Chapter 1
The World’s Arsenal
“Well. it has come at last. God help us all.”
His name is almost completely forgotten in history. Charles Babbage, though, is a name that is known by historians and computer technology experts. In 1822, Babbage came up with the idea of building a machine that could do rapid-fire computations. He called his proposed new speed calculating machine, the “Difference Machine.” The way he envisioned it; the machine would be capable of not only making speedy computations of several sets of numbers but also making a copy of the results.
Babbage needed money, a considerable amount of money to get a machine up and running. He implored the British government to contribute the funds. He got a relatively small sum from the government. It was nowhere near what he needed to create a functional machine. Yet, Babbage was on to something. Some observers even then called his proposed machine, “computer.”
In the coming decades, a slew of scientists, mathematicians, and technicians in Germany, England, and the U.S. would take Babbage’s rudimentary idea of a computer to new levels of development. But the problem that Babbage faced still hadn’t been solved. That is getting the massive funding to develop a functioning, programmable computer, and determining what and how widespread its use would be.
It would take the passage of decades and World War II to find the answer. Near the end of the war, military engineers and researchers made the breakthrough. They developed a big, bulky, but proficient computer that could do thousands of computations. More importantly, it could decipher German coded messages. Thus, this first real programmable computer was a machine that pointed the way to America’s tech future.
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On September 1, 1939, at 3:00 AM, FDR was wide awake. He had just gotten a call from the U.S. ambassador to France informing him that the occurrence that he, U.S. policymakers, and millions more throughout the world dreaded; namely the start of the war in Europe had come. Hitler had invaded Poland.
The call to FDR and the dire events that followed would bring into play what Babbage, and scores of others after him had worked hard for. That is to develop machines that would be in essence electronic brains, and that would revolutionize science, technology transportation, communications, and entertainment for decades to come. Roosevelt’s response to the news of war was terse, “Well, it has come at last. God help us all.”
Hitler’s war of aggression in Europe was one part of the challenge facing the U.S. The other was Japan’s war of aggression in Asia and the Pacific. This firmly drew the battle lines. Britain, France, and an array of smaller European nations overrun by Hitler, the democracies, were on one side. On the other were fascist, militarist, Germany, Italy, and an assortment of south and central European states. Japan loomed even more dangerously in the background. It posed a direct threat to the U.S.’s interests in the Philippines and the Pacific. Japan also represented everything that was odious to the democracies.
Hitler and the Japanese militarists, though, were careful not to give the U.S. an excuse to get directly involved. Still, there were hopeful signs. In fits and starts, public opinion and congressional support had gradually shifted toward stepped-up aid to Britain, issuing a torrent of bellicose warnings to Germany, and even limited military support to a Britain near collapse.
This was not the same as declaring war, let alone involving the U.S. in a full-scale fight against Germany. Japan, of course, resolved the dilemma for the U.S. Its deadly December 7, 1941 attack on Pearl Harbor ended all ambivalence, indecision, and hesitation on the part of Congress and the American public. Four days after the Japanese attack, Hitler settled the matter of the U.S. engagement in the war. In a speech to the German Reichstag on December 1941, he rashly declared war on the U.S. in line with Japan’s sneak attack on the U.S. at Pearl Harbor.
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There was a good reason Japan and Germany, at least initially, did not want to do anything to draw the U.S. directly into the war. Many of their leaders knew the potential industrial and economic might of the U.S. They knew that waging a modern war was not simply about nations putting the most troops in the field. It was about a nation’s capacity to build lots of ships, planes, tanks, guns, and dozens of other instruments needed to win a war.
Two months before Pearl Harbor, FDR’s war production czar Donald Nelson told the New York Times on September 3, 1941, that the U.S. was in a production race with Germany. To win the race it had to be “markedly greater than Germany’s and not just “sufficient to defend the western hemisphere.”
World War II was above all an industrial war. The mastermind of the Pearl Harbor attack, Admiral Yamamoto, repeatedly warned Japanese military leaders of this fact. He noted that he could successfully carry out the Pearl Harbor attack. However, Japan couldn’t win a prolonged war with the U.S. He went further than publicly protesting the attack. He bluntly told the commander of the strike force: “We must not start a war with so little chance of success. “He made clear that he wanted the Emperor who would make the final decision on the attack to call it off. He delicately and respectively hoped he would make what he called “a sacred decision.”
Yamamoto forcefully made the warning because he knew first-hand from living for a time in the U.S. of the country’s industrial strength. Hitler’s economic advisors and a few top generals quietly made the same point. They were wary of war with the U.S. because of the fear of the U.S.’s potential economic and industrial capacity. Their warnings were all to no avail.
Ironically, Japan of all nations should have been the most cautious about antagonizing the U.S. It got much of its scrap iron, tin, aluminum, coal, and most importantly, oil from the U.S. The U.S. threat to cut off the supplies to Japan was a powerful club it held over the country. U.S. ambassador to Japan, Joseph Grew, fully recognized the danger of pushing Japan over the edge with its threat to cut off supplies. He flatly told FDR in autumn 1939, “If we cut off Japanese supplies of oil, Japan will send her fleets down to take the Dutch East Indies.” He was prescient. This is exactly what Japan would do in 1941.
The year Germany invaded Poland. U.S. GDP topped $100 million. This was a GDP still badly marred by the prolonged and continued effect of the 1930s Great Depression. It also was a signal that American industry had unlimited room to grow if war came, and the wheels of production were geared up. The growth came in ways that few could imagine at the time. By war’s end, in 1945, America’s GDP was nearly a quarter-billion dollars. It dwarfed that of Germany, Japan and Italy combined.
This was just the start. The soaring GDP and the economic growth that spending spurred was the springboard for U.S. global economic dominance, “The U.S. emerged from the war not physically unscathed, but economically strengthened by wartime industrial expansion, which placed the United States at an absolute and relative advantage over both its allies and its enemies,” notes economic historian Christopher J. Tassava, “Possessed of an economy which was larger and richer than any other in the world, American leaders determined to make the United States the center of the postwar world economy.”
The tanks, planes, and ships that American plants and factories churned out required lots of aluminum, iron, and steel. These were vital materials that America had in abundance. Even during the Depression, the U.S. steel industry was a major world producer and exporter. By the midpoint of the war in 1943, it produced almost 70 percent of the world's pig iron and over 70 percent of the world’s steel.
FDR was keenly aware of the industrial production numbers. He knew that this could translate into an unending number of weapons. In various talks and messages to Congress in 1940 and early 1941, He thought big. He set a goal of 125,000 aircraft and 120,000 tanks.
American manufacturers moved quickly to begin fulfilling the production totals. Ford Motor Company, for instance, built one motor car that comprised 15,000 parts on its assembly lines every 69 seconds. Ford and the other auto manufacturers produced three million vehicles in 1941 alone. The planes, meanwhile, required aluminum; aluminum that Japan was woefully short of. America had vast supplies. Alcoa, alone, produced thousands of tons of aluminum used in the construction of over 300,000 planes the U.S. produced.
The final tally of weapons the U.S produced was staggering--324,000 military aircraft, 6,771 large ships 2.5 million tanks, trucks, and jeeps; 2.7 million machine guns; and 250,000 pieces of artillery. By the end of the war, the U.S. had transported a total of $50.1 billion (equivalent to $659 billion in 2020) worth of arms and food supplies, $31.4 billion of which went to Britain, $11.3 billion to the Soviet Union, $3.2 billion to France, $1.6 billion to China, and the remaining $2.6 billion to other Allies.
No other nation had the industrial capacity to produce what became outside of the atomic bomb, the most effective and devastating killing machine of the war. That was the B-29 Superfortress airplane. It had five principal manufacturers (Boeing, North American, Bell Aircraft, Wright Aeronautics, and GM’s Fisher Body) and 1,400 subcontractors who manufactured the plane’s 40,000 parts and shipped them to plants in Georgia, Nebraska, and Washington and Kansas (One of those assembly plant workers at the Kansas plant was Madelyn Dunham, a future President’s maternal grandmother; the President was Barack Obama). The planes were assembled by 1,500 workers—on six separate assembly lines.
The industries that the government mobilized from 1941 to 1945 to make war weapons were the same industries that would quickly convert from making tanks, planes, battleships, and guns to making Chevys, Fords, Buicks, stoves, irons, refrigerators, fleets of commercial airplanes, and cruise vessels almost immediately after the war. American industry had the machinery, equipment, technical capability, and abundant raw materials to make the seamless change from weapons production to consumer goods production. For the next half-century, this stood as the trademark of a post-World War world in which America would be the global leader in production.
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There were three other crucial factors that made possible the expansion of American industry. They would have an inordinate impact on American industry and government policy after the war. One, the government had to have the revenue to pay for the contracts to industry to produce the massive amounts of war materials. It raised the money through taxes and the sale of bonds. The so-called “Victory Tax” was imposed starting in 1942. Americans bought $186 billion in war bonds. Hefty tax hikes and bond purchases would not have been possible if American workers did not have the income to pay the increased tax as well as buy loads of bonds, $186 billion of them.
“The war bond campaign was enormously successful in uniting and galvanizing the country, notes historians Joshua Yates and James Davison Hunter, “Between 1941 and 1946, well over half the population of the United States invested in war bonds and Victory Bonds during eight bond drives.”
The second factor was the viability of the financial markets. The Federal Reserve, at FDR’s insistence, kept interest rates low. This enabled industry to borrow at rock bottom rates to further expand production. The government’s imposition of wage and price control and rationing measures ensured that inflation would not rise to unsustainable levels.
Finally, the government did what governments often do when they need a quick infusion of cash for financing its operations. It simply printed more money. “The government used monetary policies to finance the part of federal spending that could not be covered by taxes. Wartime monetary policy helped the government to smooth tax distortions,” noted economist Lee Ohanian, “The average growth rate of money (MI) between 1940 and 1946 was 18 percent.”
The mechanisms that the U.S. used to win the war-- deficit spending, the float and sale of bonds, increasing the money supply, and retooling industry from a consumer product producing and supply system were refined from 1941 to the war’s end in 1945. These seem commonplace financial and economic devices that governments use in the 21st Century to increase productivity, battle inflation, and unemployment.
However, this was not the case before World War II. The U.S. by skillfully combining all these industrial and monetary devices set an economic model for the future. The tank and ammo assembly line after the war’s end would become the oven and passenger auto assembly line again. Bonds, deficit spending, and lots of government borrowing would become the norm for nations that face financial crises.
Historian Doris Kearns Goodwin assessed the reasons why America won the war. She summed up the perfect confluence of economic, social, and political factors that made success possible: “Government was a source of full employment, macroeconomic recovery, technological breakthrough, worker training, reindustrialization, and a good deal of incidental social progress.”
Goodwin’s checklist of factors for the U.S.’s outsized role in winning the war are the same factors that are still the emblem of American industry, business, finance, and labor in the 21st Century. Japan and Germany on one side, were the U.S.’s foes. Britain and France on the other side were the U.S.’s allies. Neither U. S’s friends nor foes had those advantages.
It would take years for them to catch up (and at times surpass the U.S. in industrial production and efficiency). This would not have been possible without the economic template the U.S. created for effectively waging an industrial war and then to promptly transform that into the massive production of consumer goods for domestic consumption in the post-World War II world.
