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The truth was quite different. From 1939 onward, Standard had sought to develop synthetic rubber, but the quality was low and the price was high, compared to natural rubber. In 1940, before the United States entered the war, Standard Oil appealed to the government to build synthetic-rubber plants. The Roosevelt administration rejected the idea, on the assumption that there would be uninterrupted access to the natural rubber supplies of Asia.

The shortage of artificial rubber in the United States was the fault of the government, not of private industry. On coming to power in Germany in 1933, Hitler ordered a four-year plan to make Germany self-sufficient in food and chemicals, in preparation for the war of conquest he already planned. The Nazi regime forced German industry to use artificial rubber, despite its cost and low quality. As a result the German military machine was well supplied with artificial rubber when Hitler launched his war.

Wearying of Arnold’s antibusiness crusade in the middle of a world war in which American success depended on government-business collaboration, President Roosevelt removed him from the Justice Department by “kicking him upstairs” to the US Court of Appeals for the District of Columbia Circuit. After two years Arnold resigned to found the Washington law firm known today as Arnold and Porter.

INNOVATION FOR VICTORY

In 1947, twice as many Americans worked in industrial-research centers as in 1940.
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Among the breakthroughs that resulted from wartime research, in addition to nuclear energy, were jet engines, radar, computers, synthetic rubber, and a range of new drugs: penicillin, synthetic quinine, and sulfa drugs.

A massive government R&D and production effort was devoted to penicillin. In 1928, Alexander Fleming had discovered that penicillin could kill bacteria. During World War II, the US government coordinated efforts by universities, the Department of Agriculture, and nearly two dozen pharmaceutical companies to devise technologies for the mass production of the drug.
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Catalytic cracking is the process of creating high-octane fuel from petroleum feedstocks. During the war, the oil industry drew on the research into catalytic cracking of Eugene Houdry, a French engineer who immigrated to the United States in 1930 and patented the catalytic converter that is used in most automobiles today. At Baton Rouge, Standard Oil built the first full-scale operational catalytic cracking plant in 1942, a web of pipes containing tanks. Soon “cat crackers” were springing up in refineries across the country.

WARTIME INFRASTRUCTURE PROJECTS

In its capacity as state capitalist, the government also engaged in massive domestic infrastructure projects that bolstered the war effort. One was the Alaska Highway, connecting the United States with Alaska through Canada, which was authorized by Congress in 1942 and remarkably was completed by the end of the year. Another was the Saint Lawrence Seaway, connecting the Atlantic Ocean with the Great Lakes. Backed by Herbert Hoover, the proposal for the seaway was stalled until December 1940, when Roosevelt declared that “the United States needs the St. Lawrence Seaway for defense.” In 1941, the United States and Canada negotiated an agreement. The project was finally completed in 1959, when President Dwight Eisenhower and Queen Elizabeth presided at a ceremony in Montreal.

One consequence of the destroyers-for-bases transfer of ships to Britain was a shortage of tankers to transport oil within the United States. In May 1941, executives from eight major oil companies met in New York to discuss the problem. Their proposed solution was a twenty-four-inch pipeline from Texas to the East Coast. The government rejected the idea, but following Pearl Harbor the proposal was revived and approved. A corporation called War Emergency Pipelines, Inc., was formed and funded by the RFC.

Through mountains and swamps and over bridges, the Big Inch snaked from Longview, Texas, to Phoenixville, Pennsylvania, where it split into two segments, one terminating at Philadelphia and the other at Linden, New Jersey. Only 350 days after construction began, the Big Inch was complete. Each day it carried five times as much oil as had ever been carried in a pipeline before to the refineries of the East Coast.

The Big Inch was soon joined by the Little Big Inch, a pipeline that stretched 1,475 miles from Beaumont, Texas, to Linden, New Jersey. While the Big Inch carried crude oil, the Little Big Inch transported gasoline, diesel, fuel oil, and aviation fuel.
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Six of the seven billion barrels of oil used by the Allies in World War II came from the United States.
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FROM GUN BELT TO SUN BELT

The New Deal Democrats were supported by southern and western interests like the Brown brothers of Texas, whose Brown and Root evolved into Halliburton; Henry J. Kaiser of Kaiser Aluminum; and independent oil producers like Sid Richardson, who challenged the Rockefellers and Pews of the northeastern oil industry. Members of Congress and administration officials from the South and West used the military emergency to create defense plants in their regions as the nuclei of postwar economic development, achieving the goal of industrial decentralization.

The importance of World War II in the industrial transformation of the United States cannot be exaggerated. Between 1940 and 1945, nearly half of the previous total investment in all US industry was made in war production by the federal government. Before Pearl Harbor, the only states in which a third or more of the workforce was in the manufacturing sector were New Jersey, Pennsylvania, Ohio, Michigan, and the states of New England. Between 1950 and 1970, the share of traditional manufacturing activity in the northeastern core declined by 3 percent and grew in the Sunbelt by 56 percent.
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During the war, the South was the site of two-thirds of military training camps, 47.7 percent of federally financed chemical, coal, and petroleum production, 36.5 percent of total awards for military facilities in the continental United States, and 23 percent of the new plants built for the war.
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Between the Japanese attack on Pearl Harbor on December 7, 1941, and V-J Day on September 2, 1945, the landscape and economy of Texas were transformed by military-led modernization in a revolution far more profound, and with more lasting effects, than Reconstruction or the New Deal. In addition to increasing oil and gas production, the federal government made Texas the site of factories that produced rubber from petroleum, to replace natural rubber supplies from Japanese-occupied Asia and from Brazil, and also magnesium and aluminum. The government expanded and upgraded existing shipyards and created a Texas ship-building industry from nothing. The draining of the rural population into military service and factory work accelerated the mechanization of Texas agriculture, increasing its efficiency.

The Houston construction firm of Brown and Root, a longtime backer of Lyndon Johnson, grew rich from government contracts during World War II and the Cold War. In California, similar beneficiaries of military state capitalism were Kaiser Steel and Bechtel Corporation, which provided many of the members of Ronald Reagan’s cabinet (Reagan voted four times for Roosevelt for president, so his alliance with a corporate client of the Rooseveltian state was only appropriate).

Texas Instruments began before the war as Geophysical Services, Inc., building electronics to help oil companies find oil. During World War II, the company built instruments to help the navy search for enemy submarines. It specialized as a defense contractor providing electronics to the US military by the time it changed its name to Texas Instruments in 1951. TI later produced the first commercial silicon transistors, integrated circuits, and handheld calculators. The history of TI symbolized the birth of a high-tech economy from the oil-patch economy of Texas, midwifed by the US military.

KAISER’S LIBERTY SHIPS

Another beneficiary of wartime industrial development was California. World War II produced a massive expansion of the aircraft production industry around Los Angeles. The region continued to be home to prominent defense contractors for half a century until the end of the Cold War.

Henry J. Kaiser was a master builder who thought in grandiose terms. After moving in 1906 to California, the native of Sprout Brook, New York, founded a road construction company. In the 1930s, the firm took part in the construction of the Hoover, Grand Coulee, and Bonneville Dams. Although he had never built a ship, his record helped Kaiser win a grant from the government in World War II to build shipyards in Los Angeles, Portland, Houston, and elsewhere. Inspired by Henry Ford’s assembly line, Kaiser perfected the mass production of cargo-carrying Liberty Ships, building one in only four days. Kaiser built a steel plant in California and created Kaiser Aluminum.

In addition to being an innovator in shipbuilding, Kaiser was a welfare capitalist in the tradition of Gerard Swope and Owen Young of GE. During the war, Kaiser’s employees were offered prepaid medical plans and, in 1945, Kaiser joined with Dr. Sidney Garfield, who ran the hospital for the Kaiser Shipyards and had first worked with Kaiser during the construction of Grand Coulee Dam, to found the Kaiser Permanente health management organization (HMO). In 1948, he founded the Henry J. Kaiser Foundation, which focuses on health care. Proving that no good deed goes unpunished, Kaiser and his nonprofits were attacked by the for-profit medical industry. Today Kaiser Permanente, a nonprofit organization, is the largest managed-health-care plan in the United States.

“THE MAN WHO WON THE WAR FOR US”

Dwight D. Eisenhower described him as “the man who won the war for us” and Hitler grumbled that he was the “new Noah” after 156,000 Allied soldiers landed on the shores of Normandy on D-Day, June 6, 1944, in craft designed and built by Andrew Jackson Higgins. Higgins began his business career as the proprietor of A. O. Higgins Lumber and Export Company, a New Orleans firm that built its own fleet in a small boatyard to transport its products. Higgins supervised twenty thousand workers who completed seven hundred boats a month, of two kinds—fast PT boats like the one commanded by the young John F. Kennedy in the Pacific and landing craft like those used on D-Day. His motto was “The Hell I Can’t.”

After Higgins died in 1952, the subsequent history of his Michoud facility illustrated the continuing role of government procurement in the development of the postwar South. It was part of what had been a 1763 grant by the French royal government of 34,500 acres to a New Orleans merchant named Gilbert Antoine de St. Maxent. Part of that property was acquired by Antoine Michoud, the son of Napoleon’s administrator of domains, who turned it into a sugar plantation and refinery after arriving in New Orleans in 1827. Following his death in 1863, the property was kept intact by his heirs until it was incorporated into a factory facility for Higgins Industries.

The Michoud facility found a new use during the Korean War, when Chrysler used it to manufacture engines for tanks that never went into production. The inactive facility was employed again as the space race intensified. NASA took over the plant and assigned it to Chrysler and Boeing to make stages of Saturn I and Saturn V rockets that could be transported by water to Cape Canaveral (later Cape Kennedy). After the Apollo program ran its course, Martin Marietta used the property to make tanks for the space shuttle in the 1980s.
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THE END OF UNEMPLOYMENT

Unemployment fell from 17.2 percent in 1939 to 1.2 percent in 1944. Mass unemployment came to an end, as millions of unemployed men were drafted or drawn into the military or the defense-industrial workforce. At the end of 1940, five million Americans were still unemployed; by the end of 1941, there were two million in the army and navy.
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The US Army expanded from 167,767 in 1940 to 8,266,373, with 5 million overseas, in 1945.
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At the peak of World War II, more than sixteen million men and women were in the US armed forces and the merchant marine. Millions of women as well served in the military or worked in defense plants. No longer needed, the WPA and other emergency public-employment programs were dissolved.

Between 1940 and 1945, seventeen million Americans found jobs—ten million in the armed forces, two million working for the military and other government agencies, and five million in the civilian sector, producing both military and civilian goods. Of these seventeen million, seven million had formerly been unemployed; ten million were new entrants to the labor market, about half of them women, with other new entrants provided by former farmers.
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The farm population shrank by a fifth during the war.
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ORGANIZED LABOR

Tight wartime labor markets increased the bargaining power both of white unionized workers and African Americans. By executive order on March 19, 1941, President Roosevelt created the National Defense Mediation Board (NDMB), a tripartite arbitration board with representatives of management, labor, and the public. The membership of the AFL increased by 63 percent between 1940 and 1945, while the CIO made even greater gains, with a 66 percent increase in membership.
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But relations between government and organized labor were strained by wartime strikes. John L. Lewis had broken with Roosevelt over US involvement in World War II and became a bitter critic of the president. He led the United Mine Workers on a strike in the bituminous coal industry. Enraged, FDR called for a national-service law to ban strikes and compel able-bodied adults to be assigned to productive work. He did not get it, but he rescinded draft exemptions for striking miners under the age of forty-five.
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During a strike in May 1941, the US Army took over the North American Aviation factory in Los Angeles. In all the government seized industrial facilities during labor disputes a total of sixty-three times.
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ROSIE THE RIVETER

In 2010, Geraldine Hoff Doyle died, survived by five children, eighteen grandchildren, and twenty-five great-grandchildren. Few Americans would have recognized her name, but many would have recognized the name that made her face famous: Rosie the Riveter.