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The Removal of War Production Board Controls on Business, 1944–1946*

Published online by Cambridge University Press:  24 July 2012

Barton J. Bernstein
Barton J. Bernstein
Affiliation:
Assistant Professor of History, Stanford University
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Abstract

Inter-agency argument within the government and indecision and disagreement among businessmen over the demobilization of America's wartime economic controls are considered in this study of government-business relations.

Type
Research Article
Information
Business History Review , Volume 39 , Issue 2 , Summer 1965 , pp. 243 - 260
Copyright
Copyright © The President and Fellows of Harvard College 1965

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References

1 Bernstein, “Industrial Reconversion: The Protection of Oligopoly and Military Control of the Wartime Economy,” to be published in American Journal of Economics and Sociology; Baruch, Bernard and Hancock, John, Report on War and Postwar Adjustment Policies (Washington, 1944), pp. 7, 74Google Scholar; Paul Homan to E. Kohlepp, Dec. 13, 1943, cited by J. Carlyle Sitterson, Development of Reconversion Policies of the WPB (WPB Spec. Study No. 15, 1945); hereafter cited as Reconversion.

2 For a discussion of the use of power in the buyer-seller relationship during inflation, see Galbraith, John, American Capitalism (rev, ed., Boston, 1956)Google Scholar on the concept of countervailing power.

3 Interviews with: Julius Krug, Sept. 18, 1962; John Blair, Sept. 13, 14, 1961, April 19, 1962; William Y. Elliott, Oct. 17, 1961; and Chester Bowles, May 9, Sept. 13, 1962.

4 All those publications available at the New York Public and Harvard libraries from such organizations as the National Small Business Men's Association, the Conference of American Small Business Organizations, and the National Federation of Independent Business never took a position on removal of WPB controls. The Commerce Department's Small Business Advisory Committee was also silent. New York Times, May 28, 1945, p 1. In WPB files (038, 038.1, and 291.01, which refer to small business), there is no correspondence from small businessmen on this issue. (Unless otherwise indicated, all numbered files are from the WPB Policy Document Files in RG 179, National Archives.)

5 Reconversion, pp. 132–38; Krug to Sen. James Murray, Oct. 6, 1944, Krug to Sen. Homer Ferguson, Oct. 7, 1944, Krug Papers (Library of Congress); Fesler, James, et al., Industrial Mobilization for War (Washington, 1947), pp. 815–17, 723–25Google Scholar; hereafter cited as Industrial Mobilization; WPB press release, Sept. 8, 1944; Sitterson to Fesler, Oct. 11, 1944, WPB 033.308 R-15. Under Secretary of War Robert Patterson also contended that priority assistance was unnecessary for production of essential goods because “established business relationships, together with the prospect of a ready market, would adequately safeguard all consumer needs.” Elliott to Arthur Bunker, Aug. 29, 1944, cited by Drummond Jones, The Role of the Office of Civilian Requirements (WPB Spec. Study No. 20, 1946), p. 308.

6 Elliott to Krug, Sept. 4, 1944, Gordon to Krug, Sept. 10, 1944, both in WPB 963; Reconversion, pp. 140–44; Industrial Mobilization, pp. 819–21.

7 Blair to Gordon, Oct. 20, 1944, John Blair Papers (his possession); Ralph Hetzel to Samuel Anderson, Oct. 13, 1944, Joseph Keenan to Anderson, Oct. 13, 1944, cited in Reconversion, p. 146; A. C. Hill to Anderson, Sept. 21, 1944, WPB 920.1; Bowles to Krug, Oct. 5, 1944, Melvin deChazeau to Anderson, Oct. 30, 1944, WPB 814C; Anderson to all recipients of “Demobilization of Controls after Victory in Europe,” Nov. 8, 1944, WPB 965R; Bowles to Krug, Nov. 8, 1944, WPB 813.3; Elliott to Krug, Nov. 9, 1944, WPB 813.9, and Nov. 21, 1944, WPB 814.2; Krug to Frances Perkins, Nov. 21, 1944, WPB 813.9. WPB chief counsel, John Lord O'Brian, disagreed with Bowles on the interpretation of legal powers granted to the WPB. O'Brian to Bowles, Nov. 18, 1944, WPB 813.9; interviews with O'Brian, Sept. 20, 1962; Bowles; Frederick Eaton, June 23, 1964.

8 Byrnes to Vinson, Nov. 22, 1944, WPB 813.9; Edward Pritchard, Dec. 5, 1944, box 456, Central Files-Office of Economic Stabilization, OWMR Records (RG 250, National Archives); Vinson to Byrnes, Dec. 6, 1944, cited in Eckert, James (ed.), Problems in Price Control: Pricing Standards (OPA, VII, 1947), p. 359Google Scholar; CODCAVE to Krug, Feb. 23, 1945, WPB 920.1; Sitterson to Fesler, Oct. 18, 1945, WPB 033.308 R-15; “Study No. VE-1,” WPB 715C; WPB press release, April 8, 1945.

9 Donald Wallace to John Small and Bowles to Krug, April 27, 1945, WPB 921; WPB press release, May 10, 1945.

10 Vinson to Wnliam Davis, May 11, 1945, “Low-End” folder, box 188, Economic Advisers-Office of the Deputy Administrator for Price-Price Department, OPA Records (RG 188, National Archives); CIO News, May, 1945; Krug to files, April 14, 1945; Krug to Anderson, April 9, 1945; all cited by William Duffy, “History of the Automotive Division, 1941–1945,” WPB 020.1R.

11 WPB press release, May 27, 1945.

12 New York Times, June 15, 1945, p 26; OWMR Advisory Board Minutes, May 28, 1945, OWMR Records; Edwin George to Krug, July 3, 1945, box 681, WPB Sel. Doc. File (RG 179, National Archives). Murray, one of the wealthiest men in the Congress, had long identified with small business, perhaps as a result of having been dwarfed in his native Montana by firms like Anaconda. For a brief sketch, see Bailey, Stephen, Congress Makes a Law (New York, 1950), pp. 38–41.Google Scholar

13 Bertrand Fox attended the steel industry meeting; interview with Fox, Feb. 19, 1963; WPB press release, May 4, 1945; Snyder to Philip Murray, July 19, 1945, box 215, Manpower Liaison and Coordination Division-Deputy Director for War Programs, OWMR Records. Although V-I Day was not forecast before early 1946 and military procurement was still high, the auto industry in July recommended that WPB eliminate all civilian priorities by the end of August, rather than at the end of the year, as had been planned. Without priorities cluttering the system, the car industry knew it could secure scarce materials which other industries and small firms might otherwise use. “Automobile Industry Advisory Committee Meeting,” July 11, 1945, WPB Sel. Doc. File. However, during June, at least one small-car producer complained of difficulties in obtaining steel and requested priority assistance. ICrug Conference Record, June 19, 1945, Krug Papers.

14 New York Times, July 29, 1945, p 1; interviews with John Snyder, May 19, 1962; Robert R. Nathan, April 24, 1962; Chester Bowles, May 9, Sept. 13, 1962.

15 Bowles to Snyder, Aug. 6, 1945, OWMR Advisory Board Minutes, OWMR Records; “C. B. Notes,” June, 1947 (notes on Philip Coombs' interview with Bowles), Coombs Papers (his possession); Washington Post, Aug. 10, 1945, p 1. After two days of meetings, the OWMR Advisory Board, following the recommendation of OWMR Deputy Director Robert Nathan, urged a ruling that OWMR direct WPB to cooperate with OPA on low-end goods. OWMR Advisory Board Minutes, Aug. 6, 7, 1945, OWMR Records.

16 Public Papers of the Presidents of the United States: Harry S. Truman, 1945. (Washington, 1961), pp. 200–202.

17 New York Times, Wall Street Journal, Journal of Commerce, Aug. 10, 1945, p 1.

18 Fesler to Policy Analysis Staff, Aug. 10, 1945, WPB 030.05; “C.B. Notes;” also see Krug's, “When Do We Abolish Controls?,” New York Times Magazine, Aug. 12, 1945, pp 9, 30–34, which was written before Truman's decision. In his private discussions with WPB counsels, Krug was always optimistic in his interpretation of the meetings. Krug Conference Records, Aug. 9, 10, 1945, Krug Papers.

19 Interviews with Krug; Bowles; Snyder; George Auxier, May 19, 1962; “C.B. Notes.”

20 “C.B. Notes;” Maverick to Krug, Aug. 11, 1945, box 681, WPB Sel. Doc. File.

21 Gordon to Fesler, Nov. 22, 1946, Auxier Papers (his possession).

22 Executive Order 9599, 10 F.R. 10155.

23 New York Times, Aug. 21, 1945, p 1; interview with Elliott; Elliott to Fesler, April 3, 1946, WPB 033.308. Seven business organizations — the Chamber of Commerce, National Association of Manufacturers, National Industrial Conference Board, Committee for Economic Development, American Trade Association Executives, Associated General Contractors, and National Association of Purchasing Agents — applauded Krug's policy. New York Times, Aug. 23, 1945, p. 25.

24 Dwight Chapman to Hill and Caroli Burton, Aug. 23, 1945, WPB 580.01C; Bowles to Nathan, Aug. 27, 1945, box 389, Reconversion Working Committee, OWMR Records.

25 Mo. Lab. Rev. (Sept., 1948), p. 411; Carsel, Wilfred, Wartime Apparel Price Control (OPA, III, 1947), pp. 117–22.Google Scholar

26 Carsel, Apparel, pp. 134–49; Charles Hitch to Nathan, Aug. 4, 1945, Office of the Deputy-Deputy Director for Reconversion, OWMR Records; draft of Davis to Bowles, Krug, George Taylor, Paul McNutt, Leo Crowley, July 16, 1945, “Textiles-General” folder, box 192, Advisers and Assistants to the Director, OWMR Records.

27 “Construction Advisory Committee Report,” May 2, 1945, box 230, Office of the Deputy-Deputy Director for Reconversion, OWMR Records; Industrial Mobilization, pp. 918–22, 929–30; for a brief discussion of these events, see Somers, Herman, Presidential Agency: OWMR (Cambridge, 1950), pp. 90–93.CrossRefGoogle Scholar

28 Industrial Mobilization, pp. 953–55; Journal of Commerce, Aug. 21, 1945, p 1; Potter's motives were questioned in House Committee on Banking and Currency, Hearings on H.R. 4761, 79 Cong., 2 Sess., pp. 8755 ff., cited by Somers, Presidential Agency, p. 92.

29 Bowles to Davis, Sept. 11, 1945, Bowles Collection, Coombs Papers; Bowles to Davis, Sept. 17, 1945, box 443, Central Files-OES, OWMR Records.

30 American Lumberman, Sept. 15, 1945, p 30; Davis to Snyder, Sept. 17, 1945; “C.B. Notes;” Industrial Mobilization, pp. 954–55. The “First Report on Construction for Reconversion,” prepared by WPB offices of the Program vice-chairman and Operations vice-chairman, in the WPB files (School of Public Administration Library, Harvard University), expressed some doubts whether residential construction would be an effective source of employment to help in averting the predicted depression.

31 OWMR Advisory Board Minutes, Sept. 17, 1945, OWMR Records; OWMR press release, Sept. 18, 1945. With WPB unleashing inflation by removing Order L-41, the Federal Reserve Board was tempted to eliminate Reg. W, the restraint on installment consumer credit. The Board did revoke restrictions on borrowing for house repairs, and intensified the scramble for materials. Ronald Ransom to Wallace, Sept. 4, 1945, Reconversion Working Committee, OWMR Records; New York Times, Sept. 12, 1945, p. 1; Sept. 26, 1945, p. 29.

32 WPB press release, Sept. 18, 1945; National Grange Monthly (Nov., 1945), p. 20.

33 Washington Post, Sept. 19, 1945, p. 1; Oct. 1, 1945, p. 7; Hazel Kyrk and Caroline Ware, Consumers' Advisory Committee (OPA) to Bowles, Oct. 1, 1945, box 397, OWMR Advisory Board, OWMR Records.

34 Ralph Rogers to Tom Tipett, Oct. 25, 1945, Coombs Papers; Mansfield, Harvey, A Short History of OPA (OPA, XV, 1947), pp. 133–35Google Scholar; Senate Special Committee to Study and Survey Problems of Small Business Enterprise, Hearings before the Complaints Sub committee, 79 Cong., 2 Sess., pp. 8690 ff.

35 “Summary Report of Construction Stabilization Committee” to Snyder, undated (but between Oct. 15 and 19, 1945), Reconversion Working Committee, OWMR Records.

36 Nathan to Bowles, Nov. 13, 1945; Bowles to Snyder, Nov. 29, 1945; Bowles to Patman, Nov. 29, 1945, all in box 232, Office of the Deputy Director-Deputy Director for Reconversion, OWMR Records.

37 Washington Post, Dec. 6, 1945, p. 3.

38 President's Press Conference, Dec. 12, 1945, Files of the White House Official Reporter (Truman Library).

39 Hitch to Hans Klagsbrun and Nathan, Nov. 29, 1945, box 69, General Classified File-Central Files, OWMR Records; Journal of Commerce, Dec. 1, 1945, p. 2. Contrary to Administration policy, Krug earlier, on Sept. 10, had encouraged the House Appropriations Committee at a closed meeting to liquidate the WPB quickly. Harold Smith Diary, Sept. 10, 1945 (Bureau of the Budget).

40 Wallace to Bowles, Mar. 5, 1946, Textile Division-Office of Deputy Administrator for Price-Price Department, OPA Records; Elliott to Fesler, April 3, 1946; Philip Murray to Small, April 4, 1946, Papers of Harry S. Truman as President from the Central Files of the White House, OF 342 (Truman Library).

41 Business Week, June 8, 1946, p. 16; June 15, 1946, p. 7; Bill Davidson, “He Knew Him When,” Colliers, Dec. 7, 1946, p. 63; Staff Report to the Monopoly Subcommittee of the House Committee on Small Business, United States versus Economic Concentration and Monopoly, 79 Cong., 2 Sess., pp. 9, 75–86, 353–64. For small business difficulties with steel, see Hearings before Senate Special Committee to Study Problems of American Small Business, part 84, 79 Cong., 2 Sess., and the Committee's Changes in Distribution of Steel, 1940–1947, Report 44, 81 Cong., 2 Sess.

42 G. L. Belsey to Fesler, Oct. 12, 1946, Auxier Papers.

43 So far as extensive investigations reveal, there was never a general public opinion poll in 1945 on the removal of WPB controls. However, there were numerous surveys on attitudes toward price controls. Throughout 1945 and well into 1946, a majority of Americans wanted controls retained, but the opposition grew. In August, 1945, only 16 per cent with opinions wanted price controls terminated (74 per cent were opposed), but by October, 21 per cent favored termination (72 per cent opposed). AIPO surveys, cited in Hadley Cantril (ed.) with assistance of Strunk, Mildred, Public Opinion, 1935–1946 (Princeton, 1949), p. 662.Google Scholar