Chapter XVI: 
 
The ASF and Other Civilian Agencies Controlling Procurement Resources
 
 Throughout World War II differences between the War Department and the War Production Board attracted considerable public attention. Yet the WPB was by no means the only civilian agency controlling vital war production resources. There were several other emergency agencies as well. The Army Service Forces worked closely and amicably with them, avoiding the controversies that attended ASF-WPB collaboration.
 
As in its attitude toward the WPB, the ASF never suggested that any of these civilian agencies was unnecessary. On the contrary, it depended heavily upon each one for the performance of activities essential to the procurement of war supplies. Naturally there were differences of opinion; but no controversies ever developed over basic issues such as "military control of the economy" or "civilian direction of military strategy." When differences arose, they were adjusted on the merits of the particular issue at hand. The civilian agencies and the ASF found a general formula for successful collaboration. In general, this was the same one which the ASF constantly urged upon the WPB, namely, that the ASF would control the final items  of military production, while the civilian agencies would control primary economic resources and direct the distribution of an appropriate portion of these resources to military procurement. These amicable relationships are much less sensational than the storms and crises which marked efforts at collaboration with the WPB. They are none the less important.
 
Research and Development
 
On 28 June 1941 the President created the Office of Scientific Research and Development to assure adequate provision for research on scientific and medical problems arising out of the war. This agency absorbed the National Defense Research Committee (NDRC) created by the President in June 1940. It was prepared to undertake any research projects desired by the armed forces as a contribution to the improvement and development of weapons. The committee operated mainly through contracts awarded to research institutions, both university and industrial.1
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The OSRD frequently suggested new types of military equipment. A case in point is the development of the DUKW, an amphibian 2'/2-ton truck, adopted by the Army for use in ship-to-shore operations.2 The variable time (proximity) fuze, which introduced a whole new element into antiaircraft and field artillery ammunition, was another product of research by the OSRD.3
 
When the Office of Scientific Research and Development was created, it also became the parent agency for a Committee on Medical Research. Within the ASF this committee maintained relations almost exclusively with The Surgeon General's office, co-operating on a variety of projects ranging from malaria control to the development of penicillin.4 In this extensive collaboration the two offices adhered to the pattern of medical research and practice which prevailed generally between doctors, hospitals, and research personnel. The work went on so smoothly that no major problems of medical research arose requiring General Somervell's intervention.
 
Perhaps the closest working relationship between the ASF and the OSRD grew out of the MANHATTAN project which produced the atomic bomb. The original interest in atomic fission as a possible military weapon came from a group of scientists who were formally organized as a uranium committee under the NDRC in June 1940. In November 1941 uranium research for military purposes was centered in a special section of the Office of Scientific Research and Development. At the same time, Dr. Vannevar Bush of the OSRD recommended that the whole project should be transferred to the Army when the time came for building production plants. This transfer took place in August 1942 when the MANHATTAN DISTRICT was created by the Chief of Engineers to begin construction activities.5 General Somervell had already designated his chief of staff, General Styer, to be his representative in the OSRD on atomic research. Thereafter General Styer followed developments of the project for Somervell, working very closely with Dr. Bush.
 
The MANHATTAN DISTRICT project was unique in that extensive basic research was still being conducted while production plants were being built and a military laboratory was being set up. Key personnel were civilian scientists or engineers, working under the direction of Brig. Gen. Leslie R. Groves. The atomic bomb was eventually constructed at the Los Alamos Laboratory, forty-five miles from Santa Fe, and tested on the night of 16 July 1945 at the Alamogordo Air Base in central New Mexico. An atomic bomb was dropped at Hiroshima on 6 August and another at Nagasaki on 9 August. The two-billion-dollar enterprise representing the joint efforts of scientists, industry, and the Army thus proved itself a great success.
 
The creation of the National Defense Research Committee was necessary because of the inadequate attention given to research activities by the armed forces between World Wars I and II. At a time when military funds were meager at best, little money was spent on the development of new weapons. When large-scale procurement began in 1940, however, the various supply arms and services of the
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Army were suddenly able to spend considerable sums on research projects. The NDRC existed primarily to help these procurement agencies in mobilizing scientific resources.
 
There were two ways in which the NDRC assisted the technical services of the ASE In the first place, it called attention to promising work already done or being done in industry and universities in the development of new or improved weapons. In the second place, it made its services available to the procurement agencies requesting scientific assistance in solving technical problems encountered in meeting a military desire for new or improved equipment. Thus, for example, when the Army and the Navy both pointed out the need for better antiaircraft fire control devices, the NDRC led scientists in industry to develop electronic fire control systems.
 
On occasion the proposal was made by both Army officers and scientists that the military laboratories should concentrate on applied research, that is, the development of new weapons and the improvement of existing weapons. The university laboratories, under guidance of OSRD, on the other hand, should concentrate on basic research for the advancement of scientific knowledge which might have future military usefulness. No such dividing line was ever feasible in practice. In the early.period from 1940 to 1942 the procurement agencies, especially those which became the technical services of the ASF, were unable to enlarge their applied research and development activities on a broad scale and so the NDRC had to supplement their development work. Later, as the research and development programs of the technical services expanded, some contracts made by the two operating units of the OSRD were turned over to them. But the OSRD was always available to help the services on any research or development problem. From the records of the OSRD it seems evident that the closest working relationships with the NDRC, apart from the MANHATTAN project, were maintained by the Signal Corps and the Army Air Forces. The next largest agency of the Army utilizing NDRC assistance was the Ordnance Department.6 For the most part the technical services maintained direct relations with the NDRC and the Committee on Medical Research of the OSRD.
 
After the creation of the ASF, an officer in that headquarters was designated War Department liaison officer with the OSRD. Between April 1942 and August 1945 there were five such liaison officers. This was a rapid turnover which some charged hampered efficient collaboration.7 But it may perhaps be said in Somervell's defense that he had considerable difficulty in finding the right officer for the assignment. The liaison officer was primarily available to adjust any difficulties which might arise in the co-operative effort of the OSRD and the technical services. His assistance might be requested by the OSRD in attempting to overcome indifference or even hostility on the part of a technical service to certain scientific undertakings. Or a technical service might occasionally need assistance in dealing with the OSRD. For the most part, however, the technical services and the OSRD worked together harmoniously. The chief problem was an occasional reluctance within the technical services to consider scientific proposals. Usually this reluc-
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tance was overcome by pressure from General Somervell's office or from the Office of the Secretary of War, which prevented major conflicts from arising to bedevil their relationships with the OSRD.
 
The deputy director of the OSRD has commented that in the event of another war "there should be no need for another OSRD," adding that only in the event of a "large deficit of military research such as existed in 1940" would such an office have to be created.8 Whether true or not, it is beyond question that in World War II the work of the OSRD was essential to the development of new and improved weapons.
 
Before his departure in 1945 to join General MacArthur's command, General Styer wrote Dr. Bush a letter which revealed the attitude of top personnel in the ASF toward the OSRD. He said, in part: "My wandering through wonderland, while being led by your guiding hand, has been most enjoyable. My rubbing elbows with the men of science . . . has enlarged my realms of thought and keenly whetted my imagination. I hope that the association between science and the military can be continued by men of vision after the war." 9
Special Handling of Food, Petroleum, Rubber
 
Three commodities were given an administrative status apart from the War Production Board during World War II. These were food, rubber, and petroleum.
 
In 1941 there existed a separate Office of Agricultural Defense Relations (later, Office of Agricultural War Relations), which had developed originally under the Advisory Commission to the Council of National Defense. Early in 1942 the WPB set up a Food Division. By a memorandum dated 4 June 1942, the WPB chair man also established a Food Requirements Committee to handle allocations of food to various competing demands. The War Department was represented on this committee. The Office of Agricultural War Relations was transferred to the Department of Agriculture in the summer of 1942. Later, in December 1942 the President concentrated all food and agricultural aspects of the war effort in the Department of Agriculture.10 This order provided that the Secretary of Agriculture should assume full responsibility for the control of the nation's food resources and directed him to establish an advisory committee composed of representatives of the State, War, and Navy Departments, and other government agencies. He was to obtain estimates of food requirements from the members of this advisory committee and consult with the committee before making food allocations.
 
The powers conferred upon the Secretary of Agriculture were later concentrated in a War Food Administration established in March 1943.11 This step, however, did not change the basic powers originally vested in the Secretary of Agriculture nor did it affect the relationships in food administration between the War Department and the central food agency.
 
The Quartermaster General of the Army Service Forces was appointed the War Department representative on the food advisory committee. Throughout the course of the war the association between him and the War Food Administration was harmonious. Military requirements were presented to the War Food Adminis-
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tration, which exerted every effort to meet those needs. Set-aside orders and allocation orders were issued requiring canners, meat packers, and other food producers to earmark a certain portion of their output for military and other governmental purchase. Nothing in the arrangement disturbed the existing system of military procurement. Indeed, the War Food Administration encouraged other governmental agencies to make such food purchases as they required through the Subsistence Division of the Quartermaster Corps. The Chicago Quartermaster Depot, primarily responsible for food procurement, became the center for most of the food purchasing operations of the federal government. A local office of the War Food Administration was established there to work closely with Army officials. Since the Navy Department obtained more than 80 percent of its food requirements through the Army, the War Food Administration was eager to consolidate all food procurement through this single channel. Most purchases for the Treasury Procurement Division and certain other government offices were also handled through Army machinery.
 
No major difficulties arose in defining the respective roles of the two agencies. The War Food Administration recognized that it was the War Department's responsibility to purchase the foodstuffs required by it and to establish the specifications and packaging requirements. In turn, The Quartermaster General followed the recommendations of the War Food Administration in timing food procurement and in spreading contracts among various producers. Food requirements were also modified from time to time to meet supply conditions. In 1944, for example, the Army reduced its allowance of butter by 40 percent because of the shortage in this commodity. In short, it can be said that it would have been difficult, if not impossible, to have arranged for the orderly procurement of food needs without the existence of the War Food Administration. 12
 
On 28 May 1941 the President, in a letter to the Secretary of the Interior, announced that he was designating him to be Petroleum Co-ordinator for National Defense. From the outset, Secretary Harold Ickes sought the co-operation of the War Department in discharging his responsibilities. On 12 August 1941 for example, Mr. Ickes wrote to Secretary Stimson suggesting that the Army and Navy Munitions Board should have a permanent liaison officer with his organization, especially to help in pushing projects for the expansion of petroleum production. 13 Subsequently, in December 1942, the President issued an order establishing the Petroleum Administration for War, headed by the Secretary of the Interior serving ex officio.14 The new administration became the center for handling all wartime petroleum problems. Mr. Ickes had earlier created a Petroleum Supply and Distribution Board for reviewing "the world-wide petroleum supply and transportation situation" and for planning "to insure adequate petroleum supplies when and where needed by the military forces and by war industry." Representatives of
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the Army, Navy, and War Shipping Administration were invited to serve on this board.15
 
At the time the ASF was set up, General Somervell had on his staff the officer who had previously been in charge of petroleum matters for the Under Secretary of War. This officer continued to function as before, but the main problems turned out to be not procurement of petroleum but its shipping and distribution. The actual purchases of petroleum products within the Army, except for aviation gasoline, were made by The Quartermaster General's office. An Army-Navy Petroleum Board was first established on 14 July 1942 in a joint announcement signed by General Somervell and the Vice Chief of Naval Operations, Admiral Horne. This board was responsible for effecting close co-operation between the two departments in petroleum procurement, shipment, and distribution. It also maintained close relations with the Petroleum Administration for War. The Army-Navy Petroleum Board became an agency of the joint Chiefs of Staff and was thereafter the representative of the armed forces on all petroleum matters.
 
The petroleum industry was so organized in the United States that it was able, through existing storage and distribution channels, to meet all domestic military requirements. The Army-Navy Petroleum Board presented petroleum requirements to the Petroleum Administrator, who then made such adjustments in production and distribution practices as were necessary to meet these requirements. The Petroleum Administrator kept in close touch with the industry and knew at all times the exact status of petroleum stocks throughout the country. Frequently he requested the Army or the Navy to take delivery of petroleum at Galveston or some other point in order to relieve the burden on inland storage and distribution facilities. Had this not been done, refining in the southwestern part of the United States might have outrun storage and distribution capacities and have curtailed production.
 
At one time Secretary Ickes was alarmed lest a letter of instruction sent out by General Somervell and Admiral Horne on 16 December 1942 implied a desire on the part of the armed forces to ignore the Petroleum Administration for War. In a reply to his protest against the action, Secretary Stimson in February 1943 assured Ickes that the Army-Navy Petroleum Board realized that the Petroleum Administration for War was charged with responsibility for crude oil production and refining, pointed out that representatives of the board had co-operated wholeheartedly with Mr. Ickes' office, and assured him that this would continue. He explained that the December letter was intended to apply only to internal Army and Navy procedures. Secretary Stimson added: "I assure you that Army officers, who have occasion to handle petroleum matters, clearly understand the original order setting up the Army-Navy Petroleum Board, and the letter of 16 December 1942. Therefore, you need have no fear that the prerogatives of your office will be usurped, either by the original directive, or the letter of 16 December 1942." Secretary Stimson concluded by saying that a copy of his letter was being given to the Army-Navy Petroleum Board for its guidance.16 Stimson's letter, drafted in
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Somervell's office, represented the official ASF point of view on co-operation with the Petroleum Administration for War.
 
The attitude of the Petroleum Administration at all times favored enabling the Army and Navy to obtain their requirements with the least possible disruption of the industry's extraction, refining, and distribution activities. No serious jurisdictional disputes arose, and whenever a disagreement on policy or procedure arose, it was quickly adjusted between the Petroleum Administrator and the Army-Navy Petroleum Board. The entire operation worked smoothly, and no great difficulties were encountered in obtaining the necessary petroleum supplies. There were some problems in developing refining capacity for aviation gasoline, but these were outside the province of the ASK
 
In September 1942 the President ordered new arrangements for the co-ordination and control of the rubber program.17 The order directed the chairman of the War Production Board to assume full responsibility for all phases of the rubber program including technical research. In addition, it provided for a Rubber Director to be appointed by and to be responsible to the chairman of the WPB. The terms of the order were purposely broad in order to end current controversies over responsibility for developing all phases of the rubber program. One effect of the order was to establish virtually a separate organization, nominally tied to the WPB, but actually in full control of rubber activities. To carry out his mission, the Rubber Director appointed a Requirements Committee on which the ASF was represented and established a separate allocations system, whereby the Army Service Forces was permitted to purchase stated quantities of rubber products.
 
The most important rubber product bought by the ASF was tires. These were purchased directly to replace tires with which all vehicles were originally equipped. Army tire requirements continually exceeded the rubber allocations available to it. Because of the critical nature of the items, the War Department inaugurated a tire conservation program, directed by the Chief of Ordnance, which extended throughout the entire Army both in the United States and overseas. 18 The shortage did not disturb the amicable relationship which at all times existed between the Army Service Forces and the Office of the Rubber Director. The only major difficulty that arose between the War Department and the Office of the Rubber Director concerned the division of equipment and raw materials between the synthetic rubber program and the aviation gasoline program. Under Secretary Patterson personally intervened to insist upon resolving this conflict.
 
No difficulties were experienced in defining the respective authority of the ASF and the Rubber Director. The ASF recognized the need for an agency to control all phases of the rubber program and to direct the utilization of the limited rubber resources. At the same time, the procurement authority of the War Department was not questioned by the Office of the Rubber Director. Military requirements were carefully scrutinized, frequently questioned, and, as already mentioned, not always met. On the other hand, the Office of the Rubber Director conscientiously endeavored to help the ASF obtain its rubber quotas.
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WMC and Labor Relations 19
 
As the armed forces of the United States in the last half of 1943 approached full mobilization, the problem of labor supply became increasingly bothersome to those responsible for military procurement. Originally the War Production Board had been given authority to handle the mobilization of manpower. A Labor Division was established for this purpose. In April 1942, the President established a War Manpower Commission to consist of the Federal Security Administrator as chairman and of representatives from the War, Navy, Agriculture, and Labor Departments, the WPB, the Selective Service System, and the Civil Service Commission.20 After consultation with members of the commission, the chairman was authorized to formulate plans and policies for the most effective utilization of the nation's manpower. In addition, the chairman was authorized to establish policies for federal agencies governing the recruitment, training, and placement of workers in industry and agriculture, as well as within the federal government itself. At first, Mr. G. H. Dorr, special assistant to the Secretary of War, was designated as War Department representative on the WMC. Subsequently, the Under Secretary became the official War Department representative.
 
The question of the size of the Army in relation to the total manpower of the country was settled early in 1943 when the Chief of Staff set a ceiling for an Army of 7.7 million men. The peak strength of the Army actually rose to almost 8.3 million men. The recruitment of labor to work in Army arsenals, depots, and ports, and in the plants of prime contractors was also a matter of continuing interest to the ASE Only one important jurisdictional issue seems to have arisen between the War Department and the W MC. This involved the authority of the WMC to check actual labor utilization by War Department contractors. The War Department took the position that it should be responsible for the labor utilization of its prime contractors and that it would take whatever steps were necessary to prevent labor hoarding by these manufacturers. The War Manpower Commission at one time contemplated establishing a corps of investigators to check manpower utilization within plants. Following protests from the War Department, the WMC made no such investigations at plants of Army prime contractors.
 
The problem of labor supply was a many-sided one and at no time did it come solely within the purview of the WMC. The establishment of both WPB production urgency committees and WMC manpower priorities committees in critical labor areas illustrated the overlapping concern. Production urgency was determined by the WPB, and the manpower priorities committees had almost no alternative but to channel labor in accordance with these priorities. There is no need here to go into the question of whether the techniques of labor mobilization were adequate during World War II. The War Department contended that they were not, and while supporting the WMC in all its undertakings, it also pushed for more effective measures, in-
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cluding national service legislation. The ASF found that in attempting to meet labor shortages which adversely affected war procurement, it had to work with a number of different agencies, including the War Production Board, the War Manpower Commission, the National War Labor Board, the Office of Price Administration, the National Housing Agency, the Federal Works Agency, and the Office of Defense Transportation. The large number of agencies involved was partly responsible for the delay in satisfying War Department requirements.
 
When the War Department developed a team approach to labor problems in such specific industries as cotton duck, cotton tire cord, military tires, and forges and foundries, or in such specific areas as Newark, New Bedford, Seattle, and Los Angeles, the principal objection came from the WPB rather than from the WMC. Subsequently, both the WPB and the WMC favored a much broader program under War Department leadership in order to attack labor supply problems in the many different industries and localities. The War Department insisted that emergency measures should be taken only in a few specific cases, and this point of view was eventually accepted as general governmental policy.
 
One method of meeting the labor supply problem was to avoid, insofar as possible, the letting of contracts in labor shortage areas, in accordance with WPB Directive 2, issued as early as 19 October 1942. This was not an entirely satisfactory device, since the most important consideration in awarding contracts was satisfactory quantitative, qualitative, and time performance in the delivery of war supplies. Moreover, the location of existing facilities determined for the most part where contracts might be let. In December 1942 the War Manpower Commission began to classify labor market areas as I, inadequate labor supply; II, anticipated inadequate labor supply; and III, adequate labor supply. This gave contracting officers a guide in the placement of contracts. Moreover, the ASF authorized procurement offices to pay premiums up to 15 percent in order to place contracts in labor areas with surplus manpower.
 
In September 1943 WPB Directive 2 was amended to establish new criteria for the placement of contracts. Thereafter, among the other items to be considered were labor cost and efficiency of manufacturers. The Army Service Forces then began to establish techniques for measuring the labor utilization of contractors in an effort to guide both contract terminations and contract placement. As changes in war production occurred and it became possible to cancel certain contracts, an effort was made to cancel first those contracts in labor shortage areas that were held, by manufacturers whose relative number of man-hours per unit of output was higher than that of other producers in the same field.
 
When the west coast manpower program was started in September 1943, the ASF agreed to avoid placing contracts there. In December of the same year the program was extended to include six other areas-Detroit, Akron, Hartford, Buffalo, Chicago, and Cleveland. Procurement regulations were amended so that the placement of additional contracts in these areas was limited. The ASF inspected the practices of the technical services to insure that procurement district offices were avoiding. tight labor market areas. In taking these steps the ASF carried out its labor supply responsibilities in accordance
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with general policies fixed by the WPB and WMC.
 
Closely related to the question of labor supply was the government's policy on labor relations and wage stabilization. These responsibilities were assigned to the National War Labor Board, created in January 1942.21 The board considered itself a service agency and accepted War Department opinion on the importance of various kinds of procurement. Minor friction between the board and the Department arose out of certain internal security issues, but these were easily worked out. In one or two cases the War Department pressed for plant seizure when the board thought this unwise. In other cases, as in the Montgomery Ward dispute, the board insisted that the War Department take over even when the Department had no direct interest. Altogether there were twenty-five plant seizures during the war, jointly arranged by the National War Labor Board and the War Department. In thirteen of these cases, seizure resulted from labor's failure to comply with board directives; in twelve, it resulted from management's refusal to comply. There was initial disagreement between the War Department and the board on only four of these seizures.22
 
Since wage questions were most likely to arise in connection with labor disputes, the enforcement of a national wage policy became a function of the National War Labor Board. At the same time, the board adopted the administrative arrangement of designating agents to enforce its broad policies within specific labor fields. Thus the Army Service Forces administered wage policies in construction at Army installations, at government-owned, privately operated (GOPO) plants, and also among maritime workers on transport and cargo vessels operated or chartered by the War Department.
 
From time to time the National War Labor Board checked with ASF headquarters and installations on the enforcement of these policies. In many cases, the War Department appeared before local panels established by the National War Labor Board or before the board itself to press for exceptions to the wage stabilization policy. At times, the labor members of the board criticized War Department handling of wage matters, principally at GOPO plants, as for instance on the question of whether certain jobs should be paid on the basis of construction or maintenance wages. These issues were amicably settled, and the War Department continued to be the wage administration agency for all its plants and other installations. Altogether the War Department presented about thirty-five cases during the war for unusual wage adjustments, and these were all approved in whole or in part. The War Department (which meant the ASF) and the National War Labor Board co-operated in noteworthy fashion during the entire period of their association.
 
The ASF also served as War Department liaison with the Selective Service System in handling the problem of the industrial impact of military drafts. The ASF presented deferment policy requests to national headquarters only after the most careful screening. After V-E Day the ASF withdrew many deferment requests, and got out of the field entirely after V -J Day, leaving the matter of deferments for direct negotiation between industry and the Selective Service System. In December 1944 the Office of War Mobilization and
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Reconversion asked the War Department to draft men under 38 voluntarily leaving essential industrial employment, and with the help of the Selective Service System, the Army examined about 71,000 such persons, accepting over 12,000 of them.23 Relations between the ASF and the Selective Service System also were of a friendly co-operative character.
 
Price Contro1 24
 
In April 1941 the President created the Office of Price Administration and Civilian Supply, combining two of the original divisions established under the Advisory Commission to the Council of National Defense .25 The name was changed to Office of Price Administration (OPA) in August 1941. Price control was placed on a statutory basis by the passage of a Price Control Act, and approved by the President on 20 January 1942.
 
During the debates over this legislation, the Secretary of War and the Secretary of the Navy addressed a joint letter to the President dated 19 December 1941 proposing an amendment to the bill about to be passed. The two secretaries pointed out that the Army and the Navy were responsible for the procurement of war supplies and that this obligation could not be discharged unless cases of conflict between combat needs and price considerations were decided by them. Both expressed full appreciation of the need for price stability and pledged the two departments to be "very sparing in negotiations above ceiling prices." The suggested amendment provided that no regulation made under the act would apply to any sale to the War or Navy Department if the Secretary of War or the Secretary of the Navy certified to the Office of Price Control that this exemption was essential to the national defense. The next day the President replied that he could not approve the proposed amendment since it was absolutely imperative that final authority be vested in one person. The Army and Navy would be expected to conform as well as everybody else. He suggested, however, that a permanent liaison officer be assigned to work with the Price Control Administrator and that final appeals be brought to him.
 
From its creation in April until 11 May 1942, the OPA directed a program of selective price control. Certain designated basic materials were placed under price ceilings in accordance with the theory that by controlling their price the general price level would not rise unduly. The early price schedules affected metals, building materials, industrial chemicals, and textiles. In the autumn of 1941 some additional items were brought under price control, as for example, semi-fabricated goods and machinery.
 
On 24 April 1942 the approach changed when the OPA issued the General Maximum Price Regulation covering prices at all levels for every commodity not otherwise covered by a separate OPA regulation. Effective 12 May this general regulation set the highest price charged in March 1942 as the top legal price for every kind of goods. It limited Army control over the prices paid to its contractors at a time when the vast military procurement program was just getting well under
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way. The new regulation upset the Army considerably. In the absence of any previous manufacturing experience for such items as airplanes, tanks, guns, and ammunition, prices fluctuated greatly. The Army had promised contractors that where unit prices turned out to be too low, it would make adjustments. On 13 May 1942, at the request of the War and Navy Departments, the OPA acknowledged the effects of its regulation by issuing Supplementary Regulation 4 exempting a large number of military items. This supplementary regulation, however, referred only to the General Maximum Price Regulation. It did not affect specific maximum price regulations which might cover materials or supplies of interest to the Army.
 
Out of the discussions about the General Maximum Price Regulation, a formal liaison arrangement developed between the War Department and the OPA. A Price Administration Branch was established in June 1942 in the Purchases Division, ASF, while the OPA in turn set up a War Goods Office the following October. The primary function assigned to the Price Administration Branch was the handling of all procurement matters involving the OPA. Discussions between the two agencies continued as individual price regulations brought additional items of military interest under price control. Thus the application of Maximum Price Regulation 136, covering gasoline, steam and diesel engines, pumps and compressors, and construction equipment, became a subject of mutual concern.
 
A little later the OPA, as an anti-inflationary safeguard, indicated a desire to review the various military combat items exempted by Supplementary Regulation 4 to the General Maximum Price Regulation. Deeply concerned over the effect this might have on the procurement program of the armed services, Under Secretary of War Patterson and Under Secretary of the Navy Forrestal addressed a lengthy memorandum to Mr. Henderson, the Price Administrator, on 23 July 1942, objecting to the imposition of price control in the field of military equipment.26 The two Under Secretaries declared that they were "alive to the serious consequences of inflation" and that they heartily approved of the OPA's efforts to control prices. At the same time, they pointed out, they were responsible for procuring vitally needed military supplies without delay. They then presented a number of reasons why they believed that prices of military goods should not be handled in the same manner as other price controls. In their opinion the prices of equipment for purely military purposes did not contribute directly to inflation, since they did not create corresponding rises in the cost of living. Unduly large profits in any war industry, they argued, could be curtailed by renegotiation and excess profits taxes, and where large corporation incomes contributed to an increase in wages, effective wage stabilization would serve as a counterbalance.
 
Since prewar production experience was lacking as a basis for determining fair prices, they went on to say, it seemed unlikely that any price formula could be devised which would be adequate under the circumstances. Moreover, to vest price control of military items in the OPA would necessarily supplant the Army and Navy in the negotiation of prices on their contracts. Whenever a potential contractor was unable or unwilling to produce at the maximum price fixed by an OPA formula,
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he would have to apply to the OPA for adjustment. In such cases the OPA would have to substitute its judgment for that of the Army or Navy as to whether the production was necessary to the war effort and as to whether the proposed price should be granted. This would produce long delays in the delivery of vital supplies. The two Under Secretaries then repeated an earlier proposal that the OPA exempt any military article from price control upon certification by the Secretary of War or the Secretary of the Navy that the exemption was necessary for the prosecution of the war. If this proposal was not satisfactory, they suggested that the same end would be accomplished by the OPA exemption of specific categories such as aircraft, military vehicles, and ordnance items. A suggested list was attached to the memorandum. They pointed out that the items had been limited to those which under OPA price regulation were impeding or threatening to impede military procurement.
 
Long discussions between officials of the OPA and the ASF followed this memorandum from the two Under Secretaries. Finally, on 16 September 1942 Mr. Henderson put forth a counterproposal in a letter to the Under Secretary of War. In it he expressed doubt whether the dangers of inflation arising from high war contract prices could be prevented in the absence of strict price control. He feared that contracting officers, more concerned with procurement than prices, would have little incentive to reduce costs. He stated his position in these terms: "Unless prices and profits in the military goods area are controlled effectively, the entire program for avoiding inflation in this country will be threatened and perhaps undermined." He went on to acknowledge, however, that the questions at issue were complex and that there was room for disagreement and added that it made no difference who had the job of preventing inflation in the military goods area as long as it was accomplished. He denied any "desire to engage in a jurisdictional dispute."
 
Accordingly, the Price Administrator expressed his willingness to refrain from any further extension of maximum price control in the area of strictly military goods, if assured by the two departments that they would use all of their powers as effectively as possible to control both prices and profits in the exempted area. In an attempt to define their respective fields of control, Mr. Henderson said that the OPA would refrain from an extension of price control over the sales of commodities which were in such form that they could be used only for military purposes. The OPA, however, would control the prices of materials and commodities at a stage below the first emergence of an article in military form. To work out such a general line of demarkation, he designated one of his assistants.
Additional conferences were held in an effort to define more precisely the controls to be exercised by each agency. In the case of a tank transmission, for example, the first sale of the rough casting came under OPA control, but subsequent operations were in the area reserved for military control. All existing exemptions were frozen and the armed services agreed to request further exemptions only when actual difficulties arose. The OPA in turn made a similar commitment for military exemptions below the line of demarkation. The final agreement was formalized in a letter from Under Secretary Patterson and Under Secretary Forrestal on 14 October 1942 and on 12 November an official press
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release was issued announcing the arrangement.
 
It should be added that the War Department immediately followed up these discussions by holding a series of meetings at Tryon, North Carolina, on 31 October and 1 November 1942. From these meetings came a "statement of purchase policies" dated 19 November 1942, in which the War Department principle was announced that prices and the cost of war equipment should be kept at the lowest possible level as a means of encouraging efficiency in production and of conserving manpower and materials. This general principle was elaborated in other parts of the statement. Special care was taken to impress upon all contracting officers that they were not being exempted from price control, but rather that War Department price control was being substituted for OPA price control.. A price index was begun as a means of measuring the effectiveness of each technical service in negotiating close prices in each field of procurement.
 
From then on, many negotiations took place between the Purchases Division in ASF headquarters and the OPA on individual price problems. The general line of demarkation in price control worked out in September and October 1942 was carefully observed. As of 30 June 1945, it was estimated that approximately 65 percent of the dollar value on all War Department prime contracts was exempted from OPA price control.
 
The most troublesome price problems developed thereafter in the textile and clothing field. Continued negotiations between the two agencies finally produced a supplementary order on 9 March 1945 which permitted the War Department to pay more than ceiling prices in certain agreed-upon instances. ASF headquarters kept all price regulations under constant study and reviewed proposed OPA price regulations and changes prior to their issuance. Representatives from ASF headquarters attended meetings of OPA industry advisory committees. While occasional differences of opinion and of policy between the two agencies arose, they were always amicably settled. Beyond question OPA actions had a great effect upon War Department pricing, a fact which the Department readily acknowledged. By and large, however, the agreement contained in Mr. Henderson's letter of 16 September 1942 represented a workable and satisfactory division of authority.
 
The rationing program of the OPA did not directly concern military supply except once when the OPA gave some consideration to developing a plan whereby the Army's rationed food requirements would be administered by the OPA. This idea was abandoned, however, in favor of exempting the armed forces from OPA food rationing. The Army purchased its foodstuffs through the Quartermaster Corps on an unlimited ration banking account. The Quartermaster General established the necessary controls over organized military messes in order to limit the amount of rationed food served each month. Other feeding facilities such as post exchanges, civilian messes, officers clubs, and service clubs received point allocations from local OPA war price and rationing boards on a civilian point basis. In January 1945 a central procurement officer was established at each post to make all purchases of rationed foods.
 
The OPA also exempted The Quartermaster General and the Army Exchange Service from the ration controls imposed on manufacturers of candies and soft drinks using sugar. The Quartermaster
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General received an unlimited ration bank account while the Army Exchange Service received an over-all allocation of these rationed ingredients in a limited account. Quartermaster purchases were entirely for overseas shipment.
In the sale of shoes the Army Exchange Service was placed in the same category as commercial shoe dealers. The OPA made the Army an issuing agent for shoe purchase certificates after approving the general terms on which the Army agreed to issue them. Voluntarily, the Army agreed to restrict its sale of shoes to officer personnel through Quartermaster outlets. In addition, enlisted personnel, under prescribed conditions, might obtain a certificate for shoes other than those normally issued to them. Only the Army could issue shoe purchase certificates to military personnel, thus preventing any attempt to obtain shoe certificates from local war price and rationing boards.
Since gasoline and fuel oil for use in the United States were purchased through local suppliers, the Army and the OPA established an arrangement whereby the Army issued a special OPA form for buying petroleum products for military use. This entitled the local supplier to replenishment by petroleum companies of his military sales. Some difficulties arose in this procedure and changes had to be made. The sale of gasoline to privately owned vehicles operated by military personnel was placed under the same restrictions as those governing civilians, and the same procedures were employed.
 
The OPA sanctioned many local arrangements whereby Army installations established their own war price and rationing boards, issuing ration coupons in accordance with the general standards set up by the OPA. This was done not only for gasoline but also for tires, stoves, and automobiles. These arrangements likewise worked satisfactorily. Necessarily, the War Department and the OPA had to work together closely in administering both price and rationing controls.
Housing and Community Facilities
 
One major omission of the Industrial Mobilization Plan as published before World War II was any reference to the possibility of labor shortages aggravated by a lack of housing and other community facilities in the vicinity of war plants. There were a number of different federal agencies responsible for handling relations with local governments in this field. Direction of public housing activities early in 1941 was placed under a Division of Defense Housing Co-ordination which was established by the President.27 This agency gave way to a National Housing Agency in February 1942.28 An Office of Defense Health and Welfare Services was also established to handle local health and welfare requirements .29 This office was eventually absorbed by the Federal Security Agency. In addition, the Federal Works Administration was involved in the making of grants for roads and for other public facilities. The Office of Defense Transportation had general supervision of local transportation facilities.
 
As already mentioned, in 1942 the Army Service Forces pressed the WPB through its regional offices to take the lead in coordinating all federal services dealing with community facilities problems. Later the President established a Committee for
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Congested Production Areas .30 This committee had as its chairman the director of the Bureau of the Budget, and as members, the Under Secretary of War, the Under Secretary of the Navy, the chairman of the War Production Board, the administrator of the Federal Works Agency, the administrator of the National Housing Agency, and the chairman of the War Manpower Commission. The committee handled the co-ordination of federal activities affecting some eighteen different congested areas in the United States. The principal role of the ASF in the work of this committee was simply to indicate the areas in which war procurement was being seriously hampered by inadequate community facilities and services. Thereafter, the committee made sure that various agencies of the federal government concentrated upon the solution of the problems in these particular areas. The Army also worked with the committee in an effort to relieve its own burden upon the local area as far as possible. It was no part of the job of the ASF or of the War Department to handle the problems of community facilities. Yet it was the impact of war procurement which produced most of the local difficulties. The device of a committee for congested production areas was a necessary expedient in World War II because of the many agencies involved and because of the absence of any integrated government machinery for dealing with local communities.
 
The Once of War Mobilization
 
In May 1943 President Roosevelt created one of the most important of the emergency war agencies, the Office of War Mobilization. As has been stated, former Justice James F. Byrnes was appointed as its head.31 In part the office was created because of a general feeling that too many different agencies existed that were only loosely co-operating in the task of controlling the use of the nation's economic resources. The executive order directed the office "to develop unified programs and to establish policies for the maximum use of the nation's natural and industrial resources for military and civilian needs" and "to unify the activities of federal agencies and departments engaged in or concerned with production, procurement, distribution or transportation of military or civilian supplies, materials, and products, and to resolve and determine controversies between such agencies or departments."
Manpower problems at the time were looming more and more as the chief industrial bottleneck. To break it an attack had to be made on several fronts. At the behest of the Office of War Mobilization, the War Department in July 1943 arranged to release soldiers who had previously worked in the nonferrous metal mining industry. The office also helped the WPB and the War Manpower Commission in setting up a program for fixing labor priorities in congested areas. Later, in October five production urgency committees were set up on the west coast where a labor situation existed in the aircraft industry that was of grave concern to the Army Air Forces.
 
In the autumn of 1943 the Office of War Mobilization became particularly interested in certain postwar problems, and officers from ASF headquarters contributed substantially to the work which eventuated in the Baruch-Hancock Report on War and Post-War Adjustment Policy of 15
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February 1944. This collaboration continued until the passage of the Contract Settlement Act of 1 July 1944 and the Surplus Property Act of 3 October 1944.
 
The Contract Settlement Act provided for a Director of Contract Settlement, who later became a part of the Office of War Mobilization and Reconversion. Relations between the ASF and this office were very close. As a result, the ASF continued to play a major part in developing policies and procedures for contract termination. Although the Surplus Property Act established broad policies on the disposal of surplus property, it did not change practices already put into effect by the Office of War Mobilization. The War Department retained full authority to decide when property was surplus. The actual disposition of the property was handled by the Reconstruction Finance Corporation (RFC) or the Department of Commerce, two of the designated disposal agencies. Later the RFC and then the War Assets Administration became the sole disposal agency. The only problem arising in this relationship was one of storage space for surplus property. From the War Department's point of view the ideal relationship would have been one which permitted the immediate transfer of surplus property to the physical custody of the disposal agency until its actual sale. A general shortage of storage space, however, prevented such an arrangement. Moreover, the disposal agencies, for reasons of their own convenience and because of the availability of Army storage facilities, preferred to leave surplus property with the Army until actual sale had been arranged. The Army Service Forces co-operated with the RFC in setting up storage facilities for surplus industrial property which was moved out of plants. The ASF held other property until the disposal agencies could arrange for its disposition. Although the ASF at times felt that the disposal agencies moved too slowly, it had no desire whatsoever to take over the function.
 
It was not until the summer of 1944, during the controversy over Mr. Nelson's reconversion program, that the ASF was disposed to make a definite appeal for intervention by Byrnes in a dispute with a civilian agency. It was then that Mr. Byrnes indicated his sympathy with the ASF point of view. Shortly after this controversy Congress passed legislation giving Byrnes' office a statutory base and renaming it the Office of War Mobilization and Reconversion.32 Byrnes, in need of an expanded staff, asked Somervell to release General Clay to him. This Somervell did, but the action was probably a mistake.
 
General Somervell definitely did not suggest to justice Byrnes that he should use Clay as his principal assistant on production matters. General Clay had represented Somervell in the WPB Production Executive Committee since early 1943, and otherwise had carried the main burden of procurement operations while General Somervell was giving his attention to other ASF problems. Clay's presence in OWMR was regarded in many places, certainly by many persons in WPB, as the final proof of military control of the economy. When General Somervell began to realize that this was an unfortunate arrangement, he supported Clay's reassignment to the European Theater of Operations.
 
The official history of the WPB has commented: "Clay had been a vigorous opponent of any substantial reconversion
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action and his transference to a key role in the administration of occupied Germany was probably not without its effect in lifting the lid from reconversion activity in the United States." 33
 
Civil-military relations on production matters were undoubtedly somewhat complicated in the autumn of 1944 and the spring of 1945 by General Clay's participation in OWMR. Had there been any serious controversies between the ASF and WPB in this period, the situation might have proved embarrassing. But Clay's own good sense and Mr. Krug's attitude of co-operation with the armed services prevented any real difficulty.
 
From the ASF point of view, the OWMR was always helpful, and its activities were considered a necessary part of the government's wartime administrative machinery.
 
With the many civilian agencies other than the War Production Board, the ASF developed close working relationships without recriminations or ideological controversy. This experience demonstrated that the ASF could co-operate with civilian agencies. Even where responsibilities seemed to overlap, the ASF and the civilian agencies worked out lines of demarcation which apparently were satisfactory to both and conducive to the efficient mobilization of the nation's economic resources.
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Page Created June 13th 2001

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