System Change, Class War, and the WW2 Economic Conversion Experience
The climate crisis has driven our planet into uncharted territory. We are close to breaching critical environmental thresholds, setting in motion destabilizing changes to our global climate system that could well make the earth unlivable for humans and countless other species. We must decrease carbon emissions as rapidly as possible, and there is no way to do that without significantly changing the operation and aims of our economy. However, not just any change will do. It must be one that also promotes worker empowerment and solidarity, community well-being and security, and democracy.
Activists have generated a wide-ranging list of demands to advance the desired transformation, including an end to the burning of fossil fuels for energy and its replacement with a zero-emission energy infrastructure; the expansion of energy efficient systems of mass transit to dramatically reduce private car use and encourage new forms of healthy community living and working; the retrofitting of homes, offices, and factories to improve energy efficiency; the expansion of sustainable family-farm-friendly agriculture; the provision of high quality and affordable healthcare; a massive program of public works to upgrade our infrastructure and further the investment and production needed to accomplish the tasks listed above; and the re-skilling of workers employed in environmentally damaging industries to ease their transition to alternative jobs in the expanding green sectors of the economy.
System Change: Challenges and Tasks
There are movements already doing the hard organizing to build support for many of these demands. Often, the work has also helped activists develop the expertise needed to craft effective policies, and in those cases where victories have been won, monitor government and corporate actions. At the same time, individual movement efforts, no matter how summed together, do not automatically encourage an understanding of the challenges and tasks involved in the process of system change. The list of demands highlighted above is attractive, and combined they do help project a desirable vision of the future. But system change of the magnitude we want and need will involve many moving and interrelated parts. And if it is to be successfully accomplished, the whole will have to be planned.
For example, the system change we want includes the closing or significant downsizing of a number of fossil-fuel dependent industries. We will need to develop a process for humanely and efficiently repurposing the newly surplus facilities and ensuring alternative employment for released workers. Similarly, we will need agencies to decide the speed of expansion of the industries that will anchor our new economy, how their expansion will be financed, who will own and manage them, and how we can best ensure that the materials they need will be produced in sufficient quantities and made available at the appropriate time. We will also need planning to decide where to locate the new industries and how to provide the social infrastructure to house and care for the required workforce. And we will need some way to ensure that our process of transformation is compatible and supportive of efforts in other countries.
Clearly, we are not yet ready, organizationally or politically, to advance an actual transformation plan. However, it is not too soon for us to begin thinking about the choices and challenges that lie ahead, both to keep the ultimate goal of system change in mind and to begin developing the organizational relationships and networks required to create a shared sense of priorities. A number of people, including me, believe that that there is a lot to be learned from studying the World War II mobilization experience.1 Under the pressure of war, the US government was forced to confront challenges similar to those highlighted above as it sought to rapidly convert the economy from civilian to military production. And thanks to the work of a series of mobilization agencies and policies that enabled the government to fund the construction of new industries, support the expansion of existing ones, order the closure or conversion of yet others, and allocate scarce machines and resources according to established priorities, it succeeded.2
Military spending as a share of GDP rose from 1.6 percent in 1940 to 32.2 percent in 1943. That last year, federal spending hit a record high of 46.6 percent of GDP and remained at over 41 percent of GDP in each of the following two years. The combined output of the war-related manufacturing, mining, and construction industries doubled between 1939 and 1944. In 1943 and 1944 alone, the United States was responsible for approximately 40 percent of all the munitions produced during World War II.3
Not surprisingly, the strong consensus from those studying the wartime conversion experience is that a rapid and successful transformation requires aggressive state planning and direction of economic activity. And this is indeed an important lesson for our movement to learn. But there is another lesson to be learned from that period, one that deserves more attention than it currently receives. It is that in a capitalist economy, capital’s ownership position greatly enhances its ability to mold state structures and their policies in ways favourable to its interests, and to the detriment of working people. In other words, the planning process is a contested terrain, and one not usually favourable to the working majority.
As I seek to show in what follows, during the war years, corporate leaders were able to rebuff planning proposals of the Congress of Industrial Organization (CIO) and successfully marginalize the participation of unions in the mobilization agencies that were formed, ensuring that labor would be forced into a defensive and ever weaker position relative to capital as the war progressed. Thus, if our aim is not just a transformation to a somewhat less carbon-consuming economy, but also a “just” transformation, we must prepare ourselves, and the movement we hope to build, for an ongoing and complex struggle to overcome capital’s structural advantages as we work to create the state agencies and policies we want and need. It is my hope that this article, which focuses on the class dynamics shaping the World War II mobilization process, can help with that preparation. The history it describes offers a useful primer on how the other side conducts its class war.
Section 1 describes the US military’s post-World War I efforts to develop an industrialization-mobilization plan in preparation for the next war. It highlights the growing military-corporate alliance and the military’s determination to craft a mobilization plan that would promote maximum freedom of operation for the alliance partners at labor’s expense. Section 2 discusses Roosevelt’s opposition to the military’s work, the nature of the mobilization agencies actually established, and how those agencies, despite Roosevelt’s concerns, quickly became dominated by corporate America.
Section 3 presents and evaluates labor’s alternative plans for industrial mobilization. These plans – which were rejected by corporate America, mobilization authorities, and President Roosevelt – would have reorganized business relationships and potentially transformed class relations by establishing labor as an equal partner with business and government in decision making.
Section 4 describes the cost of defeat for labor over the war years, highlighting the ways in which management and government agencies steadily undermined past worker gains in both wages and working conditions by stripping unions of much of their capacity to defend worker interests.
Section 5 concludes with a brief discussion of the relevance of the World War II conversion experience to our present-day desire to transform the US economy.
Section 1. Planning Class War
State planning, investment and ownership, and direction of economic activity were key to the US wartime transformation from a civilian to a military economy. Central to this state activity was the work of three successive planning agencies, each established by presidential executive order, with President Roosevelt giving each new agency a more centralized leadership and greater authority over private economic activity.
The first was the National Defense Advisory Commission (NDAC), established in May 1940. It was replaced by the Office of Production Management (OPM) in December 1940, which was replaced, in turn, by the War Production Board (WPB) in January 1942. Despite their differences, the basic framework of the NDAC was maintained in both the OPM and WPB. And although it was Roosevelt who decided on that framework, his decision was not made in a vacuum. He had to contend with an increasingly powerful military-corporate alliance pushing its own mobilization plans.
The chaotic experience of the World War I economic mobilization encouraged the military to start thinking about an improved mobilization model soon after the war’s conclusion. The chaos was a result of poor organization and unclear lines of control on both the military and civilian sides of the mobilization. In a rush for armaments, the War and Navy Departments, and their various procurement agencies, began competing with each other to place contracts with firms. The uncoordinated purchases created havoc, leading to shortages and escalating prices.
The War Industries Board (WIB), established in 1917, was supposed to function as a coordinating agency to avoid just such chaos. The WIB was organized around trade associations with member companies participating on a voluntary basis. The trade associations were to make decisions about how best to ensure the desired military production and develop appropriate responses to shortages. However, it was not until Bernard Baruch was appointed head of the WIB in March 1918 that the industry side of the mobilization became effective. This was largely a result of his force of personality and, equally important, newly granted Presidential authority.
For example, Baruch quickly established a Priorities Committee and Priorities Division to set priorities for the allocation of scarce goods. Then, to gain compliance, he used his newly granted authority to deny manufacturers who failed to cooperate with the war effort access to the materials they needed for their civilian production. Nevertheless, rather than simply setting policies and issuing decrees, Baruch was forced to negotiate directly with some of the most powerful companies, including those in the auto and steel industries, to gain their cooperation.
The military had its own house to get in order, needing to reduce its internal competition and to rationalize its purchasing. But this was no simple task – as both the military itself and the Secretary of War, Newton Baker, wanted this authority. In August 1918, the Secretary of War, with Congressional support, ended the conflict by asserting the need for civilian control over Army decisions and giving his Assistant Secretary of War, Benedict Crowell, responsibility for overseeing and coordinating the procurement activities of the Army’s supply bureaus.
Determined to learn from the past, the Assistant Secretary was also authorized to establish a Planning Branch staffed by Army officers. Then in February 1922, the Secretaries of War and Navy created the Army-Navy Munitions Board to help them coordinate procurement and planning activities. And, two years later, the Army established the Army Industrial College, with the mission of educating officers in the skills required for planning and industrial mobilization.
The Planning Branch over the years 1922-1928 began developing a series of somewhat rudimentary plans for a future wartime mobilization. Baruch’s experience and vision had a big impact on its work. Baruch believed that the military would do best by working with, rather than by having authority over, the business community, and by 1924, Planning Branch members were openly consulting with trade association officials. In fact, to help with the work, some trade association leaders were made Reserve officers for temporary duty in the Planning Branch.
More generally, Baruch advocated for a federally established coordinating body that would be empowered to determine overall policy that industry, through its trade associations, would be required to implement. The Industrial Mobilization Plan of 1928, the most developed plan to that point, incorporated this understanding. It proposed to have trade associations self-organized into War Service Committees. These committees would, in turn, operate under the authority of an overarching agency similar to the War Industries Board of WWI. That agency would be the contact point between the military and industry. As the military historian Paul A.C. Koistinen explained, “Even though the procurement agencies would still negotiate with industry, the War Service Committees would be responsible for determining industrial expansion, defining price controls, regulation trade practices, establishing priorities, and distributing raw materials.”4
While the military’s planning focused on industry and its organization, labor was not forgotten. In contrast to the invitation extended to industry leaders to participate in the Army’s planning process, labor leaders were not only never invited, they were never even consulted. And, while there were different positions within the military on how to relate to labor during a mobilization, all tended to be hostile, seeing workers as a problem to be managed with sticks rather than carrots.
Some in the Army Industrial College wanted to, in case of war, draft all males of specified age groups and then, at soldier’s pay, furlough ones needed to work for private industry. Officers in the Planning Branch had a more moderate position, preferring instead more indirect forms of compulsion – the registration of all citizens, travel bans, and "work or fight legislation,” which meant that workers who refused to work would be drafted and sent to fight.5
New plans were prepared in 1929 and 1930, with the latter approved by Baruch. The Industrial Mobilization Plan of 1930 included a recommendation for the establishment of a National Resources Administration (NRA) that would be responsible for mobilizing and coordinating industry in the event of war. The NRA would oversee two units: the Office of the Coordinator of Requirements and the Office of the Coordinator of War Industry. The first would be staffed by military personnel and responsible for determining military needs. The second would be staffed by business people and charged with determining policies – to be carried out by trade associations organized into War Service Committees – for the industrial mobilization required to meet military needs. In brief, in a time of war, the military and leading corporations (organized by trade associations) would run the economy, and labor would be disciplined to ensure smooth production.
The plan was revised again in 1933, and a year later it was critically reviewed by the Special Senate Committee Investigating the Munitions Industry. According to Koistinen:
“Generally, the Committee concluded, Army plans not only favored capital over labor, but were designed to threaten organized labor’s very existence, while proving a framework patterned after the experience of World War I in which industry could once again unconscionably profit from the production of munitions.”6
The military responded to committee criticisms with a revised 1936 plan that actually doubled down on its vision. The National Resources Administration was renamed the War Resources Administration (WRA). It was to be led by a single appointed administrator along with officers supplied by the Army-Navy Munitions Board as staff. The WRA would perform all mobilization functions pending the creation of other agencies with more narrow responsibilities. The WRA would operate through trade associations organized into War Service Committees that would execute the policies issued by the WRA’s administrator.
The 1939 plan revision was even more extreme. The War Resources Administration was to be the direct representative of the president, and all other agencies later created would be subordinate to it. Key positions in the War Resource Administration were to be staffed with “patriotic business leaders.” As for labor policy, the plan proposed that if war broke out, the Labor Section of the Army-Navy Munitions Board, composed entirely of military personnel, would be empowered to issue or develop manpower policies until a separate Labor Administration was created. However, even then, the military would be well positioned to achieve its desired ends. Koistinen provides some of the details:
“In the first place, the military services would be involved at every stage in the evolution of the Labor Administration. In the second place, the plan called for a suspension, for the duration of the war, of the Eight-Hour Act, the Walsh-Healey and Bacon-Davis Acts, and of protective employment legislation for women and children. Even the National Labor Relations Act … was to be amended so as not to inhibit production. As if these drastic measures were not sufficient sacrifice of labor’s rights, the Labor Appendix [of the 1939 plan] further stated that all labor disputes not settled peacefully would be subject to compulsory arbitration. Stopping short of direct compulsion applied to the working population, the plan sanctioned ‘indirect controls’: transfer of workers to essential industries, ‘work-or-fight’ regulations, priority assignment of labor, and so on.”7
Clearly, the military and its corporate allies took planning seriously. And they came to share a common aim: an industrial mobilization process in which they each enjoyed maximum freedom of operation. The government was to remain on the sidelines, and labor was to be repressed. They didn’t get all they wanted, but as we see next, they came close.
Section 2.The President Acts
Although the military kept spinning out new plans, none of them had ever been formally evaluated by either the Congress or the President, much less won their approval. As the possibility of US involvement in the war grew, the military began pushing Roosevelt for a review. It wanted its plan endorsed so if war broke out it could be quickly implemented. Finally, in 1939, the President agreed to a request from the Assistant Secretary of War to appoint a civilian committee to evaluate the military’s latest plan.
The President established the War Resources Board, although most members were selected by the Assistant Secretary. Initially, all the selected panelists were industrialists. The Board was favourable to the military’s plan and submitted a report to the President saying so. The President did not share that opinion. Among his reasons was his unwillingness to turn control of the economy over to a WRA administrator. He was also not willing to approve a mobilization plan dominated by a military-corporation alliance in which business trade associations made and implemented government policy. Finally, the military’s industrial mobilization plan was designed to become operational once war was declared, not to manage a defense buildup, which was what he believed was required.
Roosevelt asked board members for a new report with a revised plan, but the new report included very few changes. It was submitted to the President in November 1939, one month after the German invasion of Poland and the UK’s and French declarations of war against Germany. Roosevelt put a secret classification on the final report and never allowed anyone, even members of Congress, to see it.
Roosevelt had downplayed his desire to boost the country’s readiness for war because of a strong isolationist sentiment in Congress, and the population in general. However, events in Europe began changing public opinion. The turning point was Germany’s rapid invasions of Belgium, the Netherlands, France, and Luxembourg in May 1940. Seizing the moment, Roosevelt ordered an increase in military spending and established his first mobilization agency, charging it with helping businesses support the defense buildup.
Rather than seek Congressional approval for a new mobilization agency, which might give the military and its corporate allies an opportunity to push their industrial mobilization plan, Roosevelt reactivated an already existing World War I-era agency, the National Defense Advisory Commission (NDAC). In contrast to what the military wanted, the NDAC had no supreme leader, and only limited powers, and included divisions representing a range of economic interests and social concerns. And in contrast to what the corporations wanted, trade associations were given no official standing to decide policy. At the same time, the underlying structure of the NDAC was only steps removed from that proposed by the military-corporate alliance in their evolving industrial mobilization plans. Moreover, with each successive change in mobilization agency, the distance became ever smaller.
The NDAC was a complex agency, organized around seven areas of specialization or divisions, each with its own appointed head: Industrial Production, Industrial Materials, Labor, Price Stabilization, Farm Products, Transportation, and Consumer Protection. Because the NDAC’s primary charge was to help business produce the goods and services needed by the military, two divisions soon came to dominate its work: the Industrial Production Division (led by William S. Knudsen, the president of General Motors Corporation) and the Industrial Materials Division (led by Edward R. Stettinius Jr., board chairman of the United States Steel Corporation). The other divisions, including the Labor Division (led by Sidney Hillman, president of the Amalgamated Clothing Workers of America) were largely ignored by industry leaders and quickly sidelined.
The Industrial Production Division was tasked with “facilitating the manufacture of munitions not normally produced by the economy” and organized into eight sections, the most important ones being aircraft; ammunition and lite ordnance; and tanks, trucks, and tractors. The Industrial Materials Division was tasked with ensuring the production of needed industrial materials. It was divided into three main subdivisions: mining and minerals products, which was further divided into sections representing products such as iron and steel, copper, aluminum, and tin; agricultural and forest products, which was further divided into sections for textiles, leather, paper, rubber, and the like; and chemical and allied products, which was further divided into sections for goods such as petroleum and nitrogen.
Significantly, every section in these two divisions had its own appointed head, almost always a so-called “dollar-a-year man.” These dollar-a-year men were business executives who, while serving the NDAC, remained employed and salaried by their corporate employer. Often, they were put in charge of a section that was to oversee the activities of the firms that employed them. In many cases, these section heads relied on industry advisory committees, as well as trade association officials, to help them with their work. In fact, it was common in the Industrial Material Division for trade association officials to be placed in charge of the sections responsible for the industries they were paid to represent.
The NDAC proved to be rather ineffective. With no central authority or powers of compliance, it found it difficult to develop an overall production plan for the economy or to overcome military and corporate resistance to its initiatives. The fact that most section heads, in line with corporate desires at the time, resisted NDAC efforts to promote conversion, priority allocation of key materials, or new investment in plant and equipment, only added to the agency’s poor performance.
Accordingly, Roosevelt, in December 1940, replaced the NDAC with the Office of Production Management. This agency had a designated leader and a policy council that included military representatives. It also had fewer divisions; those seen as tangential to the military buildup, such as those concerned with price stability, consumer interests, and agriculture, were dropped. While an improvement over the NDAC, the OPM also floundered, in large part because the President continued to withhold from it the authority to direct and regulate production. Thus, although progress was made in building a planning infrastructure, shortages of key products and materials continued to destabilize the economy and set back the military buildup.
Finally, with the US entry into the war, Roosevelt replaced the OPB in January 1942 with a new mobilization agency, the War Production Board. In contrast to the previous two agencies, the WPA was given the economic and regulatory power needed to finally unleash the country’s productive capacities in the service of military production. In particular, the WPB was able to shut down civilian industries or order their conversion to military production, prioritize and allocate the distribution of scarce goods and materials, promote new investment in plant and equipment in critical industrial sectors, and secure agreement from the military’s procurement agencies to take the economy’s ability to produce into account when making procurement demands.
Yet, while each new mobilization agency had a more centralized decision-making structure, broader responsibilities, and greater authority over private business decisions than its predecessor, one thing remained the same: key decisions were made by divisions, and most of these divisions and their sections were headed by dollar-a-year executives. As the labor historian Nelson Lichtenstein pointed out:
“Key decision making lay within the industrial divisions of the OPM and the WPB. There, almost 800 posts were held by dollar-a-year executives on loan from their corporations. Along with like-minded procurement officers in the military, the men who staffed the industrial divisions soon presided over a virtual command economy. They decided distribution of contracts, allocation of scare resources, general coordination of industrial capacity and military requirements.”8
The labor historian Rosemary Feurer highlights one way in which this process worked to benefit corporate America:
“By 1941 the Roosevelt administration had, as one scholar put it, allowed the defense mobilization apparatus to be ‘rapidly converted’ into ‘a branch of corporate America.’ Large corporate interests guided defense production allocation, resulting in a private planning system and the intense concentration of defense contracts. Two-thirds of all wartime defense contracts were awarded to one hundred of the largest corporations. Major employers such as General Electric and Westinghouse were given cost plus profit contracts. Those corporations could subcontract to whomever they wished. They reaped the most benefits of huge modern government-built plants. In the metal industries, the war mobilization promised unprecedented rewards, as the Defense Plant Corporation ‘underwrote virtually the entire machine tool production in the country’.”9
Roosevelt’s acceptance of this “behind the scenes” takeover of the mobilization process by corporate executives, despite his critical perspective, reflects the powerful leverage corporations enjoy in a capitalist economy, especially during wartime. As Roosevelt’s Secretary of War, Henry Stimson, explained: “If you are going to try and go to war, or to prepare for war, in a capitalist country, you have to let business make money out of the process or business won’t work.”10
Of course, capital’s leverage is always contested. And alternative forms of planning were considered and advanced over this period. In fact, as we see next, organized labor put forward its own workable mobilization plans. Unfortunately, they were quickly rejected by corporate leaders, including those who occupied positions of authority in the OPM and WPB, and eventually by Roosevelt himself. The war would be won and capital would claim the lion’s share of the credit, citing its “production miracle.”
Bruce Catton, who served as director of information for the WPB, highlighted what was lost when Roosevelt followed the path of least resistance:
“We had been put in the position of fighting for the preservation of the status quo; the status quo at home, where reaction had found its voice again, and, by logical extension, the status quo abroad as well. Our unlimited strength had been applied to the attainment of strictly limited objectives, military objectives – which meant that we came out of the war to find that the real issues had not yet been settled. The big operators who made the working decisions had decided that nothing very substantial was going to be changed.”11
Section 3. Labor’s Vision Rejected
The defense mobilization came at a challenging time for unions, especially those affiliated with the CIO. Labor’s gains over the years 1935 to 1937 were significant, but many key industries remained unorganized when the economy fell back into recession in late 1937. Unemployment soared and union membership plummeted. The CIO, in particular, faced another problem: a rightward shift in the political mood of the country. Beginning in 1938, the House Committee on Un-American Activities, led by Chairman Martin Dies, began holding hearings on the dangers of communism, with special attention to the role of the left in the CIO.
CIO leaders were hopeful that Roosevelt’s defense buildup would reenergize the labor movement. A growing economy meant greater employment, especially in the heavy manufacturing sector. At the same time, well aware of the anti-worker sentiments of both the military and corporate community, and hoping to sideline the most recent Industrial Mobilization Plan, Philip Murray, head of the CIO, developed his own plan. He presented it to Roosevelt, with unanimous support from the CIO Executive Board, in December 1940. What came to be called the Murray Plan was quite general. In brief, it called for the creation of Industry Councils, composed of equal representatives of management, labor, and government, in all major industries. These councils were a direct challenge to the corporate controlled War Service Committees.
More specifically, Murray’s councils would have, as Koistinen explained:
“… the authority to make all major decisions for the industry during the period of emergency. Regional and local councils would be organized where necessary. The councils would plan for converting an industry to defense and war production; allocate contracts, materials, and labor within the industry; provide for the maximum utilization of all facilities, including pooling arrangements; and ensure proper training, housing, and other facilities for the work force. A National Defense Board, composed of equal representatives from labor and industry, but chaired by the President or his representative, would serve to coordinate the various councils and to establish rules and procedure for the operation of the councils.”12
In short, under the Murray Plan, the government would consider “each industry, not as a series of corporations, but as a series of plants.” Beyond promoting a rapid and efficient industrial conversion to military production, the councils would also ensure that “small business received its share of the defense contracts and would make certain that labor’s organizational and economic interests were fully protected.”13 Beginning in January 1941, a number of CIO unions offered variants of the Murray Plan for their own respective industries, including the steel industry, aluminum industry, copper industry, and agricultural equipment industry.
The most detailed mobilization plan, and the one that came closest to adoption, was developed by Walter Reuther of the United Auto Workers for the automobile industry. After years of depression, the automobile industry was now enjoying strong sales and determined to continue producing for the civilian market. Thus, when the military began offering it contracts for the production of trucks, armored cars, jeeps, tanks, and aircraft engines, it decided to meet that demand by building new government-financed plants in low-cost locations distant from its Michigan production facilities.
The problem with this strategy was that the combined civilian and military demand for goods and services was increasingly outrunning the ability of the economy to satisfy it. The result was a growing shortage of tools and materials and delays in the completion of defense projects. Concerned, planning officials began pressing industries that were major users of machine tools and industrial materials to either dramatically reduce their civilian production to free up resources for the military or fully convert to military production. The automobile industry was at the top of their list.
Reuther, with good reason, worried that if the automobile companies mismanaged the situation, many Detroit autoworkers would find themselves out of work at the same time as newly built defense plants ramped up production. Thus, he offered his plan, one developed with the help of I.F. Stone, to begin the conversion process at existing auto plants while still maintaining civilian auto production, although at a reduced level.
In brief, his plan called for the industry to delay work on new car models for six months, thereby freeing up thousands of skilled mechanics and machines. The resulting industry excess capacity would then be pooled and used to build planes for the military at the rate of 500 a day. Although Reuther’s “500 planes a day” plan was meant to cover a transition period, there was little doubt he envisioned it as a framework for organizing the industry’s eventual total conversion to war production.
More specifically, Reuther’s plan called for the creation of a tripartite Aviation Production Board headed by a government official, with an equal number of business and union representatives. Catton summarized the basic elements of the plan as follows:
“[The Aviation Production Board] was not to be an advisory body, making suggestions to government or to management; it was to be the authority, empowered to make plans and commitments for the entire industry and to distribute production among the various corporations and plants within the industry according to the technical needs of conversion. It would operate mostly through three subcommittees.
“One of these was to be a technical committee, composed of the best engineering personnel of the auto companies, plus representatives of the parts producers, plus representatives of labor. This committee was to plan the conversion of basic facilities and the distribution of production among them; to organize the engineering activities of the companies, in other words, eliminating duplication and wasted effort.
“A second committee was to deal with the labor supply. Again, it was to be balanced as to management and labor representatives in its make-up; and it was to have authority to transfer workers to the most vital production points, to up-grade workers where necessary, and to supervise the retraining of workers who might be displaced during the transition period.
“The third committee was to handle subcontracting. It was supposed to include the best purchasing agents of the auto companies, the best technical personnel of the parts producers, and – once more – representatives of the unions. Its job would be to ensure that the facilities of the parts companies and of the other auto industry supplies were used to the maximum, and that ‘the tens of thousands of small plants for which no provision has yet been made in the work effort’ were effectively put to work.”14
Reuther shared his plan with Knudsen, the head of NDAC’s Industrial Production Division and former president of General Motors, and Knudsen rejected it. The plan became publicly known when, in late December 1940, it was sent to Roosevelt. Roosevelt sent it to the newly created OPM, which meant it went back to Knudsen, who was now the OPM Chairman.
Not surprisingly, Industry leaders strongly opposed Reuther’s plan. They were well aware that if imposed on the auto industry, other industries would soon be forced to implement it as well. And, if workers gained the power to help plan and organize production during the war, it was all too likely they would be able to maintain it after the war ended. But industry leaders didn’t have to publicly say anything; they could rely on the OPM to reject the idea for them.15 As Lichtenstein explained:
“Of course, Detroit could not denounce the plan directly, outright opposition on purely ideological grounds might seem unpatriotic. ‘They wanted to come into the shop as a union committee and try to design fixtures for the present machinery,’ OPM chief Knudsen remarked in March 1941. ‘We had to stall on that one and say that it couldn’t be handled.’ Hence the year-long attack on the Reuther Plan as technically unfeasible: Auto machine tools were too imprecise for aircraft production; pooling arrangements were difficult and cumbersome; the American government wanted to emphasize production of bombers, not fighters.”16
The stall was effective, not only in sidelining serious consideration of the Reuther plan but also in postponing the conversion of the auto industry. The auto industry didn’t embrace conversion until after Pearl Harbor and the establishment of the WPB, when it knew it had no choice and the military was ready to offer it billions in production contracts. And when the conversion took place, it was under the direction of the WPB’s Auto Industry Advisory Committee, which was headed by Ernest Kanzler, a Ford executive, who publicly rejected the establishment of joint labor-management committees to help with the process.
Strikingly, the actual conversion of the auto industry demonstrated that, despite what was said by mobilization and industry leaders, the Reuther Plan was technically feasible. Pre-war, all the leading firms in the automobile industry were members of the Automobile Manufacturers Association (AMA). Other related producers, of parts and tools for example, had their own associations. At the start of the war, all these associations came together to form the Automotive Council for War Production (ACWP). This council, in the words of Donald Nelson, chairman of the WPA, “was able to create a clearing house for practically all the facilities which the industry afforded and for all the great technicians and master mechanics who had made our motor industry a modern marvel.”17
Nelson quotes Alvan Macauley, Packard’s board chairman, and president of both the AMA and ACWP, who describes how “[t]he Council established a pattern of industrial teamwork for victory. Its purpose was the fostering of complete interchange of mass-production information, time-saving techniques, product improvements, tooling shortcuts and developments.”18
Various committee were established to share production knowledge. As Macauley explains:
“These committees, composed of production experts who express themselves most eloquently through the work of their tool-wise hands, are not debating societies. Though their members were competitors a year ago, they are operational teams, set up to get work done quickly and efficiently.
“One is a team of automotive production managers, engineers and master mechanics whose mutual problem is the manufacture of tanks and armored combat vehicles. Another [committee] handles artillery; another, shells and ammunition; another, military vehicles; and two others, aircraft engines and airframes and parts.”19
The Aircraft Engine Committee – one of the first to be created – developed and shared numerous ideas that improved and speeded up production. These included two improvements:
“- a method for milling connecting rods which is much faster than the shaping process formerly used, and
“- a general sharing of aluminum foundry techniques which, developed by one company, have widened a serious bottleneck in the casting of an air-cooled engine cylinder head by reducing foundry scrap losses from a former average of 50 percent to the present average of less than six percent.”20
The Committee for Airframes promoted similar exchanges; its members “held meetings in one another’s plants and showed each other the works in the way of machines, methods, and techniques – even exchanged personnel.”21 A case in point demonstrates how it worked:
“A company invited all former competitors now working on aircraft into its plant to study a new and rapid process for fastening sheet materials together. This process, a closely guarded secret, has resulted in joints three to four times a strong as those obtained by welding or riveting.”22
In brief, the auto industry became one major entity, pooling its research, machine tools, parts, processes, and employees, resulting in the development of new production methods, new products, and ever faster and more cost-effective production. And the auto industry was not unique. West Coast plane manufacturers and East Coast plane manufacturers each created their own associations, with firms sharing production processes, methods, tools, materials, and even machine time at each other’s factories. Eventually, both associations joined to form the National Aircraft Production Council. Among its achievements was the coordination of joint production of new aircraft. For example, a Boeing engine went into the Consolidated B-32 Dominator. The Superfortress was jointly built by Boeing, Bell, and Martin. And the Flying Fortress was built by Boeing, Douglas, and Lockheed. Industry was willing to engage in this kind of collaboration because it was profitable and because it took place under terms set by management.
While the Murray and Reuther plans were the most important union-supported national initiatives that aimed to institutionalize worker involvement in economic planning, there were also some significant local efforts. The program pursued by District 8 leaders of the United Electrical, Radio and Machine Workers of America (UE) stands out as one of the more well-organized initiatives. District 8 covered Missouri, Iowa, Kansas, Arkansas, southern Indiana, and southern and western Illinois, and UE contracts in that area were heavily weighted toward small- and medium-sized firms producing mechanical and electrical products. As the military buildup intensified over 1941, the government’s efforts to suppress civilian production hit the firms that employed UE members hard.
In response, District 8 launched a campaign in Evansville, Indiana, in mid-August 1941, for community control over the conversion process, under the banner of “Prevent Evansville from Becoming a Ghost Town.” Feurer describes what happened:
“District 8’s tentative proposal called upon union and civic and business leaders to request the establishment of a federal program that would ‘be administered through joint and bona fide union-management-government cooperation’ at the local level. It would ensure that before reductions in the production of consumer goods were instituted, government must give enough primary war contracts and subcontracts to ‘take up the slack’ of unemployment caused in cities such as Evansville. It also proposed that laid-off workers would get ‘first claim on jobs with other companies in the community,’ while excessive overtime would be eliminated until unemployment was reduced.”23
District 8 organizers pressed Evansville’s mayor to gather community, labor, and business representatives from all over the Midwest to discuss how to manage the conversion to save jobs. They organized mass petition drives and won endorsements for their campaign from a number of community groups and small businesses. Persuaded, Evansville’s mayor contacted some 500 mayors from cities with populations under 250,000 in eleven midwestern states, requesting that they send delegations of “city officials, labor leaders, managers of industry and other civic leaders” to a gathering in Chicago. Some 1500 delegates attended the September meeting.
The conference endorsed the UE’s call for a significant role for labor in conversion planning, specifically “equal participation of management and labor in determining a proper and adequate retraining program and allocation of primary and sub-contracts … [And that] all possible steps be taken to avoid serious dislocations in non-defense industries.”24 A committee of seven, with two labor representatives, was chosen to draw up a more concrete program of action. By early October UE organizers were working to organize similar conferences in Newton, Iowa, as well as Dayton and Mansfield, Ohio, places where UE had an active organizing presence.
The UE’s work paid off. The federal government named Evansville and Newton “Priority Unemployment Plan” areas, which allowed the cities to conduct “an experiment for community-based solving of unemployment and dislocations caused by war priorities.”25 The plan restricted new plant construction if existing production capacity was considered sufficient, encouraged industry-wide and geographically-based pooling of production facilities to boost efficiency and stabilize employment, required companies to provide training to help workers upgrade their skills, and supported industry-wide studies to determine how to best adapt existing facilities for military production.
Unfortunately, UE’s success was short-lived. Once the war started, the federal government took direct control over the conversion process, and military spending grew sharply. As a consequence, small businesses no longer feared bankruptcy, and workers no longer worried about employment. In January 1942, Evansville’s mayor terminated the program, claiming it was no longer needed.
After beating back labor’s challenges, corporate leaders were well placed to exercise considerable control over the mobilization process. And, as we see next, this allowed them to take advantage of the country’s single-minded focus on war production to aggressively roll back both union and worker power. Their wartime dominance in both the planning process and on the shop-floor also meant that they were well placed to craft a post-war reconversion process that was responsive to their interests.26
Section 4. The Cost of Defeat
Labor’s exclusion from defense planning left it vulnerable to a military and corporate anti-union offensive. The military did not trust the Labor Division of the NDAC (led by Hillman) or the Labor Department to handle labor disputes, preferring instead to develop and advance its own policies. Toward that end, it established a Labor Relations Branch in the Office of the Assistant Secretary of War (OASW) and ordered all procurement agencies to appoint their own labor relations officers, who were tasked with reporting to it all labor disputes or potential disputes at military contractors.
As a harbinger of what was to come, as early as 1940, periodicals like The Army and Navy Journal were printing stories that falsely charged labor unions with workplace disruptions to win higher wages that were delaying military construction projects. Both the Navy and Army engaged in similar pursuits.27
The military openly opposed the administration’s labor policies. Hillman, and even Roosevelt, would periodically voice their support for the maintenance of existing labor standards, especially the 40-hour workweek and time and a half for overtime. The NDAC even approved a policy statement that declared that work related to the national defense should be carried out in compliance with federal, state, and local labor statues.
But the Army went its own way. The Under Secretary of War ordered the Army’s procurement agencies to tell their contractors that they were expected to work their employees eight hours a day, seven days a week, including holidays, without any overtime compensation. The procurement agencies were also encouraged to use contract procedures to keep wage rates as low as possible.28
Perhaps most striking was the Army and Navy’s determination to ignore labor law violations when awarding contracts. The services made clear that the cost of the contract and delivery speed were the only things of concern to them. Hillman and Roosevelt never challenged this policy, and the government never publicly considered using its wartime powers to require contractors to obey existing labor laws.
By 1941, spurred by the military-fueled growth in production and employment, CIO unions renewed their organizing campaigns. That year there were approximately 4300 strikes involving some 2.4 million workers (the great majority in the first half of the year), with most aimed at winning union contracts and wage increases at major defense contractors in the steel, shipbuilding, and aircraft industries. Alarmed, military and corporate leaders began publicly accusing strike leaders of being communists out to undermine the country’s military preparedness. Conservatives in Congress and many newspaper editorialists called for new laws to suspend the recently won 40-hour work week, outlaw strikes at firms producing for the military, and ban the union shop.
In March 1941 Roosevelt, trying to end the strike wave, established an eleven-member National Defense Mediation Board (NDMB) that was to settle all labor disputes certified by the Secretary of Labor as threatening defense production. The CIO, for its part, was not willing to abandon its strike weapon. In April, it published, and widely circulated, a pamphlet titled “The Right to Strike – Keystone of Liberty.”
A test of wills between the CIO and the Army over the right to strike was quick to ensue. The UAW was pursuing a number of organizing campaigns at several aircraft plants in Southern California. In late 1940, it won an important strike against Vultee Aircraft, a leading producer of Army trainer planes. It then targeted the North American Aviation plant at Inglewood, California, one of the main producers of fighter aircraft. It won an NLRB election in February 1941, but with no progress in negotiations, the union held a strike vote on May 22 that was strongly supported by the membership. The next day a Department of Labor mediator sent the dispute to the NDMB, but the NDMB, already overwhelmed by submitted cases, was unable to quickly schedule a panel to hear the case.
Secretary of War Henry Stimson had long urged Roosevelt to declare strikes at defense contractors illegal. And on May 27, Roosevelt issued a Declaration of Unlimited National Emergency, suggesting that strikes at defense plants posed a threat to the country’s security; he renewed his support of the NDMB as the proper place for labor disputes to be settled. However, with workers tired of waiting for the NDMB to rule, a wildcat strike broke out at North American Aviation on the evening of June 4, and by the next day, the entire local was out.
Although they had earlier supported the right to strike, Roosevelt’s declaration had raised the stakes too high for the CIO’s national leadership. Fearing that Roosevelt might view the strike as a challenge to his recent declaration and lead him to support anti-strike legislation, CIO and national UAW leaders pressed the local to end its strike. When the local refused, the national leadership revoked its charter, suspended its negotiation committee, and fired five UAW international representatives who continued to support the strike.
But the strike continued, and the Army finally got what it wanted: presidential approval for direct action. On June 9, Roosevelt signed an executive order authorizing the Army to seize the plant. Over 2,500 troops were sent to end the picketing. Local union leaders were banned from the plant, and striking workers were threatened with a loss of their draft deferments. The strike was broken. The NDMB did eventually hold hearings and issued a recommendation quite favorable to the workers; the Army withdrew its troops in early July.
The President’s strong criticism of strikes, the growing possibility of Congress passing new laws limiting labor rights, and the ongoing threat of military intervention, all took their toll. The CIO leadership was now resigned to allowing the NDMB to settle disputes with management. The NDMB, for its part, demanded that unions end their strikes and return to work as soon as their disputes were forwarded to it if they wanted a speedy panel hearing. The result was a dramatic decline in the number of strikes over the second half of 1941.
Once the US entered the war, unions found themselves with even less room to maneuver and fewer ways to represent their membership. On December 17, Roosevelt called a top-level conference of labor and industry leaders to set ground rules for a new organization, the National War Labor Board (NWLB), to replace the NDMB. Both sides agreed that there would be no strikes or lockouts for the duration of the war; they could not agree on union security issues, with the unions wanting, and management rejecting, a closed shop. Roosevelt ended the conference, calling for trust in the NWLB, which began operation in January 1942.
As war spending intensified, inflation became one of the government’s biggest concerns. The WPB, with Roosevelt’s encouragement, began a campaign to pressure unions to eliminate premium pay for holiday and weekend work. Two days after Pearl Harbor, Roosevelt had called for a 168-hour-a-week operation for all defense plants, and companies argued that this was not cost effective if they had to pay these premiums. Conservatives in Congress began pushing legislation that would not only end premium pay but also other labor standards such as normal overtime pay. On the defensive, CIO leadership capitulated. On March 24, a conference of 500 CIO leaders agreed to eliminate premium pay in existing contracts. This decision was not well received by the rank-and-file.
As unions back peddled, workers began to question the value of union membership. The government, fearing that weak unions meant a growing likelihood of wildcat strikes, decided it had to do something to strengthen them. Thus, in June 1942, the NWLB agreed to use a standardized maintenance of membership formula that would automatically apply to any union that agreed to enforce a no-strike pledge and otherwise cooperated to boost production. The formula required every worker to join their workplace union but gave the new hire as well as existing union members under a new contract a 15-day escape period to rescind their membership. This decision substantially boosted union membership and finances but did little for workers, given the growing web of restrictions on union activity.
Those restrictions grew again in July 1942, when the NWLB devised a wage-growth policy to use as a guide in considering union demands for wage increases. The policy set a limit on general wage increases for groups of workers to not more than 15 percent of their hourly earnings in January 1941. The NWLB was originally going to use July 1, 1941, as its starting date in acknowledgement of wage gains made under normal collective bargaining activity but changed the date under pressure from the military. Unions bitterly complained about the choice of the starting date, the board’s price index, and the imposition of a real wage limit, but to no avail.
Limited in their efforts to win general wage increases, unions turned to correcting in-plant wage inequalities. Soon, the NWLB was overwhelmed with referred cases. Roosevelt’s response, in April 1943, was to issue an executive order ending the NWLB’s authority to correct them. Some 10,000 pending cases were thrown out.29
With union power essentially gutted, management pressed its advantage, ignoring worker objections to decisions that violated union contracts, created unsafe working conditions, or produced new wage inequities. In some cases, managers went out of their way to embarrass union activists by enforcing arbitrary dress codes and no-smoking regulations. Local unions could file grievances with the NWLB, but with little hope of a timely and positive decision. Lichtenstein describes the situation:
“By the winter of 1943, the board received 10,000 to 15,000 new cases each month, whereas it was incapable of reviewing one-third that number. Even after its operations were decentralized in late 1943, delays of up to a year were routine, especially if the dispute was complicated or unique. And when it finally acted, the NWLB normally sided with the employer when the latter could show that ‘managerial prerogatives’ were clearly at stake.”30
Catton, in his book on the wartime experience, speaks of the war as a missed opportunity to create something new, something more democratic and revolutionary. As he said in a statement quoted above, “We had been put in the position of fighting for the preservation of the status quo … The big operators who made the working decisions had decided that nothing very substantial was going to be changed.”
However, as important as their victory over workers was, it was only one part of the broader effort corporate leaders made to secure capitalism’s future and their future profitability. From the very beginning of the wartime mobilization, they also aggressively worked to win popular identification of democracy with corporate freedom of action, and totalitarianism with government planning and direction of economic activity. As the economist J.W. Mason points out:
“Even the largest recipients of military contracts regarded the wartime state with hostility. GM [chair] Alfred Sloan – referring to the danger of government enterprises operating after war – wondered if it is ‘not as essential to win the peace, in an economic sense, as it is to win the war, in a military sense’ while GE’s Philip Reed vowed to ‘oppose any project or program that will weaken’ free enterprise.”31
Nothing was taken for granted. Throughout the war, business leaders and associations spent heavily to win the ideological battle. The National Association of Manufacturers (NAM) was one of the most active promoters of the idea that it was business, not government, and certainly not labor, that was winning the war against state totalitarianism. It did so by funding a steady stream of films, books, tours, and speeches celebrating American businesses’ “production miracle.” The historian Mark R. Wilson describes one of its initiatives:
“One of the NAM’s major public-relations projects for 1942, which built upon its efforts in radio and print media, was its ‘Production for Victory’ tour, designed to show that ‘industry is making the utmost contributions toward victory.’ Starting the first week in May, the NAM paid for twenty newspaper reporters to take a twenty-four-day, fifteen-state trip during which they visited sixty-four major defense plants run by fifty-eight private companies. For most of May, newspapers across the country ran daily articles related to the tour, written by the papers’ own reporters or by one of the wire services. The articles’ headlines included ‘Army Gets Rubber Thanks to Akron,’ ‘General Motors Plants Turning Out Huge Volume of War Goods,’ ‘Baldwin Ups Tank Output,’ and ‘American Industry Overcomes a Start of 7 Years by Axis’.”32
The companies and reporters rarely mentioned that almost all of these new plants were actually financed, built, and owned by the government, or that it was thanks to government planning efforts that these companies received needed materials on a timely basis. Of course, the contribution of workers or the intensity of shop-floor struggles was never part of the stories. Perhaps not surprisingly, government and union efforts to challenge the corporate story were never as well funded, sustained, or shaped by as clear a class perspective. As a consequence, they were far less effective.
Section 5. Final Thoughts
There are many things to learn from the World War II conversion experience that are directly helpful for our own organizing efforts. One is that a rapid economic transformation is possible; this should definitely encourage us. Another is that state planning, public financing and ownership, and state direction of economic activity are essential for achieving such a transformation. But a third, and the focus of this paper, is that planning is more than a technical challenge, best left to government officials assisted by corporate leaders disguised as neutral production experts. Rather, all relevant decisions, including the structure, membership, and authority of key planning institutions, are first and foremost political ones, with the choices made determining whose interest will be best served by the process of change.
Of course, we are organizing in a time far different from the World War II era. Some of those differences make it more challenging for us. One of the most important is that the war itself forced the government to act decisively to convert the economy. In contrast, today, despite the worsening of our climate crisis, there is little urgency on the part of the government or corporate community for major action. Perhaps more troubling, significant numbers of people still deny the reality of climate change.
At the same time, the focus on rapid production of armaments meant that the union movement could easily be put on the defensive, with its demands for participation in decision-making and defense of workplace rights all too easily painted as obstacles to the war effort. Since the aim of our transformation is far broader, and includes new ways of working and living, it will be much harder for corporate leaders to dismiss our demands for a central role in the planning and direction of the transformation we seek.
Another challenge for us is that in contrast to the World War II era when there was a critical view of corporate motives because of the depression, and a general belief in the capacity of the government to manage economic activity thanks to popularity of the New Deal, we face the opposite situation. There are widespread doubts about the effectiveness of government policy and a celebration of corporate ingenuity.
Still, as opposed to a war-time emergency requiring immediate action, we do have some, although not unlimited, breathing space in which to deepen our organizing work and build the movement we need to put system change on the political agenda. And a core part of our efforts should be directed to overcoming the challenges noted above. In particular, we must find ways to encourage meaningful worker-community conversations that can help people better understand the connections between issues, expand their capacities for action, and generate new visions of a path toward a sustainable and equitable future.
To offer one relevant example from the war years, in 1944, in an effort to help working people envision possibilities for a worker-community planned reconversion process, UE District 8 hosted “Community Leadership for Reconversion and Postwar Employment” conferences on the need for postwar planning in five different midwestern cities where the unions had significant membership. “Representation was based on two men and two women elected from each factory department. In seeking to build a community coalition around postwar planning, district leaders invited government, church, and civic organizations and women’s and African American organizations. In addition, District 8 tried to garner business support for, or at least diffuse their opposition to, postwar planning.”33
If we are successful enough to create political conditions supportive of decisive public action to transform our economy, capital can be expected to step forward with its own preferred plans for change, including proposals for the structure, power, and aims of potential new government agencies. Hopefully, our movement will be ready and able to respond, fully aware that system change is class war. •
- See Martin Hart-Landsberg, “The Planning and Politics of Transformation: World War II Lessons for a Green New Deal,” New Politics, Vol. XVIII, No. 4 (Winter 2022), and “The Green New Deal and the State: Lessons from World War II,” Against the Current, No 207 (July-August 2020).
- For a discussion of the evolution and operation of US mobilization agencies and policies see Martin Hart-Landsberg, “Realizing A Green New Deal: Lessons From World War II,” Class, Race and Corporate Power, Vol 9, Issue 2 (2021) and Paul A. C. Koistinen, Arsenal of World War II, The Political Economy of American Warfare 1940-1945 (Lawrence, Kansas: University of Kansas Press, 2004).
- Christopher J. Tassava, “The American Economy during World War II,” EH.Net Encyclopedia, Robert Whaples, ed., Feb. 10, 2008.
- Paul A. C. Koistinen, The Hammer and the Sword (New York: Arno Press, 1979), p. 21.
- Ibid., p. 22.
- Ibid., p. 48.
- Ibid., p. 57.
- Nelson Lichtenstein, Labor’s War at Home, The CIO in World War II (New York: Cambridge University Press, 1982), p. 83.
- Rosemary Feurer, Radical Unionism in the Midwest, 1900-1950 (Urbana and Chicago: University of Illinois Press, 2006), p. 138.
- As quoted in Lichtenstein, Labor’s War at Home, p. 39.
- Bruce Catton, The War Lords of Washington, The Inside Story of Big Business Versus the People in World War II (New York: Harcourt, Brace and Company, 1948), p. 308.
- Koistinen, The Hammer and the Sword, pp. 601-02.
- Lichtenstein, Labor’s War at Home, p. 85.
- Canton, The War Lords of Washington, p. 92-93.
- Tragically, CIO officials did little to mobilize workers in support of either the Murray Plan or the Reuther Plan, and their appeals to government officials were generally ignored. Even Sidney Hillman, supposedly labor’s representative on both the NCDA and OPM, decided not to speak for either plan. See Feurer, Radical Unionism in the Midwest, p. 139.
- Lichtenstein, Labor’s War at Home, p. 88.
- Donald Nelson, Arsenal of Democracy: The Story of American War Production (New York, Harcourt, 1946), p. 217.
- As quoted in Ibid., p. 228.
- As quoted in Ibid.
- As quoted in Ibid., p. 229.
- As quoted in Ibid.
- As quoted in Ibid., p. 230.
- Feurer, Radical Unionism in the Midwest, p. 140.
- Ibid. pp. 140-141.
- Ibid. p. 141.
- See Koistinen, Arsenal of World War II, chapter 14, for a discussion of how big business maneuvered to get the reconversion process it wanted. The CIO continued to refine the Murray Plan, now as a framework for organizing the postwar economy. It approved new versions at its annual conventions in 1944, 1946, 1947, 1948, 1949, and 1951, although it did little to promote them.
- Koistinen, The Hammer and the Sword, p. 125.
- Ibid. p. 130.
- Lichtenstein, Labor’s War at Home, p. 116.
- Ibid. p. 120.
- J.W. Mason, “The Economy During Wartime,” Dissent Magazine, Fall 2017.
- Mark R. Wilson, Destructive Creation: American Business and the Winning of World War II (University of Pennsylvania Press, 2016), p. 102.
- Feurer, Radical Unionism in the Midwest, p. 161.