—in which shortages exist. However, if a plant cannot be used in military or essential civilian production and faces failure because of war restrictions, it should receive positive assistance from the War Production Board in finding substitute materials, products, or activities. This should be a definite responsibility of the industry branches.
21. In cases where manufacturing concerns are forced to liquidate because they cannot be used in war or essential civilian work or cannot find substitute activities, the government should be ready to assist in facilitating a quick, orderly liquidation : a. By arranging for prompt sale or requisitioning of inventories frozen by WPB orders. We concur in the policy of the Inventory and Requisitioning Branch of paying a price between scrap value and invested cost for semi-fabricated products and components. At the present time concerns suffer unnecessarily because they are forbidden from continuing to process their inventories and yet are unable to dispose of them. The Inventory and Requisitioning Branch must be staffed adequately to provide quick relief 144 APPENDIX from the financial burden of carrying inventories frozen by Government restrictions. b. By arranging for sale or requisitioning of machinery and other equipment. Whenever this equipment can be used by other plants engaged in war work, the Government should assist in arranging for a sale and, if necessary, arrange for requisitioning. In cases where the equipment as such cannot be used in war work but is needed for scrap in the war program, the Government should offer to purchase the machinery at its depreciated value, sell, it for scrap, and absorb the loss. The firm should be permitted to retain machinery that cannot be used in the war effort if it chooses to do so.
22. In developing plans for the concentration of essential civilian production in nucleus plants, the War Production Board should encourage arrangements under which the nucleus plant (or plants) pays out of its profits the cost of maintaining in standby condition the physical plant of firms that have been closed down. The War Production Board should favor maintenance of production in small nonconvertible plants in developing concentration plans.
23. The War Production Board should encourage arrangements by Government and other agencies for moratoria on Federal, State and local taxes and other fixed charges where firms are forced to close as a result of the war effort. Any sound plan involving the use of court or other procedure to assist distressed firms in scaling down or postponing debts should receive the endorsement of the War Production Board.
24. While reentry into business in the post-war period will be conditioned by circumstances existing at that time, advance provision might well be made for facilitating such reentry by providing easy capital.
25. The Federal Government should not subsidize by loans or grants, distressed concerns that cannot engage in war or essential civilian production. We have given this problem serious consideration, and arrive at this conclusion for the following reasons: a. Business mortalities have always been high. Although many firms that were in sound financial condition may have to close down for the duration, it may well be that actual mortalities in the near future may represent largely a concentration within a short period of time of those failures that under normal circumstances would have been strung out over a period of several years. While it also is true that both present procurement policies and the characteristics of the war demand are prejudicial to small firms, we believe that aggressive, comprehensive efforts to bring these firms into war work will go a long way towards solving their problem. b. It now appears that we are faced with a long war. Consumer demands and the pattern of market relationships are, even under normal conditions, in a constant flux. Therefore, it will not be possible to maintain peacetime competitive relationships under an economy geared to total war. These factors, plus the obsolescence of machinery and manufacturing methods and processes, appear to argue against the advisability of maintaining a large number of marginal firms in standby condition over a period of years. c. It is difficult to see how legislation providing financial relief could be administered equitably. The difficulties of determining whether a given firm is faced with failure because of the war effort or because of any one of a large number of other factors appear to us to be almost insurmountable. d. Secondary uses in the war effort can be found for many closed properties, such as storage space or dismantling for scrap. We believe that the above principles constitute the soundest and most constructive position that could be taken from the standpoint of expediting the war effort. We realize that there will be many failures as a direct result of the war, and that dislocations will be considerable. However, concern over this problem to date has been magnified by political and sentimental considerations. We fail to see any essential difference between the physician who is called into service, the workman who is deprived of his job, and the businessman who is forced to give up his business because of the war effort. There is work for them to do in the war effort. The real assistance that can be granted is to bring small busi 145 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE ness into the war effort, and if we pursue this aggressively, we shall have discharged our responsibility in a genuine sense. The recommendations in this momorandum have been directed to the problem of the manufacturer. Although there are other considerations in dealing with the problem of wholesalers and retailers, our opinion is that they have no greater claim for financial relief’than have manufacturers. For the Planning Committee Robert R. Nathan Robert R. Nathan Chairman July 8, 1942 PLANNING COMMITTEE RECOMMENDATION NO. 12 To: Mr. Donald M. Nelson, Chairman, War Production Board Subject: Concentration of Civilian Production The production program has reached a stage where we are encountering severe strains on certain resources—manpower, transport, power—to which we have given little attention in the past. These strains make it imperative that the War Production Board reconsider its past policy of uniform percentage, limitations on firms engaged in civilian production. The staff of the Planning Committee, which has made a careful study of this problem, recommends that there be substituted a policy of selective limitation and of concentration of civilian production in plants and regions which will reduce to a minimum the strain on manpower and other resources. The problem is one which concerns several divisions of the War Production Board and a number of other war agencies. The Planning Committee therefore recommends that responsibility for concentration be vested in a small committee under the appropriate Deputy Chairman. It would be the duty of this committee to initiate, review, and approve concentration programs. The accompanying memorandum, which outlines the criteria which should be used in the selection of nucleus plants and the other principles which should be observed in drafting concentration programs, should be turned over to this committee for its guidance. For the Planning Committee Robert R. Nathan Robert R. Nathan Chairman Supporting Memorandum for Planning Committee Recommendation No. 12 To: Mr. Donald M. Nelson, Chairman War Production Board Subject: Concentration of Civilian Production I. The Problem War Production Board Orders limiting the output of civilian industries have so far, with very few exceptions, imposed uniform percentage reductions on all firms. Limitation orders of this type were desirable and necessary as a first step. They could be drafted and applied quickly. They have saved large quantities of critical materials and have facilitated conversion to war production. Production has now reached a stage, however, in which limitation orders imposing uniform percentage cuts on all firms may be inconsistent with the most effective use of our scarce resources. Uniform cuts have the following serious disadvantages: (1) They are not conducive to maximum conversion. They permit plants which could convert wholly to war work to continue manufacturing civilian products. This reduces the incentive of these plants to secure war contracts, and restricts the amount of war work they can undertake. The most effective conversion to war production has occurred in plants whose civilian output has been stopped completely. (2) They waste resources. Where plants operate at a fraction of capacity manpower is wasted by part time working and by an excessive ratio of overhead labor to that engaged directly on machines. Management, one of our scarcest resources, is prevented from transferring to war production. Materials are immobilized by the necessity of keeping working inventories in an excessive number of plants operating on a small scale. (3) They intensify regional and local bottlenecks in resources. The problem of labor supply has become extremely serious in some regions and localities. Unless competing civilian production is stopped in these regions and concentrated elsewhere war production will be retarded, or labor will have to be imported from other areas and supplied at an unnecessary cost in terms of resources with housing and other essential services. Similar considerations 146 APPENDIX apply to regional bottlenecks which have developed in power, transport, and warehouse accommodation. (4) They imperil price ceilings imposed by the Office of Price Administration by fostering low volume production with consequent higher costs. A review is required of outstanding limitation orders and of industries which are ready for limitation with a view to concentrating the permitted production in selected plants. In the case of industries not yet controlled by limitation orders concentration should be enforced at the same time as limitation provisions are imposed. There is a strong prima facie case for concentrating the production of civilian goods whenever one or more of the following conditions is found in a civilian industry: ( 1 ) Some or all firms in the industry are required for and convertible to war production. (2) Permitted civilian production is so restricted as to prevent the economic operation of all firms. (3) A significant part of the production is continuing in regions or localities in which there are bottlenecks in labor, transport, power, or warehouse accommodation. The Planning Committee believes that one or more of these conditions apply to a substantial part of civilian industry. Serious consideration should be given at once to the drafting of concentration programs for the industries listed below. At the same time an intensive study should be made of all civilian industries with a view to discovering whether their concentration is required on either a nation-wide or a regional scale. Agricultural Equipment* Warm Air Furnaces* Boilers* Bicycles* Cutlery* Dairy Machinery* Typewriters* Enamel Kitchen Utensils* Flatware and Hollow-ware* Pulp Production Paper Production Furniture Portable Conveyors Construction and Road Equipment Milk Can Production Railroad Cars Sugar Refining Cork Products Unit Heaters II. Criteria for the Selection of Nucleus Plants No universal rules can be laid down for the selection of plants to continue operation (“nucleus plants”) at or near capacity. In drafting programs the operating authorities should be guided by the • Concentration programs are being developed in these industries. following criteria, but their relative importance depends upon the circumstances of the industry and the conditions which have made concentration necessary. The best judgment available both within the War Production Board and the industries affected must be used in deciding on the relative importance of the criteria in each case and in applying them to the plants in the industry. In most cases the first and second criteria will be by far the most important. ( 1 ) Suitability for conversion to war production. This will mean, as a rule although not necessarily, that small plants will be given nucleus status and large plants, which are usually better equipped to handle war contracts, will be required to suspend civilian production. (2) The local labor markets. Civilian production should be suspended in areas in which labor is urgently required in war plants, especially in cases where the labor released by suspending civilian production would be directly transferable to war production. Nucleus status should be given wherever possible to plants in areas in which there is still a surplus of labor (e.g., New York and many rural communities). (3) Economy of transport. The nucleus firms should be so selected that cross-hauling is eliminated wherever possible and the requirements on the transport system are reduced to a minimum, especially in areas in which regional transport bottlenecks have developed. (4) Power supply. Production should be suspended or restricted in regions in which the power supply is or is likely to become inadequate. (5) Requirements for warehouse accommodation. This is becoming a serious problem, especially in areas surrounding important ports. By closing and converting factories in these areas we can save the time, labor, and building materials necessary to construct new warehouses. (6) Efficiency. To save resources and to protect price ceilings production should be concentrated in the most efficient non-convertible plants. As a rule, however, relative efficiencies will be extremely difficult to evaluate, and differences in efficiency are likely to be so small that other and more important criteria should control. If the product is standardized when production is concentrated the suitability of plants to produce the standard lines must be taken into consideration. III. Other Principles of Concentration Concentration of civilian production raises many problems such as compensation to closed down firms, maintenance of trade-marks, rearrangement of distributive channels. These are of great importance to the individual firms involved but from the standpoint of war production, they are secondary to the need for determining the degree of curtailment, concentrating production and converting non-nucleus 147 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE firms to war work. Details of concentration plans, including arrangements for compensation, will vary from industry to industry and should be worked out by the firms affected under the direction of WPB and subject to its acceptance or rejection. The following principles should be applied to all plans unless there are compelling reasons for exceptions: (1) Concentration plans should not foster postwar domination of an industry by one or a few companies. That plan which permits the reentry of the largest number of firms into the industry after the war should be given preference as long as it is consistent with efficient prosecution of the war. (2) Wherever possible concentration plans should be accompanied by standardization and simplification of the product. By reducing costs, these measures will serve to protect price ceilings. While simplification and standardization programs should not delay the inauguration of concentration of production, many difficulties will be avoided by putting into effect both programs simultaneously. (3) Concentration programs should be drafted for limited periods (in no case to exceed 12 months at a time) and should be sufficiently flexible to permit revision as circumstances change. (4) Programs for concentration of a manufacturing industry should be coordinated with any program which the Office of Price Administration may evolve for concentration of the distributive channels of the industry. (5) Where compensation is provided for firms closed down it should be paid by the firms which continue operations and should be limited to the duration of the concentration program. Generally the most suitable method of compensation consistent with this condition and with the other principles of concentration will be either: (a) an agency scheme under which nucleus firms produce at cost for closed down firms which retain their sales organization and depend for compensation on the difference between purchase and sales price, or (b) a pooling scheme which concentrates both production and distribution in the nucleus firms, in which case closed down firms depend upon nucleus firms for direct compensation payments. This type of scheme is generally preferable in that it liberates more resources, especially manpower, for war production. IV. Recommendation Determination of the need for concentration and the development of concrete schemes involve consideration of factors outside the purview of the industry branches. Therefore we recommend that a small Concentration Committee, including representatives of the Bureau of Industry Branches, the Division of Civilian Supply, and the War Manpower Commssion be established and charged with responsibility for: (1) directing the concentration of civilian production in the shortest possible time, (2) reviewing and approving concentration proposals on the basis of the criteria and principles laid down in this memorandum, (3) reporting on progress at regular intervals to the appropriate deputy chairman. We recommend that the Committee should follow this procedure: (1) Initiate the development of concentration plans by drawing up lists of industries in which the possibilities are to be explored. (2) Appoint groups or “teams” of several men to develop concentration plans for specific industries. Generally the team should include representatives of the Industry Branches, the Division of Civilian Supply, the Bureau of Industrial Conservation, and the War Manpower Commission with additional members who are experts on transportation, power, or simplification procedure as the case may require. These teams, working in close cooperation with the Branches involved, would be responsible for developing within rigid time limitations, a comprehensive analysis of the pros and cons and special problems of concentration in the industry. (3) Direct the team to prepare a draft program if, on the basis of its analysis, the Committee decides to proceed with concentration in the industry. The team should work in close cooperation with the branches and the industry (including representatives of labor) in preparing its program and should consult with the OPA, the ODT, and the Power Branch. It should be required to complete its work within definite time limits. (4) Review the program submitted by the team, together with any alternatives submitted by the Branches or the industry, and to consult and secure clearance from the Department of Justice on the proposals which it finally approves. 148 APPENDIX August 12, 1942 PLANNING COMMITTEE RECOMMENDATION NO. 13 To: Mr. Donald M. Nelson, Chairman, War Production Board Subject : Transportation We have studied the problem of domestic transportation and have arrived at certain conclusions. It is a potential obstacle of threatening proportions. Although the direct responsibility for the mobilization of domestic transportation for the war effort lies with the Office of Defense Transportation, the War Production Board should give thorough consideration to the interdependence between production and transportation and should apprise the Office of Defense Transportation of the views of the War Production Board. We attach herewith a summary of the transportation situation as well as our own recommendations as to what needs to be done in this important area in order that war production be served as fully as possible. We suggest that these recommendations be transmitted to the Director-General for Operations with a directive to implement the appropriate sections thereof which fall under his jurisdiction through his various divisions and the Transportation Committee. Further, we recommend that the policies proposed in the attached memorandum be considered formally by the War Production Board and thereafter, be transmitted to the Office of Defense Transportation, as well as to the staff of the War Production Board. For the Planning Committee Robert R. Nathan Robert R. Nathan Chairman July 24, 1942 Memorandum To: Mr. Donald M. Nelson From : The Planning Committee Subject: Transportation* In view of the fact that the War Production Board has not been able to grant to the Office of Defense Transportation materials for maintenance and equipment in amounts anywhere near approximating its requests, the staff of the Planning Committee has undertaken studies of the transportation situation particularly as related to the war production program. Based on these studies, it is the conclusion of this Committee that :
26. Transportation is a potential obstacle to the war production program of considerable magnitude and relatively near term imminence.
27. To be assured of sustained essential transportation, policies and actions recommended herein are called for.
28. These recommendations should be promptly and vigorously carried out under the leadership of the W.P.B. The following is a summary of the transportation situation and recommendations :- Volume of Traffic The transportation system of this country is currently
By common cqptract carrier or equivalent. handling the largest physical volume of business in history. Assuming no change in the war production program, traffic requirements will (1) at least continue at the present high level for an indefinite period and (2) probably increase as additional capacities come into production. Total transportation facilities are shrinking at the same time traffic is expanding. Our chief reliance must be placed in the railroads because (1) waterborne commerce is constantly decreasing due to the diversion of ships to ocean service and submarine losses and (2) an unknown but substantial amount of short-haul business will be diverted from motor carrier to rail due to cumulative attrition of rubber and trucks. The railroads, therefore, are being called upon to handle not only their normal proportion of the highest level of business ever recorded, but a substantial tonnage of freight and a large number of passengers that would be carried by other media. The additional impact of the foregoing has not yet been felt fully. Impacts and Handicaps The railroads must not only handle this unprecedented load, but they must do so on a sustained basis in the face 149 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE of impacts and handicaps that are inevitable in time of war. These may be summarized as follows:
1. A material change in the general pattern and flow of traffic due to: (a) Longer average haul. (b) Abnormal movement to ports. (c) Large concentrations of war material have been accumulating and these, as well as men, may have to be moved speedily and suddenly in a predominate one-way traffic through bottlenecks. (d) Increased traffic to various parts of the country not having it in such proportionate volume heretofore, causing bottlenecks in parts of certain railroads or even in entire systems. (e) Impacts on specific carriers due to the transfer of inter-coastal, coastwise, lakewise, and South and Central American tonnages to all rail or part rail. (f) Disproportionate increases in movements of commodities requiring special types of cars.
2. Reduction of railroad efficiency because of additional short-haul business formerly carried by trucks, changes in the seasonal movement of freight, high rate of passenger operations, and various other factors.
3. A limitation of materials for repair, maintenance, and capital expenditures (including rolling stock) and tardy receipt of these materials due to encroachment of higher preference rated business.
4. Manpower difficulties due to (a) requirements of the armed services and (b) the great difficulty of retaining and adding to personnel in certain skilled and vital classifications in competition with the war industries. Ability to Handle Business The foregoing delineates the scope and character of the problem; the following is a summary of what is on hand with which to meet it: The Railroads Have:
5. Considerably less equipment than they had 12 years ago in 1929 when traffic was actually less than at present. For example, from 1929 to 1941 aggregate capacity of freight cars decreased 18.7%; railroad passenger cars, 40.2% ; total tractive power of freight and switching locomotives 19.8%; tractive power of passenger engines, 39.4%.
6. Freight cars, smaller in total capacity, are disproportionately distributed with reference to types in relation to traffic requirements. Furthermore, locomotives that are of a high average age must be kept going on an all-out basis. (Over 40% built prior to 1914)
7. Fairly stout ways and structures which are, however, inadequate in numerous places due to the change in the general pattern and flow of traffic.
8. A labor force of higher average age that has shrunk 31.4% compared with 1929 and many difficult problems not only of augmenting employees but of keeping the present personnel intact.
9. An excellent operating management and high morale.
10. A much higher degree of inter-carrier cooperation and integration than prevailed under private control in the last war. The National War Agencies Have:
11. Adequate information on what was done in the last war to make the transportation plant handle the business.
12. Exhaustive studies by the Federal Coordinator of Transportation (now head of ODT) resulting in specific suggestions and recommendations, some of which are applicable to war-time conditions.
13. A vast amount of information and knowledge accumulated on railroads in the past 50 years including the best set of statistics available on any industry.
14. The services of the ICC and other organiaztions in the transportation field.
15. Ample legal powers that have been used but moderately. Circumstances affecting railroad transportation brought on by this war are not precisely comparable to the last one. Experience, however, teaches that the railroads cannot sustain an extended period of capacity operations with existing operating practices in the face of the steady attrition of impacts brought about by wartime conditions. The railroads have done an excellent job and they are prepared to do even better under the leadership and direction of the Government. Paradoxically, the splendid performance of the railroads is one of the chief reasons for immediate action since a good part of the slack in the railway system has already been taken up by the carriers themselves. After carefully considering all the facts, this Committee has concluded that without positive assistance and vigorous direction by the War Agencies, the transportation system cannot continue to meet expanded production needs. It did not in the last war and there is every reason to believe that it cannot do so in this one. Throughout 1917 railroad circles continued optimistic on their ability to meet every need by voluntary action. Actually, they were not able to do so, precipitating Federal control and operation. Your attention is directed to public statements of the Director of Defense Transportation implying that if the transportation system breaks down, it will be due to the refusal of the War Production Board to allocate sufficient materials to the railroads. We do not believe the shortage of materials to be the only or even the most important factor, since many steps can be taken to maximize the capacity of the existing transportation system. We are, however, recommending a re-examination of materials allocations to the railroads, especially in view of the probability that we are faced with a long war. Changes, in materials allocations, should be conditioned on institution of other corrective measures. RECOMMENDA TIONS An adequate treatment of wartime transportation problems requires action along the following broad lines:
16. Limitation of transportation to essential traffic.
17. Maximum use of physical assets.
18. Adequate and efficient use of manpower.
19. Allocation and prompt delivery of sufficient materials to sustain essential transportation. The following are our specific recommendations with reference to implementing and ancillary agencies in parantheses.
20. Passenger Business (a) Nationwide rationing of gasoline to preserve existing tires for essential transportation. (OPA) (b) Contraction of passenger service to minimum essential needs. (ODT) Strict control over the use of transportation by all Federal agencies and the military services in order to eliminate unnecessary travel. (Bureau of Budget) (c) Consolidation of terminals and reduction in competing transportation service. (ODT) (d) Elimination of all-Pullman trains and more frequent stops. (ODT) (e) Conversion of lounge, parlor, observation and club cars to coaches. (Transportation Branch— WPB and ODT)
21. Reduction in Freight Traffic Load (a) Reduction of cross hauling. (Bureau of Industry Branches, Division of Civilian Supply, Legal Division—WPB, Armed Service and Solid Fuel and Petroleum Coordinators) w 150 APPENDIX (b) Reduction o£ non-essential production in accordance with Section 2.05 of Administrative Order No. 13. (Bureau of Industry Branches and Division of Civilian Supply—WPB) (c) Maximum production of non-critical minerals, lumber and manufacturers at points closest to demand. (Bureau of Industry Branches-WPB, OPA, Solid Fuel and Petroleum Coordinators) (d) Concentration of Production to be planned to minimize transportation burden. (Bureau of Industry Branches, and Office of Civilian Supply)
22. Maximum Use of Physical Assets (a) Scheduling of aggregate shipments to eliminate seasonal strains and to space it as nearly equal as possible throughout the year. (Bureau of Industry Branches, Solid Fuel and Petroleum Coordinators) (b) Operations (1) Applying all methods used in the last war to speed up traffic, that are practical under present conditions. (ODT) (2) Carrying out to extent possible suggestions developed through a three-year study by the then Federal Coordinator of Transportation, now Director of ODT. (ODT) (3) Equalization of traffic loads between competing points and lines to the extent possible. (ODT-WPB) (c) Allocation of existing motive power. (Transportation Branch of WPB on recommendation of ODT) (d) Complete allocation of tank cars (already set up by ODT). (1) Nationwide gasoline rationing to release tank cars for long-haul service. (OPA) (2) Close control over the use of commodities moving in tank cars. (WPB) (e) Pooling and unit operation of refrigerator cars, conversion of released cars to use as box cars, and conversion of box cars to open top. (Transportation Branch—WPB, ODT) (f) Concentration of repair at most efficient points and shopping of equipment by roads having surplus of facilities for roads having tight shop situation. (Transportation Branch—WPB, and ODT) (1) Articulation of above with conversion program. (Transportation Branch—WPB)
23. Materials (a) Re-examination of material allocations for repair, maintenance and additions and betterments to ways and structures. (Requirements Committee, Bureau of Priorities, Transportation Branch—WPB) (b) Allocation of materials needed to convert equipment from one type to another. (Same as (a))
24. Rolling Stock (a) Provision for additional rolling stock to be conditioned upon all steps being taken to maximize the usefulness of existing equipment and upon the reduction of transportation requirements to essential needs by the Bureau of Industry Branches and the Division of Civilian Supply. (b) Concentration of locomotive and car building in as few places as possible; manufacture of a few simplified basic types. (WPB)
25. Manpower (a) Elimination of spread work devices. (Labor Division—WPB, ODT) (b) Shortening training periods and an expansion of apprentice training. (c) Relaxation of age limits and physical requirements. (Labor Division—WPB, ODT) (d) Additional assistance to railroads by U. S. Employment Service. (MPC) (e) Draft deferment of all skilled workers in certain specified categories. (MPC)
26. Motor Truck (a) Articulation of trucks with the railroads in handling freight traffic. (WPB—ODT) (b) Elimination of the wasteful use of trucking. (ODT—WPB) (c) Drastic tightening of rationing criteria for tires; use of the rationing power over gasoline to prevent the wasteful use of trucks. (OPA) (d) Stockpiling of second-hand trucks. (WPB-Fed-eral Lending Agencies) Although much has been done by the railroads under the leadership of the ODT, an analysis of the orders issued by ODT shows them to fall short of the drastic action called for. August 31, 1942 Mémorandum To : Mr. Donald M. Nelson, Chairman. War Production Board From: Robert R. Nathan, Chairman Subject: Organization of a War Contracts I regard the organization of a War Contracts Policy Board proposed in the attached Recommendation No. 14 of the Planning Committee as a major step in discharging your responsibility over basic procurement policies. Such a Board is needed, I am convinced, because there is now no organization to coordinate and direct the price, cost, and profit Policy Board aspects of procurement. (The Procurement Policy Committee is not designed to function in that capacity.) It is also needed in order to give the public, and labor in particular, assurance that policies with respect to price, cost, and profit control in war contracts are in firm and competent hands, in the hands of a quasi-judicial body. 151 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE The recommendation of the organization of a War Contracts Policy Board does not mean that we regard any far reaching immediate changes in basic policies as necessary. We feel, however, very strongly (a) that it is essential to insist on the minimization of real cost of war production, consistent with speedy and quality production, as the decisive criterion of contracting methods and contract allocation; (b) that the contract policies of the Army, Navy and Maritime Commission should be coordinated as far as possible and to a much larger extent than they now are; and (c) that the contract policies of the procurement agencies should be coordinated with the activities of the OPA and the Treasury insofar as these affect war production through pricing or tax policies. The War Contracts Policy Board is intended to accomplish these objectives. We were ready to submit these recommendations to you more than two months ago, but were then discouraged by some members of the Purchases Policy Committee who urged us to observe the actual operations of the Price Adjustment Boards for a little while. This scrutiny, together with the observation of other developments in the field of profit control, have convinced us more than ever that a clarification, integration and vitalization of the price, cost, and profit aspects of procurement policies is urgently needed. I believe that this recommendation should receive the immediate consideration of the War Production Board. Robert R. Nathan Robert R. Nathan Chairman Planning Committee August 31, 1942 PLANNING COMMITTEE RECOMMENDATION NO. 14 To: Mr. Donald M. Nelson, Chairman, War Production Board Subject: Organization of a War Contracts Policy Board I. Conclusions and Recommendations
27. Conclusions Three months’ experience with the Price Adjustment Boards of the War and Navy Departments and the Maritime Commission, established under Section 403 of the Sixth Supplemental Appropriations Act, 1942, leads to the conclusion that the present arrangement ( 1 ) does not provide a solution that is satisfactory or sufficiently comprehensive from the point of view of the war production effort as a whole ; (2) suffers from the absence of coordinated policies; (3) fails to reflect adequately the responsibility of the WPB of determining basic policies in the field of war contracts; (4) does not give proper attention to the interests of the OPA and the Treasury, and (5) fails to recognize the deep and justified interest of the public, particularly labor, in the setting of prices and profits in war contracts.
28. Recommendations It is recommended that a War Contracts Policy Board be organized within WPB to utilize contract negotiations to the fullest extent in encouraging efficiency in war production. The Board should include, in addition to officials of the WPB, representatives of the War and Navy Departments, the Maritime Commission, the Treasury and the OPA. It should (a) develop policies applicable to all war contracts of the Government and all their sub-contracts, newly negotiated or renegotiated; (b) study departmental practices in the field of contract negotiation and administration; (c) advise the WPB, the contracting agencies, the President and Congress on problems of war contracts; and (d) explore and promote the possibilities of cost control in the production of armaments. II. The Present Status of Contract Review
29. Statutory Basis Section 403 of the Sixth Supplemental National Appropriations Act, 1942, provides for the renegotiation of any contract or its sub-contracts entered into by the War Department, the Navy Department and the Maritime Commission and not yet fully settled on the effective date of the Act (April 28, 1942), directs the insertion of renegotiation clauses in future contracts, and provides for the submission of statements of actual costs of production and other financial statements by any contractor or subcontractor who holds war contracts in an aggregate amount of $100,000 or more.
30. Organisation of Departmental Price Adjustment Boards In accordance with Section 403, the War and Navy Departments and the Maritime Commission have each formed a Price Adjustment Board. The set-up of the Boards and the procedures and policies which they follow differ, however. While none of the Price Adjustment Boards has yet developed a set of definitive policies, it appears that they all limit their activities to an examination of profits made by individual contractors and sub- 152 APPENDIX contractors under those contracts where larger amounts are involved. The Boards will then by negotiation with the contractors and subcontractors fix (or, in the case of smaller contracts for which subordinate officials will do this, approve) the amounts that should be returned to the Government as excessive profits. The readjustment of prices in individual contracts, necessary to effectuate the return of the agreed sums to the Government, will generally be left to negotiation between the contractors and the individual contracting officers in the Services. III. The Defects of Present Arrangements Three months’ actual experience has confirmed our original belief that the present arrangement is not satisfactory and fails to provide a comprehensive solution of the problems of contract negotiation from the point of view of the war production effort as a whole.
31. Lack of Definite Policies The Boards have failed to develop a coherent set of policies to guide ther operatons. (The pronouncement of August 19 can hardly be regarded as such). This defect apparently is not due primarily to the fact that they have been operating only for a short time.
32. Lack of Coordination The renegotiation of contracts is directed by three separate groups and the actual adjustment in contract prices is left in the hands of a multitude of contracting officers. While there is contact between the Price Adjustment Boards of the War and Navy Departments, anything like a really coordinated policy covering all contracting departments will hardly evolve. As a matter of fact, differences in procedure and approach have already become apparent.
33. Exclusion of New Contracts The Price Adjustment Boards deal only with the renegotiation of contracts already in force. Nothing is done towards unifying practices in letting new contracts or systematically adapting the terms of new contracts to changes in the economic situation.
34. Neglect of Cost Control If the contracting departments are in exclusive charge of renegotiation, cost control may easily be forgotten over profit pruning, or at least may be relegated to a secondary position. Evidence indicates that this has been actually happening.
35. Lack of Permanency The settlement of contracts outstanding at the end of the war will present one of the most difficult problems of transition to peacetime production. The departmental Boards are not in a position to prepare adequately for this situation, be it only because of their preoccupation with day-to-day work.
36. Insufficient Influence of WPB The present arrangement does not provide for the WPB to exercise any considerable, let alone decisive, influence on policy, as Executive Orders 9024 and 9127 appear to have envisaged. The line representative of the WPB on the three Boards can hardly be expected to influence policies directed by the departmental representatives who heavily outnumber him.
37. Lack of Representation of OPA Under the present arrangement, the OPA is left without direct contact with contract negotiation, although it has been considering the issuance of rules which will affect the prices of armaments by freezing the general pattern of the methods of price calculation. Close contact with the OPA is also necessary because we cannot, without creating very serious difficulties to business, apply one set of rules to the formation of prices or to the profits made in the production of armaments and another set to civilian commodities.
38. Lack of Representation of Treasury Participation of the Treasury is almost required because the Treasury itself is letting a considerable number of contracts through the Procurement Division ; is beginning to exercise a sort of profits control of its own by disallowing certain expenditures in corporate tax returns; imposes taxes, one of the most important factors to be taken into account in formulating contract policies; and must make allowance for the results of renegotiation in amending contractors’ tax returns.
39. Lack of Public Stature Renegotiation, together with the entire problem of war contract terms, has been treated hitherto too much as a purely technical question. Whether we like it or not, the prices paid by the Government for armaments and hence the profits made in war production are a matter of greatest interest to the public, and to labor in particular. It is, therefore, necessary to have an organization headed by a man of public standing, an organization in whose competence, firmness, impartiality, and independence the public has complete confidence, an organization of a quasi-judicial nature which gives assurance that it is not the creation but at least the equal of the contracting departments, possessing the intention and the power of coordinating their activities and of ending overlapping, inconsistencies and squabbles among them. The Price Adjustment Boards of the Army, the Navy, and the Maritime Commission, on the other hand, were conceived chiefly as operating bodies, on a technical rather than a policy making level, and were given as their primary assignment the recapture of the cream of contractors’ profits.
40. The British Example The British, immediately after World War I, set up a Coordinating Committee for government 153 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE contracts which has been functioning ever since. The Committee consists of the Directors of Contract of the contracting departments under the permanent chairmanship of a high Treasury official. It lays down the policies which the departments are to follow in negotiating contracts and in setting contract prices; obtains agreement among departments on cost reporting and auditing procedures; and eliminates overlapping examinations of contractors’ records. IV. The Scope of the War Contracts Policy Board The proposed War Contracts Policy Board shall 1. Determine policies and issue directives to be followed by the contracting departments and their Price Adjustment Boards with respect to (a) contract types; (b) the principles governing the setting of prices in war contracts; (c) the recovery of excessive profits; (d) the termination and settlement of contracts, particularly at the end of hostilities; (e) the form and content of cost records to be kept by contractors; (f) inspection and audit procedures; (g) cost and profit analysis.
41. Study departmental practices with a view to unification and improvement. The Board, in that capacity, should have access to all material available to the departmental Price Adjustment Boards and should be empowered to examine their proceedings.
42. Prepare for Cost Control. The longer the war lasts, the larger the volume of war contracts and the more the ordinary incentives to keep costs down are impaired, the more important cost control becomes. There is no other body within the Government, both close enough to the practical aspects of war production and free enough from an overpowering mass of current operating assignments, that could equally well explore the possibilities of cost control, experiment with it, and develop the system that best fits our situation.
43. Prepare for the Liquidation of War Contracts. A very large amount of war contracts will be in force when hostilities end. How quickly and how successfully these contracts are liquidated will have an important effect on the transition of our economy to peacetime operations. The Board is the logical organization to develop techniques to cope with this problem and to do the necessary educational work within the Government and Congress, and among the representatives of business and labor. It is not advisable to give the War Contracts Policy Board the power to review individual contracts or the handling of individual contracts by the departmental Price Adjustment Boards. While such power would undoubtedly strengthen its authority and increase the efficiency of its policy recommendations, it would saddle the War Contracts Policy Board with the responsibility for the specific settlements made, force it to engage a large staff and probably arouse strenuous opposition from the contracting agencies. V. Organization of War Contracts Policy Board
44. Creation It is recommended that the Board be created by an order of the WPB and attached to the Executive Office of the Chairman of the WPB. Very rough drafts of a General Administrative Order and of a Joint Memorandum, which might be used in setting up the Board, are attached as Exhibits A and B.
45. Membership The Chairman of the War Contracts Policy Board should be the direct representative of the Chairman of the WPB and a man of highest caliber and of public standing. (Some of the ranking members of the Federal bench with strong economic interests might fit the bill.) The remaining six members should be either selected by the participating agencies (War Department; Navy Department; Maritime Commission; Treasury Department; Office of Price Administration; Labor Productivity Division of WPB) or appointed by the Chairman of the WPB with their advice. The members, who should be high ranking representatives of their organization (such as direct assistants of the Undersecretaries of War and the Navy) will have to devote a good part, if not all, of their time to the affairs of the Board.
46. Staff Practical experience with similar governmental agencies, in this country and abroad, indicates that the Board will be fully effective only if it has a staff of its own. This staff, however, should not in any way supersede the accountants of the contracting agencies, although it might absorb the cost accounting section of the WPB. Rather, it should be a small but highly qualified force to assist the Board in deciding on policies; to develop and to set standards for cost recording, cost reporting and cost control systems; to cooperate with the contracting agencies in a systematic analysis of contract costs and performance; and to examine special problems as they arise.
47. Cooperation with Procurement Policy Committee Close cooperation should be established between the Procurement Policy Committee and the War Contracts Policy Board. It is our considered judgment that, although both organizations might have one or two members in common, most of the membership as well as the staffs should be separate, since the immediate field of activities and the methods of approach are different even if the ultimate objectives 154 APPENDIX are identical, namely the promotion of efficiency in war production. We do not feel that the Procurement Policy Committee could at the same time act as the War Contracts Policy Board. Specialization, prestige and permanence, all of which dictate independent existence, are, in our opinion prerequisites to the Boards success. For the Planning Committee Robert R. Nathan Robert R. Nathan, Chairman Attachments Exhibits A and B4
Attachments, entitled Exhibits A and B, have been omitted from publication. Exhibit A consists of a draft of a proposed General Administrative Order of the War Production Board establishing as a part of the Executive Office of the Chairman a War Contracts Policy Board. Exhibit B is a draft of a proposed joint memorandum from the War Department, Navy Department, Treasury Department, Maritime Commission, Defense Plant Corporation, and Smaller War Plants Corporation to officials of those agencies notifying them of the creation of the War Contracts Policy Board and instructing them to follow the policies prescribed by it, to aid it in a study of war contracts, and to give it access to all material and documents available relating to negotiation and renegotiation of contracts. September 4, 1942 PLANNING COMMITTEE RECOMMENDATION NO. 15 To: Mr. Donald M. Nelson, Chairman War Production Board Subject: Analysis of the War Production Program5 We are transmitting herewith a comprehensive analysis of the war production program, together with a statement of the basic principles of program formulation. These important documents deserve careful reading by the members of the War Production Board, the Vice Chairman, Deputy Chairman on Program Progress, and Director General for Operations of the Board, the members of the Combined Production and Resources Board, and the members of the Combined Chiefs of Staff. We accordingly request you to authorize distribution of the documents to these officials. We also recommend that the feasibility of the production program and the desirability of a more effective organizational arrangement for production programming should be formally considered at early meetings of the War Production Board and of your small cabinet of key officials. For the Planning Committee Robert R. Nathan Robert R. Nathan Chairman 5 Planning Committee Recommendation IS took two forms. The version of September 4, 1942, was prepared, pursuant to action of the Committee on September 3 (Minutes 54, item 1), primarily as a transmittal to accompany Documents 151, “Analysis of the Production Program,” and 157, a memorandum from Simon Kuznets to the Planning Committee on “Principles of Program Formulation.” The version of September 19 summarizes Document 151, which is also an attachment, and incorporates virtually all of Document 157. It was this longer version that became War Production Board Document 146, which was discussed at the Board meetings of October 6 and 13, 1942, and acted upon at the latter meeting. Presumably this version also took the place of an intended statement on production and strategy which was adopted by the Committee as Recommendation 18 on September 17, 1942 (Minutes 55 item 2), but never transmitted as a separate Recommendation. Analysis of the Production Program,” transmitted by Recommendation 15, has been omitted from publication. September 19, 1942 PLANNING COMMITTEE RECOMMENDATION NO. 15 To: Mr. Donald M. Nelson, Chairman, War Production Board From: Planning Committee, War Production Board Subject : Feasibility of the Production Program
1. The conclusions of the detailed analysis in the enclosed memorandum by Mr. Simon Kuznets may be summarized as follows : (a) The objectives for munitions and war construction for 1942 will not be reached by a fairly substantial margin. Of the total of some $55 billion, not more than $45 to $47 billion will be produced during the current year—on the basis of assumptions that, while optimistic, still stay within the bounds of feasibility. 686312—46—11 (b) The munitions and construction program for 1943 also appears to exceed significantly the limits of feasibility. Calculations based on rather optimistic assumptions indicate a possible value of munitions output and construction in 1943 of between $75 and $80 billion, which will fall short of objectives by about $10 billion. (c) The program for 1943 would be even less feasible were it to include the residue of the 1942 objectives that are not likely to be fulfilled during 155 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE the current year. On that basis the value of munitions and construction goals for 1943 would rise to roughly $97 billion, a level at least one-fourth above the total that seems feasible. (d) These conclusions are suggested not so much by a shortage of any specific resource, but by the movement of production rates in the immediate past and considered judgments as to the rates that may reasonably be expected in the immediate future. A shortage or surplus of any specific resource is not of itself an indication of the impossibility or feasibility of a given production program. (e) While shortage of materials rather than of facilities and of labor appears to be the present and prospective limiting factor, it should not be over-emphasized. What is termed scarcity of materials may really mean scarcity of components, which in turn may be due to a variety of factors on the side of facilities, labor, and organization. As proper measures solve what appear to be material shortages, other limiting factors that are already operating in the guise of material scarcity may emerge.
2. In considering whether, in the light of these conclusions, the program should be adjusted downwards, the advantages and disadvantages of a program above the levels of feasibility should be carefully scrutinized. A set of production goals that are beyond attainment carry the danger of the production effort yielding too many unfinished products: facilities for which there is no labor or materials; components for which complementary parts are missing; end-products that cannot be transported. The second disadvantage of too large a program is that mortgaging all resources to a fixed set of goals leaves no reserves to provide for unforeseen emergencies—an argument that would call for reducing the production program somewhat below that of the feasible maximum. On the other hand, a large military production program provides a powerful stimulus towards an all-out effort, and develops pressure towards reducing civilian production to the essential minimum.
3. There would be no harm and some advantage in having a program sufficiently above the levels of attainment if the objectives were so clearly articulated and the system of production controls so efficient that balance in components and end-products would be assured even if total objectives were not reached. Such close production control, which in turn must be based upon a program definitely specified, both in time and as to relative importance of the items, is of primary concern. If attainable, such control would make the question of the excessive size of the program a secondary consideration.
4. It is not possible to develop an efficient system of production control in the absence of an authoritative set of production objectives scheduled over time and classified by levels of indispensability and importance. No such objectives are available now, and the program analyzed in the detailed memorandum is nothing more than a set of claims submitted by the separate claimant agencies. In important areas, such as the Navy or war industrial facilities, there is no formally recognized set of objectives (as distinct from commitments or production schedules). We do not now have a program with reference to whose scope, contents and levels or urgency there is complete agreement.
5. Under these circumstances, a program that is too large for the productive system, carries with it the full danger of imbalance between end-products and facilities; between finished items and components ; and among various complementary endproducts. That this danger is already upon us is shown by the analysis of output of munitions and military construction during recent months. The analysis reveals that production is well above schedules for some easy items and significantly below for many of the harder items and components. This is an inevitable consequence of a huge program flooding the channels of the production system without a careful unified control of each and every production stage from raw material to end product.
6. While the pressing problem is to correct this imbalance by curbing the items that are ahead of schedules and concentrating on the items that are behind, we must not overlook the fundamental, basic source of the trouble. There can be no efficient production control without production schedules; there can be no meaningful production schedules without well-formulated and properly screened objectives, spelled out over time and in respect to relative importance of end-products; and there can be no such set of objectives unless there is a competent body, taking responsibility for formulating them in broad terms, and seeing to it that the spelling out in detail does not contravene the considerations that determined the program in its broad outlines.
7. The fundamental bases for formulating the production program in its major categories are a combination of strategic, economic, and political considerations. The strategic relate to the general balance among broad categories of weapons and complementary items; the economic to the productive resources available in the country and the extent to which they can be shifted to military production on a given time schedule; and the political to 156 APPENDIX the extent of indicating how far we can go in changing the existing institutional set-up under which the economy operates.
8. This joint determination of program formulation by strategic, economic, and political considerations must be recognized as axiomatic. Even when parts of the program are formulated, as they were in the past, by individual agencies that could not fully and officially encompass these three broad groups of considerations, these agencies inevitably took them into some account in setting their objectives. The decisions upon the size of the Army, of the Navy, of the merchant fleet, of the air fleet, even if made by bodies that are presumably and officially concerned with the strategic factors alone, will be found in the last analysis to have taken into account the economic and political factors. The trouble, however, was that the consideration of these factors was secondary and biased in favor of the agency concerned. There was no proper screening of the results by juxtaposition with the objectives set by other agencies. There was no review of the whole program from the viewpoint of all the determining factors involved.
9. What we urgently need is an authoritative body that would represent fully and competently the strategic, economic, and political (in the sense of broadly social) factors that must jointly determine a well-formulated production program. No segregation of strategic from economic, or economic from political factors is feasible; and no mechanism that calls for separate application of these factors, with continuous shuttling back and forth among agencies that are supposed to represent each, will really work. The task can be adequately performed only by a complete fusion of these factors in the work of a competent and continuously functioning body. This body would in a sense be the supreme war production council, concerned with the broad questions of production strategy. No such body seems to exist at present, although some of its functions are intermittently performed by the President.
10. It is highly significant that the President serves as that body whenever acuteness of the situation calls for action. For the President combines in the powers and interests of his office the strategic, economic, and broadly social considerations. But obviously the President cannot be expected to undertake the continuous formulation of the program and the supervision of its spelling out that the supreme war production council should undertake. Naturally, such a council would be advisory to the President and subject to overruling by him; with the President’s consent, it can itself do the major part of the job.
11. Following the earlier recommendations of the Planning Committee, this body ought to include people responsible for military strategy (not procurement) ; for production strategy (in the broadest sense of this word) ; and for social or political strategy. It ought to have a staff capable of bringing to bear the factors involved in these strategies upon the formulation of the program ; and in checking upon the ways in which the programs are being specifically articulated by the separate agencies (Army, Navy, etc.). And it ought to be given complete authority over the separate agencies in reviewing the execution of its decisions on the broad outlines of the program.
12. Unless such a body is established; unless a program can be formulated (for the first time in the present war) by a joint consideration of all its parts and in terms of the joint bearing of strategic, economic, and political considerations ; unless this body operates continuously both to revise the program and to check its detailed formulation by the separate agencies, we are in grave danger of reducing materially the contribution that the production system of this country can make to the war effort. We shall be threatened by continuous imbalance in output and by failure to obtain from our productive system the vast flow of munitions which we are capable of producing. For the Planning Committee Robert R. Nathan Robert R. Nathan, Chairman September 9, 1942 PLANNING COMMITTEE RECOMMENDATION NO. 16 To: Mr. Donald M. Nelson, Chairman, War Production Board Subject: Conservation of Resources by Curtailment of Production of Obsolescent Items 7///; / Military Equipment The responsibility of the War Production Board for production programming, conservation of critical materials, and rapid conversion of war plants to the production of newly designed weapons imposes on it an unavoidable obligation to ensure against the wastage of materials, tools, and man 157 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE power in the production of obsolescent types of military and naval items. You have recently called to the attention of the staff the time-lag involved in the translation of sound principles into specific, authoritative decisions for the guidance of industry. We feel that such a lag characterizes the attempts to relate combat experience with American weapons to contracts, production schedules, materials allocations, and facili-ties-construction programs. We therefore, recommend that the Vice Chairman on Program Determination review the endproduct requirements of the Armed Services, sub mitted to the War Production Board, in order to determine the extent to which materials are being consumed in the production of military and naval items that combat experience has revealed to be obsolescent. Information possessed by the Armed Services as to combat experience with the products of American industry should be made available to the Vice Chairman. This, of course, is fully consistent with the free interchange of production and strategy data and views that this Committee has advocated. For the Planning Committee Robert R. Nathan Robert R. Nathan, Chairman September 5, 1942 Mr. Donald M. Nelson, Chairman, War Production Board Control of the Flow of Materials PLANNING COMMITTEE RECOMMENDATION NO. 17 To: Subject: The Planning Committee has considered the problems involved in controlling the flow of materials, and transmits herewith a comprehensive analysis of these problems. On the basis of this analysis, the Committee finds that:
13. Tight control over the flow of materials is es-‘ ■ sential if program objectives are to be met, even if the objectives have been adjusted to feasible limits, t
14. There are two principal methods of controlling materials: by horizontal allocation to individual plants using the materials (PRP) and by the vertical method through end product producers.
15. If the PRP method is retained, main reliance will have to be placed on independent programming, scheduling and conservation measures. There are serious difficulties connected with independent action in each of these areas.
16. The vertical method is preferable. It would . integrate allocation with programming and scheduling and encourage conservation. The Committee recommends that:
17. The War Production Board adopt the vertical method of allocating critical materials to important programs, retaining PRP for certain special purposes.
18. An authoritative group be appointed to work out details and institute this system for materials allocation to certain programs by January 1, 1943. A concurring opinion by Mr. Blaisdell is appended. For the Planning Committee Robert R. Nathan Robert R. Nathan, Chairman September 4, 1942 Memorandum Concurring Opinion in re Planning Committee Recommendation No. 17 I am in agreement with Recommendation No. 17 insofar as the substantive provisions are concerned. However, approval of the recommendation without indicating the implications surrounding its adoption would give a false impression as to my expectations as to what cap be achieved by its adoption by the War Production Board. The struggle over PRP and the “Warrant System” has been a struggle between the Services and the War Production Board for the control of the fundamental economic machinery by which we provide the sinews for maintaining the war program. , The Services have indicated again and again their conviction that as long as they were given a relatively free hand to secure what they wanted, the rest of the economy would take care of itself. This conviction has continued even in the face of analyses which have demonstrated that their requirements both as a whole and as far as the demands on particular commodities are concerned are far in excess of anything which is available. It is presumed by them that a free hand to military contracting and expediting officials is all that is necessary for carrying out an effective supply system. This might be supplemented by the employment of a limited number of civilian representatives of industry who can make available their technical information when it is asked for. By a “Warrant System” they wished to guarantee themselves a first claim on all materials. Oh the other hand, the general position of the War Production Board has been that manufacturers if given contracts by the Services are perfectly competent to carry through the supply program provided each of them is given materials which are asked for in order to complete the program. By and large, the War Production Board has also felt that there is a plentiful supply of material to carry out everything which we want to do, including adequate civilian supply. There are many within the War Production Board who would properly resent any such attitudes being attributed to them as individuals. However, a disinterested appraisal suggests that this is not a great distortion of the facts. PRP has expressed this point of view. An accurate description should further indicate that no one who has. studied the problem had any illusion that PRP would provide all 158 APPENDIX the controls necessary. It was to be part of a system of controls.»The other parts have never been adequately forged. In one sense the advocates of both systems are right. There is sufficient material available to carry the powerful military program as well as maintain a strong civilian economy. This can only be done, however, by the establishment of a more complete and thorough-going control system. The collection of the information necessary for administering PRP or the “Warrant System” would make practical the operation of either one provided the essential ancillary control mechanisms were also made to function. However, under PRP as administered to date, inadequate bills of materials for proper allocation of materials, and inadequate knowledge of schedules, contracts, and timing have made it impossible to make proper allocations. It is difficult to believe that by shifting to the “Warrant System” we will automatically achieve the qualities which would have made it possible for us to carry out a control program under PRP. The situation is paradoxical. Each of us—the War Production Board and the Armed Services—is anxious to se cure control only so that there will be no other control, even though we have not utilized the control ourselves. The struggle over the technicalities involving PRP and the “Warrant System” has prevented us from seeing this fundamental contradiction. We have not actually wanted to control. We have wanted to prevent someone else from controlling. I am concurring in the recommendation because I believe the “Warrant System” can provide a type of control which is essential in producing certain commodities. However, a system similar to PRP will continue to be necessary for allocating materials for certain “bulked items” and maintenance and repair. Furthermore, both systems will have to be complemented by more adequate “scheduling” (in a technical engineering sense), more adequate programming of new facilities and expansions, more adequate bills of materials, more adequate inventory controls, more adequate programs of substitution and conservation, as well as vigorous administration, if we are to bring the materials problem under control. Thomas C. Blaispell, Jr. September 1, 1942 To: Mr. Donald M. Nelson, Chairman War Production Board From: Robert R. Nathan Subject: Control of the Flow of Materials The objectives of the Munitions Program are so high that there is a real question whether they am within the bounds of feasibility. Even if they prove to be too high, and are adjusted downward, they certainly shall remain—as they should—so high as to strain our resources to the very limit if we are to approximate their attainment. It follows that controls over the distribution and use of our scarce resources must be tight and inclusive. Until very recently, the War Production Board and the procurement agencies have been driving for maximum production of all war items and all components. In the early stages of the program this was the right policy. But the size of the program and our facilities for producing it have expanded to the point where imbalance has developed within the program and between the overall program and available supplies of industrial materials. The greatest difficulty in attempting to restore balance is that our bookkeeping has been so imperfect that we do not know how much we have overshot the mark, in what directions, and at what cost to the lagging items and bottleneck components. Once difficulties are encountered in securing supplies of materials forces are set in motion which magnify apparent shortages. But one thing is certain: if we fail to secure balance in the flow of materials, components and end-items, our production will fall short not only of present objectives but alào of the potentialities of American industry. To secure balance we must accomplish three things:
19. We must adjust and balance the overall program in such a way that it will be strategically sound and within the possibilities of material supply.
20. We must properly schedule end-items and components in accordance with this balanced program.
21. We must devise a tight method of distributing materials in accordance with the needs to meet these schedules. We are not equipped at present with information or mechanisms which would enable us to accomplish any one of the three. Production schedules and bills of materials required to balance the program are incomplete. Some branches of the Services have properly scheduled the production of end-items; most have not; and none has accomplished the infinitely more difficult job of scheduling the flow of components. We are using as our basic mechanism for controlling the flow of materials the Production Requirements Plan, Which allots materials on the basis of a report (PD 25A) which includes no information regarding production schedules. In other words, the basic information required for intelligent program determination and for adjusting schedules to the program is not available; we are collecting vast quantities of information in an attempt to distribute materials, but it is information which is useless for either program determination or scheduling. ; These three problems are closely related. To solve them independently will require the collection of better information for program determination and for adjustment of schedules to the programs. This same information can be used to allocate materials in proper relation to programs, scheduling, and procurement. The present PRP system, as it is now used, might be described as an ingenious attempt to shortcut the necessity of allocating materials in accordance with actual requirements to meet fixed schedules adjusted to programs which are feasible. There is no short cut. This document will deal with the method, of controlling the flow of materials and its relationship to the other major problems of program determination and balanced scheduling now facing the War Production Board and the Services. The Production Requirements Plan The use of the Production Requirements Plan in the third and fourth quarters of 1942 was not a mistake, provided that it does not prevent the development of better mechanisms. No better mechanism had been developed at the time the decision was made. The Production Requirements Plan has several advantages over the simple preference rating system:
22. It provides a rudimentary inventory control.
23. It makes it possible to deny materials for obviously non-essential products.
24. It provides some check—although an altogether inad 159 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE equate one—against the inflation of ratings as they are extended through successive levels of fabrication.
25. It makes it possible to allot balanced quantities of different materials to each plant.
26. It provides a mechanism which could be used to keep allocations of basic materials within supply, although the allocation could never be related to needs for scheduled end items. As a means of controlling the flow of materials in an all-out war economy, with a production program which is pressing on or exceeding material supplies, the Production Requirements Plan, or any other plan which allots material on the basis of total stated requirements of each material consuming plant, is not good enough. It suffers from the following grave defects, which we believe cannot be remedied within the framework of the plan:
27. It provides no basis for an intelligent “cutting of the pie” at the policy level. When requirements are collected on a plant basis, they must be summarized according to a mixed classification of end, intermediate and primary products. No group of men, no matter how intelligent and well meaning, can make meaningful policy determinations on such a basis.
28. Requirements as stated by manufacturers cannot be checked against bills of materials and production schedules. The only check available is past usage (two quarters previous to that for which requirements are stated), which actually favors the applications of manufacturers who are already ahead of schedule. There is no doubt that inflation of requirements, because of optimism, or ignorance, or simply in anticipation of cuts, is a serious problem, and will become more serious.
29. PRP does not help to keep the overall program in line with material supply. It is essentially a means of trying to cut down material allotments to programs already contracted for and scheduled.
30. It provides no effective control of the distribution of intermediate products. It divides basic materials among plants, but the use and direction of this material is still controlled, within broad limits imposed by this division, by the faulty preference rating system—a system without the all-important element of timing.
31. It provides no incentive for the Services or other procurement agencies or prime contractors to cooperate in balancing programs, scheduling, or conservation.
32. Mixed categories of products fabricated in the same plant must be reviewed and processed by persons wholly unfamiliar with some of the products.
33. It is an excessively centralized time-consuming mechanism based on elaborate formal reporting. It is worth noting that PRP applications for the fourth quarter will not be processed until the end of October; that some third quarter forms are still being processed. Most of these shortcomings could be summarized in this way: PRP attempts to control the flow of materials independently of programming and scheduling. It does not help to get schedules into line, and there is no means of integrating its authorizations with schedules. This means that we cannot rely on PRP as our major instrument for controlling production. If we retain PRP we shall have to accomplish independently all the things which PRP does not help to accomplish: i.e., we shall have to adjust and balance the program, properly schedule the flow of both end items and components, and eliminate wasteful specifications and processing methods. We shall have, in addition, to revise and sharpen the preference rating system, and to perfect and expedite inventory control. All of these things are extremely difficult to accomplish. Independent program determination. This would require 160 the same information that would be required for vertical allocation. We would be collecting requirements-for program determination in one way—bills of materials; requirements for allocation purposes in an entirely different way—PD 25A forms; and the two could not be correlated. This means that there would be no check on the accuracy of the bills of materials, no way of improving them through use. It would also mean that material allocations could not be used to enforce the programs; for enforcement we should have to resort to something closely akin to limitation orders on military items. Independent scheduling. We are making some progress in scheduling end-products, but the schedules cannot be very meaningful without an assurance of materials. The scheduling of components is an infinitely more difficult job, and has scarcely begun. Proper scheduling is not a simple job of collecting information; it involves judging the reasonableness of hundreds of thousands of lead factors. If schedules were made independently of materials allocation they would have to be enforced by the limitation order method. Merely urging manufacturers not to schedule ahead of need or to produce ahead of schedule is not likely to be effective because this runs counter to the apparent self-interest of each manufacturer and each procurement officer. Directives would be required. Independent Conservation. The difficulties of an independent conservation policy are too well understood to require a detailed analysis. The real problem is to secure cooperation from the procurement agencies and from industry. PRP does not induce such cooperation. Revision of Preference Ratings. It would become imperative to apply preference ratings to a schedule of production of end-items per month, and to police their extension. We know how difficult it is to prevent inflation of ratings, particularly at subcontracting levels where the relation between orders for material and end-product schedules is arbitrary or obscure. Inventory Control. Since PRP does not allocate against production schedules a heavy burden would be thrown on inventory control. PRP provides some control over inventories of basic materials (too little and too late), but none over work in process or components, and it is doubtful whether any reporting form can be devised that will give control over these categories. Field inspection and rigorous compliance measures provide the only satisfactory answer. A tighter inventory control is necessary whatever form of allocation we use, but we should throw as little burden on it as we can: control through inventories means control by correcting past mistakes. Retaining PRP but placing major reliance on these independent measures is the hard way to control the war production program. It involves a great many independent controls, each of which must function satisfactorily. It involves the collection of much unnecessary information. It involves highly centralized controls, and the policing of other agencies and of industry on innumerable points of detail. We believe that there is a simpler and much more effective way to accomplish the same end. Vertical Allocation The alternative method of control, which would materially assist in solving the major problems confronting the War Production Board, is vertical allocation through the prime contractor, based on quotas fixed by WPB for endproducts or groups of end-products, and administered by the agencies directly responsible for procuring and/or scheduling the output of such end-products. This method has the support of many individuals in WPB, the Services, and industry. It is the basis of the experiment (Contract Production Control) now being conducted by the War Production Board in connection with three naval radio contracts. It is also the basis of the General Motors plan. It is the method which both Great Britain and Germany have adopted, for a limited number of basic APPENDIX critical materials, after a great deal of experimentation with preference ratings and controls analogous to PRP and Materials Branch allocations. The Steel Quota Plan embodies some characteristics of this method, but we do not believe that in its present form it provides a satisfactory answer to the problem. This memorandum is concerned not with the details of any specific proposal, but with the general aspects of vertical allocation. The basic premise of vertical allocation is that the distribution of materials should be coordinated with production schedules. This means that monthly quotas of each critical material must be fixed for each end-product program, and that the distribution of the quotas among endproduct producers should be the responsibility of the branch, Service, or agency which procures or controls the endproduct. Intelligent determination of quotas requires a detailed breakdown of material requirements by end-products. The success of this method of allocation depends upon our ability to secure comprehensive and reasonably accurate bills of materials. Despite doubts expressed in some quarters we are convinced that good bills can be developed. Each manufacturer should know how much material he requires to make his product or component, and most know now. Requiring a manufacturer to develop and submit authoritative bills and lead factors will have a salutary effect in tightening controls in his own shop. Quotas would be fixed by WPB in accordance with a master production plan, although responsibility for the detailed sub-division of quotas could and probably should be delegated to the Service, branch, or agency directly concerned. (Thus, if WPB cut the quota requested for Army Ordnance, the Army could be asked to decide between cutting tanks and guns, and the master production plan adjusted accordingly.) The basic decision which WPB must make is that between major claimants; but to make this decision intelligently rather than on the basis of bargaining and compromise full supporting information is essential. It would be the function of the branch of the Service (or WPB or other agency) responsible for an end-product to sub-divide its quota among prime contracts (in the case of civilian products, the producers of end products), giving to each prime contractor sufficient material to cover his needs and those of his sub-contractors to meet the production schedule. It would also be the function of the branch, where cuts were necessary, to make appropriate adjustments in production schedules. It would be the function of the prime contractor to distribute the material authorized among his part suppliers. There is little doubt that he would perform this function well because his profits and his contribution to the war effort would depend upon his making the best possible use of his allotment. Physical “warrants” would not be necessary. A specific quantity of material would be allotted to each contract or approved production schedule with a symbol indicating the quota from which the allotment was made and a number indicating the specific allotment. Prime contractors or final assemblers’ would use this symbol and number in placing their own orders with material producers, and would authorize their sub-contractors to use them within the limits of the allotment Producers would report periodically on shipments under each quota, and the passing down of allotment numbers would enable spot checks to be made wherever violations were suspected. The WPB Materials Branches would be responsible for keeping records; for controlling the flow of raw materials to producers of basic materials; for adjusting overloads of particular basic material producers or allocating capacity wherever this proved necessary; and for making the estimates of supply on which the determination of quotas would be based. We propose that this method should be used for the limited number of materials which are at the same time of basic importance and critically short (steel, alloy steels, and copper; possibly rubber, tin, nickel, zinc, aluminum, and magnesium; the first three probably would be sufficient to control the program). A modified Production Requirements Plan would be retained :
34. To meet the requirements of producers of nuts, bolts, ball bearings, etc., which are purchased in small quantities for a very wide variety of end uses. A definitive list of such products would be prepared.
35. For repair, maintenance, and operating supplies.
36. As a periodical inventory report. Where excessive inventories were discovered they would be recaptured, or the firm would be required by directive to cancel purchase authorizations (received from a prime contractor or an agency) to the amount of the excess.
37. To extend ratings on less critical materials not covered by vertical allocation. Advantages of vertical allocation Vertical allocation of this type would remedy most of the defects of the Production Requirements Plan.
38. It would assemble material requirements in a form which would facilitate the making of intelligent policy determinations, based on strategy. The operation of the plan would require and force the making of such decisions by the authorities responsible for strategy. Firm quotas could not be fixed for more than three months in advance, but long range planning and short range quota-fixing would be in the same terms, and could easily be integrated.
39. The overall program would automatically be kept within the limits imposed by the supply of basic industrial materials.
40. WPB policy determinations would be implemented directly and accurately. Schedules would be adjusted to programs and allocations made to meet schedules and no more. It is sometimes argued that vertical allocation based on quotas involves a surrender of authority by the War Production Board. It does decentralize administrative detail to the agencies who can coordinate it with procurement and to the prime contractors. Where, cuts have to be made in programs, it permits the Service Branches to sub-divide reduced allotments among their various end products. But it gives the War Production Board, for the first time, a mechanism by which it can implement its policy determinations and thereby control procurement activities.
41. Requirements are stated by prime contractors in a form in which they can be checked against bills of materials and production schedules. There would be a problem of inflation of requirements by each procurement agency, but these could be roughly checked by the War Production Board in the same way. This would become the principal function of the Requirements Committee staff, which would have the assistance of the Statistics Division and the Materials Branches.
42. The plan will exert pressure on the Services and other agencies responsible for procurement or production programs to make the most effective use of materials. Each agency, instead of competing with others through the issue of preference ratings, will be working to a bank balance. If it wastes materials in one direction, it will have that much less in another. In the past the easiest way for a Service or a branch of Service to secure additional production has been to steal materials from another Service or branch. Once quotas are fixed the only ways will be: (a) Scheduling the flow of end-products and components, so that material can be denied to items which are ahead of others complementary to them. 161 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE (b) Conservation (i.e., substitution of less critical materials, changes in specifications, reductions in processing losses and rejects).
43. It will exert the same pressure on prime contractors, who are better equipped than anyone else to do the detailed work of scheduling components and supervising machining methods.
44. Finally, this method of control would enable us, for the first time, to keep complete and accurate books on material requirements and material usage, by contracts, end-products, and end-uses. The War Production Board should not relax its efforts to secure proper scheduling and conservation by direct action. We should advise, supervise, and where necessary issue directives. But vertical allocation would facilitate these tasks by enlisting the cooperation of the Services end of industry. In devising its mechanisms of control the War Production Board has placed too much emphasis on detailed reporting and central review, and ignored the possibilities of utilizing pressures and the force of self-interest. Vertical allocation based on quotas would go far to correct this deficiency. At the same time, a great many War Production Board regulations and much of the reporting burden now imposed oh industry would become unnecessary. The information which we require for program determination and scheduling would be used for allocating. PRP could be simplified and reduced in scope. The Production Code (Allocation Classification) and most of the reporting now required in connection with branch allocations could be dispensed with. Vertical allocation would not solve all problems of material control. Inventories would have to be dealt with independently, by separate reporting supplemented by field inspection. Scrap would have to be handled independently. Minor capacity bottlenecks in material production would have to be corrected by direct intervention on the part of the Materials Branches. But these and other problems would be simplified if allocations were made against scheduled production. Large new inventories could not be accumulated. Capacity bottlenecks would be less serious if overall demand and supply were balanced. Vertical allocation should be extended as quickly as possible to cover the entire field (with the exceptions noted in the memorandum). However, some branches of the Services and WPB are ill-equipped at the moment to handle the burden that would be placed upon them and they should not be forced into it until they are prepared. Also prime contractors should be given a reasonable time in which to collect the necessary information. Recommendations
45. That vertical allocation, based on quotas, be adopted as the method of distributing materials which are basically important and critically short.
46. That the Chairman of the War Production Board fix responsibility for working out the details of the methods to be used and the problems of the transition. We suggest that vertical allocation be used first for those parts of the production program which are : (a) of vital importance, and (b) under agencies which are prepared to assume the necessary functions. We suggest, as a minimum program, that most ordnance items, aircraft, merchant ships, Quartermaster transport vehicles, and radio be placed under vertical allocation beginning January 1, 1943. The materials which it is vitally necessary to cover in each program are carbon steel, alloy steels, and copper. It would be easy to include zinc and nickel as well, and desirable to include aluminum, magnesium, and rubber, even though reasonably effective methods of allocating them are already in operation. October 13, 1942 PLANNING COMMITTEE RECOMMENDATION NO. 18 To: Mr. Donald M. Nelson, Chairman, War Production Board Subject: Adjusting the Program In connection with the War Production Board meeting this afternoon, we have reviewed the entire matter of adjusting the program and submit for your consideration the proposals on the attached sheet. If you are in agreement, it is suggested that the attached recommendations be distributed by you at the meeting this afternoon. Irrespective of whatever mechanism is employed to bring the requirements in line with resources, we urge that steps be taken in this direction at once, both from the point of view of getting proper strategic considerations in the picture and saving the War Production Board from trying to do an impossible job with consequential imbalance throughout the program. For the Planning Committee Robert R. Nathan Robert R. Nathan, Chairman Attachment 162 Program Determination The War Production Board has received the military requirements for 1943 from the President, the Army, the Navy, the Maritime Commission, and other agencies. These requirements, not including pay, subsistence, and other miscellaneous expenditures, total about $92 billion, to which must be added the estimated deficit of the 1943* program (excluding aircraft), making a $97 billion objective for 1943. The War Production Board, on the basis of the best available evidence, believes that the capacity of production of munitions, facilities, and war construction in the United States during 1943 can be set at approximately $75 billion. The War Production Board believes that if steps are not taken to bring requirements into line with production capacity, the nation will be faced with excess fabricating facilities and a great likelihood of imbalance in the program, with the probability that the most important parts of the program will not be fully achieved. The War Production Board considers that the best way to adjust requirements to the productive capacity of the ft 4 Should read: “1942.” APPENDIX nation is to extend the date of delivery of some segments of the program until such time in 1944 as will make their attainment possible. However, account must be taken of the “must” programs set by the President for 1943—namely, the aircraft, merchant vessel, escort vessel, minor naval craft» synthetic rubber expansion, and some portions of the Lend-Lease programs. Adjustments in the production schedules should be made under the direction of the Production Executive Committee of the War Production .Board, with_the view to constantly keeping the program in balance. To this end, the Chairman of the Production Executive Committee is instructed (a) to determine what this nation can produce for war, and (b) to prepare promptly, in cooperation with the Services, the most realistic scheduling of war production month by month of the military requirements within the maximum possible production of the nation. In this process of adjusting schedules, the aircraft, merchant vessel, escort vessel, minor naval craft, synthetic rubber and “must” parts of the Lend-Lease program shall be scheduled, for full accomplishment. by the end of 1943. For all other programs, the requirements shall be scheduled for production during 1944 as is necessary, with whatever guidance can be obtained from the Joint Chiefs of Staff. October 20, 1942 To: Mr. Donald M. Nelson, Chairman, War Production Board From: The Planning Committee Subject: Planning Committee Recommendation The attached recommendation on salvage7 represents the results of study and observation over a period of many months by members of the staff of the Planning Committee. In the course of its development, we discussed details of this plan at con- T The attached lengthy Recommendation has been omitted. Its essential elements are outlined in the following excerpt from page 5: “Primary recommendations are: “(1) That the present Salvage Bureau be’ divorced from the Division of Conservation and established as a separate Salvage Division. “(2) That adequate authority be delegated to the Salvage Division to perform its functions. “(3) That an aggressive administrator be put in charge of the Salvage Division and that it be staffed with strong personnel throughout. “(4) That the order creating the Salvage Division explicitly provide _ for the development and adoption of a comprehensive plan and program of action, including the establishment of a strong nation-wide organization and adequate collection facilities to supplement those of the waste materials trade.” An addendum consists of a memorandum, Lessing J. Roseiiwald to Donald M. Nelson, October 21, 1942, objecting strongly to the proposals outlined in the study. No. 19 on Salvage siderable length with almost every member of the Conservation Division responsible for the salvage effort. Many of their ideas have been incorporated in the report. It has been reviewed by Messrs. Rosenwald and Cabot: they disagree strongly with the recommendation that salvage be separated organizationally from the other conservation functions and feel that the report generally is too critical. They are preparing written comments which will be transmitted to you and Mr. Batt. The Planning Committee endorses the report in its entirety ; feels that thé shortcomings referred to are stated moderately ; and urges you to direct that the proposals as made be put into effect within the shortest possible period of time. The salvage effort is of major importance in providing the maximum of materials for our utmost war production effort. Your personal attention and action is urged. Robert R. Nathan Robert R. Nathan November 6, 1942 PLANNING COMMUTEE RECOMMENDATION NO. 20 To: Mr. Donald M. Nelson, Chairman, War Production Board Subject: Program Scheduling and Production Control I. The Problem for 194:3 The Joint Chiefs of Staff are now revising the United States war production objectives to bring them in line with your recommendations of October 19, 1942, as to what is feasible. Informal conversations reveal that the new objective for 1943 will probably aggregate somewhere around $80 billion of munitions and war construction; thus the goals will have been brought somewhat in line with what has been indicated as feasible for 1943. Once this readjustment has been achieved, it is incumbent upon the War Production Board to bring about realistic and feasible production schedules month by month, consistent with these new objectives. This is necessary in order to assure the production feasibility of the month-by-month schedules, 163 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE to provide a basis for a tight system of production control, and finally to provide a basis for an effective system of distributing materials in relation to schedules and objectives. The urgency of establishing proper schedules and effectuating proper production controls as quickly as possible is emphasized by the materials situation. For the first quarter of 1943, the materials will continue to flow under the PRP Plan. Since this system is being largely discarded, it is not unreasonable to expect less precision in the application of this system for the first quarter as compared with what might result were the system to be retained. The new Materials Control Plan will be introduced in the second quarter of 1943 and we must not be too sanguine about the results of its initial operation. Major shortcomings are inherent in a first attempt at such a large scale operation. Inflation in the bills of materials themselves and in the lead factors is likely to exaggerate demands of claimants all along the line. Some of these difficulties can be overcome by careful review of bills of materials and comparisons of the requests for materials with production schedules. Probably the best we can hope for, in terms of a truly effective operation of the Materials Control Plan, is its successful application in the third quarter. All of this adds up to the conclusion that production throughout most of 1943 will be without the benefit of a tight and well developed system of distributing materials. Therefore, we must look elsewhere for getting the maximized production of end products out of our limited resources. Certainly the most effective possible production control system must be introduced and implemented. II. Production Scheduling Even though total objectives for 1943 may be brought into line with total feasibility, there is no assurance that any particular segment of the program is feasible, nor that any given set of schedules will be feasible. Monthly schedules must be developed in relation to facilities, materials, labor, and other resources. Although we shall probably be faced in the coming months with a general excess of fabricating facilities and with raw materials as the general limiting factor, nevertheless, many important fabricating bottlenecks retarding production of components and end products are certain to appear. If production is scheduled month by month in relation to plant facilities, then the bottlenecks can be anticipated and either overcome through positive action or taken into account in adjusting schedules. What is needed immediately is a thorough scheduling of production throughout 1943 and at 164 least half of 1944 of all significant and difficult end items and components for military and civilian purposes. The War Production Board should request from all claimant agencies at the earliest possible date, monthly schedules of production which tie in with the new objectives. Individual schedules should be provided for all items in the production of which fabricating bottlenecks may be expected to occur. There has been adequate experience within the Armed Services and WPB to determine the detail of scheduling from this point of view and the War Production Board should mobilize this experience promptly. All other requirements may be scheduled in broad categories. The breakdown of items and categories in OMPUS may serve as a point of departure. The War Production Board should establish principles and criteria of scheduling with a view toward improving the scheduling work of the Armed Services and making for greater uniformity. A review of past performance in relation to forecasts indicates looseness in the process of forecasting probable production even a month ahead. The War Production Board should review the submitted schedules in relation to available or potential facilities. Specific products or categories of munitions must be carefully appraised in the light of the prospective performance of manufacturing facilities. Such an analysis may be necessary only for lagging items and those where sharp step-ups are called for. The entire scheduled program must likewise be reviewed as to bottleneck items common to various end-products, such as compressors, valves, bearings, generators, Diesel engines, certain machine tools, and other items which experience indicates as likely to be in short supply. All important bottleneck areas must be discovered so that the fabricating limitations can be overcome as quickly as possible and schedules brought in line with what can be done. Schedules should be submitted concurrently for appraisal in relation to raw and industrial material resources. Account must be taken not only of the raw materials in their primary state, but also in fabricating shapes, types and sizes. In the event that the scheduling is not in relation to materials available month by month, the supply should be enlarged if possible or the schedules should be adjusted. While the schedules are being brought in line with fabricating capacity and raw materials, they should be reviewed concurrently in relation to manpower resources. This review should be undertaken both from an over-all point of view and also as to particular occupations and localities. The cooperation of the War Manpower Commission and of the field APPENDIX offices of the Armed Services and WPB may be profitably employed for this undertaking. It may result in reallocation of contracts or in rescheduling production under existing contracts, or both. The importance of scheduling out production month by month throughout 1943 cannot be overemphasized. Realistic and feasible schedules geared to objectives are prerequisites to any effective systems of production control and flow of materials. III. Production Control For many months past, there has been evidence of widespread imbalance in the production program. Production of many end items has run far ahead of schedule, whereas for others it has fallen far behind. The same situation has prevailed among complementary items such as guns and radios in relation to tanks and airplanes, and ammunition in relation to weapons. Finally, there has been ample evidence of considerable lack of balance among components. This luxury of unbalanced production was not serious so long as there existed an adequate supply of raw materials and other resources. However, when materials, machine tools, and labor are scarce and become definite limiting factors in total production, the tying up of critical resources in inventories of components or end items far ahead of need aggravates the situation. In fact, it serves to hold up the lagging items and makes for greater imbalance. If we are to get the most out of our limited resources, we must make a much more determined effort to have everything flow more evenly in relation to scheduled end items. The Army has ceased to make available to the War Production Board data on production schedules and deliveries of components. This withholding of important information occurred after the Office of Progress Reports had revealed month after month, the continued and growing imbalance, both in actual production and scheduled production. Adequate data have never been available from the Navy and the Maritime Commission to permit a critical appraisal of production schedules and performance as to balance between complementary items and between components. It is vitally important that such data be made available and reviewed in order to ensure balance in production. Without adequate information, the War Production Board can have no independent judgment and cannot give the necessary direction nor check the progress being made. The War Production Board will be required to give direction to the procurement agencies on scheduling and to thoroughly and frequently check the results. It must be realized that keeping production in line with balanced schedules is a most difficult task, especially when fabricating capacity is in excess of the production which is scheduled. It is to the interest of the individual manufacturers and the individual procurement officers to get out as much production within their jurisdiction as early as possible. In view of the limitations of materials, this tendency is not consistent with the over-all objective of getting out the maximum production of the most vital end products in relation to objectives as is possible. Without the benefit of a satisfactory control over the flow of materials for most of 1943, we cannot expect to avoid chaos unless production control is adequate and successful. Having received and reviewed the data on schedules of production each month, the War Production Board can then determine the degree to which production to date is currently imbalanced and the extent of further aggravation or of correction indicated for the future in the schedules. Theoretically, the adjustments which are necessary could be accomplished by the Procurement Agencies or by direct action of the War Production Board and its staff. It would appear preferable for the War Production Board to give directions to the Armed Services which would make the required adjustments so as to ensure bringing the program into balance and maintaining balance. In directing the Armed Services, the War Production Board should establish specific criteria for the guidance of the Armed Services. For instance, lead factors should be established for all important items and no production should be permitted to run ahead of these lead factors without definite approval from the top production authorities. Exceptions should be permitted only where the fabricating capacity of the slower components will permit catching up in the relatively near future. To ensure that the Directives of the War Production Board are carried out, it is recommended that a representative of this office be assigned to each Procurement Agency to work exclusively on the matter of production control. The responsibility of this representative should be confined to giving direction and checking results and not to operations. Again, it is emphasized that speed is of vital importance if we are to get the most out of our limited resources. The task of expediting production is not discussed in this report but it is obvious that this function is and should be closely related to that of production control. IV. Assignment of Responsibilities The assignment of these functions is a matter requiring careful consideration. In general, the top functions of the War Production Board may be broken down into three categories: (a) the determination of a scheduled program, month by month, which is feasible in relation to fabricating capacity, bottleneck components, raw materials and manpower; (b) the mechanism of flowing resources to accomplish this program; and (c) production control and production expediting. The relationship among these three functions, and their organizational division command your earliest and full consideration. The Planning Committee will proceed to 165 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE spell out the precise mechanisms involved in (a) and (c) in much greater detail than presented in this document. For the Planning Committee Robert R. Nathan Robert R. Nathan, Chairman PLANNING COMMITTEE RECOMMENDATION NO. 21 To: Mr. Donald M. Nelson, Chairman, War Production.Board Subject: Implementation by WPB to Promote Utilization of Waterways to Relieve Railway Overloading The staff of the Planning Committee has undertaken a study of the present use and capacity of the inland and intracoastal waterways systems. A summary of this study is attached hereto. The waterways are in a state of serious underutilization at a time when parallel railroad systems are overloaded and faced with possible breakdown as increased burdens continue in prospect. Such sustained overloadings not only increase the urgent demands for steel and other raw materials by the railroads at a period when such materials can be ill spared, but represent a potential danger to the maintenance of our high rates of industrial production. In order to promote the utilization of waterways to relieve railroad overloading, the Planning Committee makes the following recommendations which have been approved by the Stockpiling and Transportation Division. Recommendations : A. That the Stockpiling and Transportation Division, after agreement with the ODT, issue “certificates of necessity” directing the ODT, in the interest of conserving railroad rails and rolling stock, to embargo shipment of certain materials, whether for civilian or war purposes, on specified rail routes, which can be diverted practicably from rail to inland and intracoastal waterways, such embargo to be subject to exemption by permit from the ODT (after clearance by the WPB Industry Divisions through the medium of the Stockpiling and Transportation Division) certifying emergency movement or ad hoc considerations. It is suggested that the ODT and the WPB cooperate in obtaining from the waterways carriers information on pros- * pective freight movements which these carriers believe they can handle advantageously. It is also suggested that the Stockpiling and Transportation Division ascertain through its own inquiries what freight the waterways carriers ought to handle. B. That the WPB Industry Divisions be directed to furnish the Stockpiling and Transportation Division with information on the possibilities of diverting specific types of products from rail to waterways ; this information, among other criteria, to be used by the Stockpiling and Transportation Division in the formulation of embargo policies and to be furnished to the ODT as an aid in the administration thereof. C. That the Stockpiling and Transportation Division assist in the coordination of Government purchasing, stockpiling, and warehousing programs to facilitate maximum practicable utilization of waterways transportation. D. That the Stockpiling and Transportation Division request the ODT to establish procedures for pre-registering near-future transportation requirements by shippers in areas and with respect to products subject to alternative use of rail or waterway transportation. Such shipping requirement reports should be on a monthly basis and shippers should be urged to register requirements up to four months in the future when practicable. E. That the Stockpiling and Transportation Division request the ODT to institute upon the inland and intracoastal waterways an unrerestricted interchange, subject to the limitations imposed by the nature of the craft and facilities, of the services of all barges, towboats, and other shipping and terminal facilities, whether of common carriers or of private operators, for coordinated use similar to that which has been instituted upon the Great Lakes in connection with the iron ore movement. F. That the Stockpiling and Transportation Division work closely with the Industry Divisions with a view toward obtaining full information on allocations of materials far enough into the future to assist it in planning use of waterways transportation; toward permitting contractors to include the transit time for waterways transportation as a legitimate “lead factor”; and toward securing allocation of materials from specific producers where such allocation will shorten transportation distances and encourage the use of waterways. G. That the Stockpiling and Transportation Division, in conjunction with the ODT, promptly inaugurate a continuing program for the close integration of rail, waterways, truck, 166 APPENDIX and pipeline transportation, looking toward elimination of cross-hauling and most efficient use of all four methods of transportation in combination. H. That the War Department, Navy Department, Maritime Commission, and other Government agencies be directed by the War Production Board to give due consideration to the excessive wear and waste of scarce materials involved in unnecessarily long and costly rail or motor transportation, and to cooperate with the Stockpiling and Transportation Division and the ODT in routing shipments as far as practicable by waterways. Summary of Waterway Study Findings This memorandum and the foregoing recommendations are concerned primarily with our current under-utilization of available waterway freight movement capacities on the Mississippi and Ohio rivers, and the overloading of our main north-and-south railroads, leading from our greatest heavy industry centers to down-river and Gulf points. The downbound barge fleets on those rivers are now moving, in general, more than 50 percent empty and large numbers of private barges are tied up and idle at docks. This condition represents a continuing waste of tremendous volumes of the lowest cost transportation that there is, at the same time that our current overloading of the railroads is creating a railroad demand for steel above every past precedent.
47. Freight traffic should be shifted as far as practicable from rails to waterways. A. The railroads are already heavily overloaded, with increasing burdens in prospect. Director Eastman of ODT, in his letter to Chairman Nelson, of October 8, outlining his ‘‘estimate of requirements and recommendations as to allocations of materials and equipment necessary for provision of adequate domestic transportation service” for 1943, describes the present over-burdened condition of the railroads. He says the gross ton miles of railroad freight for 1942 are expected to reach 31.4 percent above 1929, the previous peakyear—with 27.9 percent less locomotives, and 16.7 percent less tractive power, and with 23.4 percent less freight cars, and 16 percent less total car capacity. Director Eastman says that “So far the railroads have been able to handle this greatly increased load of traffic with less locomotive power, in part by drawing on the reserve of unserviceable and stored locomotives” but that this “reserve has almost disappeared.” He sees a “critical situation with respect to motive power.” “Adequate motive power is the prime railroad necessity. . . Once locomotives begin to limp and halt or are unavailable when needed, car shortages rapidly develop.” He sees “prospective shortage of open-top cars and flat cars in 1943. . . Such cars are of unusual importance in the war effort, since they are used in the movement of basic commodities such as coal and ores . . . also in the movement of the larger units of war material. . . The outlook for 1943 is serious.” For specific illustration of the overloaded situation, the Illinois Central Railroad system in the first six months of 1942 handled 35,083,752 tons of freight, as against 25,365,078 tons in 1941, and the load of the Louisville and Nashville was 33,623,518 tons in 1942 as against 26,308,423 tons in 1941. That heavy freight which is so overloading the north-and-south railroads is very largely suitable for transportation on the inland waterways. B. There are very large unutilized inland waterway capacities which should be carrying freight now moving on rails. U. S. Army Engineer Corps data show 36,353,879 tons of freight to have moved on the Mississippi in 1941, and almost exactly the same amount of tonnage on the Ohio. (Figures not yet released.) There are no current official or unofficial reports or estimates of the total available and unutilized shipping capacities on these rivers. ODT has not enforced current reporting of idle or underutilized common carrier river boats or barges. Nor is there any current reporting of idle or underutilized private corporation river vessels. Representatives of the river barge lines say that more than 50 percent of their downbound carrying capacity is now moving empty. The “Regulated River Carriers Committee” presented a report to the Maritime Commission Conference on July 8, showing a total of 735,401 tons of downbound empty barges for just four barge lines, March to June. The condition is said not to be improving. Less and less steel, for example, has moved by barges month after month since June 1941. Three great steel companies — Carnegie-Illinois, Jones and Laughlin, and American Rolling Mills — each owns a large fleet of private barges which used to be us&l in moving iron and steel on the rivers. Nearly all of these barges are now reported to be idle. Carnegie has about 400 such barges, Jones and Laughlin had 66, and Armco about 40, not including their coal barges. Most of these are said to be now tied up at the docks in Pittsburgh and elsewhere. The steel which used to be moved by these barges is now going by rail, on cost-plus Government contracts. Grain for the alcohol plants is also moving by rail under Government contracts, rather than by Mississippi and Missouri rivers and the Illinois ship canal, as formerly. These enormous river barge carrying capacities obviously should be in use, providing a great relief to the parallel rails. C. Repair and maintenance requirements are vastly lower for waterways than for rail carriers. 167 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE Barge load bulk freight charges broadly generalized are about 50 percent lower than rail rates. Car lots by barge are supposed to move at about 20 percent under the rail rates. In terms of critical materials the lower costs of barge movement are much more striking than the lower money costs. The fuel costs are much lower for barges than for locomotives; the amount of steel in a barge is but a fraction of the steel per freight car, per ton capacity; the wear upon the barge is much less; and the waterway upkeep, in comparison with railroad maintenance is almost nothing. The total of all of our American waterways, including harbors, which have been put in condition through a long series of years, under the Army Engineers, have never had an annual maintenance cost of more than $42,514,879. The “maintenance of way and structures” for our Class I railways amounted in 1940 to $497,031,272, and the “maintenance of equipment” to an additional $818,975,489. Director Eastman, in the letter above cited, asks for 3,992,000 tons of carbon steel for maintenance of the railways for 1943, and also asks for 1,292,290 tons for new locomotives and freight cars. The corresponding request for the Mississippi and connected waterways maintenance is only about 36,000 tons, or less than 1 percent of the railway maintenance. These latter figures are not in Director Eastman’s letter, and no really satisfactory comparisons are readily possible. Unquestionably, however, the waterways maintenance costs in terms of materials are almost incomparably lower per ton mile of freight transportable.
48. The Practicability of Shifting Freight Traffic from Rails to Waterways. The lengthy lists of materials and commodities commonly carried in large quantities by the barge lines, as shown in the Army Engineers’ very detailed Annual Reports, provides sufficient evidence that the barges are specially suited to the handling of heavy bulk freight, and that they are also capable of advantageously handling a great variety of “package” freight, including machinery, Jeeps, Quartermasters’ supplies, canned goods, packers’ products, and nearly everything being accumulated for the war effort, or for construction or industrial purposes. A. The Time Factor. It is reckoned that the river barge time from Pittsburgh to New Orleans is about 15 days, and to Houston or Mobile about 19 days — as compared with rail time of about 7 days to New Orleans and 11 days to Houston. From Chicago to New Orleans, about 9 days by water as against 7 by rail. Shipments from or to points not directly on waterways necessarily involve some combination of rail-and-water or truck-and-water, and therefore a somewhat lengthened time for use of the waterway service. The larger unit shipments involved in barge-lot movements may tend, also, to lengthen the time required for producing or assembling a barge load, as compared with a carload; but there would not be much difference as compared with full train loads. Broadly speaking, it appears that if requirements can be foreknown in time to allow the 5, 10, or 15 days extra which are needed to employ the waterways, a great deal of freight now moving by rails should be moved, where practicable, by barges. B. The Price Factor. The characteristic of our cost-plus and lump-sum war contracts which throws the extra cost of rail shipment on the Government, naturally has tended to encourage contractors generally to use the rails, despite the higher rates and the wear upon steel, even where the waterways could equally well have served the purposes. The OPA, through the basing point system originally set upon April 16, 1942, in “Price Schedule No. 6—Iron and Steel,” and subsequently revised and applied to other products, has helped promote shipment by rail rather than water, by permitting suppliers to charge the mill price plus the rail rates to destination. Schedule No. 6 provides that the “Governing Basing Point” shall be “that established basing point the use of which results in the lowest delivered price at the place of delivery.” A provision is made, however, for “emergency basing points at or near the place of production or of origin of shipment,” and applicable to cases “in which by reason of unusual circumstances arising from the emergency demands of the war program, a shipment of any product is made to a place which is not within the usual market area,” etc. The “emergency basing point” system seems to have come largely to prevail, railroad freight charges from point of origin being regularly added to the price. The WPB, also, as in the case of the Iron and Steel Division, for example, has set up its assignment of certain shipbuilders to specified mills, for placement of their steel orders, on the assumption that railroad transportation will be used, and rail rates added to the mill price—no account whatever being taken of the possibilities of employing waterways for the handling of large amounts of this steel. C. Forward-Planning is essential to transportation economies. People in the Iron and Steel Division, WPB, believe that they could reallocate shipbuilders to mills on a basis of minimum distance from source of supply, and also with due consideration for the availability of cheap water transportation, if the Requirements Committee’s determination of steel apportionments could be had a month earlier than heretofore, and if steel orders, and especially the orders for shapes and bars could be assuredly placed 60 days in advance of essential shipping dates. Maritime officials, similarly, say that if their materials requirements in certain definite amounts and in balance, can be assured in advance, there can be no valid reason why the bulk of their programs 168 APPENDIX should not be firmly fixed at least two months in advance—leaving perhaps some mobile margin unfixed—so that the bulk programs may be placed upon a maximum efficiency basis, improving morale, considerably reducing labor force requirements, and also realizing the benefits of using the cheapest possible means of transportation. The bulk of present inventories in the shipyards were delivered more than two months in advance of date of use. The slower waterway transportation of these advance inventories obviously could not have hampered the shipbuilding program. In many items, however, the materials inventories are short, and swiftest possible transportation is mandatory. A firmly forward-planned program is essential for maximum economies and achievements both in the materials-supplying and the materials-using industries, as well as in transportation.
49. Authorities, Powers, and Responsibilities for Effecting Correctives. The authority and responsibility for effecting available economies in our transportation practices seem to be considerably decentralized. It has been traditional in our peacetime practice that shippers should have authority to route their own shipments. A. Current practice as to Government transportation routings appears to be primarily determined as follows: (1) In War Department contracts it appears that the contractor ordinarily determines the routings of the materials he buys, and under the general influence of war haste inclines to route by the fastest transportation whether necessary or not. The War Department has a central traffic control which determines the routings for all war supplies obtained from contractors. This central traffic control is reported recently to be giving more attention to the possibilities of using economical transportation. (2) The Navy has decentralized traffic control. No uniformity of practice appears to have been instituted, but excessive resort to swiftest transport, and insufficient regard for possible conservation of rails and railroad equipment, seem to prevail. (3) The Maritime Commission has centralized control of the routings of the materials purchased for all of its contracting shipyards. The Commission has been routing almost entirely by rail, quite regardless of the urgency or non-urgency of the need for particular shipments. (4) The Treasury Department exerts some influence, also, toward preferential routing by “land grant” railroads for Governmental purchases. (5) The Commodity Credit Corporation and other Federal purchasing and financing agencies seem also to be giving preferential routings to rails and rapid shipment, under the influence of general wartime haste, and quite disregardful of the requirements of the particular movement, or the economies of scarce materials which may be attained by more discriminate routing controls. B. The ODT, subject to policies, regulations and directions of the President, “shall coordinate the transportation policies and activities of the Federal agencies and private transportation groups in effecting such adjustments in the domestic transportation systems of the Nation as the successful prosecution of the war may require.” This broad authority seems to have been assumed and applied, however, mainly for the purpose of “preventing possible points of traffic congestion” or for “conserving rubber”, as further specified in the Executive Orders which give the ODT its powers. On the Great Lakes, where the WPB has specified the types of freight to be expedited in transport and where the tremendous traffic demands maximum possible efficiency in utilization of available resources, the ODT has taken almost complete control. The ore-carrying vessels are all virtually pooled and are operated subject to the orders of one centralized “dispatching” office in Cleveland, which functions for the Carriers in cooperation with ODT, and affords a practically integrated operation of all of the Great Lakes carrying capacities. On the inland river waterways, on the other hand, where Governmental price policies, expeditings of transport, and allocation of customers to suppliers on the assumption of all-rail shipment have diverted traffic from the waterways, the ODT seems to have found no “traffic congestion” problem to exist, and therefore has not felt like taking the initiative to interfere in any way to force traffic off the rails and onto the waterways. No urgent or specific demand for a closely coordinated control of the river and intracoastal waterways facilities seems to have developed. Director Eastman, however, very recently has written a letter to all Government agencies urging them to consider routing more traffic by the waterways. C. The WPB seems to hold the major responsibility in the matter of correcting this waste of available waterways transportation capacities. It is the primary responsibility of WPB to conserve scarce materials and to “determine the policies, plans, procedures, and methods of the several Federal depart 169 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE ments, establishments, and agencies in respect to war procurement and production, including purchasing, contracting, specifications,” and so on. It is in the industry branches of WPB that the patterns of assignment of customer to supplier, largely determining the transportation to be used, are made. Under GAO 2-58 it seems to be the responsibility of the Office of Program Determination to provide “an over-all national production program, integrated and coordinated with over-all strategic requirements and providing for the most effective use of national resources.” It seems to be the implied responsibility of the Requirements Committee and of the Office of Program Determination to make the necessary “determinations” as to apportionment of scarce materials in time to enable the Industry Divisions and the dependent industries to function efficiently and to take advantage of all available economies in transportation and otherwise. Administrative Order 19, furthermore, makes it the responsibility of the Division of Stockpiling and Transportation to provide “a clearing house for all domestic transportation problems involving the War Production Board.” D. The OPA unquestionably must bear some responsibility, also, as implied in the Executive Orders creating it, for the institution of pricing policies and practices which will favor the conduct of our war purpose and civilian activities on a basis of minimum necessary costs and the achievement of maximum economies, rather than a sanctioning of unnecessarily long and costly transportation compensated by freight charge additions to the producing point price as established at the “emergency basing point.” For the Planning Committee: Robert R. Nathan Robert R. Nathan Chairman March 15, 1943 PLANNING COMMITTEE RECOMMENDATION NO. 22 To: Mr. Donald M. Nelson, Chairman, War Production Board Subject: Policy Regarding Experimental and Development Work on Civilian Products. We have your request to recommend a policy to be adopted by the War Production Board on the use of scarce resources for experimental and development work on civilian products. The question was raised specifically by the case of the Toro Manufacturing Company of Minneapolis, ordinarily a producer of power lawn mowers but now engaged to capacity in war production. The Company requested review of the WPB Appeals Board denial of its application to use approximately one-half a ton of iron and steel in the construction of five experimental models of mowers, production of which was stopped on July 1, 1942, in accordance with Order L-67. One model was suggested as usable by the Air Corps and the other four models were intended to prepare the Company for the resumption of civilian production at the close of the war. Having reviewed the Toro case as well as the broader problems involved and having the benefit of study by the staff, the Planning Committee recommends that: A. At this stage of the war production program, it appears to be inconsistent with the total war mobilization of the United States to permit the use of scarce resources for the development of civilian products for post-war purposes. The production of fighting equipment is scheduled to increase substantially over the balance of 1943. If these goals are to be attained and if civilian goods and services are to be provided in quantities necessary to maintain the morale, health, and efficiency of the civilian population, there can be no diversion of manpower, materials, or critical facilities to other than war and immediate essential civilian needs. Every diversion of critical materials and manpower will necessarily reduce the volume of war production or of essential civilian production. Therefore, it is recommended that the War Production Board adopt a definite policy of denying scarce materials for development work in civilian products for post-war use. B. Research and development work on products that might be used for essential military or civilian needs during the war, as well as basic scientific research, should be given every encouragement. Certainly, materials and manpower should be made available as expeditiously as possible for the development of new weapons and more efficient industrial equipment, and more economical civilian production. C. As the war progresses toward a successful conclusion and the military requirements are 170 APPENDIX changed, this policy should be reappraised. The time may come when some modest allotment of resources for non-war purposes may be justified in order to provide materials and manpower for post-war development. This is related to problems of the general magnitude of the war effort which, as you know, we are continuously appraising. If you wish, we shall review this matter from time to time and advise you when it would appear appropriate to modify this matter. D. In executing the above policies, every effort must be made to assure the universal application of these principles in order that larger firms may not obtain advantage over smaller firms. It may be more difficult to control effectively the work of larger firms devoted to post-war development as compared with smaller firms. The Controlled Materials Plan should be administered with this consideration in mind. Also, the Office of Scien tific Development of the War Production Board, as well as the Laboratory and Technical Equipment Section of WPB should take these policies into consideration in their operations. We fully recognize the importance from the standpoint of winning the war of adequate national policies for the post-war period. The more nearly we approach the successful termination of hostilities, the greater certainty there must be that national policies, both public and private, are adequately geared to maintain employment and full economic activity. An early development of such policies is to be favored. This, however, does not appear to us to be inconsistent with the above recommendations relating to the development of new products for the post-war period. For the Planning Committee Robert R. Nathan Robert R. Nathan, Chairman March 24, 1943 PLANNING COMMITTEE RECOMMENDATION NO. 23 To: Mr. Donald M. Nelson, Chairman War Production Board Subject: Consumer Conservation Our wartime economies and conservations naturally had to begin in the field of organized industry. From now on the resources for further expanding our war effort must come increasingly from far-reaching conservation and better utilization in our consumer economy. Thus far conservation and improved utilization in the field of consumption have been applied only sporadically, and only with respect to certain special materials, commodities, and services. As indicated in the attached memorandum’, the conduct of such consumer conservation as we now have is scattered among a great number of almost completely uncoordinated Government agencies. In order that we may realize the tremendous further contributions of which our consumer economy is capable, it is important and urgent that there be created a comprehensive, unifying, and adequate consumer conservation administration. Recommendations To accomplish the essential purposes here indi- • The attachment, a memorandum on “Consumer Consumption,” Charles H. Chase to the Planning Committee, March 18, 1943 (Document 231), has been omitted from publication. The memorandum sketches the operation of the agencies each of which directs consumer conservation and recommends establishment of an agency to develop, coordinate, and administer an expanded program. 686312—46—12 cated, therefore, the Planning Committee recommends : A. That there be established within the Conservation Division or Office of Civilian Supply a Consumer Conservation Branch, with appropriate sections, units, and staff to effectuate all of the necessary coordinative and other functions assigned to the Branch. B. That the principal functions and responsibilities of the Consumer Conservation Branch shall be: (1) To develop, in cooperation with other organizations and agencies, comprehensive plans, programs, and means for achieving a high degree of consumer conservation and improved utilization covering all of our consumer goods, facilities, and utilities, including perishables, semi-durables, and durables, both in real and personal property; and also to initiate and expand essential local self-help and home industry. (2) To coordinate or assist in coordinating all consumer conservation and improved utilization activities and undertakings already in process or in preparation, both public and private, and to organize such further conservation work as conditions may require. (3) To see that stock-takings are made, or suit 171 MINUTES OF WAR PRODUCTION BOARD PLANNING COMMITTEE able working estimates formulated, covering all of America’s essential consumer goods, facilities, and properties of all kinds, both in commercial stocks and consumer hands ; to promote needed redistributions through resales, consumer exchanges, and otherwise ; to organize extensive shared use of scarce facilities and utilities; and to cooperate in guiding and promoting simplified production programs adequate to assure minimum necessary new supplies of consumer essentials in utility types and grades, thus releasing all possible resources for conversion to war purposes. (4) To accumulate all possible information on means of making our consumer goods and facilities last longer and serve more needs, and to establish far-reaching and effective contacts and cooperative relationships with and through all available agencies, organizations, and other means of promoting a consumer conservation and improved utilization drive that will engage the support of our entire population and of every group of interest that can be helpful to the fullest success of our consumer conservation efforts. For the Planning Committee Robert R. Nathan Robert R. Nathan, Chairman Attachment: PC Document 231 172 INDEX TO MINUTES AND RECOMMENDATIONS Subject page A Air Cargo Board, proposed establishment within WPB …………………………………………… 59 Aircraft : Aluminum requirements ………………………… 102 Cargo, feasibility of an extensive production program ………………………………… 59 Copper requirements …………………………… 39 Engines, waste of critical materials in production 100 President’s objective ……………………………. 8 President’s objective, feasibility…………….19,22,31 Production objectives for 1942 and 1943 …………… 25 Production objectives, reappraisal ………………. 116 Production problems …………………………….. 10 Production reports …………………………. 96 Propellers and engines, pressing problems in production …………………………………. 26 Relationship to aluminum supplies ……………….. 91 Review of feasibility ……………………………. 2 Review of production objectives ………………… 93 Revision of Presidential objectives, essential … 28 Revision of production objectives for 1942 and 1943 proposed ………………………….. 30 Study of program in preparation …………………. 90 Recommendation No. 4 …………………………. 130 Aircraft Branch, Spare Parts Committee, WPB, report on British experience with spare parts problem ………………………………………… 26,31 Alcohol, ethyl, supply and demand, study …………. 21 Allocations, decentralization ……………….. 44 Aluminum : Proposed location of new plants …………………… 8 Relation to the aircraft program ……………….27,29 Requirements for aircraft program ………………. 102 Supply and demand, study ……………………. 21 Ammunition : Expansion program ………………………. ….; 49 Feasibility of production objectives ……………; 6,41 Production ………………………………… ’38 Relation to gun requirements …………………. 21,31 Antimony, supply and demand, study ……………… ’21 Anti-trust laws, exemption of oil industry proposed 16 Appeals Board, WPB, policy for appeals involving materials used for postwar planning………………. 119 Army and Navy Munitions Board, proposed revision of preference ratings ……………………….58 60 62 Recommendation No. 7 ………………………….’ 138 Army, considerations affecting the size of .93,99,103, . , , J 105, 106* 116 Aruba, shutdown of petroleum refineries suggestèd .. 16 B Baruch, Bernard: Suggestions for establishment of a board to determine priorities of war effort on a broad policy basis ……‘………………………. 50 Suggestions for establishment of Capital Issues Committee ……………………………. 49 Blaisdell, Thomas C., Jr.: Draft of policy for WPB toward the conversion of petroleum refineries……………………. 85 Proposed establishment of a War Research Development Corporation …….. i……………. 57 Report^ on critical housing situation in shipbuilding centers ……………………….. 3 18 Resignation from the Planning Committee ’124 Study on increasing and maintaining mining _ capacity …………………………………..83,85 Bombs, incendiary, requirements …………………. 43 British Air Commission, conference of representatives with members of Planning Committee……….. 8,10 Subject Page Brown, J. Douglas, proposal for establishment of Community Clearance Unit, WPB …………………….. 23 Budget, Bureau of the, purchase of equipment by federal agencies ……………………………. 73 Butadiene : Cancellation of contracts for plants ………… 86 Relation to gasoline and toluol production……… 16, 33 Recommendation No. 1, Toluol Supply …………….. 125 C Canada : Analysis of the impact of the war upon civilian economy ………………………………… 121 Report on subcontracting in munitions industries 7 Canol project (See Yukon pipeline) Capital Issues Committee, proposed establishment as means of restricting construction projects …………. 49 Cartridge cases, substitution of steel for brass ..41,43 Chambers, C. W. : Study of excess, idle, and frozen inventories. .91,94, 97 Transportation system ………………………….. 95 Chemicals Branch, WPB, responsibilities for toluene, high-octane gasoline, and synthetic rubber production …………………………………… 16 Chemicals expansion program …………………… 49 Chromite : Imports and domestic production ………………… 41 Supply and demand, study ……………………….. 21 Civilian Conservation Branch, WPB, establishment proposed …………………….,………,………. 117 “Civilian Consumption and Output in the United States” …………………………………… .121,122 Civilian economy : Comparative analysis of impact on economy of Great Britain and U. S…………………….104,109,121 Need for agency concerned with civilian economy 105 Study of ……………………………. ..106,121,122 Civilian production (See also Concentration of civilian production) : Curtailment ………………………………….. 104,109 Failure of adequate curtailment ………………… 20 Civilian products : Policy for experimental models and developmen- tal work .,………………………….119,120,121,123 Recommendation No. 22 …………………………. 170 Civilian requirements: Difficulties of developing criteria for determination …………………………………. 43 Estimates …………………………… 38 Importance of development of a program on .. 121 Review ……………………………………….. 38 Civilian supply organization ………………….. 105 Clay, Lucius D., Brig. Gen., appointment to collab- orate in revision of war munitions program ………. 30 Coal : Anthracite and bituminous, mines not operating at capacity ……………………………… 63 Rationing in New England advocated ………………. 58 Combined Production and Resources Board: Comparative analysis of the impact of the war upon civilian economies of Great Britain and U. S. ………………………………..104,121 Comparative study of materials requirements of Great Britain and U. S. ……………………… 95 Effectiveness dependent on U. S. policies ………… 65 Functions ………………………………….. 82,83 Mechanism for correlating production program 87 Policy for effective utilization of the combined fabricating capacity of Great Britain and U. S. 105 Combined Shipping Adjustment Board, requested to prepare statement showing shipping requirements and available facilities of the United States and Great Britain for 1943 ……………………. 4 m Subject Page Community Clearance Unit, WPB, proposed establishment …………………………………….. 23 Community facilities …………………………. 22,23 Concentration Committee, WPB, proposed establishment ……………………………………….. 73 Concentration of civilian production……..72,123,124 Experience in Great Britain………………… 67 Recommendation No. 12 …………………. 146 Concentration of Production Committee, WPB, authority and responsibility for concentration program ……………………………………• ••• 123 Conservation, possibilities in construction projects (See also Consumer goods, conservation) …………. 49 Construction (See also Facilities, industrial, and military construction program) : Estimates for 1943 …………………….. 19 Feasibility of 1942 program …………………. 37 Importance of controls ……………………. 49 Program ………………………………………. 44 . Restrictions …………………………………… 22 Scheduling ……………………………………. 47 Construction and Facilities, Special Committee on (See Special committee… ) Construction Bureau, WPB, delegation of authority by Facilities Review Board …………………….. 51 Consumer goods, conservation program …………… 117 Recommendation No. 23 ………………………….. 171 Contracts : Awards for federally financed industrial facilities 37 Cost-plus-fixed-fee effect on labor utilization … 99 Cost rise after contract approval ………….. 50 Curtailment for construction of new plants and machine tools ……………………………. 22 Decentralization of authority to place ………. 7 Moratorium on letting contracts for inflated production objectives ……………………… 20 Placement policies approved ;……………… 17 Placement, principles ………i…………….. 12,13 Relation to machine tools requirements . 21 Renegotiation, criteria to be followed by procurement agencies …………………………..53,56,61 Recommendation No. 14 …………………………151,152 Control of the Flow of Materials Committee, WPB, meetings discontinued .:………………………. 86 Controlled Materials Plan: Delay in effectiveness …………………….. 97 Implementation …………………………….. ;… 107 Relationship between allocations of materials and desired production of end products …………….. 101 Copper : Feasibility of further development of mines in South America …………………………….. 43 Supply and demand, study ………………………… 21 Supply and requirements ………………………. 39 Supply and requirements report …………………… 90 Corson, John J. ……………………………… 14 Cost control and contract negotiation …………52, 53, 56 Curacao, shutdown of petroleum refineries suggested 16 Cutting tool pools …………………………. 11 D Defense Health and Welfare Services, Office of, relationship to proposed Industrial Health, Hygiene and Safety Section, WPB ………………… 69 Defense Transportation, Office of, coordination of truck and railroad operations ………………… 77 Dickinson, Edward T., Jr., appointment as Executive Director of the Planning Committee …….. 18 Douglas, Lewis, merchant shipping requirements … 4,13 E Eastern Seaboard: Alternate methods of meeting petroleum shortage ……………….61,63,100 Fuel supplies for winter, 1942-1943 ………………. 58 174 Subject Page Elliott, W. Y., transportation report …………….. 95 Executive Secretary, Office of the, WPB, prepara- tion of minutes and related work……………………… 1 Expenditures : Estimates of 1942 and 1943 ……………………….. 19 Facilities ……………………………………… 37 Ezekiel, Mordecai: Aircraft program, report on ……………. .22,25,28,91 Maritime Shipbuilding, report on …54,55,57,60,81,85 Recommendation No. 4, Aircraft Program……… 130 Recommendation No. 5, Maritime Shipbuilding Program ………………………………………… 131 F Fabricating facilities: Construction of additional … 8…………………… 83 Policy for utilization of combined capacity of Great Britain and U. S…………………………. 105 Facilities (See also Community facilities; Construction) : Curtailment of program of Armed Services …. 107 Federally financed commitments ………………….. 45 Federally financed, value and progress on projects 48 New, feasibility ………………………………. 19 Review and approval responsibility ………………… 11 Review of authorizations ………………………… 31 Study of controls …………………………….. 21 Study of projects authorized ……………………… 22 Total program ………………………………. 36 Utilization of existing …………………..7,13,29,105 Facilities and Construction Board, establishment recommended by Special Committee ……………………. 56 Facilities Bureau, WPB, claimant agency status … 108 Facilities Clearance Committee, Army and Navy Munitions Board, proposed abolishment ……………….. 47 Facilities, industrial, and military construction program …………….37, 44, 45, 47, 48, 51, 56, 79, 82 Facilities Review Board, WPB : Proposed establishment, organization and functions …………………………….. 50,51 Proposed status ……………………………….. 47 Facilities staff, proposed establishment in the Division of Industry Operations, WPB ………………….. 58 Fairey, C. R., Director General of the British Air Commission, conferences with Mr. Nathan and Mr. Blaisdell …………… ……………………….. 8,10 Feasibility of the Production Program (See War Munitions Program) Fesler, James W., appointment as Executive Secretary of the Planning Committee ………………….. 90 Field service organization, survey …… i . 32 Flesher, Carl W., Maritime Commission, ship construction program ………”……………………….. 4 Foreign and Domestic Commerce, Bureau of : Analysis of merchant shipping requirements …. 13 Report on the supply and demand for merchant shipping and the efficiency of utilization of available shipping facilities …….J……..6, 9,23,34 Fox, Bertrand, analysis of raw materials requirements ………………………………………….. 18 Fox, Matthew, proposed program for salvaging materials ……………………………………… 9,94 Fritz, Wilbert G., alternative methods of meeting the shortage of petroleum products on the Eastern Seaboard ……………………………………….. 61,63 Fuel supplies for the Eastern Seaboard in winter, 1942-1943 ……………….. I……………. 58, 61,63 Funds : t Commitment, principles to be followed ……………… 11 New industrial facilities, control on the obligations of ……….. ;……………………. 41 Unobligated ……f…………………. /…. 37, 61 i Subject Page G Gasoline : Need for rationing in Middle West ……………..61,63,77 Relation to production of toluol ………………12,15,33 Responsibilities of Petroleum Coordinator for National Defense ………………………………. 16 Recommendation No. 1, Toluol Supply ……………… 125 Germany : Pattern of experience in World Wars I and II 112 Relation of total output to war production……… 10 Goldenthal, Adolph J., proposed revision of priorities system ………………………………………. 58 Goldsmith, Raymond W. : Policy regarding experimental and development work on civilian products ………66,119,120,121,123 Report on cost control and contract renegotiation in armament production ………………….52,56,61 Gorlinski, Joseph S., Colonel ……………………. 76 Government agencies, purchase of equipment ………… 73 Governmental Requirements Plan …………………… 73 Great Britain: Aircraft spare parts experience …………………. 126 Analysis of the impact of the war upon civilian economy ………………………………104,121 Concentration of production ………………… .. 67 Materials requirements for maintaining domestic economy ………………………………… $$ Ministry of Production, report on “Non-Military Sector of British Economy” ……………………. 121 Production planning …………………………. 64,96 Requirements for shipments from U. S. and Canada …………………………………. 35 Great Lakes, increased utilization of shipbuilding facilities ………………………………….. 56 Gulf Coast, survey of shipyards ………………….. 60 Gulick, Luther, report on field relationships among procurement agencies and between such agencies and WPB …………………………………… 32 Gun requirements, relationship to ammunition requirements ………………………………….. . 21,31 H Harris, J. P., Colonel, report on TNT and toluene production …………………………………….. 15 Harrison, W. H. : Appointed head of the special committee on facilities and construction …………………….. 56 Attitude toward 1942 war production objectives 30 Invitation to discuss relation of feasible objectives to actual production ………………. 31 Hedges, Marion H. : Appointment to the Planning Committee ……………. 109 Resignation from the Planning Committee ….. 124 Heinze, W. O., war facilities expansion, memorandum on ………………………………………….. 47 Higgins, Andrew J., complaints on delay in production of boats and barges ………………………. 60 Hoge, F. H., Jr., proposed establishment of Air Cargo Board ………………………………….. 59 Housing : Critical situation in shipbuilding centers….. 3,18 Feasibility …………………………………… 37 I Ickes, Harold L., recommendation for construction of petroleum pipeline between the Southwestern oil producing area and the East Coast ……………. 61 Illinois pipeline (See Texas-Illinois pipeline) Imports and exports, reduction due to shipping shortage …………………………………………. 3 Industrial Conservation, Bureau of, WPB, functions and organization .’……………………………… 9 Industrial facilities and military construction, special committee (See Special Committee…) Subject Page Industrial Health, Hygiene and Safety Section, WPB, proposed establishment in the Labor Production Division …………………………………..68,69,74 Industrial health program ……………………… 59,69 Industrial Mobilization Plan, basis of estimates of finished goods requirements …………………….. 10 Industry Divisions, WPB : Responsibility for utilization of existing facilities 58 Role in the preparation of limitation and conservation orders …………………………….. 110 Industry Operations, Division of, WPB, proposed establishment and functions of a facilities staff …. 58 Inland waterways, utilization for transportation.. 99 International balance sheet, development by United States and Great Britain ………………………… 10 Inventories : Control, draft recommendation ………………….. 96 Excess, idle, and frozen, report and recommendations for control …………………………. 91,94 Methods of control ………………..53, 55, 90, 96,107 Procurement policy for used equipment .. ……. 60, 73 Production scheduling to prevent accumulation .. 82 Steel plates in shipyards ………………………… 57 J Johnson, Wayne, head of committee to consider Texas-Illinois pipeline ………………………… 61 Joint Aircraft Planning Committee, report on aircraft production …………………………….96,102 Joint Chiefs of Staff : Collaboration on war munitions program ………….92,93 Invitation to review the military production program and proposed révisions …………………. 94,95 Revised munitions and construction program …. 102 Justice, Department of, sanctioning of industry-wide conference held under direction of War Department ………………………………………… 16 K Keller, K. T., aircraft program, report on ………… 25 Kerr, C. T., Lt. Col., alternate on special committee on revision of objectives of the industrial facilities and military construction program ……………… 44 Kuznets, Simon : Analysis of estimated military and naval requirements ……………………………………. 10 Evaluation of objectives in terms of raw materials ……… ……………………. • • 38,41 Memorandum on principles of program formulation ……………………………………….. 88 Priorities system, revision ………………………. 58 Production program analysis …………………… 87,88 Report on new industrial facilities and direct military construction ……………………….. 37 Report on supply and demand for critical materials ………………………….. …… 51 Report on thç feasibility of the war munitions program ……………….. «……………… 18, 22 Summary of the industrial facilities program …. 49 War cycles study proposal ……………………….. 29 L Labor : Analysis of shortages …………………….. 98 Difficulty of adjusting labor supply to war pro- duction requirements ……………… …….. 117 Requirements and supply ………………………… 124 Shipbuilding program …………………………….. 55 Supply, restriction on war munitions program … 21 Supply situation …………………………….. 10,31 Work-week and worker-suggestion systems ….. 8 Labor Division, WPB, report on functions pertaining to plant sites …………………………… 24 Labor Production Division, WPB, proposed functions 59 Lawrence, R. B., Major, report on waste of critical materials in the production of aircraft engines .. :. 100 175 Subject Page Layton, Sir Walter, outline of British organization for program planning …. ;…………………….. 64 Lead, supply and demand, study …………………. 21 Letters of intent, need for control over issuance …. 50 Longview-Salem pipeline (See Texas-Illinois pipeline) Lyttleton, Oliver, Captain, Minister of Production of Great Britain ……………………………. 64 M Machine tools : Allocation and rationing …………………12,13,21,80 Idle, utilization ……………………………….. 7 Importance in aircraft production ……………….. 29 Limiting factor upon the feasibility of a large industrial facilities program ……………… 37 McClintock, R. O., invitation to discuss toluene problem ……………………………………… 33 McLaughlin, Glenn E., views on supply of petroleum products to the Eastern Seaboard ………………61,63 McSherry, Frank J., Brig. Gen…………………. 14 Maintenance, repair and operating supplies: Control of requirements…………………… 108 Criteria governing requirements …………………. 104 Manpower, requirements and supply ……………..98,124 Maritime Commission: Establishment of price adjustment board …… 52 Establishment of a scheduling unit………….. 57 Machine tools requirements ………………… 80 Reduction of ships assigned to routes between the U. S., Africa and South America ………… 4 Scheduling …………………………………… 81 Shipbuilding program ‘…………………………… 5 Marketing zones, proposal ……………………….95 Materials : ■ Balancing of supply and requirements ……………… 43 Conservation ………………………………….. 50 Evaluation of objectives in terms of …………… 38,41 Expansion of the supply of ………………………. 82 How control ………………………..24, 53, 55, 86,89, 98 Limiting factor on production ………………… 21,37 Production increase, necessity for ………………. 79 Supply and demand, reports ……………… 31 System of vertical allocation ……………………. 90 Recommendation No. 17, Control of Flow of Materials ……………………,…………… 158 Materials Redistribution Division, WPB, proposed establishment ……………………………… 91 Matkin, J. H., Captain ………………………… 17 Maverick, Maury: Proposed establishment of an Office of Technical Development …………………………… 57,63 Views on purchase of equipment by federal agencies ……………………………………. 73 May, Stacy: Discussion on expenditures and objectives of the war munitions program ……………..;……19,42 Merchant shipping problem ……………………….. 13 Meehan, Joseph, designation as representative of committee to prepare the report on the shipping situation ………………………………………13,23,34 Merchant shipbuilding program: Analysis by Office of Progress Reports, WPB… 6 Copper requirements …………………………….. 39 Facilities expansion ……………………….. 49 Goals, schedules, and possibilities of production, report by Mr. Ezekiel ………………..54,55, 57 Machine tool allocations ……………………….. 80 Report ……………………………………….. 69 Steel plate allocations ………………………81,85 Survey of shipyards on Gulf Coast………….. 60 Recommendation No. 5 ………….i………………. 131 Merchant shipping: Availability as criterion in curtailing production objectives ……………………………. 20 176 Subject Page Availability of war material for shipment abroad 110 Balancing of munitions production and shipping space ……………………………………. .30,34,41 Critical situation …………………………… 32 Loss through sinkings …………………………68,113 Relationship to munitions program ……………….. 2 Requirements …………………………..3, 5,13,23, 38 Supply and requirements, data of War Shipping Administration not to be duplicated…………….. 36 Surveys by Bureau of Foreign and Domestic Commerce and Edward Riley ……………………6,9,23 Military equipment, obsolescent ………………… 88 Recommendation No. 14 ……………………….. 157 Military strategy, relation to production ………… 90 Mines, increase and maintenance of capacity ………. 83 Mining Branch, WPB, proposal for expansion of functions and name change to Mining Division… 83,85 Mobile, Alabama, community facilities ……………. 24 Models, policy for use of materials and manpower for post-war civilian products ……………..119,120,121 Molybdenum, supply and demand, study …………….. 21 Moore, Geoffrey H., comparison of production dur- ing World Wars I and II ………………………… Ill Morale, stimulation, worker suggestion system ……… 8 Munitions, assignment to various theatres of war … 13 Munitions program (See War Munitions Program) Musson, F. W., British Air Commission, conference with Mr. Blaisdell ……………………………. 10 “Must” programs ………………………………. 94 N Nathan, Robert R. : Chairman of committee to consider downward revision of war munitions program …………. 45 Chairman of special committee to report on revision of objectives of industrial facilities and military construction …………………….. 44 Preparation of general agenda of subjects for consideration …………………………. 14 Report on present assignments of functions with respect to authorization of new plants…….. 12 Termination of deferment from military service 124 National Bureau of Economic Research, study of war cycles ………………………………… . .29,32,111 National Resources Planning Board, designation to survey proposed plant sites suggested ……………… 24 Naval equipment, obsolescent …………………… 88 Recommendation No. 16 ……………… 157 Naval shipyards, excessive inventories of materials 82 Navy Department: Conservation of materials ……………………… 39 Establishment of price adjustment board…………. 52 Production scheduling ………………….. 108 Representative requested to collaborate with the War Production Board in reviewing the war munitions program …………………….30,36,40 Navy shipbuilding program, readjustment ………. 114 New England, fuel situation ……………………. 58 Newcomb, Robinson, possibilities of reducing ma- terials requirements in construction program ……….. 49 Nickel, supply and demand, study………………… 21 O Orders : L-2-g ……………………………………… 117 L-41 ………………………………………. 49,51 L-67 ……………………………………….. 119 M-241 ………………………………………. 110 P-19 …………………………………………. 49 Assignment of representative to Clearance Committee, WPB, to view problems of preparation of orders ………………………………. 110 Relief to manufacturers forced to cease operations because of ………………………..66,69 Role of industry divisions in preparation…… 110 Subject Page Ordnance, production objectives ………………….. 19 P Paper and pulp industries, curtailment of production 109 Parton, J. R., Major, report on Texas-Illinois pipeline 78 Petroleum (See also Texas-Illinois pipeline; Yukon pipeline) : Feasibility of remedial steps suggested for meeting shortages ……………………………. 100 Refinery conversion program …………………… 84,85 Shortage on the Eastern Seaboard ………………46, 61, 63 Supply for refineries producing toluene ……………. 16 20” pipeline from Texas to East Coast ……111,115 Recommendation No. 9 ………………………… 140 Petroleum Coordinator for War, Office of, the: Comment upon the feasibility of the remedial steps suggested for meeting the petroleum situation …………………………………. 100 Responsibility for conversion of petroleum refineries ………………………………… 84 Responsibility for high-octane gasoline production ……………………………………. 16,33 Recommendation No. 1, Toluol Supply…….. 126 Phillips, J. L., Colonel, member of committee to report on revision of objectives of industrial facilities and military construction ………………….. 44 Planning Committee: Agenda ………………………………….. 8,118 Alternates to be designated to act for the members in the event of their inability to attend meetings ………………………………… 15 Appointment of Executive Director ……….. 18 Closer administrative integration with the Statis- tics Division and Office of Progress Reports of WPB ……………………,……………… 124 Functions ………………………………. 1,22 Meetings with formal agenda ……..;…………. 22 Organization ……………………………. 1,125 Participation in the work of the Combined Production and Resources Board ……………….. 82 Recognition of importance of development of a program on civilian requirements ……….. 121 Report to the War Production Board ………………… 40 Representation on other boards and committees 114 Resignation of members …………………… ….. 124 Specific problems deserving consideration …………… 2 Staff recruitment ………..,……………………… 5 Status of assigned studies ……………………….. 31 Planning Coordinator, inclusion on Planning Committee staff to stimulate planning in operating units of WPB ………………………….. …….. 31 Plant Site Board, WPB: Deferred action on proposals for new facilities.. 51 Reconstitution proposed ……………………….. 47 Supervision over plant sites …………………….. 8, 24 Plant sites, clearance………………………… 23 Post war planning, current use of resources for… .117,118, 119,120,121,123 Preference ratings: Proposed revision by Army and Navy Munitions Board……………………………58,60,62 Recommendation No. 7……………………….. 138 President, objectives for 1942 and 1943 war muni- tions program, feasibility………………………31,40,96 Price adjustment boards, creation in each of the procurement agencies …………………………… 52 Recommendation No. 14………………………….. 152 Price Administrator, comment upon the feasibility of the remedial steps suggested for meeting the petroleum situation …………………………… 100 Price control and renegotiation of contracts………61,89 Priorities (See also Controlled Materials Plan; Orders; Preference ratings; Production Requirements Plan) : Assistance to government agencies……………… 73 Subject Page Establishment of a board to determine priorities of effort on broad policy basis suggested……. 50 Imperfections of system………………….;…… 20 Task to discriminate between competing military uses …………………………………….. 44 Procurement : Over-procurement …………………………….. 33 Policy on used equipment, purchase by federal agencies …………………………………. 73 Principles, draft memorandum to be prepared… 11 Principles to be followed in placement of contracts …………………………………H» 13,17 Recommendation No. 2………………………….. 126 Production (See also War Munitions Program) : Control, criteria for formulation……………. 97,98 Estimates for 1942 and 1943…………………….. 19 Obj ectives ……………………………….10,14,17 Objectives, adjustment …………………………. 95 Objectives, revision of, for 1943……………. 102 Program, analysis…………………………….. 87, 88 Relation to military strategy………………….. 90 Report for 1942 and 1943………………………….. 107 World production ………………………………. 99 Recommendation No. 20, Program Scheduling and Production Control……………………………… 163 Production Executive Committee, WPB: Clarification of relationship to the operating divisions of WPB……………………………… 97 Instructions to secure realistic scheduling from procuring services…………………………. 96 Production Requirements Plan: Inventory reports on PD-25A……………………. 91 Procurement with respect to tabulation and review of data…………………………………. 86 Retention for certain purposes…………….. 89 Supplemented by production scheduling to control all industrial inventories………………….82,107 Production scheduling: Distinction between program and operational scheduling ……………………………….. 117 Necessity to control all types of industrial inventories ………………………………….. 82 Need for integration…………………………. 116 Principles and procedures…………………..101, 104,108 Relationship to program objectives, labor, supply, materials, transportation, and availability of plants and tools………………………….. 97, 98 Recommendation No. 20…………………………. 163 Production Vice Chairman, WPB, responsibility for the scheduling of production programs of the Army, Navy, Maritime Commission, and other agencies… 104 Profiteering, protection of public against….;…… 7 Profits : Corporate ………………………………… 53 Taxation ……………..,…………………….. 52 Program Analysis and Research Section, WPB, Chief of, review and report upon the extent of consideration given to the importance of defining a feasible War Munitions Program…………………………. 88 Program determination: Basis on simultaneous consideration of both production and strategic factors……………….90,115 Distribution of pertinent documents………………. 88 Factors for determination……………………… 98 Recommendation No. 18……………………….1… 162 Progress Reports, Office of, WPB : Analysis of the shipbuilding program……………. 6 Closer integration of work with Statistics Division and Planning Committee……………….. 124 Public utilities facilities, value………………. V.. 49 Pyron, Walter B., Brig. Gen…………………….. 72,76 R Railroad equipment program……………..8, 12, 14, 31,95 Raw materials (See Materials) tn Subject Page Recommendations: No. 1. Toluol Supply ………………..17,32,33,125 No. 2. Policies of Procurement…………….17,126 No. 3. War Munitions Program……21, 22, 90, 96,127 No. 4. The Airplane Program and Airplane Objectives …………………………….. 30,130 No. 5. Maritime Shipbuilding Program……………… 131 No. 6. Program for the Utilization of Used Equipment………………………. .60, 69, 73, 97,136 No. 7. Proposed Rerating System of the ANMB.60,138 No. 8. Mobilization of Scientific Research Resources ………………………………..63,140 No. 9. Impending Petroleum Crisis on the East Coast………………………………….63, 70, 97,140 No. 10. Smaller War Plants Corporation…………..70,141 No. 11. Relief for Manufacturers Forced out of Business as a Result of the War Effort……..69,144 No. 12. Concentration of Civilian Production… .73,146 No. 13. Transportation ……………………79, 89, 95,149 No. 14. Organization of a War Contracts Policy Board…………………………..61, 89, 151,152 No. 15. Feasibility of the Production Program 88, 90,92,94,108,155 No. 16. Conservation of Resources by Curtailment of Production of Obsolescent Items of Military Equipment …………….88,157 No. 17. Control of Flow of Materials…….89,90,158 No. 18. Adjusting the Program………….90, 94,162 No. 19. Salvage …………….. i……………..94,163 No. 20. Program Scheduling and Production Con- trol ……………………………………98,101,163 No. 21. Implementation by WPB to Promote Utilization of Waterways to Relieve Railway Overloading ……………………….. . 100,166 No. 22. Policy Regarding Experimental and De- velopment Work on Civilian Products…………….. .123,170 No. 23. Consumer Conservation 171 Reed, Philip D.: Memorandum on problems of manufacturers forced to cease operations on account of the war 66 Small business …………………………………. 62 Reed, Virgil D., memorandum on manufacturers forced to cease operations on account of the war… 62, 66 Requirements, preparation of estimates…………… 10,18 Requisitioning, handicapping by price negotiations. . .. 91 Riley, Edward, suggested appointment to War Shipping Administration to make survey of space utilization on merchant ships…………….. 6, 9 Rockwell, Willard F., Colonel, comment on shipbuilding report ………………. i….. ?. V;. 85 Rose, Matthew, tables on progress in projects financed with federal funds……………………………. 48 Rubber: Supply and demand, study……………………… 21 Synthetic, Jean’s process…………………….. 110 Synthetic, production responsibility……………… 16 Rubber Reserve Corporation, cancellation of contracts for construction of butadiene plants due to conversion program…………………………………. 86 S Salvage Division, WPB, establishment recommended. 94 Salvage program ………………………….9, 14, 90,93 Recommendation No. 19……………•…………….. 163 Scarce materials: Conservation……………………………………43,44 Superiority over Axis…………………………. 21 Scientific research resources, mobilization of…..57, 63 Recommendation No. 8…………………………… 140 Scoll, David E.: Invitation to report on current studies on the shipping situation ………………………. 2 Report on merchant shipping requirements….. 3 Scrap: Prices ……………………...…………….. 9 178 Subject Page Steel …………………………………………. 3 Searls, Fred, Jr.: Appointment as Chief of the Facilities and Construction Program Branch, WPB………………. 92 Draft recommendation on the toluene problem… 17 Report on contract negotiations and controls over the distribution of new machine tools………… 7 Report on over-procurement………………… 33 Resignation from the Planning Committee…….. 124 Services Programs Branch, WPB, establishment…. 95 Shipbuilding (See Merchant shipbuilding program) Shipping (See Merchant shipping) Sickel, H. G., Commander, member of committee to report on revision of objectives of industrial facilities and military construction…………………. 44 Small manufacturers forced out of business as a result of the war effort, relief to………………….. 66,69 Recommendation No. 11…………………………‘… 144 Smaller War Plants Act, conversion of small plants to war production…………………………….. 62 Smaller War Plants Corporation………………….69,112 Recommendation No. 10………………………… 141 Smaller War Plants Division, WPB, accomplishments 112 Smith, H. deWitt, designation as alternate for Fred Searls at meetings……………………………….. 15 Smith, Rufus Burr………………………………. 59 Somervell, Brehon B., General: Comments on feasibility of the production program ………………………………….. 90 Relationship of cargo space to soldiers……….. 3 South America, feasibility of further development of copper mines…………………………………… 43 Special committee on revision of objectives of the industrial facilities and military construction program : Curtailment of construction report……………….. 56 Progress report ……………………………….. 47 Proposed recommendations ……………………….. 51 Scope and method of report…………………….44, 45 State and local governments, construction projects…. 49 Statistics Division, WPB, closer integration of work with Planning Committee and Office of Progress Reports ………………………………………112,124 Steel: ; Civilian requirements ……………………… 38 Expansion program …………………………. 49 Production, 1942 and 1943………………….. 112 Production, expansion and maintenance………… 82 Requirements for industrial facilities and military construction programs……………………… 37 Requirements for pipelines……………………… 70 Substitution for brass in cartridge cases to reduce copper requirements ……………………..41,43 Supply and demand for ingots, plates, castings, and forgings, study……………………….. 21 Steel ingots: Supply and demand, study………………………… 21 Supply and requirements report…………………… 90 Steel plates: Allocation to shipyards……………………54, 57, 68,81 Relationship of monthly shipments to the attain- ment of the merchant shipbuilding objectives.. 85 Shortage, effect on construction program…….. 44 Shortage, obstacle to shipbuilding program………55,75 Steel Quota Plan, proposed.»…………………….. 86 Steel scrap, review of situation proposed………….. 3 Stockpiling and Transportation Division, WPB, establishment ……………………………………. 95 Subcontracting: Necessary for utilization of idle machine tools… 7 Recommendations for effecting a greater degree of ………………………………….. 14 Use for drawing smaller war plants into war program …………………………………. 70 “Subcontracting in Canada’s Munitions Industries”.. 7 Subject Page Submarine activities………………………….. 113 Surplus property, disposition authority…………. 74 T TNT: Effect of reduction of toluol on production.. 12 Production …………………………………… 15 Tanks : Priorities …………………………………… 43 Reduction in objectives……………………… 30,42 Technical Development, Office of, WPB, proposed establishment …………………………….. 58,63 Recommendation No. 10…………………………. 143 Texas-Illinois pipeline: Approval by WPB……………………………. 97 Disapproval by Planning Committee……………….. 63 Disapproval by special committee..;……………… 61 Effect of approval on overall programming……… 115 Extension to the East…………………………. 100 Factors impelling WPB approval of project……… 75 History of project…………………………….. 70 Purpose ……………………………………… 72 Recommendation ……………………………….. 78 Recommendation No. 9………………………….. 140 Toluol : Memorandum on problem………………4…………. 17 Production and requirements, 1943…………….. 12,15 Supply problem ………………………………32,33 Recommendation No. 1…………………………. 125 Transportation: National transportation system in wartime……… 14,31 Requirements and facilities…………..76, 77, 79, 89,95 Utilization of inland and intra-coastal waterways. 99 Recommendation No. 13…………………………. 149 Recommendation No. 21…………………………. 166 Transportation Committee, WPB: Comments on Recommendation No. 13……………….. 89 Estimates of transportation requirements………. 77 Treasury Department, Procurement Division, authority ………………………………………… 74 Tungsten, supply and demand, study……………… 21 Turbines, standard cargo vessel construction delayed due to shortage of……………………………. 80 U Used Equipment and Supplies, Bureau of, WPB, proposed establishment………………………….. 60 Used Equipment Branch, WPB, establishment and functions …………………………………… 97 Used equipment, utilization……………….60,69,73 Recommendation No. 6……………………. 136 V Vanadium, supply and demand, study………….. 21 “Victory Program, Feasibility of the,” analysis… 2,6 W War Contracts Policy Board, proposed establishment. 61,89 Recommendation No. 14………………………..151,152 War cycles, study by National Bureau of Economic Research ……………………………….29,32,111 War Department (See also Army) : Establishment of a price adjustment board……… 52 Facilities program……………………………. 107 Ordnance Department, responsibility for toluene production ……………………………… 16 Reduction in construction……………………….. 41 Representative to collaborate with WPB in reviewing the war munitions program……28, 30, 36,40 Subject Page Request for criteria for renegotiation of contracts 53 Shipping requirements, submission to Planning Committee ……………………………………23,35 War Munitions Program (See also Production) : Adjustment of objectives and schedules for 1943.. 92, 94, 95,102 Committee appointed to consider downward revision ……………………………………. 45 Determination by joint consideration of strategic and production objectives………………… 83 Evaluation of objectives in terms of raw materials 38 Feasibility studies……………………….87, 88,90 Feasibility studies given precedence over other studies………………………………….. 80 Feasible aircraft objectives………………… 25 Implications of objectives beyond range of feasibility ……………………………….. 32,33 Integration of……………………………….. 6,10 Layering proposed………………………………. 43 Limiting factors……………………………….. 21 Need for requirements for each category of program ………………………………….. 40 President’s approval of revised objectives….. 36 Reductions recommended for 1942 and 1943 …….. 64 Relationship of critical materials to program.. 22 Reports on feasibility, financial analysis, and raw materials requirements…………………….. 18 Review ………………………………….. 2,8 Review of objectives……………………… 17,18 Revision of objectives……………………….28, 30,31 Recommendation No. 3…………………………… 127 Recommendation No. 15…………………….. 155 Recommendation No. 18………………………… 162 Recommendation No. 20………………………….. 163 War Production Board: Organization changes……………………116,123 Reorganization ………………………………… 76 War Production Board, Chairman of: Determination of joint strategy-production objectives ……………………………….84,92 Directive principles to be followed by procurement agencies in renegotiating contracts suggested ………………………………….. 56 Request to the Joint Chiefs of Staff to review the military production program as aid in adjustment of objectives……………………… 94,95 War Production for 1942 and 1943, joint report by the Planning Committee and the Statistics Division, WPB………………………………..107, 112, 117,118 War Research Development Corporation, proposed establishment ……………………………..57, 58,63 Recommendation No. 8…………………………… 140 War Shipping Administration: Analysis of the supply of merchant ships……. 13 Collaboration with the staff of the Committee in analyzing the availability of war material for shipment abroad………………………….. 110 Forecast of available cargo shipping facilities…. 32,34 Report reviewing shipping requirements……… 5,34 Supply and requirements data…………………….. 36 Wardwell, Charles A. R., cargo requirements of the Army and estimated tonnage available, analysis of.. 34 Warehousing space……………………………… 95 Waterways, utilization for transportation…………. 99 Recommendation No. 21………………………….. 166 Watkins, Ralph, alternate for Mr. Blaisdell……… 22 Webbink, Paul, review of labor supply situation….. 31 Whitman, Walter G., review of the inter-relations of motor gasoline, high-octane gasoline, butadiene, and toluene ………………………………………. 16 Wilhelm, Warren, memorandum on loading and unloading of merchant ships in New York area……… 23 Williams, Ernest, transportation report…………… 95 Willow Run plant, community facilities in Ypsilanti, Michigan ………………………………………. 23 179 Subject Page Wilson, Thomas W., Jr., draft of recommendation outlining methods to promote utilization of waterways for transportation………………………. 99 Wool, supply and demand, study…………………… 21 Work Projects Administration, collaboration with Bureau of Industrial Conservation, WPB, in scrap collection ………………………………….. 9 World munitions production, past and prospective, by the United Nations, the Axis, and neutral countries 99 World War II, comparison of industrial production with World War I……………………………… Ill Subject Page Wright, T. P., report on aircraft program……….. 22,25 Y Yukon pipeline; Advisability of completing project…………… 110 Consideration by officials concerned with strategy and production…………………………….. 76 Investigation of proposed construction…. .68, 71,72, 76 Steel requirements………………………………. 80 Z Zinc, supply and demand, study…………………… 21 ☆ U. S. GOVERNMENT PRINTING OFFICE: ie46-€86312 180