U.S. Mobilization for World War I

Date: Beginning July 8, 1917

Location: Washington, D.C.

Principal figures: Bernard Mannes Baruch (1870–1965), F. A. Scott (1873–1949), Daniel Willard (1861–1942), Woodrow Wilson (1856–1924)

Result: The U.S. government established the War Industries Board to manage economic resources for the war effort.

The War Industries Board (WIB) was organized on July 8, 1917, to coordinate and control the industrial resources of the United States in its World War I effort against Germany. Establishment of the WIB was the climax of several frustrating months of efforts to mobilize agencies of production and distribution following the nation’s entry into the war in April.

Committee on Industrial Preapredness

Federal coordination of industry had begun in 1915, when Congress authorized the creation of a Committee on Industrial Preparedness to study the supply requirements of the Army and Navy. The committee’s work was narrow in scope—its primary accomplishment was the preparation of an inventory of plants able to manufacture munitions. As the war emergency in the United States became more acute, the government extended its power over the nation’s industrial life. By the National Defense Act of June, 1916, Congress authorized the president to place orders for war matériel with any source of supply and to commandeer plants when it was in the national interest to do so.

Two months later, Congress approved a Military Appropriations Act providing for a Council of National Defense consisting of the secretaries of war, the Navy, the interior, agriculture, commerce, and labor, and an advisory commission comprising civilian representatives from all the major sectors of the nation’s economy. The purpose of both committees was to plan for the most efficient use of the country’s resources in case of war.

The advisory commission, which served as the executive committee of the Council of National Defense, did most of the work and mapped out extensive preparations to meet wartime needs. Each of the seven members of the commission took charge of a special segment of the economy, such as transportation, engineering and education, munitions and manufacturing, medicine and surgery, raw materials, supplies, and labor. The commission soon became the nucleus of numerous committees and boards that were the forerunners of several wartime agencies, including the WIB. Finally, Bernard Baruch, a Wall Street investor and the commissioner in charge of raw materials, formulated an elaborate plan whereby representatives of various businesses were organized into “committees of the industries” to work with the council in coordinating the country’s resources. For their efforts, they received one dollar a year, and thus were known as the “dollar-a-year men.”

Because the Council of National Defense had been formed to plan for, rather than direct, industrial mobilization, its powers were only advisory. Moreover, its organization was extremely loose; many of its ablest men served only in a part-time capacity. It was ill-prepared, therefore, to assume the responsibility of directing mobilization, which was forced upon it after the U.S. entry into war in 1917. That unpreparedness was readily apparent in the council’s attempt to coordinate the purchases required by the U.S. Departments of the Navy and War. For that purpose, the advisory commission first established a Munitions Standard Board and then replaced it with a General Munitions Board, on which members of the commission and representatives from the military purchasing bureaus served. The power and authority of the latter board were poorly defined, and its machinery nearly broke down under the pressure of the war orders. Within a month after its establishment, it was found that the board merely overlapped in jurisdiction and authority with many of the other committees formed by the Advisory Commission. As a result, it was unable to coordinate the purchases of the military bureaus, which, jealous of their own prerogatives, continued to go their own ways. Realizing that a central coordinating agency was needed, the Council of National Defense, on July 18, 1917, replaced the General Munitions Board with the WIB, comprising five civilians and one representative each from the Army and the Navy.

War Industries Board

Before the Civil War, the United States had adopted a policy of procuring many—if not most—wartime goods and weapons from civilian businesses. With the exception of a few shipyards or munitions plants, the government therefore relied primarily on private industry to provide a steady stream of war goods and combat weapons. Coordinating that production and flow was a major problem for a nation that allowed the market to determine the type and number of goods to be supplied. In wartime, the urgency of delivery dictated that coordination of production and delivery systems fall to the government.

While the War Industries Board was given broad responsibilities for the direction of war industry needs, its ability to do effective work suffered from the lack of any executive power. As a result, the government’s effort to coordinate the nation’s military and industrial efforts continued to flounder for the next eight months. The board’s first chairman, F. A. Scott, broke down under the strain of the war; its second, Daniel Willard, resigned because he believed that the board lacked authority.

In the spring of 1918, President Woodrow Wilson reorganized the board and named Bernard Baruch as its chairman. In effect, the president transferred to Baruch the power to coordinate industry that Congress had granted to the president in the National Defense and Military Appropriations Acts of 1916, as well as giving Baruch certain controls over the military that Wilson had in his capacity as commander in chief. Endowed with this authority, Baruch was able to determine priorities, requisition supplies, conserve resources, commandeer plants, and make purchases for the United States and the Allies. The only important control he did not exercise directly was that of fixing prices, which was left to a separate committee within the board.

Despite some sharp criticism later by congressional critics regarding the extent of power that the War Industries Board assumed, the board was highly effective in coordinating the nation’s industrial and military effort. The pattern of organization created by the board became the model for the war regulation of industry by the Allies in World War II. Moreover, the introduction of businessmen into government procurement placed professional business managers in close proximity with bureaucrats. This led to an appreciation by business for the role of control and planning, and convinced many in government that business management practices would be effective in improving the government during peacetime. Business already had undergone a managerial revolution that emphasized planning; therefore, the new, centralized control reinforced the notion that stability could be achieved by proper accounting and forecasting. The quintessential proponent of that approach was Herbert Hoover, elected president in 1928, who attempted to apply such nostrums to the Great Depression.

On December 31, 1918, President Wilson directed that the board be dissolved, and it was liquidated on July 22, 1919. Other wartime agencies that were involved in economic mobilization—such as the War Trade Board, which licensed exports and imports and rationed supplies to neutrals, and the United States Railroad Administration, which controlled the nation’s railroads—also were dissolved gradually after the war ended.

Big Business and Government

The friendly relationship between big business and government that emerged from the war cemented an alliance that lasted until the Great Depression. In the short term, business thought that it was the beneficiary of that relationship, receiving government contracts and favorable treatment. Although the boom provided by the 1920s proved nourishing to many small businesses, as witnessed by the extensive growth of all business during that decade, the special treatment afforded to such new enterprises as airplane and some shipping companies, based on future wartime needs, served to align government with some industries at the expense of others.

More important, however, were the lessons learned by the government during wartime that were inapplicable during peacetime. The government assumed that wartime planning— based on the coercive powers yielded to bureaucrats by citizens facing a national emergency—would provide the same degree of effectiveness in the absence of the emergency. Since the national tendency of government was to increase during emergencies, but never to recede to its original levels, the war intruded federal authority into the lives of millions of people who had never before experienced it. Thus, although the WIB was disbanded after World War I, the notion that government planning and direct management of businesses could keep the economy stable was revived on a larger scale during the Great Depression.