Destructive Creation. Mark R. Wilson
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second phase of the American industrial mobilization, from June 1940 to December 1941, “big business” became an important player. And its most important role was as builder and manager of the giant new network of GOCO plants.
Table 2. The 25 Most Expensive Plants Built in the U.S. for World War II, by New Investment in Buildings and Equipment, 1940–45 (in millions of dollars)
Sources: Non–Manhattan Project data from CPA-Facilities; atomic weapons program cost data from Richard G. Hewlett and Oscar E. Anderson, Jr., A History of the United States Atomic Energy Commission, vol. 1, The New World, 1939/46 (University Park: Pennsylvania State University Press, 1962), 723.
*The public investment at the Kaiser steelworks at Fontana, California, came in the form of a long-term RFC loan, which Kaiser would need to repay out of future profits; so in this one case, the figures may overstate the degree to which the investment was fully “public.”
Even in the major war industry that made the least use of GOCO arrangements (naval shipbuilding), public-owned facilities were essential. In the summer of 1940, Congress authorized the Navy to spend about $5 billion on more than two hundred new combatant vessels, enough to double the size of its fleet. Most of the new warships were built by a beefed-up version of the same network of Navy-run and private shipyards that had done the job in the 1930s. The Navy spent half a billion dollars to expand the capacity of its own shipyards, which continued to serve as top producers of warships. Of the one million Americans working in the naval shipbuilding industry by the middle of the war, a third worked in the Navy’s own facilities. But the Navy also invested heavily to increase the capacities of its established contractors. In Groton, Connecticut, the Navy paid over $9 million to build a whole new GOCO submarine works. It was operated by Electric Boat, whose own facilities were located next door. The Navy also began to invest large sums at the works of the established warship builders, including the main yards of New York Ship, Newport News, and Bethlehem. By war’s end, each of these facilities had been expanded and improved by about $20 million, using funds provided by the Navy’s Bureau of Ships. Across the industry, the Navy investments in plant typically exceeded the established contractors’ own private investments by a factor of five or ten.44
In the merchant shipbuilding industry, GOCO arrangements were even more important. The cargo ship program was overseen by an independent government authority, the U.S. Maritime Commission (USMC), which dated from 1936. By the time the U.S. mobilization effort began in earnest in summer 1940, an expanded USMC program was in place; America’s small merchant shipbuilding industry was already busy. However, it still was nowhere close to having the capacity that would be required for the United States to send large ground forces abroad. (By the end of World War II, the USMC would build 5,700 vessels, at a cost of $13 billion, nearly as much as the $18 billion spent on warships by the Navy.)45
Table 3. Leading Privately Managed Plant Sites, by Value of Prime Contracts for Finished Munitions, with Amounts of Wartime Public Investment, 1940–45 (in millions of dollars)
Sources: Calculated from CPA-Contracts and CPA-Facilities. In a few cases, the published figures combine multiple sites operated by the contractor in the same metropolitan area. The largest government-operated Navy yards, such as Brooklyn and Philadelphia, likely produced ships worth more than those made by largest private yards, such as Newport News and Federal Ship, but they are not represented in the contracts data.
The big order that changed the American merchant shipbuilding field followed a visit by a British delegation in October 1940. Working with the USMC, British officials decided to order sixty new merchant ships. These were to be “Ocean”-type vessels—slower, cheaper ships than the “C” types ordered previously by the USMC. One “Ocean” might be built for about $1.5 million, about 40 percent less than the cost of a “C”; each new ship might be completed in just six months, instead of a full year.46
The British order of late 1940 would be filled by just two as-yet-unbuilt shipyards, which would be paid for in full by the British. The contracts for the ships would be of the cost-plus fixed-fee (CPFF) variety, with the contractors to be paid a flat fee of $160,000 for each ship, or about 10 percent of its estimated total cost. This meant that each of the two yards selected stood to earn about $5 million, with all costs reimbursed by the British government.47 These terms appeared to be favorable. But because the United States had few competent merchant shipbuilders, and even fewer who were not already swamped with USMC business, there was no obvious candidate to take the British order.
The winner of the British contract was a consortium of East and West Coast shipbuilding and construction companies, led by Henry Kaiser. Half of the sixty ships would be built in South Portland, Maine, where the British spent nearly $10 million on a new seven-shipway yard, to be co-managed by Todd Shipbuilding and the Bath Iron Works. The other thirty ships would be built at a new yard in Richmond, California, near San Francisco, where the British invested another $7 million for seven Kaiser-run shipways.48
The British order of late 1940 became a model for the giant Liberty ship program, which would account for nearly half of all the vessels built for the USMC. The Liberty ship project started in January 1941, after President Roosevelt announced that the United States needed to build two hundred additional merchant vessels. Like the British “Ocean” types, the Liberties, initially priced at about $2 million apiece, were meant to be relatively cheap, slow ships.49
In order to get the two hundred Liberties built, the USMC paid for seven large new GOCO shipyards. Built mostly in the South and the West, these seven new yards were to be operated mostly by companies with some previous experience. The biggest of the new yards, a $35 million facility in Fairfield, Maryland, outside Baltimore, was run by Bethlehem Steel Corporation, a major builder of commercial and naval vessels. In Wilmington, North Carolina, the USMC paid for a $20 million yard run by Newport News, the Navy’s top builder of aircraft carriers. On the West Coast, the USMC spent about $25 million apiece to build big new yards in Los Angeles and Portland.50
The nine large new merchant shipyards created to handle the British and American orders of the winter of 1940–41 served as the core of the U.S. cargo ship program throughout World War II. Kaiser’s yards in Richmond and Portland would end up building 821 Liberties. With a total of 197,000 employees at their peak, the various Kaiser yards on the Pacific Coast worked on nearly $4 billion worth of ships, or about a quarter of the value of all USMC construction. On the East Coast, the giant Bethlehem-Fairfield yard in Maryland finished 312 Liberties; Newport News Ship’s Wilmington yard built 126. In Maine, Todd-Bath had serious production problems, especially with a new Liberty shipyard that was built in 1941 alongside the original British-financed facility. However, despite the setbacks, the two South Portland yards together built 244 Liberties.51
The Liberty shipbuilders, including Kaiser, have been justly celebrated for their innovative use of welding and modern assembly techniques, which allowed them to produce the vessels with astonishing speed. But the miracle of American wartime shipbuilding should also be credited to public actors, who paid for everything and coordinated the larger program. The harddriving leaders of the USMC, Admirals Jerry Land and Howard L. Vickery, were both graduates of the U.S. Naval Academy. Both were experienced builders of ships, thanks to their service at the Navy’s in-house warship yards. Land and Vickery were instrumental in the Liberty program, by coordinating it at the national level and advising the private builders, including Kaiser.52
Above all, the British and USMC contracts and investments of 1940–41 created enormous new capacities. This was difficult to see in the production record of 1941, when the USMC took deliveries of just twenty-one Liberties, a third of the number originally scheduled. Until mid-1942, Germany’s U-boats succeeded in sinking more tonnage of cargo shipping than the Allies were producing. However, even before Pearl Harbor, the USMC was already planning