Numbers appearing in square brackets (ex. ) within the transcript indicate the pagination in the original, hardcopy version of the oral history interview.
Opened March, 1977
July 17, 1975
by Richard D. McKinzie
MCKINZIE: Ambassador Gordon, you were in the War Production Board at the time Mr. [Franklin D.] Roosevelt died, and shortly thereafter the war Production Board was phased into the Civilian Production Administration, in which you were the director of the Bureau of Reconversion Priorities. That process of reconversion was critical. Could we begin there?
GORDON: Yes. I had been involved in the War Production Board since Pearl Harbor -- really, since the time the Board was set up. I had done some work way back in the summer of 1940, long before
we entered the war, with the National Defense Advisory Commission, which was the precursor to all of the war mobilization agencies. I started with the Bureau of Research and Statistics of the War Production Board and then got onto the staff of what we called the Requirements Committee, which was chaired by the Program Vice Chairman and which had the responsibility for establishing a system of priorities and allocations and all of the regulations which dealt with any material or product that was scarce or threatened to become scarce.
We had to design what became famous as the Controlled Materials Plan, which allocated steel, copper and aluminum; we set priorities; we issued conservation regulations for saving copper and zinc and aluminum and other scarce materials. In the latter part of the war we became involved jointly with the War Manpower Commission even in
allocating scarce manpower, especially on the West Coast. We had a lot to do with making a success of the landing craft program, which was vital to D-Day in Normandy, and also with the atomic bomb program. We didn't know what that was; there was something called the Manhattan Project and it got an automatic AAA priority, but if anybody in the War Production Board knew what it was, it was not I.
But it was a very interesting experience. I went through a series of successive promotions. At the time of President Roosevelt's death I was the Deputy Program Vice Chairman, and chairman of what we called the Junior Requirements Committee, known as the Program Adjustment Committee.
These committees were chaired by the War Production Board man, and they had on them representatives from the three armed services; that is the Army, the Army Air Corps -- which was
treated in effect as a separate service, although the Air Force didn't yet officially exist -- the Navy, the Maritime Commission for shipbuilding, the Petroleum Administration for War -- the War Food Administration, the Foreign Economic Administration for civilian and military overseas needs -- both lend-lease and others -- and then a so-called Civilian Requirements Division of the War Production Board which was responsible for domestic civilian needs. It was headed in my day by a Harvard colleague of mine, my mentor at Harvard over many years, Professor William Y. Elliot.
In April of 1945, I was the Chairman of the Program Adjustment Committee, and in May the Program Vice Chairman resigned (shortly after President Truman took over), and, although I was very young at the time, I was asked to be Program Vice Chairman. So for the last few months of the war I chaired the Requirements Committee.
Sometime in 1944, it became evident to everybody that we were going to win the war. We didn't know just when, but it looked as if another year or two would probably do it. We began to give thought to the problem of reconversion. The problem was how to do it in an orderly way, which would avoid the kind of terrible postwar recession, or depression, which had followed World War I. That was much on everybody's mind. You must recall that all of us in those days were very conscious of the great depression, very much worried about unemployment and about sliding back into the sort of situation that we had emerged from at the beginning of the war.
MCKINZIE: Wartime opinion surveys showed that most people did expect a postwar depression.
GORDON: That's right. And in fact, there was a famous competition that was won by Herbert Stein
involving what to do in order to avoid a postwar depression. Stein also was on the War Production Board staff, later became the chief economist of the Committee for Economic Development, and then recently was chairman of the Council of Economic Advisers.
We were also aware in 1944 that there might be a very substantial time space between the surrender of Germany and the surrender of Japan. Generally the planning in those days was that a full year might elapse. This reflected in part our ignorance about the Manhattan Project, but in 1944 nobody knew whether the Manhattan Project was going to be successful -- as we now know, even the people on the inside. The general advice that we got in the War Production Board was to plan on a one-front war in the Pacific for a full year after Germany surrendered whenever that may be.
It was clear that a one-front war would not require anything like what a two-front war required in the way of materiel. There were also a number of civilian needs which had been deferred, but which couldn't be deferred forever. Automobiles were one. We had totally stopped producing passenger automobiles, but the stock was gradually wearing down, and at least for certain purposes, such as doctors and critical public services, fire chiefs and the like, we had begun to think about trying to get one line in some automobile factory going again, just to provide for priority needs of automobiles. Other things were in a similar position. But above all, we wanted to try to work out some system in which we could have a coming back of civilian production, but in a moderate way so that it wouldn't detract from the necessary war production for the residual Japanese phase of the war,
and yet avoid a postwar depression.
We set up in July or August of '44 a little committee which we called CODCAVE. CODCAVE was the Committee on Demobilization of Controls After Victory in Europe. I still remember what it stood for. We had a very bright girl, a professional member of the Committee, who wrote a piece of verse in the style of Gray's "Elegy." The last line went: "The paths of all cod lead but to the cave.
The chairman of that group was Samuel Anderson, who was Program Vice Chairman then and whom I succeeded in May of 1945 for it. I was the rapporteur and had to write the Committee's report. We worked very hard during that summer and got our report in. It was a very complex scheme for relaxing and removing controls wherever we could, but retaining those that were necessary for this assumed one-year continuing war with Japan.
Then came the Battle of the Bulge, which shocked everybody both in Europe and in Washington. For a little period, we went back almost to full, intensive industrial mobilization because the ammunition expenditure and things of that kind during the Battle of the Bulge were very heavy, but that phase only lasted for a couple of months.
By the time of Roosevelt's death it was clear that the end in Europe was just a matter of weeks away, but we still didn't know -- at least I didn't know -- about the atomic bomb. We were still working on this 12-month one-front war idea. We reviewed our 1944 plans and they still looked pretty good.
By this time the WPB Chairman, Donald Nelson, had been sent off by Roosevelt to set up the Chinese War Production Board and to get inflation in China under control. He didn't succeed at it
very well! Cap [Julius] Krug had been made chairman of the War Production Board after a brief spell in uniform in the Navy.
The effective operating head at this time was Jack Small (Commodore Small he was by then), who was detailed to us from the Navy. He was a very able administrator.
Soon after the Germans had surrendered, one day in July, Jack called me in and said, "Look, we not only had better think about something more far-reaching than our one-year plan, we'd better think about what's going to happen if Japan suddenly surrenders." He obviously had some inside knowledge about the bomb. So, we developed a scheme for the maximum and speediest possible decontrol. There was a lot of debate about it. But then, of course, the Office of War Mobilization and Reconversion was a very important cog in all of these wheels. Obviously what we
were doing was of general interest, so we had many meetings with the OWMR people and there were differences of view. Some people wanted to retain a much more elaborate system of controls. We were, on the whole, of the opinion that there wasn't very much justification for this even though there would be some cases where there clearly would be a great excess of demand over supply. We had a lot of pressure from the OPA, which was very concerned about how they could possibly maintain controls unless there were production controls to go with them, and there were some fairly vigorous debates between OPA and WPB people about this. Things that were scarce by that time were not easy to control. It wasn't so much the metals or the big industries like automobiles, but things like textiles and paper where there were hundreds of firms, and where the evasion of regulations was a serious problem, even in wartime. And we were well aware that once the moral inhibitions of wartime were off, this was going to be extraordinarily difficult to manage. So our thrust was very heavily in the direction of liberalization and removal of detailed controls. The
wartime industrial controls were extraordinarily elaborate There were volumes and volumes of regulations going into great detail as to what various scarce materials could be used for, how much, the percentages of base period, and so forth.
MCKINZIE: Mr. Ambassador, did anyone speculate about the future political environment and how that might effect the operation of the plans you were in the process of devising? I am vaguely aware that there were people in the Civilian Production Administration who believed that the WPB had worked so well during the war, that the problems of the first years of peace were going to be equally critical, and that there ought to be the same kind of orchestration during the coming peace that there had been during the war. Yet, as it turned out, the political climate of the country simply made that kind of thing unacceptable. Were there any discussions of that kind of thing?
GORDON: Well, there was a little bit. We got much
involved in my last few months on the job -- after the Japanese surrendered -- with housing. Wilson Wyatt had been brought in by President Truman as the Housing Expediter, and veterans' housing was one of the big policy objectives. We knew there was a tremendous backlog of unfulfilled demand for housing. We and the OPA were concerned about prices, and we wanted to have some sort of preference scheme for veterans. We in the CPA knew more about priority and preference schemes than anybody else in Washington. So, we worked very closely with Wilson Wyatt in trying to devise some scheme that would get the maximum number of houses built and would give veterans preferential access to any new housing. That was one of the big cases where we tried to maintain controls and we did on paper have a control scheme. When I went back to Harvard in February of '46, I maintained a consulting relationship with both the Civilian Production Administration
and the Housing Expediter, under agreement between Jack Small, who was the administrator of the CPA, and Wilson Wyatt, to help in trying to make this scheme work. I came down for three days every other week for the rest of that spring and summer. In fact, I was in Wilson Wyattts house on election night '46 when we read the returns and realized that any kind of direct economic controls had passed their political day. The time had become ripe for decontrol regardless of the effects.
So, the whole effort, including price control, was washed up very soon thereafter. But in '46, at least at my level -- the u