Freedom's Forge (52 page)

Workers at the Glenn Martin plant in Omaha, Nebraska, where
Enola Gay
was built.
Lockheed Martin Corporation

THE WAR WAS OVER.

All at once work in the Richmond shipyards stopped. Factories everywhere that had been making tanks, landing craft, rubber boats, and artillery shells sat silent. At Grumman aircraft factory in Bethpage, New York, thousands of workers had been turning out Navy fighters and
torpedo planes at four plants at once. Now the vast empty buildings that had once been coursing with frantic activity had a strange, eerie quality. “It was like coming to work on Sunday,” one worker remembered.
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Bill Knudsen was in Germany when he got the news of Japan’s surrender. After resigning his commission from the Army on June 1, he had returned to Detroit, where there had been a big parade with floats and bands and American GIs marching down Woodward Avenue. General Marshall and Undersecretary of War Robert Patterson were there on the dais, paying tribute to the man who had built the U.S. armed services into the greatest military machine in history. The mayor gave him a key to the city. When Knudsen spoke, he said simply, “Good night, my friends, and God bless you all.”
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Following Japan’s surrender, Bob Patterson, the War Department’s original tough guy, penned Knudsen a heartfelt letter from his new air-conditioned office at the Pentagon. “To me you are the great American,” he wrote. “You have never done anything for yourself, only for your country. You have never spared yourself.”
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Nor was Knudsen sparing himself now. Only two days after he came home to his family, Alfred Sloan asked him to go to Europe to see what was left of GM’s shattered plants after Allied bombers and Russian looters finished with them. Knudsen was able to speak to his family in Denmark for the first time in seven years, and had lunch with the Danish king. When he had last been there, Hitler had been lording it over Europe, and America had been totally unprepared for the conflagration about to engulf the world. So now, as news of final victory came, Knudsen must have had a moment to think about what he and his colleagues had done.

From the moment Knudsen kicked off the armament program in July 1940 until August 1945, the United States had produced $183 billion in arms. Aircraft and ships together accounted for half that total.

In those five years, America’s shipyards had launched 141 aircraft carriers, eight battleships, 807 cruisers, destroyers, and destroyer escorts, 203 submarines, and, thanks to Henry Kaiser and his colleagues, almost 52 million tons of merchant shipping. Its factories turned out 88,410 tanks and self-propelled guns, 257,000 artillery pieces, 2.4 million
trucks, 2.6 million machine guns—and 41
billion
rounds of ammunition.

As for aircraft, the United States had produced 324,750, averaging 170 a day since 1942. That was more than the Soviet Union and Great Britain combined, although the U.S. supplied enough raw materials to enable those two allies to be the number two and number three airplane producers in World War II, respectively.
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For the U.S. had not only armed its own troops, marines, and sailors, it had armed its allies as well—some $50 billion worth through Lend-Lease. When Stalin, Roosevelt, and Churchill first met at Tehran in 1943, and Stalin raised his glass in a toast “to American production, without which this war would have been lost,” it was a stunning tribute from the leader of world Communism to the forces of American capitalism.

Yet America had done all this while remaining the least mobilized of the Second World War combatants. The smallest percentage of the male population entered the armed forces. Compared to the Soviet Union or Great Britain, more women remained at home rather than going to work—more than 60 percent. And the United States converted the least of all its economic output to the war effort, just over 47 percent in 1944 compared to almost 60 percent for Britain and more for Germany and the Soviet Union, only to outproduce everyone else put together, including Japan.
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Yet the output of consumer goods was larger every war year than it had been in 1939, despite the restrictions and rationing. In 1945 Americans ate more meat, bought more shoes and gasoline, and used more electricity than they had before Hitler invaded France. The dream of an economy vibrant enough to produce both guns and butter had been realized thanks to American business.
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By contrast, the supreme war effort had left Europe in ruins, and not just from Allied bombing. Albert Speer’s reign as Nazi production czar had boosted arms production as he had promised, almost doubling output. But it came at the cost of turning Germany and much of the rest of Europe into a vast slave labor camp, employing some 17 million unwilling foreign workers—including inmates at places like Auschwitz and Treblinka—while devouring every last shred of normal economic life.
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Britain’s mobilization had consumed one-quarter of its national
wealth; Russia’s would have been impossible without America’s Lend-Lease aid, which fed and clothed civilians and soldiers alike—and which gave Britons one out of every four meals they ate during the war.

No one had foreseen this, except Bill Knudsen. He had sensed from the beginning that Washington didn’t have to command or ride herd over the American economy to achieve new heights of production, even after a decade of depression. All you had to do was put in the orders, finance the plant expansion, then stand back and let things happen. And they did, in prodigious amounts.

Total economic production in the United States had doubled;
^*
wages rose by 70 percent. American workers were twice as productive as their German counterparts, and four times more productive than the Japanese. Later critics would point out that those numbers were no different before the war than they had been during it.
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But that was the point. What made America productive wasn’t the war or government dictates or a supreme sense of national urgency. It was the miracle of mass production, which, once turned loose, could overcome any obstacle or difficulty.

That included what happened next.

Starting in 1946 nearly 10 million men and women in uniform would be coming home, eager to return to normal life, including a house and a job. They would be returning to an American economy—even after a year and a half of gradual reconversion—still geared around producing tanks and planes, not clapboard houses and refrigerators. And the unions whose record of cooperation had been less than stellar
in the war years were poised to resume their battle with private management—in the case of the auto industry, demanding postwar pay raises from Ford and GM as high as 30 percent.

How could America afford it? Now accustomed to anticipating and paying for everything that happened, Washington became worried again. A report released by Senator James Mead of New York predicted massive unemployment and inflation in the war’s aftermath, as America’s fighting men would be returning to empty factories and empty store shelves. “There should be no mincing of words” with the American people, the new head of the Office of War Mobilization and Reconversion, John Snyder, warned President Truman. The end of war production would mean the end of prosperity, and lead to eight million unemployed by the spring of 1946. Economist Leo Cherne thought that number wildly optimistic. It would be closer to 19 million, he asserted.
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And Professor Paul Samuelson, later the dean of American economists, warned that unless the government took immediate action, “there would be ushered in the greatest period of unemployment and industrial dislocation which any economy has faced”—one that would equal the Great Depression.
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Others were not so sure. One was Knudsen’s old boss Alfred Sloan. As he told the American Manufacturing Association in New Jersey back in June 1944, he foresaw a postwar world filled not with gloom and the pinched faces of the unemployed, but with a bright new explosion of American growth as the workers who had been saving away their paychecks now turned those savings loose.

“Out of this situation that I speak of, this tremendous aggregation of purchasing power, the tremendous demand for goods,” Sloan predicted a very different future. “If American industry stepped forward and planned boldly and dramatically with courage, and expanded its operations, expanded its capacity, to take care of this post-war demand,” then the result would be a huge jump in national income and rise in standard of living far greater than anything Americans had experienced before.
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The dream of the future he and Knudsen had offered at the 1939 World’s Fair would be realized within his lifetime.

Sloan was right, the doomsayers wrong. There was a brief hiccup in the last half of 1945 and early 1946, as national output dropped and
unemployment rose to 3.9 percent. As price controls were lifted, inflation rose by 20 percent.

Then things smoothed out. Private capital investment, which had gone flat and even turned down during the war, tripled from $10.6 billion in 1945 to $30.6 billion in 1946 and never looked back. Companies began to turn to the capital and bond markets to raise funds for their postwar ventures. Stock prices surged, and by 1947 shares had gained value by 92 percent. As one economist has put it, “As the war ended, real prosperity returned almost overnight.”
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It also turned out that for every returning veteran, there were three jobs waiting. The vast majority of women who had gone to work in the aircraft plants and steel mills set aside their welding tools and union membership and went home. Inflation eased, and factories that had converted to wartime use learned how to convert back to civilian production even faster. Companies like Frigidaire, Allis-Chalmers, and Walter Kidde quickly found their feet again in the new consumer-driven market. When the first Ford and Dodge and Chevrolet cars in four years rolled off the Detroit assembly lines, the buyers lined up to buy.

The gross domestic product of the United States in 1947 stood at $231 billion—roughly what it was in 1945. It rose to $258 billion in 1948, paused there for 1949, and then went from $285 billion in 1950 to $398 billion in 1955. In the two decades after 1948, GNP grew at an average annual rate of 4 percent. It was, as historian Michael Barone notes, “the most awesome economic growth ever seen in human history.”
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It was a growth helped by a government debt much lower than it should have been, thanks to tax increases during the war, when everyone’s incomes were rising. Federal tax receipts, which had been $5 billion in 1940, jumped to $49 billion the year of Hiroshima. This was followed in 1946 by a tax cut—imposed on a reluctant president by Congress, led by a coalition of Republicans and conservative Democrats—that pumped still more private investment into the reviving economy. Growth came on so fast that it could withstand the renewal of war in Korea in 1950 without missing a beat—and sustain a massive Pentagon budget all through the Cold War. Guns and butter had come to stay.

While the new U.S. military establishment built by American industry during the war guarded the free world, the new postwar American economy saw no limits to its growth. By 1960 the United States dominated the globe economically and strategically as no nation had ever done, before or since. A political scientist at Yale University, William T. R. Fox, coined a word to describe it: “superpower.”
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And the man who had pulled the trigger on it all never lived to see it.

Bill Knudsen had come back from Europe exhausted but still willing to assume new duties at General Motors. But Alfred Sloan drew the line. “No, Bill, I’m sorry,” he said, “you know the corporation’s retirement policy.” At age sixty-five, executives automatically became inactive.
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Knudsen retired back to his house at 1501 Balmoral Drive. He worked with an automotive writer, Norman Beasley, on his memoirs, which were published as a somewhat rambling biography in 1947.

But his health had been broken by his unstinting service during the war. His granddaughter remembered visiting him and seeing a frail shadow of the big, boisterous grandfather her family had known before the war. In 1947 the American Legion hosted a dinner in his honor, but Knudsen was too ill to attend. On April 27, 1948—seven years and eleven months after President Franklin Roosevelt read the headlines about the collapse of France and picked up the phone—the world learned that the man everyone called Big Bill Knudsen had had a cerebral hemorrhage and died in his Detroit home.

“All of us,” Knudsen wrote before his death, “have a duty to perform in this world.”
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Knudsen had performed his, with spectacular results. But already by his death the memory of what he had done was being erased, like a bronze monument being eaten away by acid rain.