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The US immediately revved up their economy into third gear to get troops, ammunition, weapons, food, and everything else for the war effort shipped to the front lines in Europe. This was a massive undertaking, and it would need some organization. Enter the War Industries Board.
War Industries Board: Definition
The War Industries Board (WIB) was a government agency created to ensure the United States could produce everything it needed for the war effort. The President at the time, Woodrow Wilson, issued an executive order to create the War Industries Board on May 28, 1918. The Board was up and running by that July. The Board consisted of twelve members, each from a different area of business.
Fig. 1 - Production of cavalry saddles in a factory in Portland, Oregon
The WIB was one of many boards to oversee specific sections of the nation's economy. Everything needed to run smoothly on both the homefront and the frontline, meaning all industries had to work together.
War Industries Board of WW1
Even before the US entered the war, the government wanted to prepare materially. There were many aspects of the economy and society that the government needed to be aware of if they wanted to be able to control production. It was from this need that many government agencies were born, one of them being the Council of National Defense and its Advisory Commission.
National Defense Act and the Council of National Defense
In May 1916, Congress ratified the National Defense Act. The Act allowed the President broader authority and power during times of war, as seen in this excerpt of the National Defense Act below:
The President, in time of war or when war is imminent, is empowered, through the head of any department of the Government, in addition to the present authorized methods of purchase or procurement, to place an order with any individual, firm, association, company, corporation, or organized manufacturing industry for such product or material...1 - Sec. 120 of National Defense Act, 1916
These powers allowed the executive branch to control the production of raw materials, food, and the railroad system. The founding of the Council of National Defense in August 1916 demonstrated the scope of these new powers. The Council's purpose was to make recommendations to the government about how to proceed with producing war materials. After researching which areas the US would need to manage during wartime, the Council established multiple boards. Each worked in different areas of the economy, including the General Munitions Board, which would later become the War Industry Board.
The WIB and Civil Liberties
During World War I, the government could regulate many things that hadn't been able to before, like labor and farm production. It is argued that the WIB, along with the War Labor Board, was guilty of suspending certain civil liberties.
Furthermore, acts like the Espionage Act of 1918 and the Sedition Act of 1917 curtailed the given rights of Americans. These Acts made it illegal to interfere with the draft process and other actions that the government deemed disloyal.
War Industries Board: Purpose
Soldiers needed uniforms, shoes, guns, ammunition, gas masks, tanks, and ships. It was the job of the War Industries Board to ensure that the United States was able to produce enough of these products. Industrial production increased by 20% during the war, and most of these items were shipped to the front line.
The government essentially took control of the economy to ensure that they were able to be able to produce everything they needed to. The WIB controlled the pipeline of raw materials to ensure that the industries that were essential to the war effort were prioritized before the sectors that were not necessarily essential to the war.
Fig. 2 - A division of the War Industries Board.
The WIB also worked with companies to encourage their factories to stop making their usual goods and to shift over to making war supplies. Factories were also pushed to find ways to increase production while minimizing their waste. One way factories did this was through the mass production of standardized products.
The companies that the government worked with were private businesses, so they could raise the prices of items needed for the military and the general war effort. Therefore, another essential consideration for the WIB was ensuring costs stayed level. This would keep businesses from price gouging.
Price gouging
When businesses raise their prices to take advantage of a shortage or high demand.
Heads of the War Industries Board
The War Industries Board had three leaders over its lifetime: Frank Scott, Daniel Willard, and Bernard Baruch. The first two leaders left quickly as they found that the WIB could not do much because of the antitrust laws already in place. These issues affected the abilities of the first two leaders of the WIB.
Antitrust laws
Laws created by the government to limit companies from becoming too powerful within the economy and ensure fair competition in the market.
In 1918, President Wilson expanded the abilities of the WIB, which allowed it to be much more effective. This allowed the tenure of Bernard Baruch, the final leader of the WIB, to be much more successful than his predecessors.
Bernard Baruch
President Woodrow Wilson put the Wall Street banker Bernard Baruch at the head of the War Industries Board in March 1918. Since President Wilson expanded the powers of the WIB, Baruch could work directly with industry leaders and prioritize the allocation of raw materials and then the manufacturing of goods.
Fig. 3 - Photograph of Bernard Baruch, who was nicknamed "Dr Facts" by President Wilson
War Industries Board: Significance
The creation of the War Industries Board was one of the first times in United States history when the government had the power to intervene with the country's economy. The WIB, along with the other agencies of the Fuel Administration, Food Administration, Railroad Administration, and the National War Labor Board, helped organize each corner of the American economy. Together, they ensured that the homefront economy was doing all it could to supply the war effort with everything it needed.
War Industry Boards - Key Takeaways
- The War Industry Board was created in 1917 to allocate raw materials and ensure industries produced standard goods for the war effort.
- Bernard Baruch was the more influential of the three heads of the War Industries Board because of the expanded powers President Wilson allowed in 1918.
- The WIB is an example of the wartime powers given to the executive branch in the 20th century.
- The WIB worked with other boards, like the Fuel Administration, Food Administration, and Railroad Administration, to ensure all corners of the US economy were working for the war effort.
References
- S.120 – 64th Congress (1915-1957): National Defense Act, S.120, 64th Cong. (1916)
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Frequently Asked Questions about War Industries Board
When was the War Industries Board created?
The War Industries Board was created on July 28, 1917.
Why was the War Industries Board important?
The War Industries Board was important because it assisted the US economy and industry prepare and create the materials needed for World War I.
Was the War Industries Board successful?
The War Industries Board often found itself blocked by anti-trust laws that were put in place to protect the US economy from monopolies and became more successful after the WIB's authority was expanded in 1918.
What was the War Industries Board?
The War Industries Board was a government agency that controlled the allocation of raw materials and the production of wartime goods on the homefront.
How did the War Industries Board affect the American economy?
The War Industries Board affected the economy by encouraging industrial companies to shift their production from what they usually made to goods for the warfront.
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