War Industries Board: History and Purpose

War Industries Board. Seated from left to right are: Seated, Admiral F.F. Fletcher; Robt. S. Brookings, chairman price-fixing committee; Bernard N. Baruch.
War Industries Board. Seated from left to right are: Seated, Admiral F.F. Fletcher; Robt. S. Brookings, chairman price-fixing committee; Bernard N. Baruch. Bettmann/Getty Images

The War Industries Board (WIB) was a United States government agency that operated from July 1917 to December 1918, during World War I to coordinate the purchase of war materials by the Department of the Army the Navy Department. To this end, the WIB prioritized needs, fixed prices, and oversaw the standardization of the products essential to supporting the war efforts of the United States and its allies. After a slow start, the WIB took significant strides toward meeting its objectives, especially in 1918.

Key Takeaways: War Industries Board

  • The War Industries Board (WIB) was created by President Woodrow Wilson in July 1917.
  • It was intended to help the U.S. prepare for World War I by increasing industrial production and coordinating the purchase of war materials by the Army and the Navy.
  • In carrying out its mission, the WIB employed modern industrial techniques such as the assembly line, mass production, and interchangeable parts.
  • While industrial production increased under the WIB, it was accused of helping so-called “war profiteers” amass vast fortunes.

History and Founding

Having not been involved in a major multi-national conflict since the Spanish American War of 1898, the United States needed to quickly organize its manufacturing industries to support its military effort. With the Department of Defense and Pentagon not to be created until 1947, the WIB was an ad hoc department created to coordinate procurement between the Army and the Navy. The WIB replaced the General Munitions Board, which lacked adequate authority and suffered from the inefficiency of having twenty voting members. Instead of twenty, the WIB was made up of seven members, all civilians except for one representative each from the Army and Navy.

The American financier Bernard M. Baruch (1870-1965).
The American financier Bernard M. Baruch (1870-1965). Hulton-Deutsch Collection/CORBIS/Corbis via Getty Images

In 1916, the Secretaries of Agriculture, Commerce, Interior, Labor, Navy, and War were combined to form the Council on National Defense (CND). The CND analyzed the abilities of the major U.S. industries to meet military needs and to mobilize in case of war. However, the CND struggled to deal with the Army’s inability to purchase equipment quickly and efficiently, and the Army’s competition with the Navy for scarce raw materials and finished products.

Soon after the United States entered World War I in spring 1917, President Woodrow Wilson proclaimed, ‘it is not the army we must train and shape for war, it is the nation.” Wilson and his advisers knew that both material and human resources would have to be coordinated to support the nation’s war effort. In such an overwhelming undertaking, the federal government had to play a leading role. On July 28, 1917, Wilson set up the WIB within the CND. The WIB became one of several federal agencies dedicated to America’s preparations for “The war to end all wars.”

Created largely by executive orders rather than congressionally approved legislation and law, the WIB lacked the political and legal power to fully centralize industrial mobilization. The Army and Navy, for example, continued to establish their individual priorities for buying supplies and equipment.

By March 1918, these and other mobilization problems forced President Wilson to strengthen the WIB, first be appointing influential industrialist and financier Bernard M. Baruch as its chairman. Drawing authority from the Overman Act of 1918 granting the president the power to coordinate government agencies during the war, Wilson also established the WIB as a decision-making body separate from the CND, marking a major step in its development.

Areas of Action

The primary duties of the WIB included: studying the industrial requirements and manufacturing capabilities of the United States and its allies; approving orders placed by war-related government agencies; establishing priorities in the production and delivery of basic war materials; negotiating price-fixing agreements for raw materials; encouraging the United States and its allies to conserve and develop war-related resources, and overseeing the purchasing of war materials by allies in the United States.

To carry out its many duties, the WIB employed and developed several industrial modernization techniques still in widespread use today.

Labor Management and Relations

When the U.S entered World War I, labor—the controlling factor of production—was overseen by another government agency. As a result, the newly-created WIB was on its own in dealing with labor-management disputes resulting from increased demand for materials during World War I. Since collective bargaining as a solution to labor disputes would not come until the 1930s, leaving the government powerless to negotiate wages, the WIB routinely avoided strikes by approving wage increases rather than risk a shortage of supplies needed to fight the war in Europe.

Modern Industrial Techniques

The threats and grim realities of war left the WIB facing the challenge of taking U.S. industrial production to unprecedented levels. In an attempt to accomplish this, the WIB encouraged companies to use mass-production techniques to increase efficiency and eliminate waste by the standardization of products. The board set production quotas and allocated raw materials. It also conducted psychological testing to help people find the right jobs.

As introduced in the early 1900s by automobile manufacturer Henry Ford, mass production utilizes multiple assembly lines. On assembly lines, each worker or teams of workers performs specific tasks contributing to the assembly of the finished product. To achieve consistency and interchangeability, each different part of the finished product is produced with the same equipment and tools.

Disbandment, Investigation, and Impact

U.S. industrial production increased by 20% under the WIB. However, with the WIB’s price controls applying only to wholesale prices, retail prices soared. By 1918, consumer prices were almost twice what they had been before the war. With rising retail prices, corporate profits soared, especially in the chemical, meatpacking, oil, and steel industries. On January 1, 1919, President Wilson decommissioned the WIB by executive order.

To put the WIB’s 20% industrial production increase into perspective, under the similar War Production Board, established by President Franklin D. Roosevelt on January 1, 1942, days after the Japanese attack on Pearl Harbor, industrial productivity increased by 96% and 17 million new civilian jobs were created.

To the dismay of many members of Congress, the industrial war mobilization conducted under the direction of the WIB, while marginally helpful to the war effort, helped certain war producers and holders of raw materials and patents build massive fortunes.

The Nye Committee Investigations

In 1934, the Nye Committee, chaired by Senator Gerald Nye (R-North Dakota) held hearings to investigate the profits of the industrial, commercial, and banking firms that had supplied war materials under the supervision of the WIB.

As Senator Nye connected the “war profiteers” of the banking and munitions industries to America's involvement in the war, many Americans felt they had been drawn into what was, in fact, a “European war” by pro-war propaganda that had portrayed the war as a battle between the forces of good and evil—democracy and autocracy.

The Nye Committee reported that during World War I—July 28, 1914, to November 11, 1918—the United States had loaned Germany $27 million while lending Britain and its allies $2.3 billion.

These revelations led Senator Nye, many pacifists, and members of the American public to contend that profit, rather than peace had motivated the U.S. to enter the war. The Nye Committee's findings helped to further the American isolationism movement and passage of the Neutrality Acts of the 1930s intended to prevent the United States from becoming involved in future foreign wars.

While it fell short in many ways, the WIB helped to establish the importance of issue-driven national planning in the United States. Its model influenced national policy during the New Deal and World War II. Borrowing from precedents set by the WIB, President Franklin D. Roosevelt, in 1933, established the National Recovery Administration (NRA) to combat the effects of the Great Depression by establishing the same cooperation between government and industry introduced by the WIB during World War I.

Sources

  • Baruch, Bernard. “American Industry in the War: A Report of the War Industries Board.” Prentice-Hall, 1941, https://archive.org/details/americanindustry00unit/page/n5/mode/2u.
  • Herman, Arthur. “Freedom's Forge: How American Business Produced Victory in World War II.” Random House, ISBN 978-1-4000-6964-4.
  • King, William C. “America Bears Heaviest Cost of War.” History Associates, 1922, https://books.google.com/books?id=0NwLAAAAYAAJ&pg=PA732#v=onepage&q&f=false.
  • Bogart, Ernest Ludlow. “Direct and Indirect Costs of the Great World War.” Oxford University Press, 1920, https://archive.org/details/directandindire00bogagoog.
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Longley, Robert. "War Industries Board: History and Purpose." ThoughtCo, Jun. 23, 2021, thoughtco.com/war-industries-board-history-and-purpose-5181082. Longley, Robert. (2021, June 23). War Industries Board: History and Purpose. Retrieved from https://www.thoughtco.com/war-industries-board-history-and-purpose-5181082 Longley, Robert. "War Industries Board: History and Purpose." ThoughtCo. https://www.thoughtco.com/war-industries-board-history-and-purpose-5181082 (accessed August 4, 2021).