World War II lives in our memory even today, 70 years later. After all, that was the last major war our country fought in which we met all of our political, objectives. Yet, while the conflict gave us hundreds of American heroes, those who started creating the Arsenal of Democracy 18 months before Pearl Harbor still go unrecognized.
Possibly President Roosevelt’s smartest step toward preparing America for combat was when he pried Big Bill Knudsen out of GM’s presidency to run his quasi-governmental board, one with no legitimate power, to get U.S. corporations on board for the coming conflict.
Our Future in an Immigrant’s Hands
Knudsen had stepped off the SS Norge in early 1900 with only $30 in this pocket. At his first job, in the Brooklyn shipyards, he earned 17 cents a day, but a year later he was repairing locomotives for the Erie Railroad; and a year after that he was working for Keim Mills building bicycles. It was Knudsen who convinced Henry Ford to allow his employer to build the steel axle housings for Ford’s vehicles; and just a few years later, in 1911, Ford bought Keim Mills outright.
It turned out that Knudsen was a genius at organizing production. In fact, it was mostly Knudsen who drove Ford’s moving assembly line up to its maximum efficiency. Then it was Knudsen who was tasked with building Ford’s factories across America and then in Europe. But he quit that $50,000-a-year job with 1921, because Ford constantly overrode his decisions with the workforce.
Alfred Sloan at GM realized that Knudsen was his best shot for bringing GM into modern production manufacturing and profitability. Fifteen years later, when Sloan became GM’s chairman, Big Bill Knudsen became its president. The Danish immigrant, who had spoken little English when he arrived on our shores 37 years earlier, now ran the world’s largest corporation.
Until the day that FDR called. Knudsen met with the president two days later and agreed to take on the challenge of preparing American industry for war, and he did so for zero pay. This wasn’t unusual, however, in the past; people became rich in corporations, then did government service out of a sense of duty.
Under today’s rules you work for government, then use the connections you made there in private enterprise to get rich.
For what was about to transpire, Knudsen had a partner in arms. Jesse Jones, a former Texas cotton broker, ran the Reconstruction Financial Corporation; his task was to fund any industrial expansion necessary to handle the output for the war effort. Fortunately, his respect for Knudsen knew no bounds. For inside Big Bill’s head was a comprehensive map of the nation’s industrial capabilities — all of America’s, not just GM’s. He knew which companies could build what items, or which ones could with only minor enlargements. He also knew exactly what major industrial expansions needed to take place. More than that, Knudsen knew the names of every major CEO and his production head nationwide and their private phone numbers.
So, when England ordered thousands of their exceptional Merlin aircraft engines, Knudsen picked up the phone and asked Edsel Ford to build them. He agreed, but was overridden by father Henry. No problem: Knudsen called the head of Packard, and he built those engines. Then something marvelous happened. With Packard’s top engineers on the project, they not only improved on the Merlin engine, but found ways to build in it less than 1/3 the time.
When thousands of tanks needed to be built, Knudsen called K.T. Keller at Chrysler and that order was handled. And again, Chrysler’s engineers took a tank apart and discovered that they could design a far better version for combat.
Knudsen quickly realized that England and France’s entire gold reserves could not possibly cover all of the orders for aircraft and war material. And if those items couldn’t be paid for, no corporation would make the investments necessary to build them, much incur the costs to have the products built. He informed the president; Roosevelt took care of that problem.
One of the thorniest issues Knudsen faced was the fact that a great many new factories would need to be built to produce the supplies at the volumes the president had laid out. But our tax laws required a 16-year depreciation schedule for new factories, which would not work for new plants that might be shuttered in just a couple of years if we won the war. Again, Knudsen took his case to the president; the tax laws were changed.
At the time America was building around 550 aircraft per month, but the British and French already had orders in place for 13,000. It was Knudsen who helped our aircraft industry expand, to handle first the Allies’ orders, then ours.
Before Pearl Harbor happened, in just 18 months Bill Knudsen had handled 920 contracts for our military worth $9 billion. 19,290 aircraft were built, 50,000 aircraft engines, 97,000 machine guns, 3,963 tanks and more. When FDR asked him if we were capable of building 45,000 tanks, 30,000 planes and eight times more merchant ships for the next year, he replied that the production capability was ready for that order.
Not bad for a man working for the government for no pay and in a position where only his personal influence got things accomplished. The job title didn’t come with the legal authority to order anyone to do what needed to be done.
That’s the story of how it happened that, when the Japanese bombed us at Pearl Harbor on December 7, 1941, we were already geared up to produce whatever war materiel was needed for another world war. One Danish immigrant and one former Texas cotton broker made it all happen in just a little more than a year and a half.
Knudsen’s Republican friends asked him how he could possibly work for the widely hated FDR; Jesse Jones, who was a Republican, hated the president more than anyone else in Washington. Knudsen replied to the effect that there was a job to do and politics were not part of that equation. It position of integrity we don’t see much today. But there was a more personal issue involved. Knudsen had lost track of all of his siblings when the Nazis overran Europe and would not hear from any of them again until almost a year after the war’s conclusion. For him the war was far more personal than for most.
Well Begun Is Half Won
From the time America really went on the offense in the Second World War to its successful conclusion was a period of only three years. And the reason is that Big Bill Knudsen had mobilized our entire industrial output for war materiel so well that we were ready for that conflict before we even entered it.
In the process he was vilified by the conservative business press, which claimed he was not getting the job done. The unions pounded him over wages, because they were still getting paid at 1926 rates — during a period of record corporate profits. Some members of Roosevelt’s own administration tried to stand in his way from time to time. And as stated, his GOP friends begged him to help torpedo the President publicly.
Today Big Bill Knudsen would be called a White House Czar for the miracles he performed in such a short period. But GM fought to keep him from leaving, wasting his time trying to save the world. He is the greatest unsung hero of the Second World War, never given credit for his heroic accomplishment. The media didn’t give him his credit, so the public for the most part didn’t either.
For Big Bill, it didn’t matter. He knew what he had put in place for all of us.
*Parts of this column’s facts came from the book, Freedom’s Forge, by Arthur Herman (2012, Random House).
© Ed Wallace 2014
Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism. He hosts Wheels, 8:00 to 1:00 Saturdays on 570 KLIF AM. E-mail: firstname.lastname@example.org; read all of Ed’s work at www.insideautomotive.com