Production

Perry Special Collections, Lee Library, Brigham Young University.

Used by permission.

Production is where economics meets warfare. The capacity of each belligerent nation to wage modern war depended both on the soundness of its military doctrine and on its ability to equip and supply a large fighting force. Apologists for the Axis have long argued that the Allies won, not because they fought better, but because they buried the Axis with their massive production. There is considerable evidence supporting this view.

Consider the following table of relative production (Hastings 2007):

Total production, 1942-1945

This table exaggerates the disparity in oil production, since it does not include production from the oil fields of southeast Asia seized by Japan in the early months of the war. Nevertheless, the overall picture of a huge disparity in production between the United States and Japan is correct. Total Japanese industrial capacity was about 10% that of the United States. In 1937, the United States spent just 1.5% of its national income on defense, versus 28% for Japan, yet the disparity in income meant that translated into almost identical defense spending ($1.02 billion for the United States versus $1.12 billion for Japan.) Even with 70% of U.S. resources pledged to the war in Europe, Japan was outproduced in every important category.

Almost all the major powers of the Second World War sought to maximize war production by moving away from a peacetime market economy towards a wartime command economy. Japan began the shift to a war economy on 1 April 1938 with the enactment of an economic mobilization law giving the government sweeping controls over the country's economic resources. In July 1943 Tojo announced new measures to increase production. These included tighter restrictions on civilian production, a seven day work week, and the abolition of the age limit of 60 for war production. Women began taking on traditionally male jobs such as traffic direction and streetcar operation. The entertainment industry was shut down and high school students began working part-time in the factories. None of this was sufficient to close the production gap with the Americans.

By 1944 the Japanese industrial labor force had increased from 5.8 million in 1930 to 9.5 million. However, this increase included increased numbers of women and about a million indentured Korean workers, who likely lacked the capability or motivation of Japanese men. By contrast, the U.S. industrial labor force included 13 million women alone by 1940, and the industrial labor force peaked at 45,390,000 in 1943. As with the Japanese, much of the American wartime labor force included women.

Japan was far poorer in natural resources than the United States, even including the Southern Resource Area (Nampū Yōiki) seized during the initial Japanese offensive. The only important resource Japan produced at anything close to its wartime needs was coal. The only metal mined in any quantity in Japan was copper, which still met only about 50% of Japan's needs. Japan's war was essentially a race to build an impenetrable perimeter and wear the Allies down before Japan's own stockpiles of essential raw commodities ran out. This strategy failed, both because the Americans proved far more determined than the Japanese anticipated, and because the submarine blockade of Japan was effective at cutting off exports from conquered territories.

American production was far below theoretical capacity in 1940, due to the effects of the Great Depression. As late as 1942, out of a population of 133.9 million and estimated labor force of 71.7 million, about 16 million were unemployed. By that time, defense production had already begun to put large numbers of the unemployed to work and to shift underemployed skilled labor into skilled positions. The War Department estimated that about ten workers were needed to support one soldier, sailor, or airman, but the actual number recruited into the armed forces was around 16 million, or 12% of the total population or 22% of the 1942 work force. Part of the gap was closed by recruitment of women and minorities previously excluded from the work force, and part through increased productivity per worker. Of all the major powers, the United States probably experienced the least severe manpower shortage, but, even so, a critical shortage of riflemen developed in northwest Europe by the end of 1944.

Production figures for ships and aircraft are tracked individually by type in this Encyclopedia.

Production Models

An economy is a terribly difficult thing to model.  Production depends on a complex interplay between availability of raw commodities, number of laborers with various levels of skills, and the foresight of national leadership in anticipating what to produce. The simplest wargame production models simply copy the historical production figures, without any modification for deviations of the course of the game from the actual history. More sophisticated production models take the historical production figures as a baseline, but modify these based on control of sources of raw commodities. The groundbreaking Pacific War (1985) based Japanese air squadron and ground battalion replacement rates on control of oil fields but did not allow any deviation from the historical production of warships or raising of new divisions.

A really sophisticated production model would include the effects of shifting manpower from one activity to another, including the drafting of industrial labor into the armed forces. It would also include suitable delays for changes in production capacity: One of the most fundamental bottlenecks in increasing production capacity of a manufactured article is construction of the necessary machine tools. Ironically, the machine tools required for mass production are not themselves particularly suitable to be mass produced, and the largest machine tools could cost up to $100,000 and take up to two years to manufacture. Constructing such a production model would be a fascinating exercise for an economist, but perhaps of less interest to most hobbyist wargamers. However, since most wargaming now takes place with a high level of computer assistance, there is no fundamental difficulty in coding a fairly sophisticated production model into a simulation without burdening the players with the task of managing its details.

United States

Roosevelt's famous description of the United States as "the arsenal of democracy' was no exaggeration. The United States was able to equip a large modern army and air force and construct a balanced fleet built around fifteen new fleet carriers and ten new battleships, all while providing substantial armaments to her allies, and while her civilians actually saw a modest increase in their standard of living. However, the American production miracle did not really swing into high gear until 1943. By then the decisive campaigns of Midway, Guadalcanal, Stalingrad, and Tunisia had already been decided. During the crucial first year of the war, the American logistical situation was little short of parlous. For example, the CINCPAC summary for 10 December 1941 notes that the supply of 0.50 machine gun ammunition at the naval ammunition depot at Pearl Harbor was already exhausted. Induction of manpower outstripped production of defense articles, and equipment was routinely stripped from training units to fill out the TO&E of units deploying overseas. However, once production swung into high gear, her deployed fighting strength was limited by availability of shipping and manpower, not by availability of equipment.

Funding the war posed no fundamental difficulties. Secretary of War Henry L. Stimpson later said that "The one thing upon which the whole country was agreed was that the services must have enough money. At no time in the whole period of the emergency did I ever have to worry about funds; the appropriations from Congress were always prompt and generous. The pinch came in getting money turned into weapons" (Lacey 2012). Production was financed largely by expanding the money supply early in the war. This provided the monetary base needed to kick off the industrial expansion, and the combination of the previous monetary contraction of the Great Depression, the halt on production of durable goods, and the use of price controls through the Office of Price Administration helped check inflation. But perhaps the greatest check on inflation was the caution of consumers who had suffered through the privations of the Great Depression and who, in the absence of durable goods on which to spend their income, were unusually willing to save rather than increase their consumption. The monetary expansion was accomplished by relaxing reserve requirements, which enabled banks to purchase large amounts of government bonds and make larger loans to their customers. From 1 July 1940 to 30 June 1946 the U.S. government spent $387 billion while raising $397 billion, of which $330 billion was spent on national defense. Of the $397 billion, just $176 billion or 44% came from taxes. Even more financing could have been made available if necessary, but production capacity was saturated well before the funding to pay for munitions was exhausted.

Notwithstanding the limited reliance on new taxes to pay for the war, large numbers of Americans found themselves paying income tax for the first time. Withholding of income tax was also introduced, after a long debate over how to smooth the transition to a withholding system. The new taxes were highly progressive, and a sales tax was never enacted, in spite of objections from economists that a flatter tax policy would have been much more effective at reducing inflationary pressure. However, tax policy was strongly influenced by the redistributionist philosophy of the more radical proponents of the New Deal.

Historians have long believed that the Victory Plan that guided the American buildup was the work of  Albert Wedemeyer while he was a major in the War Plans Division. This belief has been called into question by Lacey (2011), who describes Wedemeyer's Victory Program as "analogous to any one of hundreds of PowerPoint presentations given to Pentagon audiences every month— over in an hour and just as quickly forgotten." According to Lacey, the American military and economic strategy was the work of Admiral Harold Stark and economist Stacy May of the War Production Board. However, the volume of the Army's official history that discussed prewar strategic planning was based almost entirely on interviews with Wedemeyer, who also deliberately conflated the Victory Plan with his own program in his autobiography. In fact, the Army played remarkably little positive role in planning the mobilization. The Army Industrial College had trained over a thousand officers from its establishment in 1924 to 1941, but the training was based almost entirely on the Industrial Mobilization Plan, which assumed that the military would take control of all production (including civilian production) in time of war. When Roosevelt rejected this approach and put industrial mobilization in the hands of civilian production agencies, the AIC graduates were woefully unprepared to help make the system work. 

Stark's memorandum of November 1940 was a significant break from previous Navy contingency planning, which assumed that Japan was the most dangerous potential enemy. Stark wrote that "if Britain wins decisively against Germany we could win everywhere; but ... if she loses the problems confronting us would be very great; and while we might not lose everywhere, we might, possibly not win anywhere" (quoted in Lacy 2012). Of the four strategic options outlined in the memo, the fourth (Option D) was to direct the major military effort in the Atlantic as an ally of Britain while remaining on the defensive in the Pacific. Marshall concurred, and although Roosevelt made no official comment on the memorandum, Option D became Plan Dog, the basis for the "Germany First" grand strategy, at the ARCADIA conference in January 1941.

Serious economic planning began in July 1941, when Roosevelt asked the secretaries of the Army and Navy to prepare estimates of the required munitions and equipment to match the Axis. This was passed on to the Joint Board (predecessor of the Joint Chiefs of Staff) who replied by endorsing Plan Dog and submitting an estimate for each department. The Navy estimate was close to what was actually later produced in the way of combat ships, but it badly underestimated merchant shipping and landing craft requirements. The Army estimates, on the other hand, seem to have grossly underestimated requirements, which was obvious even at the time. The administration turned to Colonel James Burns, who would be later promoted to general and direct all Army munitions production and distribution during the war. Together with Colonel Henry Aurand, they produced the following estimates of the time required for industrial mobilization (Lahey 2012):

The Army adopted this as its basis for expansion planning, but it was of very little use to economics like Robert Nathan of the Office of Production Management. Lacking the necessary information, Stacy May, an economist with the Supply Priorities and Allocation Board took Burns' table and worked with Jean Monnet, a French refugee now working for Churchill, to prepare a spreadsheet that officially became known as the Anglo-American Consolidated Statement and informally as the Stacy May Document or the Stimson Balance Sheet. Described as "a comprehensive listing of the British, Canadian, and American military requirements, current and potential production, and potential material stocks", it showed just how far the U.S. was from being prepared to equip herself and the Allies.

Plan Dog and the Stacy May Document laid out what could be made available to the military and how it should be used. The timetable on which the material could be made available was produced by Robert Nathan and future Nobel Laureate Simon Kuznets. May's financial analysis of the Victory Program was delivered to Donald Nelson, Roosevelt's production czar, by May on 4 December 1941.  May concluded that the United States had to reach a gross domestic product of at least $150 billion by 1943, of which at least half would be war production. By the autumn of 1943 the cost of the program would be (Lacey 2011):

What caught the attention of the military was May's observation that the military had programmed less than $75 billion in spending to September 1943 and this amount needed to be at least doubled. The point was further reinforced by Lord Beaverbrook at the ARCADIA conference.

This was a formidable task. The Army estimated that its own arsenals could produce only about 10% of wartime needs. Industrial mobilization had hardly begun in late 1941, though the Army had identified about 10,000 industrial plants (out of 25,000 surveyed) that were capable of some kind of war production. Many plants had already been notified of what they would be expected to produce if war broke out, and some had received small "educational orders" to familiarize them with the necessary production methods. However,  leading industrialists had painful memories of the heavy financial losses incurred by the rapid buildup and equally rapid collapse of the munitions industries during the First World War, as well as the postwar demonization of industrialists as "merchants of death." As a result, they were reluctant to increase munitions production capacity until after the attack on Pearl Harbor, when the need became transparently clear. Industrial mobilization was also encouraged through the Defense Plant Corporation, which provided capital for construction of armaments plants. Industrial production experts like William S. Knudsen, who was commissioned as a lieutenant general and sent out to tour factories, help rationalize production in critical industries such as the aircraft industry (Lacey 2011):

We got all the airplane manufacturers together and talked with them. They were leery because there was a lot of money per unit in airplanes. They cost all kinds of money, around ten dollars a pound. I knew that, of course, but I didn't take much stock in it, because I knew if they ever got the quantity, the cost would come down. It so happened that we started with ten dollars a pound and ran it down to 3.6 dollars per pound simply by getting quantity manufacturing.

I had the dickens of a time getting them to understand that you could have certain units of the airplane made by other kinds of manufacturers. The first fellow who had a wing contract in Detroit lost seven hundred thousands dollars on the wings. He didn't know what he was about. I had to hold his hand for about twenty-four hours, down here in Washington. As a matter of fact, he became an outstanding airplane manufacturer of parts, and not only got his seven hundred thousand back, but quite a considerable amount more.

Meanwhile the halt on production of durable goods freed up important resources. The automobile industry, for example, had been consuming 18% of U.S. steel production and 80% of U.S. rubber production and controlled the largest collection of skilled engineers in the nation. All these resources became available for war production with the halt in civilian automobile production. Management expertise was leveraged through the mechanism of government-owned, contractor-operated manufacturing plants, which made a major contribution to wartime production.

Production was not as coordinated as it might have been, since Roosevelt was reluctant to appoint a single production czar, a position that would almost have amounted to a co-President. The National Defense Advisory Commission proved unsatisfactory and was replaced in December 1940 by the Office of Production Management (OPM). Responsibility for other facets of industrial mobilization remained divided between the War Production Board, the Office of Price Administration, the War Manpower Commission, and the Foreign Economic Administration. The creation of the Supply Priorities and Allocation Board, with former Sears executive Donald M. Nelson at the helm, brought some rationality to industrial mobilization, though Nelson's powers as production czar were far from absolute. SPAB established a system of priority ratings for key materials, but a process of rating inflation set in where so many systems received the top A-1 rating that SPAB had to create an A-1-A and then an AA rating. The SPAB proved inadequate after war actually broke out, and was replaced with the War Production Board on 16 January 1942, with Nelson still at the helm. 

Some order was brought to raw material allocations by the Controlled Materials Plan of November 1942. This was a vertical system in which requisitions flowed to the top and allocations flowed back down, and it proved highly successful. Howeer, CMP only covered steel, copper, and aluminum.

The Army did its own massive reorganization on 9 March 1942, grouping all its traditional bureaus into Army Air Forces, Army Ground Forces, and Army Service Forces. The latter was headed by Brehon Sommervell,who has been characterized as a brilliant, energetic manager but not a deep thinker (Lacey 2011). He immediately clashed with Nathan, who tried to buck up the amiable Nelson against the temperamental Sommervell (quoted in Lacey 2011):

General Somervell never ceased to attack the War Production Board and undermine the authority of Donald Nelson. He truly was a constant thorn in Nelson's activities. Nelson was intelligent, dedicated and a committed leader, but he was not tough enough to cope with Somervell's maneuvers and manipulations and dubious scruples....

[Somervell] seemed to believe there were two enemies. One included Germany, Italy, and Japan on the military front and the other included civilians on the home front. He felt that the civilian population was being coddled. But his principal enemy was the War Production Board and the other non-military government agencies. Nelson agreed that procurement for military purposes should be in the hands of the military. But Somervell never ceased to demand expansion of that function to embrace practically every aspect of war production. He never acknowledged or accepted any responsibility for delays, or failures or problems attributable to his endless manipulations. I used to say that Somervell would come into a meeting with a knife in his hand, which he would stick into Donald Nelson's back; Nelson would pull it out and say, "pardon me general; isn't this yours?" and Somervell would reply, "Yes, Don, thank you." Immediately Somervell would place it in his other hand and stick in into the other side of Nelson's back. And Nelson would repeat the same response.

Matters came to a head in October 1942, when Nathan and the other civilian economists, having prodded the military to double its planned expenditures, had the unpleasant task of telling Somvervell that the production goals could not be met before the spring of 1944.The upshot was that munitions production had to be cut by 25%. Somervell, a strong advocate of setting outsized goals as a way to inspire and motivate industry, simply refused to accept the conclusion. Angry memos were exchanged between Somervell and Nathan, and at a 6 October meeting of the War Production Board, Leon Henderson, head of the Office of Price Administration, finally exploded at the general (Lacey 2012):

... but during a brief lull in the proceedings, Henderson began to speak in a low voice, almost as though he was thinking aloud. The subject of his quasi-soliloquy was the figure set by Nathan as the maximum productive effort ... that the nation could achieve in 1943, and that Somervell and Patterson held to be insufficient for the conduct of the war. "The amount in question, 90 billion dollars, was interesting, " said Henderson, "because it exceeded by far the value of our entire national product both for 1933 and 1934." Then as if a great light were dawning, he said, in substance, "Maybe if we can't wage a war on 90 billions, we ought to get rid of our present Joint Chiefs, and find some who can."

The meeting receive this statement in dead silence, which allowed Henderson to turn to Somervell and proceed to make the most violent personal attack ever heard in a meeting of the WPB. He announced that he found himself disgusted with Somervell's repeated obstinacy, overbearing manner, and ignorance of production problems. He stated flatly his belief that Somvervell had always padded his requirements, and that the general had no idea of the disastrous implications of infeasible goals. For a considerable period, Henderson gave vent to every grievance he had accumulated throughout the first year of the war.

The economists got their way. Production goals were cut back, and the Army reduced its planned establishment from 111 division in 1943 to 100. However, Nelson was thereafter gradually shuffled aside, Kuzents and May returned to academia, and Nathan was pressured into enlisting in the Army. Industrial mobilization was put in the hands of the Office of War Mobilization on 27 May 1943; Roosevelt gave its head, Jimmy Byrnes, authority so sweeping that he was widely characterized as an assistant President. Byrnes deliberately kept his staff very small, seeing his job as coordinating the efforts of existing agencies -- with the full backing of the President.

Lacey (2011) has documented that Marshall went to the Casablanca conference already aware that American industry would not be fully enough mobilized to support the invasion of northwest Europe until spring 1944. Actual production in 1942 and 1943 was only 60% of that planned in 1 February 1942, with the notable exception of merchant ship construction.

American production figures include:

U.S. Army deployment of manpower overseas was as follows:

American aircraft production began to go into high gear on 14 November 1938, when President Roosevelt met with military and civilian leaders in the White House and announed a production goal of 10,000 aircraft per year and capacity to produce 20,000 aircraft per year. Of these, 2500 were to be trainers, 3750 combat aircraft, and 3750 reserve aircraft. At this point the emphasis was on aircraft production to sell to the Allies, not the buildup of the American air force. However, on 12 January 1939 Roosevelt asked Congress to authorize an Air Force of 6000 aircraft with emphasis on the B-17. By May 1940 the production goal had increased to 50,000 per year and by 1943 to 82,000 per year. Roosevelt attempted in January 1942 to raise the goals further, to 60,000 aircraft produced in 1942 and 125,000 in 194magnesium3, but was persuaded that this would result in the production of easier types (fighters instead of bombers) and a shortage of spare parts. 

Ship construction was another priority, taking 22.5% of the total munitions expenditures during the war. Of these, 38.2% were produced under Maritime Commission contracts and almost all the rest were under Navy contracts.

The U.S. production miracle did not come without painful costs. The long shifts by inexperienced workers was a recipe for industrial accidents, and by June 1942 more workers had died in such accidents than soldiers and sailors had died in combat. An industrial safety advisory board was set up in 1943 to reduce such accidents in the workplace.

Another difficulty with military production was the loss of the usual market signals that coordinate a market economy. The result is severe surpluses and shortages of certain goods. For example, in the United States, eggs were heavily overproduced throughout the war. An ingenious process was devised for spray-drying eggs to produce a powder taking up only 20% of the space required for fresh eggs. This was shipped around the world, and a repugnance for dried egg became one of the great common bonds of the Allied coalition. By contrast, a shortage of cotton duck (a form of canvas widely used in tents, covers, and bags) developed that required crash conversion of much of the textile industry. At a time when every resource was critical, the Navy was accused in an OWM report of badly overproducing escort vessels, patrol craft, and minesweepers and producing the wrong mix of aircraft while exercising very poor inventory control.

The United States was unusually well endowed with raw materials, but seventeen strategic materials were identified that had to be imported: bauxite, antimony, chromium, coconut-shell char, manganese, manila fiber, mica, nickel, optical glass, quartz crystal, mercury, quinine, rubber, silk, tin, tungsten, and wool. Of these, some were easy to obtain (such as nickel from Canada and antimony from Mexico) while others had to be shipped over contested sea lanes or from sources likely to fall into enemy hands (such as rubber and tin from southeast Asia or silk from Japan.) All these items were carefully conserved, and the supply increased through production of synthetic rubber from petrochemicals; from expanding and buying up the entire tin production of Bolivia; and by substituting synthetic polymers, such as nylon, for silk.

American productive capacity was so great that the standard of living rose significantly even as a flood of materiel was directed to the armed forces and to the Allies. In 1943, the United States produced $84 billion in munitions while providing a record $90 billion in consumer goods and services. One British diplomat on an American passenger train was struck by the symbolism of receiving a pat of butter inscribed with the slogan "Remember Pearl Harbor": More than any other major power, the United States was able to choose both guns and butter.

Japan

Japanese production figures include:

The fruits of victory were not very fruitful. McClain (2002) gives coal production in Manchuria and north China as 22.8 million tons in 1941, suggesting much more was produced than could be shipped to Japan. Presumably much of the rest was used by puppet industries. In addition to these imports, Japan imported 2,515 thousand tons of scrap iron in 1939, the dramatic decrease being due to the scrap iron embargo.

Much of the difficulty was due to the chronic shortage of shipping:

The pre-war Japanese economy required ten million tons of shipping. Much of this was foreign and became unavailable at a stroke when war broke out. In addition, some 519 vessels of 2,160,500 tons were drafted for the Army, of which 1,450,000 were used for landing operations alone. The Navy had likewise drafted 482 vessels of 1,740,200 tons by the time war broke out in the Pacific.

The Navy completely exhausted its reserves of 25mm antiaircraft ammunition when it loaded out its warships on the eve of war. Reserves of Type 91 aerial torpedoes and 20mm aircraft ammunition stood between 10% and 30% of estimated requirements, and only a heroic effort scaled up production rapidly enough to ensure the flow of ammunition was uninterruped. In spite of this success, the Navy remained haunted by the spectre of ammunition shortages throughout the war.

The Japanese were having serious difficulties replacing aircraft long before the quality of their pilots began to noticeably deteriorate. As early as 7 July 1942, the Operations Section of the Japanese Navy noted that land-based fighter units were down to 54% of authorized strenght, reconnaissance units were down to 37% of authorized strength, medium bomber units were at 75% of authorized strenght, and seaplane units were at 80% of authorized strength. The supply channels for replacement aircraft was described as "very sluggish", particularly for fighters.

In 1943, Tojo ordered that aircraft production be given top priority. The effects on (for example) tank production are clear from the previous tables. Japanese aircraft production did increase markedly:

However, strategic bombing took a heavy toll, including a drop in production to 1900 in January 1945 and 1260 in February 1945 due to plant dispersal in anticipation of B-29 raids on the factories.

Japanese planning was seriously hampered because only the Army knew the true production figures, and the Army did not share them with the Navy or the civilian government. This led to what Hoyt (1993) has described as "an Alice in Wonderland quality" to planning meetings. The rivalry between Army and Navy tended to make the production situation even worse, by reducing economies of scale and by making rationalization of production more difficult. For example, in much of 1943-1944 the Army was hoarding aircraft for operations in mainland Asia while the Navy was seeing its air arm bled white in the Pacific, which came about because the Army insisted on its 50% share of total aircraft production.

References

Bureau of Labor Statistics (accessed 2008-11-8)

Cohen (1949)

Collingham (2011)

Drea (2009)

Evans and Peattie (1997)

Gamble (2010)

Hastings (2007)

Hoyt (1993)

Huston (1966)

Iriye (1987)

Klein (2013)

Lacey (2011)

Lane (1951)

Larrabee (1987)
Leighton and Coakley (1955)

McLain (2002)

Morison (1959) 

Nimitz Graybook (1941-12-10; accessed 2014-5-20)

U.S. Geological Survey (accessed 2012-5-16)

Victory Games (1985)

Wolk (2010)

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