WAR PRODUCTION AND INDUSTRIAL DECENTRALIZATION
By mid-1938, events in Europe, Japan and China grabbed the attention of the leaders of Western democracies, including Roosevelt. Despite what he said publicly, he was well aware that the planet was on the threshold of a world war. FDR wanted no part of it for America; but, after WWI the American military establishment had been reduced to being a “virtual”, not real, military force. When the war started, we hoped France and England would stop Axis expansion, but it was equally clear they could do so only if we supplied them with military sustenance and equipment—sustenance and equipment we did not have for our own army, never mind theirs.
The Big Picture
As early as 1936, with the expiration of the Washington Naval Treaty, Roosevelt launched the nation’s first post-WWI ship-building program.
In 1938, the Army Air Corps got the biggest authorization for buying planes in its history … [yet] by 1939 the Army Air Corps … consisted of some seventeen hundred planes, all fighters and trainers, and fewer than 20,000 officers and enlisted men … From the fourth-biggest military force in the world in 1918, the United States Army shrank to number eighteen, just ahead of tiny Holland. (Herman, 2012, p. 7)
World War II began in September 1939 (in Europe) and still Roosevelt dithered, trying behind the scenes to somehow increase military production by ten times in one year. Little came of it. On May 28, 1940 Belgium surrendered and the British army was thrown into the sea at Dunkirk by German panzers. On the same day FDR met for the first time General Motors’ chief production executive, William Knudsen, whom he had picked to organize, plan and lead not only America’s war production effort but, for all practical purposes, British and later the Russian military production as well.
Corporate leaders were drafted to plan/reconvert/operate American privately owned factories to produce tanks, ships and the materiel needed to wage war. The volumes required were badly underestimated in these early days, but were staggering relative to existing industrial capacity. Certain industrial sectors were “platform” sectors in that other sectors’ future outputs were reliant upon the formers’ outputs. Steel, machine tools and composites (basic materials such as rubber) and energy were especially critical to war production. An increase in production required constructing new facilities because existing facilities could not contain new machine tools, multiple assembly lines and new assembly line designs and physical layout.
Much of the nation’s war-related industrial facilities were located on vulnerable coastlines (Japan invaded the Aleutians and German subs positioned outside Atlantic ports). Policy-makers/generals knew quite well that most aircraft and naval facilities were lodged in Seattle, Los Angeles and San Diego on the west coast and in Baltimore, Charleston and suburban Long Island/Connecticut on the east coast. Starting virtually from scratch, the South and non-Pacific west coast would necessarily be winners as industrial decentralization was implemented. Not only was vulnerability a concern, but also the reasonable fear concentration of industry in a few centers would intensify worker shortages, housing and overtax logistical systems.
The most serious dislocation anticipated at the time was housing for new workers. New logistics (rail and truck) had to follow if new centers were to be integrated into the national logistical system. Staging facilities for overseas transshipment of millions of soldiers and tons of materiel required new facilities built from scratch. There was never any possibility that existing facilities, however expanded, could produce the scale needed to supply the Allies’ war needs. This was not the time for entrepreneurial startups; go with big firms, proven capacity, management and experience. Accordingly, the famous “six companies” that built the Hoover (and subsequent) dams were drafted to construct shipyards across the nation. In the process, Henry Kaiser (one of the six), founded a worker health company (Kaiser-Permanente), built worker housing and designed the merchant marine liberty ship. He also dramatically altered the local economic base of most Atlantic, Gulf of Mexico, Great Lakes and Pacific seaports.
Industrial Decentralization
The existence of several independent federal wartime production agencies2 and the astounding sums tossed into federal World War II budgets elevated federal investment to an unintended federal economic development strategy—which degenerated into a competitive, self-serving municipal/state “urban hierarchical” Hobbesian war “of all, against all”. Economic developers across the nation, usually chamber-based programs, embraced an aggressive ED strategy to capture war production facilities and attract almost any kid of federal investment.
Production efficiency, cost and established infrastructure, however, initially favored locations where industrial facilities already existed (North, Pacific Coast and Midwest). So, northern and midwestern cities were as intensely involved in intergovernmental economic development as their Sunbelt counterparts. Eastern municipal competitors fought for federal offices, highway spending, ports of embarkation status, contracts of every size and representation on federal boards and panels that dispensed these assets. Each party sought to curry favor with the armed services by praising the military and identifying their own cities with service branches. Cities advertised and lobbied through their congressional delegations and media, and even persuaded the navy to name ships they built and paid for.
New facilities generated higher industrial wages, increased urbanization and augmented the South’s purchasing power. Facilities and military bases increased local employment, and multiplier effects created an increased capacity for consumption which attracted investment from corporations. Both Ford and General Motors located facilities in the South for distribution and assembly in accordance with a new, decentralized “hub” business plan. Increased mechanization of southern agriculture through the war years (caused by FDR’s revolution from above) encouraged investment in new facilities by International Harvester and Allis-Chalmers. Southern industrial decentralization got its fair share and more: the B-24 manufactured in Dallas, the B-29 in Marietta Georgia; Ellington Air Force Base in Houston eventually became NASA’s Johnson Space Center.
Florida got over $1.5 billion (the largest sum any one state received), one-half of which went to shipbuilding operations in Jacksonville, Miami, Tampa and Panama City. Charleston’s population increased by one-third, Norfolk’s by two-thirds, while Hattiesburg Mississippi doubled. Mobile Alabama was reduced to chaos as its population doubled in two years—crushing inadequate infrastructure, housing and public services (Goldfield, 1982, pp. 182–3). The South built cutting-edge manufacturing facilities and moved into the twentieth century. Backwater municipalities became thriving military centers. Nearly every major city acquired an airport and was connected to rail and truck transport. The South captured more than its fair share of military bases. Industrial capacity in the South was increased by 40 percent and over $5 billion was invested in southern war-related plants. Per capita income tripled during the 1940s and the urban population expanded by 30 percent (Cobb, 1993a, p. 31)
Accounting for just 11.8 percent of the nation’s capital expenditures in manufacturing before the war, the region acquired 17.6 percent of the value of wartime manufacturing facilities expansions … housed 23 percent of new plants built for the war … bulldozers ploughing military bases out of the “Old Plantation.” The region received 36.5 percent of the total on-continent military facility awards … almost two-thirds of the domestic Army and Navy bases … war had closed the economic gap between regions. Southern per capita income improved from a pitiful 59 percent of the national average in 1940 to 69 percent at the close of hostilities … a new mechanized industrial economy was displacing the old labor-intensive South. (Schulman, 1994, pp. 85–7, 95)
Population Migration
People followed the jobs. Between 1940 and 1945, three times as many people flooded out of the South each year as had during the previous decade. From Pearl Harbor to V-E Day, 1.6 million southern civilians left the land of Dixie, while another 4.8 million migrated within the region. Sharecroppers and wage laborers departed for the cities of the North.3 Schulman (1994, p. 82) observed that southern migration, although a largely an increasingly black phenomenon during the 1940s, also exhibited a bias toward migration of its “most downtrodden” whites. Latinos in Texas also moved out (to California mostly) for the first time (Gregory, 2005, p. 34). Jobs were the attraction.
The wartime southern exodus came from different parts of the South than the pre-war Diaspora. Instead of Georgia and the Carolinas, mostly black southerners from Mississippi and Alabama went north. The South was no longer under the control of King Cotton, its plantation-based economy lay in shatters. Farm laborers replaced sharecroppers. Nearly a half-million African-Americans served in the military. Black emigration was more varied. Chicago, Detroit and the Great Lakes cities were still the principal destinations for Mississippi Delta sharecroppers, but black Texans moved west to California. Future founder of the Black Panther Party Bobby Seale moved to the San Francisco Bay area as a nine-year-old (Gregory, 2005, p. 34).
Southern industrial development was very uneven. Arkansas, Georgia, Mississippi, North and South Carolina and Virginia had fewer manufacturing wage earners in 1945 than in 1939 (Schulman, 1994, p. 106, Table 4.5). In some instances southern states/municipalities resisted industrial decentralization, particularly if it tasted of unionism. North Carolina, for example, perceived industrial decentralization as a threat to its low-wage business climate strategy:
North Carolina’s heritage of catering to the low-paying, nonunion textile industry encouraged its publicly funded development organizations to accept the paradoxical mission of promoting progress by discouraging high-wage industries, particularly those that might bring unions with them. For a time the Raleigh Chamber of Commerce adhered to a rigid, written policy of non-recruitment of industries that would not promise to resist unionization. (Cobb, 1993b, p. 33) North Carolina enjoyed the fourth lowest ratio of war facilities to prewar manufacturing of all states (Schulman, 1994, p. 99). Increased urbanization brought new populations to cities that had long been dominated by an entrenched “old guard” that had determinedly maintained “progress and tradition”:
Wartime expansion of southern … cities and continued employment opportunities … brought to these areas many new voters who were not steeped in the traditions of deference. The sheer numbers of the in-migrants made difficult their enlistment in local political parties and organizations … Two types of newcomers demonstrate this growing independence from the old politics. (Bernard, 1993, p. 70)
Those newcomers are young native professionals and non-whites. The seeds of future change in southern municipal policy systems were sown by the opportunities created by industrial decentralization.
A short outline of Miami’s growth in this period is illustrative. Florida occupied a geography which was doomed to capture a good deal of military facilities. Clear weather meant it was prime ground for training, particularly air and naval training. Early in 1942 the US Army Air Corps (USAAC) practically took over Miami Beach, leasing more than 100 tourist hotels for fliers’ barracks. Facilities were built in Miami itself and surrounding communities (Opa-locka, Homestead and Coral Gables). The navy assumed control of Miami’s port. A major airport, Homestead Field, was located in Dade County. The war dampened tourism for sure, but troops, contractors and facilities provided year-round prosperity.
Dade County’s population increased to 450,000 by 1950—up 85 percent from 1940. The remarkable feature of this population boom was where folks lived:
The greatest growth during the forties took place in the suburban fringe [152 percent increase] and unincorporated areas [164 percent]. … The suburbs by 1945 were reported to be on the verge of “widespread new development”. Hialeah, Opa-locka and North Miami, reflecting real estate development and housing construction … rocketed upward. (Mohl, 1983, pp. 61–2)
Miami grew by increasing its population, not by relocating or developing its economic base. New residents moved directly into suburbs and unincorporated areas—never having lived in the central city. Miami’s share of the Dade County population declined from 1930 onward.
Sketches of Southern Cities War Production
Shipyards were built in Panama City, Savannah, New Orleans and Houston. Who would have guessed, however, that an entrepreneur from the South would build the most ships and be World War II’s most famous entrepreneur? Andrew Jackson Higgins, dubbed the “Henry Kaiser of the South”, started a pre-WWI business in Natchez Mississippi building low-draft boats to haul lumber out of swamps. Calling it the “Higgins Boat” (or Eureka Boat), Higgins pitched it to the federal government, without success, at the start of WWII. The British saw its potential, however, issuing a contract, and prompting Higgins to construct a facility in New Orleans. Higgins’s Eureka Boat designs were quickly modified to create the famous patrol torpedo (PT) boat and the landing ship tank (LST). Starting out with 400 workers in 1939 and $1 million in annual sales, by war’s end he had 8 plans, 20,000 workers and annual sales of $100m (Schulman, 1994, p. 97). Higgins constructed more boats than any other American shipbuilder. Most were produced on the Great Lakes, but the New Orleans facility built more LSTs than all other factories combined. Eisenhower proclaimed Higgins “the man who won the war for us”.
Birmingham’s Steve McCone and the Bechtel construction company won a federal contract in 1943 to build a 2-million square foot, 285-acre factory that introduced a new assembly process for aircraft construction, revolutionizing the aircraft industry. More than half its employees were women. The bomber they constructed (B-24s) won in May 1943 the “war of the Atlantic”. Frank Ix’s mill in Charlottesville Virginia made parachute cloth for every airborne division from 1942 to D-Day (Herman, 2012, pp. 242–4, 252).
The Dallas Chamber of Commerce and Citizens Council campaigned in Washington offices and corporate headquarters for a naval reserve aviation squadron base and a North American Aviation Company plant. By 1943, employment in the federally financed plant topped 40,000, and the Chamber of Commerce boasted Dallas was the ‘War Capital of the Southwest (Abbott, 1998, p. 7). In 1940 the Dallas Chamber and City Council granted 30 acres of municipal-owned Hensley Field and extended runways for the navy. Several years later the US Eighth Service Command moved from San Antonio to Dallas. By September of 1943 the federal government had built over $115 million in defense facilities in Dallas. Lockheed, Southern Aircraft and the gigantic North American Aviation complex (courted by the chamber since 1940) relocated facilities to Dallas. By 1944’s end, 13,000 worked at the North American complex alone. More than 25,000 families were moved into Dallas by the War Manpower Commission between January 1940 and September 1943 (Fairbanks, 1990, pp. 145–7).
Such growth necessitated a complete rebuilding of transportation infrastructure and new housing, outlined in its 1945 Master Plan. At war’s end, however, the huge North American complex was closed, making 17,000 workers redundant. Other aircraft plants were reconverted to other uses and downsized. The Dallas Chamber responded with an intensive attraction campaign. Once again the city expanded the Hensley Field runways on its own dime. Two major aircraft firms responded in 1947: TEMCO and Chance Vought Aircraft moved from Stratford Connecticut, bringing over 4500 jobs and 1500 supervisory personnel to Dallas (Fairbanks, 1990, p. 150).
If Dallas landed the aircraft industry, Houston—through efforts of its native son Jesse Jones (chief of FDR’s Reconstruction Finance Corporation)—convinced the federal government to build two pipelines allowing Texas gas and oil to reach into the northeast. Other federal contracts established Humble Oil (Exxon today) and Shell Oil, and relocated General Tire, Goodyear Tire and Sinclair Oil plants in the Houston metropolitan area:
Investment in the Houston chemical industry totaled $600 million during the war and $300 million immediately afterward. Houston’s Harris County led the United States in the value of industrial construction for 1945–1948 and emerged as … a great complex of petrochemical plants and pipelines stretching from Freeport to Port Arthur (Abbott, 1998, p. 11)
Texas garnered one-third of the entire South’s facility expansion awards (steel, petroleum and aircraft equaling $1 billion dollars). By 1945 Texas (temporarily) replaced North Carolina as the South’s leading industrial state.
Finally, entirely new cities were built for war production. The Atomic Energy Commission, starting in 1942, developed Oak Ridge Tennessee to manufacture key elements of Project Manhattan. Home to about 3000 residents in 1942, Oak Ridge housed nearly 75,000 by 1945. As of 2010, it was home to 29,000 plus residents. The Oak Ridge National Laboratory, originally the X-10 site where plutonium was made, followed and the Corps of Engineers built its own “planned community”—complete with a symphony hall. Most Oak Ridge residents were women (Kiernan, 2013). TVA facilitated construction of Oak Ridge, developing new processes for aluminum manufacturing research.
Planning and State-EDO Formation
War production was closely associated with expansion of state, regional and municipal planning. The National Planning Board (issuer of Our Cities), always controversial, never penetrated day-to-day New Deal decision-making, yet “hung around” under a variety of names (National Resources Board, National Resources Committee) during the 1930s. To coordinate war production, FDR in the 1939 Executive Reorganization Act lodged the now-called National Resources Planning Board (NRPB) in the Office of the Presidency. The intention was that the NRPB would play a valuable role in making America the “arsenal of democracy”. It didn’t. Instead, as an unintended by-product, it established the nucleus of a goodly number of state/regional economic development organizations at war’s end.
War production was pretty much dictated by the service branches, the Treasury and, of course, the National Defense Advisory Commission (and successor agencies). The NRPB ran 11 regional field divisions that worked with the various state-level planning organizations set up to satisfy federal legislation that such entities develop plans around which federal aid and projects could serve. In 1933 there were 14 state-level planning entities—by 1938, 47.4 State-level planning entities served as a magnet to attract economic development/agriculture-related functions, research, programs and staff: a 1938 annual report commented that state planning entities “engaged in a bewildering variety of activities”; and in many geographies, the Mississippi Delta being one, states had set up corresponding regional entities to deal with Cotton Belt decline. The TVA also fostered a number of regional “planning” entities. From hindsight, it is apparent these planning entities were not perfectly integrated into the politics and budgets of state governors and legislators. Such agencies were semi-regarded as agents or facilitators of the federal government; as one might suspect, southern states had their own ideas about these entities. Apparently, they were not popular in Congress either.
Congress abruptly terminated the NRPB in August 1943—specifying that its “functions exercised … shall not be transferred” (Scott, 1969, p. 409). It was a “don’t let the door hit you in the butt” kind of legislation. Planners and Progressives in general were less than thrilled; neither was Mel Scott. In any case, our story concerns what happened with the state-level entities after the NRPB’s termination:
Alabama, California, Georgia, Illinois, Indiana, Missouri abolished their state planning agencies and replaced them with postwar planning agencies specifically concerned with problems of employment and economic expansion … Arkansas, South Carolina and Washington … [created] economic organizations and abolishing their state planning boards … [and] in 1944 Nebraska, Kentucky and New Jersey established development commissions or departments … By the end of 1945 … there were forty-five or more of the newer agencies with titles denoting their legislative mandate to improve the state economy. (Scott, 1969, pp. 411–15)
State-level EDOs had arrived, in some form, on the national landscape.
The South had its own ideas regarding state-level development agencies. Several states in the twenties had already established state-level EDOs (Alabama, Florida, South and North Carolina, and Virginia) (Lepawsky, 1949, p. 8). When the NRPB was dissolved, only Virginia, Tennessee and Alabama retained planning agencies—two of which already had state-level EDOs. Georgia, Mississippi, Kentucky, Oklahoma, Louisiana, Florida, Arkansas, South Carolina and Texas had by 1945 scrapped state-level planning entirely or combined it with an EDO. Each southern state by war’s end had a multi-function state-level EDO (Cobb, 1993a, pp. 65–70, Table 2). Most southern state-level EDOs were led by gubernatorial appointees, and many included boards or commissions with private sector membership reflective of regional constituencies and were staff-driven (some more professional, others political). Emerging from the war, these new agencies played a crucial role in retaining war-time employment/ relocation gains—and provided incentives to assist their conversion to peacetime production (Cobb, 1993s, pp. 67–9).
In 1946 the Southern Economic Development Council (SEDC), led by W. Porter Grace’s Memphis Chamber Industrial Department, organized informally as the Southern Industrial Development Council (SIDC). Meeting each year, the organization grew in size and ambition. At Fort Worth in 1951, an invitation was “extended to all practitioners of industrial development in the southern region” and the council officially incorporated with, Porter Grace its first elected president. By 1958 the council had nearly 200 members. In 1961 the University of Oklahoma at Norman was approved as its “Institute” and a three-week course of “instruction in industrial development” commenced. AEDC later assumed responsibility for its operation. In 1981 the SEDC headquartered in Atlanta (where it remains today—with a short digression to Austin Texas). The SEDC in 2013 claimed 1000+ members from 30 states.
Ron W. Coan 